Cyclopædia of Political Science, Political Economy, and the Political History of the United States
SAVINGS. Saving is the intended conservation of the whole or part of a useful object; it is the setting apart of what is not indispensably necessary for actual wants; it is a provident reserve for certain contingencies, a provision or resource which perseverance increases from day to day, to guard against the necessities of an uncertain future. The saving is direct when it is exercised on the object itself, which is not actually consumed. It is, however, generally indirect, taking the form of money laid by until a profitable investment is found for it, or it is intrusted to some private or public savings institution.
—Adam Smith was the first to study the nature of savings, and he did it like a profound economist, politician and philosopher. Smith values highly the man who saves, as a benefactor of society, as the originator of a public workshop, which furnishes employment to a greater or less number of producers; the constant, uniform and uninterrupted effort of individual saving, he raises to the rank of a principle, and he sees in this principle the prime source of national wealth. The spirit of saving, he adds, is always more extensive than the wastefulness of prodigality can possibly be; its reparatory power is enormous, and no matter how great the waste of individual or governmental imprudence, it is still at work in the nation, unknown and in silence, from the irresistible necessity of assuring the future; this spirit realizes such an amount of saving, that, from one historical period to another, we may easily recognize a constant improvement in public and private fortunes. According to that illustrious economist, the immediate cause of the increase of a nation's capital is saving, and not industry. Industry, it is true, furnishes the material which is to be placed in reserve, but saving alone accomplishes this reserve, and without it, capital, being entirely consumed as fast as it is produced, would never become any greater.
—Frederick Bastiat, in an unfinished chapter of his "Economic Harmonies." bases the résumé of his entire doctrine, exchange and value, upon the definition of saving. "To save," he says, "is voluntarily to place an interval between the time when we render a service to society, and the time when we demand back an equivalent therefor. Thus, a man may, every day, from his twentieth to his sixtieth year, demand from his fellows, services equivalent to only three-fourths the value of the services he renders them in the practice of his profession or trade. Thus he acquires the right of drawing from society, in his old age, when he can no longer work, the unpaid fourth of his labor of forty years. The fact of his having received and accumulated titles, in the form of bills of exchange, sight drafts, bank notes and specie, is an entirely secondary matter and of no moment; it has reference only to the manner of accumulation; it can not change either the nature or the effects of saving. * * To save, therefore, is to have rendered a service, and granted time for the return of its equivalent, or, to speak more generally, it is to allow a certain space of time to elapse between the service rendered and the service received."
—One of the most dangerous anti-economic prejudices advanced, is that which considers saving as a veritable injury to society, and especially to labor. It is urged by unthinking men, that, to encourage commerce, it is necessary to spend, and to spend a great deal. This is even made a governmental rule in too many cases. This disastrous sophism, which, as Adam Smith has remarked, has not yet succeeded in ruining nations, because the power of saving is greater than that of prodigality, at least impedes the development of general prosperity, and impoverishes or overburdens with debt, the cities which administer their affairs in accordance with it. It is based upon a singular illusion, which identifies the man who saves with the avaricious miser, whose only care is to hoard up treasure. In times of invasion or trouble, in the absence of all security, when men's minds are tortured by the fear of pillage, the man who has received money in exchange for his services, may be driven to imbed it in a wall, or bury it in the ground, in order to save it from brutal cupidity. But in the normal state of society, unless a man be a fool or most profoundly ignorant, he will find some more profitable place for his spare capital; he will buy interest-bearing notes, or a direct interest in some industry, or he will purchase produce with the speculative chance of selling it again at a profit, or, better still, he will become an owner of real estate. How can these different operations be prejudicial to society, to industry, or even to the laborer, who is always pitied in the same breath which blames the man who saves? Workmen are the most interested of all in the general increase of capital, and, as we have seen, capital can only be increased by means of saving. In considering expense as a benefit, we must always bear in mind the great distinction that should be made between the free and voluntary outlay of a private individual who makes use of his own revenue as he wills, and public or forced expense. In the latter case, if it is intelligent and reproductive, it may turn to the profit of those who bear the expense; if foolish and unproductive, it impoverishes them, since they do not receive any equivalent advantage in return, and it benefits only a few, whose accidental or frivolous and superfluous labor it makes use of. Unfortunately such errors are regarded as incontestable truths and irrefutable axioms, by men who are otherwise most enlightened, in the official world, and they have long been the cause of disorders whose direful consequences are simply incalculable.
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