Chapter LXXIX: Section CCXXI: Limits to the Saving of Capital

It may be seen from the foregoing, that the mere saving of capital, if the nation is to be really enriched thereby, has its limits. Every consumer likes to extend his consumption-supply and his capital in use (_Gebrauchskapitalien_); but not beyond a certain point.[221-1] Besides, as trade becomes more flourishing, smaller stores answer the same purpose. And no intelligent man can desire his productive capital increased except up to the limit that he expects a larger market for his enlarged production. What merchant or manufacturer is there who would rejoice or consider himself enriched, if the number of his customers and their desire to purchase remaining the same, he saw his stores of unsaleable articles increase every year by several thousands?

This is another difference between national resources or world resources and private resources. The resources of a private person, which are only a link in the whole chain of trade, and which are, therefore, estimated at the value in exchange of their component parts should, indeed, always be increased by savings made. (§ 8.) For even the most excessive increase of supply in general, which largely lowers the price of a whole class of commodities, will never reduce the price of individual quantities of that commodity below zero, and scarcely to zero. It is quite otherwise in the case of national or world resources which must be estimated according to the value in use of their component parts. Every utility supposes a want. Where, therefore, the want of a commodity has not increased, and notwithstanding there is a continuing increase in the supply, the only result must be a corresponding decrease in the utility of each individual part.[221-2]

If a people were to save all that remained to them over and above their most urgent necessities, they would soon be obliged to seek a wider market in foreign countries, or loan their capital there; but they would make no advance whatever in higher culture nor add anything to the gladness of life.[221-3] On the other hand, if they would not save at all, they would be able to extend their enjoyments only at the expense of their capital and of their future. Yet these two extremes find their correctives in themselves. In the former case, a glut of the market would soon produce an increased consumption and a diminished production; in the latter the reverse. The ideal of progress demands that the increased outlay with increased production should be made only for worthy objects, and chiefly by the rich, while the middle and lower classes should continue to make savings and thus contribute to wipe out differences of fortune.[221-4]

[Footnote 221-1: Up to this point, indeed, wants increase
with the means of their satisfaction. The man who has two
shirts always strives to get a dozen, while the person who
has none at all, very frequently does not care for even one.
And so the person who has silver spoons generally desires
also to possess silver candle-sticks and silver plates. On
Lucullus' 5,000 chlamydes, see _Horat._, Epist., I, 6, 40
ff.]

[Footnote 221-2: That consumption and saving are not two
opposites which exclude each other is one of _Adam Smith's_
most beautiful discoveries. See Wealth of Nat., II, ch. 3.
But compare _Pinto_, Du Crédit et de la Circulation, 1771,
335. Before his time most writers who were convinced of the
necessity of consumption were apologists of extravagance.
Thus _v. Schröder_, F. Schatz- und Rentkammer, 23 seq. 47,
172. Louis XIV.'s saying: "A King gives alms when he makes
great outlays." According to _Montesquieu_, Esprit des Louis
VII., 4, the poor die of hunger when the rich curtail their
expenses. This view, which must have found great favor among
the imitators of Louis XIV. and Louis XV. was entertained to
some extent by the Physiocrates; for instance, _Quesnay_,
Maximes générales, 21 seq. Compare _Turgot_, Oeuvres, éd,
_Dare_, 424 ff. On the other hand, _Adam Smith_, loc. cit.
says that the spendthrift is a public enemy, and the person
who saves a public benefactor. _Lauderdale_, Inquiry, 219,
reacts so forcibly against the one-sidedness which this
involves that he believes no circumstance possible "which
could so far change the nature of things as to turn
parsimony into a means of increasing wealth." In his polemic
against Pitts' sinking fund as inopportune and excessive, he
assumes that all sums saved in that way are completely
withdrawn from the national demand. See per contra
_Hufeland_ n. Grundlegung I, 32, 238. _Sismondi_, N. P. II,
ch. 6, with his distinction between _production_ and
_revenu_, is more moderate; the former is converted into the
latter only in as much as it is "realized," that is, finds a
consumer who desires it, and pays for it. Now only can the
producer rely on anything; can he restore his productive
capital, estimate his profit, and use it in consumption, and
lastly begin the whole business over again.... A stationary
country must remain stationary in everything. It cannot
increase its capital and widen its market while its
aggregate want remains unaltered. (IV, ch. 1.)]

[Footnote 221-3: Thus _John Stuart Mill_ thinks that the
American people derive from all their progress and all their
favorable circumstances only this advantage: "that the life
of the whole of one sex is devoted to dollar-hunting, and of
the other to breeding dollar-hunters." (IV, ch. 6, 2.) In
the popular edition of 1865, after the experience of the
American civil war, he materially modified this judgment.]

[Footnote 221-4: _Storch_, Nationaleinkommen, 125 ff. That
there is at least not too much to be feared from the making
of too great savings is shown by _Hermann_, St. Untersuch.,
371 seq. On the other hand, there is less wealth destroyed
by spendthrifts than is generally supposed, for spendthrifts
are most frequently cheated by men who make savings
themselves. (_J. S. Mill_, Principles, I, ch. 5, 5.)]