Knowledge Is Power. Charles Knight
of capital, its causes and results—Property, its constituents—Accumulation of capital.
There is an account in Foster's Essays of a man who, having by a short career of boundless extravagance dissipated every shilling of a large estate which he inherited from his fathers, obtained possession again of the whole property by a course which the writer well describes as a singular illustration of decision of character. The unfortunate prodigal, driven forth from the home of his early years by his own imprudence, and reduced to absolute want, wandered about for some time in a state of almost unconscious despair, meditating self-destruction, till he at last sat down upon a hill which overlooked the fertile fields that he once called his own. "He remained," says the narrative, "fixed in thought a number of hours, at the end of which he sprang from the ground with a vehement exulting emotion. He had formed his resolution, which was, that all these estates should be his again; he had formed his plan, too, which he instantly began to execute." We shall show, by and by, how this plan worked in detail;—it will be sufficient, just now, to examine the principles upon which it was founded. He looked to no freak of fortune to throw into his lap by chance what he had cast from him by wilfulness. He neither trusted to inherit those lands from their present possessor by his favour, nor to wring them from him by a course of law. He was not rash and foolish enough to dream of obtaining again by force those possessions which he had exchanged for vain superfluities. But he resolved to become once more their master by the operation of the only principle which could give them to him in a civilized society. He resolved to obtain them again by the same agency through which he had lost them—by exchange. But what had he to exchange? His capital was gone, even to the uttermost farthing; he must labour to obtain new capital. With a courage worthy of imitation he resolved to accept the very first work that should be offered to him, and, however low the wages of that work, to spend only a part of those wages, leaving something for a store. The day that he made this resolution he carried it into execution. He found some service to be performed—irksome, doubtless, and in many eyes degrading. But he had a purpose which made every occupation appear honourable, as every occupation truly is that is productive of utility. Incessant labour and scrupulous parsimony soon accumulated for him a capital; and the store, gathered together with such energy, was a rapidly increasing one. In no very great number of years the once destitute labourer was again a rich proprietor. He had earned again all that he had lost. The lands of his fathers were again his. He had accomplished his plan.
A man so circumstanced—one who possesses no capital, and is only master of his own natural powers—if suddenly thrown down from a condition of ease, must look upon the world, at the first view, with deep apprehension. He sees everything around him appropriated. He is in the very opposite condition of Alexander Selkirk, when he is made to exclaim "I am monarch of all I survey." Instead of feeling that his "right there is none to dispute," he knows that every blade of corn that covers the fields, every animal that grazes in the pastures, is equally numbered as the property of some individual owner, and can only pass into his possession by exchange. In the towns it is the same as in the country. The dealer in bread and in clothes—the victualler from whom he would ask a cup of beer and a night's lodging—will give him nothing, although they will exchange everything. He cannot exist, except as a beggar, unless he puts himself in the condition to become an exchanger.
But still, with all these apparent difficulties, his prospects of subsisting, and of subsisting comfortably, are far greater than in any other situation in which he must labour to live. As we have already seen, the condition of by far the greater number of the millions that constitute the exchangers of civilized society is greatly superior to that of the few thousands who exist upon the precarious supplies of the unappropriated productions of nature in the savage life. Although an exchange must always be made—although in very few cases "the fowl and the brute" offer themselves to the wayfaring man for his daily food—although no herbs worth the gathering can be found for the support of life in the few uncultivated parts of a highly cultivated country—the aggregate riches are so abundant, and the facilities which exist for exchanging capital for labour are therefore so manifold, that the poorest man in a state of civilization has a much greater certainty of supplying all his wants, and of supplying them with considerably more ease, than the richest man in a state of uncivilization. The principle upon which he has to rely is, that in a highly civilized country there is large production. There is large production because there is profitable labour;—there is profitable labour because there is large accumulation;—there is large accumulation because there is unlimited exchange;—there is unlimited exchange because there is universal appropriation. John Tanner was accounted a rich man by the Indians—doubtless because he was more industrious than the greater number of them; but we have seen what privations he often suffered. He suffered privations because there was no capital, no accumulation of the products of labour, in the country in which he lived. Where such a store exists, the poorest man has a tolerable certainty that he may obtain his share of it as an exchanger; and the greater the store the greater the certainty that his labour, or power of adding to the store, will obtain a full proportion of what previous labour has gathered together.
In 1853 the amount of stock vested to the account of depositors in savings-banks in the United Kingdom was 34,546,434l. Since the establishment of savings-banks, 68,885,283l. had been so invested; and the gross amount of interest paid to the depositors had been 25,733,771l. This large capital, which had so fructified as to produce more than twenty-five millions as interest, was an accumulation, penny by penny, shilling by shilling, and pound by pound, of the savings of that class of persons who, in every country, have the greatest difficulty in accumulating. Habitual efforts of self-denial, and a rigid determination to postpone temporary gratification to permanent good, could alone have enabled these accumulators to retain so much of what they had produced beyond the amount of what they consumed.
The capital sum of more than thirty-four millions now belonging to the depositors in 575 savings-banks, represents as many products of industry as could be bought by that sum. It is a capital which remains for the encouragement of productive consumption; that is, it is now applied as a fund for setting others to produce—to enable them to consume while they produce—and in like manner to accumulate some part of their productions beyond what they consume. The millions of interest which the depositors have received is the price paid for the use of the capital by others who require its employment. The whole amount of our national riches—the capital of this and of every other country—has been formed by the same slow but certain process of individual savings, and the accumulations of savings, stimulating new industry, and yielding new accumulations.
The consumption of any production is the destruction of its value. The production was created by industry to administer to individual wants, to be consumed, to be destroyed. When a thing capable of being consumed is produced, a value is created; when it is consumed, that value is destroyed. The general mass of riches then remains the same as it was before that production took place. If the power to produce, and the disposition to consume, were equal and constant, there could be no saving, no accumulation, no capital. If mankind, by their intelligence, their skill, their division of employments, their union of forces, had not put themselves in a condition to produce more than is consumed while the great body of industrious undertakings is in progress, society would have been stationary—civilization could never have advanced.
It may assist us in making the value of capital more clear, if we take a rapid view of the most obvious features of the accumulation of a highly civilized country.
The first operation in a newly settled country is what is termed to clear it. Look at a civilized country, such as England. It is cleared. The encumbering woods are cut down, the unhealthy marshes are drained. The noxious animals which were once the principal inhabitants of the land are exterminated; and their place is supplied with useful creatures, bred, nourished, and domesticated by human art, and multiplied to an extent exactly proportioned to the wants of the population. Forests remain for the produce of timber, but they are confined within the limits of their utility;—mountains "where the nibbling flocks do stray," have ceased to be barriers between nations and districts. Every vegetable that the diligence of man has been able to transplant from the most distant regions is raised for food. The fields are producing a provision for the coming year; while the stock for immediate consumption is ample, and the laws of demand and supply are so perfectly in