POLITICAL ECONOMY. 



63 



Political Capitalists require their capital to be employed, that 

 it may gain a revenue ; and hence they ofler it for a 

 certain price, to such as wish to cause labour; work- 

 men, on the ( ther hand, and those who employ work- 

 men, have need of capital for their labour; and, after 

 reckoning up the profit expected from it, they ofler a 

 certain share of their advantage to capitalists. The 

 necessities of money-lenders and of money-borrowers 

 come thus to a state of equilibrium in all mai 

 those classes of men agree upon a medium rate. 

 The regulator of their bargain is always the quantity 

 of labour required by consumers, compared with the 

 quantity of capital, representing raw materials and 

 wages, to be disposed of in executing this labour. If 

 the want is great, and the means of labour small, the 

 interest of money will be considerable ; if, on the con- 

 trary, there is much capital in circulation, and little 

 employment for it, interest will be very low. It must 

 always be regulated by what is called the quanti- 

 ty of money offered in the market, because money is 

 the sign of capital, though not capital itself. Far from 

 being augmented by the magical increase of money 

 above alluded to, capital would not even be increased 

 by the arrival of money in great abundance at a parti- 

 cular place of trade, without losing any thing of its 

 value in comparison with the things it purchases ; and 

 no change in the rate of interest would result from this 

 circumstance. 



Nearly all the circulating capital of each manufactur- 

 er and trader is successively presented to him under 

 the shape of money, in its return from the buyer to the 

 seller ; but the part of his funds, which a merchant ac- 

 tually has in money, forms, in ordinary cases, but a small 

 portion of the capital employed in his commerce; an in- 

 finitely greater portion being kept in its original state 

 in his own warehouses, or in those of his debtors. On 

 the other hand, it is almost always in the power of 

 each merchant instantaneously to augment the quanti- 

 ty of money at his disposal, by selling his goods at a 

 less profit, or by discounting the debts which are owed 

 him. In this way, he has money when he pleases, 

 without being richer ; the money, far from adding to 

 his capital, is purchased with it. If such operations 

 are performed at one time by several merchants in the 

 same town, that town purchases money from its 

 neighbours ; if by a great number of French, English, 

 or German merchants, we say that France, England, 

 or Germany purchases money. There will, in reality, 

 be found much more in the markets to make payments 

 with ; guineas will be much more abundant ; but there 

 will be neither more nor fewer deposits offered to lend, 

 and the rate of interest will not be any way affected 

 by the change. Such as are acquainted with the move- 

 ments of trading places, know well that guineas may 

 abound in them while capitals are scarce, or guineas 

 be scarce while capitals abound. 



It is a gross error, then, to believe that, in all cases, 

 a considerable importation of the circulating medium 

 will make the rate of interest fall, or an exportation 

 make it rise. Money is a kind of wealth ; and, like 

 any other kind of wealth, it forms part of the circu- 

 lating capital. If the money imported is a gift, or a 

 tribute ; if it costs nothing to the nation, it will certain- 

 ly augment its circulating capital, and must certainly 

 contribute to lower the rate of interest on the spot ; but 

 the same sums paid to the nation in goods would equal- 

 ly contribute to that end. If, on the other hand, this 

 money has been purchased with any other portion of 

 the capital, in that case the sum total of the latter will 



3 



remain the same, and the rate of interest will not be af- !'.>litii 

 fected. Ecootoy. 



Upon these principles, it is easy to see how mines of -"^V^- 

 silver and gold do not enrich a nation more than any 

 other kind of industry. The precious metal* drawn 

 from the mine are goods purchased, li!;e all other goods, 

 at the price of labour and capital. The opening of the 

 mine, the construction of its galleries, the establishment 

 of refining furnaces, require large advances, independ- 

 ently of the labour by which the ore is drawn from 

 the bowels of the earth. This labour, and it* fruits, 

 may be exactly paid by the metal produced, and the 

 state will gain by the operation, as by any other manu- 

 facture. But, in general, the profits of mines are irre- 

 gular. As the head prize in a lottery seduces gamesters, 

 an unlocked for advantage encourages miners to con- 

 tinue their exertions, although the usual returns be in- 

 ferior to those obtained by any other kind of industry ; 

 and nearly all of them are ruined, just like gamesters, 

 because they were at first successful. 



From these principles, we may also conclude, that 

 the blame so frequently imputed to Frederic If. and 

 the Canton of Berne, for having hoarded up and with- 

 drawn from the country a large portion of the natu- 

 ral circulating medium, is without foundation. By 

 saving a part of their expences, they, of course, in some 

 degree, diminished consumption and reproduction ; by 

 preserving some millions in their coffers, they in some 

 degree diminished the circulating capital : but the 

 money locked up by them was soon replaced by other 

 money, which the country purchased ; and, besides, the 

 whole circulating medium of a nation is so small, com- 

 pared with its whole circulating capital, that such a 

 void can never be considered as a national misfortune, 

 or counterbalance the immense advantage of possessing 

 a fund ready, without new sacrifices, at the moment of 

 want. 



From confounding money with capital, has arisen 

 the general mistake of attempting to increase the na- 

 tional capital by a fictitious capital, which, not having 

 been created by an expensive labour, is not, like gold 

 or silver, a pledge of the values it represents ; and 

 which, after having delighted nations with the illusions 

 of wealth, has so frequently left them in ruin. 



It will be more easy to follow the operation, by which 

 so many states in our time have endeavoured to replace 

 their money by paper, if we previously direct our atten- 

 tion to the manner in which one of the most ancient 

 trading cities of France made a few crowns perform 

 the functions of a considerable circulating medium. At 

 Lyons, it was agreed upon in trade, that all payments 

 should take place only at four fixed periods, quarterly. 

 During the three days which the payments took up, all 

 the accounts of the city were settled at once. Each, at 

 the same period, had much to receive and much to pay. 

 But, on the days immediately preceding the payments, 

 all the merchants used to meet on the exchange, to make 

 what they called viremcns ; in other words, to assign 

 one to another such sums as would settle their accounts. 

 A owed B, who owed C, who owed D, who owed E, 

 himself indebted to A; and the five accounts were 

 settled without any payment. If E was not indebted 

 to A, it was agreed that A should pay E, and the other 

 four were acquitted by a single paymeut. Every 

 merchant bought but to sell again ; received, therefore, 

 but to pay ; and if those assignments were extended to 

 their utmost limits, one single sum of ten thousand 

 pounds would probably settle all the transactions of a 

 city, though these amounted to several millions. 



