2. Nature Of Wealth
Variations Of Value, The National Store, Nature Of Labour, Value And Price, The Currency.
Essays On 'Political Economy' by John Ruskin

THE last paper having consisted of little more than definition of terms, I purpose, in this, to expand and illustrate the given definitions, so as to avoid confusion in their use when we enter into the detail of our subject.

The view which has been taken of the nature of wealth, namely, that it consists in an intrinsic value developed by a vital power, is directly opposed to two nearly universal conceptions of wealth. In the assertion that value is primarily intrinsic, it opposes the idea that anything which is an object of desire to numbers, and is limited in quantity, may be called, or virtuallv become, wealth. And in the assertion that value is secondarily dependent upon power in the possessor, it opposes the idea that wealth consists of things exchange able at rated prices. Before going farther, we will make these two positions clearer.

First. All wealth is intrinsic, and is not constituted by the judgment of men. This is easily seen in the case of things affecting the body; we know that no force of fantasy will make stones nourishing, or poison innocent; but it is less apparent in things affecting the mind. We are easily — perhaps willingly — misled by the appearance of beneficial results obtained by industries addressed wholly to the gratification of fanciful desire; and apt to suppose that whatever is widely coveted, dearly bought, and pleasurable in possession, must be included in our definition of wealth. It is the more difficult to quit ourselves of this error because many things which are true wealth in moderate use, yet become false wealth in immoderate; and many things are mixed of good and evil, — as, mostly, books and works of art, — out of which one person will get the good, and another the evil; so that it seems as if there were no fixed good or evil in the things themselves, but only in the view taken, and use made of them. But that is not so. The evil and good are fixed in essence and in proportion. They are separable by instinct and judgment, but not interchangeable; and in things in which evil depends upon excess, the point of excess, though indefinable, is fixed; and the power of the thing is on the hither side for good, and on the farther side for evil. And in all cases this power is inherent, not dependent on opinion or choice. Our thoughts of things neither make, nor mar their eternal force; nor — which is the most serious point for future consideration — can they prevent the effect of it upon ourselves.

Therefore, the object of special analysis of wealth into which we have presently to enter will be not so much to enumerate what is serviceable, as to distinguish what is destructive; and to show that it is inevitably destructive; that to receive pleasure from an evil thing is not to escape from, or alter the evil of it, but to be altered by it; that is, to suffer from it to the utmost, having our own nature, in that degree, made evil also. And it will be shown farther that, through whatever length of time or subtleties of connexion the harm is accomplished (being also less or more according to the fineness and worth of the humanity on which it is wrought), still, nothing, but harm ever comes of a bad thing.

So that, finally, wealth is not the accidental object of a morbid desire, but the constant object of a legitimate one. By the fury of ignorance, and fitfulness of caprice, large interests may be continually attached to things unserviceable or hurtful; if their nature could be altered by our passions, the science of Political Economy would be but as the weighing of clouds, and the portioning out of shadows. But of ignorance there is no science; and of caprice no law. Their disturbing forces interfere with the operations of economy, but have nothing in common with them; the calm arbiter of national destiny regards only essential power for good in all it accumulates, and alike disdains the wanderings of imagination and the thirsts of disease.

Secondly. The assertion that wealth is not only intrinsic, but dependent, in order to become effectual, on a given degree of vital power in its possessor, is opposed to another popular view of wealth; — namely, that though it may always be constituted by caprice, it is, when so constituted, a substantial thing, of which given quantities may be counted as existing here, or there, and exchangeable at rated prices.

In this view there are three errors. The first and chief is the overlooking the fact that all exchangeableness of commodity, or effective demand for it, depends on the sum of capacity for its use existing, here or elsewhere. The book we cannot read, or picture we take no delight in, may indeed be called part of our wealth, in so far as we have power of exchanging either for something we like better. But our power of effecting such exchange, and yet more, of effecting it to advantage, depends absolutely on the number of accessible persons who can understand the book, or enjoy the painting, and who will dispute the possession of them. Thus the actual worth of either, even to us, depends no less on their essential goodness than on the capacity consisting somewhere for the perception of it; and it is vain in any completed system of production to think of obtaining one without the other. So that, though the great political economist knows that coexistence of capacity for use with temporary possession cannot be always secured, the final fact, on which he bases all action and administration, is that, in the whole nation, or group. of nations, he has to deal with, for every grain of intrinsic value produced he must with exactest chemistry produce its twin grain of governing capacity, or in the degrees of his failure he has no wealth. Nature's challenge to us is in earnest, as the Assyrian's mock, " I will give you two thousand horses, if thou be able on thy part to set riders upon them." Bavieca's paces are brave, if the Cid backs him; but woe to us, if we take the dust of capacity, wearing the armour of it, for capacity itself, for so all procession, however goodly in the show of it, is to the tomb.

