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subject of Distribution. It exhibits the mode in which the profits of production are distributed among the several producers.
Book IV. treats on Consumption, including that of individuals and that of the public. Individual consumption is a most important part of the subject, since all are consumers, though all may not be producers. Besides, on the proper regulation and direction of this matter among individuals depend the accumulation of wealth and increase of comfort in the nation. It is to little purpose that production be in a flourishing condition, if there be a wasteful and prodigal consumption universally prevalent. For it is much easier to consume value than to create it; and one man may destroy more than ten can produce.
But do not let us mistake on this point. Economy does not consist in consuming as little as possible, any more than in consuming recklessly and to no purpose. If the former were economy, savages would be the most economical people in the world. One essential distinction between the savage and the civilized state is, that the latter has more wants, together with greater means of satisfying them. We hear, indeed, a great many changes rung upon the hackneyed phrase, “ Man wants but little here below;" but, for the most part, this is little better than mawkish sentimentalism. This is not
the Scriptures teach. They urge contentment with our lot, and patient submission to privation; not on the ground that privation is no evil, but because the will of God is supreme, and we must acquiesce in his appointments. Contentment on any other ground is not a Christian virtue. That is the best human condition in which there is the largest amount of rational wants, with the highest capacity wisely to gratify them.
What, then, is economy? It is simply the judicious regulation of consumption, or extracting the largest amount of advantage and enjoyment out of a given amount of expenditure. It does not consist in the amount spent, but in the manner of spending it. It consists in making a given sum go as far as possible.
The rules of economy have reference to two branches of the subject; viz., productive consumption and unproductive. In the former, value is destroyed in one shape, and reproduced with increase in another. Thus, value in the shape of horns is destroyed by the comb-maker, and reproduced in the shape of combs. In the latter the object is only the gratification of desire, or the satisfaction of human wants. This includes all domestic and personal expenses of every kind.
Economy in either of these modes of consumption is to be governed by substantially the same rules. It is to be remembered in both cases that the expenditure is always to be proportioned to our means, and is to be so disposed of as to bring the largest return of utility. Upon this subject Dr. Wayland has some very important observations, to which we cordially direct the attention of our readers.
It is surprising that there should be so much lack of wisdom in a matter of such every day and universal necessity as that of individual and domestic expenditure. For instance, it is a sound rule in economy that the value of every object be fully extracted; or, in other words, that nothing be wasted. Now, let a person walk along
the streets of our cities on a winter's morning, and observe the coalashes that are placed on the pavement for the carts; and he will find that nearly one-fifth, or perhaps more, of what was paid for fuel is thrown away. A coal-sieve that would cost a dollar would save, in one year, perhaps several times its value in cinders. Again, in families that burn candles, the last inch of candle is almost uniformly wasted. In England, I suppose, a save-all is as essential an article of domestic use as a fire-shovel. By this means the candle ends are burned in the kitchen. No less indispensable is the soapbox, in which all the fragments too small to be used are deposited, until they become numerous enough to make, when boiled together, a large lump. And who can tell how much value is destroyed simply by the habit of taking on the plate more than is eaten? The remnants are, generally, thrown away. If it be a private family, the owner loses it; if it be a public house, the boarders pay for it; because the price of boarding is in proportion to the consumption. Small as this may seem to some, it is, in reality, a detestable and wicked practice. No family that are guilty of such criminal waste can be called economical, even if they go without shoes to their feet, and dress in coats of homespun; or send their children to cheap schools, or employ cheap physicians.
Another important principle, and especially to persons of small means, is to buy nothing that is not necessary. Every thing unnecessary is dear, whatever the price may be. We are to take necessity, however, in a liberal sense, to include what possesses solid ad. vantage in enjoyment or improvement. There are many persons and families who deny themselves household conveniences and important benefits on account of the expense, who yet spend more than their cost in things unnecessary; it may be in mere trifles and knickknacks. Such people cannot enjoy the comforts and decencies pro. per to their circumstances, merely because they cannot keep in mind that a hundred cents make a dollar. It is, after all, the little outlays that make great holes in small incomes. If every penny were spent to the best advantage, it would make, in the course of a year, a vast difference in the amount of domestic or personal enjoyment, comfort, and happiness.
