whole price of corn. A fourth part, it may perhaps be thought, is necessary for replacing the stock of the farmer, or for compensating the wear and tear of his laboring cattle and other instruments of husbandry. But it must be considered that the price of any instrument of husbandry, such as a laboring horse, is itself made up of the same three parts, the Rent of the land upon which he is reared, the Labor of tending and rearing him, and the Profits of the farmer who advances both the Rent of this land and the Wages of this labor.

"As any particular commodity comes to be more manufactured, that part of the price which resolves itself into Wages and Profits comes to be greater in proportion to that which resolves itself into Rent. In the progress of the manufacture, not only the number of Profits increase, but every subsequent Profit is greater than the foregoing; because the capital from which it is derived must always be greater. The capital which employs the weavers, for example, must be greater than that which employs the spinners, because it not only replaces that capital with its Profits, but pays, besides, the Wages of the weavers; and the Profits must always bear some proportion to the capital."

Still it is true, in the last analysis, as already stated, that the creation of all value can be traced to labor alone. Capital itself is created by labor, and may be called consolidated or invested labor. It consists of the economized or reserved fruits of previous labor, so that Profits are only the compensation of former industry, just as Wages are the compensation of present industry. What is usually called Rent, also, is, in great part, only the compensation of the labor and capital that have previously been expended upon the land, and so closely incorporated with it that the original and the acquired properties of the soil can no longer be distinguished from each other. The greater part of what is popularly termed Rent, then, is nothing but Profit, or, in other words, the Wages of past industry. As to Rent properly so called, or the compensation for the original and inherent properties of the soil, it is not, strictly speaking, the reward of an agent that has concurred in the production, but is only a share, appropriated on the monopoly principle, of the previously created value. These original properties of the soil are the free gift of Nature; like the air and the light,

they cost nothing to anybody. But as they are not inexhaustible in amount, at least in localities where they are most needed, they are appropriated by individuals, and through the monopoly thus created, a tax is levied upon the producers of value. Thus, a portion of the value of every article of wealth is appropriated to paying Rent properly so called; but this portion is not the reward of any personal agency that has concurred in the production of wealth.

But when Profit is spoken of as the third component part of value, there is an ambiguity in the meaning of the word which deserves attention, as it is the source of several of Mr. Ricardo's paradoxes. In the ultimate distribution of the price or value, the whole share which falls to the capitalist is called Profit by Ricardo; but this includes the replacement of the capital which he originally vested in the undertaking, as well as that enlargement of this capital in the process of production which alone is usually denominated Profit. What this economist calls Wages, also, is only the share or proportion of the finished product which is received by the laborer; as what he terms Profit is the share or proportion of the same product which accrues to the capitalist. Thus, Rent being a fixed sum, to be first deducted from the total value, without any ref erence to the comparative amount of Wages and Profits, what remains after this deduction is to be divided between the laborer and the capitalist. Hence Mr. Ricardo was led to affirm, that "nothing can affect profits but a rise of wages"; that "whatever raises the wages of labor lowers the profit of stock"; and that, "as the wages of labor fall, the profits of stock rise." Summing up the whole doctrine in one theorem, he maintains that high wages and high profits are incompatible, since whatever is added to the one must be taken from the other. Having sliced off (say) one third of the apple for Rent, he proposes to divide the remainder into two parts, giving the name of Wages to the one, and of Profits to the other; and if his nomenclature is correct, the truth of his doctrine is self-evident. When a given quantity is to be divided into only two parts, it is manifest that either one of these parts can be enlarged only at the expense of the other; they must vary in the inverse ratio of each other.

But few words are needed to expose this paradox. When

words are taken in their ordinary acceptation, it is certain that high wages and high profits often go together, and tend to produce each other. The rates of both are considerably higher in the United States than in Great Britain; both are much higher in California than in New York. When a capitalist is making large profits, he is eager to extent his business, to employ more hands, and consequently he offers higher wages. A fall in wages is symptomatic of a decline in business, and a general depreciation of profits.