The second error in this popular view of wealth is that, in estimating property which we cannot use as wealth, because it is exchangeable, we in reality confuse wealth with money. The land we have no skill to cultivate, the book which is sealed to us, or dress which is superfluous, may indeed be exchangeable, but as such are nothing more than a cumbrous form of bank-note, of doubtful and slow convertibility. As long as we retain possession of them, we merely keep our bank-notes in the shape of gravel or clay, of book leaves, or of embroidered tissue. Circumstances may perhaps render such forms the safest, or a certain complacency may attach to the exhibition of them; — into both these advantages we shall inquire afterwards; I wish the reader only to observe here, that exchangeable property which we cannot use is, to us personally, merely one of the forms of money, not of wealth.

The third error in the popular view is the confusion of guardianship with possession; the real state of men of property being, too commonly that of curators, not possessors of wealth. For a man's power of Use, Administration, Ostentation, Destruction, or Bequest; and possession is in use only, which for each man is sternly limited; so that such things, and so much of them, are well for him, or Wealth; and more of them, or any other things, are ill for him, or Illth. Plunged to the lips in Orinoco, he shall drink to his thirst measure, — more, at his peril; with a thousand oxen on his lands, he shall eat to his hunger measure, — more, at his peril. He cannot live in two houses at once; a few bales of silk or wool will suffice for the fabric of all the clothes he can ever wear, and a few books will probably hold all the furniture good for his brain. Beyond these, in the best of us but narrow, capacities, we have but the power of administering, or if for harm, mal-administering, wealth (that is to say, distributing, lending, or increasing it); — of exhibiting it (as in magnificence of retinue or furniture), of destroying, or, finally, of bequeathing it. And with multitudes of rich men, administration degenerates into curatorship; they merely hold their property in charge, as Trustees, for the benefit of some person or persons to whom it is to be delivered upon their death; and the position, explained in clear terms, would hardly seem a covetable one. What would be the probable decision of a youth on his entrance into life, to whom the career hoped for him was proposed in terms such as these:

" You must work unremittingly, and with your utmost intelligence, during all your available years; you will thus accumulate wealth to a large amount; but you must touch none of it, beyond what is needful for your support. Whatever sums you may gain beyond those required for your decent and moderate maintenance shall be properly taken care of, and on your death-bed you shall have the power of determining to whom they shall belong, or to what purposes be applied?"

The labour of life, under such conditions, would probably be neither zealous nor cheerful; yet the only difference between this position and that of the ordinary capitalist is the power which the latter delights in supposing himself to possess, and which is attributed to him by others, of spending his money at any moment. This pleasure, taken in the imagination of power to part with that which we have no intention of parting with, is one of the most curious though commonest forms of Eidolen, or Phantasm of Wealth. But the political economist has nothing to do with this idealism, and looks only to the practical issue of it, — namely, that the holder of wealth, in such temper, may be regarded simply as a mechanical means of collection; or as a money-chest with a slit in it, set in the public thoroughfare; — chest of which only Death has the key, and probably Chance the distribution of contents. In his function of lender (which, however, is one of administration, not use, as far as he is himself concerned), the capitalist takes, indeed, a more interesting aspect; but even in that function, his relations with the state are apt to degenerate into a mechanism for the convenient contraction of debt; — a function the more mischievous, because a nation invariably appeases its conscience with respect to an unjustifiable expense by meeting it with borrowed funds, — expresses its repentance of a foolish piece of business by letting its tradesmen wait for their money, — and always leaves its descendants to pay for the work which will be of the least service to them. (1)

Wealth Dictated By Character Of The Holder
Quit of these three sources of misconception, the reader will have little farther difficulty in apprehending the real nature of Effectual value. He may, however, at first not without surprise, perceive the consequences involved in the acceptance of our definition. For if the actual existence of wealth be dependent on the power of its possessor, it follows that the sum of wealth held by the nation, instead of being constant or calculable, varies hourly, nay, momentarily, with the number and character of its holders; and that in changing hands, it changes in quantity. And farther, since the worth of the currency is proportioned to the sum of material wealth which it represents, if the sum of the wealth changes, the worth of the currency changes. And thus both the sum of the property, and power of the currency, of the State, vary momentarily, as the character and number of the holders. And not only so, but a different rate and manner of variation is caused by the character of the holders of different kinds of wealth. The transitions of value caused by the character of the holders of land differ in mode from those caused by character in holders of works of art; and these again from those caused by character in holders of machinery or other working capital. But we cannot examine these special phenomena of any kind of wealth until we have a clear idea of the way in which true currency expresses them; and of the resulting modes in which the cost and price of any article are related to its value. To obtain this we must approach the subject in its first elements.

