Now, as the whole island belonged to Crusoe, this was his dominion; the whole Right centred in him. As long as his family were young they would live in common: each would help so far as he could in obtaining food and sustenance: one, perhaps, would plough the land: another would tend flocks and herds: another would take to hunting: another to fishing; according to the bent of their inclinations. They would naturally bring what they got into the common stock, and all share together each kind of produce. But as they grew up, Crusoe père would probably observe that their talents and dispositions were different, one would prefer agriculture: another pasture: another hunting: another the sea. He would probably perceive that it would conduce to the future harmony of his family if he were to divide his domain according to the natural bent of his sons' inclinations. He would appropriate the flat alluvial lands to the agriculturist: he would give the natural pasture to the one who preferred flocks and herds he would give the mountainous parts to the huntsman: while the seaman would take the sea as his domain. Each would have the exclusive Right to the produce of his own industry and instead of sharing all things in common, they would exchange their produce in such proportions as they might agree upon. As soon as this change took place, there was the creation of Property, or exclusive Rights to produce, and the society was at once changed from a Communistic or Socialistic state to an Economical state. Now, here Robinson did not create the material produce: but he created the exclusive Rights to it: and as it is these exclusive Rights which are technically termed Wealth, he thus created Wealth.

The doctrine of the Physiocrates that the earth is the sole source of wealth, and the difficulty they made in admitting Labour, and Credit to be wealth, is precisely that which has divided the Spiritualists and the Materialists for thousands of years. So far as we know, Kapila originated the Materialistic philosophy, and invented the dogma that Nothing can come from Nothing, to disprove the existence of a Deity. This dogma has been repeated by innumerable philosophers, Leucippus, Anaxagoras, Parmenides, Democritus, Epicurus, Lucretius, and scores of others.

But this dogma, which the Physiocrates so constantly used to prove that all wealth is material, concerns us not. It may be true, or it may not, for all that we care. We neither affirm it nor deny it and when it confronts us, when we say that wealth may be

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immaterial and incorporeal, we simply turn its flank by a very obvious strategic movement. We say that we are not concerned with any material thing at all, but only with RIGHTS to them. Some philosophers deny the existence of a Deity; other philosophers deny the existence of matter: but we venture to suppose that no sect of philosophers will ever have the hardihood to deny that men can create, sell or exchange, and annihilate RIGHTS.

Shades of Kapila, Leucippus, Anaxagoras, Democritus, Parmenides, Epicurus, Lucretius, Berkeley, Kant, Physical philosophers, Physiocrates, we salute you, and leave you to settle your dogmas and your quarrels among yourselves-they concern us not -we simply pass on our way, heedless of your perennial war of words. Gentle reader,

"Non ragionar di lor, ma guarda e passa."

We have now done for ever with these silly squabbles.

2. We will now shew that not only all Jurists declare these Rights to be wealth, but also all Economists since the Physiocrates. Thus Smith, who begins by filling his readers' minds with the idea that all wealth is the "annual produce of land and labour," besides acknowledging that "natural and acquired abilities" are wealth and fixed capital, under the head of circulating Capital expressly enumerates Bank Notes, Bills, &c., which are mere Rights, or Credit.

He says that circulating Capital consists" First, of the money by means of which all the other three are circulated and distributed to their proper consumers."

He afterwards calls money the "great instrument of commerce," the "great wheel of circulation," which latter expression towards the end of the last century became common as the "circulating medium."

Now under the term money, he expressly includes "paper money," and says that circulation comes to be carried on by a new wheel." There are several different sorts of paper money; but the circulating notes of banks and bankers are the species which are best known, and which seem best adapted for the purpose." It is to be observed that what Smith calls "paper money call "paper currency;" because money is restricted to that which a debtor can compel a creditor to take in payment of a debt―i. e., Wealth of Nations, B. II., ch. 1.

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legal tender. Paper money is inconvertible paper currency. But ordinary bank notes are paper currency, because they are subject to the same principle of transfer as money, i. e., the property passes with the honest possession: and they are also "circulating medium," "the wheel of circulation," because the circulation of commodities is effected by their means exactly in the same way as by money.

Smith says "When the people of any particular country have such confidence in the fortune, probity, and prudence of a particular banker as to believe that he is always ready to pay upon demand such of his promissory notes as are likely to be at any time presented to him; these notes come to have the same currency as gold and silver money, from the confidence that such money can at any time be had for them.

