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diff --git a/38194-8.txt b/38194-8.txt new file mode 100644 index 0000000..b416820 --- /dev/null +++ b/38194-8.txt @@ -0,0 +1,40914 @@ +The Project Gutenberg EBook of An Inquiry Into the Nature and Causes of +the Wealth of Nations, by Adam Smith and Germain Garnier + +This eBook is for the use of anyone anywhere at no cost and with +almost no restrictions whatsoever. You may copy it, give it away or +re-use it under the terms of the Project Gutenberg License included +with this eBook or online at www.gutenberg.org + + +Title: An Inquiry Into the Nature and Causes of the Wealth of Nations + +Author: Adam Smith + Germain Garnier + +Release Date: December 3, 2011 [EBook #38194] + +Language: English + +Character set encoding: ISO-8859-1 + +*** START OF THIS PROJECT GUTENBERG EBOOK AN INQUIRY INTO THE NATURE *** + + + + +Produced by Jeff G. and the Online Distributed Proofreading +Team at http://www.pgdp.net (This book was produced from +scanned images of public domain material from the Google +Print project.) + + + + + + + + + HARVARD COLLEGE LIBRARY + + + + AN + INQUIRY INTO THE NATURE AND CAUSES + OF THE + WEALTH OF NATIONS. + + BY + ADAM SMITH LL.D. F.R.S. + WITH A LIFE OF THE AUTHOR. + + ALSO, + + A VIEW OF THE DOCTRINE OF SMITH, COMPARED WITH THAT OF THE FRENCH + ECONOMISTS; WITH A METHOD OF FACILITATING THE STUDY OF HIS WORKS; + FROM THE FRENCH OF M. GARNIER. + + COMPLETE IN ONE VOLUME + + London: + T. NELSON AND SONS, PATERNOSTER ROW; + AND EDINBURGH. + MDCCCLII. + + + + CONTENTS + + + _Page_ + Life of the Author i + + Short View of the Doctrine of Smith, compared with that of + the French Economists xvii + + Introduction 1 + + +BOOK I. + +OF THE CAUSES OF IMPROVEMENT IN THE PRODUCTIVE POWERS OF LABOUR, AND OF +THE ORDER ACCORDING TO WHICH ITS PRODUCE IS NATURALLY DISTRIBUTED AMONG +THE DIFFERENT RANKS OF THE PEOPLE. + + CHAP. I. + + Of the Division of Labour 2 + + CHAP. II. + + Of the Principle which gives occasion to the Division of Labour 6 + + CHAP. III. + + That the Division of Labour is limited by the Extent of the Market 8 + + CHAP. IV. + + Of the Origin and Use of Money 9 + + CHAP. V. + + Of the real and nominal Price of Commodities, or of their Price + in Labour, and their Price in Money 12 + + CHAP. VI. + + Of the Component Parts of the Price of Commodities 20 + + CHAP. VII. + + Of the Natural and Market Price of Commodities 23 + + CHAP. VIII. + + Of the Wages of Labour 27 + + CHAP. IX. + + Of the Profits of Stock 36 + + CHAP. X. + + Of Wages and Profit in the different Employments of Labour + and Stock 41 + + PART I. Inequalities arising from the Nature of the + Employments themselves ib. + + PART II. Inequalities occasioned by the Policy of Europe 50 + + CHAP. XI. + + Of the Rent of Land 60 + + PART I. Of the Produce of Land which always affords Rent 61 + + PART II. Of the Produce of Land which sometimes does, and + sometimes does not, afford Rent 68 + + PART III. Of the Variations in the Proportion between the + respective Values of that sort of Produce which always + affords Rent, and of that which sometimes does, and + sometimes does not, afford Rent 74 + + Digression concerning the Variations in the Value of Silver + during the course of the four last centuries ib. + First Period ib. + Second Period 81 + Third Period ib. + + Variations in the Proportion between the respective Values + of Gold and Silver 89 + + Grounds of the Suspicion that the Value of Silver still + continues to decrease 91 + + Different Effects of the Progress of Improvement upon the + real Price of three different sorts of rude Produce ib. + First Sort 92 + Second Sort ib. + Third Sort 97 + + Conclusion of the Digression concerning the Variations in + the Value of Silver 101 + + Effects of the Progress of Improvement upon the real Price + of Manufactures 103 + + Conclusion of the Chapter 105 + + +BOOK II. + +OF THE NATURE, ACCUMULATION, AND EMPLOYMENT OF STOCK. + + Introduction 111 + + CHAP. I. + + Of the Division of Stock 112 + + CHAP. II. + + Of Money considered as a particular Branch of the general Stock + of the Society, or of the Expense of maintaining the National + Capital 115 + + CHAP. III. + + Of the Accumulation of Capital, or of productive and unproductive + Labour 135 + + CHAP. IV. + + Of Stock lent at Interest 144 + + CHAP. V. + + Of the different Employment of Capitals 147 + + +BOOK III. + +OF THE DIFFERENT PROGRESS OF OPULENCE IN DIFFERENT NATIONS. + + CHAP. I. + + Of the Natural Progress of Opulence 155 + + CHAP. II. + + Of the Discouragement of Agriculture in the ancient States of + Europe, after the fall of the Roman Empire 157 + + CHAP. III. + + Of the Rise and Progress of Cities and Towns, after the fall of + the Roman Empire 162 + + CHAP. IV. + + How the Commerce of the Towns contributed to the Improvement of + the Country 167 + + +BOOK IV. + +OF THE SYSTEMS OF POLITICAL ECONOMY. + + Introduction 173 + + CHAP. I. + + Of the Principle of the Commercial or Mercantile system ib. + + CHAP. II. + + Of Restraints upon the Importation from Foreign Countries, of + such Goods as can be produced at Home 183 + + CHAP. III. + + Of the extraordinary Restraints upon the Importation of Goods of + almost all kinds, from those Countries with which the Balance + is supposed to be disadvantageous 192 + + PART I. Of the Unreasonableness of those Restraints, even upon + the Principles of the Commercial System ib. + + Digression concerning Banks of Deposit, particularly + concerning that of Amsterdam 194 + + PART II. Of the Unreasonableness of these extraordinary + Restraints, upon other Principles 199 + + CHAP. IV. + + Of Drawbacks 203 + + CHAP. V. + + Of Bounties 205 + + Digression concerning the Corn Trade and Corn Laws 213 + + CHAP. VI. + + Of Treaties of Commerce 222 + + CHAP. VII. + + Of Colonies 227 + + PART I. Of the Motives for establishing new Colonies ib. + + PART II. Causes of the Prosperity of new Colonies 231 + + PART III. Of the Advantages which Europe has derived from + the Discovery of America, and from that of a Passage to the + East Indies by the Cape of Good Hope 243 + + CHAP. VIII. + + Conclusion of the Mercantile System 266 + + CHAP. IX. + + Of the Agricultural Systems, or of those Systems of Political + Economy which represent the Produce of Land as either the sole + or the principal Source of the Revenue and Wealth of every + Country 275 + + APPENDIX. + + Account of Herring Busses fitted out in Scotland, the Amount of + the Cargoes and the Bounties on them 287 + + Account of Foreign Salt imported into Scotland, and of Scotch + Salt delivered duty free, for the Herring Fishery 288 + + +BOOK V. + +OF THE REVENUE OF THE SOVEREIGN OR COMMONWEALTH. + + CHAP. I. + + Of the Expenses of the Sovereign or Commonwealth 289 + + PART I. Of the Expense of Defence ib. + + PART II. Of the Expense of Justice 297 + + PART III. Of the Expense of Public Works and Public + Institutions 302 + + ART. I. Of the Public Works and Institutions for + facilitating the Commerce of Society.--1st, For + facilitating the general Commerce of the Society.-- + 2d, For facilitating particular Branches of Commerce 303 + + ART. II. Of the Expense of the Institutions for the + Education of Youth 318 + + ART. III. Of the Expense of the Institutions for the + Instruction of People of all Ages 330 + + PART IV. Of the Expense of supporting the Dignity of the + Sovereign 342 + + Conclusion of the Chapter ib. + + CHAP. II. + + Of the Sources of the general or Public Revenue of the Society 343 + + PART I. Of the Funds or Sources of Revenue which may + particularly belong to the Sovereign or Commonwealth ib. + + PART II. Of Taxes 347 + + ART. I. Taxes upon rent; Taxes upon the Rent of Land 348 + + Taxes which are proportioned, not to the Rent, but to + the Produce of Land 352 + + Taxes upon the Rent of Houses 354 + + ART. II. Taxes upon Profit, or upon the Revenue arising + from Stock 357 + + Taxes upon the Profit of particular Employments 359 + + APPENDIX to Articles I. and II.--Taxes upon the Capital + Value of Lands, Houses, and Stock 362 + + ART. III. Taxes upon the Wages of Labour 365 + + ART. IV. Taxes which, it is intended, should fall + indifferently upon every different Species of Revenue 366 + + Capitation Taxes 367 + + Taxes upon consumable Commodities 368 + + CHAP. III. + + Of Public Debts 385 + + + + +SHORT ACCOUNT OF THE LIFE AND WRITINGS OF DR. ADAM SMITH + + +Adam Smith, the celebrated author of 'An Inquiry into the Nature and +Causes of the Wealth of Nations,' was born in the town of Kirkaldy, on +the 5th of June 1723. His father, at an early period of life, practised +as a writer to the signet in Edinburgh, and officiated as private +secretary to the Earl of Loudon, during the time his Lordship was +principal secretary of state in Scotland, and keeper of the great seal; +but afterwards settled at Kirkaldy, where, for some time before his +death, he held the office of comptroller of the customs. He died a few +months before the birth of his son. + +The constitution of young Smith, during infancy, was so sickly as to +require all the care and solicitude of his surviving parent, whose only +child he was. The duty which thus devolved on his mother, it is allowed, +she discharged in the most ample manner; and, indeed, carried her +indulgence so far as to have drawn on herself, it has been said, some +degree of blame. But it certainly does not appear that any bad +consequences resulted, on this occasion, from unbounded parental +fondness; nor can it be said, that any permanent disadvantage was felt +by the retirement, and even seclusion, which long-continued weakness +rendered necessary. To the inability of young Smith to engage in the +active sports of his early companions, we ought, perhaps, to trace the +foundation of those habits, and love of retirement, which distinguished +him, in a peculiar manner, during a long life[1]. + +We are informed that Smith received the rudiments of education at the +grammar-school of Kirkaldy; and, at that time, attracted some notice by +his passion for books, and by the extraordinary powers of his memory. He +was also observed, even at this early period of life, to have contracted +those habits of absence in company, and of talking to himself, for which +he was afterwards so remarkable. + +In 1737, he was sent to the university of Glasgow, where, it is said, he +evinced an uncommon partiality for the study of mathematics and natural +philosophy. Being designed for the English church, he left that place in +about three years, and entered, in 1740, an exhibitioner on Snell's +foundation, at Baliol college, Oxford. But to this celebrated seminary +he acknowledged very slender obligations. He had, however, attained a +solid foundation of knowledge, and also the precious habits of +attention, and the most industrious application. Here he diligently +pursued his favourite speculations in private, interrupted only by the +regular calls of scholastic discipline. He cultivated, with the greatest +assiduity and success, the study of the languages, both ancient and +modern; and formed an intimate acquaintance with the works of the poets +of his own country, as well as with those of Greece and Rome, France and +Italy. Of the turns and delicacies of the English tongue, it has been +observed, he then gained such a critical knowledge, as was scarcely to +be expected from his northern education. With the view of improving his +style, he employed himself in frequent translations, particularly from +the French; a practice which he used to recommend to all who cultivate +the art of writing. His modest deportment, and his secret studies, +however, provoked, it has been said, the jealousy or the suspicion of +his superiors. It has been mentioned, that the heads of the college +having thought proper to visit his chamber, found him engaged in +perusing Hume's Treatise of Human Nature, then recently published. This +the reverend inquisitors seized, while they severely reprimanded the +young philosopher. + +After a residence of seven years at Oxford, he returned, against the +wishes of his friends, to Kirkaldy, the place of his nativity, where he +lived for some time with his mother, without determining on any fixed +plan of life; Mr. Smith having thus chosen to forego every prospect of +church preferment, rather than do violence to his conscience by +preaching a particular system of tenets. + +In 1748, being then in the twenty-fifth year of his age, he took up his +residence in the capital of Scotland, when he first entered into public +life, by delivering lectures, under the patronage of Lord Kames, on +rhetoric and the belles lettres, which he continued for two years. These +lectures were never published; but the substance of them appears to have +been afterwards communicated to Dr. Blair, as he acknowledges, in his +Lectures, to have been indebted to Dr. Smith for a manuscript treatise, +from which he had taken several ideas in the eighteenth lecture, on the +general characters of style, particularly the plain and the simple; and +also the characters of those English authors belonging to the several +classes in that and the following lecture. + +In 1751, he was chosen professor of logic in the university of Glasgow. +Of the manner in which he discharged the duties of this important +situation, it would be difficult now to present a more satisfactory +account than that which has been given by one of his own pupils 'In the +professorship of logic,' it is observed, 'Mr. Smith soon saw the +necessity of departing widely from the plan that had been followed by +his predecessors, and of directing the attention of his pupils to +studies of a more interesting and useful nature than the logic and +metaphysics of the schools. Accordingly, after exhibiting a general view +of the powers of the mind, and explaining so much of the ancient logic +as was requisite to gratify curiosity, with respect to an artificial +mode of reasoning, which had once occupied the universal attention of +the learned, he dedicated all the rest of his time to the delivery of a +system of rhetoric and belles lettres.' + +During the following year, he was nominated professor of moral +philosophy in the same university. By this appointment he was peculiarly +gratified, and the duties of it he was well fitted to discharge, as it +embraced the study of his favourite science, political economy, many of +the doctrines of which, even then, had been familiarised to his mind. +After entering on the duties of his new situation, he appears to have +turned his attention to the division of the science of morals, which he +was induced to divide into four parts. The _first_ contained Natural +Theology, in which he considered the proofs of the being and attributes +of God, and those principles of the human mind upon which religion is +founded. The _second_ comprehended Ethics, strictly so called. In the +_third_, he treated, at more length, of that branch of morality which +relates to Justice, and which, being susceptible of precise and accurate +rules, is capable of a more systematic demonstration. In the _fourth_, +he examined these political regulations which are founded upon +Expediency, and which are calculated to increase the riches, the power, +and the prosperity of a state. + +His lectures on these subjects were always distinguished by a luminous +division of the subject, and by fulness and variety of illustration; and +as they were delivered in a plain unaffected manner, they were well +calculated to afford pleasure as well as instruction. They, accordingly, +excited a degree of interest, and gave rise to a spirit of inquiry in +the great commercial city of Glasgow, from which the most favourable +consequences resulted. His reputation extended so widely, that, on his +account alone, a considerable number of students, from different parts +of the country, were attracted to the university of that city; and the +science which he taught became so popular, that even the trifling +peculiarities in his pronunciation and manner of speaking, were often +objects of imitation. + +During the time Mr. Smith was thus successfully engaged in his +academical labours, he was gradually laying the foundation of a more +extensive reputation. In the year 1759, he published his 'Theory of +Moral Sentiments, or An Essay towards an Analysis of the Principles by +which Men naturally judge concerning the Conduct and Character, first of +their Neighbours, and afterwards of Themselves.' This work was founded +on the second division of his lectures, and was divided into six +parts:--The propriety of action: Merit and demerit, or the objects of +reward and punishment: The foundation of our judgments concerning our +own sentiments and conduct, and of the sense of duty: The effect of +utility upon the sentiment of approbation: The influence of custom and +fashion upon the sentiments of moral approbation and disapprobation: +And, lastly, The character of virtue. To these were added, a brief view +of the different systems of ancient and modern philosophy, which is +universally acknowledged to be the most candid and luminous that has yet +appeared. + +This Essay soon attracted a great share of the public attention, by the +ingenuity of the reasonings, and the perspicuity with which they were +displayed. The principle on which it is founded may be said to be, That +the primary objects of our moral perceptions are the actions of other +men; and that our moral judgments, with respect to our own conduct, are +only applications to ourselves of decisions which we have already passed +on the conduct of others. With this doctrine the author thinks all the +most celebrated theories of morality coincide in part, and from some +partial view of it he apprehends they are all derived. To the same work +was subjoined a short treatise on the first formation of language, and +considerations on the different genius of those which were original and +compounded. + +The Theory of Moral Sentiments, immediately on its publication, procured +a splendid reputation to the author, and led to a change in his +situation in life, that was to him no less pleasing in itself, than +gratifying from the means by which it was brought about. But the +following lively letter to him, at that time, from his friend Mr. Hume, +dated London, 12th April, 1759, will best show the manner in which this +work was received, and the influence which it had in deciding on the +future life of its author:-- + + 'I give you thanks for the agreeable present of your Theory. + Wedderburn and I made presents of our copies to such of our + acquaintances as we thought good judges, and proper to spread the + reputation of the book. I sent one to the Duke of Argyll, to Lord + Lyttleton, Horace Walpole, Soame Jenyns, and Burke, an Irish + gentleman, who wrote lately a very pretty treatise on the sublime, + Millar desired my permission to send one, in your name, to Dr. + Warburton. I have delayed writing to you till I could tell you + something of the success of the book, and could prognosticate, with + some probability, whether it should be finally damned to oblivion, or + should be registered in the temple of immortality. Though it has been + published only a few weeks, I think there appear already such strong + symptoms, that I can almost venture to foretel its fate. It is, in + short, this----But I have been interrupted in my letter, by a foolish, + impertinent visit of one who has lately come from Scotland. He tells + me, that the university of Glasgow intend to declare Rouet's office + vacant, upon his going abroad with Lord Hope. I question not but you + will have our friend Fergusson in your eye, in case another project + for procuring him a place in the university of Edinburgh should fail. + Fergusson has very much polished and improved his treatise on + Refinement, and with some amendments, it will make an admirable book, + and discovers an elegant and a singular genius. The Epigoniad, I hope, + will do; but it is somewhat up-hill work. As I doubt not but you + consult the reviewers sometimes at present, you will see in the + Critical Review a letter upon that poem, and I desire you to employ + your conjectures in finding out the author. Let me see a sample of + your skill in knowing hands, by your guessing at the person. I am + afraid of Lord Kames's Law Tracts. A man might as well think of making + a fine sauce by a mixture of wormwood and aloes, as an agreeable + composition by joining metaphysics and Scotch law. However, the book, + I believe, has merit, though few people will take the pains of diving + into it. But to return to your book and its success in this town, I + must tell you----A plague of interruptions! I ordered myself to be + denied; and yet here is one that has broke in upon me again. He is a + man of letters, and we have had a good deal of literary conversation. + You told me that you was curious of literary anecdotes, and therefore + I shall inform you of a few that have come to my knowledge. I believe + I have mentioned to you already Helvetius's book _De l'Esprit_. It is + worth your reading, not for its philosophy, which I do not highly + value, but for its agreeable composition. I had a letter from him a + few days ago, wherein he tells me that my name was much oftener in the + manuscript, but that the censor of books at Paris obliged him to + strike it out. Voltaire has lately published a small work, called + _Candide, ou l'Optimisme_ I shall give a detail of it----But what is + all this to my book? say you.