Let us suppose a national store of wealth, real or imaginary (that is to say, composed of material things either useful, or believed to be so), presided over by a Government, and that every workman, having produced any article involving labour in its production, and for which he has no immediate use, brings it to add to this store, receiving, from the Government, in exchange an order either for the return of the thing itself, or of its equivalent in other things, such as he may choose out of the store at any time when he needs them. Now, supposing that the labourer speedily uses this general order, or, in common language, "spends the money", he has neither changed the circumstances of the nation nor his own, except in so far as he may have produced useful and consumed useless articles, or vice versa. But if he does not use, or uses in part only, the order he receives, and lays aside some portion of it; and thus every day bringing his contribution to the national store, lays by some percentage of the order received in exchange for it, he increases the national wealth daily by as much as he does not use of the received order, and to the same amount accumulates a monetary claim on the Government. It is of course always in his power, as it is his legal right, to bring forward this accumulation of claim, and at once to consume, to destroy, or distribute, the sum of his wealth. Supposing he never does so, but dies, leaving his claim to others, he has enriched the State during his life by the quantity of wealth over which that claim extends, or has, in other words, rendered so much additional life possible in the State; of which additional life he bequeaths the immediate possibility to those whom he invests with his claim, he would distribute this possibility of life among the nation at large.

We hitherto consider the Government itself as simply a conservative power, taking charge of the wealth entrusted to it. But a Government may be far other than a conservative power. It may be on the one hand constructive, on the other destructive.

If a constructive, or improving power, using all the wealth entrusted to it to the best advantage, the nation is enriched in root and branch at once, and the Government is enabled for every order presented, to return a quantity of wealth greater than the order was written for, according to the fructification obtained in the interim.

This ability may be either concealed, in which case the currency does not completely represent the wealth of the country, or it may be manifested by the continual payment of the excess of value on each order, in which case there is (irrespectively; observe, of collateral results afterwards to be examined) a perpetual rise in the worth of the currency, that is to say, a fall in the price of all articles represented by it.

The Cause Of Inflation
But if the Government be destructive, or a consuming power, it becomes unable to return the value received on the presentation of the order.

This inability may either (A), be concealed by meeting demands to the full, until it issue in bankruptcy, or in some form of national debt; — or (B), it may be concealed during oscillator movements between destructiveness and productiveness, which result on the whole in stability; — or (C), it may be manifested by the consistent return of less than value received on each presented order, in which case there is a consistent fall in the worth of the currency, or rise in the price of the things represented by it.

Now, if for this conception of a central Government, we substitute that of another body of persons occupied in industrial pursuits, of whom each adds in his private capacity to the common store: so that the store itself, instead of remaining a public property of ascertainable quantity, for the guardianship of which a body of public men are responsible, becomes disseminated private property, each man giving in exchange for any article received from another, a general order for its equivalent in whatever other article the claimant may desire (such general order being payable by any member of the society in whose possession the demanded article may be found), we at once obtain an approximation to the actual condition of a civilized mercantile community from which approximation we might easily proceed into still completer analysis. I purpose, however, to arrive at every result by the gradual expansion of the simpler conception; but I wish the reader to observe, in the meantime, that both the social conditions thus supposed (and I will by anticipation say also all possible social conditions) agree in two great point; namely, in the primal importance of the supposed national store or stock, and in its destructibility or improvability by the holders of it.

I. Observe that in both conditions, that of central Government-holding, and diffused private-holding, the quantity of stock is of the same national moment. In the one case, indeed, its amount may be known by examination of the persons to whom it is confided; in, the other it cannot be known but by exposing the private affairs of every individual. But, known or unknown, its significance is the same under each condition. The riches of the nation consist in the abundance, and their wealth depends on the nature of this store.

II.In the second place, both conditions (and all other possible ones) agree in the destructibility or improvability of the store by its holders. Whether in private hands, or under Government charge, the national store may be daily consumed, or daily enlarged, by its possessors; and while the currency remains apparently unaltered, the property it represents may diminish or increase.

