the utter discomfiture of the Ricardo doctrine) obliged to have "recourse to the poorer soils.”

Nor should what has been just stated be at all surprising to those who are aware of the force and general prevalence of the principle of saving or frugality. "It can sel

dom happen, indeed," says Dr Smith, "that the circumstances of a great nation can be much affected either by the prodigality or misconduct of individuals; the profusion or imprudence of some being always more than compensated by the frugality and good conduct of others.

"With regard to profusion, the principle which prompts to expense is the passion for present enjoyment, which, though sometimes violent and very difficult to be restrained, is in general only momentary and occasional. But the principle which prompts to save is the desire of bettering our condition; a desire which, though generally calm and dispassionate, comes with us from the womb, and never leaves us till we go into the grave. In the whole interval which separates those two moments, there is scarce perhaps a single instance in which any man is so perfectly and completely satisfied with his situation as to be without any wish of alteration or improvement of any kind. An augmentation of fortune is the means by which the greater part of men propose and wish to better their condition. It is the means the most vulgar and the most obvious; and the most likely way of augmenting their fortnne is to save and accumulate some part of what they acquire, either regularly and annually, or upon some extraordinary occasions. Though the principle of expense, therefore, prevails in almost all men upon some occasions, and in some men upon almost all occasions, yet in the greater part of men, taking the whole course of their life at an average, the principle of frugality seems not only to predominate, but to predominate very greatly.

"With regard to misconduct, the number of prudent and successful undertakings is everywhere much greater than that of injudicious and unsuccessful ones. After all our complaints

of the frequency of bankruptcies, the unhappy men who fall into this misfortune make but a very small part of the whole number engaged in trade, and all other sorts of business; not much more perhaps than one in a thousand. Bankruptcy is perhaps the greatest and most humiliating calamity which can befall an innocent man. The greater part of men, therefore, are sufficiently careful to avoid it. Some, indeed, do not avoid it, as some do not avoid the gallows.

"Great nations are never impoverished by private, though they sometimes are by public prodigality and misconduct.”*

And again :-" When we compare the state of a nation at two different periods, and find that the annual produce of its land and labour is evidently greater at the latter than at the former, that its lands are better cultivated, its manufactures more numerous and more flourishing, and its trade more extensive, we may be assured that its capital must have increased during the interval between those two periods, and that more must have been added to it by the good conduct of some, than had been taken from it either by the private misconduct of others, or by the public extravagance of government."+

Nor is there any doctrine in the whole compass of political science to which the followers of Mr Ricardo bear an ampler testimony, or to which they give a fuller and more unequivocal assent than this. They seem even to vie with one another as well as with Dr Smith, and to strain their invention for stronger language in which to state it, and to express their deep sense of its truth.

"There is no instance," says one of the most noted of Mr Ricardo's disciples, "of any people having ever missed an opportunity to save and amass. In all tolerably well-governed countries the principle of accumulation has uniformly had a marked ascendency over the principle of expense. Individuals are fully sensible of the value of the articles they ex

• Wealth of Nations, book ii. chap. 3.

+ Ibid.

pend; for, in the vast majority of instances, they are the immediate result of their industry, perseverance, and economy; and they will not consume them, unless to obtain an equivalent advantage."*

It may be stated therefore, I think, as an undoubted axiom, that the disposition to accumulate wealth is at least as strong as the propensity to multiply population; and that the former principle of our nature is perfectly sufficient to keep the latter in subjection and in check, under any tolerable system of laws or good government.

CHAPTER VI.

OF THE PROFIT OR INTEREST OF STOCK OR CAPITAL.

SECTION I.

PROFIT OF STOCK DEFINED.

THE profit of stock or capital is that share of wealth,—the produce of land, labour, and capital,-which belongs to the capitalist after the deduction of rent and wages,-including of course in that deduction his own wages, where he bestows his own labour in the employment of his capital. In other words, profit of stock is that exact share of wealth which the capitalist can procure by means of his capital without labouring himself, or without, at least, labouring or

Principles of Political Economy, by J. R. Maculloch, Esq. part iv. p. 415.

troubling himself further than may be necessary to lend and secure it in the best manner. Profit of stock is therefore the same thing with interest of money.

The distinctive characteristics of rent and wages are not difficult to be ascertained, and the revenues which ought properly to fall under those denominations have been in general pretty correctly understood; but the notions that have prevailed hitherto in regard to what ought to be considered as the profit of stock seem singularly vague, unsettled, and erroneous, as confounding those profits with the wages of labour, in all the employments where capital is required as well as with what is properly compensation for risk,—an undefinable and uncertain quantity.

There is in fact no such thing as profit of stock or capital, properly so called, distinct from that which is paid for the use of stock or capital; and all gain in any business, profession, or employment, which is over and above the ordinary rate of interest on the capital employed, is either wages,that is, remuneration or reward for labour or industry, or ingenuity, or skill, in the use and application of that capital, -or otherwise it is the result of fortune or accident,—that is, of "secret and unknown causes,' "*which sometimes occasion greater or less gain in trade, or no gain at all, and sometimes a loss, and falls properly to be considered as compensation for risk, which ought not to be confounded with the profit ordinarily derivable from capital any more than with the ordinary wages of labour;-such accidental gain being regulated by no certain principles, and being therefore without the pale of science, or at least of political science, which is conversant alone with "known and determinate causes,"† rejecting all others with disdain.

Mr Hume's definition of chance, i. e. fortune or accident. Vide Essays, part i. essay 14.

+ Vide Ibid.

The word profit indeed, in its common and popular acceptation, is understood to mean the same thing with gain, and in this sense it includes every thing in the shape of wealth that any person can acquire from any subject whatever, be it land or capital, or from any business, profession, or employment whatever; in which sense it is a very useful and perhaps necessary word ;* but as a term designating the revenue arising from a peculiar species of property or capital, and as defining and limiting the right to that revenue, it must be confined precisely to the sense of interest. Not that interest measures the exact quantity of wealth produced by capital; for, as I have already endeavoured to prove at large,† a great part of that wealth diffuses itself, and communicates its benefits indirectly to the whole community. But interest measures the whole gain arising from it directly to the individual proprietor,—all that he can claim specifically in his character of capitalist, or all that he can directly gain by it without labouring himself; and what he gains by the superaddition of his labour is WAGES.

But Dr Smith, it will be said, did not himself restrict the · meaning of the expression profit of stock thus far, or confine it to the signification exclusively of interest of money. Still, however, all his reasonings concerning profit and wages, and especially his exposition of the true ultimate incidence and effect of taxes, require that it should be restricted to this meaning; and, as I have already mentioned, Dr Smith himself was perfectly aware that he had not fully explained this point, or always perfectly discriminated between wages and profit. This will now most distinctly and plainly ap

* Perhaps it might be expedient to discontinue the use of the word profit in its technical sense altogether, and, substituting for it the term rent, to say rent of stock or capital, instead of profit of stock, &c., as we say rent, not profit of land. I have not, however, ventured to make so great an innovation.

+ Chap. v. section 2. of book 1. et passim.