----My dear Mr. Smith, have patience; + compose yourself to tranquillity; show yourself a philosopher in + practice as well as profession; think on the emptiness, and rashness, + and futility of the common judgments of men; how little they are + regulated by reason in any subject, much more in philosophical + subjects, which so far exceed the comprehension of the vulgar. + + ----Non si quid turbida Roma + Elevat, accedas; examenve improbum in illa + Castiges trutina; nec te quæsiveris extra. + + A wise man's kingdom is his own breast, or if he ever looks farther, + it will only be to the judgment of a select few, who are free from + prejudices, and capable of examining his work. Nothing, indeed, can + be a stronger presumption of falsehood than the approbation of the + multitude; and Phocion, you know, always suspected himself of some + blunder when he was attended with the applauses of the populace. + + 'Supposing, therefore, that you have duly prepared yourself for the + worst, by all these reflections, I proceed to tell you the melancholy + news,--that your book has been very unfortunate; for the public seem + disposed to applaud it extremely. It was looked for by the foolish + people with some impatience and the mob of literati are beginning + already to be very loud in its praises. Three bishops called + yesterday at Millar's shop, in order to buy copies, and to ask + questions about the author. The bishop of Peterborough said he had + passed the evening in a company where he heard it extolled above all + books in the world. The Duke of Argyll is more decisive than he uses + to be in its favour I suppose he either considers it as an exotic, or + thinks the author will be serviceable to him in the Glasgow + elections. Lord Lyttleton says, that Robertson, and Smith, and Bower, + are the glories of English literature. Oswald protests, he does not + know whether he has reaped more instruction or entertainment from it. + But you may easily judge what reliance can be put on his judgment, + who has been engaged all his life in public business, and who never + sees any faults in his friends. Millar exults, and brags that two + thirds of the edition are already sold, and that he is now sure of + success. You see what a son of the earth that is, to value books only + by the profit they bring him. In that view, I believe, it may prove a + very good book. + + 'Charles Townsend, who passes for the cleverest fellow in England, is + so taken with the performance, that he said to Oswald, he would put + the Duke or Buccleugh under the author's care, and would make it + worth his while to accept of that charge. As soon as I heard this, + I called on him twice with a view of talking with him about the + matter, and of convincing him of the propriety of sending that young + nobleman to Glasgow; for I could not hope, that he could offer you + any terms which would tempt you to renounce your professorship. But I + missed him. Mr. Townsend passes for being a little uncertain in his + resolutions; so, perhaps, you need not build much on this sally. + + 'In recompense for so many mortifying things, which nothing but truth + could have extorted from me, and which I could easily have multiplied + to a greater number, I doubt not but you are so good a christian as + to return good for evil, and to flatter my vanity, by telling me, + that all the godly in Scotland abuse me for my account of John Knox + and the reformation.' + +Mr. Smith having completed, and given to the world his system of ethics, +that subject afterwards occupied but a small part of his lectures. His +attention was now chiefly directed to the illustration of those other +branches of science which he taught; and, accordingly, he seems to have +taken up the resolution, even at that early period, of publishing an +investigation into the principles of what he considered to be the only +other branch of Moral Philosophy,--Jurisprudence, the subject of which +formed the third division of his lectures. At the conclusion of the +Theory of Moral Sentiments, after treating of the importance of a system +of Natural Jurisprudence, and remarking that Grotius was the first, and +perhaps the only writer, who had given any thing like a system of those +principles which ought to run through, and be the foundation of the law +of nations, Mr. Smith promised, in another discourse, to give an account +of the general principles of law and government, and of the different +revolutions they have undergone in the different ages and periods of +society, not only in what concerns justice, but in what concerns police, +revenue, and arms, and whatever else is the object of law. + +Four years after the publication of this work, and after a residence of +thirteen years in Glasgow, Mr. Smith, in 1763, was induced to relinquish +his professorship, by an invitation from the Hon. Mr. Townsend, who had +married the Duchess of Buccleugh, to accompany the young Duke, her son, +in his travels. Being indebted for this invitation to his own talents +alone, it must have appeared peculiarly flattering to him. Such an +appointment was, besides, the more acceptable, as it afforded him a +better opportunity of becoming acquainted with the internal policy of +other states, and of completing that system of political economy, the +principles of which he had previously delivered in his lectures, and +which it was then the leading object of his studies to perfect. + +Mr. Smith did not, however, resign his professorship till the day after +his arrival in Paris, in February 1764. He then addressed the following +letter to the Right Honourable Thomas Millar, lord advocate of Scotland, +and then rector of the college of Glasgow:-- + + 'MY LORD,--I take this first opportunity after my arrival in this + place, which was not till yesterday, to resign my office into the + hands of your lordship, of the dean of faculty, of the principal of + the college, and of all my other most respectable and worthy + colleagues. Into your and their hands, therefore, I do resign my + office of professor of moral philosophy in the university of Glasgow, + and in the college thereof, with all the emoluments, privileges, and + advantages, which belong to it. I reserve, however, my right to the + salary for the current half-year, which commenced at the 10th of + October, for one part of my salary, and at Martinmas last for + another; and I desire that this salary may be paid to the gentleman + who does that part of my duty which I was obliged to leave undone, in + the manner agreed on between my very worthy colleagues before we + parted. I never was more anxious for the good of the college than at + this moment; and I sincerely wish, that whoever is my successor, he + may not only do credit to the office by his abilities, but be a + comfort to the very excellent men with whom he is likely to spend his + life, by the probity of his heart and the goodness of his temper.' + +His lordship having transmitted the above to the professors, a meeting +was held; on which occasion the following honourable testimony of the +sense they entertained of the worth of their former colleague was +entered in their minutes:-- + + 'The meeting accept of Dr. Smith's resignation in terms of the above + letter; and the office of professor of moral philosophy in this + university is therefore hereby declared to be vacant. The university + at the same time, cannot help expressing their sincere regret at the + removal of Dr. Smith, whose distinguished probity and amiable + qualities procured him the esteem and affection of his colleagues; + whose uncommon genius, great abilities, and extensive learning, did + so much honour to this society. His elegant and ingenious Theory of + Moral Sentiments having recommended him to the esteem of men of taste + and literature throughout Europe, his happy talents in illustrating + abstracted subjects, and faithful assiduity in communicating useful + knowledge, distinguished him as a professor, and at once afforded the + greatest pleasure, and the most important instruction, to the youth + under his care.' + +In the first visit that Mr. Smith and his noble pupil made to Paris, +they only remained ten or twelve days; after which, they proceeded to +Thoulouse, where, during a residence of eighteen months, Mr. Smith had +an opportunity of extending his information concerning the internal +policy of France, by the intimacy in which he lived with some of the +members of the parliament. After visiting several other places in the +south of France, and residing two months at Geneva, they returned about +Christmas to Paris. Here Mr. Smith ranked among his friends many of the +highest literary characters, among whom were several of the most +distinguished of those political philosophers who were denominated +Economists. + +Before Mr. Smith left Paris, he received a flattering letter from the +unfortunate Duke of Rochefoucault, with a copy of a new edition of the +Maxims of his grandfather. Notwithstanding the unfavourable manner in +which the opinions of the author of that work were mentioned in the +Theory of Moral Sentiments, the Duke informed Mr. Smith, on this +occasion, that he had been prevented only from finishing a translation, +which he had begun, of his estimable system of morals, into French, by +the knowledge of having been anticipated in the design. He also +observed, that some apology might be made for his ancestor, when it was +considered, that he formed his opinions of mankind in two of the worst +situations of life,--a court and a camp. The last communication Mr. +Smith had with this nobleman was in 1789, when he gave him to +understand, that he would no longer rank the name of Rochefoncault with +that of the author of the Fable of the Bees; and, accordingly, in the +first edition that was afterwards published of the Theory of Moral +Sentiments, this promised alteration was made. + +The next ten years of his life, after his arrival from the continent, +Mr. Smith passed with his mother at Kirkaldy, though he occasionally, +during that time, visited London and Edinburgh. Mr. Hume, who considered +a town as the proper scene for a man of letters, made many attempts to +prevail on him to leave his retirement. + +At length, in the beginning of the year 1776, Mr. Smith accounted to the +world for his long retreat, by the publication of his 'Inquiry into the +Nature and Causes of the Wealth of Nations.' This work chiefly +comprehended the subject of the fourth and last division of his +lectures, namely, those political regulations that have their origin in +expediency. For about twenty years of his life, his attention had been +chiefly devoted to the study of subjects connected with the science of +political economy. His long residence in the mercantile city of Glasgow +afforded him opportunities of deriving information, in many particulars, +from the best sources; his travels on the continent contributed to +extend his knowledge, and correct many of those misapprehensions of life +and manners which the best descriptions of them are found to convey; and +the intimacy in which he lived with some of the leaders of the sect of +economists, and other writers on the subject of political economy, could +not fail to assist him in methodizing his speculations, and of adding to +the soundness of his conclusions.--After his arrival in this country, he +wanted nothing more than leisure, to arrange his materials, and prepare +them for publication: and for this purpose he passed in retirement the +subsequent ten years. + +The great aim of Mr. Smith's Inquiry, the fruit of so much research, and +the work of so many years, is, as Professor Stewart observes, to direct +the policy of nations with respect to one most important class of its +laws,--those which form its system of political economy: 'and he has +unquestionably,' the same eloquent writer adds, 'had the merit of +presenting to the world the most comprehensive and perfect work that has +yet appeared on the general principles of any branch of legislation.' + +'A great and leading object of Mr. Smith's speculations,' as Mr. Stewart +also observes, 'is to demonstrate, that the most effectual plan for +advancing a people to greatness, is to maintain that order of things +which nature has pointed out, by allowing every man, as long as he +observes the rules of justice, to pursue his own interest in his own +way, and to bring both his industry and his capital into the freest +competition with these of his fellow citizens.' + +Several authors, in this country, had before written on commercial +affairs, but Mr. Smith was the first who reduced to a regular form and +order the information that was to be obtained on that subject, and +deduced from it the policy which an enlightened commercial nation ought +to adopt. The successful manner in which he has treated this unlimited +freedom of trade, as well as some others, and his able exposure of the +errors of the commercial system, have rendered the science of which he +treats highly interesting to the great body of the people; and a spirit +of inquiry, on every branch of political economy, has, in consequence, +been excited, which promises now, more than ever, to be attended with +the most beneficial effects. This intricate science, the most important +to the interests of mankind though long neglected, Dr. Smith has had the +merit of advancing so far, as to lay a foundation, on which, it may +safely be said, investigation may for a long time proceed. + +It has frequently been alleged, that Dr. Smith was indebted for a large +portion of the reasonings in his Inquiry to the French economists, and +that the coincidence between some branches of his doctrine and theirs, +particularly those which relate to freedom of trade and the powers of +labour, is more than casual. But Professor Stewart has ably vindicated +him from this charge, and established his right to the general +principles of his doctrine, which, he thinks, were altogether original, +and the result of his own reflections. That he, however, derived some +advantage from his intimacy with Turgot, and those great men who were at +the head of the sect of economists, and, perhaps, adopted some of their +illustrations, it would be as unnecessary to deny, as it would he far +from discreditable to his talents to acknowledge. + +There is also a similar, or perhaps a greater coincidence between many +parts of his doctrine and the opinions of Sir James Stewart, as detailed +in his 'Inquiry into the Principles of Political Economy.' This +congruity of opinion is chiefly apparent in their respective conclusions +concerning the effects of competition,--the principles of exchangeable +value,--the relation between the interest of money and the profit of +stock,--the functions of coin,--the rise and progress of credit,--and +the sources and limits of taxation. As this author had published his +Inquiry many years before Dr. Smith's work appeared, and had, besides, +lived in great intimacy with him, there was some reason to believe, what +has been often asserted, that he possessed a just claim to some of the +doctrines contained in that work, though Dr. Smith never once mentioned +his name in any part of his work. But the present Sir James Stewart, who +has recently published a full edition of the writings of his father, +relinquishes, on his part, all such pretensions. With the partiality of +a friend, in ranking his father with Dr. Smith, he gives it as his +opinion, however, that both had, with original powers of equal strength, +drawn their knowledge from the same source, the French economists. + +Dr. Mandeville has also, of late, got the credit of being the author of +those Principles of Political Economy, which have interested the world +for the last fifty years, and to him alone, it is said, not only the +English, but also the French writers, are indebted for their doctrines +in that science. In the work of this eccentric writer, there seems, +indeed, a similarity of opinion on some of the more obvious sources of +wealth, particularly in the division of labour, which Dr. Smith +investigates so fully; and in the erroneous doctrine of productive and +non-productive labour; and also, perhaps, on some other points: but it +would be difficult to show, that he ought, on this account, to be +considered the author of all, or even the chief part of what has been +written on the subject. On this, as well as on all questions of a +similar nature, a great diversity of opinions will subsist. But it may +be a matter of curiosity to those who are unacquainted with his work, +the Fable of the Bees, not only to trace the connection of that author's +sentiments with what is advanced by subsequent writers on this important +subject, but also to learn his peculiar notions of morality, that +attracted, at one time, so much attention. These last, Dr. Smith says, +though described by a lively and humorous, yet coarse and rustic +eloquence, which throws an air of truth and probability on them, are, +almost in every respect, erroneous. + +Soon after the publication of the Wealth of Nations, Mr. Smith received +the following congratulatory letter from Mr. Hume, six months before his +death, dated Edinburgh, 1st April 1776. + + '_Euge! Belle!_ Dear Mr. Smith--I am much pleased with your + performance, and the perusal of it has taken me from a state of great + anxiety. It was a work of so much expectation, by yourself, by your + friends, and by the public, that I trembled for its appearance; but + am now much relieved; not but that the reading of it necessarily + requires so much attention, and the public is disposed to give so + little, that I shall still doubt for some time of its being at first + very popular. But it has depth, and solidity, and acuteness, and is + so much illustrated by curious facts, that it must at last take the + public attention. It is probably much improved by your last abode in + London. If you were here at my fireside, I should dispute some of + your principles. But these, and a hundred other points, are fit, only + to be discussed in conversation. I hope it will be soon, for I am in + a very bad state of health, and cannot afford a long delay.' + +The publication of this great work drew praise to its author, indeed, +from many different quarters.--Dr. Barnard, in a political epistle, +addressed to Sir Joshua Reynolds, where the characteristic qualities of +some eminent literary men of that time are brought forward, spoke of +Smith as one who would teach him how to think. Gibbon made honourable +mention of him in his Roman history; and Mr. Fox contributed, in no +small degree, to extend his reputation, by observing in the House of +Commons, that 'the way, as my learned friend Dr. Adam Smith says, for a +nation, as well as an individual, to be rich, is for both to live within +their income.' + +The opinion which Dr. Johnson delivered, at that time, on its being +alleged by Sir John Pringle, that a person who, like Dr. Smith, was not +practically acquainted with trade, could not be qualified to write on +that subject, may also be mentioned here, though somewhat erroneous, as +far as it respects the received doctrines of Political Economy:--'He is +mistaken,' said Johnson. 'A man who has never been engaged in trade +himself, may undoubtedly write well on trade; and there is nothing which +requires more to be illustrated by philosophy than trade does. As to +mere wealth, that is to say, money, it is clear that one nation, or one +individual, cannot increase its store but by making another poorer; but +trade procures what is more valuable, the reciprocation of the peculiar +advantages of different countries. A merchant seldom thinks of any but +his own trade. To write a good book upon it, a man must have extensive +views. It is not necessary to have practised, to write well upon a +subject.'[2] + +On the Inquiry into the Causes of the Wealth of Nations, it only remains +farther to be observed, that its success has been every way commensurate +to its merits. It has, however, been often regretted, that the author +did not live to favour the world with his reasonings on those important +events which have taken place since 1784, when he put the last hand to +his invaluable work. That another, with competent talents, and a mind +disposed to the task, should soon appear, to treat of these occurrences, +and give a satisfactory view of the progress of the science from that +time to the present, is not to be expected. But as the honour to be +gained from a successful execution of such an undertaking is very +considerable, it is not to be wondered at that an attempt of this kind +should be made. Accordingly, Mr Playfair of London has had the boldness +to follow Smith, by endeavouring to supply, in part, this desideratum, +by adding supplementary chapters and notes to the Treatise on the Wealth +of Nations. + +But it is greatly to be feared, that there are few persons who have read +this improved edition, as it is called, of Dr. Smith's Inquiry, but will +still look forward to the accomplishment of the wishes they must +previously have formed, for a continuation, and probably an +illustration, of the discussions contained in that work. Leaving, +therefore, the supplementary chapters and elucidations of Mr Playfair, +it must be observed, that Dr. Smith has, on this occasion, been equally +unfortunate in a biographer. The detail of his peaceful life is almost +lost among dissertations on the wickedness of atheism and the horrors of +a revolution. But these dissertations, strangely misplaced as they +appear to be, would certainly not alone have been sufficient to attract +observation here, whatever latitude the author might have allowed to +himself on such subjects. When he goes on, however, to apologise for Dr. +Smith's acquaintance with some individuals among the economists, and to +connect the whole of that sect with those philosophers to whom he +ascribes the evils which have so long afflicted France, his opinions +become still more insupportable. It will, perhaps, be said, and with +some reason, that, in this instance, at least, the writer has followed +those alarmists, who, on any men of learning belonging to that country +being mentioned, immediately ally them to the revolutionists without +regard to difference of opinion, or distance of time. + +The reputation, however, of the economists is too well established to be +affected, either by the clamours of the ignorant, or the mad +intemperance of political alarmists. The doctrine of the great men who +formed the school of the economists, was, that the produce of the land +is the sole or principal source of the revenue and wealth of every +country; and this doctrine, with the manner of deriving from it the +greatest possible advantage, it is almost universally acknowledged, +engaged entirely their attention. Dr. Smith, who lived in great +intimacy with many of the founders of that sect, does ample justice, on +every occasion, to the purity of their views; and indeed they, as well +as himself, it has always been said, by the impartial and well informed, +were ever animated by a zeal for the best interests of society. + +M. Quesnai, the first of that sect, and the author of the Economical +Table, a work of the greatest profoundness and originality, was, in +particular, represented by Mr. Smith as a man of the greatest modesty +and simplicity; and his system he pronounced, with all its +imperfections, to be the nearest approximation to the truth, of any that +had then been published on the principles of political science. His +veneration for this worthy man was even so great, that had he lived, it +was his intention to have inscribed to him the Inquiry into the Causes +of the Wealth of Nations. + +Nor will the memory of those illustrious men be soon forgotten, +notwithstanding the calumnies with which it has been charged. It may +safely be predicted, in the words of a highly respectable periodical +publication, that 'Those prospects of political improvements which +flattered the benevolent anticipations of the economists, will soon be +recognised as sound conclusions of science; and it will at length be +acknowledged that Turgot, Mirabeau, and Quesnai, were the friends of +mankind, and that their genius and their labours were devoted to the +refinement of social happiness and the consolidation of the political +fabric.'[3] + +The life of Mr. Smith, after the publication of his Inquiry, might be +said to draw towards a close. The following particulars of the last +years, are mostly extracted from Professor Stewart's Life of this +incomparable writer. + +After residing some time in London, he was appointed one of the +commissioners of customs in Scotland, in 1778, when he removed to +Edinburgh. He was accompanied by his mother, who, though in extreme old +age, possessed a considerable share of good health; and his cousin, Miss +Douglass, who had long resided with him at Glasgow, undertook to +superintend his domestic economy. + +The Duke of Buccleugh had continued to allow Mr. Smith L.300 a-year, and +the accession which he now received to his income enabled him to live, +not only with comfort and independence, but to indulge the benevolence +of his heart, in making numerous private benefactions. + +During the remaining period of his life, he appears to have done little +more than to discharge, with peculiar exactness, the duties of his +office, which, though they required no great exertion, were sufficient +to divert his attention from his studies. He very early felt the +infirmities of old age, but his health and strength were not greatly +affected till he was left alone, by the death of his mother, in 1784, +and of his cousin four years after. They had been the objects of his +affection for more than sixty years; and in their society he had +enjoyed, from his infancy, all that he ever knew of the endearments of a +family. In return for the anxious and watchful solicitude of his mother +during infancy, he had the singular good fortune of being able to show +his gratitude to her during a very long life; and it was often observed, +that the nearest avenue to his heart was through his mother. + +He now gradually declined till the period of his death, which happened +in 1790. His last illness, which arose from a chronic obstruction in the +bowels, was lingering and painful; but he had every consolation to +soothe it which he could desire, from the tenderest sympathy of his +friends, and from the completest resignation of his own mind. + +His friends had been in use to sup with him every Sunday. The last time +he received them, which was a few days before his death, there was a +pretty numerous meeting; but not being able to sit up as usual, he +retired to bed before supper. On going away, he took leave of the +company, by saying, 'I believe we must adjourn this meeting to some +other place.' + +In a letter addressed, in the year 1787, to the principal of the +university of Glasgow, in consequence of his being elected rector of +that learned body, a pleasing memorial remains of the satisfaction with +which he always recollected that period of his literary career, which +had been more peculiarly consecrated to his academical studies. On that +occasion he writes:-- + + 'No preferment could have given me so much real satisfaction. No man + can owe greater obligations to a society than I do to the university + of Glasgow. They educated me; they sent me to Oxford. Soon after my + return to Scotland, they elected me one of their own members, and + afterwards preferred me to another office, to which the abilities and + virtues of the never-to-be-forgotten Dr. Hutcheson had given a + superior degree of illustration. The period of thirteen years, which + I spent as a member of that society, I remember as by far the most + useful, and therefore, as by far the happiest and most honourable + period of my life; and now, after three-and-twenty years absence, to + be remembered in so very agreeable a manner by my old friends and + protectors, gives me a heart-felt joy which I cannot easily express + to you.' + +Not long before the death of Smith, finding his end approach rapidly, he +gave orders to destroy all his manuscripts, excepting some detached +essays, which he entrusted to the care of his executors. With the +exception of these essays, all his papers were committed to the flames. +What were the particular contents of these papers was not known, even to +his most intimate friends. The additions to the Theory of Moral +Sentiments, most of which were composed under severe illness, had +fortunately been sent to the press in the beginning of the preceding +winter; and the author lived to see the publication of this new +edition.