Intrinsic value is the absolute power of anything to support life. A sheaf of wheat of given quality and weight has in it a measurable power of sustaining the substance of the body; a cubic foot of pure air, a fixed power of sustaining its warmth; and a cl.u.s.ter of flowers of given beauty, a fixed power of enlivening or animating the senses and heart.

It does not in the least affect the intrinsic value of the wheat, the air, or the flowers, that men refuse or despise them. Used or not, their own power is in them, and that particular power is in nothing else.

But in order that this value of theirs may become effectual, a certain state is necessary in the recipient of it. The digesting, the breathing, and perceiving functions must be perfect in the human creature before the food, air, or flowers can become their full value to it. The production of effectual value, therefore, always involves two needs; first, the production of a thing essentially useful; then the production of the capacity to use it. Where the intrinsic value and acceptant capacity come together there is EFFECTUAL value, or wealth. Where there is either no intrinsic value, or no acceptant capacity, there is no effectual value; that is to say, no wealth. A horse is no wealth to us if we cannot ride, nor a picture if we cannot see, nor can any n.o.ble thing be wealth, except to a n.o.ble person. As the aptness of the user increases, the effectual value of the thing used increases; and in its entirety can co-exist only with perfect skill of use, or harmony of nature. The effectual value of a given quant.i.ty of any commodity existing in the world at any moment is therefore a mathematical function of the capacity existing in the human race to enjoy it. Let its intrinsic value be represented by _x_, and the recipient faculty by _y_; its effectual value is _x y_, in which the sum varies as either co-efficient varies, is increased by either's increase,[68] and cancelled by either's absence.

[68] With this somewhat strange and ungeometrical limitation, however, which, here expressed for the moment in the briefest terms, we must afterwards trace in detail--that _x y_ may be indefinitely increased by the increase of _y_ only; but not by the increase of _x_, unless _y_ increases also in a fixed proportion.

Valuable material things may be conveniently referred to five heads:--

1. Land, with an a.s.sociated air, water, and organisms.

2. Houses, furniture, and instruments.

3. Stored or prepared food and medicine, and articles of bodily luxury, including clothing.

4. Books.

5. Works of art.

We shall enter into separate inquiry as to the conditions of value under each of these heads. The following sketch of the entire subject may be useful for future reference:--

1. Land. Its value is twofold--

A. As producing food and mechanical power.

B. As an object of sight and thought, producing intellectual power.

A. Its value, as a means of producing food and mechanical power, varies with its form (as mountain or plain), with its substance (in soil or mineral contents), and with its climate. All these conditions of intrinsic value, in order to give effectual value, must be known and complied with by the men who have to deal with it; but at any given time, or place, the intrinsic value is fixed; such and such a piece of land, with its a.s.sociated lakes and seas, rightly treated in surface and substance, can produce precisely so much food and power, and no more. Its surface treatment (agriculture) and substance treatment (practical geology and chemistry), are the first roots of economical science. By surface treatment, however, I mean more than agriculture as commonly understood; I mean land and sea culture;--dominion over both the fixed and the flowing fields;--perfect acquaintance with the laws of climate, and of vegetable and animal growth in the given tracts of earth or ocean, and of their relations regulating especially the production of those articles of food which, being in each particular spot producible in the highest perfection, will bring the best price in commercial exchanges.

B. The second element of value in land is its beauty, united with such conditions of s.p.a.ce and form as are necessary for exercise, or pleasant to the eye, a.s.sociated with vital organism.

Land of the highest value in these respects is that lying in temperate climates, and boldly varied in form; removed from unhealthy or dangerous influences (as of miasm or volcano); and capable of sustaining a rich fauna and flora. Such land, carefully tended by the hand of man, so far as to remove from it unsightlinesses and evidences of decay; guarded from violence, and inhabited, under man's affectionate protection, by every kind of living creature that can occupy it in peace, forms the most precious "property" that human beings can possess.

The determination of the degree in which these two elements of value can be united in land, or in which either element must, or should, in particular cases, be sacrificed to the other, forms the most important branch of economical inquiry respecting preferences of things.

