An Essay on the Principle of Population
Book III, Chapter X
Of Systems of Agriculture and Commerce combined.
In a country the most exclusively confined to agriculture, some of its raw materials will always be worked up for domestic use. In the most commercial state, not absolutely confined to the walls of a town, some part of the food of its inhabitants, or of its cattle, will be drawn from the small territory in its neighbourhood. But, in speaking of systems of agriculture and commerce combined, something much further than this kind of combination is intended; and it is meant to refer to countries, where the resources in land, and the capitals employed in commerce and manufactures, are both considerable, and neither preponderating greatly over the other.
A country so circumstanced possesses the advantages of both systems, while at the same time it is free from the peculiar evils which belong to each, taken separately.
The prosperity of manufactures and commerce in any state implies at once that it has freed itself from the worst parts of the feudal system. It shews that the great body of the people are not in a state of servitude; that they have both the power and the will to save; that when capital accumulates it can find the means of secure employment, and consequently that the government is such as to afford the necessary protection to property. Under these circumstances, it is scarcely possible that it should ever experience that premature stagnation in the demand for labour, and the produce of the soil, which at times has marked the history of most of the nations of Europe. In a country in which manufactures and commerce flourish, the produce of the soil will always find a ready market at home; and such a market is peculiarly favourable to the progressive increase of capital. But the progressive increase of capital, and particularly of the quantity and value of the funds for the maintenance of labour, is the great cause of a demand for labour, and of good corn wages, while the high relative price of corn, occasioned by the improved machinery and extended capital employed in manufactures, together with the prosperity of foreign commerce, enables the labourer to exchange any given portion of his earnings in corn for a large proportion both of domestic and foreign conveniences and luxuries. Even when the effective demand for labour begins to slacken, and the corn wages to be reduced, still the high relative value of corn keeps up comparatively the condition of the labouring classes; and though their increase is checked, yet a very considerable body of them may still be well lodged and well clothed, and able to indulge themselves in the conveniences and luxuries of foreign produce. Nor can they ever be reduced to the miserable condition of the people in those countries, where, at the same time that the demand for labour is stationary, the value of corn, compared with manufactures and foreign commodities, is extremely low.
All the peculiar disadvantages therefore of a purely agricultural country are avoided by the growth and prosperity of manufactures and commerce.
In the same manner it will be found that the peculiar disadvantages attending states merely manufacturing and commercial will be avoided by the possession of resources in land.
A country which raises its own food cannot by any sort of foreign competition be reduced at once to a necessarily declining population. If the exports of a merely commercial country be essentially diminished by foreign competition, it may lose, in a very short time, its power of supporting the same number of people; but if the exports of a country which has resources in land be diminished, it will merely lose some of its foreign conveniencies and luxuries; and the great and most important of all trades, the domestic trade carried on between the towns and the country, will remain comparatively undisturbed. It may indeed be checked in the rate of its progress for a time by the want of the same stimulus; but there is no reason for its becoming retrograde; and there is no doubt that the capital thrown out of employment by the loss of foreign trade will not lie idle. It will find some channel in which it can be employed with advantage, though not with the same advantage as before; and will be able to maintain an increasing population, though not increasing at the same rate as under the stimulus of a prosperous foreign trade.
The effects of home competition will in like manner be very different in the two states we are comparing.
In a state merely manufacturing and commercial, home competition and abundance of capital may so reduce the price of manufactured compared with raw produce, that the increased capital employed in manufactures may not procure in exchange an increased quantity of food. In a country where there are resources in land this cannot happen; and though from improvements in machinery and the decreasing fertility of the new land taken into cultivation, a greater quantity of manufactures will be given for raw produce, yet the mass of manufactures can never fall in value, owing to a competition of capital in this species of industry, unaccompanied by a correspondent competition of capital on land.
It should also be observed that in a state, the revenue of which consists solely in profits and wages, the diminution of profits and wages may greatly impair its disposable income. The increase in the amount of capital and in the number of labourers may in many cases not be sufficient to make up for the diminished rate of profits and wages. But where the revenue of the country consists of rents as well as profits and wages, a great part of what is lost in profits and wages is gained in rents, and the disposable income remains comparatively unimpaired.