The first question, then, which we have to put under our simple conception of central Government, namely, "What store has it?" is one of equal importance, whatever may be the constitution of the State; while the second question — namely, "Who are the holders of the store?" — involves the discussion of the constitution of the State itself.

The first inquiry resolves itself into three heads:
1. What is the nature of the store?
2.What is its quantity in relation to the population?
3. What is its quantity in relation to the currency?
The second inquiry, into two:
1.Who are the Holders of the store, and in what proportions?
2.Who are the Claimants of the store (that is to say, the holders of the currency), and in what proportions?

We will examine the range of the first three questions in the present paper; of the two following, in the sequel.

Question First. What is the nature of the store? Has the nation hitherto worked for and gathered the right thing or the wrong? On that issue rest the possibilities of its life.

For example, let us imagine a society, of no great extent, occupied in procuring and laying up store of corn, wine, wool, silk, and other such preservable materials of food and clothing; and that it has a currency representing them. Imagine farther, that on days of festivity, the society, discovering itself to derive satisfaction from pyrotechnics, gradually turns its attention more and more to the manufacture of gunpowder; so that an increasing number of labourers, giving what time they can spare to this branch of industry, bring increasing quantities of combustibles into the store, and use the general orders received in exchange to obtain such wine, wool, or corn as they may have need of. The currency remains the same, and represents precisely the same amount of material in the store, and of labour spent in producing it. But the corn and wine gradually vanish, and in their place, as gradually, appear sulphur and saltpetre; till at last, the labourers who have consumed corn and supplied nitre, presenting on a festal morning some of their currency to obtain materials for the feast, discover that no amount of currency will command anything Festive, except Fire. The supply of rockets is unlimited, but that of food limited in a quite final manner; and the whole currency in the hands of the society represents an infinite power of detonation, but none of existence.

The statement, caricatured as it may seem, is only exaggerated in assuming the persistence of the folly to extremity, unchecked, as in reality it would be, by the gradual rise in price of food. But it falls short of the actual facts of human life in expression of the depth and intensity of the folly itself. For a great part (the reader would not believe how great until he saw the statistics in detail) of the most earnest and ingenious industry of the world is spent in producing munitions of war; gathering that is to say the materials, not of festive, but of consuming fire; filling its stores with all power of the instruments of pain, and all affluence of the ministries of death. It was no true Trionfo della Morte which men have seen and feared (sometimes scarcely feared) so long; — wherein he brought them rest from their labours. We see and share another and higher form of his triumph now. Task-master instead of Releaser, he rules the dust of the arena no less than of the tomb; and, content once in the grave whither man went, to make his works cease and his devices to vanish, — now, in the busy city and on the serviceable sea, makes his work to increase, and his devices to multiply.

To this doubled loss, or negative power of labour, spent in producing means of destruction, we have to add in our estimate of the consequences of human folly, whatever more insidious waste of toil there is in the production of unnecessary luxury. Such and such an occupation (it is said) supports so many labourers, because so many obtain wages in following it; but it is never considered that unless there be a supporting power in the product of the occupation, the wages given to one man are merely withdrawn from another. We cannot say of any trade that it maintains such and such a number of persons, unless we know how and where the money, now spent in the purchase of its produce, would have been spent, if that produce had not been manufactured. The purchasing funds truly support a number of people in making This; but (probably) leave unsupported an equal number who are making, or could have made That. The manufacturers of small watches thrive in Geneva; — it is well; — but where would the money spent on small watches have gone, had there been no small watches to buy?

If the so frequently uttered aphorism of mercantile economy — "labour is limited by capital" — were true, this question would be a definite one. But it is untrue; and that widely. Out of a given quantity of wages, more or less labour is to be had, according to the quantity of will with which we can inspire the workman; and the true limit of labour is only in the limit of this moral stimulus of the will, and the bodily power. In an ultimate, but entirely practical sense, labour is limited by capital, as it is by matter — that is to say, where there is no material, there can be no work — but in the practical sense, labour is limited only by the great original capital of Head, Heart, and Hand. Even in the most artificial relations of commerce, it is to capital as fire to fuel: out of so much fuel you shall have so much fire — not in proportion to the mass of combustibles, but to the force of wind that fans and water that quenches; and the appliance of both. And labour is furthered, as conflagration is, not so much by added fuel, as by admitted air.