We shall mention but one more rule: it is, that articles of the best quality are usually most economical in the end. Many persons do not know how it is that they spend so much, when they buy the cheapest things they can get, and yet are neither as decent nor comfortable as their neighbors in the same circumstances. They make a great mistake. Parsimony is not economy. Dr. Wayland observes, It is a given amount of utility we want, and not the mere form in which it happens to reside. It is cheaper to purchase a dollar's worth of utility for a dollar, than half a dollar's worth for seventy-five cents.” If a cloth, at four dollars the yard, wear eight months, and one at six wear twelve, the latter is the more economical; for, though the wear of the cloth is the same, you save in the making and trimmings.
We may, however, notice one exception to the rule above given. It is, when an article of the best quality is in the newest fashion. In this case you must distinguish between what you pay for the quality and what you pay for the fashion. Fashion must, necessarily, be very expensive ; for, on account of its capriciousness, its demands could not be supplied but at a high rate of remuneration. An article in great demand this week may, next week, become dead stock. The patrons of fashion must, of course, pay a price that will cover these risks and losses. Hence we often pay more for the fashion of an article than for its quality; and hence, also, the difference in the prices of articles after the fashion has changed. Things of the best quality are cheapest, therefore, only when you pay for the quality alone; and the cheapest of all are those of the best quality when gone out of fashion; for the maker probably realized his profit on them while in the fashion, and he can often afford to sell them afterward for less than the cost.
On the employment of domestic labor Dr. Wayland observes,
“Economy directs, that in a household we should purchase as much labor as we need, and of the kind that we need, but no more than we need."
The same principle applies here as in the other case, viz., that the best kind is usually cheapest in the end. It would be a great mistake to refuse five dollars a month to an economical and capable domestic, and then give four to one who would waste, and break, and spoil more than would pay the difference; to say nothing of the vexation and disagreements that would follow. We are always to compare the price with the utility, and remember that that is most economical which gives us the best return for our money.
Again, as it is poor economy to hire more labor than we need, it is about equally so to hire less; for, in the latter case, the work must be left undone or we must do it ourselves. The question, then, to be decided is, whether it be worth doing; and if so, is our own labor as valuable is that form as in any other? It would certainly be great folly to leave undone what is worth a dollar and a half for the sake of doing what we might hire another to do for a dollar. Men generally have sagacity enough to perceive this, and hence a man's employment is considered an indication of the value he sets upon his time. Yet there are some people who are too penurious to be economical.
But it is time for us to point out what we conceive to be defects in this treatise.
Dr. Wayland has omitted a doctrine of no small importance in this science, which, we believe, the elder Say was the first to point out; viz., the distinction between the real and the relative variation of price. Real variation is occasioned by a saving in the costs of production; relative is that variation which takes place while the costs of production continue the same. Thus, if ten men could make five pairs of boots in a day, and sell them at six dollars a pair, if any means were invented by which the same cost would produce ten pairs, the price might fall to three dollars. The effect would be, that while the boot-maker would be just as well off as he was before, the community would be much better provided for. The article, being cheaper, would be brought within reach of a larger portion of society ; more would be consumed, and comfort would be extended. In this case, therefore, while the producer is not injured, the community is benefited to the full extent of the saving in productive agency. This is real variation. But, as in relative
variation, if the boot-maker have one hundred pairs on hand, which fall, without any saving in the cost of production, from six dollars to three, he will sustain a heavy loss. Again, if a farmer can raise thirty bushels of wheat to the acre, and sell it at seventy-five cents a bushel, if the same land and labor will produce only fifteen, it will occasion a real increase of price. He ought, in that case, to get one dollar and fifty cents, in order to be as well off as before. The country, therefore, would be all this the poorer and worse provided for. But it is found that a falling off of production never remunerates the producer by an equivalent rise of price ; i. e., when the quantity produced is diminished by one half, though the price must rise, yet it never doubles. The producer, therefore, must lose, first, by a diminution of his receipts ; and, secondly, by the rise of other prices, occasioned by the increased expenses of living. The community, also, will be injured, by a diminution in the quantity and an increase of price.
