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<body>
<div>*** START OF THE PROJECT GUTENBERG EBOOK 62407 ***</div>

<div class="center wspace vspace">

<h1>
<span class="small">THE</span><br />
MEASURE OF VALUE</h1>

<p class="p1 b2">STATED AND ILLUSTRATED,</p>

<p class="p2 smaller">WITH</p>

<p class="p2">AN APPLICATION OF IT TO THE ALTERATIONS IN<br />

THE VALUE OF THE ENGLISH CURRENCY<br />

SINCE 1790.</p>

<p class="p1 b1 xxlarge bold">—♦—</p>

<p class="p2 larger bold"><span class="smcap">By the Rev.</span> T. R. MALTHUS, M.A. F.R.S.</p>

<p class="p1 small">PROFESSOR OF HISTORY AND POLITICAL ECONOMY IN THE<br />
EAST INDIA COLLEGE, HERTFORDSHIRE.</p>

<p class="p2"><span class="larger">LONDON:</span><br />
JOHN MURRAY, ALBEMARLE STREET.<br />
<span class="smaller">MDCCCXXIII.</span>
</p>
</div>

<div class="newpage p12 in12 narrow">
<p class="center small"><span class="bt">London: Printed by C. Roworth,</span><br />
<span class="bb in2 l2">Bell-yard, Temple-bar.</span></p>
</div>

<hr class="chap" />

<div class="chapter">
<p><span class="pagenum" id="Page_1">1</span></p>

<h2 class="nobreak" id="THE_MEASURE_OF_VALUE">THE MEASURE OF VALUE.</h2>
</div>

<p class="in0 first">It is generally allowed that the word value, in
common language, has two different meanings;
one, value in use, the other, value in exchange;
the first expressing merely the usefulness of an
object in supplying the most important wants
of mankind, without reference to its power of
commanding other objects in exchange; and
the second expressing the power of commanding
other objects in exchange, without reference to
its usefulness in supplying the most important
wants of mankind.</p>

<p>It is obviously value in the last sense, not
the first, with which the science of Political
Economy is mainly concerned.</p>

<p>But the power of one object to command
another in exchange, or in other words the
power of purchasing, may obviously arise either
from causes affecting the object itself, or the
commodities against which it is exchanged.</p>

<p>In the one case, the value of the object itself<span class="pagenum" id="Page_2">2</span>
may properly be said to be affected; in the other,
only the value of the commodities which it purchases;
and if we could suppose any object always
to remain of the same value, the comparison of
other commodities with this one would clearly
show, which had risen, which had fallen, and
which had remained the same. The value of
any commodity estimated in a measure of this
kind might with propriety be called its absolute
or natural value; while the value of a commodity
estimated in others which were liable to
variation, whether they were one or many,
could only be considered as its nominal or
relative value, that is, its value in relation to
any particular commodity, or to commodities
in general.</p>

<p>That a correct measure of the power of purchasing
generally, or of commanding such important
commodities as the necessaries and conveniences
of life, in whatever way such power might
arise, would be very desirable, cannot for a moment
be doubted, as it would at once enable us
to form a just estimate and comparison of wages,
salaries, and revenues, in all countries, and at all
periods. But when we consider what such a
measure implies, we must feel certain that no
one object exists, or can be supposed to exist,<span class="pagenum" id="Page_3">3</span>
with such qualities as would fit it to become a
standard measure of this kind. It would imply
steadiness of value, not merely in one object,
but in a great number, which is contrary to all
theory and experience.</p>

<p>Whether there is any object, which, though
it cannot measure the power of purchasing generally
under the varying facilities of production
and varying state of the demand and supply by
which different commodities are affected, may
be a correct measure of absolute and natural
value as above described, is the specific object
of the present inquiry.</p>

<p>It follows directly, from the principles of
Adam Smith, that the conditions of the supply
of the great mass of commodities are, that
the returns should be sufficient to pay the
wages, profits and rents necessary to their
production. If these payments be made in
money at the ordinary rates of the time, they
form what Adam Smith calls their natural
prices. Money however we know is variable.
But if for money we substitute the objects necessary
to give the producer the same power
of production and accumulation as the natural
money prices would have commanded, such returns
maybe considered as the natural conditions
of the supply of commodities, and may with propriety<span class="pagenum" id="Page_4">4</span>
be denominated their natural value, in
contradistinction to their natural price.</p>

<p>Of these three conditions of supply, or elements
of natural value, the two first are obviously
the most important. They are not only
the sole conditions of supply in those early
stages of society before the appropriation of
land has taken place, but they continue to be
so in reference to large classes of objects in the
most advanced stages of improvement; and it
is now generally acknowledged that even the
main vegetable food of an improving country,
which is the foundation of wages, must necessarily
be of the same value as that part of the
produce which is almost exclusively resolvable
into wages and profits, and pays very little rent.</p>

<p>We cannot therefore essentially err in assuming
for the present that the natural value of
objects in their more simple forms is composed
of labour and profits,<a id="FNanchor_1" href="#Footnote_1" class="fnanchor">A</a> and the effect of any portion
of rent, or of other ingredients which are
sometimes added to these elements, may be
allowed for subsequently.</p>

<p>We may also consider as a postulate which will<span class="pagenum" id="Page_5">5</span>
be readily granted, that any given quantity of
labour must be of the same value as the wages
which command it, or for which it actually exchanges.</p>

<p>Of the two main elements of value, labour
and profits, the former, particularly if we include,
as we ought to do, accumulated as well
as immediate labour, is much the largest and
most powerful.</p>

<p>The great instrument of production is labour.
There is no commodity nor implement used to
assist manual exertions in which it does not
enter as a condition of supply, and very few in
which it does not enter very largely. If in the
production of commodities and of the implements
which assist in this production, no other
ingredient were required than labour, and the
interval between the exertion of the labour and
its remuneration in the completed commodity
were so inconsiderable that it might be entirely
disregarded, it is certain that, as the same quantity
of labour would have a constant tendency to
produce commodities in the same relative proportion
to each other, and to the demand for
them, they would be found on an average to
exchange with each other according to the<span class="pagenum" id="Page_6">6</span>
quantity of labour which had been employed
to obtain them.</p>

<p>Thus if ten mackerel were, on an average,
obtained by the same quantity of labour as two
soals, it would be necessary, in order to continue
the supply of both in the market, that the
value of a soal should be five times as great in
the power of purchasing similar commodities,
as the value of a mackerel; because if it were
less, none would apply themselves to the catching
of soals; and though it is quite certain that
at any given period the relative value of soals
and mackerel would be exclusively determined
by the state of the demand and supply of each;
and that they would, in consequence, often vary
very considerably; yet it is as certain, that on
the supposition of the hypothesis being correct,
and that they both continued to be brought to
market, each would on an average be supplied
in such a quantity, compared with the demand
for it, that a soal would ordinarily exchange
for five mackerel, and the different quantities of
labour required to produce them would, in this
case, be a correct measure both of their natural
and relative value in exchange.</p>

<p>Now supposing that the skill and power of
the labourers were so to increase, that, in the<span class="pagenum" id="Page_7">7</span>
same time and with the same personal exertions,
they could obtain three soals and fifteen
mackerel, it is obvious that the relative value of
soals to mackerel would remain the same, but
they would both have essentially altered their
value compared with all those commodities
which still required the same quantity of labour
to produce the same supply of them. With
regard to such commodities, soals and mackerel
would have become of less value, and consequently
they would have become of less value
with regard to a given quantity of labour. The
correct language in this case would be, not that
labour had become dearer, but that soals and
mackerel had become cheaper. And if the same
increase of skill and power could be conceived to
extend to all other commodities, and all commodities
were similarly circumstanced as to their
mode of production and bringing to market; it
cannot be doubted, that though they might
retain the same relative value compared with
each other, they would all become more plentiful
with regard to the wants of the society,
and any given quantity of labour. And the
correct language would still be, not that labour
had become dearer, but that all commodities had
become cheaper. This fall would be a fall in
the absolute and natural value of commodities;<span class="pagenum" id="Page_8">8</span>
and as long as labour alone was concerned in
their production, and they were brought to
market immediately, it would be allowed that
the different quantities of labour employed upon
them would be a correct measure both of their
relative value compared with each other, and of
their absolute and natural value in reference to
the conditions of their supply. Their natural
values would be exactly represented by the
different quantities of labour worked up in
them; while their natural prices would be these
different quantities of labour estimated in money,
according to the money price of the labour
employed.</p>

<p>But at a very early period of society a considerable
interval must elapse between the exertion
of some sorts of labour and the completion
of the article on which they are employed.
And the next simplest form of production, beyond
the result of mere labour, is that, where,
in addition to the labour employed directly on
the commodity and on the simple tools necessary
to its production, the condition of the
supply requires that a certain compensation be
made in the final remuneration for the time which
has elapsed from the period of the advances of
the labour, to the period when the labourer, or
capitalist, can be remunerated. This compensation,<span class="pagenum" id="Page_9">9</span>
which equally applies to the formation of
the capital, as to the products to be obtained
by it, is the profit which must be paid on the
advances of the labour, and is absolutely necessary
to the encouragement of such advances.</p>

<p>But in this state of things commodities would
cease to exchange with each other according
to the quantity of labour employed upon them.
Some commodities, on which the same quantity
of accumulated and immediate labour had been
employed, would be of a different exchangeable
value, on account of the different quantity of
profits which had entered into their composition;
while others, on which different quantities
of accumulated and immediate labour had been
employed, might be of the same exchangeable
value, on account of the greater quantity of
profits of which they were composed being
balanced by the smaller quantity of labour advanced
to produce them.</p>

<p>In the earliest stages of society accumulations
of capital are very rare, and profits may
be extremely high, perhaps forty or fifty per
cent. If under these circumstances the construction
of a war canoe were to take two years
before it were fit for use, it is evident that its
value in exchange would be prodigiously enhanced
by such profits. Compared with a<span class="pagenum" id="Page_10">10</span>
number of deer which might have cost exactly
the same quantity of accumulated and immediate
labour to bring to market, the canoe would
be seventy or eighty per cent. of greater value;
and on the fall of profits from forty or fifty per
cent. to ten per cent. in the progress of society,
an object of this kind might fall in value sixty
or seventy per cent. compared with such objects
as deer or fish, without any difference in the
quantity of labour employed upon either.</p>

<p>It is observed by Adam Smith that corn is
an annual crop, butchers’ meat a crop which
requires four or five years to grow; and consequently,
if we compare two quantities of corn
and beef which are of equal exchangeable
value, it is certain that a difference of three or
four additional years profit at fifteen per cent.
upon the capital employed in the production of
the beef would, exclusively of any other considerations,
make up in value for a much smaller
quantity of labour, and thus we might have two
commodities of the same exchangeable value,
while the accumulated and immediate labour of
the one was forty or fifty per cent. less than
that of the other. This is an event of daily
occurrence in reference to a vast mass of the
most important commodities in the country;
and if profits were to fall from fifteen per cent.<span class="pagenum" id="Page_11">11</span>
to eight per cent. the value of beef compared
with corn would fall above twenty per cent.</p>

<p>When commodities are obtained by the assistance
of a large proportion of fixed capital of
a very durable nature, the advances are only
consumed in part, and the whole produce of the
accumulated and immediate labour employed
must be considered as composed of the new
produce obtained, together with the remainder
of the fixed capital which is unconsumed.<a id="FNanchor_2" href="#Footnote_2" class="fnanchor">B</a> In
reference to the separate value of the new
produce, this will be the same as if to the
labour actually worked up in such produce
were added the profits of the whole capital
advanced. It sometimes happens that the proportion
of value arising from these profits is
very considerable; and commodities so produced
will necessarily have much less labour
worked up in them, and will be much more
affected in their value by a rise or fall of profits,
than those which are composed mainly of immediate
labour.</p>

<p>Thus, if a commodity were produced by the
aid of accumulated labour in machinery worth
£2,000, the annual wear and tear of which was<span class="pagenum" id="Page_12">12</span>
one-twentieth, or £100, and the labour employed
on cheap materials and in the working of the
machinery were worth £200, while profits were
20 per cent. then the value of the labour worked
up in the commodity would be £100 added to
£200, equal to £300; and the whole capital advanced
being £2,300, the profits upon it would
be £460, which, added to £300 would make the
whole value of the produce £760. Compared
with a commodity of equal value which had
been produced without fixed capital, and had
yet been brought to market in the same time
and with the same rate of profits, it would contain
less than half of the labour worked up in
it; while, if profits were to fall from 20 per
cent. to 10 per cent. the value of the commodity
would fall in the proportion of from £760 to
£530, or, if profits had been 10 per cent. and
were to rise to 20 per cent. the value of the
commodity would rise in the proportion of from
£530 to £760, or above 42 per cent., without any
change in the quantity of labour employed.<a id="FNanchor_3" href="#Footnote_3" class="fnanchor">C</a></p>

