Economy. We observe that the quality of the diamond is not in any way affected by the quantity of labour bestowed on finding it. A diamond of the first water may be found after a search of five minutes; a search of as many days, months, or years, may only be rewarded by finding a very inferior one. But yet the result of the lesser amount of labour may be far more valuable than the result of the greater amount. This is a universal truth in Economics. In all cases it is the result, and that only, which is looked to, wholly independent of the labour by which it has been arrived at.

24. The clear understanding that it is Demand, and not Labour, which is the sole cause of Value, and the basis of Wealth, gives the true and simple solution of the question which so long puzzled the world. Cicero and Luther were wholly unable to understand how a person could gain in an exchange, except by robbing the other. It was the universal doctrine before the first school of Economists, that what one side gained, the other lost. The Physiocrates however maintained that in an exchange neither side gained, and that it was an exchange of equal values. They saw that each product was valued in money at the same sum; and therefore they maintained that neither side could gain. Nor was it easy to see the fallacy of this reasoning, although a little reflection on the facts must have shewn them that nations became

enriched by commerce. Still less is it easy to see the fallacy, if we adopt the doctrine of the second school of Economists that all value depends upon the quantity of labour bestowed upon a thing. For if the Value is exclusively determined by quantity of Labour, it is only an exchange of equal value.

But when we firmly grasp the principle that Demand is the sole cause of Value, and that no Labour can give value to a product, whatever its qualities be, which is not wanted, the solution of the problem is obvious and simple.

A shoemaker perhaps makes 50 pairs of shoes: but he is not a centipede, and therefore he does not want 50 pairs of shoes: therefore all the shoes he makes above his own requirements are so much labour thrown away, without any result. These superfluous pairs of shoes are no more wealth than the corn which we spoke of before, as rotting on the ground for want of some one to consume it.

A glovemaker makes 50 pairs of gloves: but he is not a Briareus therefore he does not want 50 pairs of gloves: therefore as in the former case, all the gloves he makes above his own requirements are so much labour thrown away without any return.

A tailor makes 50 coats; but he has no use for so many; consequently all the labour and materials used in making them are utterly wasted and thrown away.

A farmer grows corn upon 500 acres of land, and has a herd of 100 cattle: but his family and dependents cannot eat the corn grown upon 500 acres: nor 100 cattle: therefore all the corn he grows, and the cattle he rears, above his own and his family's wants, is just so much labour and expense thrown away.

An author does not want more than a very few copies of his own work. The vainest author does not want 1,000 copies of it. Hence all copies printed above those sufficient to satisfy his wants, are so much labour and money thrown away.

And so on through the whole catalogue of producers and products. If a man bestows labour upon producing what he does not want, it is so much labour thrown away without any return. But the shoemaker, the glovemaker, the farmer, the author, and all other producers as above, cannot live on their own products solely. The shoemaker wants gloves, food, clothes, books, &c. The glovemaker wants shoes, food, clothes, books, &c. The farmer wants shoes, gloves, clothes, books, &c. The tailor wants shoes, gloves, food, books, &c. The author cannot live on the fumes of self incense; he requires shoes, gloves, clothes, food, &c. Hence each producer begins to exchange the superfluity of his own produce for the superfluity of each of the others; the shoemaker exchanges some of his shoes for gloves; others of his shoes he exchanges for clothes; others for food, and so on, for any other products he may require. Similarly each of the other producers exchanges some of his products for others he requires. Hence Demand arises for the products of each producer which were before without demand, and without value. It is the demand of the shoemaker for gloves which gives value to the gloves of the glovemaker, which were superfluous and not wanted by him. Hence, by means of this exchange, the labour of each producer has brought him something he does want, and which he does value; instead of something

he does not want. And it is this reciprocal Demand, or Consumption, which gives value to each product in succession. The labour of the shoemaker now produces him gloves, clothes, food, books, and any other product he may want, and therefore Value. Each producer has therefore got something he does want, instead of something he does not want; and hence each side has gained, or got a reward for his labour.