[4] + +Some time before his last illness, when he had occasion to go to London, +he enjoined his friends, to whom he had entrusted the disposal of his +manuscripts, to destroy, in the event of his death, all the volumes of +his lectures, doing with the rest what they pleased. When he had become +weak, and saw the last period of his life approach, he spoke to his +friends again upon the same subject. They entreated him to make his mind +easy, as he might depend upon their fulfilling his desire. Though he +then seemed to be satisfied, he, some days afterwards, begged that the +volume might be immediately destroyed; which was accordingly done. + +Mr. Riddell, an intimate friend of Mr. Smith, mentions, that on one of +these occasions he regretted he had done so little; 'but I meant,' he +added, 'to have done more; and there are materials in my papers of which +I could make a great deal.--But that is now out of the question.' + +That the idea of destroying such unfinished works as might be in his +possession at the time of his death, was not the effect of any sudden or +hasty resolution, appears from the following letter to Mr. Hume, written +in 1773, at the time when he was preparing for a journey to London, with +the prospect of a pretty long absence from Scotland. + + 'My dear friend,--As I have left the care of all my literary papers + to you, I must tell you, that except those which I carry along with + me, there are none worth the publication, but a fragment of a great + work, which contains a history of the astronomical systems that were + successively in fashion down to the time of Descartes. Whether that + might not be published as a fragment of an intended juvenile work, I + leave entirely to your judgment, though I begin to suspect myself, + that there is more refinement than solidity in some parts of it. This + little work you will find in a thin folio paper book in my back-room. + All the other loose papers which you will find in that desk, or + within the glass folding-doors of a bureau, which stands in my + bed-room, together with about eighteen thin paper folio books, which + you will likewise find within the same glass folding doors, I desire + may be destroyed without any examination. Unless I die very suddenly, + I shall take care that the papers I carry with me shall he carefully + sent to you.' + +But he himself long survived his friend Mr. Hume. The persons entrusted +with his remaining papers were Dr. Black and Dr. Hutton, his executors, +with whom he had long lived in habits of the closest friendship. These +gentlemen afterwards collected into a volume, such of the writings of +Dr. Smith as were fitted for publication: and they appeared in 1795, +under the title of _Essays on Philosophical Subjects_. These essays had +been composed early in life, and were designed to illustrate the +principles of the human mind, by a theoretical deduction of the progress +of the sciences and the liberal arts. The most considerable piece in +this volume is, on the principles which lead and direct philosophical +inquiries, illustrated by the history of astronomy, ancient physics, and +ancient logic and metaphysics. The others, with the exception of an +essay on the external senses, relate to the imitative and liberal arts. +The contents of this volume, Mr. Smith's executors observe, appear to be +parts of a plan he once had formed for giving a connected history of the +liberal sciences and elegant arts; but which he had been obliged to +abandon, as being far too extensive; and these parts lay beside him +neglected till after his death. In them, however, will be found that +happy connection, that full and accurate expression, and the same +copiousness and facility of illustration, which are conspicuous in the +rest of his writings. + +As a writer, the character of Mr. Smith is so well known, that any +observation on his merits, must appear almost unnecessary. His literary +fame is circumscribed by no ordinary limits. To the voice of his own +country, is added the testimony of Europe, and, indeed, of the civilized +world. And had even only one volume of his inestimable writings +appeared, his name would have been carried down to posterity in the +first rank of those illustrious characters that adorn the last century. + +In the words of Professor Stewart, it may be said, that,--of the +intellectual gifts and attainments by which he was so eminently +distinguished;--of the originality and comprehensiveness of his views; +the extent, the variety, and the correctness of his information; the +inexhaustible fertility of his invention; and the ornaments which his +rich and beautiful imagination had borrowed from classical culture;--he +has left behind him lasting monuments. + +One observation more may he added to what is now said on his writings, +that, whatever be the nature of his subject, he seldom misses an +opportunity of indulging his curiosity, in tracing, from the principles +of human nature, or from the circumstances of society, the origin of the +opinions and the institutions which he describes. + +With regard to the private character of this amiable and enlightened +philosopher, it fortunately happens, that the most certain of all +testimonies to his private worth may be found in the confidence, +respect, and attachment which followed him through all the various +relations of life. There were many peculiarities, indeed, both in his +manners and in his intellectual habits; but to those who knew him, these +peculiarities, so far from detracting from the respect which his +abilities commanded, added an irresistible charm to his conversation, +and strongly displayed the artless simplicity of his heart. The +comprehensive speculations with which he had always been occupied, and +the variety of materials which his own invention continually supplied to +his thoughts, rendered him habitually inattentive to familiar objects, +and to common occurrences. On this account, he was remarkable, +throughout the whole of life, for speaking to himself when alone, and +for being so absent in company, as, on some occasions, to exceed almost +what the fancy of a Bruyere could imagine. In company, he was apt to be +engrossed by his studies; and appeared, at times, by the motion of his +lips, as well as by his looks and gestures, to be in the fervour of +composition. It was observed, that he rarely started a topic himself, or +even fell in easily with the common dialogue of conversation. When he +did speak, however, he was somewhat apt to convey his ideas in the form +of a lecture; but this never proceeded from a wish to engross the +discourse, or to gratify his vanity. His own inclination disposed him so +strongly to enjoy, in silence, the gaiety of those around him, that his +friends were often led to concert little schemes, in order to bring on +the subjects most likely to interest him. + + + + +SHORT VIEW + +OF THE + +DOCTRINE OF SMITH, COMPARED WITH THAT OF THE FRENCH ECONOMISTS. + +TRANSLATED FROM THE FRENCH OF M. GARNIER. + + +The ancient philosophers were little accustomed to employ themselves in +the observation of those laws which regulate the distribution of riches +among the different orders of society in a nation, or in the search +after the sources of the increase of its wealth. In fact, political +economy is a science of very modern origin; for although, towards the +end of the seventeenth century, several writers, both of France and +England, had begun to discuss the comparative advantages of agriculture +and commerce, yet it was not till the middle of the eighteenth, that any +thing like a complete system appeared upon the growth and distribution +of national wealth. At this period, the philosophical Quesnai directed +his attention to this very abstract subject, and became the founder of a +celebrated school, which may boast among its adherents many +distinguished men of talents and extensive knowledge. + +All philosophical sects owe their first origin and foundation to the +discovery of some great truth; and it is the madness inspiring their +members, to deduce every thing from this new discovery, that contributes +most to their downfal. Thus it was with the economists. They saw that +the original source of all wealth was the soil, and that the labour of +its cultivation produced not only the means of subsisting the labourer, +but also a neat surplus, which went to the increase of the existing +stock: while, on the other hand, the labour applied to the productions +of the earth, the labour of manufactures and commerce, can only add to +the material a value exactly equal to that expended during the execution +of the work; by which means, in the end, this species of labour operates +no real change on the total sum of national riches. They perceived that +the landed proprietors are the first receivers of the whole wealth of +the community; and that, whatever is consumed by those who are not +possessed of land, must come, directly or indirectly, from the former; +and hence, that these receive wages from the proprietors, and that the +circulation of national wealth, is, in fact, only a succession of +exchanges between these two classes of men, the proprietors furnishing +their wealth, and the non-proprietors giving as an equivalent their +labour and industry. They perceived that a tax, being a portion of the +national wealth applied to public use, in every instance, however +levied, bears finally upon the landed proprietors, inasmuch as they are +the distributors of that wealth, either by retrenching their luxuries, +or by loading them with an additional expense; and that, therefore, +every tax which is not levied directly on the rude produce of the earth, +falls in the end on the landed proprietors, with a surplus produce, from +which the amount of the revenue receives no addition. + +These assertions are almost all incontestible, and capable of a rigorous +demonstration; and those who have attempted to shew their falsity, have, +in general, opposed them only with idle sophistry. Why, then, has this +doctrine met with so little success, and why does every day diminish its +reputation? because it agrees in no one point with the moral condition, +either of societies or of individuals; because it is continually +contradicted by experience, and by the infallible instinct of +self-interest; because it does not possess that indispensible sanction +of all truths, utility. In fact, of what consequence is it, that the +labour of agriculture produces not only what covers its own expenses, +but new beings which would never have existed without it, and that it +has this advantage over the labour of manufactures and commerce? Does it +by any means follow from this, that the former kind of labour is more +profitable to the community than the latter? The real essence of all +wealth, and that which determines its value, is the necessity under +which the consumer lies to purchase it; for, in truth, there is no such +thing as wealth properly so called, nor absolute value; but the words +wealth and value are really nothing more than the co-relatives of +consumption and demand. Even the necessaries of life, in a country which +is inhabited, but incapable of commercial intercourse, will not form +wealth; and to whatever degree of civilization that country may have +reached, still the same principle will hold without alteration. If the +sum of national wealth shall in any case have exceeded the sum of +demands, then a part of the former sum will cease to bear the name of +wealth, and will again be without value. In vain, then, will agriculture +multiply her produce; for the instant that it exceeds the bounds of +actual consumption, a part will lose its value; and self-interest, that +prime director of all labour and industry, seeing herself thus deceived +in her expectations, will not fail to turn her activity and efforts to +another quarter. + +In almost every instance, it is an idle refinement to distinguish +between the labour of those employed in agriculture, and of those +employed in manufactures and commerce; for wealth is necessarily the +result of both descriptions of labour, and consumption can no more take +place independently of the one, than it can independently of the other. +It is by their simultaneous concurrence that any thing becomes +consumable, and, of course, that it comes to constitute wealth. How then +are we entitled to compare their respective products, since it is +impossible to distinguish these in the joint product, and thus +appreciate the separate value of each? The value of growing wheat +results as much from the industry of the reaper who gathers it in, of +the thrasher who separates it from the chaff and straw, of the miller +and baker who convert it successively into flour and bread, as it does +from that of the ploughman and of the sower. Without the labour of the +weaver, the raw material of flax would lose all its value, and be +regarded as no way superior to the most useless weed that grows. What +then can we gain by any attempts to determine which of these two species +of labour conduces most to the advancement of national wealth; or, are +they not as idle, as if we busied ourselves in inquiring, whether the +right or the left foot is the most useful in walking? + +It is true, indeed, that in every species of manufacture, the workman +adds to the value of the raw material a value exactly equal to that +which was expended during the process of manufacture; and what is the +conclusion we are to draw this? It is merely, that a certain exchange +has taken place and that the food consumed by the manufacturer is now +represented by the increase of value resulting from his manual labour. +Thus wool, when converted into cloth, has gained a value precisely equal +to that expended by the manufacturer during the conversion. But, if it +is shown that, without this exchange, the wool would have remained +without value, while, on the other hand, the food of the manufacturer +would have been without a consumer; it will then appear, that this +exchange has, in fact, done what is equivalent to creating these two +values, and that it has proved to the society an operation infinitely +more useful, than if an equal quantity of labour had been spent in the +increase of that rude produce, which already existed in overabundance. +The first description of labour has been truly productive; while the +last would have been altogether unproductive, since it would not have +created any value. + +'The soil,' say the economists, 'is the source of all wealth.' But, to +prevent this assertion from leading us into erroneous conclusions, it +will be necessary to explain it. The materials of all wealth originate +primarily in the bosom of the earth; but it is only by the aid of labour +that they can ever truly constitute wealth. The earth furnishes the +means of wealth; but wealth itself cannot possibly have any existence, +unless through that industry and labour which modifies, divides, +connects, and combines the various productions of the soil, so as to +render them fit for consumption. Commerce, indeed, regards those rude +productions as real wealth; but it is only from the consideration, that +the proprietor has it always in his power to convert them, at will, into +consumable goods, by submitting them to the necessary operations of +manufacture. They possess, as yet, merely the virtual value of a +promissory-note, which passes current, because the bearer is assured +that he can, at pleasure, convert it into cash. Many gold mines, which +are well known, are not worked, because their whole produce would not +cover the incidental expenses; but the gold which they contain is, in +reality, the same with that of our coin; and yet no one would be foolish +enough to call it wealth, for there is no probability it will ever be +extracted from the mine, or purified; and, of course, it possesses no +value. The wild fowl becomes wealth the moment it is in the possession +of the sportsman; while those of the very same species, that have +escaped his attempts, remain without any title to the term. + +It is further, without question, true, that all who do not possess +property in land must draw their subsistence from wages received, +directly or indirectly, from the proprietors, unless they violate all +rights, and become robbers. In this respect, every service is alike; the +most honourable and the most disgraceful receives each its wages. It is +certain, too, that if the circumstances determining the rate of the +various kinds of wages remain the same, that is if the offers of +service, and the demand, preserve the same proportion to each other, +after as well as before the imposition of a tax; then, of course, the +wages will continue at the same rate, and thus the tax, however imposed, +will uniformly, in the end, fall on that class in the community who +furnish the wages; so that they must suffer, either an addition to their +former expenses, or a retrenchment of those luxuries they enjoyed. And +according as the tax is less directly levied, the greater will be the +burden they are subjected to; for besides indemnifying all the other +classes who have advanced the tax-money, a further expense must be +incurred, in the additional number of persons now necessary to collect +it. The natural conclusion we must draw from the theory is, that a tax, +directly levied on the neat revenue of the land proprietors, is that +which agrees best with reason and justice, and that which bears lightest +on the contributors. + +If, however, this theory should be found to throw entirely out of +consideration a multitude of circumstances, which possess a powerful +influence over the facility of collecting a tax, as well an over its +consequences; and if the general result of this influence be of far more +importance than the single advantage of a less burden; then the theory, +inasmuch as it neglects a part of those particulars which have their +weight in the practice, is contradicted by this last. And this is +exactly what happens in the question respecting the comparative +advantages and inconveniencies of the two modes of levying taxes. + +The habit which men have acquired, of viewing money as the +representation of every thing which contributes to the support or +comfort of life, makes them naturally very unwilling to part with what +portion of it they possess, unless it be to procure some necessary or +enjoyment. We spend money with pleasure, but it requires an effort to +pay a debt, and particularly so when the value received in exchange is +not very obvious to the generality, as in the case of a tax. But by +levying the tax on some object of consumption, by thus confounding it +with the price of the latter, and by making the payment of the duty and +of the price of enjoyment become one and the same act, we render the +consumer desirous to pay the impost. It is amid the profusion of +entertainments, that the duties on wine, salt, &c. are paid; the public +treasury thus finding a source of gain in the excitements to expense +produced by the extravagance and gaiety of feasts. + +Another advantage of the same nature, possessed by the indirect mode of +taxation, is its extreme divisibility into minute parts, and the +facility which it affords to the individual, of paying it off day by +day, or even minute by minute. Thus the mechanic, who sups on a portion +of his day's wages, will sometimes in one quarter of an hour, pay part +of four or five different duties. + +In the plan of direct taxation, the impost appears without any disguise; +it comes upon us unexpectedly, from the imprudence so common to the bulk +of mankind, and never fails to carry with it constraint and +discouragement. + +All these considerations are overlooked by the friends of direct +taxation; and yet their importance must be well known to all who have +ever attended to the art of governing men. + +But, perhaps, this is not all. An indirect tax, by increasing from time +to time the price of the objects of general consumption, when the +members of the community have contracted the habit of this consumption, +renders these objects a little more costly, and thus gives birth to that +increase of labour and industry which is now required to obtain them. +But if this tax be so proportioned as not to discourage the consumption, +will it not then operate as a universal stimulus upon the active and +industrious part of the community? Will it not incite that part to +redoubled efforts, by which it may still enjoy those luxuries which, +by habit, have become almost necessaries, and, of course, produce +a further developement of the productive powers of labour, and of the +resources of industry? Are we not, in such a case, to conclude, that +after the imposition of a tax, there will exist not only the quantity of +labour and industry which was formerly requisite to procure the +necessaries and habitual enjoyments of the active class of mankind, but +also such an addition to this, as will suffice for the payment of the +tax? And will not this tax, or increase of produce required for the +tax--as it is spent by the government that receives it--will it not +serve to support a new class of consumers, requiring a variety of +commodities which the impost enables them to pay? If these conjectures +are well founded, it will follow, that indirect taxation, far from +having any hurtful influence on wealth and population, must, when wisely +regulated, tend to increase and strengthen these two great foundations +of national prosperity and power. And it will tend to do this, inasmuch +as it bears immediately on the body of the people, and operates on the +working and industrious class, which forms the active part of the +community; while, on the other hand, direct taxation operates solely on +the idle class of landed proprietors--which furnishes us with the +characteristic difference existing between these two modes of +taxation.