<p>It must be allowed, then, that whenever two<span class="pagenum" id="Page_13">13</span>
elements are necessary to the supply, and
enter into the composition of commodities, their
value cannot depend exclusively upon one of
them, except by accident, or when the other
can be considered as a given or common quantity.
But it is universally acknowledged, that
the great mass of commodities in civilized and
improved countries is made up at the least of
two elements—labour and profits; consequently,
the exchangeable value of commodities into
which these two elements enter as the conditions
of their supply, will not depend exclusively
upon the quantity of labour employed
upon them, except in the very peculiar cases
when both the returns of the advances and the
proportions of fixed and circulating capitals
are exactly the same.</p>

<p>It cannot, then, be said with any thing like
an approximation towards correctness, that the
labour worked up in commodities is the measure
of their exchangeable value.</p>

<p>But if to the accumulated and immediate labour<span class="pagenum" id="Page_14">14</span>
worked up in commodities, we add the
profits upon the whole advances for the time
that they are advanced, we shall then make
the proper allowance for the other element of
value, and may expect to obtain a more accurate
measure. If we had estimated the value
of the labour advanced in money, or any other
medium, we should of course estimate the profits
in the same medium, and the natural price
of the commodity estimated in such medium,
would obviously be equal to the price of the
accumulated and immediate labour expended
on the commodity, together with the ordinary
profits estimated upon such advances. But if,
with a view to the natural conditions of supply,
we consider only the quantity of labour advanced,
without reference to any other medium, we
must of course estimate the profits in quantity
of labour also, which will give us an amount of
labour in proportion to which commodities will
be found to exchange with each other, just in
the same way as they would exchange with
each other according to the quantity of labour
employed on them, if labour had been the sole
ingredient which had entered into their composition.</p>

<p>Thus, if a hundred days labour were employed
upon a commodity, at two shillings a day, and<span class="pagenum" id="Page_15">15</span>
the average interval between the advance of such
wages and the period when the commodity could
be brought to sale were a year, and profits were
20 per cent. the price of the commodity would be
£12, while the price of a commodity which had
cost the same quantity of labour of the same kind,
and could be brought to market immediately,
would be only £10. And it is equally certain,
that, if putting money or any other medium of
exchange out of the question, we had estimated
the profits for a year upon the advances of the
hundred days labour actually employed, we
should obtain a quantity of labour which, compared
with the labour employed on the commodity
sold immediately, would be in the proportion
of 120 to 100, and expressing the relative
conditions of supply, would accurately
measure the rate at which the two commodities
obtained under these different circumstances
would exchange with each other.</p>

<p>It appears, then, that in the same country,
and at the same time, the exchangeable value of
those commodities which can be resolved into
labour and profits alone, would be accurately
measured by the quantity of labour which
would result from adding to the accumulated
and immediate labour actually worked up in
them the varying amount of the profits on all<span class="pagenum" id="Page_16">16</span>
the advances estimated in labour. But this
must necessarily be the same as the quantity of
labour which they will command, as appears
from the instances above stated, and will be
more fully shown farther on; and where the
precious metals may be considered for short
periods as of a uniform value, the conformity of
this measure with the proportions of money
prices at which commodities would be exchanging
all around us, might daily be brought to the
test of experience and be established beyond
the possibility of doubt.</p>

<p>It will be said, perhaps, that in the same
place, and at the same time, almost every commodity
may be considered as an accurate measure
of the relative value of others, and that
what is true of labour in this respect is true of
cloth, cotton, iron, or any other article. Any
two commodities which, at the same time, and
in the same place, will purchase or command
the same quantity of cloth, cotton, or iron, of
a given quality, will have the same relative
value, or will exchange with each other.</p>

<p>This will be readily granted, if we take the
same time and place exactly, and consider only
relative value; but not if either any latitude be
allowed as to time and place, or if we consider,
as it is our object to do, not merely relative, but<span class="pagenum" id="Page_17">17</span>
absolute and natural value. Cloth, cotton,
iron, and similar commodities, are subject to
vary most essentially in a single year, or even
month, so that the manufacturer who could obtain
for his goods the same quantity of cloth as
he could the year before, would be very little
likely to obtain the same quantity of other articles.
But even supposing that these articles
and the product of the capitalist were to continue
of the same relative value to each other,
he might still be quite unable to carry on his
business. The conditions of the supply of
commodities do not require that they should
retain always the same relative values, but that
each should retain its proper <em>natural</em> value, or
the means of obtaining those objects which will
continue to the producer the same power of
production and accumulation. If the advances
of capitalists consisted specifically in cloth, then
these advances would always have the effect
required in production; and as profits are calculated
upon the advances necessary to production,
whatever they may be, the quantity of cloth
advanced, with the addition of the ordinary
profits estimated also in quantity of cloth, would
represent both the natural and relative value of
the commodity. But the specific advances of
capitalists do not consist of cloth, but of labour;<span class="pagenum" id="Page_18">18</span>
and as no other object whatever can represent
a given quantity of labour, it is obvious that labour
stands quite alone in this respect, and that
it is the quantity of <em>labour</em> which a commodity
will command, and not the quantity of any
other commodity, which can represent the conditions
of its supply, or its natural value.<a id="FNanchor_4" href="#Footnote_4" class="fnanchor">D</a></p>

<p>It will be allowed, then,</p>

<p>First, that when commodities are obtained
by labour alone, and sold immediately, they
will, on an average, exchange with each other
according to the quantity of labour employed
upon them.</p>

<p>Secondly, that when profits are concerned,
and differ either in rate or quantity, commodities
can no longer exchange with each other,
according to the quantity of labour employed
upon them, except by accident.</p>

<p>Thirdly, that the quantity of accumulated
and immediate labour applied to their production,
must, in all the less complex cases, form<span class="pagenum" id="Page_19">19</span>
the advances on which profits may be correctly
calculated.</p>

<p>And, fourthly, that when profits are calculated
upon these advances, a quantity of labour
is obtained, according to which it is found,
by experience, that commodities do exchange
with each other in the same country; and,
further, that this quantity of labour not only
expresses correctly their value in exchange with
each other, but their absolute and natural value
in reference to the conditions of their supply.</p>

<div class="tb">* * * * *</div>

<p>In proceeding to consider what takes place
in different countries where the value of the
precious metals is very different, it will readily
be acknowledged, that the rate at which commodities
exchange with each other is not proportioned
to the labour which has been employed
upon them, with the addition of profits.
And it is quite certain, that they cannot be
proportioned to the quantity of labour alone
of which they are composed. We know, from
experience, that the commodities of different
countries are actually exchanged with each
other according to their money prices at the
time. These prices must be determined partly
by those natural elements of value which determine
the rate at which commodities exchange<span class="pagenum" id="Page_20">20</span>
with each other, and the natural conditions
of their supply in each country, and
partly by the different value of the precious
metals in different situations, which must necessarily
have a most powerful effect on the
rate at which foreign commodities are exchanged.</p>

<p>Knowing then the elements of the natural
and relative value of commodities in the same
country, if we knew also the difference in the
value of money in different countries, we
should know at once the rate at which the
commodities of different countries would exchange
with each other.</p>

<p>Now there is no supposition but one, relating
to the value of money in different countries,
which, combined with the natural elements of
the value of produce in each, would constitute
the present natural prices of commodities in
these countries, or the rates at which they
actually exchange with each other. This is
the supposition that the differences in the
value of money in different countries are proportioned
to the differences in the money
prices of agricultural labour.<a id="FNanchor_5" href="#Footnote_5" class="fnanchor">E</a></p>

<p>The conditions of the supply of an Indian<span class="pagenum" id="Page_21">21</span>
commodity are the advance and consumption
of a certain quantity of Indian labour, with
the profits on all the advances for the time
that they are employed. Thus, if for the
production of an Indian commodity, a fixed
capital consisting of accumulated labour and
profits, equal to 300 days, were advanced for
a year, and a quantity of accumulated and
immediate labour, consisting of the wear and
tear of the machinery, the materials to be
worked up, and direct labour, equal to 1500
days, were consumed on the commodity in
the same time, profits being 20 per cent., the
natural value of such commodity in India
would be equal to the 1500 days labour consumed,
with a profit of 20 per cent. upon
1800 days labour, which would amount to 1860
days labour.</p>

<p>If labour in India were fourpence a day, the
fixed money capital in this case would equal £5,
the labour advanced and consumed £25, and
the labour consumed, together with the profits
on the whole advances, would be equal to £31.<span class="pagenum" id="Page_22">22</span>
And this would evidently be the natural price
at which the commodity would circulate, and
according to which it would exchange with any
foreign commodity brought to India.</p>

<p>On the same principle, if for the production
of an English commodity, 300 days labour
were advanced in fixed capital for a year, and
1500 days labour were consumed on the commodity
in the same time, while profits were 10
per cent., the natural value of such commodity,
or the conditions of its supply, would be 1500
days labour, with a profit of 10 per cent. upon
1800, which together would equal 1680: and
if labour were two shillings a day, the natural
price at which the commodity would circulate,
and according to which it would exchange with
any foreign commodity brought to England,
would be £168. This prodigious difference in
the natural prices of two commodities in England
and India, the natural values of which in
each country were nearly the same, could only
arise from a difference in the value of money
occasioned by the very superior efficiency of
English labour in the purchase of the precious
metals, owing to the energy, skill, and situation
of English labourers and capitalists, compared
with those of India. But in estimating this
difference in the value of money in England and<span class="pagenum" id="Page_23">23</span>
India, it is quite obvious, that if, after ascertaining
the natural conditions of the supply of a
commodity in each country, we were to estimate
the value of money either by its general
power of purchasing, by a mean between corn
and labour,<a id="FNanchor_6" href="#Footnote_6" class="fnanchor">F</a> or by the quantity of labour alone
which had been actually employed in bringing
the money from the mine to the market, or by
any other measure whatever, except the labour
which it would command, we should not account
for the natural prices which are found
actually to prevail in the two countries, and
according to which Indian and English commodities
are found to exchange with each other
by experience.</p>

<p>Consequently, as no other supposition will
suit the actual phenomena, and as it has already
appeared that the value of commodities in the
same country is determined by the quantity of
labour which they will command, we may
safely conclude that the value of the precious
metals in different countries is determined by
the same measure, or by the different quantities
of common agricultural labour, taking the average<span class="pagenum" id="Page_24">24</span>
of summer and winter wages, which a
given portion of them will command.</p>

<div class="tb">* * * * *</div>

<p>When we come to consider the varying value
of commodities at distant periods in the same
country, or the rise or fall of produce in the progress
of cultivation and improvement, we are
necessarily deprived of the test of an actual
exchange. We know, however, that at different
periods in the same country both the value of
the precious metals, and the rate of profits and
corn wages, may alter most essentially.</p>

<p>The effect of the varying value of the precious
metals, when we have once obtained a
measure of value, will be easily estimated.
The most important point at present is, to consider
the effects which must be produced upon
the value of commodities in the progress of
society, by the changes which necessarily take
place in the profits of stock and the corn wages
of labour.</p>

<p>On the supposition of high profits at an early
period of society, and a considerable fall of
them subsequently, how are we to measure and
compare the value of commodities at these different
periods? With regard to those which
had continued to cost the same quantity of
accumulated and immediate labour, we could
not say that they were of the same value, unless<span class="pagenum" id="Page_25">25</span>
we were prepared to assert that the value
of commodities is determined solely by the
labour employed upon them, not only when
the rate of profits is the same but when it is
totally different;<a id="FNanchor_7" href="#Footnote_7" class="fnanchor">G</a> a proposition which no one
can venture to assert in the case of foreign
commodities, and which there is as little reason
to assert in comparing the commodities of distant
periods.</p>

<p>If profits were 50 per cent. five hundred
years ago, and are 10 per cent. now, the question
is, whether a piece of cloth which had cost
the same quantity of labour at these different
periods would be of the same value. By the
supposition it was composed of a greater quantity
of profits in the earlier period, and having
cost the same quantity of labour, we should
naturally conclude that it would be of a higher
value.</p>

