Abbildungen der Seite
PDF
EPUB

cost; that of all other articles, upon demand and cost. To prove the appreciation or depreciation of money, its price or value, which measures its cost, should be compared with the price of other articles whose cost has remained unchanged for long periods of years, or whose cost has changed no than the cost of producing gold and silver; but all such comparisons amount to nothing, from the want of adequate data upon which they can be based. Whatever may be the fact, however, a little reflection should have shown Smith that no advantage could be gained from the application of his distinction between nominal and real price. If it were for the interest of lessors of lands to have their rents payable in corn, it would be equally against the interest of the lessees; and as it takes two to make a bargain, no lease would ever be made upon the terms suggested. Nothing can be more puerile than such illustrations and arguments. Of course, there is little use in replying to them, and they are referred to chiefly for the purpose of showing the total inadequacy of Smith's premises, and the absurdity of his conclusions from them.1

From the discussion of the distinction between real and nominal prices, Smith proceeds, in the second chapter of the second book of his "Wealth of Nations," to that of metallic and paper money; or, to use his own words, " money considered as a particular branch of the general stock of society, or the expense of maintaining the national capital."

"It has been shown in the first book " (that on division of labor), says Smith," that the price of the greater part of commodities resolves itself into three parts: one of which pays the wages of the laborer; another, the profits of the stock; and a third, the rent of the land which had been employed in producing and bringing them to market. . . . The price of every commodity necessarily resolves itself into some one or other or all of these three parts. Every part of it which goes neither to rent or to wages being necessarily profit to somebody.

1 Smith's assumption, which is awkwardly interpolated into his chapters on money, that corn is a better measure of value than coin, is wholly borrowed, and without acknowledgment, from Law, with this difference, that, while Law states the argument most fully in a single paragraph, Smith drags the reader through page after page of incoherent and inconclusive assertions, utterly foreign to his main argument, and winds up by proving the very opposite of the proposition with which he started.

"Since this is the case, it has been observed, with regard to every particular commodity taken separately, it must be so with regard to all the commodities which compose the whole annual produce of the land and labor of every country, taken complexly. The whole

price or exchangeable value of that annual produce must resolve itself into the same three parts, and be parcelled out among the different inhabitants of the country, either as the wages of their labor, the profits of their stock, or the rent of their land.

"But though the whole value of the annual produce of the land and labor of every country is thus divided among, and constitutes a revenue to, its different inhabitants, . . . yet as in the rent of a private estate we distinguish between the gross and the neat rent, so we may likewise in the revenue of all the inhabitants of a great country. The gross rent of a private estate comprehends whatever is paid by the farmer; the neat rent, what remains free to the landlord after deducting the expenses of management, of repairs, and all other necessary charges, or what, without hurting his estate, he can afford to place in his stock reserved for immediate consumption, or to spend upon his table, equipage, the ornaments of his house, his private enjoyments and amusements. His real wealth is in proportion, not to his gross, but to his neat, rent.

"The gross revenue of all the inhabitants of a great country comprehends the whole annual produce of their land and labor; the neat revenue, what remains free to them after deducting the expense of maintaining, first, their fixed, and, secondly, their circulating, capital; or what, without encroaching upon their capital, they can place in their stock reserved for immediate consumption, or spend upon their subsistence, conveniences, and amusement. Their real wealth, too, is in proportion, not to their gross, but to their neat, revenue.

"The whole expense of maintaining the fixed capital must evidently be excluded from the neat revenue of society. Neither the materials necessary for supporting their useful machines and instruments of trade, their profitable buildings, &c., nor the produce of the labor necessary for fashioning these materials into proper form, can ever make any part of it.

"The expense of maintaining the fixed capital of a great country may very properly be compared to that of repairs in a private estate: the expense of repairs may be frequently necessary for supporting the produce of the estate, and, consequently, both the gross and the neat rent of the landlord. When, by a more proper direction, however, it can be diminished without occasioning any diminution of produce, the gross rent remains at least the same as before, and the neat rent is necessarily augmented.

"But, though the whole expense of maintaining the fixed capital is thus necessarily excluded from the neat revenue of society, it is not the same case with that of maintaining the circulating capital. Of the four parts of which this latter capital is composed, money, provisions, materials, and finished work, the three last, it has already been observed, are regularly withdrawn from it, and placed either in the fixed capital of the society, or in their stock reserved

for immediate consumption. Whatever portion of these consumable goods is not employed in maintaining the former, goes all to the latter, and makes a part of the neat revenue of the society. The maintenance of these three parts of the circulating capital, therefore, withdraws no portion of the annual produce from the neat revenue of the society, besides what is necessary for maintaining the fixed capital.

"The circulating capital of a society is in this respect different from that of an individual. That of an individual is wholly excluded from making any part of his neat revenue, which must consist altogether in his profits. But, though the circulating capital of every individual makes a part of that of the society to which he belongs, it is not upon that account totally excluded from making a part likewise of their neat revenue. Though the whole goods in a merchant's shop must by no means be placed in his own stock reserved for immediate consumption, they may in that of other people's, from whom a revenue derived from other funds may regularly replace their value to him, together with its profits, without occasioning any diminution either of his capital or of theirs.

