The consequence would have been that the country would have remained much in the condition of England in the Middle Ages before her shipping trade and the great mechanical inventions of the Eighteenth Century had opened up to her the markets of the world. But from the time that the Southern planters found that they could connect the productive side of their wheel with the consumption side of the cotton wheels of Lancashire, as well as with the sugar, rice, and tobacco consumers of the rest of the world (thus making by means of the belts thrown across between them one gigantic wheel of production and consumption), then it was that through this world-market for consumption suddenly thrown open, a Southern Confederacy arose, so wealthy and powerful, that it was enabled to sustain the burdens of a war which would have taxed the resources of even a first-class European Power; proving to us again that it is the extent of the market for consumption that is the source of the increase of wealth, whether of an individual among other individuals or a nation among other nations; and that this increase comes not out of Production alone, as the orthodox Economists teach (as this is only half the process), but out of a continuous wheel of Production and Consumption: the savings consisting not only in the addition to the fixed capital embodied in improved soils, machinery, ships, railways, and means of transport generally, - which as we have seen would be the only form of saving for a nation if it stood alone by itself, - but including also the gold, and credits redeemable in gold, which when held against other nations are a distinct addition to its wealth, inasmuch as they can be converted at pleasure either into additional fixed capital or additional consumable goods, or both, as pleasure, convenience, or economic necessity dictates; precisely as in the case of an individual who saves and increases his wealth when in business relations with other individuals.

And this in turn explains how it is that a nation may increase its wealth by 'leaps and bounds' either when most of its population are in dire poverty or even in a state of slavery; and so could not by any possibility carry off by their own consumption more than a small part of what is continuously being produced. For just as a man may live like a miser and yet increase his wealth by the credits which he holds against other men, so a nation may keep the great masses of its population on the wages of slavery and yet increase its wealth by the credits which it holds against other nations, - as we have just seen in Ancient Rome, the Southern States of America, and England in the early years of the last century. And thus we see that the history of States, instead of contradicting, supports our doctrine of the wheel, namely, that consumption must always regulate the pace of the production which in turn must keep time and balance with it; the only difference between the economic conditions we have cited and those existing in the most progressive States at the present day, being, that whereas then the foreign commodities in which the gold and credit savings were paid found their way mainly into the hands of the few, at the present day they are more equally diffused among the many - nothing more.

But as for the orthodox Economists, the fallacy in suppressing the element of Consumption and in representing savings and the increase of wealth as coming out of Production alone, can only be compared, as we have seen, with the fallacy of the generations of men who were imbued with the belief in perpetual motion, - to which indeed it is an exact parallel. For both have dropped an essential element from the premises on which their conclusions were based; the perpetual motion schemers' that of friction, the orthodox Economists that of consumption. The former said in effect; - if we can only transmit our original force undiminished through a series of accurately and cunningly adjusted wheels and pulleys to the point from which it started, the motion so begun and transmitted must go on for ever, - not knowing that it cannot be so transmitted without losing some of its power through friction; the latter said, if we will only produce and go on producing at the same time that we save and go on saving, we shall increase our wealth accordingly, - forgetting that you cannot save anything until your product is sold or consumed by someone, as otherwise you would be producing for the amusement of seeing your products decompose and go bad on your hands! The former drew their conclusions from half the factors involved in their wheels, - namely from the transmission without the friction; the latter from half the mechanism involved in theirs, - the production without the consumption.

And this brings us to the last of the principles of our Applied Science of Political Economy which it is necessary to enunciate before we can proceed to bring them to bear in their combination, and as a single organic unity, on the practical problem of Free Trade and Protection, as well as on the criticisms of the various schools of the orthodox Economy which we shall have to pass under review, and which will be found in a later part of this volume.