<p>It is said, however, that, although it cost the
same quantity of labour, yet that the labour in
the former period was of much less value,<span class="pagenum" id="Page_26">26</span>
which would counterbalance the greater quantity
of profits, and leave the value obtained by
the same quantity of labour the same. But
when we are thus referred to the lower value
of labour, the principle of compensation which
had before been applied is quite forgotten.
The corn which pays the labourer is indeed
obtained by a smaller quantity of labour, on
account of the superior fertility of the soil from
which it is raised, but it is sold as the cloth is
sold, at a profit of 50 per cent.; and if it be
said that, in the case of the cloth, the low value
of wages which is supposed to be the result of
superior fertility counteracts the high profits
and keeps the value of cloth the same, surely it
may be said, in the case of the corn which pays
the wages, that the smaller quantity of labour
necessary to produce it is made up by the
greater rate of profits at which it is sold, and
the value of wages is thus kept the same.</p>

<p>If 100 quarters of corn be obtained in the
different periods of society by the labour of a
different number of men, such as 7, 8 and 9,
each paid at the rate of 10 quarters a year, the
value of the 100 quarters of corn, or the value
of the wages of any one of the men employed,
estimated in the labour advanced, with the<span class="pagenum" id="Page_27">27</span>
addition of the profits upon such advances,
must obviously always be the same.</p>

<p>At an early period of society, when the soil
was very fertile and the labour of 7 men only
was necessary to produce 100 quarters of corn
on land which paid little or no rent, the advances
in labour being 7 men, or in corn 70
quarters, and the return 100 quarters, the rate
of profits would be 42-6/7 per cent., and the advances
of the labour of 7 men increased by a
profit of 42-6/7 would equal the labour of 10 men,
or the quantity of labour which the whole
return would command. At a more advanced
period, when the last land taken into cultivation
was less fertile, and the labour of 8 men was
necessary to obtain the return of 100 quarters,
the advances in labour being 8 men, or in corn
80 quarters, the rate of profits would be 25 per
cent., and the labour of 8 men increased by 25
per cent. would exactly equal the labour of 10
men. On the same principle, if at a still later
period 9 men were necessary to produce the
100 quarters, the rate of profits would be 11-1/9
per cent., and the quantity of labour employed
increased by the profits would still be equal to
the labour of 10 men.</p>

<p>It appears then that when the labourer continues<span class="pagenum" id="Page_28">28</span>
to be paid the same corn wages, the
value of the whole corn produce, or the value
of each man’s wages estimated in the usual
way in labour and profits, must obviously remain
constant, and that it must be most erroneous
to infer that labour rises in value because
it requires more labour in the progress of cultivation
to produce the wages of 10 men or one
man, if at the same time it requires such a
diminished value of profits as exactly to balance
it.</p>

<p>But in the progress of cultivation, the corn
wages of labour do not continue the same, and
corn must consequently be liable to great variation
of value, both on account of temporary
variations in the state of the supply compared
with labour, and on account of the more permanent
state of the demand and supply of corn
compared with labour, owing to the increasing
difficulty of production.</p>

<p>It may be laid down, however, as a general
proposition, liable to no exception, that when
the value of any produce can be resolved into
labour and profits, then as the <em>proportion</em> of such
produce which goes to labour increases, the
proportion which goes to profits must decrease
in the same degree, and as the <em>proportion</em> which<span class="pagenum" id="Page_29">29</span>
goes to labour decreases, the proportion which
goes to profits must increase in the same degree.<a id="FNanchor_8" href="#Footnote_8" class="fnanchor">H</a></p>

<p>Thus if ¾ of the produce, whatever that produce
may be, go to labour, ¼ will remain for
profits; if ⅚ go to labour, ⅙ will remain for profits;
and if ½ only go to labour, ½ will remain
for profits.</p>

<p>In reference to corn or commodities in general,
compared with each other at different
periods in the progress of cultivation, it is obvious
that neither an increase in the quantity of
labour required to produce them, nor an increase
in the quantity of produce awarded to
the labourer, can ever determine the proportion<span class="pagenum" id="Page_30">30</span>
of the whole produce which goes to labour and
affect profits accordingly; because if the quantity
of labour required to produce them increases,
the effect of this upon profits may be
totally destroyed by a diminution at the same
time of the quantity of produce awarded to the
labourer; or if a larger quantity of produce be
awarded to the labourer, it may be only in consequence
of a smaller quantity of labour being
necessary to obtain the same produce, in which
case profits may remain undiminished, or even
rise, at the same time that corn wages rise.</p>

<p>But if instead of referring to commodities
generally, we refer to the variable quantity of
produce which, under different circumstances,
forms the wages of a given number of labourers,
we shall find that the variable quantity of
labour required to obtain this produce will
always exactly agree with the proportion of the
whole produce which goes to labour; because,
however variable may be the amount of this
produce, it will be divided into a number of
parts equal to the number of labourers which it
will command, and as the first set of labourers
who produced these wages may be considered
as having been paid at the same rate as the
second set, whose labour the produce commands;
it is obvious that if to obtain the produce<span class="pagenum" id="Page_31">31</span>
which commands ten labourers, 6, 7, 8,
or 9 labourers be required, the proportion of
the produce which goes to labour, in these different
cases, will be 6/10, 7/10, 8/10, or 9/10, leaving
4/10, 3/10, 2/10, or 1/10, for profits.</p>

<p>It is impossible to refer what is proposed as
a standard to any <em>other</em> measure, because, in
that case, the other measure would be the standard.
But if it can be shown, that any object,
the value of which is composed of two elements,
is of such a nature that while the value of one
of these elements increases, the value of the
other decreases exactly in the same degree,
such object must be of a constant value. If
the values of two variable quantities, <i>X</i> and <i>Y</i>,
be equal to the constant value <i>A</i>, it follows
that, in all the variations to which <i>X</i> and <i>Y</i> are
subject, whatever value <i>X</i> gains must be lost
by <i>Y</i>, and whatever value <i>Y</i> gains must be lost
by <i>X</i>. The converse of this proposition must
also be true, that is, if the value of any object
be made up of the variable values of two other
objects, and it can be shown that, from the
nature of these two objects, whatever increase
of value one of them gains, must necessarily be
lost by the other, and vice versâ, it follows that
the value of the object, to which the two others
are equal, must be constant. Now it has appeared<span class="pagenum" id="Page_32">32</span>
that the variable values of the labour
and of the profits which compose the value of
the variable quantity of corn awarded in wages
to a given number of labourers, must necessarily
be such, that, as the quantity of labour
required to produce them increases, either from
difficulty of production or from the greater
quantity of produce awarded to the labourer,
all the value thus gained by labour is lost by
profits; and as the quantity of labour required
to produce them is diminished, either by facility
of production or the small quantity of
produce awarded to the labourer, all the value
which is gained by profits is lost by labour.
Consequently, the value of the variable quantity
of produce which, under different circumstances,
forms the wages of a given number of
men, being composed of the values of the two
elements, labour and profits, varying as above
described, must be constant, and may therefore,
with propriety, be proposed as a standard
measure.</p>

<p>I have entered at some length into the details
which show the necessary constancy of the
value of labour, on account of its great importance;
but, in reality, it follows directly
from the manner in which the natural value of
commodities and of wages is estimated, that<span class="pagenum" id="Page_33">33</span>
when the labourer earns a greater or a smaller
quantity of money or necessaries, it is not the
value of labour which varies, but, as Adam
Smith says, “it is the goods which are cheap
in the one case and dear in the other.”</p>

<p>If labour alone, without any capital, were
employed in procuring the fruits of the earth,
the greater facility of procuring one sort of
them compared with another, would not, it is
acknowledged, alter the value of labour, or the
exchangeable value of the whole produce obtained
by a given quantity of exertion. We
should, without hesitation, allow that the difference
was in the cheapness or dearness of the
produce, not of the labour.</p>

<p>In the same manner it will follow, that when
capital and profits enter into the computation
of value, and the demand for labour varies, the
high or low reward of labour estimated in produce,
implies a change in the value of the produce,
not a change in the value of the labour.</p>

<p>If the increased reward of the labourer takes
place without an increase of produce, this cannot
happen without a fall of profits, as it is a
self-evident truth, that given the quantity of the
produce to be divided between labour and
profits, the greater the portion of it which
goes to labour the less will be left for profits.
What then will be the result? It will appear<span class="pagenum" id="Page_34">34</span>
that the value of the produce has fallen, and the
value of wages, or of labour, will have remained
the same. To obtain any given portion of the
produce the same quantity of labour is necessary
as before, but profits being diminished,
the value of the produce is decreased; while
this diminution of profits in reference to the
value of wages is just counterbalanced by the
increased quantity of labour necessary to procure
the increased produce awarded to the labourer,
leaving the value of labour the same as before.</p>

<p>Perhaps in the case just supposed, the result
may be said to be occasioned by a fall in the
value of the produce, without what could properly
be called an increased demand for labour.
But if we suppose that a considerable number
of labourers were sent out of the country, or
swept off by a plague, there could then be no
doubt of a great demand for labour, yet the result
would be similar. A larger quantity of
produce would necessarily be awarded to the
labourer, and profits would fall. A given quantity
of produce obtained by the same quantity
of labour as before, would fall in value on account
of the fall of that part of its value which
consisted of profits, while the fall of profits on
the increased wages would be balanced by the
increased labour necessary to obtain them.</p>

<p>If instead of labourers being sent out of the<span class="pagenum" id="Page_35">35</span>
country, labourers were imported, the result
would be just opposite. A smaller quantity of
produce would be awarded to the labourer and
profits would rise. A given quantity of produce,
which had been obtained by the same
quantity of labour as before, would rise in value
on account of the rise of profits, while this rise
of profits, in reference to the wages of the
labourer, would be balanced by the smaller
quantity of labour necessary to obtain the diminished
produce awarded to the labourer.</p>

<p>In the former case of the demand for labour,
it appeared that the greater earnings of the
labourer were occasioned, not by a rise in the
value of labour, but by a fall in the value of
the produce for which the labour was exchanged.
And in the latter case of the abundance
of labour, it appeared that the small
earnings of the labourer were occasioned by a
rise in the value of the produce, and not by a
fall in the value of the labour.</p>

<p>The result would be similar, if instead of
supposing the same quantity of produce to be
obtained by the same quantity of labour, we
were to suppose the greatest variations to take
place in the fertility of the soil, and, consequently,
in the productive power of labour.<span class="pagenum" id="Page_36">36</span>
In all cases it would still be found that, as
Adam Smith says, it is the produce which varies
in value, not the labour for which it will exchange;
and if money were obtained in the
way in which its value would unquestionably
be the most constant, all these variations would
appear in the money prices of commodities,
whenever the demand for labour varied; while
the money price of a given quantify of labour
would remain the same.<a id="FNanchor_9" href="#Footnote_9" class="fnanchor">I</a></p>

<p>The following Table will further illustrate
the necessary constancy in the value of labour,
and some of its most important results, in a
clearer manner and in a shorter compass than
if each case were taken separately.</p>

<p>The first column represents the varying fertility
of the soil, by the varying quantity of
corn which can be obtained by the labour of a
given number of men.</p>

<p>The second column represents the yearly<span class="pagenum" id="Page_37">37</span>
corn wages of each labourer, determined by
the state of the demand and supply of produce
compared with labour.</p>

<p>The third column represents the variable
advances of produce, in the form of corn wages,
which, according to the rate at which the labourers
are paid, are necessary to obtain the
produce of the first column.</p>

<p>The fourth column represents the rate of
profits determined in the common way, by the
proportion which the excess of the produce in
the first column above the produce paid to the
labourers in the third, bears to these advances.</p>

<p>The fifth and sixth columns represent the
quantity of labour required to produce the
varying corn wages of the given number of
men, with the profits estimated also in quantity
of labour; and the reader will see at once that
these two columns must necessarily, from the
manner in which profits and wages are estimated,
make up the constant quantity and
value of labour which appears in the seventh
column.</p>

<p>The eighth and ninth columns show the value
of a given quantity of corn, and the value of the
produce of a given number of men under the
varying circumstances supposed.</p>

<p class="p2 center"><i>Table illustrating the invariable Value of Labour and its Results.</i><span class="pagenum" id="Page_38">38</span></p>

<div class="blockquot hang">

<p>KEY:</p>

<p>1.  Quarters of Corn produced by Ten Men, of varying Fertility of the Soil.</p>

<p>2.  Yearly Corn Wages to each Labourer, determined by the Demand and Supply.</p>

<p>3.  Advances in Corn Wages, or variable Produce commanding the Labour of Ten Men.</p>

<p>4.  Rate of Profits under the foregoing Circumstances.</p>

<p>5.  Quantity of Labour required to produce the Wages of Ten Men under the foregoing Circumstances.</p>

