DIMINUTION OF REAL COST.

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interference with improvements from which society at large profits so greatly, for the sake of protecting the particular classes engaged in the employments about to be superseded, is obviously indefensible. Interference has been often asked for by the sufferers in these cases, and their advocates. But such a principle, once admitted, it is evident, would tend directly to stop all improvement; it would have necessitated the prohibition of printing for the protection of manuscript copyists-of steamboats for the protection of sailmakers-and of bridges for the protection of ferrymen: it would go to prevent the employment of every contrivance by which human labour is aided in any branch of industry, and reduce us,—as was well observed by a Glasgow operative before a committee of the House of Commons-to the teeth and nails as our sole instruments of production. The sure result of every improvement in machinery is an increased production of the means of enjoyment. Whatever partial evils attend that beneficial result, may and ought to be mitigated by other means than by placing obstacles in the way of the march of improvement.

Capital which consists in tools or machinery, is more or less durable, and will usually aid in the successive production of a large quantity of commodities before it is wholly consumed. The portion of such capital that is consumed in production enters as an element into cost, together with the current rate of profit upon it for the time during which it has been advanced. Thus the cost of one hundred quarters of corn to the grower includes, besides his labourers' wages

and his own, the value of that portion of his stock (viz., seed-corn, ploughs, harrows, and other implements, horses, horse-provender, manure, &c.,) which has been consumed in raising his crop, together with the current profit on the value of every several portion of this capital for the time during which it has been employed in the production of his corn. Hence, improvements which save any part of the time necessarily consumed in the business of production, effect a material reduction in the cost of the produce, by lessening the amount of profit chargeable on the capital employed, as well as the amount of wages chargeable for the labour of those who assist in, or superintend, the work. The improvements we have just noticed in communications of every kind, and above all the extraordinary acceleration which has taken place of late years in the conveyance of both public and private intelligence, throughout this and other countries, have contributed in a remarkable degree to diminish the producing costs of many objects by enabling their producers to save much of the time which was formerly wasted in the intervals between the different stages of the process of production, as well as between its completion and final sale. If a manufacturer is able through such circumstances to turn his capital twice in the year, where formerly he could have turned it but once, that portion of the producing cost of his article which consists of the profit on the capital employed, and of the wages of himself, and perhaps several of his assistant labourers, his clerks, &c., will be but half what it was at the former period.

2. When the entire supply of a commodity, or

of

MONOPOLY CHARGES.

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any of the elements necessary to the production of a commodity, is produced under a monopoly, the extraordinary charges which the owner of the monopoly is thereby enabled to make, go to swell the amount of its cost. Thus the proprietor of a patent or secret process by which a particular article is exclusively produced, has it in his power to charge a monopoly price for his article beyond. the amount of the ordinary wages and profits on the labour and capital consumed in its production. So the owner of a vineyard, which, like that of Tokay, or Chateau Margaut, exclusively produces wine of a peculiarly fine quality, is enabled to raise the price of its produce to those who buy of him far beyond the ordinary remuneration for the capital and labour expended upon it. And these extraordinary charges enter into the producing cost of the article, because their payment is the necessary condition of its production for sale.. Unless their terms are agreed to, the monopolists may decline to produce or sell the article at all. All commodities which, in any stage of their production, or in any one of their necessary elements, are subject to similar charges for exclusive powers or privileges, are proportionably raised in producing cost. And their cost is proportionably lowered by the breaking down of any such monopolies, and the opening to all of the power or privi lege so exercised by a few. But it must be observed that the payment of all such monopoly charges is wholly voluntary on the part of the consumer, who has no right to complain of its exaction, so long as he is left free to purchase or procure the article in any cheaper manner if he can.

When, however, only a portion of the entire supply is produced under a monopoly, the necessary cost of the article is not affected by such monopoly, but consists solely of the labour, time, and capital required to produce that portion of the supply which is brought to market under the least favourable circumstances to its producers, and consequently, under no monopoly. Though the parties concerned in the production of the remaining portion of the supply receive a monopoly profit, they do not thereby raise the price of their article. It is out of their power by refusing to produce, or by any other means, to raise the price one jot beyond that at which the commodity can be supplied by other parties who will be content to get the current profit on capital and wages of labour. The proprietor of a peculiarly rich or well-situated coal mine, for example, obtains a monopoly profit upon his produce, consisting of the difference between the cost of producing the article from his mine, and the cost of the same article from the poorest or worst-situated mine of all by which the market is habitually supplied. But the price of the entire supply of coal is determined by the cost of this latter portion, and is therefore in no degree raised by the superior advantages enjoyed by the owner of the best mines. The same law, as we have already seen, applies to all raw produce derived from land;-the cost of which is in no degree affected by the rent of the best lands; but is determined by the labour, capital, and time required for its production from the least favourably situated lands of all that habitually supply the same market.

3. It is obvious that the amount of taxation to which a commodity is liable, in itself or any of its component elements, must add just so much to the cost of producing it for sale in the market, together with the current rate of profit on the sums so paid for the time during which they have been advanced. A diminution of the customs duties on foreign produce, or of the taxes levied on articles of home growth or manufacture, or on any of the materials employed in their production, has the effect of diminishing their cost to the producer. So also the breaking out of a war, by increasing the premium on marine insurances, adds to the producing cost of all imported goods.*

The majority of political economists, in pursuance of the fallacy already exposed of identifying value with labour, resolve cost of production into the quantity of labour only, required for producing the article. It is scarcely necessary to say more in refutation of so palpable an error. Land and capital must unite with labour in the production of every thing, and the owners of land and capital, no less than the owners of labour, have the power of demanding and are in the habit of receiving a share of the value of every commodity, in return for what they contribute towards its pro duction. And even though we should exclude from consideration all monopoly charges, and view the value of land and capital as the result merely of anterior labour, yet it would be in the highest degree irrational to refuse to distinguish the labour that inclosed and cleared a field, planted an oak, or raised a building centuries ago, or that which built a ship, or framed a machine several years back, from the labour which is employed at the present time in using the land, building, timber, vessel, or machine, in the preparation of something for immediate sale. Nor even though we admitted all land and capital to owe their value to labour, would this suffice to resolve cost ultimately into labour. For it will not be denied that profit is a constant element in cost. And this, as we have proved, is a compensation not for labour,