A publication of

of labor is liberal. The laborer can support a moderate

family with ease; and plenty and comfort diffuse them-

selves throughout the community. Have we not seen that

this progressive state of society, that all these happy

consequences result from continual additions made to

the capital of the country, or to that part of the annual

produce which is devoted to reproduction? and have we

not seen that the retrograde condition, with all its deplor-

able consequences, results from making continual addi-

tions to that part of the annual produce which is taken for

mere consumption?

4

 Little obligation then has society to

those doctrines by which this consumption is recom-

mended. Obstacles enough exist to the augmentation of

capital without the operation of ridiculous speculations.

Were the doctrine that it can increase too fast, as great a

truth as it is an absurdity, the experience of all the nations

on earth proves to us, that of all possible calamities this

would be the least to be feared. Slow has been its progress

every where; and low the degree of prosperity which has

in any place been given to the mass of the people to enjoy.

OF THE NATIONAL DEBT

Were the exhortations to consumption, of Mr. Spence

and others, addressed only to individuals, we might listen

to them with a great deal of indifference; as we might

trust with abundant confidence that the disposition in

mankind to save and to better their condition would

easily prevail over any speculative opinion, and be even

little affected by its practical influence. When the same

advice, however, is offered to government, the case is

widely and awfully changed. Here the disposition is not

to save but to expend. The tendency in national affairs to

improve, by the disposition in individuals to save and to

better their condition, here finds its chief counteraction.

Here all the most obvious motives, the motives calcu-

lated to operate upon the greater part of mankind, urge

to expence; and human wisdom has not yet devised

adequate checks to confine within the just bounds this

universal propensity. Let us consider then what are likely

to be the consequences should this strong disposition

become impelled, and precipitated by a prevailing senti-

ment among mankind. One of the most powerful re-

straints upon the prodigal inclinations of governments,

is the condemnation with which expence, at least beyond

the received ideas of propriety, is sure to be viewed by

the people. But should this restraint be taken off, should

the disposition of government to spend become heated

by an opinion that it is right to spend, and should this be

still farther inflamed by the assurance that it will by the

people also be deemed right in their government to

expend, no bounds would then be set to the consumption

of the annual produce. Such a delusion could not cer-

tainly last long: but even its partial operation, and that

but for a short time, might be productive of the most

baneful consequences. The doctrines of Mr. Spence

which we have already considered, naturally lead to this

dangerous application; but it is only when he comes to

speak of the national debt that his advice is directly

addressed to government.

*

“For my own part,” says Mr. Spence,

**

 “ I am inclined

to believe that the national debt, instead of being injuri-

ous, has been of the greatest service to our wealth and

prosperity. It appears that man is in fact much more

inclined to save than to spend. The land-proprietors

accordingly have never fully performed their duty; they

have never expended the whole of their revenue. What

the land-proprietors have neglected to do, has been ac-

complished by the national debt. It has every now and

then converted twenty or thirty millions of what was

destined for capital into consumable revenue, and it has

thus given a most beneficial stimulus to agriculture.”

The reader does not, I suppose, expect that I should

compliment this doctrine with any very long discussion.

JAMES MILL

11

ON THE OVERPRODUCTION AND UNDERCONSUMPTION FALLACIES

* 

We have already seen, p. 137, an application of the doctrine of the utility of

expence, in the plea of Lord Henry Petty for alienating part of the sinking fund. The

sinking fund has been operating for twenty years. It ought in that time to have given

a tolerable specimen of its effects. Well, how has it paid the national debt? Why, the

national debt is now nearly triple its amount at that time when the sinking fund was

instituted. If the rapid payment of the national debt were the greatest of our dangers,

we might bless God upon being the securest nation in the universe. We may here

see, however, with some alarm, the extent of practice which might rapidly be given

to the consuming doctrine. Lord Henry Petty professes to regard the sinking fund as

the sheet anchor of the nation. Yet upon the strength of this speculation he could

recommend to Parliament to devote part of that sinking fund to immediate

consumption!

** 

Britain Indep. of Commerce, p. 74.