"A particular banker lends among his customers his own promissory notes, to the extent, we shall suppose, of a hundred thousand pounds. As those notes serve all the purposes of money, his debtors pay him the same interest as if he had lent them so much money. This interest is the source of his gain. Though some of those notes are continually coming back upon him for payment, part of them continue to circulate for months and years together. Though he has generally in circulation, therefore, notes to the extent of a hundred thousand pounds, twenty thousand pounds in gold and silver may frequently be a sufficient provision for answering occasional demands. By this operation, therefore, twenty thousand pounds in gold and silver perform all the functions which a hundred thousand could otherwise have performed."

Hence as these notes, which are mere Credit, produce exactly the same profit to the banker as if they were gold, they are evidently Capital to him just as if they were gold and as their effects on the produce and industry of the country are exactly the same as if they were gold, they are evidently Capital to the country, just as so much gold.

"Let us suppose, for example, that the whole circulating money of some particular country amounted at a particular time to one million sterling, that sum being then sufficient for circulating the whole annual produce of their land and labour. Let us suppose, too, that some time thereafter, different banks and bankers issued promissory notes payable to the bearer, to the extent of one 1 Wealth of Nations, B. II., ch. 2.

million, reserving in their different coffers two hundred thousand pounds for answering occasional demands. There would remain, therefore, in circulation eight hundred thousand pounds in gold and silver, and a million of bank notes, or eighteen hundred thousand pounds of paper and money together." Thus we see that Smith places these Notes, mere abstract Rights, pure Credit, exactly on the same footing, and the same value, as so much gold and silver.

Smith sometimes supposes that Bank Notes are only issued to supersede existing specie. That no doubt is sometimes done; but we have shewn that it is a great error to suppose that that is always the case. Bank Notes may be multiplied on a given basis of bullion, where there was no specie before. If with an existing amount of specie of £100,000, £80,000 in specie may be withdrawn and £80,000 in paper substituted, leaving that £80,000 in specie free to be exported for the purposes of foreign trade, it is quite evident that on an existing basis of £20,000 in specie, a paper currency of £80,000 may be built up equally well, provided occupation can be found for it, as we have exemplified in Scotch banking; and, in fact, in English banking, Notes were multiplied on an existing basis of specie, and were not issued in substitution for it.

3. Smith goes on-"It is chiefly by discounting Bills of Exchange, that is, by advancing money upon them before they are due, that the greater part of banks and bankers issue their promissory notes. The banker who advances to the merchant whose bills he discounts, not gold and silver, but his own promissory notes, has the advantage of being able to discount to a greater amount by the whole value of his promissory notes which he finds by experience are commonly in circulation. He is thereby enabled to make his clear gain of interest on so much a larger sum."

Here Smith clearly admits that Notes may be issued, not only in substitution for existing specie, but in addition to it, and consequently that is an increase of Capital.

And we may cite-"The banks when their customers apply to them for money, generally advance it to them in their own promissory notes. These the merchants pay away to the manufacturers for goods the manufacturers to farmers for materials and

provisions [and to their own workpeople for wages], the farmers to their landlords for rent, the landlords repay them to the merchants for the conveniences and luxuries with which they supply them, and the merchants again return them to the banks, in order to balance their cash accounts, or to replace what they may have borrowed of them: and thus almost the whole money business of the country is transacted by means of them." Thus we see that as Smith expressly includes under circulating Capital the money by which goods and commodities are circulated and distributed to their proper consumers, and he calls these promissory notes, money, and shews how they circulate commodities, he manifestly affirms that these Notes, or Credit, are circulating Capital.

These extracts are quite sufficient to prove what we wished to shew, that Smith clearly admits that abstract Rights are wealth, and that Credit is Capital.

Now, of course, these Rights, or Credit, are only a type of all saleable Rights; so that Smith, notwithstanding his supposed doctrine that all Wealth is the "produce of land and labour," expressly admits Incorporeal Property to be Wealth, and thus he is obliged to recognise the three species of wealth, Money, Labour, and Credit, exactly as had been done in ancient times.

4. J. B. Say recognises exactly the same three forms of wealth. He says "The exclusive possession which in the midst of a number of men, clearly distinguishes the property of one person from the property of another person, causes, in common usage, this sort of goods (biens) to be the only one to which the name of wealth is given. And for that reason are included in it

money, instruments of credit (titres de créance) and the public funds, &c." And he elsewhere says that the name of Wealth is applied to all property (biens) which have a value in exchange, and also that the words include "effets de commerce," which are Bills of Exchange, and Notes of all kinds.

He also says "This is why immediately that this value resides in the objects employed in a productive operation, I call it a Capital, whatever be the form of the objects in which it resides," and-"These capital values may consist of the public funds, commercial paper, coffee, or any other merchandise."

Cours d'Economie Politique, Part I., ch. 1.

2 Ibid. Considérations Générales. 3 Ibid., Part I., ch. 8.

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