of the word. We have but very few middlemen and no need of any. Nearly every capitalist performs some labor, and employs as many laborers as he can, if he chooses to do so; and nearly every laborer owns some capital, and is welcome to all he can honestly acquire, and will use wisely and well. And the whole genius of our country and its institutions is to elevate the laborer, so that he may become a capitalist to the extent, at least, of owning all that he needs to use, and is essential to a self-respecting manhood and the management of his own affairs.

Now without attempting, in this place, any comparison of the relative merits of the two systems of nationality, or making any effort to vindicate our own, it is manifest that we must have a Political Economy which is, in practice at least, quite different in many respects from the English.

Theoretically, doubtless, the principles of the science should be derived from facts and definitions that are irrespective of any special nationality, and designed rather to correct and improve those that are wrong, than to perpetuate any one as it is, unless it is just right as it is now.

It is, however, customary to speak of the capital as owned by one person, and the labor as performed

ΙΟ

by another. This distinction is convenient for the sake of discussion, but it is not essential or impotant for any law or result. When the capital is owned by one man, and the labor performed by another, some division of the products, some distribution, of what are called the "profits," must be made between them. Whereas, if the laborer owns his capital, he receives the whole income to himself. It is, however, vastly important to ascertain the law that determines the proportion that shall go to each. It is manifest that each party must have some portion.

113. Their necessity to each other.

The laborer, if he be only a laborer, can not work without being indebted to some one else for capital. Not only must he have tools-which he must borrow if he does not own them, (and if he does he is so far a capitalist)—but he must have something to work upon, a piece of ground to till, stone to hammer, lumber to work up, etc., etc., all of which are capital. Since all commodities that have passed from the farmer's and miner's hands have exchangeable value; and all land, for farming and mining purposes, has now come to be owned by somebody, and to have consequently a price and an exchangeable value, there is nothing now with which, or on

which, work can be done, that is, not owned by somebody.

The capitalist can not eat what he has, or if he could he would soon exhaust his store and be without supplies. If he goes to work with it, he ceases, thereby, to be simply a capitalist. His true policy, therefore, is to rent his capital to some one who is desirous of using it as a means of producing value; and of course he will do so, only on condition that he can get a share of what is produced.

114. Rent, wages, and profit.

We call that portion of the increment of any operation that goes to the capitalist, when the amount is agreed upon before hand, and does not depend at all upon the amount of the increment, rent; and the other part in this case, we call profit, or in case it is a minus quantity, loss. Hence if we let R denote rent, P profit, and I the increment, we have

I=R+P

and as R is in this case constant, we have

dIdP

that is, the rate of profits is equal to the rate of the increment.

We call that portion that goes to the laborer, when it is agreed upon before hand, and does not depend upon the amount of increment, or the success or

failure of the enterprise, wages; and the rest of the increment in this case, also, profit.

Hence if we take W to denote wages, and use I and P as before, we have

I=W+P

and for the same reason as before

dI=dP

It is manifest that in the first of the two cases, the laborer takes all the risk, while the capitalist takes it in the latter case.

But in some cases the laborer and capitalist provide for a distribution of the increments, whether positive or negative-gain or loss—in some ratio, as half and half, one and two-thirds, etc., etc. In this case the formula is

and of course the differential coefficients of P1 and Pa will depend upon the nature of the contract between the parties, and as we shall see, varies by pretty definite laws in different stages of the civilization.

115.

The contract between the parties.

But the nature of the contract, whether it will be one in which the laborer works for wages, or hires the capital for rent, will depend, in each case, upon the estimate he puts upon his own capacities. If he

thinks that he can make as profit, more than he can get as wages, he will hire the capital and pay rent for it. If, on the other hand, he is distrustful of himself, and fears that for any reason his profits will be less than his wages, if he should hire himself out, he will work for such wages as he can get.

Hence, as a natural consequence, the more intelligent and skillful the laborer, the larger will be the portion seeking to work for themselves on capital of their own, or hired at a low rate of rent, and the more ignorant and unskillful, the larger will be the amount of capital accumulated in the hands of a few.

116.

The law of supply and demand.

Before proceeding farther with our general subject, however, let us pause to consider two of the most important and fundamental of the laws of Political Economy, namely, the law of (1) supply and demand, and (2) the law, or rather the fact, of competition. These are the two great laws that regulate prices.

The law of supply and demand supposes people in anxious pursuit of wealth, and each one desirous of increasing his profits as fast as he can [honestly].

If, now, there are two men in a community, doing different kinds of business, and one sees that the