We look upon these principles as of great importance, as they serve to exhibit the mischievous effects of raising the prices upon consumers. These effects are, to diminish the amount of consumption, to abridge the means of comfort, and, perhaps, even of subsistence, and by this means to bring some to premature death. For as, in the best state of things, there must be some who can only just make out to live, and others only just live comfortably, when the means are removed farther off by one degree, the former class must die, and the latter fall into their place. Thus the tendency of society will be downwards. On the other hand, when prices fall through increased productiveness, the effects are just opposite. Those who barely lived before are made comfortable; the merely comfortable begin to possess conveniences and superfluities ; the resources of the rich are increased, by which they can extend greater aid to the indigent and industrious; and the whole face of society wears a thriving and happy aspect.
But where the fall of price is but relatively to other products, without any saving in the costs of production, these benefits do not follow; because the producer loses, by the fall of the price, all that the consumer gains. Thus the one balances the other, and the community, therefore, are no gainers.
We did wish to supply some remarks which our author has omitted, in relation to the balance of trade. For instance, it is often said that, “if our importations be greater than our exportations, we must become poorer.” This is about as wise as to say that if, for eight hundred dollars, I purchase what is worth, to me, twelve hundred, I suffer loss. Évidently, if a nation can, with exports worth forty millions, import to the amount of fifty millions, she has made a profit to the extent of the difference. “But, perhaps, she has to send out specie to pay for it." If so, it is because that is the most profitable way of paying for it. The specie must have been made or earned, I suppose, before it could be sent out, and so we have its value left in some other form. “But the country will be drained of specie.” Well, then, the interest of money will rise, and that, provided trade be not crippled, nor public confidence shaken, will cause an influx from abroad. Men will not keep money in Europe at five per cent. interest if they can invest it here at seven. But, then, the influx of specie will not depend on its scarcity alone, but chiefly on the facilities and profits of investment. “But we shall be in the pay of foreigners.” Just as much as you are in the rich man's pay, of whom you borrow a thousand dollars to carry on business. “ But if the nation pay more than it receives, it will certainly become empoverished.” Not always; for the improvement made by the excess may more than counterbalance the outlay. Thus a person may lay out several hundred dollars upon his house or farm more than his in. come, and be all the richer for it. But having already extended our remarks so far, we must forbear.
But the greatest objection we feel to Dr. Wayland's work, is the little prominence which it gives to agriculture. We, of course, did not look for an agricultural treatise ; but, then, a source of production so important, and so peculiarly adapted to our country, deserved to hold a very prominent place in an American text-book on Political Economy. Yet Dr. Wayland says almost nothing on it; and some things which he has said do not indicate the most profound acquaintance with the subject. Thus, for instance, he observes, “ the produce of a soil, when new, is generally greater than ever afterwards.” But this is true only where agriculture is in a bad condition. The old lands of England are as productive as the new lands of Michigan or Illinois. Again, “ the soil (of rich new lands) never needing manure, requires but small investments of capital.” There is no land which never needs manure. Constant exhaustion without renovation, must, in the course of time, destroy the productive power of any soil, how. ever rich at first.
As illustrations of both positions, there are lands in England, originally of great fertility, so perfectly exhausted, that they were thrown out into common as useless; and yet, by scientific culture, they have been reclaimed, and rendered more productive than ever, yielding of wheat, of the best quality, fifty bushels to the acre. Such is the case on Mr. Coke's estate, at Holkham Hall, in Norfolk. It is observed, also, in our own country, that where the farmers have access to fish manure, the poorest soil is made equal to the richest. This is thought by some an extraordinary fact. But the same effect may be produced on any land, by applying a manure adapted to the soil. But it requires skill and science to discover such manures and their application. Hence the importance of science, as well as capi. tal, in agriculture.
It seems strange to us, that a subject possessing so many claims to notice as this, should receive so little attention in our country. When we consider the nature of its employments, with their influence upon the health, morals, and intelligence of a people; the importance of the products it furnishes; the peculiar adaptation of this source of wealth to our country, arising from our extent of surface, variety of soil, climate, and productions, thin population, and, compared with many other nations, deficiency of capital for manufacturing purposes ;— when we consider these things, it seems strange that it should have been so much neglected by those who control the minds of the nation, and, by influencing opinion, direct their conduct. It seems really to be the object of the nation--for what are the acts of government but an expression of the nation's will ?—to direct science, capital, and in. dustry, into any channels rather than those of agriculture. Congress