25. Some persons indeed consider that it is an inadequate account to say that Value originates in Demand, but that the Economist should go further, and investigate the causes of Demand. But this would be a great error. This would introduce the whole of Psychology into Economics. It would be as great an error in the mental, or subjective, department of the subject, and of a similar nature, to what it would be in the external, or objective, department, to investigate the whole processes of agriculture and commerce. An Economist, quà Economist, has no more to do with the causes which operate on the mind to produce Demand, or Value, than an Astronomer, quà Astronomer, has to do with the metaphysical cause of gravity. An Astronomer's business is to discover the Laws of the Phenomena of the motions of the heavenly bodies, and there the science ends. What may be the cause of the Law of Gravity is another and a higher consideration. Similarly Economics rigorously excludes all considerations of the preparation and cultivation of the mind which produces the desire, or the Demand, equally with all considerations of the preparation and cultivation, or manufacture, of the product. The considerations which produce Demand, or Value, are the province of the Moralist; the processes of agriculture and manufacture are the province of the farmer and the manufacturer. Economics deals only with the desire, or the Demand, which is the cause of Value, and the product which is the subject matter of Value.

26. The clear conception that it is Demand, or Consumption, and not Labour, which is the principle of Value and of Wealth, shews how mistaken are those demagogues who go about flattering the "working classes," and telling them that they are the producers of all wealth, with a view to rising into public importance by their means. It is not the Producer but the Consumer

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who causes a thing to be Wealth; and all the labour of the working classes would be thrown away if they could find no one to demand or consume it. Each class of society, therefore, is necessary to the other. If, therefore, a man has nothing to offer for sale but his labour, so far from being at enmity with, or hostile to, the wealthy classes, he ought to wish for the greatest number possible of rich people to demand the products of his labour.

27. When Locke said that the differences of value of agricultural land were due to labour, in which he has been followed by so many Economists, it was a striking example of Bacon's remark" For no man can rightly and succesfully investigate the nature of a thing in the thing itself,”—but must vary his observations, and appeal to all sorts of experience. When Locke and his train of followers point to the smiling harvests and vintages, and assert that the cause of the differences of the value of the land is labour, they should remember that the cause of the difference of value in agricultural land must be the cause of the differences of value in everything else: and we point to the dif ferences in the value of different parts of the ground on which London stands, and ask-Are these differences of Value due to Labour? When this school of Economists point to manufactures of all sorts, watches, furniture, clothes, &c., &c., and say that their value is due to labour, we place before them the accounts of the Bank of England, which on the 4th October, 1872, stood thus; as made up in the old form.

Now we observe that one side amounting to £55,435,778 consists wholly of liabilities or Credit, and of the other side, £21,156,452 consists of money, and £38,091,424 of liabilities or Credit. The liabilities or Credit, however, is valued exactly as if it were so much money. Now we ask what is the cause of

1 Distributio Operis.

the value of this Credit? Is it Labour? When some Economists point to a large amount of material commodities, the produce of labour and of great value, we point to a table given by Mr. Mill' shewing the amount of Bills of Exchange created in Great Britain

and ask what is the cause of the value of this enormous mass of Credit, which of course is but small compared to the Credit created now? Is Labour the cause of its Value?

28. As we ascend Father Thames, passing by Putney, Hammersmith, Kew, Richmond, Kingston, Eton, Oxford, &c., we find the river banks crowded with exquisitely built boats of all sorts. Why are these boats there? And what gives them Value? It is simply because the youth of England are fond of rowing. It was not the building of the boats which made the English youth fond of rowing; but their love of rowing which encouraged the builders to build the boats. What value would such boats have among a people whose favorite aphorism is dolce far niente?

29. When we visit the Santa Casa at Loreto, we see the great square in front of the church filled with shops, whose principal wares are waxen models of different parts of the human body, the heart, legs, arms, ears, &c. What gives value to these things? They are meant as offerings to the Virgin, for her supposed kind influence in healing the part of the body they represent. So that the custom which led Horace to offer up his dripping garments to the god of the sea, still flourishes in undiminished vigour among the modern Italians. Would these things have any value among Protestant Englishmen?

In 1846, two children near La Salette, in France, averred that, while tending their flocks, the VIRGIN had suddenly appeared to them, and confided to them a secret which they were to tell to no one but the Pope. They were taken to Rome

1 Book iii., ch. 12, § 6.