The proposition we have stated above, that every man's income comes out of the income of some one else, stands exactly on the same footing as the doctrine that in commerce both sides gain; and is the necessary consequence of it.

Now let us take a few examples.

We have shewn already that it is the wants of men alone which give value to the land. It is well known that men will continue to want food and clothing, and therefore owners of land devote their money and labour in producing corn and cattle. Now this is their capital. When this capital, in the form of corn, say, has produced its increase, the landlord offers it for sale to the public. The proceeds of the sale in ordinary times will exceed the cost of production. Now the portion of these proceeds which equals the cost of the investment replaces the capital, and all above that is profit or income. No doubt the landlord might, if he chose, spend the whole proceeds in personal enjoyment and then it would not be capital to him. But we suppose him to be a prudent man, and not disposed to diminish his capital. We may therefore consider, without error, all the excess of the proceeds above the cost of production, as profit or income, which he may spend upon his own enjoyment without diminishing his capital. Now, where does that income come from? Most clearly from the income of some one else.

A merchant, we will say, does business on a similar principle to the landlord. He invests a sum of money in business as capital, and that capital brings him in a profit, or income, which he may spend on personal enjoyment. With this income he buys corn and meat from the landlord. Hence the landlord's income is derived from the merchant's income.

Reverse the case. The landlord has made an income, and he wants things from the merchant for personal use. Therefore, out of his income he purchases things from the merchant, and hence the income of the merchant comes out of the income of the landlord.

It might, perhaps, be said by some, that though this is true, so far as it goes, yet it is not the whole truth. Because there are many traders who never deal with the public, or ultimate consumers, but only with intermediate consumers. Thus merchants deal with wholesale dealers, and these again with retail dealers. When the wholesale dealer purchases from the merchant, he purchases with capital, because he means to sell again. But the merchant of course must make a profit; and this comes, in this case,

from the capital of the wholesale dealer, and not from income. So the profits or income of the wholesale dealer come from the capital of the retail dealer. And here again is income made from capital.

But this objection, which seems plausible at first, is soon dissipated, when we consider that the ultimate consumer replaces all these profits in the price he pays for the article. The price he pays for it manifestly replaces the capital and the profits of all the intermediate parties, and consequently the profits made by these intermediate parties is, in fact, only an advance of the profit which is to be recovered at a future time from the ultimate consumer.

Now, the very same mechanism is true of all other traders and dealers whatever. Their incomes always proceed from the incomes of the ultimate consumers of the articles they deal in.

This is obviously true of Railways. The income of railways evidently comes out of the incomes of other classes in the community, and yet the income of railways is justly reckoned separately in the general income of the country.

It is also obviously true of all professional men. The incomes of lawyers and medical men manifestly come out of the incomes of their clients and patients. So the incomes of actors, and those of the musical profession, evidently come out of the incomes of those who frequent places of public amusement. And the incomes of all these persons are justly reckoned separately in the general income of the country.

We will take a case even yet more clear and decisive. A noble lord has an income of £50,000 a year. He keeps, perhaps, a French cook at £300 a year, a Scotch gardener at £250 a year, and a retinue of other domestics. Now it is quite evident that the incomes of all his employés and domestics comes out of my lord's income and yet their income is reckoned separately in the income of the country over and above and distinct from my lord's income. And my lord pays income tax on his income; and each of his employés, whose income is above the limit, pays income tax on his income. And justly so.

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Thus we arrive at this general truth, after exhausting the whole catalogue of incomes in succession-that the income of every man is made up by driblets out of the incomes of other people; and every man's income (at least, of those who spend it) goes to make up the incomes of all the persons he deals with, directly

and indirectly. And all this manifestly flows from the fact observed by Smith, that the same pieces of money pay every one's income in succession by endless circulation.

Hence, whenever there is exchange of money for services there is a profit, and income. Now the judges perform a public service, and consequently the salaries they receive from the public are justly reckoned as income, although they are paid out of the taxes. It is precisely the same with soldiers and sailors; they perform a public service, and the pay they receive is justly reckoned in the general income of the country, just as the services of the French cook and Scotch gardener are reckoned in the general income of the country, although the wages they receive come out of my lord's income which has already paid income tax.

The same argument exactly applies to the fundholders; they do a service to the nation by lending it money for any national emergency, and the annuity they receive in exchange for this service is truly income to them, and to be reckoned as part of the general income for the same reason that the incomes of soldiers, sailors, judges, &c., are.

