A Treatise on Political Economy

Jean-Baptiste Say
Say, Jean-Baptiste
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C. R. Prinsep, trans. and Clement C. Biddle., ed.
First Pub. Date
Philadelphia: Lippincott, Grambo & Co.,
Pub. Date
6th edition. Based on the 4th-5th editions.
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We have seen above (Chap. III.) of what the productive capital of a nation consists, and to what uses it is applicable. So much it was necessary to specify, in enumerating the various means of production. We now come to consider and examine, what becomes of capital in the progress of production, and how it is perpetuated and increased.


To avoid fatiguing the reader with abstract speculation, I shall begin with giving examples, which I shall take from every day's experience and observation. The general principles will follow of themselves, and the reader will immediately see their applicability to all other cases, which he may have occasion to pronounce a judgment upon.


When the land-owner is himself the cultivator, he must possess a capital over and above the value of his land; that is to say, value to some amount or other consisting, in the first place, of clearance of the ground, together with works and erections thereon, which may at pleasure be looked upon as part of the value of the estate, but which are, nevertheless, the result of previous human exertion, and an accession to the original value of the land.*1


This portion of his capital is little subject to wear and tear; trifling occasional repairs will preserve it entire. If the cultivator obtain from the annual produce wherewithal to effect these repairs, this item of capital is thereby preservable in perpetuity.


Ploughs, and other farming implements and utensils, together with the animals employed in tillage, form another item of the cultivator's capital, and an article of much quicker consumption, which, however, may in like manner be kept up and renovated, as occasion may require, at the expense of the annual produce of the concern, and thus be maintained at its full original amount.


Finally, he must have stores of various kinds; seeds for his ground, provisions, fodder for his cattle, and food as well as money for his labourers' wages, &c.*2 Observe, that this branch of capital is totally decomposed once in the course of the year, at least; and sometimes three or four times over. The money, grain and provisions of every description disappear altogether; but so it must necessarily be, and yet not an atom of the capital is lost, if the cultivator, after abstracting from the produce a fair allowance for the productive service of his land (rent) for the productive service of the capital embarked (interest) and for the productive service of the personal labour that has set the whole in motion (wages), contrive to make the annual produce replace the outlay of money, seed, live stock, &c., even to the article of manure, so as to put himself in possession of a value equal to what he started with the preceding year.


Thus we find, that capital may yet be kept up, though almost every part of it have undergone some change, and many parts be completely annihilated; for, indeed, capital consists not in this or that commodity or substance, but in its value.


Nor is it difficult to conceive, that if the estate be sufficiently extensive, and managed with order, economy, and intelligence, the profits of the cultivator may enable him to lay by a surplus, after replacing the entire value of his capital, and defraying the expenses of himself and family. The mode of disposing of this surplus is of the utmost importance to the community, and will be treated of in the next chapter. All that is at present necessary is, to impress a clear conviction, that the value of capital, though consumed, is not yet destroyed, wherever it has been consumed in such way as to reproduce itself; and that a concern may go on forever, and annually render a new product with the same capital, although that capital be in a perpetual course of consumption.


After tracing capital through its various transformations in the department of agriculture, it will be easy to follow its transformations in the other two departments of manufacture and commerce.


In manufacture, as well as agriculture, there are some branches of capital that last for years; buildings and fixtures for instance, machinery and some kinds of tools; others, on the contrary, lose their form entirely; the oil and pot-ash used by soap-makers cease to be oil and pot-ash when they assume the form of soap. In the same manner, the drugs employed in dyeing indigo cease to be Brazil wood or annatto, as the case may be, and are incorporated with the fabric they are employed in colouring. And so of the wages and maintenance of the labourers.


In commerce, almost the whole capital undergoes complete transmutation, and many items of it several times in the course of a year. A merchant exchanges his specie for woollens or jewellery, which is one change of form. He ships them for Turkey, and on the voyage, some more of his money is converted into the wages of the crew. The cargo arrives at Constantinople, where he sells the investment to the wholesale dealers, who pay him in bills upon Smyrna, which is a second metamorphosis; the capital embarked is now in the shape of bills, which he makes use of in the purchase of cotton at Smyrna; a third transformation. The cotton is shipped for France and sold there, which completes the fourth change of form; thus reproducing the capital, most probably with profit, under its original shape of French coin.


