As regards the happiness of the community, then, a pressure on their comforts, which must be more severely felt, is a greater detraction from that happiness than any equal pressure could be on those who, besides being fewer in number, are more able to bear it.

A rise in the value of money tends to destroy capital; especially that which belongs to the active capitalists. We have seen that a great deal of borrowed capital is in the hands of persons in business; consequently there is a loss to them on the whole of this capital when repaid, and on the interest while it is retained, from their having to return or discharge it in money of a higher value than that which was received and engaged to be paid. The farmer and trader, when they bring their articles to market, find they fetch less money than before, though the cost of bringing them there is the same, and, consequently, they are deprived of the accustomed profit on which they are to live, or perhaps are subjected to a loss. It is true, the money they receive is of higher value than that which they expended in production, and if all prices and charges were at once adjusted to this higher value, their smaller nominal amount of money received would enable them to purchase a fresh supply of materials, to hire workmen, and continue production as before. But the wages and charges to which they are exposed in business, cannot be all reduced immediately to the level of the new prices. The farmer's rent, during the continuance of his lease, will not be lowered; the same may be said of the taxes, interest of money; in short, of almost all the charges to which he is subject. All these, though paid in money of superior value, will remain for some time the same; and nothing but a suspension of business and an interval of distress will induce any of the parties to lower their demands. Accordingly, such suspension and distress ensue, not less as a matter of necessity, because business cannot be continued without loss, than as the only means through which it can be again renewed with advantage to all parties. The fall of prices, and the failure of demand, disconcert the best planned undertakings and the most prudent speculations. Those men who were scarcely able to make good their engagements before, are now,

that profits are taken away and business suspended, deprived of the means of doing so. Their failures entail losses on others, and property becomes locked up, or wasted in bankruptcies and law expenses. A want of confidence ensues. The diminution in the amount of paper money in circulation, which perhaps occasioned an enhancement of the value of the currency, compels, while the apprehension of losses induces, the banks to lessen or withdraw their discounts; monied capitalists follow their example, and the merchant is deprived of the accustomed accommodation on which he calculated. When this takes place suddenly, as is sometimes the case, the most disastrous consequences ensue; especially to persons who have been led by the previous accommodation to extend their concerns beyond what their own capitals are sufficient to carry on. In such cases stoppages become numerous, credit is shaken, even wealthy men are not safe. In the storm which a general panic occasions, it is not the most wealthy but the most prudent who suffer the least. As in a storm at sea, it is not the largest or the strongest vessel which best rides out the tempest, but the one whose sails are most quickly reefed, and which is best prepared to let it blow over. In the mean time, the labours of industry are suspended. One individual, under the apprehension that he will not be able to sell his usual quantity of goods, or that he will not be able to gain a profit upon them, or perhaps that he may lose through trusting others, employs fewer workmen than before. But the diminished quantity of his goods will not enable him to obtain better prices, because money has become more valuable; and because similar apprehensions cause less business to be done in other trades, from which there will be fewer articles to offer in exchange for them; and hence the demand will be contracted in the same proportion as the supply. Thus, whilst the active capitalists are wholly paralyzed in their exertions, or, with business at a stand, are compelled to employ a part of their capital, which ought to be destined for reproduction, in consumption for the support of their families, the inactive proprietors in general spend the whole of the really increased rents and interest they get at their expense; and the want of production and losses on one side, with little or no countervailing

capital, and future reEven these proprietors way by the increased

accumulation on the other, causes the sources of the country, to waste away. themselves, though they gain in one value of their rents and interest, are yet compelled to submit to a set-off of losses, and to share in some measure in the general distress. It is the industrious classes from whom every sort of supply is originally acquired. If their industry is suspended or impeded, the supply of the whole is lessened; the rents or interest of the rich cannot be so well paid, and all must suffer.

