CONVERSATION VII.

ON CAPITAL-CONTINUED.

Of fixed Capital.-Distinction between fixed and circulating Capital.-Examples of the different kinds of Capital.-Of Slaves.-Fixed Capital and circulating Capital equally beneficial to the laboring Class-Machinery advantageous to the laboring Classes.-Quotation from Macpherson on the advantages of Machinery.—- Quotation from M. Say's Treatise on Political Economy.

MRS B.

I HAVE Some further remarks to make to you on the nature of capital.

A land owner, when he increases his capital by savings from his income, may probably, instead of employing the whole of his additional capital on husbandmen, find it more advantageous to lay out some part of it on workmen to build barns and outhouses, to store his crops and shelter his cattle; he may plant trees to produce timber, build cottages, and bring into cultivation some of the waste land on his farm.

A manufacturer also, in proportion as he increases the number of his workmen, must enlarge his machinery or implements of industry.

Caroline. But the capital laid out in building, tools, and machinery, will not yield a profit, like that which is employed in the payment of workmen, the produce of whose labor is brought to market.

Mrs B. The farmer and manufacturer would not lay out their capital in this way, did they not expect to reap a profit from it. If a farmer has no barn or granary for his corn, he will be compelled to sell his crops

241. How will a landholder be likely to expend a portion of his surplus income?--242. How would it be with the manufacturer ? -243. Why will the farmer thus appropriate his capital ?

immediately after the harvest, although he might probably dispose of them to greater advantage by keeping them sometime longer. So a manufacturer, by improving or enlarging his machinery, can, with less labor, perform a greater quantity of work, and his profits will be proportionate.

Thus, for instance, when a manufacturer can afford to establish a steam engine, and employ a steam of vapor as a substitute for the labor of men and horses, he saves the expense of more than half the number of hands he before employed.

The capital laid out in this manner is called fixed capital; because it becomes fixed, either in land, in buildings, in machinery, or implements of art; it is by keeping this capital in possession, and using it, that it produces an income. Whilst the capital employed in the maintenance of productive laborers, whose work is sold and affords an immediate profit, is distinguished by the name of circulating capital.

The produce of a farm, or the goods of a manufacturer, afford no profit until they are brought to market, and sold or exchanged for other things. This description of capital is, therefore, constantly circulating. It is transferred first from the master to the laborer, in the form of wages and raw materials, then from the laborer it is returned to the master in the form of produce or workmanship of increased value; but the latter does not realize his profits until this produce is sold to the public, who turn it to their use, and are therefore called the consumers of it.

Caroline. I think I understand the difference between fixed and circulating capital perfectly. A farmer derives profit from his implements of husbandry by

244. Why will the manufacturer thus appropriate his?--245. -How much is saved to the manufacturer by the use of the steam engine?246. What is capital thus expended called?247. Why is it called fixed capital ?-248. What is called circulating capital?249. When does the produce of the farm, and the goods of the manufacturer yield profit?

their use, while kept in his possession; and from his crops by parting with them. But to which kind of capital should the farming cattle be referred?

Mrs B. It depends upon the nature of the cattle. The value of the laboring cattle is fixed capital, like the implements of agriculture; thus the horses which draw the plough, as well as the plough itself, are fixed capital. But sheep and oxen intended for market are circulating capital.

Caroline. But should the plough be drawn by oxen, Mrs B., how would you settle the point then? for whilst they labor for the farmer they are fixed capital; but when they are sold to the butcher they become circulating capital.

Mrs B. They alternately belong to each of these descriptions of capital; because the farmer makes his profit, first by keeping, and afterwards by selling them.

Caroline. I do not understand why you should call the maintenance of laboring men circulating capital, whilst you consider that of laboring cattle as fixed capital: they appear to me to be exactly similar.

Mrs B. And so they are. The maintenance of cattle as well as that of laborers is circulating capital; that maintenance is in both cases consumed and reproduced with advantage; it is therefore by parting with it that profits are derived. But the value of the cattle themselves is fixed capital, and if laborers, like cattle, were purchased, instead of being hired, thus becoming the property of their employers, they also would be fixed capital.

Caroline. And this, I suppose, is the case with the poor Africans in the West Indies?

250. To which description of capital should farming cattle be referred?--251. What objection does Caroline make to Mrs B.'s answer to the above question?-252. How does Mrs B. answer the objection?-253. What further explanation does Mrs B. make to the objection of Caroline?

Mrs B. Yes, and with slaves of every description. Even the peasantry of Russia and Poland are in general considered as fixed capital, because their state of vassalage is such as to amount to slavery, the proprietors of the land having a right to their labor without remuneration: and the value of an estate in Russia is not estimated by the number of acres, but the number of slaves upon it; in the same manner as a West India plantation. Á similar state of vassalage prevailed throughout most parts of Europe some centuries ago; but in later times the progress of civilization has been such, that I believe every country, excepting Russia and Poland, has emancipated the laboring classes, experience having proved that the more free and independent men are, the more industrious they become, and the better the land is cultivated.

Caroline. I wish that the West Indian planters could be induced to adopt this opinion.

Mrs B. The time will no doubt arrive when slavery will be abolished in every civilized country. But important changes ought not to be introduced without extreme caution. The minds of men should be freed from the degrading fetters of ignorance, before they can reap advantage from personal emancipation. An ingenious author observes "that liberty is an instrument with which men may either make their fortune or destroy themselves; that they should therefore be taught the use of it before it is entrusted to their hands." In all cases we shall find that gradual and progressive improvement is invariably conducive to the happiness of mankind, whilst sudden and violent revolutions are al

254. To which description of property do slaves belong? -255. In what countries exists what is called vassalage?-256. What is to be understood by vassalage as here explained?--257. Why has the vassalage of Europe been reduced to smaller limits than it formerly was?259. What supposition is made as to the perpetuity of human slavery?260. What should precede the emancipation of slaves?261. What remark on the subject is quoted from an ingenious author?

ways attended with danger. But we are deviating from our subject.

Caroline. Well then, to return to it. I thought at first that I understood the difference of fixed and circulating capital perfectly; but I find upon reflection, that I am at a loss to determine to which kind of capital several articles of property belong. For instance, is the money laid out in the improvement of land, fixed or circulating capital?

Mrs B. The money laid out on waste land to bring it into a state fit for cultivation, such as inclosing, draining, ditching, preparing the soil, &c. is fixed capital; and so is that which is employed in the improvement of land already cultivated. If it is the proprietor who lays out capital on land which he lets, he receives in remuneration an increase of rent; if the farmer, he makes greater profits. But the money laid out in the regular course of cultivation, such as ploughing, sowing, reaping, &c. consists, as we have before observed, partly in fixed and partly in circulating capital.

Caroline. I must say that I prefer the employment of wealth in the form of circulating, rather than in that of fixed capital. Granaries, barns, machinery, &c. may be advantageous to the proprietors, but they must be injurious to the laboring classes; for the more a man lays out as fixed capital, the less remains to be employed as circulating capital, and therefore the fewer laborers he can maintain.

Mrs B. You must always remember that the greatest good you can do the laboring classes, is to increase the consumable produce of the country. Whilst plenty of the necessaries of life is raised, it signifies little to whom it belongs; for whoever may be the proprietors of this wealth, they can derive no advantage from it but

262. Is money laid out in the improvement of land fixed or circulating capital?-- -263. Why does Caroline prefer that wealth should be in the form of circulating capital?--264. What reply does Mrs B. make to her on this point?