CAROLINE. Thus a farmer would be able to extend and improve the cultivation of his farm by increasing the number of his labourers and a merchant proportionally to extend his commercial dealings - so that the richer a man becomes, the more it will be in his power to increase his wealth? MRS. B. Yes; the second thousand pounds is often acquired with less difficulty than the first hundred. CAROLINE. That is hard upon those who have nothing. The rich have too many advantages over the poor. MRS. B. The man who accumulates a large fortune by his industry injures no one; on the contrary, he confers a benefit on the community. You will understand this better by-and-by. In the mean time I must observe to you, that happiness, so far as it is dependent on wealth, consists less in the possession of riches than in the pleasure of acquiring them. Every degree of increasing prosperity is attended with its enjoyment. Your gardener, who saves his earnings with the prospect of settling at the end of two or three years, has probably more satisfaction in the anticipation of his future wealth than he will have in the possession of it; as long as he continues making annual additions to his capital, the same source of enjoyment will be preserved, but will never excite so strong an interest as at first. Merchants will tell you that their first gains gave them greater pleasure than all their subsequent accumulations. Nature has wisely attached happiness to the gradual acquisition, rather than to the actual possession of wealth, thus rendering it an incitement to industry; and we shall hereafter see that this progressive state of prosperity is most conducive also to the happiness of nations. CONVERSATION VIL 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 LABOURING CLASS. MACHINERY ADVANTAGEOUS TO THE LABOURING MRS. B. I HAVE some further remarks to make to you on the nature of capital. A land-owner, when he increases his wealth 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 buildings, tools, and machinery will not yield a profit like that which is employed in the payment of workmen, the produce of whose labour 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 immediately after the harvest, although he might probably dispose of them to greater advantage by keeping them some time longer. So a manufacturer, by improving or enlarging his machinery, can, with less labour, perform a greater quantity of work, and his profits will be proportionate. CAROLINE. No doubt if he employ machines instead of men, he will have no wages to pay, and the whole will be profit. MRS. B. Thus, for instance, when a manufacturer can afford to establish a steam-engine, and use a stream of vapour as a substitute for the labour 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 labourers, 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 labourer, in the form of wages and raw materials, then from the labourer it is returned to the master, in the form of produce or workmanship of increased value; but the latter does not realise his profits until this produce is sold to the public, by which it is consumed. CAROLINE. I think I understand the difference between fixed and circulating capital perfectly. A farmer derives profit from his implements of husbandry by their use, while kept in his possession; and from his |