[5] These hints, which seem to afford an explanation of that +most extraordinary phenomenon in political economy, viz. the rapid and +prodigious increase of wealth in those nations which are most loaded +with indirect taxes, deserve to be discussed at greater length than our +limits will allow. Enough, however, has been said to shew, that no +rigorous and purely mathematical calculation will ever enable us to +appreciate the real influence of taxes upon the prosperity of a nation. +Thus, some of the truths perceived by the economists are of little use +in practice; while others are found to be contradicted in their +application, by those accessory circumstances which were overlooked in +the calculations of the theory. + +While this sect of philosophers filled all Europe with their +speculations, an observer of more depth and ability directed his +researches to the same subject, and laboured to establish, on a true and +lasting foundation, the doctrines of political economy. + +Dr. Smith succeeded in discovering a great truth,--the most fruitful in +consequences, the most useful in practice, the origin of all the +principles of the science, and one which unveiled to him all the +mysteries of the growth and distribution of wealth. This great man +perceived, that the universal agent in the creation of wealth is labour; +and was thence led to analyse the powers of this agent, and to search +after the causes to which they owe their origin and increase. + +The great difference between the doctrine of Smith and of the +economists, lies in the point from which they set out, in the reduction +of their consequences. The latter go back to the soil as the primary +source of all wealth; while the former regards labour as the universal +agent which, in every case, produces it. It will appear, at first sight, +how very superior the school of the Scotch professor is to that of the +French philosophers, with regard to the practical utility, as well as to +the application of its precepts. Labour is a power of which man is the +machine; and, of course, the increase of this power can only be limited +by the indefinite bounds of human intelligence and industry; and it +possesses, like these faculties, a susceptibility of being directed by +design, and perfected by the aid of study. The earth, on the contrary, +if we set aside the influence which labour has over the nature and +quantity of its productions, is totally out of our power, in every +respect which can render it more or less useful--in its extent, in its +situation, and in its physical properties. + +Thus the science of political economy, considered according to the view +of the French economists, must be classed with the natural sciences, +which are purely speculative, and can have no other end than the +knowledge of the laws which regulate the object of their researches; +while, viewed according to the doctrine of Smith, political economy +becomes connected with the other moral sciences, which tend to +ameliorate the condition of their object, and to carry it to the highest +perfection of which it is susceptible. + +A few words will suffice to explain the grounds of the doctrine of +Smith. The power by which a nation creates its wealth is its labour; and +the quantity of wealth created will increase in direct proportion as the +power increases. But the increase of this last may take place in two +ways--in energy, and in extent. Labour increases in energy, when the +same quantity of labour furnishes a more abundant product; and the two +great means of effecting the increase, or of perfecting the productive +powers of labour, are the division of labour, and the invention of such +machines as shorten and facilitate the manual operations of industry. +Labour increases in extent, when the number of those engaged in it +augments in proportion to the increasing number of the consumers, which +can take place only in consequence of an increase of capitals, and of +those branches of business in which they are employed. + +Now, to accomplish the increase of labour in both these ways, and to +conduct it gradually to the utmost pitch of energy and extent to which +it can reach in any nation, considering the situation, the nature, and +the peculiarities of its territories, what are the exertions to be made +by its government? The subdivision of labour, and the invention and +perfecting of machines. These two great means of augmenting the energy +of labour, advance in proportion to the extent of the market, or, in +other words, in proportion to the number of exchanges which can be made, +and to the ease and readiness with which these can take place. Let the +government, then, direct all its attention to the enlargement of the +market, by forming safe and convenient roads, by the circulation of +sterling coin, and by securing the faithful fulfilment of contracts; all +of which are indispensible measures, at the same time that, when put in +practice, they will never fail to attain the desired end. And the nearer +a government approaches to perfection in each of these three points, the +more certainly will it produce every possible increase of the national +market. The first of the three means is, without doubt, the most +essential, as no other expedient whatever can possibly supply its place. + +The gradual accumulation of capitals is a necessary consequence of the +increased productive powers of labour, and it becomes also a cause of +still farther increase in these powers; but, in proportion as this +accumulation becomes greater and greater, it serves to increase the +extent of labour, inasmuch as it multiplies the number of labourers, or +the sum of national industry. This increase, however, of the number of +hands in the nation employed, will always be regulated by the nature of +the business to which the capitals are dedicated. + +Under this second head of the increase of the products of labour, the +exertions of government are much more easy. In fact, it has only to +refrain from doing harm. It is only required of it, that it shall +protect the natural liberty of industry; that it shall leave open every +channel into which, by its own tendencies, industry may be carried; that +government shall abandon it to its own direction, and shall not attempt +to point its efforts one way more than another; for private interest, +that infallible instinct which guides the exertions of all industry, is +infinitely better suited than any legislator to judge of the direction +which it will with most advantage follow. Let government, then, renounce +alike the system of prohibitions and of bounties; let it no longer +attempt to impede the efforts of industry by regulations, or to +accelerate her progress by rewards; let it leave in the most perfect +freedom the exertions of labour and the employment of capital; let its +protecting influence extend only to the removal of such obstacles as +avarice or ignorance have raised up to the unlimited liberty of industry +and commerce;--then capitals will naturally develope themselves, by +their own movement, in those directions which are at once most agreeable +to the private interest of the capitalist, and most favourable to the +increase of the national wealth. + + +METHOD OF FACILITATING THE STUDY OF DR. SMITH'S WORK. + +Such are the results of the doctrine of Smith, and the fruits we are to +reap from his immortal work. The proofs of the principle upon which his +opinions are grounded, and the natural and easy manner in which his +deductions flow from it, give it an air of simplicity and truth, which +render it no less admirable than convincing. This simplicity, however, +to be fully perceived, requires much study and consideration; for it +cannot be denied that the 'Wealth of Nations' exhibits a striking +instance of that defect for which English authors have so often been +blamed, viz. a want of method, and a neglect, in their scientific works, +of those divisions and arrangements which serve to assist the memory of +the reader, and to guide his understanding. The author seems to have +seized the pen at the moment when he was most elevated with the +importance of his subject, and with the extent of his discoveries. He +begins, by displaying before the eyes of his reader the innumerable +wonders effected by the division of labour; and with this magnificent +and impressive picture, he opens his course of instructions. He then +goes back, to consider those circumstances which give rise to or limit +this division; and is led by his subject to the definition of values--to +the laws which regulate them, to the analysis of their several elements, +and to the relations subsisting between those of different natures and +origin; all of which are preliminary ideas, which ought naturally to +have been explained to the reader before exhibiting to him the +complicated instrument of the multiplication of wealth, or unveiling the +prodigies of the most powerful of its resources. + +On the other hand, he has often introduced long digressions, which +interrupt the thread of his discussion, and, in many cases, completely +destroy the connection of its several parts. Of this description is the +digression + + On the variations in the value of the precious metals during the four + last centuries, with a critical examination of the opinions that + their value is decreasing--book 1, chap. xi. + + Upon banks of circulation and paper money--book 2, chap. ii. + + Upon banks of deposit, and particularly that of Amsterdam--book 4, + chap. iii. + + Upon the advantage of seignorage in the coining of money--book 4, + chap. vi. + + Upon the commerce of grain, and the laws regarding this trade--book + 4, chap. v. + +These different treatises, although they are unquestionably the best +that have ever been written on the subjects to which they relate, are, +however, so introduced, as to distract the reader's attention--to make +him lose sight of the principal object of the work--and to lessen the +general effect of it as a whole. + +To remedy, as far as I am able, these inconveniencies, and to facilitate +to beginners the study of the doctrine of Smith, I have thought proper +to point out the order which appears to me most agreeable to the natural +progress of ideas, and, on this account, best calculated for the purpose +of instruction. + +I would begin by remarking, that the whole doctrine of Smith, upon the +origin, multiplication, and distribution of wealth, is contained in his +two first books; and that the three others may be read separately, as so +many detached treatises, which, no doubt, confirm and develope his +opinions, but do not by any means add to them. + +The third book is an historical and political discussion on the progress +which wealth would make in a country where labour and industry were left +free; and upon the different causes which have tended, in all the +countries of Europe, to reverse this progress. + +In the fourth book, the author has endeavoured to combat the various +systems of political economy which were popular previous to his time; +and, in a particular manner, that which is denominated the mercantile +system, which has exercised so strong an influence over the financial +regulations of the European governments, and particularly over those of +England. + +In the fifth and last book, he considers the expenses of government; the +most equitable and convenient modes of providing for these expenses; and +lastly, public debts, and the influence they have over national +prosperity. + +The three last books may be read and studied in the same order and +arrangement in which they were written, without any difficulty, by one +who is completely master of the general doctrine contained in the two +first. + +I regard, then, the two first books, as a complete work, which I would +divide into three parts. + +The 1st relates to values in particular. It contains their definition; +the laws which regulate them; the analysis of the elements which +constitute a value, or enter into its composition; and the relations +which values of different origin bear to each other. + +The 2d part treats of the general mass of national wealth, which is here +divided into separate classes, according to its destination or +employment. + +The 3d and last part explains the manner in which the growth and +distribution of national wealth takes place. + + +PART FIRST.--OF VALUES IN PARTICULAR. + +The essential quality which constitutes wealth, and without which it +would not be entitled to the name, is its _exchangeable value_. + +Exchangeable value differs from the value of utility--book 1, end of +chap. iv. + +The relation existing between two exchangeable values, when expressed by +a value generally agreed upon, is denominated _price_. + +The value generally agreed on among civilized nations, is that of +metals. Motives to this preference. Origin of money--book 1, chap. iv. +Relation between money and the metal in the state of bullion--book 1, +chap. v. + +The price in money, or _nominal_ price of a thing, differs from its +_real_ price, which is its valuation by the quantity of labour expended +upon it, or which it represents--ibid. + +Laws, according to which the price of wealth is naturally fixed; and +those accidental circumstances which occasion the actual to differ from +the natural price, and which gave rise to a distinction between the +_natural_ and the _market price_--book 1, chap. vii. + +The price of a thing, in most cases, consists of three distinct +elements--the wages of the labour, the profit of the master who directs +the labour, and the rent of the ground that furnishes the materials on +which it is erected. There are, however, some descriptions of +merchandize in which the rent forms no part of the price; and others, in +which the profit forms no part of it; but none, in which it is not +formed principally by the wages--book 1, chap. vi. + +Of _wages_. Laws, according to which the natural rate of wages is fixed; +accidental circumstances which cause them to vary, during a short +period, from that natural rate--book 1, chap. viii. + +Of the _profit_ of capitals. Laws, by which the natural right of profit +is fixed; accidental circumstances which, for a long while, increase or +diminish it beyond that rate--book 1, chap. ix. + +Labour and capitals tend naturally to diffuse themselves through every +species of employment; and, as certain employments are, by their nature, +accompanied with inconveniencies and difficulties which do not occur in +others, while these, on the contrary, offer some real or imaginary +advantages which are peculiar to themselves; wages and profits should +rise and fall in proportion to these advantages and disadvantages; thus +forming a complete equilibrium between the various kinds of employment. +The arbitrary and oppressive policy of Europe, in many instances, +opposes the establishment of this equilibrium, which is conformable to +the order of nature--book 1, chap. x. + +Of the _rent_ of the ground. The nature of rent: the manner in which it +enters into the price of wealth; and according to what principles it in +some cases forms an integral part of that price, while in others it does +not--book 1, chap. xi. + + +Division of the rude produce of the earth into two great classes: + + 1. That produce which is always necessarily disposed of in such a way + as to bring a rent to the landed proprietor. + + 2. That which, according to circumstances, may be disposed of so as + to bring, or so as not to bring, a rent. + + +The produce of the first description is derived from the ground +appropriated to furnishing subsistence for man, or for those animals +which he uses as food. The value of the produce of the ground cultivated +for the support of man, determines the value of the produce of all other +ground proper for this species of culture. This general rule allows of +some exceptions. Causes of these exceptions. + +The produce of the second class consists of the materials of clothing, +lodging, fuel, and the ornaments of dress and furniture. The value of +this species of produce depends on that of the first description. Some +circumstances render it possible that the produce of the second kind may +be disposed of in such a way as to furnish a rent to the landed +proprietor. Principles which regulate the proportion of the price of +these products, which is formed by the rent--book 1, chap. xi. + +Relation between the respective values of the produce of the first +class, and those of the produce of the second. Variations which may take +place in this relation, and the causes of such variations--ibid. + +Relation existing between the values of the two descriptions of rude +produce above mentioned, and the values of the produce of manufacture. +Variations which may occur in this relation--ibid. + +Certain kinds of rude produce, procured from very different sources, +are, however, intended for the same kind of consumption; and hence it +happens, the value of one determines and limits that of another--ibid. + +The relations between values of different natures vary according to the +state of society. This state is _improving_, _declining_, or +_stationary_; that is to say, society is either increasing in wealth, or +falling into poverty, or remaining in the same unchanged state of +opulence. + + +Of the effects of these different states of society, + + Upon the price of wages--book 1, chap. viii. + + Upon the rate of profit--book 1, chap. ix. + + Upon the value of the rude produce of the earth, and on that of the + produce of manufacture--book 1, chap. xi. + + Difference, in this respect, between the various kinds of rude + produce, viz. 1. Those which the industry of man cannot multiply: 2. + Those which his industry can always multiply in proportion to the + demand: 3. Those over which human exertions have only an uncertain or + limited influence--ibid. + + +PART SECOND.--OF STOCK AND ITS EMPLOYMENT. + +Wealth, accumulated in the possession of an individual, is of two +descriptions, according to its destination or employment: + + 1. That reserved for immediate consumption. + + 2. That employed as capital, for the production of a revenue--book 2, + chap. i. + + +Capital is also of two kinds: + + 1. Fixed capital, which produces a revenue and still remains in the + same hands + + 2. Circulating capital, which yields no revenue unless it be employed + in trade--book 2 chap. i. + + +The whole accumulated wealth of any community may be divided into three +parts: + + 1. The fund appropriated to the immediate consumption of the + proprietors of wealth. + + 2. The fixed capital of the community. + + 3. Its circulating capital. + + +The _fixed capital_ of the society consists, + + 1. Of all machines and instruments of labour; + + 2. Of all buildings and edifices erected for the purposes of industry; + + 3. Of every kind of agricultural improvement which can tend to render + the soil more productive; + + 4. Of the talents and skill which certain members of the community + have acquired by time and expense. + + +The _circulating capital_ of a community consists, + + 1. In the money in circulation; + + 2. In the stock of provisions in the hands both of the producers and + of the merchants, and from the sale of which they expect to derive a + profit; + + 3. In the materials of lodging, clothing, dress, and ornament, more or + less manufactured, which are in the hands of those who are employed in + rendering them fit for use and consumption; + + 4. In the goods more completely fit for consumption, and preserved in + warehouses and shops, by merchants who propose to sell them with a + profit--book 2, chap. i. + + +Of the relation existing between the employment of these two kinds of +capital--ibid. + +Of the mode in which the capital withdrawn from circulation is disposed +of--ibid. + +The sources which continually renew the circulating capital, as soon +as it enters into the fixed capital, or the stock for immediate +consumption, are, + + 1. Lands; + + 2. Mines and quarries; + + 3. Fisheries--ibid. + + +Of the purposes accomplished by circulating coin--book 2, chap. ii; and +the expedients which may be resorted to, in order to attain these with +less expense, and fewer of those inconveniencies to which money is +subjected--ibid. + +Of the stock lent at interest; and of those things which regulate the +proportion that this kind of stock bears to the whole existing stock of +the community. The quantity of stock which may be lent depends in no +degree upon the quantity of money in circulation--book 2, chap. iv. + +Of the principles which determine the rate of interest--ibid. + +There exists a necessary relation between this and the price of +land--ibid. + + +PART THIRD--OF THE MANNER IN WHICH THE MULTIPLICATION AND DISTRIBUTION +OF WEALTH TAKES PLACE. + +Wealth uniformly increases in proportion to the augmentation which the +power producing it receives, whether that be in _energy_ or in +_extent_--book I. introduction. + + +Labour, in which this power increases in _energy_, + + 1. By the division of the parts of the same work; + + 2. By the invention of such machines as abridge and facilitate + labour--book I, chap. i. + + +The division of labour adds to its energy, + + 1. By the skill which the workman in this way acquires; + + 2. By the saving of time--ibid. + + +The invention of machines is itself an effect of the division of +labour--ibid. + +The natural disposition of mankind to exchange with each other the +different productions of their respective labours and talents, is the +principle which has given birth to the division of labour--book I, chap. +ii. + +The division of labour must of course be limited by the extent of the +market; therefore, whatever tends to widen the market, facilitates the +progress of a nation towards opulence--book I, chap. iii. + + +Labour gains in _extent_, + + 1. In proportion to the accumulation of capital; + + 2. In proportion to the manner in which these are employed--book I, + introduction. + + +The accumulation of capitals is hastened by the increase of the +proportion existing between the productive and unproductive +consumers--book 2, chap. iii. + +The proportion between these two classes of consumers is determined by +the proportion existing between that part of the annual produce destined +to the replacement of capital, and that destined for the purpose of +revenue--ibid. + +The proportion between that part of the annual produce which goes to +form capital, and that which goes to form revenue, is great in a rich +country, and small in a poor one--ibid. + +In a wealthy country, the rent of land, taken absolutely, is much +greater than in a poor country; but, taken in relation to the capital +employed, it is much less--book 2, chap. iii. + +In a wealthy country, the whole profits of its capital are infinitely +greater than in one that is poor; although a given quantity of capital +will, in a country of the latter description, produce profits much +greater than in an opulent one--ibid. + +It is industry that furnishes the produce; but it is economy that places +in the capital that part of it which would otherwise have become +revenue--ibid. + +The economy of individuals arises from a principle which is universally +diffused, and one that is continually in action; the desire of +ameliorating their condition. This principle supports the existence and +increase of national wealth, in spite of the prodigality of some +individuals; and even triumphs over the profusion and errors of +governments--ibid. + +Of the different modes of spending money, some are more favourable than +others to the increase of national wealth--ibid. + +Those branches of employment which require a capital, never fail to call +forth more or less labour; and thus contribute, in a greater or less +degree, to increase the extent of national labour. + + +Capital can be employed only in four ways: + + 1. In cultivating and improving the earth, or, in other words, + multiplying its rude produce; + + 2. In supporting manufactures; + + 3. In buying by the gross, to sell in the same manner; + + 4. In buying by the gross, to sell by retail. + + +These four modes of employing capital are equally necessary to, and +serve mutually to support, each other. The first supports, beyond all +comparison, the greatest number of productive hands; the second occupies +more than the two remaining; and the fourth the fewest of any. + +Capital may be employed, according to the third mode, in three different +ways; each contributing in a very different degree to the support and +encouragement of national industry. + +When capital is employed in exchanging one description of the produce of +national industry for another, it then supports as great a portion of +industry as can be done by any capital employed in commerce. + +When it is employed in exchanging the produce of national for that of +foreign industry, for the purposes of home consumption, half of it goes +to the support of foreign industry; by which means, it is only of half +that service to the industry of the nation which it would have been had +it been employed another way. + +Lastly, when it is employed in exchanging one description of the produce +of foreign industry for another, or in what is termed the _carrying +trade_, it then serves wholly for the support and encouragement of the +industry of the two foreign nations, and adds only to the annual produce +of the country the profits of the merchant--book 2, chap. v. + +Self-interest, when left uncontrouled, will necessarily lead the +proprietors of capitals to prefer that species of employment which is +most favourable to national industry, because it is, at the same time, +most profitable for themselves--ibid. For, when capitals have been +employed in a way different from that suggested by the infallible +instinct of self-interest, it has always been in consequence of the +peculiar circumstances of the European governments, and of that +influence which the vulgar prejudices of merchants have had over the +system of administration which these governments have adopted. + +The account of these circumstances, with the discussion of the errors of +this system, form the matter of the third and fourth books. + + * * * * * + +Political Economy is, of all sciences, that which affords most room for +prejudices, and in which they are most liable to become deeply rooted. +The desire of improving our condition, that universal principle, which +continually acts upon every member of the community, is ever directing +the thoughts of each individual to the means of increasing his