For which reasons, I had to insert, above, the qualifying "probably"; for it can never be said positively that the purchase money, or wages fund of any trade is withdrawn from some other trade. The object itself may be the stimulus of the production of the money which buys it; that is to say, the work by which the purchaser obtained the means of buying it would not have been done by him, unless he had wanted that particular thing. And the production of any article not intrinsically (nor in the process of manufacture) injurious, is useful, if the desire of it causes productive labour in other directions.

In the national store, therefore, the presence of things intrinsically valueless does not imply an entirely correlative absence of things valuable. We cannot be certain that all the labour spent on vanity has been diverted from reality, and that for every bad thing produced, a precious thing has been lost. In great measure, the vain things represent the results of roused indolence; they have been carved, as toys, in extra time; and, if they had not been made, nothing else would have been made. Even to munitions of war this principle applies; they partly represent the work of men who, if they had not made spears, would never have made pruning-hooks, and who are incapable of any activities but those of contest.

Thus, then, finally, the nature of the store has to be considered under two main lights, the one, that of its immediate and actual utility; the other, that of the past national character which it signifies by its production, and future character which it must develop by its uses. And the issue of this investigation will be to show us that Economy does not depend merely on principles of "demand and supply", but primarily on what is demanded, and what is supplied.

Question Second. What is the quantity of the store in relation to the population? It follows from what has been already stated that the accurate form in which this question has to be put is — "What quantity of each article composing the store exists in proportion to the real need for it by the population?" But we shall for the time assume, in order to keep all our terms at the simplest, that the store is wholly composed of useful articles, and accurately proportioned to the several needs of them.

Now it does not follow, because the store is large in proportion to the number of people, that the people must be in comfort, nor because it is small, that they must be in distress. An active and economical race always produces more than it requires, and lives (if it is permitted to do so) in competence on the produce of its daily labour. The quantity of its store, great or small, is therefore in many respects indifferent to it, and cannot be inferred by its aspect. Similarly an inactive and wasteful population, which cannot live by its daily labour, but is dependent, partly or wholly, on consumption of its store, may be (by various difficulties hereafter to be examined, in realization of getting at such store) retained in a state of abject distress, though its possessions may be immense. But the results always involved in the magnitude of store are, the commercial power of the nation, its security, and its mental character. Its commercial power, in that according to the quantity of its store, may be the extent of its dealings; its security, in that according to the quantity of its store are its means of sudden exertion or sustained endurance; and its character, in that certain conditions of civilization cannot be attained without permanent and continually accumulating store, of great intrinsic value, and of peculiar nature.

Now, seeing that these three advantages arise from largeness of store in proportion to population, the question arises immediately, "Given the store — is the nation enriched by diminution of its numbers? Are a successful national speculation and a pestilence, economically the same thing?"

Wealth is only the means of life
This is in part a sophistical question; such as it would be to ask whether a man was richer when struck by disease which must limit his life within a predicable period than he was when in health. He is enabled to enlarge his current expenses, and has for all purposes a larger sum at his immediate disposal (for, given the fortune, the shorter the life the larger the annuity); yet no man considers himself richer because he is condemned by his physician. The logical reply is that, since Wealth is by definition only the means of life, a nation cannot be enriched by its own mortality. Or in shorter words, the life is more than the meat; and existence itself more wealth than the means of existence. Whence, of two nations who have equal store, the more numerous is to be considered the richer, provided the type of the inhabitant be as high (for, though the relative bulk of their store be less, its relative efficiency, or the amount of effectual wealth, must be greater). But if the type of the population be deteriorated by increase of its numbers, we have evidence of poverty in its worst influence; and then, to determine whether the nation in its total may still be justifiably esteemed rich, we must set or weigh the number of the poor against that of the rich.

To effect which piece of scalework, it is of course necessary to determine, first, who are poor and who are rich; nor this only, but also how poor and how rich they are! Which will prove a curious thermometrical investigation; for we shall have to do for gold and for silver what we have done for quicksilver — determine, namely, their freezing-point, their zero, their temperate and fever-heat points; finally, their vaporescent point, at which riches, sometimes explosively, as lately in America, "make to themselves wings"; — and correspondently the number of degrees below zero at which poverty, ceasing to brace with any wholesome cold, burns to the bone.

For the performance of these operations, in the strictest sense scientific, we will first look to the existing so-called "science" of Political Economy; we will ask it to define for us the comparatively and superlatively rich, and the comparatively and superlatively poor; and on its own terms — if any terms it can pronounce — examine, in our prosperous England, how many rich and how many poor people there are; and whether the quantity and intensity of the poverty is indeed so overbalanced by the quantity and intensity of wealth, that we may permit ourselves a luxurious blindness to it, and call ourselves, complacently, a rich country. And if we find no clear definition in the existing science, we will endeavour for ourselves to fix the true degrees of the Plutonic scale, and to apply them.