But it should be distinctly understood, that we here mean by wages, not the proportion of the finished product that falls to the laborer, but the amount, the quantity and quality, of the commodities which he can purchase with the results of his day's labor. If a journeyman carpenter is able to buy one fourth of a barrel of flour with his day's wages, while a seamstress can obtain only one tenth of a barrel with hers, then the wages of the former are two and a half times greater than those of the latter; and this would be true, though the carpenter received only 80 per cent of what his day's work sold for, while the seamstress was paid 90 per cent of the value of hers. In like manner, "profits are not measured by the proportion which they bear to the rate of wages, but by the proportion which they bear to the capital by the agency of which they have been produced." If a farmer, to borrow Mr. McCulloch's illustration, employs a capital amounting to 1,000 bushels of grain, paying 700 of it for wages, and 300 for seed and other expenses, then, if the return at the end of the season be 1,200 bushels, his profit is 200 bushels, and his rate of profit is 20 per cent. Mr. Ricardo would say, that the total product, 1,200 bushels, is divided into profits and wages in the propor tion of 5 to 7, inasmuch as the laborers received seven twelfths of it, and the capitalist only five twelfths;-a doctrine which is correct as he understands it, but which is calculated only to mislead, if words are taken in their ordinary meaning.

Several things are usually confounded under the name of Profit, which must be clearly distinguished from each other before we can gain a clear view of the circumstances on which the rate of Profit, at any given time and place, depends. The general principle is, that Profits tend to an equality in all employments and in all localities. I do not say that they are

equal, or that they must become equal; but an equalizing process is constantly going on; for if the gains in one department of enterprise are notoriously above the average, - if it is even suspected by a multitude of sharp-sighted observers, who are on the lookout for such opportunities, that they exceed the average, - more capital is at once attracted into the employment, till, by the competition of the capitalists with each other, the rate of Profit is reduced to the common standard in other enterprises.

But though Profits tend to an equality in different employments, it is equally certain that there is a great seeming inequality in them, most of which can be readily explained by a reference to the several really distinct elements which are usually confounded under the general name of Profits. Thus, among those who superintend the application of capital,-entrepreneurs the French call them, managers is the nearest English appellation, for they are not always the owners of the capital which they manage, there is every degree of skill, enterprise, and intelligence; the gains vary, of course, in proportion as these faculties are exercised. The prudent and sagacious merchant makes a fortune out of the very business from which a dozen of his competitors may retire as bankrupts. Only those who are successful continue in the business for a long time; and the average of the gains of such persons is found greatly to exceed the ordinary rate of Profits. Obviously, however, their gains are not all to be reckoned as Profits, strictly so called; a large portion of them are to be considered rather as the Wages of labor, or as the salary paid to an unusually skilful person for managing the concern. This portion-the wages of management - being deducted from their total gains, it is only the remainder which can properly be regarded as Profit, and its rate compared with the rate of Profits in other employments, with which it will be found to agree. These wages for skilful management often rise to a very high point; some of the manufacturing corporations in Massachusetts have found it for their advantage to pay to their general agent or manager a higher salary than the government of the United States paid to its Minister to Great Britain, or than it now pays to the Chief Justice of our Supreme Court. If this person, instead of acting as an agent for

others, should enter into business on his own account, and trade with his own capital, we ought to subtract $10,000 a year from his annual gains, before those gains are considered as any indication of the general rate of profit in his business.

Again, the risk incurred varies much in different employments. If, in a particular business, three ventures out of four fail altogether, or result in a loss, the gains of the fourth venture, on an average, must be high enough to compensate for all these losses, and to afford at least the ordinary rate of profit for the capital required during all the time which is consumed by all four ventures. The gains of the slave-trade between the coast of Africa and Brazil are so great, that if three ships out of four are captured and condemned, with all their slaves on board, the profit on the return cargo of the fourth ship is large enough to make the business a lucrative one to the merchant. The true rate of profit, then, must be calculated only after a large deduction is made from the total gains as an insurance against total loss.

But here another element comes in to modify our calculations, an element already once mentioned as "the lottery principle in human nature." So much does the prospect of splendid gains outweigh, in the estimation of sanguine and adventurous persons, the chances of loss, that an undue proportion of capital is attracted into some very uncertain employments, and the rate of profit in them is consequently reduced to a very low point, — often, indeed, to nothing or less than nothing. There is no doubt that the average gains in a trade in which large fortunes may be made, -in our own flour-trade, for instance, or in California mining,-"are lower than those in which gains are slow, though comparatively sure, and in which nothing is to be ultimately hoped for beyond a competency. In such points as this, much depends on the characters of nations, according as they partake more or less of the adventurous, or, as it is called when the intention is to blame it, the gambling spirit. This spirit is much stronger in the United States than in Great Britain; and in Great Britain than in any country on the Continent of Europe. In some Continental countries, the tendency is so much the reverse, that safe and quiet employments probably yield a less average profit to