private +fortune. But should this individual ever chance to raise his views to +the management of the public money, he would naturally be led to reason +from analogy, and apply to the general interest of his country those +principles which reflection and experience have led him to regard as the +best guides in the conduct of his own private affairs. Thus, from +attending to the fact, that money constitutes a part of the productive +stock in the fortune of an individual, and that his fortune increases in +proportion to the increase of this article, there arises that erroneous +opinion so generally received, that money is a constituent part of +national wealth, and that a country becomes rich, in proportion as it +receives money from those countries with which it has commercial +connections. + +Merchants who have been accustomed to retire each night to their desks, +to count, with eagerness, the quantity of currency, or of good debts, +which their day's sale has produced, calculating their profits only by +this result, and confident that such a calculation has never deceived +them, are naturally led to think that the affairs of the nation must +follow the same rule; and they have been strengthened in this opinion by +that unshaken confidence which a long and never-failing experience, that +has been the source of wealth and prosperity, inspires. Hence those +extravagant opinions respecting the advantages and profits of foreign +commerce, and the importance of money; hence those absurd calculations +that have been made regarding what is termed the balance of trade, the +thermometer of public prosperity; hence those systems of regulations, +and those oppressive monopolies, which are resorted to for the purpose +of making one side of the balance preponderate; hence, too, those bloody +and destructive wars, which have raged in both hemispheres, from the +period in which the road to the Indies, and to the new world, became +familiar to European nations. + +When we observe, that the many bloody wars that have been waged in the +different parts of the world for these two last centuries, and even the +present war, in many points of view, have had, as their principal end, +the maintenance of some monopoly, contrary even to the interest of the +nation armed to protect it; we shall feel the full importance of those +benefits which the illustrious author of the 'Wealth of Nations' has +endeavoured to confer upon mankind, by victoriously combating such +strong and baneful prejudices. But we cannot help deeply lamenting, to +see how slowly, and with what difficulty, reason in all its strength, +and truth in all its clearness, regain the possession of these +territories which error and passion have so rapidly overrun. + +The prejudices so successfully attacked by Dr. Smith, appear again and +again, with undiminished assurance, in the tribunals of legislature, in +the councils of administration, in the cabinets of ministry, and in the +writings of politicians. They still talk of the importance of foreign +and colonial commerce; they still attempt to determine the balance of +trade; they renew all the reveries of political arithmetic, as if these +questions had not been determined by Smith, in a way which renders them +no longer capable of controversy. + +It was in the midst of a country, the most deeply imbued with mercantile +prejudices; the most completely subjected to its prohibitory policy, +that Dr. Smith sapped the foundations of this absurd and tyrannical +system; it was at the very moment when England, in alarm, saw, with +terror, the possibility of a separation from her American colonies: it +was then that he derided the universal fear, and proudly prophesied the +success of the colonists, and their approaching independence; and that +he confidently announced, what experience has since completely affirmed, +the happy consequences which this separation and this independence, so +much dreaded, would produce upon the prosperity, both of Great Britain +and her colonies--book 4, chap. vii. part 3. + +The wealth of communities is so intimately connected with their civil +and political existence, that the author has been drawn by his subject +into numerous other discussions, which seem more or less removed from +it; and in which we discover the same sagacity of observation, the same +depth of research, and the same force of reasoning. + +The advantages of a complete and permanent freedom in the corn trade +have never been better shown; and they have been proved by Dr. Smith, to +arise from that fruitful source of wealth, the division of labour--book +4, chap. v. + +The national defence and public education, two objects of very high +importance, have also been discussed at length by our author. + +He proves, that, in conformity to that desire to better our condition, +by which all men are directed, and upon which the author has founded his +whole doctrine, the teacher, whose wages are a fixed salary, will have +no other end than to spare himself every trouble, and dedicate as little +attention as possible to his pupils; while he that is paid in proportion +to his labour, will naturally endeavour, by every means in his power, to +increase his success, at the same time that he confers a great advantage +on his scholars and on society. He confirms his theoretical opinions by +incontestible examples---book 5, chap. i. part 3. + +The superiority of regular troops over national militia is proved in +theory, by the division of labour; and in practice, by the most +remarkable facts in history--book 5, chap. i, part 1. + + + + +AN INQUIRY INTO THE NATURE AND CAUSES OF THE WEALTH OF NATIONS. + + + + +INTRODUCTION AND PLAN OF THE WORK. + + +The annual labour of every nation is the fund which originally supplies +it with all the necessaries and conveniencies of life which it annually +consumes, and which consist always either in the immediate produce of +that labour, or in what is purchased with that produce from other +nations. + +According, therefore, as this produce, or what is purchased with it, +bears a greater or smaller proportion to the number of those who are to +consume it, the nation will be better or worse supplied with all the +necessaries and conveniencies for which it has occasion. + +But this proportion must in every nation be regulated by two different +circumstances: first, by the skill, dexterity, and judgment with which +its labour is generally applied; and, secondly, by the proportion +between the number of those who are employed in useful labour, and that +of those who are not so employed. Whatever be the soil, climate, or +extent of territory of any particular nation, the abundance or +scantiness of its annual supply must, in that particular situation, +depend upon those two circumstances. + +The abundance or scantiness of this supply, too, seems to depend more +upon the former of those two circumstances than upon the latter. Among +the savage nations of hunters and fishers, every individual who is able +to work is more or less employed in useful labour, and endeavours to +provide, as well as he can, the necessaries and conveniencies of life, +for himself, and such of his family or tribe as are either too old, or +too young, or too infirm, to go a-hunting and fishing. Such nations, +however, are so miserably poor, that, from mere want, they are +frequently reduced, or at least think themselves reduced, to the +necessity sometimes of directly destroying, and sometimes of abandoning +their infants, their old people, and those afflicted with lingering +diseases, to perish with hunger, or to be devoured by wild beasts. Among +civilized and thriving nations, on the contrary, though a great number +of people do not labour at all, many of whom consume the produce of ten +times, frequently of a hundred times, more labour than the greater part +of those who work; yet the produce of the whole labour of the society is +so great, that all are often abundantly supplied; and a workman, even of +the lowest and poorest order, if he is frugal and industrious, may enjoy +a greater share of the necessaries and conveniencies of life than it is +possible for any savage to acquire. + +The causes of this improvement in the productive powers of labour, and +the order according to which its produce is naturally distributed among +the different ranks and conditions of men in the society, make the +subject of the first book of this Inquiry. + +Whatever be the actual state of the skill, dexterity, and judgment, with +which labour is applied in any nation, the abundance or scantiness of +its annual supply must depend, during the continuance of that state, +upon the proportion between the number of those who are annually +employed in useful labour, and that of those who are not so employed. +The number of useful and productive labourers, it will hereafter +appear, is everywhere in proportion to the quantity of capital stock +which is employed in setting them to work, and to the particular way in +which it is so employed. The second book, therefore, treats of the +nature of capital stock, of the manner in which it is gradually +accumulated, and of the different quantities of labour which it puts +into motion, according to the different ways in which it is employed. + +Nations tolerably well advanced as to skill, dexterity, and judgment, in +the application of labour, have followed very different plans in the +general conduct or direction of it; and those plans have not all been +equally favourable to the greatness of its produce. The policy of some +nations has given extraordinary encouragement to the industry of the +country; that of others to the industry of towns. Scarce any nation has +dealt equally and impartially with every sort of industry. Since the +downfall of the Roman empire, the policy of Europe has been more +favourable to arts, manufactures, and commerce, the industry of towns, +than to agriculture, the industry of the country. The circumstances +which seem to have introduced and established this policy are explained +in the third book. + +Though those different plans were, perhaps, first introduced by the +private interests and prejudices of particular orders of men, without +any regard to, or foresight of, their consequences upon the general +welfare of the society; yet they have given occasion to very different +theories of political economy; of which some magnify the importance of +that industry which is carried on in towns, others of that which is +carried on in the country. Those theories have had a considerable +influence, not only upon the opinions of men of learning, but upon the +public conduct of princes and sovereign states. I have endeavoured, in +the fourth book, to explain as fully and distinctly as I can those +different theories, and the principal effects which they have produced +in different ages and nations. + +To explain in what has consisted the revenue of the great body of the +people, or what has been the nature of those funds, which, in different +ages and nations, have supplied their annual consumption, is the object +of these four first books. The fifth and last book treats of the revenue +of the sovereign, or commonwealth. In this book I have endeavoured to +shew, first, what are the necessary expenses of the sovereign, or +commonwealth; which of those expenses ought to be defrayed by the +general contribution of the whole society, and which of them, by that of +some particular part only, or of some particular members of it: +secondly, what are the different methods in which the whole society may +be made to contribute towards defraying the expenses incumbent on the +whole society, and what are the principal advantages and inconveniencies +of each of those methods; and, thirdly and lastly, what are the reasons +and causes which have induced almost all modern governments to mortgage +some part of this revenue, or to contract debts; and what have been the +effects of those debts upon the real wealth, the annual produce of the +land and labour of the society. + + + + +BOOK I. + + +OF THE CAUSES OF IMPROVEMENT IN THE PRODUCTIVE POWERS OF LABOUR, AND OF +THE ORDER ACCORDING TO WHICH ITS PRODUCE IS NATURALLY DISTRIBUTED AMONG +THE DIFFERENT RANKS OF THE PEOPLE. + + + + +CHAP. I. + +OF THE DIVISION OF LABOUR. + + +The greatest improvements in the productive powers of labour, and the +greater part of the skill, dexterity, and judgment, with which it is +anywhere directed, or applied, seem to have been the effects of the +division of labour. + +The effects of the division of labour, in the general business of +society, will be more easily understood, by considering in what manner +it operates in some particular manufactures. It is commonly supposed to +be carried furthest in some very trifling ones; not perhaps that it +really is carried further in them than in others of more importance: but +in those trifling manufactures which are destined to supply the small +wants of but a small number of people, the whole number of workmen must +necessarily be small; and those employed in every different branch of +the work can often be collected into the same workhouse, and placed at +once under the view of the spectator. In those great manufactures, on +the contrary, which are destined to supply the great wants of the great +body of the people, every different branch of the work employs so great +a number of workmen, that it is impossible to collect them all into the +same workhouse. We can seldom see more, at one time, than those employed +in one single branch. Though in such manufactures, therefore, the work +may really be divided into a much greater number of parts, than in those +of a more trifling nature, the division is not near so obvious, and has +accordingly been much less observed. + +To take an example, therefore, from a very trifling manufacture, but one +in which the division of labour has been very often taken notice of, the +trade of a pin-maker: a workman not educated to this business (which the +division of labour has rendered a distinct trade), nor acquainted with +the use of the machinery employed in it (to the invention of which the +same division of labour has probably given occasion), could scarce, +perhaps, with his utmost industry, make one pin in a day, and certainly +could not make twenty. But in the way in which this business is now +carried on, not only the whole work is a peculiar trade, but it is +divided into a number of branches, of which the greater part are +likewise peculiar trades. One man draws out the wire; another straights +it; a third cuts it; a fourth points it; a fifth grinds it at the top +for receiving the head; to make the head requires two or three distinct +operations; to put it on is a peculiar business; to whiten the pins is +another; it is even a trade by itself to put them into the paper; and +the important business of making a pin is, in this manner, divided into +about eighteen distinct operations, which, in some manufactories, are +all performed by distinct hands, though in others the same man will +sometimes perform two or three of them. I have seen a small manufactory +of this kind, where ten men only were employed, and where some of them +consequently performed two or three distinct operations. But though they +were very poor, and therefore but indifferently accommodated with the +necessary machinery, they could, when they exerted themselves, make +among them about twelve pounds of pins in a day. There are in a pound +upwards of four thousand pins of a middling size. Those ten persons, +therefore, could make among them upwards of forty-eight thousand pins in +a day. Each person, therefore, making a tenth part of forty-eight +thousand pins, might be considered as making four thousand eight hundred +pins in a day. But if they had all wrought separately and independently, +and without any of them having been educated to this peculiar business, +they certainly could not each of them have made twenty, perhaps not one +pin in a day; that is, certainly, not the two hundred and fortieth, +perhaps not the four thousand eight hundredth, part of what they are at +present capable of performing, in consequence of a proper division and +combination of their different operations. + +In every other art and manufacture, the effects of the division of +labour are similar to what they are in this very trifling one, though, +in many of them, the labour can neither be so much subdivided, nor +reduced to so great a simplicity of operation. The division of labour, +however, so far as it can be introduced, occasions, in every art, a +proportionable increase of the productive powers of labour. The +separation of different trades and employments from one another, seems +to have taken place in consequence of this advantage. This separation, +too, is generally carried furthest in those countries which enjoy the +highest degree of industry and improvement; what is the work of one man, +in a rude state of society, being generally that of several in an +improved one. In every improved society, the farmer is generally nothing +but a farmer; the manufacturer, nothing but a manufacturer. The labour, +too, which is necessary to produce any one complete manufacture, is +almost always divided among a great number of hands. How many different +trades are employed in each branch of the linen and woollen +manufactures, from the growers of the flax and the wool, to the +bleachers and smoothers of the linen, or to the dyers and dressers of +the cloth! The nature of agriculture, indeed, does not admit of so many +subdivisions of labour, nor of so complete a separation of one business +from another, as manufactures. It is impossible to separate so entirely +the business of the grazier from that of the corn-farmer, as the trade +of the carpenter is commonly separated from that of the smith. The +spinner is almost always a distinct person from the weaver; but the +ploughman, the harrower, the sower of the seed, and the reaper of the +corn, are often the same. The occasions for those different sorts of +labour returning with the different seasons of the year, it is +impossible that one man should be constantly employed in any one of +them. This impossibility of making so complete and entire a separation +of all the different branches of labour employed in agriculture, is +perhaps the reason why the improvement of the productive powers of +labour, in this art, does not always keep pace with their improvement in +manufactures. The most opulent nations, indeed, generally excel all +their neighbours in agriculture as well as in manufactures; but they are +commonly more distinguished by their superiority in the latter than in +the former. Their lands are in general better cultivated, and having +more labour and expense bestowed upon them, produce more in proportion +to the extent and natural fertility of the ground. But this superiority +of produce is seldom much more than in proportion to the superiority of +labour and expense. In agriculture, the labour of the rich country is +not always much more productive than that of the poor; or, at least, it +is never so much more productive, as it commonly is in manufactures. The +corn of the rich country, therefore, will not always, in the same degree +of goodness, come cheaper to market than that of the poor. The corn of +Poland, in the same degree of goodness, is as cheap as that of France, +notwithstanding the superior opulence and improvement of the latter +country. The corn of France is, in the corn-provinces, fully as good, +and in most years nearly about the same price with the corn of England, +though, in opulence and improvement, France in perhaps inferior to +England. The corn-lands of England, however, are better cultivated than +those of France, and the corn-lands of France are said to be much better +cultivated than those of Poland. But though the poor country, +notwithstanding the inferiority of its cultivation, can, in some +measure, rival the rich in the cheapness and goodness of its corn, it +can pretend to no such competition in its manufactures, at least if +those manufactures suit the soil, climate, and situation, of the rich +country. The silks of France are better and cheaper than those of +England, because the silk manufacture, at least under the present high +duties upon the importation of raw silk, does not so well suit the +climate of England as that of France. But the hardware and the coarse +woollens of England are beyond all comparison superior to those of +France, and much cheaper, too, in the same degree of goodness. In Poland +there are said to be scarce any manufactures of any kind, a few of those +coarser household manufactures excepted, without which no country can +well subsist. + +This great increase in the quantity of work, which, in consequence of +the division of labour, the same number of people are capable of +performing, is owing to three different circumstances; first, to the +increase of dexterity in every particular workman; secondly, to the +saving of the time which is commonly lost in passing from one species of +work to another; and, lastly, to the invention of a great number of +machines which facilitate and abridge labour, and enable one man to do +the work of many. + +First, the improvement of the dexterity of the workmen, necessarily +increases the quantity of the work he can perform; and the division of +labour, by reducing every man's business to some one simple operation, +and by making this operation the sole employment of his life, +necessarily increases very much the dexterity of the workman. A common +smith, who, though accustomed to handle the hammer, has never been used +to make nails, if, upon some particular occasion, he is obliged to +attempt it, will scarce, I am assured, be able to make above two or +three hundred nails in a day, and those, too, very bad ones. A smith who +has been accustomed to make nails, but whose sole or principal business +has not been that of a nailer, can seldom, with his utmost diligence, +make more than eight hundred or a thousand nails in a day. I have seen +several boys, under twenty years of age, who had never exercised any +other trade but that of making nails, and who, when they exerted +themselves, could make, each of them, upwards of two thousand three +hundred nails in a day. The making of a nail, however, is by no means +one of the simplest operations. The same person blows the bellows, stirs +or mends the fire as there is occasion, heats the iron, and forges every +part of the nail: in forging the head, too, he in obliged to change his +tools. The different operations into which the making of a pin, or of a +metal button, is subdivided, are all of them much more simple, and the +dexterity of the person, of whose life it has been the sole business to +perform them, is usually much greater. The rapidity with which some of +the operations of those manufactures are performed, exceeds what the +human hand could, by those who had never seen them, be supposed capable +of acquiring. + +Secondly, The advantage which is gained by saving the time commonly lost +in passing from one sort of work to another, is much greater than we +should at first view be apt to imagine it. It is impossible to pass very +quickly from one kind of work to another, that is carried on in a +different place, and with quite different tools. A country weaver, who +cultivates a small farm, must loose a good deal of time in passing from +his loom to the field, and from the field to his loom. When the two +trades can be carried on in the same workhouse, the loss of time is, no +doubt, much less. It is, even in this case, however, very considerable. +A man commonly saunters a little in turning his hand from one sort of +employment to another. When he first begins the new work, he is seldom +very keen and hearty; his mind, as they say, does not go to it, and for +some time he rather trifles than applies to good purpose. The habit of +sauntering, and of indolent careless application, which is naturally, or +rather necessarily, acquired by every country workman who is obliged to +change his work and his tools every half hour, and to apply his hand in +twenty different ways almost every day of his life, renders him almost +always slothful and lazy, and incapable of any vigorous application, +even on the most pressing occasions. Independent, therefore, of his +deficiency in point of dexterity, this cause alone must always reduce +considerably the quantity of work which he is capable of performing. + +Thirdly, and lastly, everybody must be sensible how much labour is +facilitated and abridged by the application of proper machinery. It is +unnecessary to give any