Question Third. What is the quantity of the store in relation to the Currency? We have seen that the real worth of the currency, so far as dependent on its relation to the magnitude of the store, may vary within certain limits, without affecting its worth in exchange. The diminution or increase of the represented wealth may be unperceived, and the currency may be taken either for more or less than it is truly worth. Usually, it is taken for more; and its power in exchange, or credit-power, is thus increased (or retained) up to a given strain upon its relation to existing wealth. This credit-power is of chief importance in the thoughts, because most sharply present to the experience, of a mercantile community; but the conditions of its stability and all other relations of the currency to the material store are entirely simple in principle, if not in action. Far other than simple are the relations of the currency to that "available labour" which by our definition it also represents. For this relation is involved not only with that of the magnitude of the store to the number, but with that of the magnitude of the store to the mind, of the population. Its proportion to their number, and the resulting worth of currency, are calculable; but its proportion to their will for labour is not. The worth of the piece of money which claims a given quantity of the store, is, in exchange, less or greater according to the facility of obtaining the same quantity of the same thing without having recourse to the store. In other words, it depends on the immediate Cost and Price of the thing. We must now, therefore, complete the definition of these terms.

All cost and price are counted in Labour. We must know first, therefore, what is to be counted as Labour.

I have already defined labour to be the Contest of the life of man with an opposite. Literally, it is the quantity of "Lapse", loss, or failure of human life caused by any effort. It is usually confused with effort itself, or the application of power (opera); but there is much effort which is merely a mode of recreation, or of pleasure. The most beautiful actions of the human body and the highest results of the human intelligence, are conditions, or achievements, of quite unlaborious, nay, of recreative, effort. But labour is the suffering in effort. It is the negative quantity, or quantity of defeat which has to be counted against every Feat, and of defect which has to be counted against every Fact, or Deed of men. In brief, it is "that quantity of our toils which we die in".

We might, therefore, à priori, conjecture (as we shall ultimately find) that it cannot be bought, nor sold. Everything else is bought and sold for Labour, but labour itself cannot be bought nor sold for anything, being priceless. The idea that it is a commodity to be bought or sold, is the alpha and omega of Politico-Economic fallacy.

This being the nature of labour, the "Cost" of anything is the quantity of labour necessary to obtain it; — the quantity for which, or at which, it "stands" (constat). It is literally the "Constancy" of the thing; — you shall win it — move it — come at it — for no less than this.

Cast is measured and measurable only in "labor", not in "opera". It does not matter how much power a thing needs to produce it; it matters only how much distress. Generally the more power it requires, the less the distress; so that the noblest works of man cost less than the meanest. True labour, or spending of life, is either of the body, in fatigue or pain, of the temper or heart (as in perseverance of search for things, — patience in waiting for them, — fortitude or degradation in suffering for them, and the like), or of the intellect. All these kinds of labour are supposed to be included in the general term, and the quantity of labour is then expressed by the time it lasts. So that a unit of labour is "an hour's work" or a day's work, as we may determine.

Cost, like value, is both intrinsic and effectual. Intrinsic cost is that of getting the thing in the right way; effectual cost is that of getting the thing in the way we set about it. But intrinsic cannot be made a subject of analytical investigation, being only partially discoverable, and that by long experience. Effectual cost is all that the political economist can deal with; that is to say, the cost of the thing under existing circumstances and by known processes.

Cost (irrespectively of any question of demand or supply) varies with the quantity of the thing wanted, and with the number of persons who work for it. It is easy to get a little of some things, but difficult to get much; it is impossible to get some things with few hands, but easy to get them with many.

The cost and value of things, however difficult to determine accurately, are thus both dependent on ascertainable physical circumstances.(3)

But their price is dependent on the human will.

Such and such a thing is demonstrably good for so much. And it may demonstrably be bad for so much.

But it remains questionable, and in all manner of ways questionable, whether I choose to give so much.

This choice is always a relative one. It is a choice to give a price for this, rather than for that; — a resolution to have the thing, if getting it does not involve the loss of a better thing. Price depends, therefore, not only on the cost of the commodity itself, but on its relation to the cost of every other attainable thing.