Another eminent advantage possessed by a nation which is rich in land, as well as in commerce and manufactures, is, that the progress of its wealth and population is in a comparatively slight degree dependent upon the state and progress of other countries. A nation, whose wealth depends exclusively on manufactures and commerce, cannot increase without an increase in the raw products of the countries with which it trades; or taking away a share of what they have been in the habit of actually consuming, which will rarely be parted with; and thus the ignorance and indolence of others may not only be prejudicial, but fatal to its progress.
A country with resources in land can never be exposed to these inconveniences; and if its industry, ingenuity, and economy increase, its wealth and population will increase, whatever may be the situation and conduct of the nations with which it trades. When its manufacturing capital becomes redundant, and manufactured commodities are too cheap, it will have no occasion to wait for the increasing raw products of its neighbours. The transfer of its own redundant capital to its own land will raise fresh products, against which its manufactures may be exchanged, and by the double operation of diminishing comparatively the supply, and increasing the demand, enhance their price. A similar operation, when raw produce is too abundant, will restore the level between the profits of agriculture and manufactures. And upon the same principle the stock of the country will be distributed through its various and distant provinces, according to the advantages presented by each situation for the employment, either of agricultural or manufacturing capital.
A country, in which in this manner agriculture, manufactures, and commerce, and all the different parts of a large territory, act and re-act upon each other in turn, might evidently go on increasing in riches and strength, although surrounded by Bishop Berkely's wall of brass. Such a country would naturally make the most of its foreign commerce, whatever might be the actual state of it; and its increase or decrease would be the addition or removal of a powerful stimulus to its own produce; but still the increase of this produce, to a very considerable extent, would be independent of foreign countries; and though it might be retarded by a failure of foreign commerce, it could not either be stopped or be made retrograde.
A fourth advantage derived from the union of agriculture and manufactures, particularly when they are nearly balanced, is, that the capital and population of such a country can never be forced to make a retrograde movement, merely by the natural progress of other countries to that state of improvement to which they are all constantly tending.
According to all general principles, it will finally answer to most landed nations, both to manufacture for themselves, and to conduct their own commerce. That raw cottons should be shipped in America, carried some thousands of miles to another country, unshipped there, to be manufactured and shipped again for the American market, is a state of things which cannot be permanent. That it may last for some time, there can be no doubt; and I am very far from meaning to insinuate that an advantage, while it lasts, should not be used, merely because it will not continue for ever. But if the advantage be in its nature temporary, it is surely prudent to have this in view, and to use it in such a way, that when it ceases, it may not have been productive, on the whole, of more evil than good.
If a country, owing to temporary advantages of this kind, should have its commerce and manufactures so greatly preponderate as to make it necessary to support a large portion of its people on foreign corn, it is certain that the progressive improvement of foreign countries in manufactures and commerce might, after a time, subject it to a period of poverty and of retrograde movements in capital and population, which might more than counterbalance the temporary benefits before enjoyed; while a nation in which the commercial and manufacturing population continued to be supported by its agriculture, might receive a very considerable stimulus to both, from such temporary advantages, without being exposed to any essential evil on their ceasing.
The countries which thus unite great landed resources with a prosperous state of commerce and manufactures, and in which the commercial part of the population never essentially exceeds the agricultural part, are eminently secure from sudden reverses. Their increasing wealth seems to be out of the reach of all common accidents; and there is no reason to say that they might not go on increasing in riches and population for hundreds, nay almost thousands of years.
We must not, however, imagine that there is no limit to this progress though it is distant, and has certainly not been attained by any large landed nation yet known.
We have already seen that the limit to the population of commercial nations is the period when, from the actual state of foreign markets, they are unable regularly to import an increasing quantity of food. And the limit to the population of a nation which raises the whole of its food on its own territory is, when the land has been so fully occupied and worked, that the employment of another labourer on it will not, on an average, raise an additional quantity of food sufficient to support a family of such a size as will admit of an increase of population.
This is evidently the extreme practical limit to the progress of population, which no nation has ever yet reached, nor, indeed, ever will; since no allowance has been here made either for other necessaries besides food, or for the profits of stock, both of which, however low, must always be something not inconsiderable.
