EXTENSIVE USE OF CREDIT.

8.

of exchange. But these two things are perfectly distinct, and a very little examination would suffice to convince us that the employment of credit in commerce, as a medium of exchange, has been very considerably underrated—that it has always carried on a much larger amount of business than money, and indeed that, without it, commerce could have made but very little progress, cramped and fettered as it would have been by the disadvantages incident to the use of metallic money, which is, in truth, only a somewhat superior kind of barter.

This inquiry, however, may be better reserved for a future occasion. I will only mention here three facts, illustrative of the vastly superior extent to which in commercial countries credit is necessarily employed as an instrument of exchange, beyond real or metallic money. These are, first, that the entire commerce of Scotland, foreign and domestic, is carried on without the practical use of a single gold piece. Secondly, that, at the banker's clearing-house in London, exchange transactions are daily settled to the extent of five millions sterling-on some days of thirteen millions-without the intervention of any coin whatever, and by the employment of a floating balance of only about 200,0001. in Bank of England notes, themselves merely representing the credit of that establishment. Thirdly, that there is at every moment in existence an aggregate mass of transferable credit in the shape of book debts, foreign and inland bills of exchange, mortgages, annuities, and other monied liabilities, including the great national debt itself, to an extent, as regards

the whole empire, certainly of several thousand millions in value, the whole of which is strictly in continual employment as a medium of exchangean instrument, that is, whereby one individual obtains possession by consent of the produce or property of another;-while the amount of real or metallic money circulating through the same countries does not perhaps exceed thirty millions, and might probably, as in Scotland, be dispensed with altogether, without affecting in the least the extent of this prodigious mass of transactions on credit.

CHAPTER V.

Wages-Ample and continually increasing Wages secured to Labourers by the principles of Free Labour and Free Exchange-Inequality of Wages in different employments, and of different individuals—Ability, even of the lowest class, increases, and its reward ought to rise proportionately, with the progress of civilization.

HOWEVER directed, the motive to labour, freely exercised, must always be the result accruing to the labourer. This is technically called his wages. And since the more productive labour is rendered by the subdivision of employments and facilitation of exchanges we have been describing, the greater must be the aggregate quantity of the good things of life produced, it seems self-evident that the share falling to the lot of each individual labourer, as his recompense or wages, ought to be proportionately augmented. That it will be so, seems equally obvious, if the several labourers and the several owners of the elements of production are left free to settle terms with each other, whence there must result a fair adjustment of their relative claims on the joint produce. The great principles, in short, of free labour, and free disposal of its produce, would seem amply sufficient to secure an equitable distribution of property among the several classes who contribute to its creation.

And this we believe to be an unquestionable truth. Under institutions securing freedom in

the direction of labour, and in the enjoyment, disposal, and consequently exchange of its products in the home or foreign markets, the products of industry will divide themselves spontaneously in the most equitable manner among the several classes whose labour or property co-operates in any way in their production; and the benefits they thence derive will so stimulate the exertions of the several classes of producers, as to cause a continued cumulative increase, not merely in the wealth of the society so organized, but also in the share of that wealth falling to the lot of any individual member. We believe that if, in some societies which have reached a highly artificial and complicated state, this, its natural and legitimate consequence, has not always followed every improvement in the division of labour and facilitation of exchanges, it must necessarily be owing, and can in every case, by some little attention, be traced to the interference of erroneous institutions with these simple natural principles of production and distribution, an interference adopted sometimes, perhaps, in ignorance of its mischievous effects to the community at large, but generally with more or less of a fraudulent intention of diverting the produce of industry into other hands than those into which the just system of free labour and free exchange would distribute it. On such interferences, and the means whereby their ill effects can be most safely and speedily corrected, we shall have the opportunity of dwelling more at length hereafter.

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But under a system of free exchange the recompense (wages) of every labourer will be by no

INEQUALITY OF ABILITY AND OF ITS REWARD. 87

means equal; nor even exactly proportioned to the severity or duration of his employment. It must be determined by the value of his produce in the market. And this will increase in proportion to the talent, skill, and application of the labourer, or any other circumstances which may render his labour more productive than that of another. A man whose natural powers of body or mind enable him to contribute more efficiently to the general work of production than another, may equitably expect, and will, under the system of free exchange, receive a larger share of the gross general produce. The same is true of one who by advantages of education or continued application, has acquired a supe rior degree of skill or knowledge in any of the arts of industry. And the increased reward thus obtained by increased productiveness, is the motive and necessary stimulus to those efforts for rendering labour more productive, which have carried mankind forward from the savage to the civilized state, and can alone be depended upon for inciting him to yet further advances. Every attempt to equalize the wages of different employments or individuals by compulsory arrangements has the certain effect of damping the ardour of industry, putting a stop to improvement, and checking the march of production.

The powers of an individual to produce, or cooperate in the production of wealth, may be called his ability. The lowest degree of ability consists of the rude, unskilled, untutored, muscular powers of the human frame. The great body of labourers in all countries are possessed of little more than this inferior ability. But the recompense (wages)