<p>6.  Quantity of Profits on the Advances of Labour.</p>

<p>7.  Invariable Value of the Wages of a given Number of Men.</p>

<p>8.  Value of 100 Quarters of Corn under the varying Circumstances supposed.</p>

<p>9.  Value of the Product of the Labour of Ten Men under the Circumstances supposed.</p></div>

<table class="wide" summary="Value of Labor">
  <tr>
    <td class="tdc bx">1.</td>
    <td class="tdc bx">2.</td>
    <td class="tdc bx">3.</td>
    <td class="tdc bx">4.</td>
    <td class="tdc bx">5.</td>
    <td class="tdc bx">6.</td>
    <td class="tdc bx">7.</td>
    <td class="tdc bx">8.</td>
    <td class="tdc bx">9.</td>
</tr>
  <tr>
    <td class="tdl bl">150 qrs.</td>
    <td class="tdl bl">12 qrs.</td>
    <td class="tdl bl">120 qrs.</td>
    <td class="tdl bl">25 pr. Ct.</td>
    <td class="tdl bl">8</td>
    <td class="tdl bl">2</td>
    <td class="tdl bl">10</td>
    <td class="tdl bl">  8.33</td>
    <td class="tdl bl br">12.5</td>
</tr>
  <tr>
    <td class="tdl bl">150</td>
    <td class="tdl bl">13</td>
    <td class="tdl bl">130</td>
    <td class="tdl bl">15.38</td>
    <td class="tdl bl">8.66</td>
    <td class="tdl bl">1.34</td>
    <td class="tdl bl">10</td>
    <td class="tdl bl">  7.7</td>
    <td class="tdl bl br">11.53</td>
</tr>
  <tr>
    <td class="tdl bl">150</td>
    <td class="tdl bl">10</td>
    <td class="tdl bl">100</td>
    <td class="tdl bl">50</td>
    <td class="tdl bl">6.6</td>
    <td class="tdl bl">3.4</td>
    <td class="tdl bl">10</td>
    <td class="tdl bl">10</td>
    <td class="tdl bl br">15</td>
</tr>
  <tr>
    <td class="tdl bl">140</td>
    <td class="tdl bl">12</td>
    <td class="tdl bl">120</td>
    <td class="tdl bl">16.66</td>
    <td class="tdl bl">8.6</td>
    <td class="tdl bl">1.4</td>
    <td class="tdl bl">10</td>
    <td class="tdl bl">  7.14</td>
    <td class="tdl bl br">11.6</td>
</tr>
  <tr>
    <td class="tdl bl">140</td>
    <td class="tdl bl">11</td>
    <td class="tdl bl">110</td>
    <td class="tdl bl">27.2</td>
    <td class="tdl bl">7.85</td>
    <td class="tdl bl">2.15</td>
    <td class="tdl bl">10</td>
    <td class="tdl bl">  9.09</td>
    <td class="tdl bl br">12.7</td>
</tr>
  <tr>
    <td class="tdl bl">130</td>
    <td class="tdl bl">12</td>
    <td class="tdl bl">120</td>
    <td class="tdl bl">  8.3</td>
    <td class="tdl bl">9.23</td>
    <td class="tdl bl">0.77</td>
    <td class="tdl bl">10</td>
    <td class="tdl bl">  8.33</td>
    <td class="tdl bl br">10.8</td>
</tr>
  <tr>
    <td class="tdl bl">130</td>
    <td class="tdl bl">10</td>
    <td class="tdl bl">100</td>
    <td class="tdl bl">30</td>
    <td class="tdl bl">7.7</td>
    <td class="tdl bl">2.3</td>
    <td class="tdl bl">10</td>
    <td class="tdl bl">10</td>
    <td class="tdl bl br">13</td>
</tr>
  <tr>
    <td class="tdl bl">120</td>
    <td class="tdl bl">11</td>
    <td class="tdl bl">110</td>
    <td class="tdl bl">  9</td>
    <td class="tdl bl">9.17</td>
    <td class="tdl bl">0.83</td>
    <td class="tdl bl">10</td>
    <td class="tdl bl">  9.09</td>
    <td class="tdl bl br">10.9</td>
</tr>
  <tr>
    <td class="tdl bl">120</td>
    <td class="tdl bl">10</td>
    <td class="tdl bl">100</td>
    <td class="tdl bl">20</td>
    <td class="tdl bl">8.33</td>
    <td class="tdl bl">1.67</td>
    <td class="tdl bl">10</td>
    <td class="tdl bl">10</td>
    <td class="tdl bl br">12</td>
</tr>
  <tr>
    <td class="tdl bl">110</td>
    <td class="tdl bl">10</td>
    <td class="tdl bl">100</td>
    <td class="tdl bl">10</td>
    <td class="tdl bl">9.09</td>
    <td class="tdl bl">0.91</td>
    <td class="tdl bl">10</td>
    <td class="tdl bl">10</td>
    <td class="tdl bl br">11</td>
</tr>
  <tr>
    <td class="tdl bl">110</td>
    <td class="tdl bl">  9</td>
    <td class="tdl bl">  90</td>
    <td class="tdl bl">22.2</td>
    <td class="tdl bl">8.18</td>
    <td class="tdl bl">1.82</td>
    <td class="tdl bl">10</td>
    <td class="tdl bl">11.1</td>
    <td class="tdl bl br">12.2</td>
</tr>
  <tr>
    <td class="tdl bl">100</td>
    <td class="tdl bl">  9</td>
    <td class="tdl bl">  90</td>
    <td class="tdl bl">11.1</td>
    <td class="tdl bl">9</td>
    <td class="tdl bl">1</td>
    <td class="tdl bl">10</td>
    <td class="tdl bl">11.1</td>
    <td class="tdl bl br">11.1</td>
</tr>
  <tr>
    <td class="tdl bl">100</td>
    <td class="tdl bl">  8</td>
    <td class="tdl bl">  80</td>
    <td class="tdl bl">25</td>
    <td class="tdl bl">8</td>
    <td class="tdl bl">2</td>
    <td class="tdl bl">10</td>
    <td class="tdl bl">12.5</td>
    <td class="tdl bl br">12.5</td>
</tr>
  <tr>
    <td class="tdl bl bb">  90</td>
    <td class="tdl bl bb">  8</td>
    <td class="tdl bl bb">  80</td>
    <td class="tdl bl bb">12.5</td>
    <td class="tdl bl bb">8.88</td>
    <td class="tdl bl bb">1.12</td>
    <td class="tdl bl bb">10</td>
    <td class="tdl bl bb">12.5</td>
    <td class="tdl bl bb br">11.25</td>
</tr>
</table>

<p>The first and most important truth illustrated<span class="pagenum" id="Page_39">39</span>
in the table is, that, from the division of value into
labour and profits, and the mode in which profits
are always estimated, it follows necessarily, that
the quantity of labour required to produce the
wages of a given number of men, with the addition
of the profits upon these advances estimated
in labour, must always be exactly the same
as the quantity of labour which the wages will
command, and must together always make up
the constant quantity which appears in the
seventh column. But the quantity of labour
required to produce the varying wages of ten
men is, under the different circumstances supposed,
very different, as appears in the fifth
column; and it is obvious, that while the numbers
in the fifth column vary, the numbers in
the seventh column, or the quantity of labour
and profits united, cannot be constant, unless,
as the quantity of labour required to produce
the wages of ten men increases, the quantity of
profits estimated in labour diminishes exactly
in the same degree. But this, from what has
before been stated, must, under the circumstances
supposed, be the case. And it follows,
that if the natural value of a commodity may
be estimated by the labour and profits of which
it is composed, the natural value of the corn<span class="pagenum" id="Page_40">40</span>
wages of a given number of men must always
be the same. But such wages, according to
the postulate with which we commenced, must
necessarily be equal to the quantity of labour
for which they will exchange. Consequently
the value of a given quantity of labour
must, under every variety which can take
place in the fertility of the soil and the corn
wages of labour, be always constant. It is,
however, of the greatest importance to remark,
that an exact balance of labour, and of profits
estimated in labour, so as to yield always a
constant quantity, cannot take place in the production
of any one commodity or given portion
of a commodity; because any one commodity,
or given portion of a commodity, is liable to
vary in relation to labour, and such variation
will either increase or decrease the amount
of the labour and profits united. It is only
the varying wages of a given number of men
bearing, as the terms imply, a constant relation
to labour, which, under any changes in
the quantity of labour required to produce
them, can still continue of the same natural
value. And it is precisely this necessary constancy
in the natural value of the varying corn
wages of labour, which renders the labour
which a commodity will command, a standard<span class="pagenum" id="Page_41">41</span>
measure both of its natural and exchangeable
value.</p>

<p>2dly. It appears from the Table, that given
the produce obtained by ten men, then as corn
wages rise, the value of the produce will fall,
or command less labour; and the constant
value of the advances in labour absorbing a
larger proportion of the value of the produce,
profits will fall in proportion. But when more
is produced by the same number of persons,
then unless the corn wages rise so high as exactly
to balance it, the value of the whole produce
is increased, and the rate of profits and
corn wages may both rise at the same time.
Thus while the produce is 130 quarters, as
labour rises from ten to twelve quarters, profits
fall in an opposite direction from 30 per
cent. to 8.3. per cent.; but if we compare the
wages of labour when the produce is 130 quarters,
with the wages of labour when the produce
is 150, it appears that labour may rise from
twelve to thirteen quarters, at the same time
that profits rise from 8.3. to 15.38.</p>

<p>A third result illustrated in the Table is, that
labour being constant, all commodities into
which profits enter, which may be said to be
nearly the whole mass, must fall on the fall of
profits, and among these will, of course, be found<span class="pagenum" id="Page_42">42</span>
metallic money. Supposing, therefore, money
always to require in its production the same
quantity of labour and capital, it will regularly
fall in value in the progress of cultivation and
population; while labour being uniform in value
will rise in money price,<a id="FNanchor_10" href="#Footnote_10" class="fnanchor">J</a> and the demand for
corn increasing, compared with the demand for
labour, the money price of corn will probably
rise still more. But if the labourers were paid
at all times exactly the same quantity of corn,
(which, however, cannot be the case,) the value
of corn, like the value of wages, would be constant,
and the variations of fertility would only
show themselves in the enormous variations of
profits.</p>

<p>Thus, when labour is paid at ten quarters
each man, the numbers in the eighth column,
or the value of a given quantity of corn, must,
it is obvious, always be the same, whatever be
the quantity produced; and when the land is
fertile, the small quantity of labour required to
produce ten quarters is balanced by the great
profits which appear in the fourth column.</p>

<p>In the actual state of things, corn generally<span class="pagenum" id="Page_43">43</span>
rises in the progress of cultivation, not only
nominally, but really, as may be seen in the
eighth column, while labour, it is evident, can
only rise nominally.</p>

<p>A fourth result shown in the Table is, that the
value of the corn obtained by ten men depends
mainly upon the rate of profits, which again depends
mainly upon the demand and supply of
corn compared with labour. If corn be in such
demand, that notwithstanding the fertility of
the soil, a small quantity of it comparatively
will purchase the labour required, profits will
be very high, and the value of the produce will
greatly exceed the constant value of the wages
of the labour advanced; but if the supply of
corn be so great, compared with labour, that a
large quantity of it is required to purchase the
given quantity of labour, profits will be low,
and the excess of the value of the produce
above the constant value of the advances in
wages will be inconsiderable.</p>

<p>Thus, when the produce is 150 quarters, if
corn be in such plenty that each labourer is
awarded thirteen quarters, the profits of stock
will be only 15.38 per cent.; and this rate of
profit, added to the constant value of the advances
in labour, which are represented by 10,<span class="pagenum" id="Page_44">44</span>
will make the natural value of the produce
equal to 11.53. But if corn, notwithstanding
the fertility of the soil, be only supplied in such
quantities, compared with labour, as to award
the labourer no more than ten quarters, the rate
of profits, instead of 15.38 per cent., will be 50
per cent., and the value of the produce, instead
of being 11.53, will be 15.</p>

<p>This shows how greatly the natural value of
commodities depends upon the average state
of the demand and supply, and completely
confirms the position in my last work, that the
only difference between natural and market
prices is, that the former are regulated by the
average and ordinary relations of the demand to
the supply, and the latter, when they differ
from the former, upon the accidental and extraordinary
relations of the demand to the supply.</p>

<p>Fifthly, it follows, from the constant value of
labour, that,</p>

<p>Given the value of money in different countries,
the natural prices of commodities, in
which the same quantities of labour have been
employed, will depend upon the rate and quantity
of profits.</p>