Yet, even this limit is very far short of what the earth is capable of producing, if all were employed upon it who were not employed in the production of other necessaries; that is, if soldiers, sailors, menial servants, and all the artificers of luxuries, were made to labour upon the land. They would not, indeed, produce the support of a family, and ultimately not even of themselves; but, till the earth absolutely refused to yield any more, they would continue to add something to the common stock; and, by increasing the means of subsistence, would afford the means of supporting an increasing population. The whole people of a country might thus be employed during their whole time in the production of mere necessaries, and no leisure be left for other pursuits of any kind. But this state of things could only be effected by the forced direction of the national industry into one channel by public authority. Upon the principal of private property, which it may be fairly presumed will always prevail in society, it could never happen. With a view to the individual interest, either of a landlord or farmer, no labourer can ever be employed on the soil, who does not produce more than the value of his wages; and if these wages be not on an average sufficient to maintain a wife, and rear two children to the age of marriage, it is evident that both the population and produce must come to a stand. Consequently, at the most extreme practical limit of population, the state of the land must be such as to enable the last employed labourers to produce the maintenance of as many, probably, as four persons.
And it is happy for mankind that such are the laws of nature. If the competition for the necessaries of life, in the progress of population, could reduce the whole human race to the necessity of incessant labour for them, man would be continually tending to a state of degradation; and all the improvements which had marked the middle stages of his career would be completely lost at the end of it; but, in reality, and according to the universal principle of private property, at the period when it will cease to answer to employ more labour upon the land, the excess of raw produce, not actually consumed by the cultivators, will, in the shape of rents, profits, and wages, particularly the first, bear nearly as great a proportion to the whole as at any previous period, and, at all events, sufficient to support a large part of the society living, either without manual labour, or employing themselves in modifying the raw materials of the land into the forms best suited to the gratification of man.
When we refer, therefore, to the practical limits of population, it is of great importance to recollect that they must be always very far short of the utmost power of the earth to produce food.
It is also of great importance to recollect that, long before this practical limit is attained in any country, the rate of the increase of population will gradually diminish. When the capital of a country becomes stationary from bad government, indolence, extravagance, or a sudden shock to commerce, it is just possible that the check to population may, in some degree, be sudden, though, in that case, it cannot take place without a considerable convulsion. But when the capital of a country comes to a stop from the continued progress of accumulation and the exhaustion of the cultivable land, both the profits of stock and the wages of labour must have been gradually diminishing for a long period, till they are both ultimately so low as to afford no further encouragement to an increase of stock, and no further means for the support of an increasing population. If we could suppose that the capital employed upon the land was, at all times, as great as could possibly be applied with the same profit, and there were no agricultural improvements to save labour, it is obvious that, as accumulation proceeded, profits and wages would regularly fall, and the diminished rate in the progress of population would be quite regular. But practically this can never happen; and various causes, both natural and artificial, will concur to prevent this regularity, and occasion great variations at different times in the rate at which the population proceeds towards its final limit.
In the first place, land is practically almost always understocked with capital. This arises partly from the usual tenures on which farms are held, which, by discouraging the transfer of capital from commerce and manufactures, leaves it principally to be generated on the land; and partly from the very nature of much of the soil of almost all large countries, which is such that the employment of a small capital upon it may be little productive, while the employment of a large capital in draining, or in changing the character of the soil by a sufficient quantity of natural and artificial manures, may be productive in a high degree; and partly also, from the circumstance that after every fall of profits and wages there will often be room for the employment of a much greater capital upon the land than is at the command of those, who, by being in the actual occupation of farms, can alone so employ it.
Secondly; improvements in agriculture. If new and superior modes of cultivation be invented, by which not only the land is better managed, but is worked with less labour, it is obvious that inferior land may be cultivated at higher profits than could be obtained from richer land before; and an improved system of culture, with the use of better instruments, may, for a long period, more than counterbalance the tendency of an extended cultivation and a great increase of capital to yield smaller proportionate returns.
Thirdly; improvements in manufactures. When by increased skill and the invention of unproved machinery in manufactures one man becomes capable of doing as much as eight or ten could before, it is well known that, from the principle of home competition and the consequent great increase of quantity, the prices of such manufactures will greatly fall; and, as far as they include the necessaries and accustomed conveniences of labourers and farmers, they must tend to diminish that portion of the value of the whole produce which is consumed necessarily on the land, and leave a larger remainder. From this larger remainder may be drawn a higher rate of profits, notwithstanding the increase of capital and extension of cultivation.