These considerations satisfactorily prove, we think, that Mill's objection to the incomes of the fundholders being reckoned separately, as well as the incomes of the general public, is not well founded.

15. But we have still to investigate another question. Are the funds separate property? Are we to conclude that they are part of the wealth of the nation? Now to determine this, we must not let dust be thrown in our eyes by names, but we must look to the nature of the thing.

Let us suppose that a country was subject to inundations of the sea and that to preserve the lives and property of its inhabitants it should be absolutely necessary to erect vast sea-dykes. Now, as these sea-dykes would be for the general benefit, it is manifestly just that all the inhabitants should contribute to their formation and maintenance. Now, suppose that the Government, wanting to execute the work quickly, borrows large sums of money upon the promise to pay interest for it out of the taxes of the country. The money borrowed to erect the sea-dykes is withdrawn from other purposes; and if it had not been spent in erecting seadykes, something else might have been created with it. But this

is evident the sea-dykes are something. The people of the country wanting them have paid money for them, and therefore they are to be placed in the same category as any other property. It is evident that the sea-dykes of Holland are fixed Capital to the country.

Now let us suppose that in order to make the original loans more generally useful and convenient for the lenders, the Government makes the certificates, or vouchers of the loans, and the right to receive interest, transferable-would they not be separate and independent property? Call it by what name we please-stock, funds, or public debts-it is perfectly evident that it is independent property.

Now such a country is Holland, which draws 20 feet of water. The sea-dykes of Holland were formed, and are maintained, at a great expense.

Now let us ask this question, are the sea-dykes of Holland part of the wealth of Holland? Under the peculiar circumstances of that country, they are wanted; they are useful: they are the result of human labour; and they are embodied in a material form. Taking the very narrowest view of wealth that any Economist has taken, these sea-dykes, under the peculiar circumstances of the case, answer all the conditions of wealth. It is perfectly clear that they stand in just the same position as roads, canals, and railways, and a great quantity of the other fixed capital of the country. The people continually want them, and they pay a portion of their annual income to the persons who made them, and that forms the income of the persons who constructed them, and is justly reckoned as a separate item in the catalogue of the general income of the country.

So the stock of any public company engaged in any trading enterprise is manifestly part of the wealth of the country. But the value of this stock manifestly depends upon the income which accrues to the company, and that income is derived from the incomes of the general community. The subject of shares in public companies is more fully considered further on.

It is perfectly manifest that the public funds are property analogous to the stock or shares of any public trading company. For a country may have other enemies besides the sea. She may have human enemies, and it may be necessary to raise fleets and armies to defend her existence. And to preserve her security from

these enemies it may be necessary to borrow large sums of money upon the promise of paying an annual interest for it out of the income of the country, and the shares of those who advance this money may be made transferable, and are the public funds, or public debts.

Now it is evident that the funds, created to obtain this moral security, are just as much separate property as the funds, or stock, created to obtain the material security of the sea-dykes. In either case it is a service done to the general public, who have to pay for it out of their general income, just as they pay for every other service whatever. And the incomes of those who render this service stand in the same position as the incomes of those who render any other service whatever.

These considerations manifestly shew that the funds, or public debts, are property, as much as any other property, and they are properly reckoned as independent items in the general property of the country. No doubt the money might have been spent in some other way, and some other product might have been obtained instead. It is also true that the expenditure may have been injudicious, and other things might have been produced which would have been more advantageous for the country, but these considerations in no way affect their existence as property.

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The argument of Mill, then, is wholly erroneous as applied to fundholders: the case to which it would apply is where a father makes his son an allowance, as, for instance, to keep his son at college in this case the youth does nothing to earn an income: it is a pure gratuity: it comes out of his father's income: and is no more to be reckoned as part of the income of the country than the sum spent in maintaining children in their father's house is part of the income of the country. Suppose, however, a father has a son in the Guards, and, finding his pay not sufficient to enable him to maintain him suitably to his position in society, makes him an allowance; then the pay he receives is part of the income of the country, because it is earned in exchange for a service done; the allowance which he receives from his father is not income: it is mere expenditure on the part of the father, and not to be counted as income; but the interest paid to the fundholders is a sum given in exchange for a service rendered, and therefore it is income.

The true reason, therefore, why the funds are property, and the