<p>Given the rate and quantity of profits, and
the value of money, the natural prices of commodities
in different countries will depend<span class="pagenum" id="Page_45">45</span>
upon the quantity of labour employed upon
them.</p>

<p>And given the quantity of labour employed
on them, and the rate and quantity of profits,
the natural prices of commodities will depend
upon the value of money.</p>

<p>But in reality none of the ingredients of natural
or money price are given, excepting the
natural value of labour, and consequently the
money prices of commodities which regulate
the ordinary rate at which different countries
exchange their commodities with each other,
will be determined partly by the quantity of
labour employed upon them, partly by the ordinary
rate of profits, and partly by the value
of money.</p>

<p>The value of metallic money, it has before been
stated, while it continues to be obtained by the
same quantity of labour and capital, must always
fall with the fall of profits, and will consequently
have a strong tendency to fall with the progress
of cultivation and improvement; but as few nations
comparatively have mines of their own,
the supplies which they obtain of the precious
metals must be purchased by their exportable
commodities; and these are produced and exported
under such a variety of circumstances,
in respect to cost, and the value of the same<span class="pagenum" id="Page_46">46</span>
amount of the precious metals is further so
much affected by the demand for corn and labour,
the state of credit, paper currencies,
taxation, and other circumstances, that no rule
can safely be laid down on the subject.</p>

<p>Generally the value of money is the lowest
in the richest and most manufacturing countries;
but this is not always the case; and a country
which raises an abundance of raw produce at a
small expense of labour and profits, while its
money value is kept up by a ready sale for it
in foreign markets, and a continued demand
for labour, may have the value of its money
very low, although it is not rich or manufacturing.
This is the case with the United States
of America, where, owing to the low value of
money, or high money price of labour, there
are no doubt some commodities which, though
produced by a less value of labour and profits,
cannot be exported to England on account of
the higher value of money in England; while
we know that there are many other products
which are obtained by so much a smaller quantity
of labour and profits as more than to
counterbalance the higher value of money in
England, or the higher money price of labour
in the United States.</p>

<p>In the same manner there are no doubt many<span class="pagenum" id="Page_47">47</span>
commodities which, though obtained in England
by a much less quantity of labour and
profits than in India, cannot be exported to
that country on account of the very high value
of money in India; while, on the other hand,
there are a few commodities in England in
which the saving of labour and the effects of
capital and skill have been so great, as to
allow of their exportation from a country
where the money wages of labour are two
shillings a day, to one where they are only fourpence;
that is, from a country where the value
of money is six times lower than in the country
to which the commodities are sent.</p>

<p>On the same principle, commodities may be
imported from India into England, although the
same commodities might be produced in England
by a much less quantity of labour and
profits, the low value of money in England
more than compensating the greater quantity
of labour and profits employed in India.</p>

<p>It is evident, therefore, that the values which
determine what commodities shall be exported,
and what imported, depend, as before stated,
partly upon the quantity of labour employed
in their production, partly upon the ordinary
rates of profits in each country, and partly
upon the value of money.</p>

<p>A sixth result illustrated in the Table is the<span class="pagenum" id="Page_48">48</span>
important distinction between cost and value.
The two last columns show the value of a given
quantity of corn, and the value of the product
of a given quantity of labour, under all the variations
which may be supposed of fertility and
corn wages. The difference between the numbers
in the last column, and the uniform number
expressing the value of labour, shows exactly
the difference between the value of the
labour which has been employed upon a production,
or its cost, and the labour which that
production will command, or its natural and
exchangeable value; which, where profits and
wages are alone concerned, must be exactly
equal to the additional value occasioned by
the amount of profits.</p>

<p>The reader will be aware that neither the
preceding Table, nor any thing which has been
said, tends in any degree to contradict the
acknowledged truth that different <em>kinds</em> of labour
are of very different natural and exchangeable
value. It will be further allowed, that
even the same kind of labour, and the kind
which has been especially referred to, namely
common agricultural labour, may, under particular
circumstances, and in particular places,
vary in value from a partial or temporary state<span class="pagenum" id="Page_49">49</span>
of demand and supply. We well know,
that, from a partial and temporary demand
at a particular period of the year, summer
wages are of a very different value from winter
wages; but in reality summer wages form a
very important part of the wages of the whole
year. They are generally employed to pay the
rent of the house, or to purchase the necessary
clothing for the family. They could not be
essentially diminished, without altering the
condition of the labourer throughout the year,
or the rate of the increase of population. And
if the labourer earned a smaller quantity of corn
throughout the year, with an undiminished produce,
it appears from the Table that the value
of that corn would still remain the same, owing
to the increased value of those profits of which
it was in part composed.</p>

<p>With regard to the variations in the value of
labour in different parts of the same country,
if they are not partial, or temporary, and consequently
exceptions to the general average,
they are all resolvable into those differences in
the value of money, which unquestionably take
place in different parts of the same country,
and arise from a want of demand for corn and
labour, and a want of commodities to exchange<span class="pagenum" id="Page_50">50</span>
with those parts of the country which are richer
in the precious metals.</p>

<p>Having obtained a measure of the value of
commodities in their more simple forms, we
may apply this measure to the ingredients
which compose the most complicated productions,
and estimate all the advances which consist
of accumulated profits, rents, tithes, and
taxes in labour. In the case of taxes on the
wages of labour, or an increase in the prices of
those other necessaries of the labourer, besides
food, which may occasion the sale of a greater
quantity of the produce, in order to pay the
same number of labourers, as these increased
advances will have the same effect upon profits
as a simple increase of wages, they will in no
respect interfere with the constant value of
labour, though an increase of wages, under
such circumstances, will be of no advantage to
the labourer.</p>

<p>Cases will of course frequently occur, in
which the advances which do not consist of
wages vary in a different degree from wages;
but still the value of labour will remain constant.
If the produce, instead of being obtained
by the direct labour of a certain number
of men, were obtained by the direct labour of<span class="pagenum" id="Page_51">51</span>
only a part of this number, together with an
amount of materials, or other advances consumed
in the same time, equal to the labour
of the other part, then upon a rise in the
corn wages of labour, if the other advances
were to fall, or not to be worth so much labour
as before, it is obvious that the profits of stock
would not fall so much as if the same rise of
corn wages had taken place, when all the advances
had been in labour; and it might be
thought at first that profits not falling in proportion
to the rise of labour, the value of labour
would not continue the same. But it will be
observed, that, in all cases of this kind, there
will be a less value of labour, which is equivalent
to a less quantity of it employed to obtain
the same produce; and a less quantity of
labour altogether being consequently necessary
to produce the food of the labourer, than if
labour alone had been employed, the higher
profits, or smaller diminution of the former
profits, will only just be such as to maintain
labour of a constant value.</p>

<p>Let us suppose, for instance, that 120 quarters
of corn are produced by ten men. If each
man were paid ten quarters, profits would be
20 per cent.; and if wages were increased to
eleven quarters, profits would fall from 20 per<span class="pagenum" id="Page_52">52</span>
cent. to 9.09 per cent. Now supposing, that,
instead of ten men being directly employed,
five only are so employed, and that the other
advances consist of capital which will continue
of the same value as the corn;<a id="FNanchor_11" href="#Footnote_11" class="fnanchor">K</a> then, while
each labourer earns ten quarters, and the other
capital advanced is worth the labour of five
men so paid, profits will be, as before, 20 per
cent. But if the labourer be paid eleven
quarters instead of ten, profits will not fall, as
before, from 20 per cent. to 9.09 per cent., but
only from 20 per cent. to 14.28 per cent.; because
the advances, instead of being 110, will
only be 105; and the value of these advances
estimated in labour paid at eleven quarters
each man, being only 9.54, instead of 10; 9.54
may be considered as the number of persons
employed. Then if 120 quarters be produced
by 9.54 men, 105 quarters will be produced by
8.34. But 8.34, increased by a profit of 14.28,
will make 9.54, the quantity of labour employed,
and show that the natural value of
labour is always proportioned to its quantity.
In the former case, when ten men were employed
at eleven quarters, as the advances<span class="pagenum" id="Page_53">53</span>
were 110 quarters, instead of 105, the labour
required to produce the food of the labourer
was 9.166, and consequently a profit of only
9.09 will be sufficient to make up ten, the
number of men employed, and thus equalize
the value with the quantity.</p>

<p>In the case of fixed capital of considerable
duration, there is always a probability that it
will alter in value in reference to the quantity
of labour, and of profits estimated in labour, of
which it was composed when first produced;
but after having advanced so far in establishing
the labour which a commodity will command,
as the measure of its value, we are entitled to
consider the present value estimated in labour
of any fixed capital which is about to be employed
in production, as representing the quantity
of accumulated labour actually so applied.
It is further necessary, as before stated, to
reckon the remaining value of the fixed capital
as a part of the produce resulting from the
whole of the accumulated and immediate labour
employed. When, however, these corrections
have been made, all the cases in which fixed
capital enters, which may be said to include
the great mass of commodities, will be found to
answer to the theory as accurately as the simplest
case that can be stated.</p>

<p>The exceptions, therefore, to the general proposition<span class="pagenum" id="Page_54">54</span>
that the labour which commodities will
command may be considered as a standard
measure of their value are only apparent, not
real, and may all be consistently explained.</p>

<p>And if the proposition be true, a standard
measure of value is of so much importance in
political economy, and the one proposed is at
all times so very ready and easy of application,<a id="FNanchor_12" href="#Footnote_12" class="fnanchor">L</a>
that there is scarcely any part of the science in
which it will not tend to simplify and facilitate
our inquiries.</p>

<p>To advert shortly to a few points on which
there have been some differences of opinion.</p>

<p>On the subject of rents, such a standard
would determine, among other things, that, as
the increase in the <em>value</em> of corn is only measured
by a decrease in the corn wages of
labour, such increase of value is a very inconsiderable
source of the increase of rents compared
with improvements in agriculture; and
on the same principle that, if tithes do not fall
mainly on the labourer, the acknowledged diminution
in the <em>corn</em> rents of the landlord,<span class="pagenum" id="Page_55">55</span>
occasioned by tithes, cannot be balanced by
an increase of their value, and that, consequently,
tithes must fall mainly on the landlord.</p>

<p>On the subject of labour it would determine,
that the increasing <em>value</em> of the funds
destined for the maintenance of labour can
alone occasion an increase in the demand for
it, or the will and power to employ a greater
number of labourers; and that it is consistent
with theory, as well as general experience,
that high corn wages, in proportion to the
quantity of work done, should frequently occur
with a very slack demand for labour;<a id="FNanchor_13" href="#Footnote_13" class="fnanchor">M</a> or, in
other words, that when the <em>value</em> of the whole
produce falls from excess of supply compared
with the demand, it cannot have the power of
setting the same number of labourers to work.</p>

<p>On the subject of profits, it would show, that
they are determined, not by the varying value
of a given quantity of labour compared with
the constant value of the commodities which
it produces, but, as is more conformable to<span class="pagenum" id="Page_56">56</span>
our experience, by the variable value of the
commodities produced by a given quantity of
labour, compared with the constant value of
such labour; and that profits never, on any
occasion, rise or fall, unless the value of the produce
of a given quantity of labour rises or falls,
either from the temporary or ordinary state of
the demand and supply.</p>

<p>On the subject of the distinction between
wealth and value, it would show, that though
they are by no means the same, they are much
more closely connected than they have of late
been supposed to be; and that the best practical
measure of the relative wealth of different
countries would be the quantity of common
labour which the value of the whole annual
produce of each country would enable it to
command at the actual price of the time, which
in some rich countries might amount to above
double the number of families actually employed,
and in poor countries might not greatly
exceed such number.</p>

<p>On the subject of foreign trade, it would
show that its universally acknowledged effect
in giving a stimulus to production, generally,
is mainly owing to its increasing the value of
the produce of a country’s labour by the extension
of demand, before the value of its labour<span class="pagenum" id="Page_57">57</span>
is increased by the increase of its quantity;
and that the effect of every extension of demand,
whether foreign or domestic, is always,
as far as it goes, to increase the average rate of
profits<a id="FNanchor_14" href="#Footnote_14" class="fnanchor">N</a> till this increase is counteracted by a
further accumulation of capital.</p>

<p>On the subject of the accumulation of capital
it would show that if the increase of capital be
measured by the increase of its materials, such
as corn, clothing, &amp;c., then it is obvious that
the supply of these materials may, by saving,
increase so rapidly, compared with labour and
the wants of the effective demanders, that with
a greater quantity of materials the capitalist
will neither have the power nor the will to set
in motion the same quantity of labour, and that
consequently the progress of wealth will be
checked; but that if the increase of capital be
measured, as it ought to be, by the increase of
its power to command labour, then accumulation
so limited cannot possibly go on too fast.</p>

