CHAPTER VI.

THE NATURE OF CAPITAL, AND THE MEANS OF ITS INCREASE.

ANOTHER circumstance on which the efficiency of labor largely depends is the coöperation of capital, or stock. All capital is wealth, but all wealth is not capital. The furniture of a rich man's house, for instance, - his carpets, his plate, his paintings, and much even of the food which is daily placed upon his table,- forms a portion of his wealth, but not of his capital. All these articles contribute to his enjoyment, perhaps some of them are necessary for his sustenance; but they do not directly aid him in the creation of other values. As they are consumed, or slowly worn out, they create nothing to replace them, and leave behind them nothing but the remembrance of the gratification which they have afforded. They are the fruit of previous industry indeed, having been created, as all other values are, by labor; but with the exception of the little food which is necessary to support life, they do not sustain present labor, do not aid in the production of fresh values. Capital is that portion of wealth which is consumed, not for purposes of mere enjoyment, not for immediate gratification, but to aid in the production of more wealth. It is still consumed, with greater or less rapidity; but its value disappears in one shape only to reappear in another. The necessity for the employment of capital arises from the fact, that man cannot labor to any good purpose with his hands alone. He must have tools, implements, machinery, raw material; if the article on which he is engaged requires time for its manufacture, he must be fed, clothed, and lodged while he is occupied in manufacturing it. The aggregate of wealth existing in these various forms, designed either to aid the laborer in his work, or to support him while working, is capital. It is consumed, but its value appears again in the larger amount of wealth which industry produces when thus assisted. The tools and machinery wear out; but the products which they have aided in creating enable the capitalist to replace them with a profit. Raw cotton

is consumed in large quantities, and reappears as cloth; the seed-corn is buried in the earth, but in a few months, the harvest yields twenty or thirty fold.

Labor is limited by capital, because labor cannot be prosecuted to any advantage without capital. Yet this fact does not contradict our general proposition, that wealth is created by labor alone; for capital itself is created by labor, and might be called consolidated or invested labor. But although labor is thus limited, it is by no means proportioned to the amount of capital employed. A master-shoemaker, with a capital of not more than $5,000, may keep twenty journeymen and apprentices in constant employment; while a manufacturer of gold and silver plate, or a wholesale merchant, with a capital of half a million of dollars, may not pay wages to more than thirty or forty persons. McCulloch observes, that "a manufacturer's power to employ labor is not measured by the total amount of his capital, but by the amount of that portion only which is circulating capital. A capitalist possessed of a hundred steam-engines, and of £ 50,000 of circulating capital, has no greater demand for labor, and does not, in fact, employ a single workman more, than the capitalist who has no machinery, and only £ 50,000 devoted exclusively to the payment of wages." Boots and shoes, for instance, are at present manufactured without machinery, and with the aid only of a few cheap tools. With a lapstone, a hammer, a knife, and an awl, the journeyman can begin work; and even the raw material which he needs is so frequently "turned over," as the phrase goes, or so quickly converted from leather into merchantable boots and shoes, that, if the articles can be sold as soon as they are manufactured, a few dollars will keep him constantly supplied with sufficient stock. On the other hand, an immense capital must be vested in machinery, before the business of weaving cotton or woollen cloth on a great scale can begin.

Even in the rudest states of society, among savage nations, capital exists, though in small quantities, and performs its appropriate functions. "The wretched native of New Holland," says Colonel Torrens, "has his spear, his fishing implements, and his canoe, for the purpose of abridging his labor, of performing operations of which he would otherwise be incapable, and appropriating productions of nature which, but for the aid

of these rude instruments, would for ever have remained beyond his reach." Before he labors directly to capture the wild tenants of the forests and the rivers, he labors to prepare himself for the task by manufacturing the necessary implements; consequently, the exchangeable value of the articles which he finally obtains is measured by the quantity of labor, both direct and indirect, which was devoted to their production. No one will give labor of either sort for nothing. That which was bestowed on the manufacture of bows and arrows must be compensated just as much, and in the same ratio, as that which was given to the pursuit and killing of wild animals; otherwise, no one will make bows and arrows. The law of distribution, therefore, that the value of the completed product will be divided among its producers in exact proportion to the labor bestowed by each, is not altered by the coöperation of capital with labor. The profits of capital are the reward of labor just as much as the wages directly paid to the laborer.

