on, the things spared from consumption would remain unconsumed, and would always be forthcoming when the accumulator thought fit to exercise his ownership by lending them or applying them to some productive industry. When a saving is made by means of a currency, unless the social mechanism can exactly anticipate and provide for it, the result is different. The goods which the accumulator does not consume do not wait for his suspended demand. They move off at cheaper prices, and increase the shares of other consumers. When he comes forward again to take his arrears out of the general stock, whether as capital or as income, he increases the aggregate of purchasing power brought to bear against supplies not increased, and of course can only make good his claim by "crushing in," as Mr. Mill says, with others, for such a share as competition will leave him. The diminution of his usual demand in the first instance lowered prices; the subsequent increase raises them. In both cases the separate existence of the purchasing power causes the distribution of commodities to be different from what it would have been in a state of barter. It is true that when accumulations become habitual, they are anticipated to some extent, and production takes such forms as are more or less adapted to the real demand; but as the growth of a separate paying power becomes greater, and the transactions of society become more complex, and difficult, even for those who have the best information, to forecast, it must happen that the divergence becomes every day wider between the movements of the new money capital and those of the specific capital or commodities with which it is presumed to preserve a correspondence. When it further comes to pass that large classes of fixed incomes and other engagements spring up, measured not in goods but in money, these must necessarily be new sources of discrepancy.

The nature of money capital will more fully appear in considering some of its relations to income. The capitalist exchanges it either for specific capital, by which I always mean goods of some sort, or for the services of productive labourers.

In the latter case it breaks up into streams of money income, which again reunite as capital, or are further subdivided, until they seem to thin out from the view, but still, after a thousand windings, make their way back to some aggregate of capital.

A farmer may spend in drainage a hundred pounds of money capital, itself a saving from his income: he distributes it among The wages

labourers whose services are his immediate return. thus received are income. If part goes to the savings bank, it is again money capital, and finds its way to some of the great collections. The greater part goes for the food and necessaries, which in the shops were specific capital or capital in kind, and in the hands of the consumers are now specific income, or income in kind. In the hands of the baker, the grocer, the draper, the paying power thus received from the labourers, in exchange for goods, is all money capital, except a percentage which is profit to these dealers, and constitutes their money income. The chief part goes on, as money capital, to the miller, the merchant, the manufacturer, in exchange for portions of specific capital, in each case throwing off an edge or rim of profit, as its contribution to their several money incomes. Further, it may proceed to combine in one mass in payment of loans, or as a deposit with a banker. The several classes of money income formed out of profits are, in their turn, exchanged, against portions of capital in kind, and, on taking its place, become money capital.

Money the Basis of Industrial Calculations.

Money capital, or the conventional paying power, forms the basis of all commercial and industrial calculations. It is continually parting from its possessors, in the expectation that a return, with increase, will come back in the same form. The merchant begins with a certain definite property not in goods, but in the pure form of money, and his ultimate aim is, that that amount shall be increased and multiplied. The immense importance of this fact was first clearly seen by Dr. Chalmers.

Each separate transaction is incomplete, until it places at the merchant's command its appropriate portion of money capital. Stocks and works, tea, cotton, ships, mills, and mines, are all, in the eye of the capitalist, means conducive to the end of realizing money. The very essence of the commercial idea of realizing property, when any enterprise is at an end, consists in getting rid of everything tangible and saleable, in exchange for some definite amount of pure paying power.

The grand condition of success in all commercial operations is, that that money capital which, at starting, is parted with, shall be periodically replaced. There are no ultimate means of replacing it, except from payments made out of income. The blood leaves the head to proceed to the remotest extremities, and comes back through the veins, to be refreshed with new ingredients for another revolution. So capital flows out and returns through income. It flows into the minutest arteries, even into the miserable wages of the poor shirtmaker, and her scanty indulgence in the purchase of a pennyworth of tea is the return which that the minutest filament of income sends back to capital. The aggregate of income devoted to expenditure, therefore, in the words of Dr. Chalmers, constitutes the "Return Power" to capital. The sum total of the income spent is the sum total of the return which capital can obtain. It is only the money income spent which replaces money capital embarked in an industrial enterprise; what is saved from income is, indeed, transformed by the act of saving into money capital also, but it will make no return to the money capital which previously existed. On the contrary, it will enter into competition with it for profitable employment. In other words, it is a new accumulation of the paying power, which will look for its own return out of income.

Proportion between Capital and Income.

Money capital, then, having always to obtain its return out of income, and the governing motive in parting with it being to

get it back with increase, it would seem that the possibility of regularly attaining such a result must depend upon the maintenance of some definite proportion between money capital and money income. If the amount of capital employed, or ready for employment be greater than the amount of income devoted to expenditure, some of the capital must fail of its return. From this conclusion there can be no escape. But the question was long disputed whether each new addition of capital did not of itself involve some corresponding increase of income out of which it would draw its return. The more logical thinkers, unfortunately, took up premises, which excluded the great fact of the existence of a paying power, separate from commodities. From their erroneous data, they argued correctly, down to conclusions which contradicted the plainest experience. Others of less acuteness, but who were better observers, like Malthus and Chalmers, but especially Sismondi, who brought so many varied lights of history to converge on social phenomena, refused to believe that a social disease was not real, because it unsettled the formulas of the physicians. What these eminent men failed to develop with perfect clearness may be understood in the present advanced stage of general thought by far inferior intellects.

A "general Glut" habitual in England.

The truth is, that the peculiar state of things which was intended by the famous phrase "general glut," is not only possible, but has long been, in a more or less aggravated form, the habitual, though not the uniform, condition of England. It was never meant that the stock of every article in the price current might be at the same moment in excess, but that the general mass of commodities and services were pressed upon the market beyond its power of making a return for them. Nowhere were openings for making any certain profit thrown away for want of capital. Frequently capital was compelled to lie idle for want of openings. In the retail markets, by which,

of course, the wholesale must be governed, one saw, and sees, sellers everywhere running after customers, customers nowhere after sellers. In short, a general power of supply has been and is at half stretch, and is ready at any moment to start out into double activity upon the presentation of a demand. What is this but a general glut? The condition of the bulk of the middle classes, arising from this state of things, was depicted in 1833, by Mr. Gibbon Wakefield in one condensed phrase, the "uneasy classes," the truth of which everybody acknowledged. This is the normal condition of society in England-too many in the law-too many at the hospitals-too many in commerce—one mechanical trade after another of those embanked by combination gradually loosened by the pressure of the general flood, and settling down on that wide, desolate, defenceless level, over which, for ever, heave and roar the wild surges of universal competition. What is all this but glut, general glut, and its consequences? Such is, I say, the habitual condition of England: men of all classes, "uneasy," anxious to find secure employment, seeking to rise, still more fearing to fall, while capital is continually flowing together in great congested masses, and in vain seeking new outlets for its discharge. Since the last war this state of things has only been interrupted by those well-known decennial bursts of speculative, and ultimately disastrous, excitement, described with such concentrated power and awful truth in the words of Lord Overstone which I have placed at the commencement of the present chapter. Think for a moment of the import of the fact, that what those words describe is the life, the habitual life, of a people more favoured than any that have yet been permitted to look upon the light of the sun.

Each one of those speculative excitements operated precisely like blood-letting upon a person of plethoric habit. It gave immediate relief and left behind an aggravated tendency to a recurrence of the disorder'. The antecedent or predisposing

See the Article on Accumulations of Capital in the Quarterly Review, Dec., 1847.