It may be thought that a rise in the value of money, as it lowers the prices of commodities, would raise the real wages of labour, by affording to the labourer a greater command over the necessaries and conveniences of life. But though it has this effect in the case of some workmen, its general effect is the reverse. We have seen that a fall in the prices of goods must necessarily be followed by a reduction in the cost of producing them, and that this reduction cannot be effected except by a suspension of business and general distress through which parties are compelled to lower their charges. Now the greater part of the cost of production in most articles consists in the wages of labour. Wages, therefore, in such case must come down. But the common people, having no notion that money ever fluctuates in value, when prices decline, though it be merely from an enhancement in the value of money, the lower prices of which are of equal value and will purchase as much of other goods as the higher prices procured before, are unwilling to lessen their wages and charges, and become indignant at the offer of lower terms. Thus the period of suspension of industry and suffering is protracted. The best workmen may continue to get full employment at their accustomed wages; but, with the greater number, if at first they obtain those wages, there is but little work to be procured, and through want of full occupation their earnings on the whole are lessened; while the worst hands find no work at all, and are reduced to distress. Ultimately, however, wages come down to that level at which the master can proceed with business, and find a vent for all the goods which the workmen can produce at such prices as yield a profit to himself. In the interim, we ought rot to complain of this

distress. It is the salutary, though painful, process through which alone industry can again arrive at its healthy state of renewed activity; it is the medicine which cures the disease of over-selfishness by which commercial prosperity is prevented.

An advance in the value of money occasions an addition to the pressure of the debt and taxation of a country. The dividends and annuities of the public funds, the pensions and salaries of all the public officers, are paid in money, nominally the same in amount, but of greater value; and, consequently, with a larger portion of the produce of the industry of the community; while this increased burthen, by absorbing that part of the produce out of which accumulations of capital would be chiefly made, lessens the ability of the people to support it, not only for the time present, but in future.

Mr. Scrope asserts, that "The great pressure which is now felt from the excessive burthen imposed by taxation on the springs of our productive industry, is owing to the gradual rise during the last fifteen years in the value of our standard metal, gold. The currency has been on the whole appreciated nearly one hundred per cent. since the greater portion of our debt was incurred. Consequently, the burthen of taxation is nearly double what it was at that time."*

Thus we have seen that a change in the value of the currency inflicts equal injustice in the distribution of property, whether it be a rise or fall, altering the previous relation of debtor and creditor, varying the terms, and violating the spirit of all previous monetary engagements. The effects of a fall, however, are for the time beneficial to the great majority of the community, though injurious to a few,-promoting industry, diffusing confidence, and increasing capital and production. But this factitious prosperity has no solid base to rest upon. The violations of private engagements which it occasions are followed, at no great distance of time, by similar violations on the opposite parties, from a restoration of the currency, not merely to its original value, but to a value even beyond it; and no previous advantage accruing from the fall, can be put in competition with the incalculable mischief and loss to the comPolit. Econ. p. 409.

munity, proceeding from the general suspension of business and destruction of capital which such restoration of value occasions.

From all that has been said on this branch of our subject, we are enabled to appreciate, in some measure, the importance of the influence which the employment of a circulating medium has on industry and society at large; as well as the magnitude of the consequences, and derangement in the distribution of property, which follow from an alteration in its value. To prevent this, and maintain that medium at a steady and uniform amount and value, differing only from time to time as natural circumstances and the actual wants of circulation require, must ever be an object of the first national concern. Accordingly, there is nothing affecting industry in which it is more essential that the maxim of non-interference should be observed than in this

CHAPTER XVII.

ON THE DIVISION OF PROPERTY.

PROPERTY is only desirable as it affords the means of enjoyment; and the degree of enjoyment which the whole property of any community may be expected to afford to its members must very much depend upon its distribution amongst them, or the sort of equality or inequality and gradation of fortune generally obtaining throughout the society.

If the property of a community be possessed in large masses by a few individuals, while the great body of the people are poor, the enjoyment which this property confers must be much inferior to what it would confer if it were more equally distributed. However large a private fortune may be, it affords gratification to only one person or family; that is, to the proprietor and his family; and perhaps this family, with all its riches, is not more happy than it would have been had its possessions never been more than a small part of what they are. While its