You have seen how the production of wealth takes place through the combination of these three things, LAND, LABOUR AND CAPITAL, and you have also seen how the wealth so produced consists not in the objects themselves, but in the economic values attached to the objects.

Now we will take a particular instance of wealth and show how this works out in practice and what various forms the production of wealth takes.

Wealth, as we have seen, arises from the transposing of things around us from a condition where they are less to a condition where they are more useful to our needs.

Let us take a ton of coal lying a thousand feet down under the earth and no way provided of getting at it. A man possessing that ton of coal would not possess any wealth. The coal lying in the earth has no economic value attaching to it whatsoever. It has not yet entered the process whereby it ultimately satisfies a human need.

A shaft is sunk to get at that coal, and once the coal is reached a first economic value begins to attach to it. Next, further labour, capital and natural forces are applied to the task of hewing the coal out and raising it to the surface. This means that yet more economic values are attached to the ton of coal. These we express by saying that the ton of coal at the bottom of the mine, just hewed out, is worth so much—say 15/-; and later at the pit head is worth so much more—say £1. But the process of production of wealth is not yet completed. The coal is needed to warm you in your house, and your house is a long way from the pit head. It must be taken from the pit head to your house, and for this transport further labour, natural forces and capital must be used, and these add yet another economic value to the coal.

We express this by saying that the ton of coal delivered (that is, at your house) is worth not £1, which it was at the pit head, but £1 10s.; and in this example we see that transport is as much a part of the production of wealth as other work. We also see a further example of the truth originally stated that wealth does not consist in the object itself but in the values attached to it. The ton of coal is there in your cellar exactly the same (except that it is broken up) as it was when it lay a thousand feet under the earth with no way of getting to it. In your cellar it represents wealth. In possessing it you are possessing wealth to the amount of 30s. You could exchange it against 30s. worth of some other thing, such as wheat. But the wealth you thus possess is not the actual coal, but the values attaching to the coal. These economic values are being piled up from the very beginning of the process of production until the process of consumption begins.

Here is another case which shows how the process of production will add values to a thing without necessarily changing the thing itself.

Suppose an island where there is a lot of salt in mines near the surface, but with very poor pasture and very little of it; most of the soil barren and the climate bad. On the main-land, a day’s journey from the island, there is good soil and pasture and a good climate, but there is no salt. Salt is a prime necessity of life, and it comes into a lot of things besides necessaries. To the people of the main land, therefore, salt, which they lack, is of high value. To the people of the island it is of low value, for they can get as much of it as they want, with very little trouble. Meanwhile, meat is of very high value to the people of the island, who can grow little of it on their own soil, while it is of much less value to the people of the main-land, who have plenty of it through their good pastures and climate. Here we have, let us say, 100 tons of salt in the island and 100 tons of meat on the main-land. A boat takes the 100 tons of salt from the island to the main-land and brings back the meat from the main-land to the island. Here wealth has been created on both sides, although no change has taken place in the articles themselves except a change in position. Both parties, the islanders and the main-land people, are wealthier through the transaction, and this is a case where exchange is a direct creator of wealth, and the transport effecting the exchange is a creator of wealth.

Strictly speaking, everything done to increase the usefulness of an object right up to the moment when consumption begins is part of the production of wealth. For instance, wealth is being produced from the moment that wheat is sowed in the ground to the moment when the baked loaf is ready for eating, and the wealth expressed by the loaf, that is, the values attaching to it, are made up by all the processes of adding values from the first moment the seed was sown. When you eat a sixpenny loaf you are beginning to consume values created by the sowing of the wheat and its culture and its harvesting and grinding, and the working of the flour into dough, and the baking, and created by every piece of transport in the process, the carting of the sheaf into the rick, the carting thrashed wheat to the mill, the taking of the flour to the baker, the taking of the baked loaf to your house, and even the bringing of the loaf from the larder to your table. Every one of these actions is part of the production of wealth.

There is attaching to the process of the production of wealth a certain character which we appreciate easily in some cases, but with much more difficulty in others. We have already come across it in discussing Capital. It is this:

All wealth is consumed.

This is universally true of all wealth whatsoever, though the rate of consumption is very different in different cases.

The purpose of nature is not the purpose of man. Man only creates wealth by a perpetual effort against the purpose of nature, and the moment his effort ceases nature tends to drag back man’s creation from a condition where it is more to a condition where it is less useful to himself.

For some sorts of wealth the process is very rapid, as, for instance, in the consumption of fuel, or in the wasting of ice on a hot day. Man with an expenditure of his energy and brains applied to natural forces, and by the use of capital, has caused ice to be present under conditions where nature meant there to be no ice—a hot summer’s day.

He has brought it from a high, cold place far away; or he has kept it from the winter onwards stored in an ice house which he had to make and to which he had to transport it; or he has made it with engine power. But the force of nature is always ready to melt the ice when man’s effort ceases.

The moment man’s effort ceases, deterioration, that is, the consumption of the wealth present, at once begins. And this truth applies at the other end of the scale. You may make a building of granite, but it will not last for ever. The consumption is exceedingly slow, but it is there all the same. And whether the consumption takes place in the service of man (as when fuel is burnt on a hearth) or by neglect (as when a derelict house decays) it is always economic consumption.

We may sum up in the following Formulæ:—