PREFACE. IN a pamphlet entitled, "A few Observations on some Topics of Political Economy," the Westminster Review for April 1825, says, "The Author takes an opportunity of refuting the common fallacy about Absentees in the following instructive passage:— "There is an observation frequently made, that the number of people who spend their incomes abroad, is very injurious to the industry and wealth of this country. I allow that they may avoid paying the assessed taxes, and may in some degree lessen the produce of others, and therefore that the public revenue of the state may to that extent be injured; but I do not see how the produc tive industry or wealth of the country should be affected. It is the production of revenue, and not the expenditure of it, which employs productive industry, and creates wealth. If from a capi tal of 10,000l. I derive an income of 10007. a-year, it is that capi tal which employs British industry, and procures my income o 10007.; but whether that income is consumed in England, France or any other country, is quite immaterial. If I buy clothes in Paris, I do not thereby employ French industry; it was the capi tal of the French clothier which employed French manufacturer to make the cloth, and it was the capital of the French tailc which maintained his workmen while they made the suit of clothes and for which I give a portion of my revenue, derived fro British capital, and British industry. "It will not be contended that the mode in which the remi tance is made signifies, whether in gold, or any other article; f all exports from a country that does not produce gold, must b made ultimately in goods. "Perhaps it may be said, that if I had bought the suit of clothes in London, I should have replaced the capital of an English clothier, and an English tailor. If that were so, then I should not have replaced the capital of the manufacturer who fabricated the goods in which my revenue was remitted to France. But this idea of one man replacing the capital of another, appears to me quite erroneous: all capitalists replace their own capitals by their productions, and which they exchange with each other for their mutual advantage. A farmer with a capital of 1000l. has replaced it as soon as he has raised 1000l. worth of corn, exclusive of his rent; and if he raises 100l. worth more, he has ten per cent. profit on his capital: the whole 11007. worth of corn may be exchanged by him for the same value in goods produced by the other capitalists; and in the course of the year, they will all have reproduced their own capitals, and a surplus in addition, which they may either enjoy as revenue, or employ as additional capital." This fair and clear statement of a favorite doctrine of some of our political economists having attracted my attention, I was desirous to examine opinions which appeared to me highly paradoxi cal. Soon after, 'some letters in the Morning Chronicle attracted my notice; and lastly, Mr. McCulloch's celebrated evidence before a Committee of the House of Commons. The apparent extravagance of the opinions given by that gentleman determined me to investigate the subject of absenteeism: I felt assured that a fallacy lurked somewhere; but never having thought much on the subject, I did not find it easy to detect it. Mr. McCulloch has been unsparingly censured, and not always in the most courteous terms; but I soon discovered that this was a much easier task than to answer him. By perseverance, however, I satisfied at least myself, that he has committed a great error, having totally overlooked the retail trade. Liverpool, January, 1826. ABSENTEEISM, &c. &c. Preliminary Observations. I SHALL assume the following propositions : viz. 1st. Absenteeism either produces some effect, or none, on the wealth and industry of a country. 2d. If it produces some effect, then the effect produced will be proportionate to the duration of the absence. 3d. If it produces no effect, it is of no consequence whether it be temporary, or permanent. 1. Although in an opulent country like England, the effects of absenteeism may not be materially felt, we must not infer from this that it produces no effect: the question is not so much, what is the amount of the effect, as whether there is any actually produced; and to ascertain this we must take extreme cases; for, if it produces no effect, it can be of no importance to what extent it is carried. 2. If the buying a coat in Paris does not in any degree affect British industry or wealth, the buying of two coats in Paris will not, or two hundred, or two thousand, or two millions. If this proposition be true, it would be "quite immaterial" if all the people in England were to have their coats made in Paris. 3. If there are 10,000 British subjects, men, women and children resident in foreign countries, and if their expenses average only 100%. a-year each, here is an expenditure of one million sterling a-year abroad; and really, it requires some courage to maintain that it would not be more advantageous to expend it in England. 4. If 10,000 British subjects, who spend their incomes abroad, do not in any degree injure the wealth and industry of the country, the same may be said of 20,000 or 50,000. If this proposition be true, I do not see why it should be of any importance if every family in England, who are not engaged in any kind of business, were to spend their incomes abroad. 5. If ten or twenty families of our nobility were to take up their residence permanently in Italy, having the revenues of their English estates remitted to them in Italy, why then, those English estates might just as well belong to ten, or twenty families of Italian nobility; and if such absenteeism is not injurious to the wealth and industry of a country, then the law which prohibits foreigners from holding landed property in England is an absurd law, and it would be of no consequence if a large portion of the land in England were held by foreigners. 6. An absentee differs in nothing from an emigrant: he is, to be sure, only a temporary emigrant; but the effect is precisely the same: it only differs in duration. While he is absent, himself and his revenue are lost to his country. His estate is, to all intents and purposes, during his absence, no more an English estate, than if it belonged for the time to a Frenchman, or an Italian; for it can be of little importance, if the revenue is to be sent abroad to be expended there, whether it be sent to an Englishman, or to a Frenchman. Effects of Absenteeism on the Capital of a Country. The capital of a nation consists of every thing that the community possesses that has an exchangeable value. This includes all that the merchant possesses, or that is due to him in foreign countries. It is of no consequence whether it is abroad or at home; in British or in foreign securities, or mines; it is still British property, as effectually and truly as if it were all in specie, and in the hands of its owners: wherever it is, it forms a part of the aggregate wealth of the nation. The greater the amount of the aggregate property of the community the richer is the nation. Whatever diminishes that amount diminishes the wealth and resources of the nation. Revenue expended at home gives birth to fresh industry, to supply the deficiency caused by consumption; the savings of the profit on which is an addition to the aggregate wealth of the country. Absenteeism diminishes the wealth and resources of a nation, by withdrawing a part of the aggregate capital of the community, and receiving nothing for it in return. |