INTRODUCTION.

DEFINITIONS AND DIVISIONS.

Political Economy is the science which shows how things intended to satisfy our wants are produced, and how they are consumed; how they are distributed among a people, and how they are exchanged one for another all over the world.

The science springs from four fundamental truths: 1. God has made men creatures of many wants, and filled the world in which they live with means for satisfying those wants.

2. The labor of men is necessary to draw out the materials of nature, and to fit them for use in meeting men's wants.

3. The exertion of labor establishes for the laborer a right of property in the things which he produces. 4. The right of property implies the right of exchange or sale, and diversity of labor necessitates between men exchanges of the fruits of their labor.

Three desires in men contend for the mastery: 1. Desire of ease. This tends to repress labor. 2. Desire of present gratification. This tends to consume the fruits of labor at once.

3. Desire of means for future gratifications. This tends to stimulate labor, and to save its fruits.

A man or a nation grows rich only as the third of these desires overrules the other two.

Wealth is the collective name for all useful things which can be owned and exchanged. Some things are very useful, yet they form no part of wealth, because they cannot be exclusively appropriated. Such are air, sunlight, and commonly water. Other things, such as bread, salt, cloth, iron, houses, &c., are capable both of satisfying wants, and of being exclusively possessed and exchanged. Only these are properly accounted wealth.

The original source of wealth is the bounty of God in nature.

The secondary source of wealth is human labor directed to bring forth the bounty of nature in form, in time, and in place, to meet the wants of

men.

Wealth is increased only by constant reproduction, i.e., by destroying some useful articles to bring forth others. Thus the wheat that is sown must die, in order that a new crop may spring from it, yielding thirty, sixty, or a hundred fold: the leather in the hide must be cut up to make shoes, in which form it meets wants. If a man consumes all his wheat, he will have none to sow. The tanner prepares his leather, expecting it to be used up for shoes. Abstinence and foresight attend all productive labor. Thus industry and frugality are indispensable conditions of the increase of wealth.

Value is purchasing power, or that quality in an object which gives it power to command other objects in exchange. The term supposes always a comparison of two objects with reference to an exchange. Thus value is a relative, not an absolute, quality.

Two things are combined in this quality of value, first, utility, that is, adaptedness to satisfy want or gratify desire; second, cost, that is, some labor necessary to produce the object. We can think of nothing which has greater utility than air and light; but they have no value, because they are so freely supplied to all that they cost no labor. If one has spent a day's labor in making a table, he will not give it to his neighbor for air or light which he can have for nothing; nor will he exchange it for a box which he could make with half a day's labor. So, in general, the value of an article is determined very much by the labor which it costs to produce or procure it. Things are exchanged at what is called their natural value, when the terms are adjusted by the relative cost, labor for labor.

The utility of an object is its desirableness for gratification. This may vary with circumstances, such as individual taste, the fashion of the day, the emergency of the hour, &c. To one who cannot read, a book will have no use; for his own gratification he will give nothing for it. One will readily give a gold watch for a loaf of bread when there is no other means of saving him from starvation; then the value, the purchasing power, of the loaf, rises a thousand-fold above its actual cost.

These two elements thus define the extreme limits

of value. The most one will give for an object is determined by his estimate of its utility, or the gratification it will afford him. The least a man will ordinarily take for an object is determined by its cost, or the labor necessary to produce it.

Between these limits value may temporarily fluctuate, as the relations of supply and demand vary. When the supply of an object is small, and many persons desire it, the purchasing power of that object is increased by competition among the buyers. When a larger quantity of an article has been produced than is wanted, the purchasing power of that article is diminished by competition among the sellers. But this state of things, in either case, will not continue long; for free competition tends always to settle the value of all things upon the natural basis of cost.

Divisions. - Political economy treats of the production of things to satisfy wants. Hence the two leading divisions of the science are Production and Consumption.

Production is the process of labor applied to objects of nature to adapt them to the satisfaction of wants. We can neither create nor annihilate any part of matter; but we can modify almost every thing so as to impart to it some utility,—that is, we can create value. Under this division, therefore, are considered the processes and laws by which labor gives value to things. The substances thus brought out are called products.

Consumption is the act of destroying utilities

either for immediate gratifications, or to produce some new utility for future gratifications. The actual destruction of values is necessarily involved. Under this division are considered the laws which govern the economical use of wealth to satisfy wants or gratify desires.

There are among men great diversities of capacity for labor. It is therefore good economy of productive effort to unite the labors of many persons on a particular product, so that each may contribute the part which he can do best. Yet each person has a variety of wants, while his own labor is devoted to one thing. He must therefore get what he needs in exchange for what he makes. Hence arise two other branches of our science, logically subordinate to those just mentioned, though practically of the highest importance. They are Distribution and Exchange.

Distribution embraces questions of equity and practical methods pertaining to the assignment to different laborers of their respective shares of values produced. Here are considered the difficult problems growing out of the mutual relations of employers and employed.

Exchange is the act of transferring things from one to another, according to their values. Each individual is busied in creating one utility, and wants a thousand. Each country produces of certain articles far more than it needs, and needs many others which it cannot produce at all. Hence the necessity of universal and ceaseless exchange. Under this division are considered the instruments,