Farther. The power of choice is also a relative one. It depends not merely on our own estimate of the thing, but on everybody else's estimate; therefore on the number and force of the will of the concurrent buyers, and on the existing quantity of the thing in proportion to that number and force. Hence the price of anything depends on four variables.

1.Its cost.
2. Its attainable quantity at that cost.
3. The number and power of the persons who want it.
4. The estimate they have formed of its desirableness.

(Its value only affects its price so far as it is contemplated in this estimate; perhaps, therefore, not at all.)

Now, in order to show the manner in which price is expressed in terms of a currency, we must assume these four quantities to be known, and the "estimate of desirableness", commonly called the Demand, to be certain. We will take the number of persons at the lowest. Let A and B be two labourers who "demand", that is to say, have resolved to labour for, two articles, a and b. Their demand for these articles (if the reader likes better, he may say their need) is to be absolute, existence depending on the getting these two things. Suppose, for instance, that they are bread and fuel in a cold country, and let a represent the least quantity of bread, and b the least quantity of fuel, which will support a man's life for a day. Let a be producible by an hour's labour but b only by two hours' labour; then the cost of a is one hour, and of b two (cost, by our definition, being expressible in terms of time). If, therefore, each man worked both for his corn and fuel, each would have to work three hours a day. But they divide the labour for its greater ease. Then if A works three hours, he produces 3a, which is one a more than both the men want. And if B works three hours, he produces only 1½b, or half of b less than both want. But if A works three hours and B six, A has 3a, and B has 3b, a maintenance in the right proportion for both for a day and a half; so that each might take a half a day's rest. But as B has worked double time, the whole of this day's rest belongs in equity to him. Therefore, the just exchange should be, A, giving two a for one b, has one a and one b; — maintenance for a day. B, giving one b for two a, has two a and two b; — maintenance for two days.

But B cannot rest on the second day, or A would be left without the article which B produces. Nor is there any means of making the exchange just, unless a third labourer is called in. Then one workman, A, produces a, and two, B and C, produce b; — A, working three hours, has three a; — B, three hours, 1½b;— C, three hours, 1½b. B and C each give half of b for a, and all have their equal daily maintenance for equal daily work.

To carry the example a single step farther, let three articles, a, b, and c, be needed.

Let a need one hour's work, b two, and c four; then the day's work must be seven hours, and one man in a day's work can make 7a, or 3½b, or 1¾c. Therefore one A works for a, producing 7a; two B's work for b, producing 7b; four C's work for c, producing 7c.

A has six a to spare, and gives two a for one b, and four a for one c. Each B has 2½b to spare, and gives ½b for one a, and two b for one c. Each C has ¾ of c to spare, and gives ½c for one b, and ¼ of c for one a. And all have their day's maintenance.

Generally, therefore, it follows that, if the demand is constant, the relative prices of things are as their costs, or as the quantities of labour involved in production.

Then, in order to express their prices in terms of a currency, we have only to put the currency into the form of orders for a certain quantity of any given article (with us it is in the form of orders for gold), and all quantities of other articles are priced by the relation they bear to the article which the currency claims.

But the worth of the currency itself is not in the slightest degree founded more on the worth of the article for which the gold is exchangeable. It is just as accurate to say, "So many pounds are worth an acre of land", as "An acre of land is worth so many pounds". The worth of gold, of land, of houses, and of food, and of all other things, depends at any moment on the existing quantities and relative demands for all and each; and a change in the worth of, or demand for, any one, involves an instantaneously correspondent change in any one, worth, and demand for, all the rest — a change as inevitable and as accurately balanced (though often in its process as untraceable) as the change in volume of the outflowing river from some vast lake, caused by change in the volume of the inflowing streams, though no eye can trace, no instrument detect motion either on its surface, or in the depth.

Thus, then, the real working power or worth of the currency is founded on the entire sum of the relative estimates formed by the population of its possessions; a change in this estimate in any direction (and therefore every change in the national character), instantly alters the value of money, in its second great function of commanding labour. But we must always carefully and sternly distinguish between this worth of currency, dependent on the conceived or appreciated value of what it represents, and the worth of it, dependent on the existence of what it represents. A currency is true or false, in proportion to the security with which it gives claim to the possession of land, house, horse, or picture; but a currency is strong or weak, worth much or worth little, in proportion to the degree of estimate in which the nation holds the house, horse, or picture which is claimed. Thus the power of the English currency has been, till of late, largely based on the national estimate of horses and of wine: so that a man might always give any price to furnish choicely his stable, or his cellar, and receive public approval therefore: but if he gave the same sum to furnish his library, he was called mad, or a Bibliomaniac. And although he might lose his fortune by his horses, and his health or life by his cellar, and rarely lost either by his books, he was yet never called a Hippomaniac nor an Oinomaniac; but only Bibliomaniac, because the current worth of money was understood to be legitimately founded on cattle and wine, but not on literature. The prices lately given at sales for pictures and MSS. indicate some tendency to change in the national character in this respect, so that the worth of the currency may even come in time to rest, in an acknowledged manner, somewhat on the state and keeping of the Bedford missal, as well as on the health of Caractacus or Blink Bonny; and old pictures be considered property, no less than old port. They might have been so before now, but it is more difficult to choose the one than the other.

