can have no bread stored up, for there is none prepared; the labouring cotton-spinner himself knows nothing of any stock of corn being in existence from which his bread can be made; he knows that he has always been able to get bread when he had wherewithal to buy it, and further he does not require to know. But, even if he did know of such a stock, he would probably give up cotton-spinning and take to preparing food, if he did not also know, that while he is making cotton other labourers will till the ground, and prepare him food, which he will be able to procure by making cotton. His conviction that he will obtain bread when he requires it, and his master's conviction that the money he pays him will enable him to obtain it, arise simply from the fact that the bread has always been obtained when required."

"If we duly consider the number and importance of those wealthproducing operations which are not completed within the year, and the numberless products of daily labour, necessary to subsistence, which are consumed as soon as produced, we shall, I think, be sensible that the success and productive power of every different species of labour is at all times more dependent on the coexisting productive labour of other men than on any accumulation of circulating capital. The labourer, having no stock of commodities, undertakes to bring up his children, and teach them an useful art, always relying on his own labour; and various classes of persons undertake tasks, the produce of which is not completed for a long period, relying on the labour of other men to procure them, in the mean time, what they require for subsistence. All classes of men carry on their daily toils in the full confidence that while each is engaged in his particular occupation, some others will prepare whatever he requires, both for his immediate and future consumption and use. I have already explained, that this confidence arises from that law of our nature by which we securely expect the sun will rise to-morrow, and that our fellow-men will labour on the morrow and during the next year as they have laboured during the year and the day which have passed. I hope I have also satisfied the reader that there is no knowledge of any produce of previous labour stored up for use; that the effects usually attributed to a stock of commodities are caused by coexisting labour; and that it is by the command the capitalist possesses over the labour of some men, not by his possessing a stock of commodities, that HE is enabled to support and consequently employ other labourers."

The important truth, that the thing which the capitalist possesses is simply a command over labour and goods, was used in this pamphlet as an argument to prove that the capitalist is not entitled to the remuneration which he now receives. My own mind, on first reading it, was only struck by the fallacy of the conclusion, but afterwards having got, by a different train

Y

of thought, at what I believe to be the true idea of money capital, its resemblance to that of Mr. Hodgskin became manifest. His error appears to me to have lain in the assumption, that the power possessed by the capitalist, of securing the co-operation of the different classes of labourers, is something arbitrary and obtained without sacrifice. But in fact this power is always the result of sacrifice; that is to say, of a series of acts of abstinence on the part of one or more persons who originally possessed the right of immediate consumption, and forbore to exercise it. Such abstinence will not be practised without remuneration, and no legal principle for settling the remuneration can be laid down, except that of leaving it to the voluntary bargainings of capitalists and labourers, which is the principle actually in operation.

NOTE B.

The Quarterly Review on Accumulations of Capital.

With the permission of Mr. Murray, I make some extracts here from the article on "Accumulations of Capital" in the Quarterly Review for Dec., 1847. The writer appears to me to fall into a serious error in under-estimating the evil produced by speculative excitements, but his conception of the process of accumulation must be felt by every one to be, in the main, as correct as his exposition of it is felicitous.

"The manufacturer who finds at the end of the year a larger balance at his banker's than is necessary for conducting his business at its present extent, obeys a very natural and a very reasonable impulse when he employs the surplus in increasing his business. He keeps his capital under his own eye and control, and the existence of the surplus proves that the state of the trade in which it has accumulated justifies the application. By this process the half-dozen spinning-jennies, first collected in a loft by Arkwright, have expanded into the fifteen hundred cotton-factories which now exist within thirty miles of the Exchange at Manchester. 'So you are building another cotton-mill!'-'They build one another,' was the reply of an old and successful spinner.

"Extraneous capital has only gone into the cotton manufacture on the legitimately acquired and generally well-vindicated credit of those who created the trade and have carried it on, and has been applied under their guidance. So universally has this been the case, that we believe

that in almost every instance in which unconnected parties have, under the idea of large profits, thrust themselves and their money into that business, they have pretty speedily retired, leaving their money behind them. In early life we were acquainted with a gentleman who at fortyfive retired from the wine-trade, having realized a fortune of thirty thousand pounds. He unfortunately visited Manchester, and on the Exchange there he could not cast his eyes on any side without their lighting on men who had been themselves operatives, or at most were only removed from that class by one generation, who were still in the vigour of mercantile life, and who were reputed to be worth eighty, one hundred, two hundred thousand pounds. He determined to be a manufacturer. He built a mill in the most approved form, and filled it with new machinery. In twelve years the mill stood for want of cotton; the broker and the banker were inexorable. Like Jeames de la Pluche, our friend was the 'soul of honour:' the relics of 30,000l. paid to his creditors fourteen shillings in the pound; and he finished his life in a country town as commission agent to a London wine-house. This is no solitary instance. We bring it forward to exemplify our statement that the manufacturing districts have been covered with their existing enormous amount of fixed capital-mills, warehouses, houses, shops, water and gas works, with a hundred etceteras-mainly by accumulations within the trade to which they administer."

"The accumulations of the purely mercantile and trading class have not merged so immediately in brick, mortar, iron, and timber, as those of the manufacturing class. A large portion of them has no doubt gone to create the British mercantile marine; another portion has been expended, at home, in the colonies, and in foreign countries, in creating establishments destined to increase the facilities of British commerce; but a portion has at all times floated on the surface of the money market, recurring to its owners from time to time by the maturity of the temporary investment, or easily revocable by its realization.