<p>On the general subject of demand and supply,<span class="pagenum" id="Page_58">58</span>
it would show that they must be restored
to their universal empire, both in reference to
the prices of commodities, and the dependence
of the progress of wealth on the due proportion
maintained between them. If the cost of a
commodity be considered as composed exclusively
of the actual advances of the capital
required for its production, which seems to be
the most natural and correct mode of viewing
it,<a id="FNanchor_15" href="#Footnote_15" class="fnanchor">O</a> then it is obvious, that as both the prices and
values of commodities are proportioned to these
advances, with the <em>addition</em> of profits very variable
in their amount, neither of them can be
determined by these advances alone, or by the
costs of production so defined. We must therefore
have recourse to demand and supply.
And on the other hand, if profits be included in
the costs of production, then, as it follows, from
the constancy of the value of labour, that ordinary
profits are determined by the ordinary
demand compared with the ordinary supply
of the products of the same quantity of
labour, the certain conclusion must be, that<span class="pagenum" id="Page_59">59</span>
demand and supply enter powerfully into the
costs of production according to this latter definition,
and that therefore their dominion as to
prices and value is absolutely universal.<a id="FNanchor_16" href="#Footnote_16" class="fnanchor">P</a></p>

<p>Nor would they be less so in their effect on
the general progress of wealth. If commodities
and the materials of capital increase faster than
the effectual demand for them, profits fall prematurely,
and capitalists are ruined without a
proportionate benefit to the labouring classes,
because an increasing demand for labour cannot
go on under such circumstances. If the value
of commodities and the materials of capital
increase for some time without an increase of
their quantity, the labouring classes must soon
be supported on the lowest amount of food on<span class="pagenum" id="Page_60">60</span>
which they will consent to keep up their actual
number; and the main part of the population
would suffer severely without any proportionate
benefit to the capitalists; because the value of
their capitals, measured by the labour which
they can command, would shortly be incapable
of further increase. In either of these cases a
decided check would be given to the progress
of wealth, which progress must necessarily be
the greatest, when the joint product of the
capitalist and labourer, which the state of the
land and the skill with which it is worked
enable them to obtain, is so divided between
them, that in the progress of cultivation and
improvement any unnecessary or premature fall
either of profits or corn wages is prevented.
But this can only be accomplished by a proper
proportion of the supply to the demand, that
is, by an accumulation so proportioned to the
actual consumption of produce by those who
can make an effectual demand for it, as to occasion
the greatest permanent annual increase
in the value of the materials of capital.</p>

<p>The reader of my last work, in which I laid
down as my rule, to admit no principles of Political
Economy as just which were inconsistent
with general experience, will be aware that the
conclusions to which I have here shortly adverted,<span class="pagenum" id="Page_61">61</span>
as following necessarily from the constancy
of the value of labour, are almost exactly
the same as the conclusions of that work.
And the reason is, that although at that time I
did not think that the labour which a commodity
would command could, with propriety, be
considered as a <em>standard</em> measure of value,
yet I thought it the nearest approximation to
a standard of any one object known, and consequently
applied it, on almost all occasions, to
correct the errors arising from the application
of more variable measures. The conclusions,
therefore, of my former and present reasonings
were likely to be nearly the same, although the
premises might now admit of further correction
and illustration, and the conclusions might be
pronounced with greater precision and certainty.</p>

<p>It was my intention to have done this much
more fully than in the present treatise; but
having been interrupted by unforeseen circumstances,
and being unwilling to delay any longer
the publication of this essential part of my
proposed plan, I have determined to submit it
to the public in its present form; and will only
add here a few observations on a question
closely connected with it, which has lately
excited much interest and discussion.</p>

<p>Among the questions for the determination<span class="pagenum" id="Page_62">62</span>
of which a standard measure of value is most
particularly required, are those which relate to
alterations in the value of the currency. We
know perfectly well, from experience, that
commodities are subject to great variations of
price, and that many of these variations may
arise from causes which alter the natural value
of these commodities, and are equally applicable
to a large mass of them, as to a very few.
On the supposition of a large mass being altered,
any article which had retained the same natural
value, would have its power of purchasing considerably
affected; but this would be owing to
an alteration in the value of the mass of commodities,
and not in the value of the article, which
by the supposition remains the same. It follows,
that although money may increase in its
power of purchasing, it does not necessarily
increase in value. But in estimating the value
of money, some criterion or other must be referred
to. If we cannot refer to the mass of
commodities, we must refer to some one object,
and this object can only be labour. Our present
inquiry, therefore, must be into the causes
which affect the value of the precious metals as
compared with labour.</p>

<p>These causes are of two kinds:—first, those<span class="pagenum" id="Page_63">63</span>
which occasion a high or low rate of profits,
which, as connected with the progressive cultivation
of poorer land, and operating universally
and necessarily on the precious metals in common
with all other commodities, and raising or
lowering them with regard to labour, may be
denominated the primary and necessary cause
of the high or low value of metallic money.—And
secondly, those which depend on the fertility
and vicinity of the mines; the different
efficiency of labour in different countries; the
abundance or scarcity of exportable commodities;
and the state of the demand and supply
of commodities and labour compared with money;
which may be denominated the secondary
and incidental causes of the high or low value
of metallic money.</p>

<p>These two different kinds of causes will sometimes
act in conjunction, and sometimes in
opposition, so that it may not always be easy
to distinguish their separate effects; but as
these effects have really a different origin, it is
desirable to keep them as separate as we can.</p>

<p>The marks which distinguish a fall in the
value of the precious metals, arising from the
primary cause, are,—a rise in the money price
of raw produce and labour, without a general
rise in the price of wrought commodities.
All of them, indeed, as far as they are composed<span class="pagenum" id="Page_64">64</span>
of raw produce, will have a tendency to
rise; but, in a large class of commodities, this
tendency to rise will be more than counterbalanced
by the effect of the fall of profits.—Some
therefore will rise, and some will fall, as
I stated in my last work,<a id="FNanchor_17" href="#Footnote_17" class="fnanchor">Q</a> according to the nature
of the capitals employed upon them, compared
with those which produce money; and
while the money prices of corn and labour very
decidedly increase, the prices of commodities,
taken on the average, may possibly remain not
far from the same.</p>

<p>On the other hand, when the value of metallic
money falls, from the secondary causes
above noticed, there will be a tendency to a
proportionate rise of all commodities as well as
of corn and labour, though in some cases it
may take a considerable time before it is completely
effected. And, in general, whenever a
fall in the value of money takes place, without
a fall in the rate of profits, an event which is
generally open to observation, it is to be attributed
to incidental and secondary causes affecting
the relations of money to labour, and
not to that which is connected with the taking
of poorer land into cultivation.</p>

<p>Of these two classes of causes the second<span class="pagenum" id="Page_65">65</span>
produces much the greatest part of those differences
in the value of metallic money, which
are the most observable in different countries,
and at different periods in the same country.
If India and England had each of them mines
of equal natural fertility, the superior efficiency
of English labour, assisted by machinery, would
extract a much greater quantity of metal from
such mines; and the money price of labour
might be three or four times higher, and the
value of money three or four times lower in
England than in India.</p>

<p>The same effect is, at present, practically
produced by the skill and machinery employed
on the manufactures with which England purchases
her gold. If she can prepare exportable
commodities which are in demand abroad,
with much less labour than other nations, she
will be able to buy gold at a much lower
natural value, and will continue to import it
under favourable exchanges, till its value falls in
proportion.</p>

<p>It is farther established by experience, that
a brisk or slack demand for commodities and
labour, and particularly for corn, has a considerable
effect on the value of gold. Such a demand
not only occasions a more rapid circulation
of money, and enables the same quantity<span class="pagenum" id="Page_66">66</span>
to perform a greater number of transactions,
but calls into action a greater quantity of credit
and private paper,<a id="FNanchor_18" href="#Footnote_18" class="fnanchor">R</a> so that a general rise
of bullion prices, including labour, seems to be
at all times possible, even without any fresh
importations of the precious metals; and the
only practical limit to this rise, is the turn of
the exchange, and the impossibility of maintaining
the exchanges nearly at par beyond a
certain elevation of labour and commodities.</p>

<p>The secondary and incidental causes here
enumerated, as affecting the value of gold, often
completely overcome the effects arising from
the primary cause. The state of bullion prices
in most of the countries of the commercial
world make it evident, that the efficiency of
labour, and the abundance of exportable commodities,
are much more powerful in lowering
the value of bullion in the countries where they
prevail, than high profits in raising it; and the
same appears to be true, in reference to an increased
demand for corn and labour.</p>

<p>It cannot be doubted that the rate of interest<span class="pagenum" id="Page_67">67</span>
and profits was comparatively high during the late
war, and this high rate of profits would naturally
have a tendency to lower the bullion price of
labour; but this was more than counterbalanced
by the tendency of a brisk demand for corn
and labour to raise money prices generally, including
labour, and the consequence was a fall,
during the greatest part of the time, in the value
of bullion.</p>

<p>It can as little be doubted, that the rate of
interest and profits has fallen since the war,
and this low rate of profits would have a natural
tendency to raise the bullion price of
labour; but this has been more than counterbalanced
by the tendency of a slack demand
for corn and labour to lower prices generally,
and the consequence has been a rise in the
value of gold, and a still greater rise in the
value of the currency.</p>

<p>This rise, however, in the value of the currency,
has been by no means so considerable
as those are inclined to make it, who would
measure it by the fall of agricultural produce;
nor is it so inconsiderable as those imagine who
would measure it solely by the difference between
paper and gold. But whether this difference
is the whole of what can be fairly
attributed to the Bank Restriction and the return<span class="pagenum" id="Page_68">68</span>
to cash payments, or not, it may by no
means be the whole change which has taken
place in the value of the currency, when compared
with an object which has not changed.</p>

<p>It would be very desirable to be able to form
an accurate estimate of the rise and fall which
has taken place in the bullion price of labour
for the last thirty years; but unfortunately,
during the latter part of the period, no general
estimates of the price of labour have been
made, at least none that have come to my knowledge;
and there is reason to think that, under
the late stagnation in the demand for agricultural
labour, the common rate of wages in
England has been more than usually interrupted
by the operation of the poor laws. On this
account, I have made some inquiries respecting
wages in Scotland, and have obtained a most
valuable communication; but before I refer to
it particularly, it may be useful to consider the
results of the data we possess in England. The
rise in the bullion price of labour from 1790 to
1810 and 11, may be established upon satisfactory
grounds, although the amount of the
fall which has since taken place may be a
matter of considerable uncertainty.</p>

<p>According to the communications to the
Board of Agriculture, the price of labour, in<span class="pagenum" id="Page_69">69</span>
1790, was 8<i>s.</i> 1<i>d.</i> per week. In 1796, Sir F.
M. Eden, in his work on the Poor, stated it at
8<i>s.</i> 11<i>d.</i> per week. In 1803, the communications
to the Board of Agriculture make it 11<i>s.</i> 5<i>d.</i>,
and in 1810 and 11, according to satisfactory
returns obtained by Arthur Young, it was
14<i>s.</i> 6<i>d.</i><a id="FNanchor_19" href="#Footnote_19" class="fnanchor">S</a> This was a steady and very great rise
in the price of agricultural labour during the
course of twenty years. But in 1810 and 11,
paper had separated from gold to a considerable
extent. Taking an average of the market prices
of gold during these two years, this price
was £4. 13<i>s.</i> and reducing the 14<i>s.</i> 6<i>d.</i> currency
to a bullion price, it will appear that the
bullion wages of labour in 1810 and 11 were a
little above 12<i>s.</i> The bullion price of labour
had therefore risen 50 per cent. Now, on the
supposition that manufacturing and mercantile
labour continued to bear the same proportion
to agricultural labour as before,<a id="FNanchor_20" href="#Footnote_20" class="fnanchor">T</a> it is obvious
that there would be a difference of 50 per cent.<span class="pagenum" id="Page_70">70</span>
between the quantity of labour and profits with
which an ounce of gold could be purchased
at the former period, compared with the latter;
that is, while labour was 8<i>s.</i> 1<i>d.</i> per week, it
would require a piece of muslin, which would
command above nine and a half weeks labour,
to purchase an ounce of gold; but when wages
were 12<i>s.</i> per week, a piece of muslin, which
would command little more than six and a
half weeks labour, would be sufficient for the
purpose. The natural value of bullion, therefore,
the quantity of English labour and profits
of which it was composed, must have fallen to
that extent.</p>

