venient instrument for passing capital from one man to another, he has no difficulty in disposing of it and it takes its place as a circulating medium.
Money is therefore valuable to the owner in the same way as any other acknowledgment of indebtedness. As a commodity, its proper cost is nothing, but it is a token proving a legal claim to a share of the wealth of others.
Having now explained the definitions which I believe to represent most accurately what wealth and capital really are, as well as the less important ones which it was necessary for the purposes of my paper also to explain, I will proceed to my main work, which is to test the arguments employed by Mill in the 9th part of chap. V. book I. of his "Political Economy," by substituting these definitions for those employed by him. The greater clearness of view which we get will enable us to detect the fallacies which the confusion of his definitions prevented him from seeing.
His fourth fundamental theorem respecting capital may be shortly stated to be, that by purchasing commodities a capitalist is not an employer of labour and does no good to the working classes, but that by keeping retainers, grooms, gardeners, and others working for him, or by giving away his income in alms, he does good to them and tends to raise their rate of wages.
His illustrations are very telling and well selected. A man, he says, may spend part of his income in employing workmen to build houses, dig artificial lakes, and lay out pleasure grounds; or he may spend the same sum in buying velvet and lace. If he has been in the habit of buying velvet and then changes his expenditure to hiring bricklayers, there is, at once, additional work for bricklayers, and the velvet-makers do not lose their employment, for they are employed making corduroy and other things for the bricklayers, so that the work given to the latter is clear gain to the working classes.
He gives several other illustrations, but none, I think, in which the fallacy lies so deeply hidden as in the one I have selected. At first sight his argument looks unanswerable, but it is really quite erroneous.
There is in the world a certain store of commodities, part of which is suitable to the wants of the rich, and part to those of the poor. The capitalist may select which of these he will take for his share, but he cannot turn velvet into corduroy, nor Chateau Lafitte into gin. The proportions of these which have been produced have been decided by men whose occupation and interest it is to estimate, as closely as they can, the quantity of each that will be required, and any sudden upsetting of their calculations is pretty certain to do harm. The philanthropic capitalist will find it very difficult to do any immediate good to anyone whom he would care to benefit,
