J. R. (John Ramsay) McCulloch.

A discourse on the rise, progress, peculiar objects, and importance, of political economy : containing an outline of a course of lectures on the principles and doctrines of that science online

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Online LibraryJ. R. (John Ramsay) McCullochA discourse on the rise, progress, peculiar objects, and importance, of political economy : containing an outline of a course of lectures on the principles and doctrines of that science → online text (page 7 of 8)
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tainous districts, are most advantageously fattened
in meadow and low grounds. Nothing is more
obvious than that an infinitely greater aggregate
quantity of useful and desirable commodities will
be produced, by the inhabitants of these different
districts, separately confining themselves to the
particular branches of industry for the successful
prosecution of which they have some peculiar na-
tural capability, than if they attempted, indiscri-
minately, to carry on every different employment.
Who can doubt that vastly more manufactured
goods, corn, and cattle, are produced by the in-
habitants of Glasgow, the Carse of Gowrie, and
Argyleshire, respectively confining themselves to
manufactures, agriculture, and the rearing of cattle,
than if those of each district had endeavoured di-


rectly to supply themselves with these various pro-
ducts, without the intervention of an exchange ?

But it is easy to see that foreign trade, or the
territorial division of labour between different and
independent countries, contributes to increase the
wealth of each in precisely the same manner that
the trade between different provinces of the same
kingdom contributes to increase their wealth.
There is a still greater difference between the pro-
ductive powers wherewith nature has endowed dif-
ferent and distant countries, than there is between
the productive powers of the provinces of the same

Heic segetes, illic veniunt felicius uvce :
Arborei fetus alibi, atque injussa virescunt
Gramma. Nonne vides, croceos ut Tmolus odores,
India mittit ebur, molles sua thura Sabcei ?
At Chalybes nudiferrum, virosaque Pontus
Castorea, Eliadum palmas Epeiros equarum ?
Continue has leges, ceternaq uefcedera certis

Imposuit natura locis.

Georg. lib. i. lin. 54-.

The establishment of a free intercourse between
countries possessed of such an infinite variety of pro-
ducts must, therefore, be proportionally advanta-
geous. It would evidently cost an infinitely greater
expence to raise the wines of France or Spain in
England than to make Yorkshire yield the same


products as Devonshire. Indeed, there are a mul
titude of products, and some of them of the very
greatest utility, which cannot possibly be raised ex-
cept in particular situations. Were it not for com-
mercial intercourse, we should not be able to ob-
tain the smallest supplies of tea, coffee, raw cotton,
raw silk, gold bullion, and a thousand other equally
useful and valuable commodities. Providence, by
giving different soils, climates, and natural produc-
tions, to different countries, has evidently provided
for their mutual intercourse and civilization. By
permitting the people of each to employ their capi-
tal and labour in those departments in which their
geographical situation, the physical capacities of
their soil, their national character and habits fit
them to excel, foreign commerce has a wonderful
effect in multiplying the productions of art and in-
dustry. When it is not subjected to restrictions,
each people naturally devote themselves to such
employments as are most beneficial to each. This
pursuit of individual advantage is admirably con-
nected with the good of the whole. By stimulat-
ing industry, by rewarding ingenuity, and by using
most efficaciously the particular powers bestowed
by nature, commerce distributes labour most effec-
tively and economically 5 while, by increasing
the general mass of necessary and useful products,
it diffuses general opulence, and binds together the
universal society of nations by the common and


powerful ties of mutual interest and reciprocal obli-

" On peut dire," it has been eloquently ob-
served, " sans crainte d'etre soup^onne d'exag-
geration, que le commerce est le plus solide fon-
dement de la societe civile, et le lien le plus neces-
saire pour unir entr'eux tous les hommes de quel-
que pays et de quelque condition qu'ils soient. Par
son moyen le monde entier semble ne former qu'une
seule ville et qu'une seule famille. II y fait regner
de toutes parts une abondance universelle. Les ri-
chesses d'une nation deviennent celles de tons les
autres peuples. Nulle contree n'est sterile, ou du
moins ne se sent de sa sterilite. Tous ses besoins
lui sont apportes a point nomme du bout de 1'uni-
vers, et chaque region est ettonee de fruits etran-
gers, que son propre fonds ne pouvoit lui fournir,
et enrichie de mille commodites qui lui etoient
inconnues, et qui cependant font toute la douceur
de la vie." * Commerce has given us new tastes
and new appetites, and it has also given us the
means and the desire of gratifying them. It has
enabled each particular people to profit by the in-
ventions and discoveries of all the rest. It has
forced routine to give way to emulation ; and has
stimulated the industry and ingenuity of the home

