224 REPORT— 1871. 



presence of large capital, simply l)ecanse capital consists to a large extent of those 

 requisites of life that make our daily food. Hence the importance, for <auy such 

 emergency, that a country have a large instead of a small capital, that it carry on 

 its business with a large instead of a siuaU cui-rent balance of all the things dealt 

 in. The object of the paper is to set forth the causes by which capital arises and 

 increases or decreases in a country, to set forth, in short, the law of capital. 



In speaking of Persia, it will be said at once that an element of political or 

 social insecurit)' readily accounts for a permanently small capital. That is both 

 true and obvious, and therefore the author confined himself to countries that are, in a 

 general way, of equal civilization and security, in order that our law of capital may 

 more clearly show itself. Take then most of the European States, and average 

 them respectively in their soils, forests, mines, in their respective climates. Their 

 industry is all thoroughly organized, and the respective governments, although 

 politically unlike, may be assumed as equally protective of the private rights "of 

 property. They seem thus fairly matched for the commercial race, and yet they 

 arrive at very different results, for some have come to much greater wealth than 

 others. Our own country in particular has reached a surpassing position in this 

 respect, with capital ever overflowing to make up the deficiencies of its neigh- 

 bours. 



When we ask for the causes of this in countries that, as we saw, appeared so 

 equally balanced in the substantials of the race, we shall find one dissimilar con- 

 dition that has not been alluded to, namely, the mode of a country's industry or 

 trading. It is of a more aggregative or wholesale character in one country than 

 another. As matter of fact, we can perceive that the more aggregative industries 

 carry with them the largest capitals, and our business now is to inquire how this 

 is so. How does capital arise, how maintain itself, how increase or diminish ? 



There is no need at this time of daj- to explain the economic doctrine of the sub- 

 division of labour, by which industry is made more productive. That is ostensibly 

 and mainly a question of the law of production ; but the author deals with the part of 

 the subject that has to do with the law of capital. Let us for a moment go bade 

 to that primitivism that must have preceded subdivision of labour amongst early 

 mankind generalh', and that still lingers amongst existing barbarism. There is no 

 trading in that social condition. The family, with its fitful industry and its few 

 wants, works only for itself. The only property such a society can have is the 

 home or the homestead of each family, whatever these may be like. There is no 

 exchanging and no exchangeable property, no capital in the commercial sense. 



From this isolative aspect of industrial life let us turn to the other, with which 

 we are more familiar. With advancing civilization society has lapsed or drifted of 

 itself into labour-subdivision, from a practical perception that its labour-power is 

 thus turned to better account. Let us follow this arrangement and note how a 

 fund or capital, that had no previous existence, arises out of it. AVhere the family 

 no longer supplies directly its own wants, but is occupied in each case over only 

 one or a few of society's many various requirements, there comes concurrently, of 

 course, a system of mutual exchange of products. The difierent households of a 

 town or district fall in this way into intertrading, and by extension of the same 

 principle the trading extends by degrees to adjacent commvmities, to adjacent 

 countries, and to the world in general. But all this trading requires a trade-appa- 

 ratus. When the families of a community begin to intertrade, each requires some 

 little stock on hand, according to its extent of custom ; others need a factory, or a 

 warehouse, or a shop, and a stock in trade is piled up, according to the wants of 

 each case. When one community trades with another the aggregation of industry 

 and its wholesale dispositions are still more marked, and all tlie stoclcs and other 

 apparatus of iutertracling are on a proportionately greater scale. There are roads 

 and railways for the inland, and ships for the 'sea-transportations, and greater 

 stocks and machinery and agency everywhere. 



_ AU this may be called the trading expenses. They constitute, indeed, an expen- 

 sive accompaniment, which would not be willingly maintained by traders, were it 

 not essential to the kind of trade they carry on, and were it not paid for, and some- 

 thing more, by tlie progressive economy of production accompanying every such 

 8tep in this aggregative or wholesale direction of industry. This, then, is our 