Now, observe, all these sources of variation in the power of the currency exist wholly irrespective of the influences of vice, indolence, and improvidence. We have hitherto supposed, throughout the analysis, every professing labourer to labour honestly, heartily, and in harmony with his fellows. We have now to bring farther into the calculation the effects of relative industry, honour, and forethought, and thus to follow out the bearings of our second inquiry: Who are the holders of the Store and Currency, and in what proportions?

This, however, we must reserve for our next paper, — noticing here only that, however distinct the several branches of the subject are, radically, they are so interwoven in their issues that we cannot rightly treat any one, till we have taken cognisance of all. Thus the quantity of the currency in proportion to number of population is materially influenced by the number of the holders in proportion to the non-holders; and this again by the number of holders of goods. For as, by definition, the currency is a claim to goods which are not possessed, its quantity indicates the number of claimants in proportion to the number of holders; and the force and complexity of claim. For if the claims be not complex, currency as a means of exchange may be very small in quantity. A sells some corn to B, receiving a promise from B to pay in cattle, which A then hands over to C, to get some wine. C in due time claims the cattle from B; and B takes back his promise. These exchanges have, or might have been, all effected with a single coin or promise; and the proportion of the currency to the store would in such circumstances indicate only the circulating vitality of it — that is to say, the quantity and convenient divisibility of that part of the store which the habits of the nation keep in circulation. If a cattle-breeder is content to live with his household chiefly on meat and milk, and does not want rich furniture, or jewels, or books, — if a wine — and corn-grower maintains himself and his men chiefly on grapes and bread; — if the wives and daughters of families weave and spin the clothing of the household, and the nation, as a whole, remains content with the produce of its own soil and the work of its own hands, it has little occasion for circulating media. It pledges and promises little and seldom; exchanges only so far as exchange is necessary for life. The store belongs to the people in whose hands it is found, and money is little needed either as an expression of right, or practical means of division and exchange.

But in proportion as the habits of the nation become complex and fantastic (and they may be both, without therefore being civilized), its circulating medium must increase in proportion to its store. If everyone wants a little of everything, — if food must be of many kinds, and dress of many fashions, — if multitudes live by work which; ministering to fancy, has its pay measured by fancy, so that large prices will be given by one person for what is valueless to another, — if there are great inequalities of knowledge, causing great inequalities of estimate, — and finally, and worst of all, if the currency itself, from its largeness, and the power which the possession of it implies, becomes the sole object of desire with large numbers of the nation, so that the holding of it is disputed among them as the main object of life: — in each and all these cases, the currency enlarges in proportion to the store, and, as a means of exchange and division, as a bond of right, and as an expression of passion, plays a more and more important part in the nation's dealings, character, and life.

The Law Of Property
Against which part, when, as a bond of Right, it becomes too conspicuous and too burdensome, the popular voice is apt to be raised in a violent and irrational manner, leading to revolution instead of remedy. Whereas all possibility of Economy depends on the clear assertion and maintenance of this bond of right, however burdensome. The first necessity of all economical government is to secure the unquestioned and unquestionable working of the great law of Property — that a man who works for a thing shall be allowed to get it, keep it, and consume it, in peace; and that he who does not eat his cake to-day, shall be seen, without grudging, to have his cake to-morrow. This, I say, is the first point to be secured by social law; without this, no political advance, nay, no political existence, is in any sort possible. Whatever evil, luxury, iniquity, may seem to result from it, this is nevertheless the first of all Equities; and to the enforcement of this, by law and by police-truncheon, the nation must always primarily set its mind — that the cupboard door may have a firm lock to it, and no man's dinner be carried off by the mob, on its way home from the baker's. Which, thus fearlessly asserting, we shall endeavour in the next paper to consider how far it may be practicable for the mob itself, also, in due breadth of dish, to have dinners to carry home.

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