SECTION CCXX.. When Saving Is Injurious.

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]