BANKING FACILITIES 827 
us suppose manufacturers in Lancashire paying five millions 4-D-1776 
of pounds in wages; that money is expended in provisions, 
clothing, &c., by their work-people; and a very large portion 
in commodities produced abroad; such as the sugar, tea, 
coffee, a great Part of the material of their clothes, &c.; but and the 
all these commodities are paid for by a portion of their for lane 
labour exported in the form of cotton goods. But on the en 
other hand, suppose five millions paid for wages on railways!; 
the same portion goes for the consumption of imported com- 
modities, tea, sugar, coffee, materials of clothing, &c., but no 
portion whatever of their produce is exported, or can be so, 
to pay for those commodities. Again, with respect to the 
money paid for iron; the demand for this article increases 
the quantity made, which is all absorbed in these under- 
takings, but the largest portion of the price goes to pay 
wages, which are again to a great extent expended in articles 
of foreign import, while no equivalent of export is produced 
against them, so that a large portion of the whole money 
expended in railways is actually paid for imported com- 
modities, while no equivalent of export is produced. Now 
this state of things acts in two ways on the commerce of 
the country, next upon the exchanges, and quickly upon 
the money market. The extraordinary expenditure at home 
increases very much the consumption of all commodities, 
both of foreign import and home production, and raises their 
price, as is the case at this time. The high price of foreign 
commodities induces to a large importation; the high price 
and home demand for domestic produce cause a decreased 
export. The exchanges are thus turned against us, and 
we must remit money for the payment of that balance 
created by the use of those foreizn commodities consumed in 
sale of goods which have been actually produced. Unless capital is replaced by 
sale and thus realised, it cannot be transferred to other directions of employment. 
The permanent effects of increasing unproductive, at the expense of productive 
consumption, are frequently dwelt on in economic treatises, but the railway mania 
illustrates the mischiefs which may temporarily arise, from a sudden increase of 
productive consumption, and a sudden cessation of the ordinary consumption. 
whether productive or not. 
L As wages are paid in coin, not in paper, large permanent works are apt to 
cause an internal drain on the reserve of the Bank, and thus to entail difficulties 
in regard to credit. Nicholson, op. cit. Im. 210.