It is obvious, that the objects capable of acting the part of capital are innumerable. If, at any given period, one wishes to know what the capital of a nation consisted of, it would be found composed of an infinity of objects, commodities and substances, of which it would be impossible to guess the aggregate value with any tolerable accuracy, and of which some are situated many thousand leagues from its frontiers. At the same time, it appears that the most insignificant and perishable articles are a part, and often a very important part, too, of the national capital; that although the items of capital are in a continual course of consumption and decomposition, it by no means follows, that the capital itself is destroyed and consumed, provided that its value be preserved in some other shape; consequently, that the introduction or import of the vilest and most perishable commodities may be just as profitable as that of the most costly and durable—gold or silver; that, in fact, the former, are more profitable the instant they are more sought after; that the producers themselves are the only competent judges of the transformation, export, and import, of these various matters and commodities; and that every government which interferes, every system calculated to influence production, can only do mischief.


There are concerns, in which the capital is completely renovated, and the work of production begun afresh, several times in the year. An operation of manufacture, that can be perfected and the product sold in three months, will admit of the capital being turned to account annually four times. It may be supposed that the profit each time is less than when the capital is turned but once in twelve months. Were it otherwise, there would be four times the profit gained; an advantage that would soon attract an overflow of capital in this particular channel, and lower the profit by competition. On the other hand, products that it requires more than a year to perfect, such as leather, must, over and above the original capital, yield the profits of more than one year; otherwise, who could undertake to raise them?


In the trade of Europe with China and the East Indies, the capital embarked is two or three years before its return. Nor is it necessary in commerce or in manufacture, any more than in agriculture, which has been cited as an example, that the capital should be realized in the form of money, to be entirely replaced. Merchants and manufacturers, for the most part, realize in this way the whole of their capital but once in their lives, and that is when they wind up and leave off business. Yet they are at no loss to discover at any time whether their capital be enlarged or diminished, by referring to the inventory of their assets for the time being.


The capital employed on a productive operation is always a mere advance made for payment of productive services, and reimbursed by the value of their resulting product.


The miner extracts the ore from the bowels of the earth; the iron-founder pays him for it. Here ends the miner's production, which is paid for by an advance out of the capital of the iron-founder. This latter next smelts the ore, refines and makes it into steel, which he sells to the cutler: thus is the production of the founder paid, and his advance reimbursed by a second advance on the part of the cutler, made in the price for the steel. This again the cutler works up into razor-blades, the price for which replaces his advance of capital, and at the same time pays for his productive agency.


It is manifest, then, that the value of the ultimate product, razor-blades, has been sufficient to replace all the capital successively employed in its production, and, at the same time, to pay for the production itself; or rather, that the successive advances of capital have paid for the productive services, and the price of the product has reimbursed those advances; which is precisely the same thing as if the aggregate or gross value of the product had gone immediately to defray the charges of its production.

Notes for this chapter

Arthur Young, in his View of the Agriculture of France, makes no estimate of this item of capital permanently vested in the land of France within its old limits; but merely reckons it to be less than the capital so vested in England, in the proportion of 36 livres tournois per English acre. So that, in the very moderate supposition, that half as much capital is vested in permanent amelioration of the land in France as in England, the capital so vested in Old France, reckoned at 7 dollars per acre, would amount, upon 131 millions of acres, to 817 millions of dollars for this item of French capital alone.
The same writer (Young) estimates, that in France, these two last items of capital, viz. implements, beasts of husbandry, stores of provisions, &c. may be set down at 9 dollars per acre, one acre with another; making an aggregate of 1179 millions of dollars; which, added to the former estimate, shows a total of 1996 millions of dollars, capital engaged in the agricultural industry of Old France. He estimates the same items of capital in England at twice as much per acre.

Book I, Chapter XI

End of Notes

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