"Money, therefore, is the only part of the circulating capital of a society of which the maintenance can occasion any diminution in their neat revenue.

"The fixed capital, and that part of the circulating capital which consists in money, so far as they affect the revenue of society, bear a very great resemblance to one another.

"As those machines and instruments of trade, &c., require a certain expense, first to erect them, and afterwards to support them, both of which expenses, though they make a part of the gross, are deductions from the neat, revenue of society: so the stock of money which circulates in any country must require a certain expense, first to collect it, and afterwards to support it; both which expenses, though they make a part of the gross, are in the same manner deductions from the neat, revenue of the society. A certain quantity of very valuable materials, gold and silver, and of very curious labor, instead of augmenting the stock reserved for immediate consumption, the subsistence, convenience, and amusement of individuals, is employed in supporting that great but expensive instrument of commerce by means of which every individual in the society has his subsistence, conveniences, and amusements regularly distributed to him, in their proper proportions.

[ocr errors]

"As the machines and instruments of trade, &c., which compose the fixed capital either of an individual or of society, make no part of the gross or of the neat revenue of either, so money, by means of which the whole revenue of society is regularly distributed among its different members, makes itself no part of that revenue. The great wheel of circulation is altogether different from the goods which are circulated by means of it. The revenue of society consists altogether in those goods, and not in the wheel which circulates them. In computing either the gross or the neat revenue of any country, we must always, from their whole annual circulation of money and goods, deduct the whole value of

the money, of which not a single farthing can ever make any part of either." 1

[ocr errors]

The preceding extracts are given at length, as the only mode of presenting Smith's notions upon the subject of money. Nothing can be more inappropriate than his method to scientific discussion. He has more than Aristotle's passion for elaborate classification, resting upon no better support than his own fancies. That which divides the circulating capital of society into money, material, provisions, and finished work, is wholly arbitrary and absurd. Money - gold and silver is material in the same sense as is iron, wood, or wool. Like these, it is constantly going into the arts, into tools and finished work. It is in one sense the highest kind of finished work, as it is always received by every one in exchange for what he may have to sell. The classification given by Smith, therefore, has no warrant whatever in the nature of things. The usual classification of property-that known to the law and to the books-into real and personal, is the only proper one, for the reason that it is the only one that rests upon a radical distinction in kind.

It is a capital defect in Smith, as well as in all the Economists, that he entirely overlooks interest as an element in price, and as a source of revenue. "The revenue of society," he tells us, "consists wholly of the three parts of the circulating capital, consisting of provisions, material, and finished work. The maintenance of these costs nothing; moneythough a part of the circulating capital-is wholly to be deducted from the neat and gross revenue, of which not a farthing can ever make any part of either. The fixed capital and that part of the circulating capital which consists of money, have, so far as they affect the neat revenue of society, a very great resemblance the one to the other."

The expense of maintaining any kind of property is, in one very important particular, in direct ratio to its cost; and this is interest on its cost. Interest is always chargeable against every kind of property, for the reason that it could be realized on loans of the money paid for it. Interest, therefore, enters into the price of every article put upon the market. Take the case of a carpet: the importer of the wool used in its manu

1 Wealth of Nations, Book ii., Chap. ii.

facture charges interest on its cost from the time of its purchase, in Africa or Australia, till it is delivered to the manufacturer. If it be sold on time, interest in addition to cost is charged for such time. The interest the manufacturer pays is included in the price at which the finished goods are put upon the market. If sold on time, interest is charged on such sales. If the merchant pay cash, he includes interest on the price to his customers, as the only mode in which he can be reimbursed for the use of his capital. But for such payments, he might be receiving interest on loans of the money by which they were made. The price which the consumer pays is not only the cost, but interest on the same from the time of the purchase of the material till the finished product is taken for consumption; interest on the machinery and tools employed in its manufacture; on the cost of their maintenance, cost of warehousing, cost of distribution for consumption; and a profit to all parties engaged in the various processes described. It costs far less to maintain money than it does any other kind of capital. In such a country as the United States, for example, there is at the close of every harvest a year's stock of food on hand, the value of which may be estimated at $1,000,000,000. This food is to be carried by some one for an average of six months, for which service interest is charged to the consumers, amounting, say, to $30,000,000; the cost of warehousing this food may be estimated at $20,000,000; insurance, $10,000,000: making a total of $60,000,000, every dollar of which enters into the price. It costs very little to maintain $1,000,000,000 for six months. On the contrary, while that value of produce is to be carried without interest to the holder, an equal amount of money would produce him $30,000,000. Money can be used at all times; food must be held in very large quantities, in reserve, for future use. The maintenance of such reserves is a burden to which society must submit. Such comparisons or illustrations, however, are of very little importance; for the reason that every kind of property necessary to the operations of society is to be considered as equally expensive in its maintenance, equally valuable, and equally productive in its use. But for money, the exchanges of property could not be made; nor could it have any commercial value.

Money, therefore, as a medium of exchange, performs an indispensable function, and consequently is always a most impor

« ZurückWeiter »