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"which it flows; but the treasures of the new 66 world, like a swelling torrent, were seen, were "heard, were felt, were admired: yet their first operation was to desolate and lay waste the spot "on which they fell. The shock was sudden; the "contrast was too great. Spain overflowed with specie, whilst other nations were comparatively 66 poor in the extreme. The price of labour, of provisions, and of manufactures, bore proportion "to the quantity of circulating cash. The consequence is obvious: in the poor countries industry "advanced; in the more wealthy it declined.

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"Even in the present day (1806), specie being "about 6 per cent. less valuable in Spain than it "is in other countries, operates precisely in the "same proportion against her manufactures and " her population."

We may here, I think, conclude our observations on the principles of trade; and having now explained the different sources from which a revenue may be derived, we shall at our next meeting make a few enquiries into the nature and effects of expenditure.

SUMING CAPITAL. INCREASE OF REVENUE OF A COUNTRY BENEFICIAL TO ALL CLASSES OF PEOPLE.

EXCEPT IN CASES WHERE GOVERNMENT INTERFERES WITH THE DISPOSAL OF CAPITAL.

OF

OF LUXURY.

INDUSTRY

SUMPTUARY LAWS.
PROMOTED BY LUXURY. PASSAGE FROM PALEY

ON LUXURY.

SUDDEN INCREASE OF WEALTH

PREJUDICIAL TO THE LABOURING CLASSES.

PASSAGE FROM BENTHAM ON LEGISLATION.

LUXURY OF THE ROMANS NOT THE RESULT OF INDUSTRY. OF THE DISADVANTAGES ARISING

FROM EXCESS OF LUXURY.

MRS. B.

I TRUST that you now understand both the manner in which capital is accumulated, and the various modes of employing it to produce a revenue.

It

remains for us to examine how this revenue may be disposed of.

CAROLINE.

I have already learnt that revenue may either be spent, or accumulated and converted into capital; and that the more a man economises for the latter purpose, the richer he becomes.

MRS. B.

This observation is equally applicable to the capital of a country, which may be augmented by industry and frugality, or diminished by prodigality.

CAROLINE.

The capital of a country, I think you said, consisted of the capital of its inhabitants taken collectively?

MRS. B.

It does; but you must be careful not to estimate the revenue of a country in the same manner, for it would lead to very erroneous calculations. Let us, for instance, suppose my income to be 10,0002. a-year, and that I pay 500l. a-year for the rent of my house it is plain that this 500l. constitutes a portion of the income of my landlord; and since therefore the same property, by being transferred from one to another, may successively form the income of several individuals, the revenue of the country cannot be estimated by the aggregate income of the people.

CAROLINE.

And does not the same reasoning apply to the expenditure of a country; since the 500l. a-year which you spend in house-rent will be afterwards spent by your landlord in some other manner?

MRS. B.

--

True, because spending money is but exchanging one thing against another of equal value; — it is giving, for instance, one shilling in exchange for a loaf of bread, five guineas in exchange for a coat ; instead of a shilling we are possessed of a loaf of bread; instead of five guineas, of a coat; we are therefore as rich before as after these purchases are made.

CAROLINE.

If so, how is it that we are impoverished by spending money?

MRS. B.

It is not by purchasing, but by consuming the things we have purchased, that we are impoverished. When we have eaten the bread, and worn out the coat, we are the poorer, by five guineas and a shilling, than we were before.

A baker is not poorer for purchasing a hundred sacks of flour, nor a clothier for buying a hundred pieces of cloth, because they do not consume these commodities.

When a man purchases commodities with a view of re-selling them, he is a dealer in such commodities, and it is capital which he lays out. But when he purchases commodities for the purpose of using and consuming them, it is called expenditure. Expenditure therefore always implies consumption.

CAROLINE.

I understand the difference perfectly. The one lays out capital with the view of re-selling his goods with profit. The other spends money with the view of consuming the goods with loss; that is to say, the loss of the value of the goods he con

sumes.

MRS. B.

Just so. Thus though the sum of money you spend will serve the purpose of transferring commodities successively from one person to another, yet the commodities themselves can be consumed but once.

Therefore the consumption of a country may, like its capital, be estimated by the aggregate consumption of its inhabitants; and the great question relative to the prosperity of the country, is, how far that consumption takes place productively, and how far unproductively.

CAROLINE.

That, certainly, is a very important point; for in