<p>Mr. Tooke, in his late valuable publication,
after stating very justly that an unusual proportion
of unfavourable seasons must have had
a considerable effect in raising the prices of
corn and labour during the period adverted to,
goes on to “ask upon what ground of fact or
reasoning can the high prices included in such a
period be ascribed, in fairness, to alterations in
the currency, beyond the degree indicated by the
difference between paper and gold, when, after
a sufficient time has elapsed for the subsidence
of the extraordinary effects of such an unusual
succession of bad seasons, there is a restoration
to a level even somewhat lower than that from<span class="pagenum" id="Page_71">71</span>
which the rise is assumed to have taken place,
and to have continued progressively.”</p>

<p>Of the subsidence here alluded to, before
1814, Mr. Tooke has certainly not given proofs
sufficiently general; but without dwelling on
this point, it appears to me that the question of
the fall in the value of the currency including
the gold, is exclusively a question of fact, and
must be referred to some criterion. It is a
very intelligible thing to say that paper has
fallen, if it has fallen with regard to the gold
which it professes to represent; but it is not
intelligible to say that gold has not fallen, when
it is acknowledged to have fallen both with regard
to its power of purchasing generally, and its
power of commanding labour; unless a reference
can be made for the proof of it to some more
satisfactory criterion. A season of scarcity will
make corn dear, and a season of plenty cheap,
without necessarily affecting labour in either
case, as is shown by Adam Smith, and proved
by repeated experience. But if seasons of
scarcity occur so frequently as to raise generally
the bullion price of labour, it must of necessity
be accompanied by a power of purchasing
bullion with a smaller quantity of labour
and profits; otherwise the event could not<span class="pagenum" id="Page_72">72</span>
occur. Whenever it does occur, the natural
value of bullion falls.<a id="FNanchor_21" href="#Footnote_21" class="fnanchor">U</a></p>

<p>The observations here made, with a view to
place the controversy respecting the alterations
in the currency on its proper ground, and to
make the necessary distinction between facts
and the causes which may have produced them,
apply still more strongly to the publication
of Mr. Blake, in much of the reasoning of which
I entirely concur. He proposes to prove that
it was the gold which rose, and not the paper
which fell during the war, although he acknowledges
as a matter of fact, that almost all prices,
including labour, rose not only in paper but in
gold. This has, no doubt, the air of a contradiction,
according to all the common modes of estimating
the value of money; and it certainly
is not removed by showing that the main cause
of these high prices was a great demand compared
with the supply of commodities—a cause
which, involving as it always does, more transactions
on credit, and a more rapid circulation<span class="pagenum" id="Page_73">73</span>
of currency, is one of the most legitimate
causes of a fall in the value of money.</p>

<p>Mr. Blake, however, is certainly right in
his view of the effects of an unfavourable exchange
on the price of gold, when it ceases to
form a part of the circulation. It is not only
possible that from this cause gold might for a
time rise in value much beyond the expense of
transporting it; but as a matter of fact, this
did unquestionably occur at certain periods
during the war. There is no account of the
price of agricultural labour in England subsequently
to 1811. Probably it did not rise any
more; but if it did, judging from what took place
in Scotland, it did not rise sufficiently to balance
the subsequent rise in the market price of
gold, which was from £4. 15<i>s.</i> in 1811, to
£5. 8<i>s.</i><a id="FNanchor_22" href="#Footnote_22" class="fnanchor">V</a> in 1813. Consequently, in 1813, as
compared with 1811, the value of gold must
have risen considerably; and on the supposition
that the price of labour did not rise after 1811,
it would appear that the natural and exchangeable
value of gold, as measured by the standard,
rose above 13½ per cent.</p>

<p>The rise of gold from the sudden fall of the
exchange in consequence of Buonaparte’s return<span class="pagenum" id="Page_74">74</span>
from Elba was still more remarkable. The
price had been as low, in the spring of 1815, as
4<i>l.</i> 9<i>s.</i>, and without any known change in the
currency price of labour, it rose suddenly to
5<i>l.</i> 5<i>s.</i>, or 18 per cent.; and consequently, to
purchase an ounce of gold it was necessary at
that time to give commodities worth 18 per
cent. more of agricultural labour than it might
have been purchased for a month or two before.
Whatever might have been the case with
the paper, there could not, on any view of the
subject, be the slightest foundation for the supposition
of a sudden abundance and cheapness
of labour just before the battle of Waterloo. In
fact, agricultural labour had not fallen, and manufacturing
labour was higher than usual; so
that even without considering labour as a
standard, it must have been acknowledged, that,
of these two objects which had altered in relative
value, it was the gold which had risen,
not the labour which had fallen.</p>

<p>In attempting to measure the <em>rise</em> in the
value of the currency since the period of the
high prices, we shall be greatly assisted by the
following very valuable document respecting
the price of labour in the county or stewartry
of Kircudbright. It is considered that the
prices in this table represent pretty nearly
(though they are rather below) the wages in<span class="pagenum" id="Page_75">75</span>
other parts of Scotland. The labourers have
no other allowances whatever except the daily
wages specified in the table. In the intermediate
years not quoted the wages remained
stationary at the rates last mentioned; and
when any change took place, the period of such
change and the degree of it are regularly
stated.</p>

<table class="narrow" summary="Labour rates">
  <tr>
    <td class="tdc bt bb br">Years.</td>
    <td class="tdc bt bb bl br">Rate per day<br />in winter.</td>
    <td class="tdc bt bb bl">Rate per day<br />in summer.</td>
</tr>
  <tr>
    <td class="tdc br">1760</td>
    <td class="tdc br">  4<i>d.</i></td>
    <td class="tdc">  6<i>d.</i></td>
</tr>
  <tr>
    <td class="tdc br">1765</td>
    <td class="tdc br">  6<i>d.</i></td>
    <td class="tdc">  8<i>d.</i></td>
</tr>
  <tr>
    <td class="tdc br">1770</td>
    <td class="tdc br">  8<i>d.</i></td>
    <td class="tdc">10<i>d.</i></td>
</tr>
  <tr>
    <td class="tdc br">1772</td>
    <td class="tdc br">  8<i>d.</i></td>
    <td class="tdc">12<i>d.</i></td>
</tr>
  <tr>
    <td class="tdc br">1776</td>
    <td class="tdc br">  7<i>d.</i></td>
    <td class="tdc">  9<i>d.</i></td>
</tr>
  <tr>
    <td class="tdc br">1780</td>
    <td class="tdc br">  8<i>d.</i></td>
    <td class="tdc">10<i>d.</i></td>
</tr>
  <tr>
    <td class="tdc br">1791</td>
    <td class="tdc br">  8<i>d.</i></td>
    <td class="tdc">11<i>d.</i></td>
</tr>
  <tr>
    <td class="tdc br">1793</td>
    <td class="tdc br">  9<i>d.</i></td>
    <td class="tdc">12<i>d.</i></td>
</tr>
  <tr>
    <td class="tdc br">1798</td>
    <td class="tdc br">11<i>d.</i></td>
    <td class="tdc">14<i>d.</i></td>
</tr>
  <tr>
    <td class="tdc br">1799</td>
    <td class="tdc br">12<i>d.</i></td>
    <td class="tdc">15<i>d.</i></td>
</tr>
  <tr>
    <td class="tdc br">1800</td>
    <td class="tdc br">14<i>d.</i></td>
    <td class="tdc">16<i>d.</i></td>
</tr>
  <tr>
    <td class="tdc br">1802</td>
    <td class="tdc br">16<i>d.</i></td>
    <td class="tdc">18<i>d.</i></td>
</tr>
  <tr>
    <td class="tdc br">1811</td>
    <td class="tdc br">18<i>d.</i></td>
    <td class="tdc">22<i>d.</i></td>
</tr>
  <tr>
    <td class="tdc br">1812</td>
    <td class="tdc br">20<i>d.</i></td>
    <td class="tdc">24<i>d.</i></td>
</tr>
  <tr>
    <td class="tdc br">1816</td>
    <td class="tdc br">18<i>d.</i></td>
    <td class="tdc">22<i>d.</i></td>
</tr>
  <tr>
    <td class="tdc br">1817</td>
    <td class="tdc br">16<i>d.</i></td>
    <td class="tdc">20<i>d.</i></td>
</tr>
  <tr>
    <td class="tdc br">1819</td>
    <td class="tdc br">15<i>d.</i></td>
    <td class="tdc">18<i>d.</i></td>
</tr>
  <tr>
    <td class="tdc br">1822</td>
    <td class="tdc br">12<i>d.</i></td>
    <td class="tdc">15<i>d.</i></td>
</tr>
</table>

<p>In 1812, farm servants boarded in the house
received from 14<i>l.</i> to 22<i>l.</i> a year; women servants
from 5<i>l.</i> to 8<i>l.</i> At present, (April, 1823,)
men receive from 10<i>l.</i> to 14<i>l.</i>, and women from
3<i>l.</i> 10<i>s.</i> to 6<i>l.</i></p>

<p>Masons’ wages per day were three shillings
in 1812, and are now half-a-crown.</p>

<p>All work done by the piece, such as building
stone fences, cutting ditches either for
fences or drains, making roads, &amp;c. may be<span class="pagenum" id="Page_76">76</span>
done at a greater reduction of price than the
fall in the rate of labour by the day. Work
is now performed more frequently by the
piece; and the best labourers are employed
by the day; while the inferior workmen, and
those unable from age, or other causes, to perform
a full day’s work, are turned over to work
by the piece. Agricultural affairs are under
such depression, that the work is curtailed,
and the competition for work is thereby increased.<a id="FNanchor_23" href="#Footnote_23" class="fnanchor">W</a></p>

<p>The first thing that strikes us in the table is
the very remarkable rise of labour in Scotland
from 1760—much greater than in England, and
much greater than in proportion to the rise in
the price of corn. This was no doubt owing in
part to the comparatively unimproved state of
the district in question, and of Scotland in
general at the earliest period adverted to. But
to go no farther back than 1790, the period
with which we commenced in England, it appears
that the rise from 1790 to 1811, was considerably
greater than in England, and nearly
in proportion to the rise in the price of wheat.<span class="pagenum" id="Page_77">77</span>
If, indeed, we take the price of labour as mentioned
in the table for 1812, and compare it
with the average price of wheat for the four
years from 1812 to 1815 inclusive, during
which period the same price of labour seems
to have continued, it will appear, that labour,
taking summer and winter wages together, rose
in the proportion of from 19<i>s.</i> to 44<i>s.</i>, while
wheat rose from 43<i>s.</i> in 1792, (according to the
average of England and Wales, which commences
with that year,) to 88<i>s.</i> and therefore
labour rose decidedly more than wheat, except
in reference to the peculiarly high price of
wheat in 1812.</p>

<p>Taking the currency price of labour in Scotland
as having risen from 9½<i>d.</i> to 22<i>d.</i>, and reducing
the 22<i>d.</i> to its value in bullion, the
average price of bullion in that year being 5<i>l.</i> 1<i>s.</i>,
it will appear, that the bullion price of labour
in Scotland rose, in the interval between 1790
and 1812, from 9½<i>d.</i> to 16½<i>d.</i>, or nearly 73 per
cent. And consequently, the same quantity of
gold for which it would have been necessary to
give commodities worth 173 days labour in
1790, might be purchased for 100 days labour
in 1812; or the value of the currency estimated
in gold might be considered as having fallen in
that proportion.</p>

<p>In 1812, the bullion price of labour as above<span class="pagenum" id="Page_78">78</span>
stated was 16½<i>d.</i>; it has since fallen to 13½<i>d.</i>,
or in the proportion of from 100 to 81·8—rather
more than 18 per cent. This view of it shows most
clearly the change in the bullion value of the
currency since 1812. But if we wish to estimate
the whole fall which has taken place in the
currency, and then subtract what is due to the
difference between paper and gold, it will appear
that the whole fall since 1812, estimated on the
currency wages of 1812, has been rather less
than 39 per cent.; of which, if the average difference
between paper and gold in the year 1812
was as 101 to 78, about 23 per cent. would
belong to the paper, leaving about 16 per cent.
for the fall in the currency independently of the
excess of paper prices above gold prices. The
apparent difference in the results of these estimates
arises merely from the per centage in the
latter case being taken on a higher number.</p>

