When the use of machinery has diminished the exchangeable value of certain commodities, the question may be asked, What has become of the difference between their former and their present cost? The difficulty of obtaining these commodities is diminished, the labor required to overcome that difficulty is consequently lessened, and therefore, according to the principles already laid down, less exchangeable value is created. Suppose cloth to be the commodity manufactured, and that the price was formerly ten cents a yard, while it can now be had for four cents. All of that cloth which is already in the market will now be held at only two fifths of its former value. What has become of the other three fifths? Is this amount of exchangeable value destroyed, and is the introduction of labor-saving machinery, therefore, an evil to the community?

case.

The answer is, in this case as in the former one, that the exchangeable value of the commodity is diminished; but what is taken away from that value is added to what I have called the natural wealth of the people, in distinction from their artificial wealth, to the stock of those things, like the air and the sunlight, which are of preëminent utility, but, being universal and inexhaustible, cannot be exchanged for anything. That this is true may be seen at once by putting the extreme Imagine that the machine, instead of saving only three fifths of the labor, should save the whole of it. Imagine that some contrivance should be hit upon for producing cloth in unbounded profusion, no labor of man being required in any part of the process. It is obvious that we should then obtain cloth on the same easy terms on which we now obtain air and light. It would be an addition to the natural wealth of mankind; but as any person could have as much of it as he wished without difficulty, he would not give in exchange for it anything which had cost him labor; it would have no exchangeable value. And as a machine which would save the whole of the labor would transform the whole exchangeable value into natural wealth, so, if it saved but three fifths of the labor, it would add that three fifths to our natural wealth.

Observe, however, as before, that this result would follow only if the use of the machine became common. If its inventor or first introducer could keep it to himself for a time, he could exchange the cloth which cost him the labor of only four men

for articles which cost others, and would cost him, the labor of ten men; because it would take ten persons, without the aid of the machine, to produce the cloth. The value produced is measured by the average of the labor required for making or obtaining the commodity, and not by the greater or smaller amount of labor which circumstances may render necessary in a particular case. If any person has a monopoly granted by the government, or a secret process, or a machine which others cannot imitate, he can turn to his own exclusive advantage the value which would otherwise be added to the natural wealth of the community.

Accident, or good fortune, as it is called, may have the same effect as a monopoly or a secret process. Take the pearl-fishery, for instance. The value of the pearls obtained will be determined by dividing the whole amount procured in one day by the whole number of divers employed during that day; and by dividing the quantity obtained in the whole season by the number of days in that season;—thus ascertaining the average cost of the pearls in labor. But the business is a mere lottery; one diver may bring up, from his first plunge, a pearl worth a hundred dollars; another may dive for a week, and obtain little or nothing. If a capitalist should undertake the business, and pay fixed wages to all the divers on condition of receiving all the pearls which they found, his profits, or the value of the pearls, will evidently be determined by their average cost in labor, and not by individual and extraordinary cases. When Mr. Senior, who denies that labor is essential to the creation of wealth, asks triumphantly, "If, while carelessly lounging along the sea-shore, I were to pick up a pearl, would it have no value?" and, "Supposing that aerolites consisted of gold, would they have no value?" he might be answered, that accidents and miraculous events are supposed to be eliminated when we are reasoning upon the general principles which govern ordinary events; and that, if pearls were common enough to be often found by loungers on the seashore, or if showers of golden aerolites were so frequent as no longer to appear miraculous, certainly both the pearls and the gold would have little or no value.

I have dwelt at length upon the two fundamental maxims of Political Economy, that labor is the source of wealth, and

that the wealth produced is in exact proportion to the labor expended, and is therefore measured by it, because, obvious and unquestionable as these truths may appear, they are yet such as the world is slow to recognize and reluctant to act upon. Here in America especially, too many people spend their time and waste their substance upon vain projects for getting rich without labor. They hope that some one of those accidents, or peculiar circumstances, which we have noticed as occasionally disturbing the regular proportion of value to labor, may fall to their lot; that is, for it amounts to nothing else, that they may become rich at the expense of their fellows; that they may, by some invention, or perhaps some roguery, be able to exchange four days' labor for ten days' la

bor.

They will take shares in a copper-mine, or go to California to dig gold, or commit any other extravagance, though it should be demonstrated to them that the average return, the whole profit divided by the whole number of adventurers, would not keep one from starvation.

