SIR,I think I have proved in my first letter that Produce can only be bought with Produce.I still see no eause to abandon this doctrine,that it is produetion which opens a market for production.It is true that I have taken as produce,all the services which proceed from our personal capacities,from our capitals,and our property in land,whieh has put me under the necessity of sketching afresh,and in other terms,the Doctrine of Production,which Smith evidently has neither understood,nor entirely described.
However,Sir,on reading again the 3rd section of your chapter 7,(10)I feel that there is still one point in which you do not agree with me.
You will perhaps confess that produce is bought onlv with other produce,but you persist in maintaining that men can,putting all productions together,produce a cluantitv more than equal to their wants,and consequently --thief there will be no employ for a part of these productions --that there may be a superabundance and glut of all kinds at the same time.For the purpose of presenting your objection in all its force,I will transform it into a figure,and will say,M.Malthus readily admits that one hundred sacks of wheat will purchase a hundred pieces of cloth,in a partnership which has occasion for this quantity of cloth and wheat to clothe and feed themselves,but that if the same company should produce two hundred sacks of wheat and two hundred pieces of cloth,it would be in vain that these two commodities could be exchanged the one for the other:he will maintain that a part of'them woukl find no buyers.I must therefore,Sir,prove in the first place,that whatever be the quantity produced,and the consequent depreciation of its price,a quantity produced of one kind is always sufficient to enable the producer to acquire the quantity produced of another kind;and after having proved that the possibility of acquiring exists,I must enquire how those productions which superabound give rise to wants to consume them.
The farmer who produces wheat,after having bought the productive services of the land,of the capital he employs,and of his servants,and having added his oxrn labour to it,has consumed all these values to convert them into sacks of wheat,and each sack,including his own labour,that is to say his profit,we will suppose returns him 30francs.On the other hand the manufacturer who produces flaxen,woollen,or cotton cloth,no matter which,--the manufacturer in fact after having in the same manner consumed the services of his capital,his own services,and those of his men,has manufactured pieces of cloth,each of which also returns him 30francs.
If you will allow me to come at once to the main point of the question,I will confess to you that my cloth-merchant represents in my mind the producers of all manufactured produce,and my wheat-merchant the producers of all the provisions of life and raw materials.The question is,whether the whole of their two productions,to whatever extent they may be multiplied,and whatever mav be the consequent depression in their price,can be bought by their producers,who are at the same time their consumers,and how the want continually increases in proportion to the quantity produced.
We will first examine what takes place in the hypothesis of a perfect liberty,which allows the indefinite multiplication of all productions,and afterwards we will examine into the obstacles which the nature of things or the imperfections of society oppose to this indefinite liberty of production.
But you will say that the hypothesis of an indefinite production is more favorable to your cause,because it is more difficult to dispose of an unlimited than of a circumscribed production,and that the hypothesis of a circumscribed production,sometimes from one cause sometimes another,is more favorable to mine,which establishes,that it is these very restrictions which,by preventing certain productions,injure the purchase that might be made of those productions which can only be indefinitely multiplied.
In the hypothesis of perfect liberty,the producer of wheat arrives at market with a sack which yields him,including his profit,30francs;and the producer of cloth with a piece which brings him the same price:
and consequently with two productions which exchange equally:(11)that which sells above its cost of production,will induce a part of the producers of the other commodity to turn to the production of this until the productive services are equally paid by both.This is an effect generally admitted.
It is right to observe that in this hypothesis the producers of the piece of cloth altogether have gained sufficient to buy in the whole piece or any other production of equal value.--If it amounts for example to 30francs,including every thing even the manufacturer's profit at the rate at which competition has fixed it,this sum is found distributed amongst the producers of the piece of cloth,but in unequal parts,according to the kind and quantity of services rendered to produce it.
If the piece contains ten ells,he who has gained 6francs can buy two ells of it,he who has gained 30sons can only buy half an ell,but it is still clear that all of them together can buy the whole piece.That,if instead of buying cloth they wish to buy wheat,they can also buy the whole quantity,because like the cloth it is only worth 30francs,the same as they can buy indifferently according to their wants,either a portion of the piece of cloth or an equivalent part of the sack of wheat.
He who has gained by either of these productions six francs,may employ three francs in a tenth of the piece of cloth,and three francs in a tenth of the wheat,still it is true that all the producers together can acquire the.whole of the productions.