2. Buildings, furniture, and instruments.

The value of buildings consists--A, in permanent strength, with convenience of form, of size, and of position; so as to render employment peaceful, social intercourse easy, temperature and air healthy. The advisable or possible magnitude of cities and mode of their distribution in squares, streets, courts, etc., the relative value of sites of land, and the modes of structure which are healthiest and most permanent, have to be studied under this head.

B. The value of buildings consists, secondarily, in historical a.s.sociation and architectural beauty, of which we have to examine the influence on manners and life.

The value of instruments consists--

A. In their power of shortening labour, or otherwise accomplishing (as ships) what human strength unaided could not. The kinds of work which are severally best accomplished by hand or by machine;--the effect of machinery in gathering and multiplying population, and its influence on the minds and bodies of such population; together with the conceivable uses of machinery on a colossal scale in accomplishing mighty and useful works, hitherto unthought of, such as the deepening of large river channels;--changing the surface of mountainous districts;--irrigating tracts of desert in the torrid zone;--breaking up, and thus rendering capable of quicker fusion edges of ice in the northern and southern Arctic seas, etc., so rendering parts of the earth habitable which hitherto have not been so, are to be studied under this head.

B. The value of instruments is, secondarily, in their aid to abstract sciences. The degree in which the multiplication of such instruments should be encouraged, so as to make them, if large, easy of access to numbers (as costly telescopes), or so cheap as that they might, in a serviceable form, become a common part of the furniture of households, is to be considered under this head.

3. Food, medicine, and articles of luxury. Under this head we shall have to examine the possible methods of obtaining pure and nourishing food in such security and equality of supply as to avoid both waste and famine; then the economy of medicine and just range of sanitary law; finally, the economy of luxury, partly an aesthetic and partly an ethical question.

4. Books. The value of these consists--

A. In their power of preserving and communicating the knowledge of facts.

B. In their power of exciting vital or n.o.ble emotion and intellectual action. They have also their corresponding negative powers of disguising and effacing the memory of facts, and killing the n.o.ble emotions, or exciting base ones. Under these two heads we have to consider the economical and educational value, positive and negative, of literature;--the means of producing and educating good authors, and the means and advisability of rendering good books generally accessible, and directing the reader's choice to them.

5. Works of art. The value of these is of the same nature as that of books, but the laws of their production and possible modes of distribution are very different, and require separate examination.

SECTION II.--MONEY.

Under this head, we shall have to examine the laws of currency and exchange; of which I will note here the first principles.

Money has been inaccurately spoken of as merely a means of circulation. It is, on the contrary, an expression of right. It is not wealth, being the sign[69] of the relative quant.i.ties of it, to which, at a given time, persons or societies are ent.i.tled.

[69] Always, and necessarily, an imperfect sign; but capable of approximate accuracy if rightly ordered.

If all the money in the world, notes and gold, were destroyed in an instant, it would leave the world neither richer nor poorer than it was. But it would leave the individual inhabitants of it in different relations.

Money is, therefore, correspondent in its nature to the t.i.tle-deed of an estate. Though the deed be burned, the estate still exists, but the right to it has become disputable.

The worth of money remains unchanged, as long as the proportion of the quant.i.ty of existing money to the quant.i.ty of existing wealth, or available labour which it professes to represent, remains unchanged.

If the wealth increases, but not the money, the worth of the money increases; if the money increases, but not the wealth, the worth of the money diminishes.

Money, therefore, cannot be arbitrarily multiplied, any more than t.i.tle-deeds can. So long as the existing wealth or available labour is not fully represented by the currency, the currency may be increased without diminution of the a.s.signed worth of its pieces. But when the existing wealth, or available labour, is once fully represented, every piece of money thrown into circulation diminishes the worth of every other existing piece, in the proportion it bears to the number of them, provided the new piece be received with equal credit; if not, the depreciation of worth takes place exclusively in the new piece, according to the inferiority of its credit.

When, however, new money, composed of some substance of supposed intrinsic value (as of gold), is brought into the market, or when new notes are issued which are supposed to be deserving of credit, the desire to obtain money will, under certain circ.u.mstances, stimulate industry; an additional quant.i.ty of wealth is immediately produced, and if this be in proportion to the new claims advanced, the value of the existing currency is undepreciated. If the stimulus given be so great as to produce more goods than are proportioned to the additional coinage, the worth of the existing currency will be raised.

