situation. Land in the neighborhood of a market is more valuable than land of equal fertility lying at a greater distance from the market; because, in the latter case, a considerable portion of the value of products is consumed in transportation. Hence, land of inferior quality in one place, may be of greater value than land of superior fertility in another. The disadvantages of situation, however, are often removed by the construction of canals, rail-roads, and other improvements of internal communication; and lands are thus frequently raised to two or three times their former value.

§ 976. We see from what has been said, what circumstances enter into the computation, in estimating the value of land. There must be taken into account the several items of the cost of production, embracing the cost of the labor of the master-farmer and others employed in tillage and securing the crop, the cost of seed, and the expense of transportation. These may ordinarily be estimated with sufficient accuracy, to enable a person to determine how much he can afford to pay for the use of land.

§ 977. The principle of distribution may be exemplified in the case of a manufactured product. The aggregate cost of a coat includes these several items: the cost of the wool from which the garment is made; the labor of the mastermanufacturer, the interest on his capital, and the wear of his machinery; the labor of the spinner, weaver, dyer, and dresser of the cloth, and the cost of the dying materials; the additional charge of the manufacturer for risks and losses; the labor and skill of the merchant, with interest on his capital; and lastly, the labor of the tailor. Thus the price of the coat is distributed among these several producers.

§ 978. For aught that has been said, it may be supposed that every man has a right to loan his capital for what another is willing to pay. But such is the law, that capital, consisting of any thing else than money, may be thus loan

land. §975. How does the situation of land affect its price? How may the disadvantage of situation be removed? $976. What are the principal circumstances to be taken into account in estimating the price of land? § 977. Illustrate the principle of distribution in the ase of a manufactured product. § 978. May a person receive for

ed; but in loaning money, the lender is restricted to a certain rate of interest.

§ 979. Many are of the opinion, that this law unjustly interferes with the right of property, and is in its operation injurious to the community. Why should money be the subject of such a regulation, when every other species of capital or property is exempt from it? When land is productive, and its products are dear, a high price may be taken for the use of it; and if no person will pay the rent asked, the owner may occupy it himself.

§ 980. When money may be so invested as to yield a higher than ordinary profit, the borrower can afford to pay a corresponding price for it. But if the law forbid his receiving for it what it is worth, he will choose to invest it himself where it will produce such revenue. Thus he is compelled to enter into a business for which he has no inclination, and the other is obliged to forego the privi lege of engaging in what may be to him a profitable and agreeable undertaking. But it is often the case, that, rather than relinquish a promising or favorite project, a price is offered for money sufficiently high to induce the lender to risk the consequences of a violation of the law, or to devise some dishonorable means of evading its penalty.

§ 981. Whatever may be the tendency and operation of this law, it has in view the worthy object of preventing men from oppressing the poor and necessitous, by extorting from them ruinous rates of interest. And public sentiment in this and other civilized nations has hitherto sanctioned this law. The propriety of a law fixing the rate of interest to be paid in cases in which there is no previous agreement between parties, is admitted by all.

the use of money whatever another is willing to pay? § 979. Why should a distinction be made between money and other property? § 980. What reasons may be given against this distinction? § 991. How extensively do usury laws prevail? Can you tell what are the probable good effects that would result from the repeal of these laws? 27*

CHAPTER XXI.

Consumption.-Individual Consumption.

§ 982. By consumption is meant the destruction of value; and this destruction of value or utility of a product, is effected by appropriating it to the use for which it is intended. The production of wealth, we have defined to be the creation of value, or the investing of any substance with utility; that is, with the capability of gratifying our desires, or of satis fying our wants. Consumption, on the contrary, is the destruction of this utility, which is effected by appropriating it to its intended use, or by accident. A person may destroy the value of a garment by wearing it, or it may accidentally fall into the fire, and be burned. In either case, the garment is consumed; that is, its value is destroyed.

our wants.

