in the same trade can employ a greater capital than another; sometimes directly, by employing twenty hundreds of pounds where the other can employ only five; sometimes indirectly, by turning over several times (i. e. by using for several distinct operations) each separate portion of capital, whilst the other man turns it over only once. But of all such differences between man and man, we may say either that they do not affect the rate of profits by the least disturbance; or if in any case they do, in a world of practice where the principle of average must be applied to wages, to rent, and to every mode of return, the inference will simply be, that we must apply that principle also to profits. I have already stated my own incredulity as to the notoriety (not as to the existence) of any definite rate upon profits at any period. Such a rate may be approximated conjecturally; it cannot be known. But if it could, that result must be obtained by abstracting from all extremes, whether one way or the other; and therefore to have proved an extreme would not have disproved a mean

rate.

rise

up

Finally, I will answer two important questions likely to in the end before every student: Is there, he will ask, any known objection or demur to the law of profits, as stated by Ricardo? That is, any demur to this particular doctrine as distinct from objection to the entire system of Ricardo? I answer that there is none, except the following of Mr. Malthus. He in his Principles, at p. 301, (1st edit.) insists upon it, that there is “a main cause which influences profits," quite overlooked by Ricardo. What may that cause be? "The proportion which capital bears to labor." Ricardo had laid it down, that the rate of profit upon the land last brought under tillage, • upon that land which is presumably the worst in use,must be the regulating rate for all profits whatso

ever. No, replies Mr. Malthus; not necessarily. That is one regulating cause, no doubt; but there is another. "When capital is abundant compared with labor, nothing can prevent low profits"; and inversely, no fertility in the land as yet taken up can separately maintain high profits, "unless capital is scarce compared with labor." But to this, however tortuous the objection becomes by Mr. Malthus's clouded logic, the answer is short. The action is supposed to lie through wages. Mr. Malthus means that the laborers will receive higher wages when capital is redundant, so that the part of the produce left for profits will be smaller; and versû vice. But without entering into the changes incident to the price of labor, (for labor does not depend for its value upon any one element as capital, but upon several, which may be all acting in one direction, or all in opposite directions,) thus much is evident, that only the binomial (or market) price of the labor could be affected in the circumstances supposed, consequently only the binomial value of profits. A disturbed relation between capital and labor, would no otherwise affect labor in its price than as the rate of population would affect it. When population advances too rapidly, the tendency of wages must pro tanto be downwards; and so of other elements concurring to the complex value of labor. But none of these potential modifications escaped the eye of Ricardo: again and again he has pointed them out as fit subjects for allowance when they occur, though he has designedly and avowedly neglected them where they would have interfered with the simplicity of the principal law. What Mr. Malthus brings forward as a second law, such as ought therefore to be capable of defeating and intercepting the first, is nothing more than a tendency to modify the first. In the same spirit of high promise and trivial performance, Mr. Malthus had menaced the whole of Ricardo's doctrine upon

value. The quantity of labor, he would show us, did not always constitute the cost of an article; nor the cost of an article always constitute its price. Why, then, what did? With loud laughter Ricardo heard, as if this were some new and strange proposition, that by possibility the too much or too little of the article might also affect the price, a price of twenty might by a scarcity of five be raised to twenty-five; or by a redundancy of five be lowered to fifteen. But who doubted, or had ever doubted, this? That is binomial price. All the points which Malthus exposed as weak and assailable points, had always been exposed by Ricardo as points liable to a separate caution. But this is not to answer Ricardo's doctrine of profits: this is simply to exhibit Ricardo's doctrine with those modifications broadly expanded, which for good reasons Ricardo had left indicated in a briefer shape.

The other question remains a practical question, and carrying along with it a sting of anxiety to whole generations. It is this. Amongst all men (even those who pretend to no scientific economy) there is a misgiving that profits, and by consequence interest, must be under a fatal necessity of gradually sinking, until at length they touch. the point of extinction. Even Ricardo has too much authorized this false idea. There is no essential tendency downwards in profits, more than upwards. True, there is a constant motion downwards upon the land scale from good to bad, from bad to worse: and as that happens to be chiefly concerned in the doctrine of rent, which again reappears in the doctrines of profits and wages, Ricardo had a disproportionate necessity for continually dwelling on that particular movement. But to this, which acts from year to year, there is a tendency strictly antagonist, which acts much more slowly at times, and is felt most from century to century. The principle has been repeatedly brought

forward and explained; so that there is no reason for dwelling on it here. But, by way of a single illustration from our modern experience in this particular, it may be well to mention these facts. Go back to a period two centuries from 1844, and the current rate of interest will be found nearer to 8 than 7 per cent. Go back to a period only one century from 1844, and interest is found to have fallen so low as 3 per cent. This was the prevailing rate through that part of Sir Robert Walpole's public life which lay in the reign of George II., or, in general terms, from 1727 to about 1739-43. In the course of this latter period, interest again began to advance; and in forty or forty-five years more it had risen beyond 5 per cent. During the great revolutionary war, although limited at that time by law, interest rose in the market much beyond that legal maximum. It was more than double what it had been in the reign of George II. In our present era of peace, uninterrupted for twenty-eight years, it has again receded. But this brief abstract of experience through two centuries, unites with the à priori theory in showing, that the rate of interest is under no immutable law of declension. During these two centuries it has not uniformly declined, - on the contrary, it has oscillated in all directions; and by that one fact, so abundantly established, we are released from all apprehensions of a downward destiny. Our fate in that respect is not sealed; it rests very much in our own hands.

NOTES.

NOTE 1. Page 10.

MEANING- —no credit at all, but ready money. One incomprehensible old commentator pretends that Plautus, in this phrase, designed a compliment to Greek integrity! He is obliged, however, to confess, as the true ground of the saying, that "Fluxæ fuerunt olim admodum fidei Græci: idcirco Græcus Græco non fidebat, nisi præsenti et numeratâ pecuniâ." Meantime. though the fluxa fides of the unprincipled Greek was quite undeniable, and, in fact, ruinous to the fiscal service, yet, doubtless, the general want of capital amongst sellers contributed to this absence of credit almost as much as the universal want of probity in the buyers.

NOTE 2. Page 12.

"A striking instance of such a use."—It occurs in a very useful letter (under date of Dantzic, January 21, 1843) on the Baltic corntrade, from a writer evidently familiar with the subject, and authenticating his statements by a real signature. The object of the writer, Mr. J. L. Stoddart, is to expose the true and ultimate operation of all fixed duties considered as protections to the home-grower, under those dreadful fluctuations in price which not man but nature causes, and which "cannot be avoided, in spite of the philosophers, who dream they have discovered the philosopher's stone for steadying prices." The purpose and the execution of this gentleman's letter are equally excellent; but the use which he makes of the word value, was so perplexing to me in its particular position and connection, that at first I apprehended some gross misprint. After one introductory sentence, in which he describes himself as a neutral observer under the advantage of being "removed from the excitement of the struggle between manufacturer and agriculturist," Mr. Stoddart goes