Arbitrary control and issues of currency affect the production of wealth, by acting on the hopes and fears of men; and are, under certain circ.u.mstances, wise. But the issue of additional currency to meet the exigencies of immediate expense, is merely one of the disguised forms of borrowing or taxing.

It is, however, in the present low state of economical knowledge, often possible for Governments to venture on an issue of currency, when they could not venture on an additional loan or tax, because the real operation of such issue is not understood by the people, and the pressure of it is irregularly distributed, and with an unperceived gradation. Finally, the use of substances of intrinsic value as the materials of a currency, is a barbarism;--a remnant of the conditions of barter, which alone can render commerce possible among savage nations. It is, however, still necessary, partly as a mechanical check on arbitrary issues; partly as a means of exchanges with foreign nations. In proportion to the extension of civilization, and increase of trustworthiness in Governments, it will cease. So long as it exists, the phenomena of the cost and price of the articles used for currency, are mingled with those of currency itself, in an almost inextricable manner; and the worth of money in the market is affected by mult.i.tudinous accidental circ.u.mstances, which have been traced, with more or less success, by writers on commercial operations; but with these variations the true political economist has no more to do than an engineer fortifying a harbour of refuge against Atlantic tide, has to concern himself with the cries or quarrels of children who dig pools with their fingers for its ebbing currents among the sand.

SECTION III.--RICHES.

According to the various industry, capacity, good fortune, and desires of men, they obtain greater or smaller share of, and claim upon, the wealth of the world.

The inequalities between these shares, always in some degree just and necessary, may be either restrained by law (or circ.u.mstance) within certain limits; or may increase indefinitely.

Where no moral or legal restraint is put upon the exercise of the will and intellect of the stronger, shrewder, or more covetous men, these differences become ultimately enormous. But as soon as they become so distinct in their extremes as that, on one side, there shall be manifest redundance of possession, and on the other manifest pressure of need,--the terms "riches" and "poverty" are used to express the opposite states; being contrary only in the manner of the terms "warmth" and "cold"; which neither of them imply an actual degree, but only a relation to other degrees, of temperature.

Respecting riches, the economist has to inquire, first, into the advisable modes of their collection; secondly, into the advisable modes of their administration. Respecting the collection of national riches, he has to inquire, first, whether he is justified in calling the nation rich; if the quant.i.ty of money it possesses relatively to that possessed by other nations be large, irrespectively of the manner of its distribution. Or does the mode of distribution in any wise affect the nature of the riches? Thus, if the king alone be rich--suppose Croesus or Mausolus--are the Lydians and Carians therefore a rich nation? Or if one or two slave-masters be rich, and the nation be otherwise composed of slaves, is it to be called a rich nation? For if not, and the ideas of a certain mode of distribution or operation in the riches, and of a certain degree of freedom in the people, enter into our idea of riches as attributed to a people, we shall have to define the degree of fluency or circulative character which is essential to their vitality; and the degree of independence of action required in their possessors. Questions which look as if they would take time in answering. And farther. Since there are two modes in which the inequality, which is indeed the condition and const.i.tuent of riches, may be established--namely, by increase of possession on the one side, and by decrease of it on the other--we have to inquire, with respect to any given state of riches, precisely in what manner the correlative poverty was produced; that is to say, whether by being surpa.s.sed only, or being depressed, what are the advantages, or the contrary, conceivable in the depression. For instance, it being one of the commonest advantages of being rich to entertain a number of servants, we have to inquire, on the one side, what economical process produced the poverty of the persons who serve him; and what advantage each (on his own side) derives from the result.

These being the main questions touching the collection of riches, the next, or last, part of the inquiry is into their administration.

They have in the main three great economical powers which require separate examination: namely, the powers of selection, direction, and provision.

A. Their power of SELECTION relates to things of which the supply is limited (as the supply of best things is always). When it becomes matter of question to whom such things are to belong, the richest person has necessarily the first choice, unless some arbitrary mode of distribution be otherwise determined upon. The business of the economist is to show how this choice may be a Wise one.

B. Their power of DIRECTION arises out of the necessary relation of rich men to poor, which ultimately, in one way or another, involves the direction of, or authority over, the labour of the poor; and this nearly as much over their mental as their bodily labour. The business of the economist is to show how this direction may be a Just one.