---

As it is founded upon the very same mistakes which we

have traced in our author’s doctrines respecting the con-

sumption of individuals; it would be necessary for me to

tread over again the very same steps, to the fatigue of my

reader as well as of myself. As the practical conse-

quences, however, of these mistakes are deeply danger-

ous, and as there is reason to think that they have a more

real operation in the administration of British affairs than

the mere speculative reader, it is probable, would easily

believe; it is necessary to consider with a little attention

the principal points of this application of Mr. Spence’s

theory.

According to Mr. Spence the national debt has been

advantageous because the government has thus spent

what the land-proprietors would otherwise have saved.

When his language is put into accurate terms it means

this; the land-proprietors have every year endeavoured

to increase to a certain amount that part of the annual

produce which is destined for the business of reproduc-

tion, whereby they would have increased the annual

produce, and the permanent riches of the country; but

government has every year, or at least at every short

interval of years, taken the property which the people

would thus have employed in augmenting the riches of

the country, and has devoted it to mere dead consump-

tion, whence the increase of production has been pre-

vented. It is in this manner, according to Mr. Spence, that

the national debt has been advantageous.

Let us hear Mr. Spence’s reasonings in defence of this

doctrine. “Capital,” says he,

*

 “is essential to a nation, but

a nation may have too much of it; for what is the use of

capital, but to prepare articles on which a revenue may

be spent, and where is the revenue to be spent, to be

derived from, if it be all converted into capital?” It is

evident that Mr. Spence here falls into his old mistake,

supposing that capital is not spent as well as revenue, that

is, the part of the national produce which is appropriated

to reproduction, as well as that which is appropriated to

consumption.

“When, during a war,” says Mr. Spence,

**

 “a loan of

twenty or thirty millions is made, in what is the sum

expended? Is it not consumed in providing food and

clothing for the army and navy, etc.” But, had no loan

been wanted; and had the individuals of the army and

navy been cultivators, manufacturers, and contributors,

in all the necessary ways, to national production, might

not the same sums have been employed in maintaining

and clothing them? The difference would have been

highly important. As industrious individuals, they would

have reproduced within each year a property equivalent

to that which they consumed, together with its natural

profits. As soldiers and sailors, they consumed without

producing any thing; and at the end of each year a

property equal to what they consumed was destroyed,

and not the value of a pin created to replace it.

After hearing what Mr. Spence has to say in favor of

loans, let us hear him on the subject of the taxes paid for

the interest of those loans. “These taxes,” says he,

***

 “are

perhaps a greater cause of prosperity than the original

debt was.” His reason is immediately added; because,

says he,

****

 “they are, for the most part, constantly

devoted to the purchase of consumable commodities,”

that is to say, they are constantly devoted to dead con-

sumption. The same fatal mistake still clings to Mr.

Spence. The double meaning of the word consumption

still confounds him. Were the sums, paid in taxes, not

sacrificed to dead consumption, would they not still be

employed in making purchases? would they not be em-

ployed in purchasing the raw materials of manufactures,

or in paying the wages of manufacturing and agricultural

servants, who with these wages again would purchase

their food and clothing? Mr. Spence applauds the taxes,

because they take so much from that part of the annual

produce of the country which is destined for productive

consumption, and add it to the part which is destined for

dead consumption. This is the very cause for which the

intelligent contemplator deplores them.

“Heavy taxes,” says Mr. Spence,

+

 “are doubtless op-

pressive to many of the members of a society individu-

ally considered, yet where the whole, or by far the greater

part of the taxes of a nation are expended in that nation,

taxation may be carried to a very great extent, without

injuring national prosperity.” It is curious to observe how

extremes meet. This is a favorite doctrine too of the

mercantile system, of which those of the school of Mr.

Spence have so great an abhorrence. The reason of both

is the same, that the taxes are laid out in the purchase of

commodities; and they have not the discernment to re-

flect, that the money would have been as certainly laid

out in the purchase of commodities, had it remained as

12

JAMES MILL

ON THE OVERPRODUCTION AND UNDERCONSUMPTION FALLACIES

* 

Britain Indep. of Commerce, p. 75.

** 

Ibid.

*** 

Britain Indep. of Commerce, p. 75.

**** 

Ibid.

+ 

Britain Indep. of Commerce, p. 76.

---