pect of settling at the end of two or three years, has probably more satisfaction in the anticipation of his future wealth than he will have in the possession of it; as long as he continues making annual additions to his capital, the same source of enjoyment will be preserved, but will never excite so strong an interest as at first. Merchants will tell you that their first gains gave them greater pleasure than all their subsequent accumulations. Nature has wisely attached happiness to the gradual acquisition, rather than to the actual possession of wealth, thus rendering it an incitement to industry; and we shall hereafter see that this progressive state of prosperity is most conducive also to the happiness of nations. OF FIXED CAPITAL. DISTINCTION BETWEEN FIXED AND CIRCULATING CAPITAL. EXAMPLES OF THE DIFFERENT KINDS OF CAPITAL. OF SLAVES. FIXED CAPITAL AND CIRCULATING CAPITAL EQUALLY BENEFICIAL TO THE LABOURING CLASS. MACHINERY ADVANTAGEOUS ΤΟ THE LABOURING CLASSES. QUOTATION FROM MACPHERSON ON THE ADVANTAGES OF MACHINERY. QUOTATION FROM MR. SAY'S TREATISE ON POLITICAL ECONOMY. MRS. B. I HAVE Some further remarks to make to you on the nature of capital. A land-owner, when he increases his wealth by savings from his income, may probably, instead of employing the whole of his additional capital on husbandmen, find it more advantageous to lay out some part of it on workmen to build barns and outhouses, to store his crops and shelter his cattle; he may plant trees to produce timber, build cottages, and bring into cultivation some of the waste land on his farm. A manufacturer also may employ part of his capital in enlarging his machinery or augmenting his implements of industry. CAROLINE. But the capital laid out in buildings, tools, and machinery will not yield a profit like that which is employed in the payment of workmen, the produce of whose labour is brought to market? MRS. B. Not so immediately; but the farmer and manufacturer would not lay out their capital in this way, did they not expect to reap a profit from it. If a farmer has no barn or granary for his corn, he will be compelled to sell his crops immediately after the harvest, although he might probably dispose of them to greater advantage by keeping them some time longer. So a manufacturer, by improving or enlarging his machinery, can, with less labour, perform a greater quantity of work, and his profits will be proportionate. CAROLINE. No doubt if he employ machines instead of men, he will have no wages to pay, and the whole will be profit. MRS. B. Thus, for instance, when a manufacturer can afford to establish a steam-engine, and use a stream of vapour as a substitute for the labour of men and horses, he saves the expense of more than half the number of hands he before employed. The capital laid out in this manner is called fixed capital; because it becomes fixed, either in land, in buildings, in machinery or implements of art; it is by keeping this capital in possession, and using it, that it produces an income. Whilst the capital employed in the maintenance of productive labourers, whose work is sold and affords an immediate profit, is distinguished by the name of circulating capital. The produce of a farm, or the goods of a manufac turer, afford no profit until they are brought to market, and sold or exchanged for other things. This description of capital is, therefore, constantly circulating. It is transferred first from the master to the labourer, in the form of wages and raw materials; then from the labourer it is returned to the master, in the form of produce or workmanship of increased value; but the latter does not realise his profits until this produce is sold to the public, by which it is consumed. CAROLINE. I think I understand the difference between fixed and circulating capital perfectly. A farmer derives profit from his implements of husbandry by their use, while kept in his possession; and from his crops by parting with them. But to which kind of capital should the farming cattle be referred? MRS. B. It depends upon the nature of the cattle. The value of the labouring cattle is fixed capital, like the implements of agriculture; thus, the horses which draw the plough, as well as the plough itself, are fixed capital. But sheep and oxen intended for market are circulating capital. CAROLINE. But should the plough be drawn by oxen, Mrs. B., how would you settle the point then? for whilst they labour for the farmer they are fixed capital; but when they are sold to the butcher they become circulating capital. MRS. B. They alternately belong to each of these descriptions of capital; because the farmer makes his profit, first by keeping, and afterwards by selling them. CAROLINE. I do not understand why you should call the maintenance of labouring men circulating capital, whilst you consider that of labouring cattle as fixed capital: they appear to me to be exactly similar. MRS. B. The maintenance of cattle as well as that of labourers is circulating capital; that maintenance is in both cases consumed and reproduced with advantage; it is therefore by parting with it that profits are derived. But the value of the cattle themselves is fixed capital; and if labourers, like cattle, were purchased, instead of being hired, thus becoming the property of their employers, they also would be fixed capital. CAROLINE. And this was formerly the case with the poor Africans in the West Indies? MRS. B. Yes, and with slaves of every description. Even the peasantry of Russia and Poland are in general considered as fixed capital, because their state of vassalage is such as to amount to slavery, the proprietors of the land having a right to their labour without remuneration and the value of an estate in Russia is not estimated by the number of acres, but the number of slaves upon it; in the same manner as a West Indian plantation was estimated previous to the emancipation of the negroes. A similar state of vassalage prevailed through most parts of Europe some centuries ago; but in |