§ 983. Production consists, not in the creation of matter, but in giving it value, or in so changing its form as to invest it with utility; consumption is the subtracting from a product its value or utility; that is, its capability of satisfying All products are created for the purpose of use or consumption, and, sooner or later, they will be consumed. § 984. Consumption may be considered to be of two kinds, individual and national. As many things relating to the subject of consumption, have necessarily been remarked, incidentally, in the other divisions of this treatise, we shall embrace what remains to be said on this division, in two chapters; one of which will be devoted to each of the two kinds of consumption above mentioned; and our remarks will relate chiefly to the principles by which consumption is regulated.

985. Individual consumption is always designed either to effect the reproduction of value, or to gratify the desires or satisfy the wants of individuals. And no value can be produced without the destruction of some other value previously created. Thus the value of wool, as such, is consumed in the production of a piece of cloth. And the

§ 982, 983. What is understood by consumption? How is the value of a product destroyed? § 985. What is individual consump

farmer, in producing the various agricultural products, must consume a portion of his previously acquired capital, consisting of seed, wages of labor, provender for working animals, wear and tear of the implements of husbandry, &c.

§ 986. In a former part of this essay, we have seen that a union of capital and labor is essential to production; which is, in effect, the consumption of one value for the production of another value: and this consumption is of capital and labor. As no valuable product is created but by the destruction of previously existing values, in other words, the consumption of capital previously produced, economy requires that this productive consumption, as it is properly called, should be of the smallest value capable of creating the largest product.

§ 987. To the economical consumption of capital and labor, several things are necessary. A man would unwisely expend his capital, who should build a manufactory at a cost of one thousand dollars, when one costing half that sum would be sufficient for his business. There would be a total waste of five hundred dollars, which might have been profitably employed in carrying on his manufacturing operations. The farmer would be chargeable with the same improvidence, who should purchase twice as much land as he is able to stock and cultivate to advantage, or who should keep twice as many working animals as are necessary for the cultivation of his farm. The same may be said of the merchant who should purchase a stock of merchandise worth ten thousand dollars, when a stock of half that amount would supply the wants of his customers.

§ 989. In commencing business, therefore, a man should not only invest the least amount of capital that he can profitably employ; but he ought so to regulate his investment, that his fixed capital shall be duly proportioned to his circulating capital; by which we mean, that he ought to lay out so small a portion of his capital for land, buildings, or machinery, as to leave as much as possible to be employed in

tion? What is it designed for? § 986. What is meant by produc tive consumption? § 987. If a farmer should buy more land than he could cultivate, what would be the effect upon his interest? § 988. What general principle should regulate the outlay of his capita

carrying on directly the business of production. Suppose that a man has a capital of two thousand dollars, and that he expends fifteen hundred dollars in the purchase of machinery, tools, &c. when an outlay of one thousand dollars for that purpose is sufficient: he has now but five hundred dollars for the purchase of the raw material of his manufacture, and provisions for his workmen, and for the payment of their wages; whereas, by an economical apportion. ment of his capital, he might employ double this amount in the business of production.

989. The same principle applies to the consumption of labor. A manufacturer may employ too great a number of laborers. Where there are too many workmen, some of them will generally be idle a part of the time, and one idle person will hinder many others. On the other hand, he may employ too small a number of laborers to avail himself of the greatest benefit of the division of labor, which has been explained in one of the chapters on production. For if there be too few workmen, one must perform several kinds of labor, or several different operations, which could be most profitably performed, when each workman is confined to one kind of labor, or to a single operation.

§ 990. Also, the different kinds of labor should be rightly proportioned to each other. In almost every branch of industry, there is employed a greater or less quantity of both educated and simple labor. If, therefore, a manufacturer should employ none but experienced and skilful laborers at the highest rate of wages, when a part of the labor might be done by uneducated laborers, perhaps by women and children; he would evince a great lack of economy. On the contrary, the intrusting of important business to persons wanting the requisite experience and skill, is sometimes attended with much loss.

§ 991. Every part and every item of capital should be turned to account. A tailor who should so cut up his cloth, as to waste as much of every piece as would make a garment, must necessarily make slow progress in the way to

How ought he to proportion his fixed and circulating capitals? § 989. What is the effect of a man's employing too many or to few laborers? § 990. Wherein consists the advantage of employing a portion of