Rollin, Histoire Ancicnne, Tome V. p. 509, 4to ed.


producers by bringing them into competition with
foreigners. It is the grand engine by which the
blessings of civilization are diffused, and the trea-
sures of knowledge and of science conveyed to the
remotest corners of the habitable globe. Its hu-
manizing influence is in this respect most import-
ant. Nothing, indeed, has ever done so much to
soften and polish the manners of men. By mak-
ing each particular people depend for the means of
supplying a considerable portion of their wants on
the assistance of others, it has gone far to remove
a host of the most destructive prejudices, and
forms a powerful principle of harmony, of union,
and of concord. It cannot indeed be denied, that
mistaken views of commerce, like the mistaken views
that have been so frequently entertained of reli-
gion, have been the cause of many wars and of
much bloodshed. But the folly of the monopo-
ly system, and the ruinous nature of the contests
to which it has given rise, have been fully demon-
strated. It is now ascertained that nothing can
be more irrational and absurd, than that dread
of the progress of others in wealth and civiliza-
tion that was once so prevalent ; and that the true
glory and real interest of every people will be
more certainly advanced by endeavouring to emu-
late and outstrip their neighbours in the ca-
reer of science and civilization, than by labouring


to attain a barren pre-eminence in the bloody and
destructive art of war.

In treating this most important branch of the
science, I first endeavonr to present a general view
of the effects of commercial intercourse ; to exhibit
the principles on which it is founded ; and to give
a sketch of the principal epochs in its history. I
then proceed to examine, in detail, the various
reasons which have been urged in defence of those
regulations by which the freedom of commerce be-
tween certain countries and in particular commo-
dities has been fettered and restricted. Of these,
the restrictions on the importation and exportation
of the precious metals, on the trade in corn and
provisions, on the colony trade, and on the free-
dom of navigation, are among the most important.
I treat them in succession, with that degree of
minuteness, and fulness of illustration, which their
great practical interest and importance imperious-
ly require.

When the division of labour was first introduc-
ed, barter was the only method by which commo-
dities were exchanged. But as society advanced,
as the division of employments was extended, and
as exchanges became more numerous, the advan-
tage of using some one commodity as a common
medium of exchange as an equivalent for all other
commodities, and as a standard whereby to esti-
mate their relative values gradually became ob-


vious. The benefits resulting from the use of this
common medium, or of money, were so great, that,
as previously stated, gold and silver, of which it has
been chiefly formed, were, for many ages, alone
supposed to form wealth. The error of this opi-
nion has been long since demonstrated ; but money
is still very generally considered in a different light
from other commodities ; and the importance of its
functions, and the necessity of being intimately ac-
quainted with the principles which determine its
exchangeable value, have induced me to treat it at
considerable length.*

The first grand division of the science, or that
which treats of the production of wealth, being thus

* The Roman jurists have given a very distinct statement
of the circumstances which led to the use of money : Origo
emendi vendendiquea permutationibus coepit Olim enim non
ita erat nummus ; neque aliud merx, aliud prethim vocaba-
tus ; sed unusquisque secundum necessitatem temporum, ac
rerum, utilibus inutilia permutabat, quando plerumque evenit,
ut quod alteri superest, alteri desit. Sed quia non semper,
nee facile concurrebat, ut, cum tu haberes, quod ego deside-
rarem, invicem haberem, quod tu accipere velles,, electa ma-
teria est, cujus publica ac perpetua estimatio difficultatibus
permutationum, aequalitate quantitatis subveniret : eaque ma-
teria forma publica percussa, usum dominiumque non tarn ex-
substantia praebet, quam ex quantitate ; nee ultra merx utrum-
que, sed alterum pretium vocatur. Digest, lib. xviii. tit. 1 .
De contrahenda emptione, $c.


disposed of, I proceed to the second, or that which
has for its object to discover and unfold the laws
regulating the distribution of the various products
of art and industry among the different classes of
the community.