<p>I stated before, that I was not aware of any
data on which reliance could be placed respecting
the amount of the fall of agricultural wages
in England since the termination of the war;
but on the supposition that the wages, which
in 1810 and 1811 were 14<i>s.</i> 6<i>d.</i> per week,
had fallen to 10<i>s.</i> then as the bullion wages of
1810 and 1811 were a little above 12<i>s.</i>, the<span class="pagenum" id="Page_79">79</span>
fall in the bullion value of the currency
would be nearly 17 per cent., or for the same
quantity of gold which in 1810 and 1811 might
be purchased by commodities worth 83 days
labour, it would now be necessary to give commodities
the natural value of which would be
represented by 100 days labour. This difference
of course includes the effects which have
been attributed to the purchases of bullion by
the Bank with a view to a return to cash payments,
the amount of which separately it is
scarcely possible to calculate; but I am inclined
to agree with Mr. Tooke in thinking that it is
not above one or two per cent. If the price of
agricultural labour in England has not fallen so
much as is here supposed, the difference in the
value of the currency will not be so great as
above stated, but on any supposition which is
at all probable, it must be something considerable.</p>

<p>It is certain therefore that the currency, estimated
in what appears to be a correct standard
of value, has fallen in such a degree beyond the
difference between paper and gold, as to add
much to the pressure upon the landed interest,
though by no means to the extent which would
be implied by measuring the value of the
currency in agricultural produce. This produce,<span class="pagenum" id="Page_80">80</span>
from the scantiness of the supply compared
with the demand, was at one time much above
its natural and ordinary value, and has since,
from the abundance of the supply compared
with the demand, been as much below its
natural value; while the value of the currency,
though it has fallen and risen considerably, has
been much more steady than the value of
corn.</p>

<p>To what extent the alterations in the value of
the currency beyond the difference between
bullion and paper are attributable to the Bank
restriction, and the return to cash payments,
it is by no means easy to say. That the currency
would have fallen very considerably under the
circumstances of the last war, and risen very
considerably under the circumstances which
accompanied the peace, although paper had
been kept on a par with gold, I cannot feel the
least doubt; and probably the only difference
has been, that as the increase of paper beyond
what would circulate at par with gold gave
facilities to production, and to the bringing of
poor land into cultivation during the war, it has
tended to increase the glut and low prices since
the peace.</p>

<p>But whatever may have been the pressure on
the owners of land since the peace, they cannot<span class="pagenum" id="Page_81">81</span>
have the slightest plea for an attempt to indemnify
themselves at the expense of the public
creditor. In the turns of the wheel of fortune
all parties should have fair play; no class of
persons can be justified in endeavouring to lift
themselves up by using unfair and dishonourable
means to pull others down; and least of all ought
such means to be thought of by the landlords of
this country, who, whatever inconveniences they
may have suffered latterly, have unquestionably
altogether benefited much more largely from
the alterations in the value of the currency, than
the very persons who in their opinion should
be made to relieve them from their embarrassments.</p>

<p class="p4 center small"><span class="bt">London: Printed by C. Roworth,</span><br />
<span class="bb in2 l2">Bell-Yard, Temple-Bar.</span></p>

<div class="chapter"><div class="footnotes">
<h2 class="nobreak p1" id="FOOTNOTES">FOOTNOTES</h2>

<div class="footnote">

<p class="fn1"><a id="Footnote_1" href="#FNanchor_1" class="label">A</a> Mr. Ricardo, speaking of the commodities produced by the
capitalist, says, “their whole value is divided into two portions
only: one constitutes the profits of stock; the other the wages
of labour.” (p. 107. 3d edit.) The language of Mr. Mill, in his
<cite>Elements of Political Economy</cite>, is similar.</p></div>

<div class="footnote">

<p class="fn1"><a id="Footnote_2" href="#FNanchor_2" class="label">B</a> This is very properly stated by Colonel Torrens, in his
<cite>Production of Wealth</cite>, c. 1. p. 28.</p></div>

<div class="footnote">

<p class="fn1"><a id="Footnote_3" href="#FNanchor_3" class="label">C</a> The effects of slow or quick returns, and of the different
proportions of fixed and circulating capitals, are distinctly allowed
by Mr. Ricardo; but in his last edition, (the third, p. 32.) he
has much underrated their amount. They are both theoretically
and practically so considerable as entirely to destroy the position
that commodities exchange with each other according to
the quantity of labour which has been employed upon them;
but no one that I am aware of has ever stated that the different
quantity of labour employed on commodities is not a much
more powerful source of difference of value.</p></div>

<div class="footnote">

<p class="fn1"><a id="Footnote_4" href="#FNanchor_4" class="label">D</a> Colonel Torrens, by representing capital under the form of
certain quantities of cloth and corn, instead of value in labour,
has precluded himself from the possibility of giving a just view
either of value, profits, or effectual demand. An increase of cloth
and corn from the same quantity of labour is of no avail whatever
in increasing value, profits, or effectual demand, if this increased
produce will not command so much labour as before, an
event which is continually occurring, from deficiency of demand.</p></div>

<div class="footnote">

<p class="fn1"><a id="Footnote_5" href="#FNanchor_5" class="label">E</a> Agricultural labour is taken for the obvious reasons that it
is the commonest species of labour, that it directly produces the
food of the labourer, and that it is the most immediately connected
with the gradations of soil, and the necessary variations
of profits. It is also assumed with Adam Smith, Mr. Ricardo,
and other political economists, that, on an average, other kinds
of labour continue to bear the same proportions to agricultural
labour.</p></div>

<div class="footnote">

<p class="fn1"><a id="Footnote_6" href="#FNanchor_6" class="label">F</a> In my last work, I thought that a mean between corn and
labour might be a better measure of value than labour alone;
but I am now convinced that I was wrong, and that labour
alone is the true measure.</p></div>

<div class="footnote">

<p class="fn1"><a id="Footnote_7" href="#FNanchor_7" class="label">G</a> Whenever it is said that the value of labour rises in the progress
of cultivation, a comparison is made between the value of
a given quantity of labour at two different periods; and when it
is added that wages rise in proportion to the quantity of labour
required to produce them, objects are measured solely by the
quantity of labour employed upon them, although the rate of
profits may be totally different.</p></div>

<div class="footnote">

<p class="fn1"><a id="Footnote_8" href="#FNanchor_8" class="label">H</a> This proposition is essentially the same as that which is
very clearly and ably expressed by Mr. Ricardo in his chapter on
Profits, (p. 128. 3d ed.) in the following terms: “in all countries
and at all times profits depend on the quantity of labour requisite
to provide necessaries for the labourers on that land, or
with that capital which yields no rent;” a proposition which
though incomplete in reference to the ultimate causes of the
variations of profits, contains a most important truth. From
this truth the legitimate deduction appears to me to be, the
constant value of labour; but Mr. Ricardo has formed his system
on a deduction exactly opposite to it. He has, however,
in my opinion, amply compensated for the errors into which he
may have fallen, by furnishing us, at the same time, not only
with the means of their refutation, but the means of improving
the science of Political Economy.</p></div>

<div class="footnote">

<p class="fn1"><a id="Footnote_9" href="#FNanchor_9" class="label">I</a> Mr. Ricardo, by supposing gold to be produced always by
a certain quantity of labour and <em>capital</em>, is compelled to acknowledge
that his standard “would be a perfect measure of value
for all things produced under the same circumstances precisely
as itself, but for no others.” p. 43. This concession appears to
me quite fatal. We want to measure the value of commodities
under <em>all circumstances</em>, and it is only gold obtained exclusively
by labour, or labour itself, which can do this. See <cite>Principles
of Political Economy considered with a View to their Practical
Application</cite>, pp. 111 and 118.</p></div>

<div class="footnote">

<p class="fn1"><a id="Footnote_10" href="#FNanchor_10" class="label">J</a> It is this rise in the money price of labour, occasioned by
the fall of profits, which Mr. Ricardo considers as that necessary
rise in the <em>value</em> of labour on which he makes so much
depend in his system; but if the foregoing reasoning be well
founded, it follows that this rise is not a rise in the <em>value</em> of
labour, but a fall in the value of money.</p></div>

<div class="footnote">

<p class="fn1"><a id="Footnote_11" href="#FNanchor_11" class="label">K</a> This applies to the seed, and the food of the working cattle
in agriculture.</p></div>

<div class="footnote">

<p class="fn1"><a id="Footnote_12" href="#FNanchor_12" class="label">L</a> The labour worked up in a commodity could not, in many
cases, be ascertained without considerable difficulty; but the
labour which it will command is always open and palpable.</p></div>

<div class="footnote">

<p class="fn1"><a id="Footnote_13" href="#FNanchor_13" class="label">M</a> Practically, in all countries such as South America and
Ireland, where there is a slack demand for labour, and the
people are but half employed, the food wages of labour are
high, compared with the work done.</p></div>

<div class="footnote">

<p class="fn1"><a id="Footnote_14" href="#FNanchor_14" class="label">N</a> If profits rise in some departments without falling proportionally
in others, the <em>average</em> rate of profits will have increased,
although, from the difficulty of moving capital, the rate of profits
in some employments may not have had time to rise before
the stimulus to such rise comes to an end by a fresh increase of
capital.</p></div>

<div class="footnote">

<p class="fn1"><a id="Footnote_15" href="#FNanchor_15" class="label">O</a> This is the view taken of it by Colonel Torrens in his
<cite>Production of Wealth</cite>, which I think the just one; because it
makes the proper distinction between cost and value, on which
the great stimulus to production depends. But he has most
unnecessarily and incorrectly given the same interpretation to
<em>natural price</em>, which always includes profits.</p></div>

<div class="footnote">

<p class="fn1"><a id="Footnote_16" href="#FNanchor_16" class="label">P</a> In order to exclude demand and supply from the costs of
production, when ordinary profits are considered as making a
part of them, it would be necessary to assume that the corn
wages of labour are always the same, an assumption which
would be quite unwarranted, not only in reference to short periods,
but to periods of fifty or sixty years, as the history of corn
wages in this country alone amply testifies (see ch. iv. sect. 4, of
my Princ. of Pol. Econ. &amp;c.); and what but the state of the demand
and supply of corn, compared with labour, prevents profits
in the United States from being 100 per cent.? The quantity
of corn divided between the labourer and capitalist would
be amply sufficient to yield such profits, if the corn wages of
labour were no higher than in England.</p></div>

<div class="footnote">

<p class="fn1"><a id="Footnote_17" href="#FNanchor_17" class="label">Q</a> Sect. IV. p. 91, et seq.</p></div>

<div class="footnote">

<p class="fn1"><a id="Footnote_18" href="#FNanchor_18" class="label">R</a> One of the most valuable sections in Mr. Tooke’s late work
<cite>On High and Low Prices</cite>, is the seventh, in which he proves the
frequent occurrence of this event, and explains, with great clearness
and knowledge of the subject, the mode in which it takes
place.</p></div>

<div class="footnote">

<p class="fn1"><a id="Footnote_19" href="#FNanchor_19" class="label">S</a> Inquiry into the Rise of Prices in Europe, p. 15.</p></div>

<div class="footnote">

<p class="fn1"><a id="Footnote_20" href="#FNanchor_20" class="label">T</a> Perhaps at the time specifically adverted to, this supposition
will not be allowed. But it is always assumed as a general
proposition; and although 1810 and 11 were years of great
manufacturing distress, yet Mr. Tooke himself brings evidence
which shows that manufacturing labour was particularly high
in 1805 and 6.</p></div>

<div class="footnote">

<p class="fn1"><a id="Footnote_21" href="#FNanchor_21" class="label">U</a> In poor countries a succession of bad seasons sometimes
takes place without any rise in the price of labour, and in that
case, though there may be a high price of corn, there is no fall
in the natural value of money. It will not be purchased with
less labour.</p></div>

<div class="footnote">

<p class="fn1"><a id="Footnote_22" href="#FNanchor_22" class="label">V</a> These averages are taken from Lord Lauderdale’s <cite>Further
Considerations on the State of the Currency, published in 1813</cite>.
Appendix, p. 33.</p></div>

<div class="footnote">

<p class="fn1"><a id="Footnote_23" href="#FNanchor_23" class="label">W</a> For the foregoing valuable table, and the information accompanying
it, I am indebted to Mr. Mure, of Kircudbright,
through the kind intervention of Mr. M’Culloch, of Edinburgh.</p></div>
</div>
</div>

<div class="chapter"><div class="transnote">
<h2 class="nobreak" id="Transcribers_Notes">Transcriber’s Notes</h2>

<p>Simple typographical errors were corrected.
Punctuation, hyphenation, and spelling were made
consistent when a predominant preference was found
in the original book; otherwise they were not changed.</p>

<p>This book has no Table of Contents.</p>
</div>
</div>

<div>*** END OF THE PROJECT GUTENBERG EBOOK 62407 ***</div>
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