Capital exists, as I have said, among savages; and it accumulates very rapidly with the progress of civilization. So rapid, indeed, is its increase, and so vast becomes its aggregation, that it constitutes the chief difference in point of efficiency between the labor of the savage and that of civilized man. The Australian or the Indian may be as muscular as the European; he often works as hard, and is even more capable of enduring hardship and privation. He also practises the division of labor to some extent, as a whole tribe often unite in the chase or in war, and make larger captures by acting in concert and parcelling out the work among each other. But their labor on the whole is miserably inefficient and unproductive, because it is aided only by a trifling amount of capital. "Ten men, abundantly supplied with capital, and skilful in the use of it, would be able to appropriate a greater quantity of fish, and of useful mineral productions, than could be appropriated by ten thousand, whose only instrument of production was the labor of their hands."

The savage does not amass capital, because he is incapable of foresight and self-denial. What he obtains is devoted to the gratification of the present moment, or is wasted. This, in truth, is the chief reason why he does not till the ground; he often has knowledge enough for this end, his powers of ob

servation being largely developed. He notices slight peculiarities of vegetation, which escape the eye of the white man; and by this means, is often enabled to find his way through the trackless forests. He knows that edible fruits and grains are produced from seed. But he is not economical and prudent enough to reserve seed-corn for agriculture, or to lay in a store of food which will enable him to expend labor on the ground, to dig and plant, with the expectation of reaping the fruits of his labor only after an interval of some months. He is obliged to give all his toil to the necessities of the present hour, because he is not prudent enough to save, and not industrious enough to work when there is no immediate necessity for working. Though the common opinion runs the other way, I believe that man has no natural instinct for saving, no original propensity for labor;-none, at least, that is not constantly overridden by other and stronger propensities. The hardest lesson for children and savages to learn is that of economy,the necessity of bridling the inclination or appetite of the moment, with a view to some prospective benefit. Long and hard experience has taught this lesson to the full-grown and reflecting man, and taught it so effectually, that, as is often the case, the acquired inclination overrides the original impulses, and all other passions are merged, not merely in the love of accumulation, but in that of saving. We not infrequently hear of misers who will give away thousands, while they are depriving themselves almost of the necessaries of life for the sake of saving units. Exertion is naturally pleasant, it is true; yet only when directed by the caprice of the moment, as in sport; not the long-continued and monotonous exertion which is necessary for the attainment of a future good. That always requires self-restraint, a contest with and a victory over our original inclinations.

This view of the difference between the barbarian and the civilized man leads directly to a knowledge of the origin of capital and the means of its increase. It begins in saving, and is enlarged only by the continued exercise of frugality. Labor creates wealth, the object of which is, as we have seen, the gratification of desire; and the portion of wealth which is saved from the gratification of our immediate wants, and reserved to aid our future labor, so that the future product may

be greater, is capital. The inducement to the practice of such frugality is always strong enough in a civilized community; for the ability to save increases in a geometrical ratio with its exercise. C'est le premier pas qui coute. The hardest struggle, the severest exercise of self-denial, is to make the beginning, to spare a little from our daily comforts when as yet we are entirely dependent upon the fruits of our unaided labor. Afterwards, that little which was reserved works along with us, and the surplus is greater at the end of the second year, though we have practised no additional self-restraint. Soon, the aggregate of these savings produces more than our original, individual earnings, and our expenditures may come up again to the full measure of what they would have been if no frugality had been practised at the outset; and yet accumulation goes on as rapidly as if we had been able to reserve the whole original product of our labor, and subsist upon nothing. The industrial organization of society is now so perfect, that the smallest savings can be utilized, or devoted immediately to active employment as capital. This rapid progress of accumulation, operating like the constantly accelerating force of gravitation, supplies the strong motive for frugality, which operates like a charm in the swift growth of national opulence.

It is now easy to explain the difference, on which so much stress is laid, between productive and unproductive consumption. Take the case, referred to in a former chapter, of a laborer who has saved $100 from his yearly earnings. At the end of the year, having this sum in reserve, he may immediately expend it all in giving an entertainment to his friends, or purchasing finer clothes and furniture for his family. In neither case would the values thus consumed aid either his labor or that of any other being; in the first case, it would be consumed all at once, the wine being drunk, the music heard, the delicacies eaten, and there would be an end of his savings; in the other case, the enjoyment would only be spread over a little longer time; the clothes and furniture, in the course of a few months or years, would be worn out, and the $100 would then have equally disappeared without return. Such is what is termed unproductive consumption.

But let us suppose, as before, that at the end of the year he placed the money in a savings' bank, or bought a machine