It is abundantly obvious, that in the early pe-
riods of society, before capital was accumulated
and land appropriated, the whole produce of in-
dustry must have belonged to the labourer, and
that the quantity of labour necessary to produce
commodities, and bring them to market, must have
formed the only standard by which their ex-
changeable worth, or relative value, could be esti-
mated.* As soon, however, as capital has been
accumulated, those who possess it find it to be for
their advantage to supply industrious individuals
with food and other articles necessary to enable
them to produce commodities, on condition of their
getting back a greater quantity of such articles, or
a greater value in their stead : And after land
has been appropriated, and cultivation extended,
the proprietors of the superior lands will not allow
them to be cultivated, unless they receive a por-
tion of the produce as rent. Instead, therefore, of
belonging, as in the earlier stages of society, ex-

* There is no difference whatever of opinion respecting this
position : It is equally assented to by Dr Smith, Mr Mal-
thus, and Mr Ricardo.


clusively to the labourers, the produce of industry
is, in every advanced and civilized community, di-
vided into three portions, whereof one goes to the
labourers as wages, another to the capitalists as
profit, and a third to the landlords as rent. It be-
comes, therefore, essential to ascertain the laws
which regulate wages, profit, and rent ; that is,
the laws which determine the proportions in which
the produce of industry, or the sum of the various
necessaries, conveniences, and enjoyments of human
life, is divided among the great classes, of which
every civilized society is made up.

But this does not exhaust the whole of this de-
partment of the science. We have farther to inquire,
whether the employment of capital in production,
and the payment of rent, have any effect on the ex-
changeable value of commodities ; or whether their
value is determined in cultivated and refined so-
cieties by the quantities of labour necessarily requir-
ed to produce and bring them to market, as in the
earliest and rudest periods. I have endeavoured
to simplify this rather difficult, but fundamentally
important inquiry ; and have entered into a pretty
full discussion of the correlative questions with re-
spect to the influence of supply and demand, mo-
nopolies, &c. on price.

It is not, however, enough to know the constituent
elements of value, and the proportions in which
the produce of industry is distributed. We ought


farther to render ourselves acquainted with the
principles which determine the increase and di-
minution of those sentient, social, and accounta-
ble beings, for whom, and by whom, all wealth is
produced. For this purpose, I endeavour to give
a pretty full, and I hope satisfactory, exposition
of the theory of population. I also inquire in-
to the effects that would most probably result
from the establishment of a national system
of education, or of parochial schools, where the
children of the poor should be furnished, at a
cheap rate, with instruction in the arts of reading,
writing, and arithmetic ; in the duties enjoined by
religion and morality ; and in the elementary prin-
ciples of this science, more especially in those
which show on what the rate of wages, and conse-
quently the condition of the poor, must always de-
pend : I also examine, in this part of my course,
the effect of the establishment of a compulsory pro-
vision for the support of the poor.

The third and last division of the science of
Political Economy is that which treats of the cow-
sumption of wealth.

Consumption, in the sense in which the word is
used by Political Economists, is synonymous with
use. We produce commodities only that we may
be able to use or consume them. Consumption is
the great end and object of all human industry.
Production is merely a means to attain an end.


No one would produce were it not that he might
afterwards consume. All the products of art and
industry are destined to be consumed, or made use
of; and when a commodity is brought into a state
fit to be used, if its consumption be deferred, a loss
is incurred. All products are intended either to
satisfy the immediate wants, or to add to the en-
joyments of their producers ; or they are intended
to be employed as capital, and made to reproduce
a greater value than themselves. In thejirst case,
by delaying to use them, it is plain we either refuse
to satisfy a want, or deny ourselves a gratification
it is in our power to obtain ; and in the second,
by delaying to use them, it is equally plain we al-
low the instruments of production to lie idle, and
lose the profit that might be derived from their

