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farmer, in producing the various agricultural products, must consume a portion of his previously acquired capital, consisting of seed, wages of labor, provender for working ani. mals, wear and tear of the implements of husbandry, &c.

§ 986. In a former part of this essay, we have seen that a union of capital and labor is essential to production; which is, in effect, the consumption of one value for the production of another value: and this consumption is of capital and labor. As no valuable product is created but by the destruction of previously existing values, in other words, the consumption of capital previously produced, economy requires that this productive consumption, as it is properly called, should be of the smallest value capable of creating the largest product.

§ 987. To the economical consumption of capital and labor, several things are necessary. A man would unwisely expend his capital, who should build a manufactory at a cost of one thousand dollars, when one costing half that sum would be sufficient for his business. There would be a total waste of five hundred dollars, which might have been profitably employed in carrying on his manufacturing operations. The farmer would be chargeable with the same im. providence, who should purchase twice as much land as he is able to stock and cultivate to advantage, or who should keep twice as many working animals as are necessary for the cultivation of his farm. The same may be said of the merchant who should purchase a stock of merchandise worth ten thousand dollars, when a stock of half that amount would supply the wants of his customers.

§ 988. In commencing business, therefore, a man should not only invest the least amount of capital that he can profitably employ; but he ought so to regulate his investment, that his fixed capital shall be duly proportioned to his circu lating capital; by which we mean, that he ought to lay out so small a portion of his capital for land, buildings, or ma. chinery, as to leave as much as possible to be employed in

tion? What is it designed for? § 986. What is meant by produc tive consumption? § 987. If a farmer should buy more land than he could cultivate, what would be the effect upon his interest? § 988. What general principle should regulate the outlay of his capital?

carrying on directly the business of production. Suppose that a man has a capital of two thousand dollars, and that he expends fifteen hundred dollars in the purchase of machinery, tools, &c. when an outlay of one thousand dollars for that purpose is sufficient: he has now but five hundred dollars for the purchase of the raw material of his manufacture, and provisions for his workmen, and for the payment of their wages; whereas, by an economical apportionment of his capital, he might employ double this amount in the business of production.

§ 989. The same principle applies to the consumption of labor. A manufacturer may employ too great a number of laborers. Where there are too many workmen, some of them will generally be idle a part of the time, and one idle person will hinder many others. On the other hand, he may employ too small a number of laborers to avail himself of the greatest benefit of the division of labor, which has been explained in one of the chapters on production. For if there be too few workmen, one must perform several kinds of labor, or several different operations, which could be most profitably performed, when each workman is confined to one kind of labor, or to a single operation.

§ 990. Also, the different kinds of labor should be rightly proportioned to each other. In almost every branch of industry, there is employed a greater or less quantity of both educated and simple labor. If, therefore, a manufacturer should employ none but experienced and skilful laborers at the highest rate of wages, when a part of the labor might be done by uneducated laborers, perhaps by women and children; he would evince a great lack of economy. On the contrary, the intrusting of important business to persons wanting the requisite experience and skill, is sometimes attended with much loss.

§ 991. Every part and every item of capital should be furned to account. A tailor who should so cut up his cloth, as to waste as much of every piece as would make a gar. ment, must necessarily make slow progress in the way to

How ought he to proportion his fixed and circulating capitals? § 989 What is the effect of a man's employing too many or to few laborers? § 990. Wherein consists the advantage of employing a portion of

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wealth. Many a mechanic has thus been kept in a state of poverty; while others by an habitual observance of proper care in working up, or saving all the pieces," (to use a common phrase,) have accumulated moderate fortunes in the course of their business.

§ 992. Like economy should be practised in the consumption of labor. To secure the faithful performance of all the labor employed, the farmer or mechanic must, as far as possible, personally superintend his own business. Few workmen are as careful of their employer's interest, as he is himself, or as industrious in his absence as in his presence. It is important, also, that the best tools be had, and that they be kept in the best order, and ready for use at all times. Much labor is often lost by the failure of a weak, unsound instrument, or by the use of one that is unwieldy, or out of repair.

