If then the first principle of our Applied Science is that Consumption and the extent of its market is not only the self-moving but the controlling factor in the wheel of wealth-reproduction and increase, and if our second principle is that this increase is.drawn from the surplus aid gratuitously rendered by the powers of Nature when yoked to the wheel of wealth by appropriate discoveries and inventions, and not from the mere physical labour of man; we may now advance to our third principle which is, that the very savings which play so important a part in the first principles of the Political Economists, could not possibly come out of mere Production alone, as they contend, but must come out of a wheel, of Production and Consumption combined: But as this will open up some important collateral principles which are necessary to our further advance, it will be necessary that the question should be carefully and thoroughly discussed. It has indeed been already thoroughly discussed, and in my judgment settled, by Mr. Hobson in his various economic works, but as these works have been more or less ignored by the orthodox Economists, I must make another attempt to raise the question in my own way and from my own point of view.

The problem, then, which we have to discuss is: - Whence come the savings from which the increase of wealth of one man relatively to another, or of one nation relatively to another is built up? Do they come from mere Production as such, as, for example, from so much corn or wine, or meat or coal or iron or clothing, or what not, produced it matters not how, and left to take care of themselves afterwards as best they may, but from which a certain portion, the least possible, is set aside for immediate consumption; or do they in actual fact come from a double-sided process in which the amount of actual consumption is as definite and important a factor as the mere production; a constituent element, in short, necessary to the Science, and which cannot be dropped, suppressed, or otherwise shoved aside, without entailing endless fallacies in every deduction drawn? Or, to-keep to our original symbols, do savings come out of some original stick or stock of wealth-products, from which more or less has been lopped off for individual consumption, the remainder being carried forward as savings increasing from year to year accordingly; or do these savings come, like the sparks thrown off a grindstone from a continuously revolving double-sided wheel of production and consumption, where what is produced must be consumed (not saved) before the savings can emerge? Now, although to the man in the street it is certain that there can be no savings without consumption, to the Orthodox Economists it is equally certain (and they lose no opportunity of proclaiming it) that they come out of Production as such alone.

To begin with, then, we may say that the mere statement that there can be no saving from commodities that have been merely produced, ought of itself to be a self-evident proposition. For if these commodities could all be gathered into a heap, and you had to save as much of them as possible, either they would moulder and decay if they were articles of daily consumption, or if they would keep a while, like corn or wool or cotton not yet converted into articles of immediate consumption, the more that was saved of them and the longer you tried to keep them, the more would be your loss in storing and warehousing them. Something more, then, must happen to them than their mere production before any savings can be got out of them. And what is this? Clearly, that all alike, whether raw materials or articles of immediate consumption, must be sold, that is to say consumed (for no one would be foolish enough to buy them if they did not intend to consume them) before any savings, in the economic or any other sense of the term, can accrue.

In other words they must actually be put on the wheel of wealth to be carried round its full circle to that part of the wheel where they are taken off again and actually eaten, or otherwise consumed and destroyed, before anyone concerned can be said to have saved anything by their possession. If they are merely produced, and by any caprice of their owners are not put on the wheel, they remain mere 'dead stock,' that not only cannot be saved, but can have no economic value whatever, whether as 'value in use' or 'value in exchange,' and so exist as human aberrations, the subjects of Psychology, but have no place in a Science of Political Economy. Or, to put it concretely, landowner, farmer, mine-owner, manufacturer, wholesale merchant and retailer, must all alike wait until their products are taken off the wheel by being sold, consumed, and as such destroyed, before any one of them can save anything out of what they have produced. For if their products are not sold, far from saving anything by this series of transactions, each and every one of these various producers will lose all.

It is true that one or more of them may have received ready cash or bills for their products before their goods were sold by the retailer, and so have made themselves safe, but if the retailer in turn does not sell them, and so they are not consumed and destroyed, the result will be what? This namely, that neither farmer, mine-owner, manufacturer, nor wholesale dealer will get another order from the retailer. They will have had their cake and eaten it, and now their turn will have come. For the goods they have produced in anticipation of a renewal of orders, and which are waiting to be put on the wheel, will never get there, but will lie on their hands till they moulder and decay. The mere fact that they have been producers will not help them, and as for getting savings out of these products - not savings but dead loss all round will and must issue. Now I have selected this single file of economic producers merely as illustration of my argument, but all we have to do to make it correspond with the full complexity of the economic world is to multiply and expand them until every variety of manufacturer, middleman, and retailer is embraced in our purview; and then to put all these producers with their commodities and services on the wheel of wealth together; not in serial order, but coming and going together as it were, like the generations of human life, where births and deaths alike occur at all hours, and yet the great moving mass of humanity itself keeps on its steady course unbroken.