Take another instance. Three persons out of four, when the temptation is brought home to them, will buy a ticket in a lottery; though this is the only adventure ever offered to the public, in which, avowedly, the net result is not a gain, but a loss. For $120,000 received as the price of tickets, perhaps $100,000 are returned in prizes; that is, the adventurers expect that only five sixths of what they have invested will be returned to them, instead of getting back the whole and a profit besides. And the $100,000 returned are divided into so few prizes, that nineteen out of twenty of the ticket-holders must suffer a total loss of their investment. But one fortunate person one out of 60,000-must receive $20,000 for two invested. And yet lotteries are so popular, that they must be forbidden by law, in order to prevent clerks from robbing their employers for the sake of investing money in them; and the most effectual way of encouraging the fine arts in this country is found to be the establishment of an Art-Union lottery for their benefit. Sydney Smith, a veteran opponent of abuses in church and state, and one whose wit was not more remarkable than his sagacity and benevolence, strenuously opposed a scheme for reducing the monstrous inequalities in the compensation of the English clergy, on the ground that these inequal

ities allured more talent into the Church than would be brought thither by a much larger income equally distributed. Men, he argued, think only of the prizes, and take no account of the blanks. The chance of becoming an Archbishop of Canterbury, with £20,000 a year, is enough to allure over 10,000 clergymen into an Establishment one half of the livings in which produce less than £ 100 of annual income.*

Coming back to the subject of the coöperation and the compensation of labor, it may be remarked, that the seemingly complex and difficult process of dividing the ultimate value of the finished article equitably among all those who have had a share in its production, is really accomplished with ease, through the number of exchanges it undergoes at the different stages of its manufacture. At each stage, labor effects a change in its form, bringing it nearer to the state in which it is fitted for consumption; at each exchange, therefore, it has more labor vested in it, and consequently buys more labor vested in other products, the difference being the compensation of the last person who has made an alteration of its form. What regulates this difference, and causes each producer to be paid in exact proportion to the labor which he has bestowed, is the competition of other producers. Wheat, for instance, is first sold or exchanged as wheat, the price paid for it being the compensation of the farmer by whose care and la

* First Letter to Archdeacon Singleton.

This argument, however, was not original with Sydney Smith. It was urged, more than a hundred years before his day, by the famous Dr. Bentley, the Aristarchus of English literature, in his "Remarks" upon Collins's "Discourse on FreeThinking." I borrow the passage, which is written in the character of a foreigner, Phileleutherus Lipsiensis.

"I congratulated, indeed, the felicity of your Establishment, which attracted the choice youth of your nation for such very low pay; but my wonder was at the parents, who generally have interest, maintenance, and wealth the first thing in their view: till at last one of your state lotteries ceased my astonishment. For as in that, a few glittering prizes, 1,000, 5,000, 10,000 pounds, among an infinity of blanks, drew troops of adventurers, who, if the whole fund had been equally ticketed, would never have come in; so a few shining dignities in your Church, prebends, deaneries, bishoprics, are the pious fraud that induces and decoys the parents to risk their child's fortune in it. Every one hopes his own will get some great prize in the Church, and never reflects on the thousands of blanks in poor country livings. And if a foreigner may tell you his mind, from what he sees at home, 't is this part of your Establishment that makes your clergy excel ours. Do but once level your preferments, and you'll soon be as level in your learning."

bor it was raised. As labor is the measure of value, a quantity of wheat which represents five days' labor must be exchangeable for a quantity of cloth which also represents five days' labor, no more and no less; no more, because this would induce the cloth-maker to turn farmer; no less, because the farmer would then turn cloth-maker. No man will give six days' labor in any one product for another product which he might himself raise in five days. And though it may be said, that he who has long practised a particular trade or art will be reluctant to exchange it for another, as he would thereby sacrifice the skill which he has obtained by experience, and be obliged to serve another apprenticeship to a new handicraft or profession, it must be remembered, that all employments can be kept full only by a succession of young and fresh hands constantly entering them, and these persons will choose, of course, the occupation that is most profitable. Thus the number of those who pursue the art which is underpaid will rapidly diminish, while the number in the more profitable branches of industry will increase, until an equality of gains among all these branches is reëstablished. Exchanges then regulate themselves, and must be made on equal terms. The farmer having received a fair compensation for his work, the miller next obtains the wheat, and, having converted it into flour, sells it to the flour-merchant at an advanced price, because more labor is now vested in it. In like manner, it passes successively into the hands of the retail dealer, the baker, and the consumer, at each stage acquiring an additional value in exchange just sufficient to compensate, on an average, the labor expended upon it at that stage.

Competition, then, when it is free, or competition modified by custom, determines the distribution of the value of a product among those who have concurred in its production. How far it may be modified by custom depends on circumstances. Mr. Mill justly observes, that competition has become "the governing principle of contracts only at a comparatively modern period"; and that "the relations, more especially, between the land-owner and the cultivator, and the payments made by the latter to the former, are, in all stages of society but the most modern, determined by the usage of the country." It was thus that, in many European countries, the serfs were gradually el