993. Hence we see, that a man who would thrive in business, must be frugal in the consumption of capital and labor. What is saved by an economical expenditure of these, reduces, by so much, the cost of the manufacture; and his profits on the capital and labor employed are so much greater. A persevering application of these princi. ples to almost any business, if it do not speedily put a man in the possession of a fortune, will never fail of securing to him at least a comfortable independence.

§ 994. The consumption of value to satisfy the wants and desires of individuals, is called unproductive consumption, in contradistinction to the consumption of value for the purpose of reproduction; and may be considered to include the consumption of whatever is necessary to sustain human life, and render it agreeable. The expenditure of what is necessary to procure the absolute necessaries of life and a practical education, has been with some degree of propriety called productive consumption; because without them we could either not produce any thing at all, or we could not produce it abundantly. But as no material product is directly

simple labor? § 992. By what management can an employer get the greatest amount of labor from his workmen ? § 993. What will be the effect of an observance of these principles of economy upon a person's prosperity? § 994. What is unproductive consumption?

produced by this consumption, we choose to call it unproductive consumption.

§ 995. A person who has learned economy in the expenditure of capital and labor for reproduction, will not be at a loss in managing the business of unproductive consumption. He will neither purchase too much of a thing at a time, nor purchase what he does not want, simply because it is cheap. And every article will be wholly consumed; that is to say, he will avail himself of all the bene. fit which it is capable of affording, before its use is dispensed with. And if he indulge in pleasure or amusements of any kind, they will be of a rational and intellectual character

CHAPTER XXII.

Public Consumption.

§ 996. By recurring to those chapters in different parts of this work, which relate to taxation, duties, &c., it will be seen what are some of the objects of public expenditure, and the necessity of taxation, in order to provide the means of compensating the legislative, executive, and judicial officers of the government, and of promoting various other objects of public utility. Whether the consumption of the national capital be more properly called productive, or unproductive consumption; it is a fact which admits of no dispute, that the expenditure of money beyond what is necessary to secure the services of the best officers, and to promote the general welfare, is a total public loss.

§ 997. The different modes of taxation have been de. scribed in those parts of this work above referred to. Taxes, as we have there observed, are either direct, as when they

995. By what general principles ought a man's household economy to be regulated?

§ 996. Is the needless expenditure of the public money a public loss? § 997. What are direct taxes? Indirect taxes? §998, 999

are laid upon the head or property of a person; or indirect, as when they are laid upon articles of consumption. But in which of these two modes taxes ought to be levied, is a question on which statesmen and political economists are not agreed.

§ 998. A large portion of the taxes collected in this country, are of the indirect kind. Such are those which are paid into the national treasury: they consist chiefly of duties paid on goods imported. It is objected to this mode of taxation, that the mass of the people do not know the amount of the taxes they pay, when they buy the commo. dities on which the taxes are imposed. Hence they become careless of expenditure, and are less disposed to watch those who are intrusted with the expenditure of the public

treasure.

§ 999. Another objection to indirect taxation, is, that it is unequal. The poor are obliged either to forego the use of the articles taxed, or to pay as great a portion of the public tax as the rich. Whereas it is contended, that the latter ought to bear a part of the public burthen, proportioned to the relative amount of their property, or to their ability to pay. Taxes are therefore most equal when laid upon property.

1000. Taxes laid upon property in proportion to its value, are clearly the most equal; and indirect taxes, so far as they augment the prices of the necessaries of life, with out conveying a corresponding benefit to the consumer, must be in their operation unequal. But if the conclusions which we have drawn from the arguments presented in favor of and against protective duties, and from the operation of the system of protection in this country, are correct, the duties laid upon imports do not operate as taxes to the consumer, at least not to the extent by many supposed. (See Protective Duties.)

§ 1001. In public consumption, the first and immediate

What are the objections which are sometimes made against indirect taxation? Why are they supposed to operate unequally? § 1000. What conclusion have you formed from the arguments given for and against protective duties, in former chapters? § 1001. What is the more immediate object of public consumption? What would be the

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