ON SAVING.
Bra—Your invitation in a recent number of the Spectator to inquiry upon the question whether an undue proportion of surplus may not have been devoted to the purposes of accumulation, instead of devoting the same means to placing the sources and instruments of production in the highest state of energy," induces me to offer a few remarks thereon : but before doing so, permit me to say a few words in defence of the maxims of political eco- nomy. ,
Capital is necessary to production. In the rudest states of society a man can do nothing unless he have a store of food laid up for his use during the time spent in his operations : this store of food is his capital. Agricultural tribes cannot till the ground unless they have food to sustain them till their b,arvests are reaped : this food and their tools are their capital. And as in Obese cases, so in all others, up to the manifold developments of productive energy and skill of the,present day, capital must be had ; and capital is nothing else than accumulated savings from the results of former productive opera- tions. Hence saving must be allowed to be the foundation of all wealth. Political economy, however, does not regard saving apart from invest- ment—or rather, apart from devotion to the purposes of production. Every surplus saved and accumulated becomes capital for new enterprises ; and thus, although saving is the foundation, shrewd and safe investments are the pillars on which the whole fabric of wealth must be built up. Hoarding, viewed economically, is so much waste; for in that the savings as they ac- cumulate are not applied as capital to the purposes of production, in which employment they might rapidly double and treble themselves, but lie per- fectly useless. In these days none but misers hoard : even the savings of the poor, too little for the owners to use productively, are put out at interest (though but scanty interest) in savings-banks ; while—such is the desire of English people to "get on "—those poor people and others who can find a productive use for their savings, buy trucks and mangles or open little shops in crowded 'thoroughfares : by and by they get carts and larger shops; until at last the "saving" principle combined with shrewd invest- ment enables them to "retire."
Moreover, saving and borrowing are not inconsistent. Borrowing is only the transfer of capital from one man's hands to another's. It does not cre- ate capital. All the borrowing and lending throughout England has not created one penny of additional capital ; it has only transferred the money of people who had it, but did not want to employ it in productive operations, to those who had it not, but who if they had it would so employ it. This is a truth not generally known. It is commonly thought that credit is a mighty power in itself, creating capital, setting machinery in motion, and filling warehouses with goods, woiking in all the million forms of productive energy. But it is not so. The railways have been built with 350,000,000/. or more of real money—every pound saved from the results of former pro- ductive operations : the capital of those who lent the 70,000,0007. no longer exists in an available form ; part lies along the ground, and part, having been paid in wages, has been diffused through the world : their property now consists only in the right to receive yearly such and such dividends. It is true that credit produces marvellous results; but it is in directing capital, already in existence, to those productive operations where it is most wanted. Hence the reason why great nations are great borrowers. In a great nation the laws are respected and enforced ; credit is good ; capital flows continually to those who are willing and able to employ it to the highest advantage; the wealth of the country is thus vastly increased, and the country itself becomes still greater. Saving, -then, and commercial in- debtedness, are not at all at variance with each other ; and, in fact, there is no reason why the most saving people should not be at the same time the greatest borrowers.
Baying for .the purposes of insurance, notwithstanding appearances, does not proceed from a different principle. It is but an outlay of a portion of capital in the purchase of security from violent interruptions of productive operations, and for indemnification in the case of losses arising from such interruptions. Before the principle of association was understood and ap- plied to secure these objects, they had to he dearly paid for ; and before banks, giving interest, were established, however meritorious in itself, it could be nothing else than hoarding. New, however, not only is the price to be paid for these advantages-remarkably reduced, but the portion of capital so employed is not hoarded at all : the community loses very little more than the direct consequence of the casualty insured against ; and in the se- curity under which productive operations are carried on, it gains to an ex- ceedingly great extent. There is still, however, room for much to be done ; and the more sound systems of insurance are developed, and the farther they are extended, the greater will be the productive power of the entire community. The question, then, before us, viewed economically, is not one of saving but of investment. Is it wise to expend, a portion of capital in placing the sources and instruments of production in the highest state of energy And it is a question of extreme importance. In the case of all sources and in- struments of production, but human ones, it has long ago been answered in the affirmative ; but with regard to the human agents of production, the question has, till lately, been scarcely entertained at all. The selfish greed of capitalists and manufacturers, intent only upon adding house to house and mill to mill, has ground the workman down, and doomed him to remain in his degraded state. Vast sums of money are expended upon our land, to raise it to the highest known state of fertility ; hundreds of thousands of pounds are spent to build mills with machines of the most refined and elaborate workmanship ; but the living agents of pro- duction are left with hardly any efforts made to increase and sustain their efficiency. The economical injury the community receives from this cul- pable neglect is very great ; if it could be accurately calculated it would be startling. Take, for instance, the losses caused by a mortality like that of the present summer, due, as it undoubtedly is, to the filthy and wretched state of our towns and villages. There is the loss of so many agents of pro- duction ; of the time and energies of those who, though sick, recovered ; of
the wealth consumed unproductively on drugs and medical attendance, and in many other ways. It may be only now and then that such a terrible loss as all these items amount to falls at once on the productive power of a coun- try, but the same causes are continually going on, and fever and sickness never cease to prey upon it. Then there are strikes ; the last great one cost us more than half a million of pounds. How much the community loses from the absence of education and elevation among the masses, we cannot tell, though it is doubtless extremely great—greater, perhaps, than all the rest put together. The principles of all real sciences are found to be consistent a ith God's nature. and government I and in none is this more strikingly exemplified than in political economy. f we would become as rich as possible in the products of industry, we must raise the agents of production to the highest possible state of energy ; and in the case of the living agents of production we can- not do that without raising them morally and intellectually, as well as in physical comfort and happiness. We must not expect employers as a body to do this spontaneously ; it will not be done till a change from the selfish mammon-worshiping spirit of the present day gives rise to an enlightened, generous, and Christian public opinion. We see the signs of such a public opinion advancing ; may they soon be realized. I am, Sir, your obedient servant, ROXERT E. Hoorerax.
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