OF THE INFLUENCE OF CONSUMPTION ON PRODUCTION.


Before the appearance of those great writers whose discoveries have
given to political economy its present comparatively scientific
character, the ideas universally entertained both by theorists and by
practical men, on the causes of national wealth, were grounded upon
certain general views, which almost all who have given any considerable
attention to the subject now justly hold to be completely erroneous.

Among the mistakes which were most pernicious in their direct
consequences, and tended in the greatest degree to prevent a just
conception of the objects of the science, or of the test to be applied
to the solution of the questions which it presents, was the immense
importance attached to consumption. The great end of legislation in
matters of national wealth, according to the prevalent opinion, was to
create consumers. A great and rapid consumption was what the producers,
of all classes and denominations, wanted, to enrich themselves and the
country. This object, under the varying names of an extensive demand, a
brisk circulation, a great expenditure of money, and sometimes _totidem
verbis_ a large consumption, was conceived to be the great condition of
prosperity.

It is not necessary, in the present state of the science, to contest
this doctrine in the most flagrantly absurd of its forms or of its
applications. The utility of a large government expenditure, for the
purpose of encouraging industry, is no longer maintained. Taxes are not
now esteemed to be "like the dews of heaven, which return again in
prolific showers." It is no longer supposed that you benefit the
producer by taking his money, provided you give it to him again in