Fourthly; the prosperity of foreign commerce. If from a prosperous foreign commerce our labour and domestic commodities rise considerably in price, while foreign commodities are advanced comparatively very little, an event which is very common, it is evident that the farmer or labourer will be able to obtain the tea, sugar, cottons, linens, leather, tallow, timber, &c. which he stands in need of, for a smaller quantity of corn or labour than before; and this increased power of purchasing foreign commodities will have precisely the same effect, in allowing the means of an extended cultivation without a fall of profits, as the improvements in manufactures just referred to.
Fifthly; a temporary increase in the relative price of raw produce from increased demand. Allowing, what is certainly not true, that a rise in the price of raw produce, will, after a certain number of years, occasion a proportionate rise in labour*37 and other commodities; yet, during the time that the price of raw produce takes the lead, it is obvious that the profits of cultivation may increase under an extended agriculture, and a continued accumulation of capital. And these intervals, it should be observed, must be of infinite importance in the progress of the wealth of a landed nation, particularly with reference to the causes of deficient capital upon the land before mentioned. If the land, for the most part, generates the new capital which is employed in extending its cultivation; and if the employment of a considerable capital for a certain period will often put land in such a state, that it can be cultivated afterwards at comparatively little expense; a period of high agricultural profits, though it may last only eight or ten years, may often be the means of giving to a country what is equivalent to a fresh quantity of land.
Though it is unquestionably and necessarily true, therefore, that the tendency of a continually increasing capital and extending cultivation is to occasion a progressive fall both of profits and wages; yet the causes above enumerated are evidently sufficient to account for great and long irregularities in this progress.
We see, in consequence, in all the states of Europe, great variations at different periods in the progress of their capital and population. After slumbering for years in a state almost stationary, some countries have made a sudden start, and have begun increasing at a rate almost approaching to that of new colonies. Russia and parts of Prussia have afforded instances of this kind, and have continued this rate of progress after the accumulation of capital and the extension of cultivation had been proceeding with great rapidity for many years.
From the operation of the same causes we have seen similar variations in our own country. About the middle of last century the interest of money was at 3 per cent.; and we may conclude that the profits of stock were nearly in proportion. At that time, as far as can be collected from the births and marriages, the population was increasing but slowly. From 1720 to 1750, a period of 30 years, the increase is calculated to have been only about 900,000 on a population of 5,565,000.*38 Since this period it cannot be doubted that the capital of the country has been prodigiously enlarged, and its cultivation very greatly extended; yet, during the last twenty years, we have seen the interest of money at above 5 per cent., with profits in proportion; and, from 1800 to 1811, an increase of population equal to 1,200,000 on 9,287,000, a rate of increase about two and a half times as great as at the former period.
But, notwithstanding these causes of irregularity in the progress of capital and population, it is quite certain that they cannot reach their necessary practical limit but by a very gradual process. Before the accumulation of capital comes to a stop from necessity, the profits of stock must, for a long time, have been so low as to afford scarcely any encouragement to an excess of saving above expenditure; and before the progress of population is finally stopped, the real wages of labour most have been gradually diminishing, till, under the existing habits of the people, they could only support such families as would just keep up, and no more than keep up, the actual population.
It appears then, that it is the union of the agricultural and commercial systems, and not either of them taken separately, that is calculated to produce the greatest national prosperity; that a country with an extensive and rich territory, the cultivation of which is stimulated by improvements in agriculture, manufactures, and foreign commerce, has such various and abundant resources, that it is extremely difficult to say when they will reach their limits. That there is, however, a limit, which, if the capital and population of a country continue increasing, they must ultimately reach, and cannot pass; and that this limit, upon the principle of private property, must be far short of the utmost power of the earth to produce food.
Notes for this chapter
A rise, which is occasioned exclusively by the increased quantity of labour which may be required in the progress of society to raise a given quantity of corn on the last land taken into cultivation, must, of course, be peculiar to raw produce, and will not be communicated to those commodities, in the production of which there is no increase of labour.
Population Abstracts, Preliminary Observations, table, p. xxv. .
End of Notes
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