example. I shall only observe, therefore, that +the invention of all those machines by which labour is to much +facilitated and abridged, seems to have been originally owing to the +division of labour. Men are much more likely to discover easier and +readier methods of attaining any object, when the whole attention of +their minds is directed towards that single object, than when it is +dissipated among a great variety of things. But, in consequence of the +division of labour, the whole of every man's attention comes naturally +to be directed towards some one very simple object. It is naturally to +be expected, therefore, that some one or other of those who are employed +in each particular branch of labour should soon find out easier and +readier methods of performing their own particular work, wherever the +nature of it admits of such improvement. A great part of the machines +made use of in those manufactures in which labour is most subdivided, +were originally the inventions of common workmen, who, being each of +them employed in some very simple operation, naturally turned their +thoughts towards finding out easier and readier methods of performing +it. Whoever has been much accustomed to visit such manufactures, must +frequently have been shewn very pretty machines, which were the +inventions of such workmen, in order to facilitate and quicken their own +particular part of the work. In the first fire engines, a boy was +constantly employed to open and shut alternately the communication +between the boiler and the cylinder, according as the piston either +ascended or descended. One of those boys, who loved to play with his +companions, observed that, by tying a string from the handle of the +valve which opened this communication to another part of the machine, +the valve would open and shut without his assistance, and leave him at +liberty to divert himself with his play-fellows. One of the greatest +improvements that has been made upon this machine, since it was first +invented, was in this manner the discovery of a boy who wanted to save +his own labour. + +All the improvements in machinery, however, have by no means been the +inventions of those who had occasion to use the machines. Many +improvements have been made by the ingenuity of the makers of the +machines, when to make them became the business of a peculiar trade; and +some by that of those who are called philosophers, or men of +speculation, whose trade it is not to do any thing, but to observe every +thing, and who, upon that account, are often capable of combining +together the powers of the most distant and dissimilar objects. In the +progress of society, philosophy or speculation becomes, like every other +employment, the principal or sole trade and occupation of a particular +class of citizens. Like every other employment, too, it is subdivided +into a great number of different branches, each of which affords +occupation to a peculiar tribe or class of philosophers; and this +subdivision of employment in philosophy, as well as in every other +business, improves dexterity, and saves time. Each individual becomes +more expert in his own peculiar branch, more work is done upon the +whole, and the quantity of science is considerably increased by it. + +It is the great multiplication of the productions of all the different +arts, in consequence of the division of labour, which occasions, in a +well-governed society, that universal opulence which extends itself to +the lowest ranks of the people. Every workman has a great quantity of +his own work to dispose of beyond what he himself has occasion for; and +every other workman being exactly in the same situation, he is enabled +to exchange a great quantity of his own goods for a great quantity or, +what comes to the same thing, for the price of a great quantity of +theirs. He supplies them abundantly with what they have occasion for, +and they accommodate him as amply with what he has occasion for, and a +general plenty diffuses itself through all the different ranks of the +society. + +Observe the accommodation of the most common artificer or day-labourer +in a civilized and thriving country, and you will perceive that the +number of people, of whose industry a part, though but a small part, has +been employed in procuring him this accommodation, exceeds all +computation. The woollen coat, for example, which covers the +day-labourer, as coarse and rough as it may appear, is the produce of +the joint labour of a great multitude of workmen. The shepherd, the +sorter of the wool, the wool-comber or carder, the dyer, the scribbler, +the spinner, the weaver, the fuller, the dresser, with many others, must +all join their different arts in order to complete even this homely +production. How many merchants and carriers, besides, must have been +employed in transporting the materials from some of those workmen to +others who often live in a very distant part of the country? How much +commerce and navigation in particular, how many ship-builders, sailors, +sail-makers, rope-makers, must have been employed in order to bring +together the different drugs made use of by the dyer, which often come +from the remotest corners of the world? What a variety of labour, too, +is necessary in order to produce the tools of the meanest of those +workmen! To say nothing of such complicated machines as the ship of the +sailor, the mill of the fuller, or even the loom of the weaver, let us +consider only what a variety of labour is requisite in order to form +that very simple machine, the shears with which the shepherd clips the +wool. The miner, the builder of the furnace for smelting the ore, the +feller of the timber, the burner of the charcoal to be made use of in +the smelting-house, the brickmaker, the bricklayer, the workmen who +attend the furnace, the millwright, the forger, the smith, must all of +them join their different arts in order to produce them. Were we to +examine, in the same manner, all the different parts of his dress and +household furniture, the coarse linen shirt which he wears next his +skin, the shoes which cover his feet, the bed which he lies on, and all +the different parts which compose it, the kitchen-grate at which he +prepares his victuals, the coals which he makes use of for that purpose, +dug from the bowels of the earth, and brought to him, perhaps, by a long +sea and a long land-carriage, all the other utensils of his kitchen, all +the furniture of his table, the knives and forks, the earthen or pewter +plates upon which he serves up and divides his victuals, the different +hands employed in preparing his bread and his beer, the glass window +which lets in the heat and the light, and keeps out the wind and the +rain, with all the knowledge and art requisite for preparing that +beautiful and happy invention, without which these northern parts of the +world could scarce have afforded a very comfortable habitation, together +with the tools of all the different workmen employed in producing those +different conveniencies; if we examine, I say, all these things, and +consider what a variety of labour is employed about each of them, we +shall be sensible that, without the assistance and co-operation of many +thousands, the very meanest person in a civilized country could not be +provided, even according to, what we very falsely imagine, the easy and +simple manner in which he is commonly accommodated. Compared, indeed, +with the more extravagant luxury of the great, his accommodation must no +doubt appear extremely simple and easy; and yet it may be true, perhaps, +that the accommodation of an European prince does not always so much +exceed that of an industrious and frugal peasant, as the accommodation +of the latter exceeds that of many an African king, the absolute masters +of the lives and liberties of ten thousand naked savages. + + + + +CHAP. II. + +OF THE PRINCIPLE WHICH GIVES OCCASION TO THE DIVISION OF LABOUR. + + +This division of labour, from which so many advantages are derived, is +not originally the effect of any human wisdom, which foresees and +intends that general opulence to which it gives occasion. It is the +necessary, though very slow and gradual, consequence of a certain +propensity in human nature, which has in view no such extensive utility; +the propensity to truck, barter, and exchange one thing for another. + +Whether this propensity be one of these original principles in human +nature, of which no further account can be given, or whether, as seems +more probable, it be the necessary consequence of the faculties of +reason and speech, it belongs not to our present subject to inquire. It +is common to all men, and to be found in no other race of animals, which +seem to know neither this nor any other species of contracts. Two +greyhounds, in running down the same hare, have sometimes the appearance +of acting in some sort of concert. Each turns her towards his companion, +or endeavours to intercept her when his companion turns her towards +himself. This, however, is not the effect of any contract, but of the +accidental concurrence of their passions in the same object at that +particular time. Nobody ever saw a dog make a fair and deliberate +exchange of one bone for another with another dog. Nobody ever saw one +animal, by its gestures and natural cries signify to another, this is +mine, that yours; I am willing to give this for that. When an animal +wants to obtain something either of a man, or of another animal, it has +no other means of persuasion, but to gain the favour of those whose +service it requires. A puppy fawns upon its dam, and a spaniel +endeavours, by a thousand attractions, to engage the attention of its +master who is at dinner, when it wants to be fed by him. Man sometimes +uses the same arts with his brethren, and when he has no other means of +engaging them to act according to his inclinations, endeavours by every +servile and fawning attention to obtain their good will. He has not +time, however, to do this upon every occasion. In civilized society he +stands at all times in need of the co-operation and assistance of great +multitudes, while his whole life is scarce sufficient to gain the +friendship of a few persons. In almost every other race of animals, each +individual, when it is grown up to maturity, is entirely independent, +and in its natural state has occasion for the assistance of no other +living creature. But man has almost constant occasion for the help of +his brethren, and it is in vain for him to expect it from their +benevolence only. He will be more likely to prevail if he can interest +their self-love in his favour, and shew them that it is for their own +advantage to do for him what he requires of them. Whoever offers to +another a bargain of any kind, proposes to do this. Give me that which I +want, and you shall have this which you want, is the meaning of every +such offer; and it is in this manner that we obtain from one another the +far greater part of those good offices which we stand in need of. It is +not from the benevolence of the butcher, the brewer, or the baker that +we expect our dinner, but from their regard to their own interest. We +address ourselves, not to their humanity, but to their self-love, and +never talk to them of our own necessities, but of their advantages. +Nobody but a beggar chooses to depend chiefly upon the benevolence of +his fellow-citizens. Even a beggar does not depend upon it entirely. The +charity of well-disposed people, indeed, supplies him with the whole +fund of his subsistence. But though this principle ultimately provides +him with all the necessaries of life which he has occasion for, it +neither does nor can provide him with them as he has occasion for them. +The greater part of his occasional wants are supplied in the same manner +as those of other people, by treaty, by barter, and by purchase. With +the money which one man gives him he purchases food. The old clothes +which another bestows upon him he exchanges for other clothes which suit +him better, or for lodging, or for food, or for money, with which he can +buy either food, clothes, or lodging, as he has occasion. + +As it is by treaty, by barter, and by purchase, that we obtain from one +another the greater part of those mutual good offices which we stand in +need of, so it is this same trucking disposition which originally gives +occasion to the division of labour. In a tribe of hunters or shepherds, +a particular person makes bows and arrows, for example, with more +readiness and dexterity than any other. He frequently exchanges them for +cattle or for venison, with his companions; and he finds at last that he +can, in this manner, get more cattle and venison, than if he himself +went to the field to catch them. From a regard to his own interest, +therefore, the making of bows and arrows grows to be his chief business, +and he becomes a sort of armourer. Another excels in making the frames +and covers of their little huts or moveable houses. He is accustomed to +be of use in this way to his neighbours, who reward him in the same +manner with cattle and with venison, till at last he finds it his +interest to dedicate himself entirely to this employment, and to become +a sort of house-carpenter. In the same manner a third becomes a smith or +a brazier; a fourth, a tanner or dresser of hides or skins, the +principal part of the clothing of savages. And thus the certainty of +being able to exchange all that surplus part of the produce of his own +labour, which is over and above his own consumption, for such parts of +the produce of other men's labour as he may have occasion for, +encourages every man to apply himself to a particular occupation, and to +cultivate and bring to perfection whatever talent of genius he may +possess for that particular species of business. + +The difference of natural talents in different men, is, in reality, much +less than we are aware of; and the very different genius which appears +to distinguish men of different professions, when grown up to maturity, +is not upon many occasions so much the cause, as the effect of the +division of labour. The difference between the most dissimilar +characters, between a philosopher and a common street porter, for +example, seems to arise not so much from nature, as from habit, custom, +and education. When they came into the world, and for the first six or +eight years of their existence, they were, perhaps, very much alike, and +neither their parents nor playfellows could perceive any remarkable +difference. About that age, or soon after, they come to be employed in +very different occupations. The difference of talents comes then to be +taken notice of, and widens by degrees, till at last the vanity of the +philosopher is willing to acknowledge scarce any resemblance. But +without the disposition to truck, barter, and exchange, every man must +have procured to himself every necessary and conveniency of life which +he wanted. All must have had the same duties to perform, and the same +work to do, and there could have been no such difference of employment +as could alone give occasion to any great difference of talents. + +As it is this disposition which forms that difference of talents, so +remarkable among men of different professions, so it is this same +disposition which renders that difference useful. Many tribes of +animals, acknowledged to be all of the same species, derive from nature +a much more remarkable distinction of genius, than what, antecedent to +custom and education, appears to take place among men. By nature a +philosopher is not in genius and disposition half so different from a +street porter, as a mastiff is from a grey-hound, or a grey-hound from a +spaniel, or this last from a shepherd's dog. Those different tribes of +animals, however, though all of the same species, are of scarce any use +to one another. The strength of the mastiff is not in the least +supported either by the swiftness of the grey-hound, or by the sagacity +of the spaniel, or by the docility of the shepherd's dog. The effects of +those different geniuses and talents, for want of the power or +disposition to barter and exchange, cannot be brought into a common +stock, and do not in the least contribute to the better accommodation +and conveniency of the species. Each animal is still obliged to support +and defend itself, separately and independently, and derives no sort of +advantage from that variety of talents with which nature has +distinguished its fellows. Among men, on the contrary, the most +dissimilar geniuses are of use to one another; the different produces of +their respective talents, by the general disposition to truck, barter, +and exchange, being brought, as it were, into a common stock, where +every man may purchase whatever part of the produce of other men's +talents he has occasion for. + + + + +CHAP. III. + +THAT THE DIVISION OF LABOUR IS LIMITED BY THE EXTENT OF THE MARKET. + + +As it is the power of exchanging that gives occasion to the division of +labour, so the extent of this division must always be limited by the +extent of that power, or, in other words, by the extent of the market. +When the market is very small, no person can have any encouragement to +dedicate himself entirely to one employment, for want of the power to +exchange all that surplus part of the produce of his own labour, which +is over and above his own consumption, for such parts of the produce of +other men's labour as he has occasion for. + +There are some sorts of industry, even of the lowest kind, which can be +carried on nowhere but in a great town. A porter, for example, can find +employment and subsistence in no other place. A village is by much too +narrow a sphere for him; even an ordinary market-town is scarce large +enough to afford him constant occupation. In the lone houses and very +small villages which are scattered about in so desert a country as the +highlands of Scotland, every farmer must be butcher, baker, and brewer, +for his own family. In such situations we can scarce expect to find even +a smith, a carpenter, or a mason, within less than twenty miles of +another of the same trade. The scattered families that live at eight or +ten miles distance from the nearest of them, must learn to perform +themselves a great number of little pieces of work, for which, in more +populous countries, they would call in the assistance of these workmen. +Country workmen are almost everywhere obliged to apply themselves to all +the different branches of industry that have so much affinity to one +another as to be employed about the same sort of materials. A country +carpenter deals in every sort of work that is made of wood; a country +smith in every sort of work that is made of iron. The former is not only +a carpenter, but a joiner, a cabinet-maker, and even a carver in wood, +as well as a wheel-wright, a plough-wright, a cart and waggon-maker. The +employments of the latter are still more various. It is impossible there +should be such a trade as even that of a nailer in the remote and inland +parts of the highlands of Scotland. Such a workman at the rate of a +thousand nails a-day, and three hundred working days in the year, will +make three hundred thousand nails in the year. But in such a situation +it would be impossible to dispose of one thousand, that is, of one day's +work in the year. + +As by means of water-carriage, a more extensive market is opened to +every sort of industry than what land-carriage alone can afford it, so +it is upon the sea-coast, and along the banks of navigable rivers, that +industry of every kind naturally begins to subdivide and improve itself, +and it is frequently not till a long time after that those improvements +extend themselves to the inland parts of the country. A broad-wheeled +waggon, attended by two men, and drawn by eight horses, in about six +weeks time, carries and brings back between London and Edinburgh near +four ton weight of goods. In about the same time a ship navigated by six +or eight men, and sailing between the ports of London and Leith, +frequently carries and brings back two hundred ton weight of goods. Six +or eight men, therefore, by the help of water-carriage, can carry and +bring back, in the same time, the same quantity of goods between London +and Edinburgh as fifty broad-wheeled waggons, attended by a hundred men, +and drawn by four hundred horses. Upon two hundred tons of goods, +therefore, carried by the cheapest land-carriage from London to +Edinburgh, there must be charged the maintenance of a hundred men for +three weeks, and both the maintenance and what is nearly equal to +maintenance the wear and tear of four hundred horses, as well as of +fifty great waggons. Whereas, upon the same quantity of goods carried by +water, there is to be charged only the maintenance of six or eight men, +and the wear and tear of a ship of two hundred tons burthen, together +with the value of the superior risk, or the difference of the insurance +between land and water-carriage. Were there no other communication +between those two places, therefore, but by land-carriage, as no goods +could be transported from the one to other, except such whose price was +very considerable in proportion to their weight, they could carry on but +a small part of that commerce which at present subsists between them, +and consequently could give but a small part of that encouragement which +they at present mutually afford to each other's industry. There could be +little or no commerce of any kind between the distant parts of the +world. What goods could bear the expense of land-carriage between London +and Calcutta? Or if there were any so precious as to be able to support +this expense, with what safety could they be transported through the +territories of so many barbarous nations? Those two cities, however, at +present carry on a very considerable commerce with each other, and by +mutually affording a market, give a good deal of encouragement to each +other's industry. + +Since such, therefore, are the advantages of water-carriage, it is +natural that the first improvements of art and industry should be made +where this conveniency opens the whole world for a market to the produce +of every sort of labour, and that they should always be much later in +extending themselves into the inland parts of the country. The inland +parts of the country can for a long time have no other market for the +greater part of their goods, but the country which lies round about +them, and separates them from the sea-coast, and the great navigable +rivers. The extent of the market, therefore, must for a long time be in +proportion to the riches and populousness of that country, and +consequently their improvement must always be posterior to the +improvement of that country. In our North American colonies, the +plantations have constantly followed either the sea-coast or the banks +of the navigable rivers, and have scarce anywhere extended themselves to +any considerable distance from both. + +The nations that, according to the best authenticated history, appear to +have been first civilized, were those that dwelt round the coast of the +Mediterranean sea. That sea, by far the greatest inlet that is known in +the world, having no tides, nor consequently any waves, except such as +are caused by the wind only, was, by the smoothness of its surface, as +well as by the multitude of its islands, and the proximity of its +neighbouring shores, extremely favourable to the infant navigation of +the world; when, from their ignorance of the compass, men were afraid to +quit the view of the coast, and from the imperfection of the art of +ship-building, to abandon themselves to the boisterous waves of the +ocean. To pass beyond the pillars of Hercules, that is, to sail out of +the straits of Gibraltar, was, in the ancient world, long considered as +a most wonderful and dangerous exploit of navigation. It was late before +even the Phoenicians and Carthaginians, the most skilful navigators +and ship-builders of those old times, attempted it; and they were, for a +long time, the only nations that did attempt it. + +Of all the countries on the coast of the Mediterranean sea, Egypt seems +to have been the first in which either agriculture or manufactures were +cultivated and improved to any considerable degree. Upper Egypt extends +itself nowhere above a few miles from the Nile; and in Lower Egypt, that +great river breaks itself into many different canals, which, with the +assistance of a little art, seem to have afforded a communication by +water-carriage, not only between all the great towns, but between all +the considerable villages, and even to many farm-houses in the country, +nearly in the same manner as the Rhine and the Maese do in Holland at +present. The extent and easiness of this inland navigation was probably +one of the principal causes of the early improvement of Egypt. + +The improvements in agriculture and manufactures seem likewise to have +been of very great antiquity in the provinces of Bengal in the East +Indies, and in some of the eastern provinces of China, though the great +extent of this antiquity is not authenticated by any histories of whose +authority we, in this part of the world, are well assured. In Bengal, +the Ganges, and several other great rivers, form a great number of +navigable canals, in the same manner as the Nile does in Egypt. In the +eastern provinces of China, too, several great rivers form, by their +different branches, a multitude of canals, and, by communicating with +one another, afford an inland navigation much more extensive than that +either of the Nile or the Ganges, or, perhaps, than both of them put +together. It is remarkable, that neither the ancient Egyptians, nor the +Indians, nor the Chinese, encouraged foreign commerce, but seem all to +have derived their great opulence from this inland navigation. + +All the inland parts of Africa, and all that part of Asia which lies any +considerable way north of the Euxine and Caspian seas, the ancient +Scythia, the modern Tartary and Siberia, seem, in all ages of the world, +to have been in the same barbarous and uncivilized state in which we +find them at present. The sea of Tartary is the frozen ocean, which +admits of no navigation; and though some of the greatest rivers in the +world run through that country, they are at too great a distance from +one another to carry commerce and communication through the greater part +of it. There are in Africa none of those great inlets, such as the +Baltic and Adriatic seas in Europe, the Mediterranean and Euxine seas in +both Europe and Asia, and the gulfs of Arabia, Persia, India, Bengal, +and Siam, in Asia, to carry maritime commerce into the interior parts of +that great continent; and the great rivers of Africa are at too great a +distance from one another to give occasion to any considerable inland +navigation. The commerce, besides, which any nation can carry on by +means of a river which does not break itself into any great number of +branches or canals, and which runs into another territory before it +reaches the sea, can never be very considerable, because it is always in +the power of the nations who possess that other territory to obstruct +the communication between the upper country and the sea. The navigation +of the Danube is of very little use to the different states of Bavaria, +Austria, and Hungary, in comparison of what it would be, if any of them +possessed the whole of its course, till it falls into the Black sea. + + + + +CHAP. IV. + +OF THE ORIGIN AND USE OF MONEY. + + +When the division of labor has been once thoroughly established, it is +but a very small part of a man's wants which the produce of his own +labour can supply. He supplies the far greater part of them by +exchanging that surplus part of the produce of his own labour, which is +over and above his own consumption, for such parts of the produce of +other men's labour as he has occasion for. Every man thus lives by +exchanging, or becomes, in some measure, a merchant, and the society +itself grows to be what is properly a commercial society. + +But when the division of labour first began to take place, this power of +exchanging must frequently have been very much clogged and embarrassed +in in operations. One man, we shall suppose, has more of a certain +commodity than he himself has occasion for, while another has less. The +former, consequently, would be glad to dispose of, and the latter to +purchase, a part of this superfluity. But if this latter should chance +to have nothing that the former stands in need of, no exchange can be +made between them. The butcher has more meat in his shop than he himself +can consume, and the brewer and the baker would each of them be willing +to purchase a part of it. But they have nothing to offer in exchange, +except the different productions of their respective trades, and the +butcher is already provided with all the bread and beer which he has +immediate occasion for. No exchange can, in this case, be made between +them. He cannot be their merchant, nor they his customers; and they are +all of them thus mutually less serviceable to one another. In order to +avoid the inconveniency of such situations, every prudent man in every +period of society, after the first establishment of the division of +labour, must naturally have endeavoured to manage his affairs in such a +manner, as to have at all times by him, besides the peculiar produce of +his own industry, a certain quantity of some one commodity or other, +such as he imagined few people would be likely to refuse in exchange for +the produce of their industry. Many different commodities, it is +probable, were successively both thought of and employed for this +purpose. In the rude ages of society, cattle are said to have been the +common instrument of commerce; and, though they must have been a most +inconvenient one, yet, in old times, we find things were frequently +valued according to the number of cattle which had been given in +exchange for them. The armour of Diomede, says Homer, cost only nine +oxen; but that of Glaucus cost a hundred oxen. Salt is said to be the +common instrument of commerce and exchanges in Abyssinia; a species of +shells in some parts of the coast of India; dried cod at Newfoundland; +tobacco in Virginia; sugar in some of our West India colonies; hides or +dressed leather in some other countries; and there is at this day a +village in Scotland, where it is not uncommon, I am told, for a workman +to carry nails instead of money to the baker's shop or the ale-house. + +In all countries, however, men seem at last to have been determined by +irresistible reasons to give the preference, for this employment, to +metals above every other commodity. Metals can not only be kept with as +little loss as any other commodity, scarce any thing being less +perishable than they are, but they can likewise, without any loss, be +divided into any number of parts, as by fusion those parts can easily be +re-united again; a quality which no other equally durable commodities +possess, and which, more than any other quality, renders them fit to be +the instruments of commerce and circulation. The man who wanted to buy +salt, for example, and had nothing but cattle to give in exchange for +it, must have been obliged to buy salt to the value of a whole ox, or a +whole sheep, at a time. He could seldom buy less than this, because what +he was to give for it could seldom be divided without loss; and if he +had a mind to buy more, he must, for the same reasons, have been obliged +to buy double or triple the quantity, the value, to wit, of two or three +oxen, or of two or three sheep. If, on the contrary, instead of sheep or +oxen, he had metals to give in exchange for it, he could easily +proportion the quantity of the metal to the precise quantity of the +commodity which he had immediate occasion for. + +Different metals have been made use of by different nations for this +purpose. Iron was the common instrument of commerce among the ancient +Spartans, copper among the ancient Romans, and gold and silver among all +rich and commercial nations. + +Those metals seem originally to have been made use of for this purpose +in rude bars, without any stamp or coinage. Thus we are told by +Pliny[6], upon the authority of Timæus, an ancient historian, that, till +the time of Servius Tullius, the Romans had no coined money, but made +use of unstamped bars of copper, to purchase whatever they had occasion +for. These rude bars, therefore, performed at this time the function of +money. + +The use of metals in this rude state was attended with two very +considerable inconveniences; first, with the trouble of weighing, and +secondly, with that of assaying them. In the precious metals, where a +small difference in the quantity makes a great difference in the value, +even the business of weighing, with proper exactness, requires at least +very accurate weights and scales. The weighing of gold, in particular, +is an operation of some nicety. In the coarser metals, indeed, where a +small error would be of little consequence, less accuracy would, no +doubt, be necessary. Yet we should find it excessively troublesome if +every time a poor man had occasion either to buy or sell a farthing's +worth of goods, he was obliged to weigh the farthing. The operation of +assaying is still more difficult, still more tedious; and, unless part +of the metal is fairly melted in the crucible, with proper dissolvents, +any conclusion that can be drawn from it is extremely uncertain. Before +the institution of coined money, however, unless they went through this +tedious and difficult operation, people must always have been liable to +the grossest frauds and impositions; and instead of a pound weight of +pure silver, or pure copper, might receive, in exchange for their goods, +an adulterated composition of the coarsest and cheapest materials, which +had, however, in their outward appearance, been made to resemble these +metals. To prevent such abuses, to facilitate exchanges, and thereby to +encourage all sorts of industry and commerce, it has been found +necessary, in all countries that have made any considerable advances +towards improvement, to affix a public stamp upon certain quantities of +such particular metals, as were in those countries commonly made use of +to purchase goods. Hence the origin of coined money, and of those public +offices called mints; institutions exactly of the same nature with these +of the aulnagers and stamp-masters of woollen and linen cloth. All of +them are equally meant to ascertain, by means of a public stamp, the +quantity and uniform goodness of those different commodities when +brought to market. + +The first public stamps of this kind that were affixed to the current +metals, seem in many cases to have been intended to ascertain, what it +was both most difficult and most important to ascertain, the goodness or +fineness of the metal, and to have resembled the sterling mark which is +at present affixed to plate and bars of silver, or the Spanish mark +which is sometimes affixed to ingots of gold, and which, being struck +only upon one side of the piece, and not covering the whole surface, +ascertains the fineness, but not the weight of the metal. Abraham weighs +to Ephron the four hundred shekels of silver which he had agreed to pay +for the field of Machpelah. They are said, however, to be the current +money of the merchant, and yet are received by weight, and not by tale, +in the same manner as ingots of gold and bars of silver are at present. +The revenues of the ancient Saxon kings of England are said to have been +paid, not in money, but in kind, that is, in victuals and provisions of +all sorts. William the Conqueror introduced the custom of paying them in +money. This money, however, was for a long time, received at the +exchequer, by weight, and not by tale. + +The inconveniency and difficulty of weighing those metals with +exactness, gave occasion to the institution of coins, of which the +stamp, covering entirely both sides of the piece, and sometimes the +edges too, was supposed to ascertain not only the fineness, but the +weight of the metal. Such coins, therefore, were received by tale, as at +present, without the trouble of weighing. + +The denominations of those coins seem originally to have expressed the +weight or quantity of metal contained in them. In the time of Servius +Tullius, who first coined money at Rome, the Roman as or pondo contained +a Roman pound of good copper. It was divided, in the same manner as our +Troyes pound, into twelve ounces, each of which contained a real ounce +of good copper. The English pound sterling, in the time of Edward I. +contained a pound, Tower weight, of silver of a known fineness. The +Tower pound seems to have been something more than the Roman pound, and +something less than the Troyes pound. This last was not introduced into +the mint of England till the 18th of Henry the VIII. The French livre +contained, in the time of Charlemagne, a pound, Troyes weight, of silver +of a known fineness. The fair of Troyes in Champaign was at that time +frequented by all the nations of Europe, and the weights and measures of +so famous a market were generally know and esteemed. The Scots money +pound contained, from the time of Alexander the First to that of Robert +Bruce, a pound of silver of the same weight and fineness with the +English pound sterling. English, French, and Scots pennies, too, +contained all of them originally a real penny-weight of silver, the +twentieth part of an ounce, and the two hundred-and-fortieth part of a +pound. The shilling, too, seems originally to have been the denomination +of a weight. _When wheat is at twelve shillings the quarter_, says an +ancient statute of Henry III. _then wastel bread of a farthing shall +weigh eleven shillings and fourpence_. The proportion, however, between +the shilling, and either the penny on the one hand, or the pound on the +other, seems not to have been so constant and uniform as that between +the penny and the pound. During the first race of the kings of France, +the French sou or shilling appears upon different occasions to have +contained five, twelve, twenty, and forty pennies. Among the ancient +Saxons, a shilling appears at one time to have contained only five +pennies, and it is not improbable that it may have been as variable +among them as among their neighbours, the ancient Franks. From the time +of Charlemagne among the French, and from that of William the Conqueror +among the English, the proportion between the pound, the shilling, and +the penny, seems to have been uniformly the same as at present, though +the value of each has been very different; for in every country of the +world, I believe, the avarice and injustice of princes and sovereign +states, abusing the confidence of their subjects, have by degrees +diminished the real quantity of metal, which had been originally +contained in their coins. The Roman as, in the latter ages of the +republic, was reduced to the twenty-fourth part of its original value, +and, instead of weighing a pound, came to weigh only half an ounce. The +English pound and penny contain at present about a third only; the Scots +pound and penny about a thirty-sixth; and the French pound and penny +about a sixty-sixth part of their original value. By means of those +operations, the princes and sovereign states which performed them were +enabled, in appearance, to pay their debts and fulfil their engagements +with a smaller quantity of silver than would otherwise have been +requisite. It was indeed in appearance only; for their creditors were +really defrauded of a part of what was due to them. All other debtors in +the state were allowed the same privilege, and might pay with the same +nominal sum of the new and debased coin whatever they had borrowed in +the old. Such operations, therefore, have always proved favourable to +the debtor, and ruinous to the creditor, and have sometimes produced a +greater and more universal revolution in the fortunes of private +persons, than could have been occasioned by a very great public +calamity. + +It is in this manner that money has become, in all civilized nations, +the universal instrument of commerce, by the intervention of which goods +of all kinds are bought and sold, or exchanged for one another. + +What are the rules which men naturally observe, in exchanging them +either for money, or for one another, I shall now proceed to examine. +These rules determine what may be called the relative or exchangeable +value of goods. + +The word VALUE, it is to be observed, has two different meanings, and +sometimes expresses the utility of some particular object, and sometimes +the power of purchasing other goods which the possession of that object +conveys. The one may be called 'value in use;' the other, 'value in +exchange.' The things which have the greatest value in use have +frequently little or no value in exchange; and, on the contrary, those +which have the greatest value in exchange have frequently little or no +value in use. Nothing is more useful than water; but it will purchase +scarce any thing; scarce any thing can be had in exchange for it. A +diamond, on the contrary, has scarce any value in use; but a very great +quantity of other goods may frequently be had in exchange for it. + +In order to investigate the principles which regulate the exchangeable +value of commodities, I shall endeavour to shew, + +First, what is the real measure of this exchangeable value; or wherein +consists the real price of all commodities. + +Secondly, what are the different parts of which this real price is +composed or made up. + +And, lastly, what are the different circumstances which sometimes raise +some or all of these different parts of price above, and sometimes sink +them below, their natural or ordinary rate; or, what are the causes +which sometimes hinder the market price, that is, the actual price of +commodities, from coinciding exactly with what may be called their +natural price. + +I shall endeavour to explain, as fully and distinctly as I can, those +three subjects in the three following chapters, for which I must very +earnestly entreat both the patience and attention of the reader: his +patience, in order to examine a detail which may, perhaps, in some +places, appear unnecessarily tedious; and his attention, in order to +understand what may perhaps, after the fullest explication which I am +capable of giving it, appear still in some degree obscure. I am always +willing to run some hazard of being tedious, in order to be sure that I +am perspicuous; and, after taking the utmost pains that I can to be +perspicuous, some obscurity may still appear to remain upon a subject, +in its own nature extremely abstracted. + + + + +CHAP. V. + +OF THE REAL AND NOMINAL PRICE OF COMMODITIES, OR OF THEIR PRICE IN +LABOUR, AND THEIR PRICE IN MONEY. + + +Every man is rich or poor according to the degree in which he can afford +to enjoy the necessaries, conveniencies, and amusements of human life. +But after the division of labour has once thoroughly taken place, it is +but a very small part of these with which a man's own labour can supply +him. The far greater part of them he must derive from the labour of +other people, and he must be rich or poor according to the quantity of +that labour which he can command, or which he can afford to purchase. +The value of any commodity, therefore, to the person who possesses it, +and who means not to use or consume it himself, but to exchange it for +other commodities, is equal to the quantity of labour which it enables +him to purchase or command. Labour therefore, is the real measure of the +exchangeable value of all commodities. + +The real price of every thing, what every thing really costs to the man +who wants to acquire it, is the toil and trouble of acquiring it. What +every thing is really worth to the man who has acquired it and who wants +to dispose of it, or exchange it for something else, is the toil and +trouble which it can save to himself, and which it can impose upon other +people. What is bought with money, or with goods, is purchased by +labour, as much as what we acquire by the toil of our own body. That +money, or those goods, indeed, save us this toil. They contain the value +of a certain quantity of labour, which we exchange for what is supposed +at the time to contain the value of an equal quantity. Labour was the +first price, the original purchase-money that was paid for all things. +It was not by gold or by silver, but by labour, that all the wealth of +the world was originally purchased; and its value, to those who possess +it, and who want to exchange it for some new productions, is precisely +equal to the quantity of labour which it can enable them to purchase or +command. + +Wealth, as Mr Hobbes says, is power. But the person who either acquires, +or succeeds to a great fortune, does not necessarily acquire or succeed +to any political power, either civil or military. His fortune may, +perhaps, afford him the means of acquiring both; but the mere possession +of that fortune does not necessarily convey to him either. The power +which that possession immediately and directly conveys to him, is the +power of purchasing a certain command over all the labour, or over all +the produce of labour which is then in the market. His fortune is +greater or less, precisely in proportion to the extent of this power, or +to the quantity either of other men's labour, or, what is the same +thing, of the produce of other men's labour, which it enables him to +purchase or command. The exchangeable value of every thing must always +be precisely equal to the extent of this power which it conveys to its +owner. + +But though labour be the real measure of the exchangeable value of all +commodities, it is not that by which their value is commonly estimated. +It is often difficult to ascertain the proportion between two different +quantities of labour. The time spent in two different sorts of work will +not always alone determine this proportion. The different degrees of +hardship endured, and of ingenuity exercised, must likewise be taken +into account. There may be more labour in an hour's hard work, than in +two hours easy business; or in an hour's application to a trade which it +cost ten years labour to learn, than in a month's industry, at an +ordinary and obvious employment. But it is not easy to find any accurate +measure either of hardship or ingenuity. In exchanging, indeed, the +different productions of different sorts of labour for one another, some +allowance is commonly made for both. It is adjusted, however, not by any +accurate measure, but by the higgling and bargaining of the market, +according to that sort of rough equality which, though not exact, is +sufficient for carrying on the business of common life. + +Every commodity, besides, is more frequently exchanged for, and thereby +compared with, other commodities, than with labour. It is more natural, +therefore, to estimate its exchangeable value by the quantity of some +other commodity, than by that of the labour which it can produce. The +greater part of people, too, understand better what is meant by a +quantity of a particular commodity, than by a quantity of labour. The +one is a plain palpable object; the other an abstract notion, which, +though it can be made sufficiently intelligible, is not altogether so +natural and obvious. + +But when barter ceases, and money has become the common instrument of +commerce, every particular commodity is more frequently exchanged for +money than for any other commodity. The butcher seldom carries his beef +or his mutton to the baker or the brewer, in order to exchange them for +bread or for beer; but he carries them to the market, where he exchanges +them for money, and afterwards exchanges that money for bread and for +beer. The quantity of money which he gets for them regulates, too, the +quantity of bread and beer which he can afterwards purchase. It is more +natural and obvious to him, therefore, to estimate their value by the +quantity of money, the commodity for which he immediately exchanges +them, than by that of bread and beer, the commodities for which he can +exchange them only by the intervention of another commodity; and rather +to say that his butcher's meat is worth threepence or fourpence a-pound, +than that it is worth three or four pounds of bread, or three or four +quarts of small beer. Hence it comes to pass, that the exchangeable +value of every commodity is more frequently estimated by the quantity of +money, than by the quantity either of labour or of any other commodity +which can be had in exchange for it. + +Gold and silver, however, like every other commodity, vary in their +value; are sometimes cheaper and sometimes dearer, sometimes of easier +and sometimes of more difficult purchase. The quantity of labour which +any particular quantity of them can purchase or command, or the quantity +of other goods which it will exchange for, depends always upon the +fertility or barrenness of the mines which happen to be known about the +time when such exchanges are made. The discovery of the