they cause to circulate. The mortgage of private promissory notes, consists in the moveable and immovable goods of the debtor; and public funds or stocks have their mortgages in a particular branch of the revenue. This mer

chandize, these moveable and immovable goods, and this branch of public revenue, constitute part of the fixed capital, of the circulating capital, and of the stock reserved for immediate consumption.

Capital stock, considered as fixed capital, as circulating capital, and as capital destined for immediate consumption, provides for the wants of labour, contributes to its progress in proportion to its own increase, and always affords an exact measure of the progress of national wealth. There is a fourth employment of capital, by its being lent out to interest, either to private individuals or to the public. Writers on political economy are not agreed respecting either the utility or disadvantages of this kind of employment of capital. For the various theories on the subject, we refer to the works of Dr. Smith and M. Ganilk.

We shall now briefly consider the various systems relating to the circulation of the produce of labour by means of commerce, which is the only method by which nations attain wealth, splendour, and power. "Trade," according to Dr. Davenant, "is the living fountain whence we draw all our nourishment. It disperses that blood and those spirits through all the members, by which the body politic subsists. The price of lands, value of rents, manufactures, &c. rise and fall as it goes well or ill with our foreign. trade." "The greatness of a state, and the happiness of its subjects, are," says Mr. Hume, "generally allowed to be inseparable with regard to commerce." M. Quesuai observes, "Like sale, like production." An able Italian writer on political economy, M. Genovesi, says, "The end of social economy is, 1st. increased population; 2d. wealth; Sd. natural and civil happiness; 4th. the grandeur, glory, and welfare of the sovereign. Of all the means of attaining this

end, there is not one more efficient than commerce, which avails itself of human avidity, as the most powerful promoter of all social advantages." To these testimonies in favour of the circulation of produce, by means of commerce, we may add that of our countryman, Dr. Adam Smith. "As it is the power of exchanging, that gives occasion to the division of labour, so the extent of this division must always be limited by the extent of that power, or the extent of the market." Hence the importance of commerce, or of the circulation of the produce of labour. In this point all writers on political economy are unanimous; but with regard to the principle, nature, progress, and effects of this beneficial circulation, opinions are very various. The origin of commerce is sought for, by some, in the avarice of mankind; by others, in their propensity to barter and exchange one thing for another; and by others, in their variety. The same sort of uncertainty prevails respecting the laws which determine the respective value of the produce exchanged by commerce, concerning the influence of money and credit upon commerce, and concerning the most useful and profitable mode of commerce.

Without attempting to decide upon the origin of commerce, we may observe, that no one parts with the produce of his labour, and puts it into circulation, but in the expectation that it will procure him more food, or greater conveniences, comforts, and enjoyments: hence the farther circulation extends, or the larger the market, and the more that market offers varied productions and new enjoyments, the more does. labour increase in intensity and activity, the more is its produce multiplied, and wealth enlarged and augmented. The sources of the circulation of the produce of labour may be traced in the passion for enjoyment, in the efforts of commerce, and in the genius of the arts. To their united action commerce owes its impulse, its progress, and its success.

The value of produce is regulated by the wants of the consumers, and their means of supplying them; by the demand for commodities, and their abundance and scarcity; by labour,

&c. Most writers on this subject are of opinion, that things have no other value than what is fixed by the demand for them, and their abundance or scarcity. One writer observes, that the words price, worth, value, are relative terms, because things have no price or value but relatively to man: wherever there are no men, there are no values; but man assigns no value to things, but as he wants them. By another person it is said, that the sole capability of being exchanged, combined with the greater or smaller natural abundance of things, and with a more or less ardent desire to be possessed of them, forms the basis of what mankind denominate value. The price of things, according to another author, is composed of two elements-their utility and their scarcity: of course their value increases with their scarcity, and diminishes with their plenty. Dr. Smith observes, "that the value of any commodity to those who possess it, and who want to exchange it for some new production, is precisely equal to the quantity of labour which it can enable them to purchase or command: whence he infers, that labour is the real measure of the exchangeable value of all commodities." The earl of Lauderdale opposes this doctrine. He maintains, that a perfect measure of value is impossible; for as nothing can be a real measure of length and quantity, which is subject to variations in its own dimensions; so nothing can be a real measure of the value of other commodities, which is constantly varying in its own value. But things may alter in their value in three different ways: 1st, in respect to different periods of time; 2d, in different countries; 3d, in different parts of the same country. Labour is not only subject to all the usual sources of variation, but possesses the characteristic of varying at the same time and place: hence labour cannot be a standard, Money and corn are not better calculated than labour to fix the value of things for distant times. As then the value experiences a rise and fall perfectly similar to the rise and fall of the price of commodities, and as this variation in their respective values proceeds from the same cause, that is, from the proportion of

the demand to their abundance or scarcity, there is no difference between their values: both are alike liable to vary, and consequently both are alike unfit to form an invariable measure of value; so that it is the exchangeable value which ultimately gives to every producer the equivalent of what his commodity cost to produce, and consequently secures the producers against loss. Beyond this, the profits on the productions of labour are unequal. This inequality of profits is indifferent with regard to home-trade: for the superiority of certain labours and employments of capital cannot be of long duration, because those which are least favoured go over to the most favoured ones, and by their competition re-establish a certain proportion between the profits of all labours and employments of capital. But it may be asked, is the inequality of profits in the exchange of home for foreign produce equally harmless? The question has been ably discussed, and decided affirmatively, with the observation, that there is but one motive that should induce a nation to prohibit the importation of the produce of other countries; that is, when the government of our own country is so defective, that none of our home productions can stand a competition with foreign productions, even in the home market; when national industry is not capable of being stimulated by the rivalry of foreign industry; and when the people abandon themselves to sloth and misery. With this single exception, foreign commerce, or general circulation, is beneficial, useful, and profitable to all, and contributes, if not with equal, at least with certain, success to the progress of wealth.

CHAP. XXV.

POLITICAL ECONOMY,

Continued.

General observations on the mercantile system-Money-Taxes on the rent of land-On the wages of labour-On consumable commoditiesVarious systems concerning national income and expenditure-Popula tion-Dr. Smith's theory-Malthus's Essay on Population-Progress of Population-Tables-Brief notices on other topics of Political economy -Method of studying the subject.

THE fundamental principle of what is called the mercantile system, is, that wealth consists in money, in gold and silver. The facility of exchanging these metals for any other commodity, the habit thence derived of calculating the wealth belonging to each individual, has made this a natural as well as a general error.

The exchange of one thing for another of equal value, is essential to the supply of the varied wants of man. Thus it is, that men, while merely consulting their own interests, minister to each other's necessities. It is, however, attended with an obvious inconvenience. A man may have goods to exchange, which do not suit his neighbour. The farmer has a sheep, and is in want of cloth, but the cloth manufacturer may not be