But, although all commodities are produced only
to be consumed, we must not fall into the error of
supposing, that all consumption is equally advan-
tageous to the individual, or the society. If an in-
dividual employs a set of labourers to build him a
house the one summer, and to pull it down the
next, their labour, or rather the capital he gave
them in exchange for their labour, and which they
have consumed during the time they were engaged
in this futile employment, is evidently destroyed
for ever, and absolutely lost both to himself and the
public ; whereas, had he employed them in the


raising of corn, or in the production of any species
of valuable produce, he would have obtained com-
modities of equal, or more than equal, value to the
capital he gave them. The value of the return, or
the advantage obtained from the consumption, is,
therefore, the true and only test of advantageous
and disadvantageous, or, as it is more commonly
termed, of productive and unproductive consump-
tion. Commodities are consumed productively
when the advantage or benefit accruing in conse-
quence to their possessors, or when the value of
the products obtained in their stead exceeds their
value ; and they are consumed unproductively
when the value of the advantage or benefit, or the
value of the new commodities, is less than their
value. It is on this balance of consumption and
reproduction, and not, as was long supposed, on
the balance of trade, that the prosperity or decay
of every nation depends. If, in given periods, the
commodities produced in a country exceed those
consumed in it, the means of increasing its capital
will be provided, and its population will either in-
crease, or the actual numbers will be better ac-
commodated, or both. If the consumption in such
periods fully equals the reproduction, no means
will be afforded of increasing the stock or capital
of the nation, and society will be at a stand. And
if the consumption exceeds the reproduction, every
succeeding period will see the society worse sup-



plied ; its prosperity and population will evidently
decline, and pauperism will gradually and progres-
sively . spread itself over the whole country* It
must plainly, therefore, be an object of great im-
portance to acertain how the balance between con-
sumption and reproduction may be made to incline
in favour of the last.

To be able to solve this problem satisfactorily,
we must endeavour to render ourselves acquainted,
not only with the circumstances which influence
individual consumption, and the means by which it
may be rendered most advantageous, but also with
the nature and effects of the consumption carried
on by government. And hence, it is in this
department of the science that I investigate the
principles of Taxation, and of the Funding System,
for the purpose of determining the manner in which
the revenue necessary to defray the expences of the
state, both in periods of peace and war, may be
raised and collected with the least injury to indivi-
duals. Many of my readers will probably be inclin-
ed to think that this is the most important of all
the inquiries involved in this science. But, how-
ever important, those who have not previously
made themselves masters of the laws which regu-
late the production and distribution of wealth, need
not expect to be able to acquire any accurate
knowledge of the ultimate incidence and real ef-
fect of any tax or loan. What Lord Bacon has


so beautifully said of physical will be found to be
equally true of economical science Qui autemju-
dicium cohibere, et gradatim ascender -e, et rerum,
veluti montiumjuga, unum primo, delude alterum,
ac rursus alterum superare cum sapientia vera et
indefessa sustinuerit, ille ad summitates et ver-
tices scientice mature perveniet, ubi et statio se-
rena, et pulcherrimus rerum prospectus, ET DE-


I have also endeavoured to facilitate the study
of the science, by forming conversational classes,
limited to a small number of pupils, which may be
attended by those who do not, as well as by
those who do, attend my public class. The vari-
ous branches of the science are taken up in these
classes in the order followed in the lectures. The
pupils having previously read such portions of some
popular work as treat of the subject of a conversa-
tion, I examine them, to ascertain whether they
have a clear ^prehension of the doctrine laid down
by the author : If this doctrine be either erro-
neous in principle or defective in statement, I
tell them so, and the pupils apply themselves
to find out wherein the error or defect consists,
or I explain it to them. Having in this way
made them thoroughly masters of what I con-


ceive to be the true theory of the subject under
discussion, I desire them to state such difficulties
as may occur to them in respect to it ; which I ex-
plain, should they not be explained, as is generally
the case, by some of the pupils. This done, I
next state such objections, not already stated, by
themselves, as either are or might be made to the
doctrines I have taught them, setting them in the
strongest light possible, and requiring them to show
how they can be solved, or, in the event of their
not doing this, solving them myself. The atten-
tion of the student is thus perpetually excited ; he
is stimulated to exert all his powers ; to think and
reason for himself; to probe every question to the
bottom ; and to investigate the grounds on which
every conclusion rests. The principles of the
science being gone over in this way, and short
abstracts of the whole committed to paper, they
are indelibly impressed on the memory ; and that
readiness is acquired in the resolution of a complex
question into its elements, in the detection of so-
phistry and error, and in the application of general
principles to particular cases, which characterise an
able and expert economist, but which it is difficult
to acquire by the most extensive reading.

