Chapter LXXVIII: Section CCXX: When Saving Is Injurious

The act of saving, if the consumption omitted was a productive one, is detrimental to the common good; because now a real want of the national economy remains unsatisfied.[220-1] The effecting of savings by curtailing unproductive consumption may embarrass those who had calculated on its continuance. But its utility or damage to the whole national economy will depend on the application or employment of what is saved. Here two different cases are possible.

A. It is stored up and remains idle. If this happens to a sum of money, the number of instruments of exchange in commerce is diminished. Hence, in consequence, there may be either a general fall in the price of commodities, or some commodities may remain unsold; that is, according to § 217, a commercial crisis of greater or smaller extent.[220-2] If it be objects of immediate consumption that are stored up and lie idle, articles of food or clothing, for instance, the price of such commodities is wont to be raised by the new and unusual demand for them, precisely as it is lowered afterwards when the stores are suddenly opened and thrown upon the market.[220-3]

B. If the saving effected be used to create fixed capital, there is as much consumption of goods, the same support of employed workmen, the same sale for industrial articles as in the previous unproductive consumption; only, there the stream is usually conducted into other channels. If a rich man now employs in house-building what he formerly paid out to mistresses; masons, carpenters, etc. earn what was formerly claimed by hair-dressers, milliners, etc.: there is less spent for truffles and champagne and more for bread and meat. The last result is a house which adds permanently either to personal enjoyment, or permanently increases the material products of the nation's economy.[220-4] And it is just so when the wealth saved is used as circulating capital. Here, the wealth saved is consumed in a shorter or longer time; and to superficial observers, this saving might seem like destruction; but it is distinguished from the last by this, that it always reproduces its full equivalent and more. However, the whole quantity of goods brought into the market by such new capital cannot be called its product. Only the use (_Nützung_) of the new capital can be so called; that is the holding together or the development in some other way of other forces which were already in existence until their achievements are perfected and ready for sale.[220-5] [220-6]

[Footnote 220-1: What evil influences such saving can have
may be seen from Prussian frugality in its military system
before 1806.]

[Footnote 220-2: The custom of burying treasure is produced
by a want of security (compare _Montanari_, Delia Moneta,
1683-87, 97 Cust.), and by an absence of the spirit which
leads to production. As _Burke_ says, where property is not
sacred, gold and silver fly back into the bosom of the earth
whence they came. Hence, in the middle ages, this custom was
frequent, and is yet, in most oriental despotic countries.
(_Montesquieu_, E. des L., XXII, 2.) And so in Arabia: _d'Arvieux_,
_Rosenmüller's_ translation, 61 seq. _Fontanier_, Voyage dans l'Inde
et dans le Golfe persique, 1644, I, 279. A Persian governor on his
death bed refused to give any information as to where he had buried
his treasure. His father had always murdered the slave who helped him
to bury his money or any part of it. (_Klemm_, Kulturgeschichte, VII,
220.) In lower stages of civilization, it is a very usual luxury to
have one's treasures buried with the corpse. In relation to David's
grave, see _Joseph._, Ant. Jud., VII, 15,3, XIII, 8, 4; XVI, 7, 1.
Hence the orientals believe that _every_ unknown ruin hides a
treasure, that every unintelligible inscription is a talisman to
discover it by, and that every scientific traveler is a
treasure-digger, (_v. Wrede_, R. in Hadhramaut, 113, 182 and
_passim_.) Similarly in Sicily. (_Rehfues_, Neuester Zustand von S.,
1807, I, 99.) In the East Indies every circumstance that weakens
confidence in the power of the government increases the frequency of
treasure-burial, as was noticed, for instance, after the Afghan
defeat. Treasure-burial by the Spanish peasantry (_Borrego_,
translated by Rottenkamp, 81), in Ireland (_Wakefield_, Account of I.
I, 593), in the interior of Russia (_Storch_, Handbuch, I, 142), and
among the Laplanders. The custom was very much strengthened among the
latter when, in 1813, they lost 80 per cent. by the bankruptcy of the
state through its paper money. (_Brooke_, Winter in Lapland, 1829,
119; compare _Blom_, Statistik von Norwegen, II, 205.) As during the
Thirty Years' War, so also in 1848, it is said that large amounts of
money were burned by the Silesian and Austrian peasantry. Much of it
is lost forever, but, on the whole, much treasure is wont to be found
where much is buried; governments there make it a regal right to
search for it.]

[Footnote 220-3: If the hoarding takes place in a time of superfluity,
and the restitution of the stores in a time of want, there is of
course no detrimental disturbance, but on the contrary the consequence
is a beneficent equilibrium of prices. This is the fundamental idea in
the storage of wheat.]

[Footnote 220-4: In the construction of national buildings, etc., we
have the following course of things: compulsory contributions made by
taxpayers, or an invitation to the national creditors to desist
somewhat from their usual amount of consumption, and to employ what is
saved in the building of canals, roads etc. In France, for instance,
after 1835, 100,000,000 francs per annum. (_M. Chevalier_, Cours, I,
109.) The higher and middle classes of England saved, not without much
trouble, however, between 1844 and 1858, £134,500,000 in behalf of
railway construction. _Tooke-Newmarch_.]

[Footnote 220-5: Such savings have sometimes been prescribed
by the state. In ancient Athens many prohibitions of
consumption in order to allow the productive capital to
first attain a certain height. Thus it was forbidden to
slaughter sheep until they had lambed, or before they were
shorn. (_Athen._, IX, 375, I. 9.) Similarly the old
prohibition of the exportation of figs. (Ibid., III, 74.)
Compare Petit. Leges. Atticae, V, 3. _Boeckh_,
Staatshaushaltung, I, 62 seq.]

[Footnote 220-6: The process of the transformation of
savings from a money-income, in a money-economy
(_Geldwirthschaft_), into other products, more closely
analyzed in _v. Mangoldt_, V. W. L., 152 ff.]