When a commodity is destroyed at once by use, as in the case of food, it is obvious that only one person can use the same portion of commodity. Our object must then be to consume it when it is most useful. If a man lost in the bush find himself with a short supply of food, it would be foolish of him to eat it all up at once, when he might starve for several days afterwards. He should spread out his supply, so as to eat each bit of food when it will support his strength the most. So we ought to do with the earnings of a life time. The working man should not spend all his wages when trade is brisk, because he will want some of it much more when trade becomes slack, and he is out of employment. Similarly, that which is spent in early life upon mere luxuries and frivolities, might be much more useful in old age, when even necessaries and ordinary comforts may be difficult to obtain. #All wealth is produced in order that it may be consumed, but then it must be consumed when it best fulfils its purpose; that is, when it is most useful.#
#14. The Fallacy of Consumption.# It is not uncommon to hear people say that they ought to spend money freely in order to encourage trade. If every person were to save his money instead of spending it, trade, they think, would languish and workmen would be out of employment. Tradespeople favour these notions, because it is obvious that, the more a milliner or draper can persuade his customer to buy, the more profit he makes thereby. The customers, too, are quite inclined to think the argument a good one, because they enjoy buying new dresses, and other pleasant things. Nevertheless #the argument is a bad fallacy#.
The fact is, that a person who has riches cannot help employing labour of some kind or other. If he saves up his money he probably puts it into a bank; but the banker does not keep it idle. The banker lends it out again to merchants, manufacturers and builders, who use it to increase their business and employ more hands. If he buy railway shares or government funds, those who receive the money put it to some other profitable use. If the rich man actually hoards up his money in the form of gold or silver, he gets no advantage from it, but he creates so much more demand for gold or silver. If many rich people were to take to hoarding up gold, the result would be to make gold mining more profitable, and there would be so many more gold miners, instead of railway navvies, or other workmen.