"Another class remains, exceedingly varied in its composition, but having this common quality—that they have been rendered by their occupations and habits an unbargaining class. In every pecuniary transaction they feel the suspicion which inexperience renders natural and reasonable. This class includes all professional men, civil, military, and ecclesiastical; all who depend on fixed salaries; those generally whose incomes are realized; trustees; and all those timid and very provident persons who are the modern representatives of the hoarders of a more ignorant and less secure state of society. This class is in the aggregate a vast accumulator. Every quarter-day presents a vast sum seeking interest without trouble and without risk. To have the Bank of England, with its unbounded and mysterious wealth, as a paymaster; to find the private bankers debited in the pass-book at the end of every

half-year 'To Divd, on £3630 Con3. £—;' to be able to invest through a broker for a small charge, his power of imposition being confined within very narrow limits by quotations in every newspaper;—these circumstances satisfy so many feelings, and obviate so many inconveniences, that our investors are reconciled to 3 per cent., and often, for a time at least, to less; for the banks of deposit in England and Scotland, which allow a low rate of interest, are mainly supported by this quiescent class. They are, in fact, merely its agents to bring this mass of money into the general market. Every monetary crisis confirms the propensities, justifies the wisdom, and recruits the numbers of those who, in their investments, make security and ease the first, and profit the second, consideration. Regular, though slow, when others fail, they flourish; they burst on the market with no gluts, but they keep up a constant pressure on the value of money; the silent plodding operation of compound interest is always there."

"Since the peace in 1815 money crises in this country have nearly conformed to a decennial recurrence. The grand exception of 1839 is manifestly referable to a failure of food. The years 1825, 35, and 45, with those immediately following each, have been marked by the same broad features-a glut of money, a wild speculation, scarcity, remorse, and suffering; and the nation starts again on confirmed principles of prudence and caution. One-pound notes have been suppressed; banks having more than six partners legalized; the Bank Charter has been tinkered more than once; banks of issue have been regulated and restrained. Time after time we have been assured that speculation and panics would cease, because the exciting causes of the former and the pabulum of the latter had been put down by Act of Parliament. But the course of 1825, recurring in 1835, repeated in 1845, and probably to be repeated again in 1855, holds on its way totally regardless of the quackery which, smothered in returns and statistics, has wholly passed by the simple principles by which mainly it is governed.

"Let us endeavour to trace this course, commencing with the period of prudence and caution to which a panic has brought the country. The engagements of the hot fit have, with whatever pain, been liquidated, compromised, or otherwise closed. From the walks of mercantile and manufacturing industry, two classes have disappeared—those who went too fast, and those who went too slow-those who without the requisite power and depth aspired to lead, and those who from old habits and connections were unable to follow-those who flashed into the front, and those who dwindled into the rear. Every one who has seen a large field of horses start in the same race will have observed that those which dash off at a pace which the main body cannot maintain, speedily join in the rear those whose natural rate will not bring them into an average place. The steady, deep, persevering runners carry on the race. As one

effect of the crisis just passed, stocks of everything, except the raw produce of the earth in its first shape, are light. Perhaps, nationally, this is its worst effect. Pecuniary difficulties can only be overcome by producing more, whereas the tendency of a crisis is to make the nation produce less. In the mercantile and manufacturing classes the rate of accumulation has been retarded, or, more probably, accumulation has been altogether suspended. But the earth goes on producing. We have heard of many factories which have ceased to produce calico because the hire of money was eight per cent. per annum. We seldom hear of a field which has ceased to produce wheat for the same reason. Cattle and sheep procreate and rear their young, heedless of the dismay which reigns in Capel Court and Threadneedle Street. Here, then, the foundation is laid; and where peace prevails, and property and person are secure, men will produce, and trade, and accumulate. But, passing by the state of the mercantile and manufacturing classes in this early stage of revival, let us see how it fares with the quiet class of accumulators. We see several things which will accelerate their rate of accumulation—nothing occurs to us which will retard it. Indeed, we are inclined to think that with this class accumulation goes on fastest in times of pecuniary pressure, and slowest in times of abundance. In the first place, when great abundance reigns, large sums always lie idle, as far as the first hand is concerned, yielding him nothing. He, somewhat spurning three per cent., has not yet acquired sufficient hardihood to venture on a novel, or more hazardous, or more troublesome security, and leaves his money in the Bank of England, or at his private banker's, by whom a portion of it is cautiously employed at the existing low rate. But five, and still more eight, per cent. calls all these sums into use. From time to time moneys come in which were lent at a low, and go out again at an enhanced, rate of interest. This is a complicated subject. When employment is curtailed, of course accumulation by the working classes must be curtailed also. We are inclined, however, to think that the case of the manufacturing and that of the saving classes generally was pretty accurately summed up the other day by a Manchester gentleman who belongs to both (being a great cotton-spinner, and employing also a large sum of money in temporary investments), who, in answer to the remark that cotton-spinning was bad, said 'Yes; but lending money on railway shares is good.' "On the whole, we think no one will be disposed to deny that this saving class does accumulate during and after panic at a very rapid rate; and that their accumulations do press and must press on the rate of interest. The first assault is usually made on Consols; they are beset on every side, and must rise in price. Consols contain within themselves no principle of expansion, and though Chancellors of the Exchequer have done as much to expand them as could reasonably be expected after thirty years of peace, by dint of twenty millions for the Negroes, and eight for the Irish, and two or three at different times for Whig defi