Such is a brief, and, I am afraid, very imper-
fect sketch of the objects of the science of Politi-
cal Economy ; the species of evidence on which it
is founded ; the principal theories that have been


formed to explain its various phenomena ; the im-
portance of its study to all classes of society ; and
the mode I follow in teaching it in my public
and private classes. I endeavour to set the fun-
damental principles of the science in the clearest
point of view, to show the intimate dependence
of its different parts on each other, to point out
its more important practical applications, and to
illustrate the doctrines advanced by examples drawn
from the history of this and other countries. At
the same time, I am most ready to admit, that no
skill on the part of a teacher, though it were in-
finitely greater than any I can pretend to, will ever
enable the student to obtain a perfect command of
such a science as this, without considerable indus-
try and attention on his part. But no ingenuous
or liberal mind will ever grudge that labour and
application, which has for its object to unfold the
real sources of private and public opulence, and of
poverty and degradation to discover

what makes the nations smile,

Improves their soil, and gives them double suns,
And why they pine beneath the brightest skies,
In Nature's richest lap.


NOTE A, p. 52.

THAT M. Quesnay is entitled to the merit of originality
cannot be disputed. It is certain, however, that he had
been anticipated in several of his peculiar doctrines by some
English writers of the previous century. The fundamental
principles of the economical system are distinctly and clear-
ly stated in a tract entitled Reasons for a limited Exportation
of Wool y published in 1677- ." That it is of the greatest
concern and interest of the nation/' says the author of the
tract, " to preserve the nobility, gentry, and those to whom
the land of the country belongs, at least, much greater than
a few artificers employed in working the superfluity of our
wool, or the merchants who gain by the exportation of our
manufactures, is manifest 1. Because they are the masters
and proprietaries of the foundation of all the wealth in this
nationy all profit arising out of the ground ivhich is theirs.
2. Because they bear all taxes and public burdens ; which, in
truth, are only borne by those who buy, and sell not ; all
sellers, raising the price of their commodities, or abating of
their goodness, according to their taxes." p. 5.

In 1696, Mr Asgill published a treatise entitled Several
Assertions Proved, in order to Create Another Species o


ney than Gold, in support of Dr Chamberlayne's proposition
for a Land Bank, The following extract from this treatise
breathes, as Mr Stewart has justly observed, in his Life of
Dr Smith, the very spirit of Quesnay's philosophy :

" What we call commodities is nothing but land severed
from the soil Man deals in nothing but earth. The mer-
chants are the factors of the world, to exchange one part of
the earth for another. The king himself is fed by the la-
bour of the ox : and the clothing of the army and victualling
of the navy must all be paid for to the owner of the soil as
the ultimate receiver. All things in the world are originally
the produce of the ground, and there must all things be rais-
ed/' (This passage has been quoted in Lord Lauderdale's
Inquiry into the Nature and Origin of Public Wealth, 2d ed.
p. 109.)

These passages are interesting, as exhibiting the first germs
of the theory of the Economists. But there is no reason
whatever to suppose that Quesnay was aware of the existence
of either of the tracts referred to. The subjects treated in
them were of too local a description to excite the attention
of foreigners ; and Quesnay was too candid to conceal his
obligations, had he really owed them any. It is probable
he may have seen Mr Locke's treatise on Raising the Value
of Money, where the idea is thrown out that all taxes fall

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Online LibraryJ. R. (John Ramsay) McCullochA discourse on the rise, progress, peculiar objects, and importance, of political economy : containing an outline of a course of lectures on the principles and doctrines of that science → online text (page 7 of 8)