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they enjoy internal tranquillity, as in the United States and the British Colonies. In the provinces formerly colonized by Spain and Portugal, civil dissension, the natural fruit of the despotic principles introduced from the mother countries, has unhappily marred, in some degree, the lot of their inhabitants.

Political economists are in the habit of explaining the high wages and prosperous condition of the cultivators of North America and our Australian possessions, by the single circumstance of these newly-settled countries possessing vast tracts of uncultivated land, from which it is easy for any industrious man by the labour of his own arm to procure a comfortable subsistence for himself and his family. But the fact is, that many of the most ancient states of the old world contain an almost equal abundance of waste and untilled. lands, of high natural fertility, and provided by nature with every requisite quality for the occupation and enjoyment of man, upon the sole condition that he exert the powers with which she has furnished him in the development of their productiveness. It is to the vices of the governments and institutions of the old world, not to the deficiency or exhaustion of its rich, and, through a vast extent, yet virgin soils, that we must attribute whatever is to be found of misery in the condition of their people. It is by the strong remaining taint of feudal slavery, the weight of despotic tyranny, and the ignorance and bigotry which a long course of systematic oppression has engendered in both people and rulers, that the development of their natural resources is impeded, in

dustry, economy, and foresight prevented from expanding themselves, and the gifts of a bountiful Providence turned but too frequently into curses. Nor can there be a stronger proof of this assertion than the comparatively unimproved condition in which the Spanish and Portuguese colonies have stagnated, though new and highly fertile states, for several centuries; whilst the northern states of America have made, in a third part of the time, such rapid progress in improvement, as to present already to the delighted contemplation of the friend of humanity one of the most powerful, wealthy, prosperous, and civilized nations of the globe, spread over a territory where little more than a century back there wandered only some scattered hordes of barbarous savages. The difference can be attributed to nothing but the different political institutions of these settlements, the one having been modelled on the peninsular despotisms, the other an emanation of the stern and independent spirit inherited from the ancient Scythian tribes, and which, even in the worst of times, still struggled for existence in some angle or other of the old world. There is nowhere a more striking proof of the relative advantages of free and despotic institutions, and of the habits, ways of thinking and acting, in a word, the social disposition, respectively generated in nations by such institutions, than is afforded by a comparison of the actual condition and past history of the American states of British origin, with those of Spanish and Portuguese derivation.

In countries where erroneous institutions-by

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giving to an arbitrary sovereign, or equally arbitrary aristocracy, the exclusive property of the soil,-have retained the cultivators in a state of poverty and helplessness, each individual peasant, with his family, occupies a separate plot of ground, and the share of the produce which is allowed to remain with him constitutes his wages, or the return for his labour. We have seen how scanty and insufficient under such circumstances this return will always be. Where, as in Britain, a better system of cultivation prevails, the occupier is in the habit of employing labourers to assist him, advancing to them their subsistence, or wages, and providing the tools, seed, and stock, necessary for carrying on his agricultural operations on tha extensive scale which is proved by experience to be most favourable to production. Such a cultivator is a capitalist, that is to say, an owner and employer of capital, or stock productively engaged. Before, therefore, we can appreciate all the results of this peculiar system of land occupation, we must endeavour to obtain a correct notion of the characteristics of that which has been already mentioned as the third great and almost indispensable element of production, viz. capital.

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CHAPTER VII

CAPITAL.

The result of previous Labour-Not affixed to Land-Nor incorporated with human ability-Nor reserved for private Consumption-But employed, or reserved for Employment, in Production, with a view to Profit from sale of its Produce.-Necessity of so restricting the meaning of the term.-Utility of Capital.-Profit on Capital.Nature of Profit, and natural right to its enjoyment.— Mistaken Views of those who declaim against the Profits of Capital.-Fixed and Circulating Capitals.-Elements of Profit.-Net Profit, or Interest of Money.-Inequality of Gross Profits.-Equality of Net Profit, in the same country.

LABOUR, as we have seen, without the assistance of the powers of nature as developed on the surface of the earth, can do nothing. But neither can labour do much, even with the possession of land, and the aid of all the powers of nature, in the absence of much previous preparation, the result of preceding labour;-and especially of a stock of tools to work with, of materials to work upon, and of food, clothing, and other necessaries for the maintenance of the labourer while at work. A few berries from the bush, water from the spring, and now and then a stray animal, taken by superior swiftness of foot, must compose the sole subsistence of the man who has within reach no prepared reserve, either of food, or of instruments for ob

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taining it. The poorest savage generally possesses some stores of this nature, the products of previous labour, nor always depends for his daily meal upon the chance of obtaining it by his daily exertion. But in an advanced state of society, few things can be produced and prepared for consumption except by processes which require much timedays, months, often years during which the labourers employed must be supplied with food, clothing, and other necessaries of subsistence. A variety of tools, instruments, and machinery, are equally necessary, as well as a stock of materials; all of which things have to be provided at an expense of much time and labour, before any of the ordinary operations of industry can commence. Stocks of all these things, it is evident, must be accumulated somewhere at hand, for the use of the various classes of labourers, or production of no kind could be carried on. The agricultural labourer could neither turn the soil, nor deposit a grain in it, if he were unprovided with his spade, plough, harrow, and other implements of husbandry. The smith and the carpenter must cease to work unless they can find somewhere a stock of iron and timber prepared to their hands, as well as the fuel, forge, and workshop, with the tools and instruments peculiar to their trades. And these, and all other classes of labourers, depend likewise for their daily sustenance and comforts, on the due provision of food, clothes, furniture, and houses, either in their own possession or within their reach.

The results of previous labour, accumulated in any country, constitute its stock of wealth or of the