abundant mines +of America, reduced, in the sixteenth century, the value of gold and +silver in Europe to about a third of what it had been before. As it cost +less labour to bring those metals from the mine to the market, so, when +they were brought thither, they could purchase or command less labour; +and this revolution in their value, though perhaps the greatest, is by +no means the only one of which history gives some account. But as a +measure of quantity, such as the natural foot, fathom, or handful, which +is continually varying in its own quantity, can never be an accurate +measure of the quantity of other things; so a commodity which is itself +continually varying in its own value, can never be an accurate measure +of the value of other commodities. Equal quantities of labour, at all +times and places, may be said to be of equal value to the labourer. In +his ordinary state of health, strength, and spirits; in the ordinary +degree of his skill and dexterity, he must always lay down the same +portion of his ease, his liberty, and his happiness. The price which he +pays must always be the same, whatever may be the quantity of goods +which he receives in return for it. Of these, indeed, it may sometimes +purchase a greater and sometimes a smaller quantity; but it is their +value which varies, not that of the labour which purchases them. At all +times and places, that is dear which it is difficult to come at, or +which it costs much labour to acquire; and that cheap which is to be had +easily, or with very little labour. Labour alone, therefore, never +varying in its own value, is alone the ultimate and real standard by +which the value of all commodities can at all times and places be +estimated and compared. It is their real price; money is their nominal +price only. + +But though equal quantities of labour are always of equal value to the +labourer, yet to the person who employs him they appear sometimes to be +of greater, and sometimes of smaller value. He purchases them sometimes +with a greater, and sometimes with a smaller quantity of goods, and to +him the price of labour seems to vary like that of all other things. It +appears to him dear in the one case, and cheap in the other. In reality, +however, it is the goods which are cheap in the one case, and dear in +the other. + +In this popular sense, therefore, labour, like commodities, may be said +to have a real and a nominal price. Its real price may be said to +consist in the quantity of the necessaries and conveniencies of life +which are given for it; its nominal price, in the quantity of money. The +labourer is rich or poor, is well or ill rewarded, in proportion to the +real, not to the nominal price of his labour. + +The distinction between the real and the nominal price of commodities +and labour is not a matter of mere speculation, but may sometimes be of +considerable use in practice. The same real price is always of the same +value; but on account of the variations in the value of gold and silver, +the same nominal price is sometimes of very different values. When a +landed estate, therefore, is sold with a reservation of a perpetual +rent, if it is intended that this rent should always be of the same +value, it is of importance to the family in whose favour it is reserved, +that it should not consist in a particular sum of money. Its value would +in this case be liable to variations of two different kinds: first, to +those which arise from the different quantities of gold and silver which +are contained at different times in coin of the same denomination; and, +secondly, to those which arise from the different values of equal +quantities of gold and silver at different times. + +Princes and sovereign states have frequently fancied that they had a +temporary interest to diminish the quantity of pure metal contained in +their coins; but they seldom have fancied that they had any to augment +it. The quantity of metal contained in the coins, I believe of all +nations, has accordingly been almost continually diminishing, and hardly +ever augmenting. Such variations, therefore, tend almost always to +diminish the value of a money rent. + +The discovery of the mines of America diminished the value of gold and +silver in Europe. This diminution, it is commonly supposed, though I +apprehend without any certain proof, is still going on gradually, and is +likely to continue to do so for a long time. Upon this supposition, +therefore, such variations are more likely to diminish than to augment +the value of a money rent, even though it should be stipulated to be +paid, not in such a quantity of coined money of such a denomination (in +so many pounds sterling, for example), but in so many ounces, either of +pure silver, or of silver of a certain standard. + +The rents which have been reserved in corn, have preserved their value +much better than those which have been reserved in money, even where the +denomination of the coin has not been altered. By the 18th of Elizabeth, +it was enacted, that a third of the rent of all college leases should be +reserved in corn, to be paid either in kind, or according to the current +prices at the nearest public market. The money arising from this corn +rent, though originally but a third of the whole, is, in the present +times, according to Dr. Blackstone, commonly near double of what arises +from the other two-thirds. The old money rents of colleges must, +according to this account, have sunk almost to a fourth part of their +ancient value, or are worth little more than a fourth part of the corn +which they were formerly worth. But since the reign of Philip and Mary, +the denomination of the English coin has undergone little or no +alteration, and the same number of pounds, shillings, and pence, have +contained very nearly the same quantity of pure silver. This +degradation, therefore, in the value of the money rents of colleges, has +arisen altogether from the degradation in the price of silver. + +When the degradation in the value of silver is combined with the +diminution of the quantity of it contained in the coin of the same +denomination, the loss is frequently still greater. In Scotland, where +the denomination of the coin has undergone much greater alterations +than it ever did in England, and in France, where it has undergone still +greater than it ever did in Scotland, some ancient rents, originally of +considerable value, have, in this manner, been reduced almost to +nothing. + +Equal quantities of labour will, at distant times, be purchased more +nearly with equal quantities of corn, the subsistence of the labourer, +than with equal quantities of gold and silver, or, perhaps, of any other +commodity. Equal quantities of corn, therefore, will, at distant times, +be more nearly of the same real value, or enable the possessor to +purchase or command more nearly the same quantity of the labour of other +people. They will do this, I say, more nearly than equal quantities of +almost any other commodity; for even equal quantities of corn will not +do it exactly. The subsistence of the labourer, or the real price of +labour, as I shall endeavour to shew hereafter, is very different upon +different occasions; more liberal in a society advancing to opulence, +than in one that is standing still, and in one that is standing still, +than in one that is going backwards. Every other commodity, however, +will, at any particular time, purchase a greater or smaller quantity of +labour, in proportion to the quantity of subsistence which it can +purchase at that time. A rent, therefore, reserved in corn, is liable +only to the variations in the quantity of labour which a certain +quantity of corn can purchase. But a rent reserved in any other +commodity is liable, not only to the variations in the quantity of +labour which any particular quantity of corn can purchase, but to the +variations in the quantity of corn which can be purchased by any +particular quantity of that commodity. + +Though the real value of a corn rent, it is to be observed, however, +varies much less from century to century than that of a money rent, it +varies much more from year to year. The money price of labour, as I +shall endeavour to shew hereafter, does not fluctuate from year to year +with the money price of corn, but seems to be everywhere accommodated, +not to the temporary or occasional, but to the average or ordinary price +of that necessary of life. The average or ordinary price of corn, again +is regulated, as I shall likewise endeavour to shew hereafter, by the +value of silver, by the richness or barrenness of the mines which supply +the market with that metal, or by the quantity of labour which must be +employed, and consequently of corn which must be consumed, in order to +bring any particular quantity of silver from the mine to the market. But +the value of silver, though it sometimes varies greatly from century to +century, seldom varies much from year to year, but frequently continues +the same, or very nearly the same, for half a century or a century +together. The ordinary or average money price of corn, therefore, may, +during so long a period, continue the same, or very nearly the same, +too, and along with it the money price of labour, provided, at least, +the society continues, in other respects, in the same, or nearly in the +same, condition. In the mean time, the temporary and occasional price of +corn may frequently be double one year of what it had been the year +before, or fluctuate, for example, from five-and-twenty to fifty +shillings the quarter. But when corn is at the latter price, not only +the nominal, but the real value of a corn rent, will be double of what +it is when at the former, or will command double the quantity either of +labour, or of the greater part of other commodities; the money price of +labour, and along with it that of most other things, continuing the same +during all these fluctuations. + +Labour, therefore, it appears evidently, is the only universal, as well +as the only accurate, measure of value, or the only standard by which we +can compare the values of different commodities, at all times, and at +all places. We cannot estimate, it is allowed, the real value of +different commodities from century to century by the quantities of +silver which were given for them. We cannot estimate it from year to +year by the quantities of corn. By the quantities of labour, we can, +with the greatest accuracy, estimate it, both from century to century, +and from year to year. From century to century, corn is a better measure +than silver, because, from century to century, equal quantities of corn +will command the same quantity of labour more nearly than equal +quantities of silver. From year to year, on the contrary, silver is a +better measure than corn, because equal quantities of it will more +nearly command the same quantity of labour. + +But though, in establishing perpetual rents, or even in letting very +long leases, it may be of use to distinguish between real and nominal +price; it is of none in buying and selling, the more common and ordinary +transactions of human life. + +At the same time and place, the real and the nominal price of all +commodities are exactly in proportion to one another. The more or less +money you get for any commodity, in the London market, for example, the +more or less labour it will at that time and place enable you to +purchase or command. At the same time and place, therefore, money is the +exact measure of the real exchangeable value of all commodities. It is +so, however, at the same time and place only. + +Though at distant places there is no regular proportion between the real +and the money price of commodities, yet the merchant who carries goods +from the one to the other, has nothing to consider but the money price, +or the difference between the quantity of silver for which he buys them, +and that for which he is likely to sell them. Half an ounce of silver +at Canton in China may command a greater quantity both of labour and of +the necessaries and conveniencies of life, than an ounce at London. A +commodity, therefore, which sells for half an ounce of silver at Canton, +may there be really dearer, of more real importance to the man who +possesses it there, than a commodity which sells for an ounce at London +is to the man who possesses it at London. If a London merchant, however, +can buy at Canton, for half an ounce of silver, a commodity which he can +afterwards sell at London for an ounce, he gains a hundred per cent. by +the bargain, just as much as if an ounce of silver was at London exactly +of the same value as at Canton. It is of no importance to him that half +an ounce of silver at Canton would have given him the command of more +labour, and of a greater quantity of the necessaries and conveniencies +of life than an ounce can do at London. An ounce at London will always +give him the command of double the quantity of all these, which half an +ounce could have done there, and this is precisely what he wants. + +As it is the nominal or money price of goods, therefore, which finally +determines the prudence or imprudence of all purchases and sales, and +thereby regulates almost the whole business of common life in which +price is concerned, we cannot wonder that it should have been so much +more attended to than the real price. + +In such a work as this, however, it may sometimes be of use to compare +the different real values of a particular commodity at different times +and places, or the different degrees of power over the labour of other +people which it may, upon different occasions, have given to those who +possessed it. We must in this case compare, not so much the different +quantities of silver for which it was commonly sold, as the different +quantities of labour which those different quantities of silver could +have purchased. But the current prices of labour, at distant times and +places, can scarce ever be known with any degree of exactness. Those of +corn, though they have in few places been regularly recorded, are in +general better known, and have been more frequently taken notice of by +historians and other writers. We must generally, therefore, content +ourselves with them, not as being always exactly in the same proportion +as the current prices of labour, but as being the nearest approximation +which can commonly be had to that proportion. I shall hereafter have +occasion to make several comparisons of this kind. + +In the progress of industry, commercial nations have found it convenient +to coin several different metals into money; gold for larger payments, +silver for purchases of moderate value, and copper, or some other coarse +metal, for those of still smaller consideration. They have always, +however, considered one of those metals as more peculiarly the measure +of value than any of the other two; and this preference seems generally +to have been given to the metal which they happen first to make use of +as the instrument of commerce. Having once begun to use it as their +standard, which they must have done when they had no other money, they +have generally continued to do so even when the necessity was not the +same. + +The Romans are said to have had nothing but copper money till within +five years before the first Punic war[7], when they first began to coin +silver. Copper, therefore, appears to have continued always the measure +of value in that republic. At Rome all accounts appear to have been +kept, and the value of all estates to have been computed, either in +_asses_ or in _sestertii_. The _as_ was always the denomination of a +copper coin. The word _sestertius_ signifies two _asses_ and a half. +Though the _sestertius_, therefore, was originally a silver coin, its +value was estimated in copper. At Rome, one who owed a great deal of +money was said to have a great deal of other people's copper. + +The northern nations who established themselves upon the ruins of the +Roman empire, seem to have had silver money from the first beginning of +their settlements, and not to have known either gold or copper coins for +several ages thereafter. There were silver coins in England in the time +of the Saxons; but there was little gold coined till the time of of +Edward III. nor any copper till that of James I. of Great Britain. In +England, therefore, and for the same reason, I believe, in all other +modern nations of Europe, all accounts are kept, and the value of all +goods and of all estates is generally computed, in silver: and when we +mean to express the amount of a person's fortune, we seldom mention the +number of guineas, but the number of pounds sterling which we suppose +would be given for it. + +Originally, in all countries, I believe, a legal tender of payment could +be made only in the coin of that metal which was peculiarly considered +as the standard or measure of value. In England, gold was not considered +as a legal tender for a long time after it was coined into money. The +proportion between the values of gold and silver money was not fixed by +any public law or proclamation, but was left to be settled by the +market. If a debtor offered payment in gold, the creditor might either +reject such payment altogether, or accept of it at such a valuation of +the gold as he and his debtor could agree upon. Copper is not at present +a legal tender, except in the change of the smaller silver coins. In +this state of things, the distinction between the metal which was the +standard, and that which was not the standard, was something more than a +nominal distinction. + +In process of time, and as people became gradually more familiar with +the use of the different metals in coin, and consequently better +acquainted with the proportion between their respective values, it has, +in most countries, I believe, been found convenient to ascertain this +proportion, and to declare by a public law, that a guinea, for example, +of such a weight and fineness, should exchange for one-and-twenty +shillings, or be a legal tender for a debt of that amount. In this state +of things, and during the continuance of any one regulated proportion of +this kind, the distinction between the metal, which is the standard, and +that which is not the standard, becomes little more than a nominal +distinction. + +In consequence of any change, however, in this regulated proportion, +this distinction becomes, or at least seems to become, something more +than nominal again. If the regulated value of a guinea, for example, was +either reduced to twenty, or raised to two-and-twenty shillings, all +accounts being kept, and almost all obligations for debt being +expressed, in silver money, the greater part of payments could in either +case be made with the same quantity of silver money as before; but would +require very different quantities of gold money; a greater in the one +case, and a smaller in the other. Silver would appear to be more +invariable in its value than gold. Silver would appear to measure the +value of gold, and gold would not appear to measure the value of silver. +The value of gold would seem to depend upon the quantity of silver which +it would exchange for, and the value of silver would not seem to depend +upon the quantity of gold which it would exchange for. This difference, +however, would be altogether owing to the custom of keeping accounts, +and of expressing the amount of all great and small sums rather in +silver than in gold money. One of Mr Drummond's notes for +five-and-twenty or fifty guineas would, after an alteration of this +kind, be still payable with five-and-twenty or fifty guineas, in the +same manner as before. It would, after such an alteration, be payable +with the same quantity of gold as before, but with very different +quantities of silver. In the payment of such a note, gold would appear +to be more invariable in its value than silver. Gold would appear to +measure the value of silver, and silver would not appear to measure the +value of gold. If the custom of keeping accounts, and of expressing +promissory-notes and other obligations for money, in this manner should +ever become general, gold, and not silver, would be considered as the +metal which was peculiarly the standard or measure of value. + +In reality, during the continuance of any one regulated proportion +between the respective values of the different metals in coin, the value +of the most precious metal regulates the value of the whole coin. Twelve +copper pence contain half a pound avoirdupois of copper, of not the best +quality, which, before it is coined, is seldom worth sevenpence in +silver. But as, by the regulation, twelve such pence are ordered to +exchange for a shilling, they are in the market considered as worth a +shilling, and a shilling can at any time be had for them. Even before +the late reformation of the gold coin of Great Britain, the gold, that +part of it at least which circulated in London and its neighbourhood, +was in general less degraded below its standard weight than the greater +part of the silver. One-and-twenty worn and defaced shillings, however, +were considered as equivalent to a guinea, which, perhaps, indeed, was +worn and defaced too, but seldom so much so. The late regulations have +brought the gold coin as near, perhaps, to its standard weight as it is +possible to bring the current coin of any nation; and the order to +receive no gold at the public offices but by weight, is likely to +preserve it so, as long as that order is enforced. The silver coin still +continues in the same worn and degraded state as before the reformation +of the gold coin. In the market, however, one-and-twenty shillings of +this degraded silver coin are still considered as worth a guinea of this +excellent gold coin. + +The reformation of the gold coin has evidently raised the value of the +silver coin which can be exchanged for it. + +In the English mint, a pound weight of gold is coined into forty-four +guineas and a half, which at one-and-twenty shillings the guinea, is +equal to forty-six pounds fourteen shillings and sixpence. An ounce of +such gold coin, therefore, is worth L.3 : 17 : 10-1/2 in silver. In +England, no duty or seignorage is paid upon the coinage, and he who +carries a pound weight or an ounce weight of standard gold bullion to +the mint, gets back a pound weight or an ounce weight of gold in coin, +without any deduction. Three pounds seventeen shillings and tenpence +halfpenny an ounce, therefore, is said to be the mint price of gold in +England, or the quantity of gold coin which the mint gives in return for +standard gold bullion. + +Before the reformation of the gold coin, the price of standard gold +bullion in the market had, for many years, been upwards of L.3 : 18s. +sometimes L.3 : 19s. and very frequently L.4 an ounce; that sum, it is +probable, in the worn and degraded gold coin, seldom containing more +than an ounce of standard gold. Since the reformation of the gold coin, +the market price of standard gold bullion seldom exceeds L.3 : 17 : 7 an +ounce. Before the reformation of the gold coin, the market price was +always more or less above the mint price. Since that reformation, the +market price has been constantly below the mint price. But that market +price is the same whether it is paid in gold or in silver coin. The late +reformation of the gold coin, therefore, has raised not only the value +of the gold coin, but likewise that of the silver coin in proportion to +gold bullion, and probably, too, in proportion to all other commodities; +though the price of the greater part of other commodities being +influenced by so many other causes, the rise in the value of either gold +or silver coin in proportion to them may not be so distinct and +sensible. + +In the English mint, a pound weight of standard silver bullion is coined +into sixty-two shillings, containing, in the same manner, a pound weight +of standard silver. Five shillings and twopence an ounce, therefore, is +said to be the mint price of silver in England, or the quantity of +silver coin which the mint gives in return for standard silver bullion. +Before the reformation of the gold coin, the market price of standard +silver bullion was, upon different occasions, five shillings and +fourpence, five shillings and fivepence, five shillings and sixpence, +five shillings and sevenpence, and very often five shillings and +eightpence an ounce. Five shillings and sevenpence, however, seems to +have been the most common price. Since the reformation of the gold coin, +the market price of standard silver bullion has fallen occasionally to +five shillings and threepence, five shillings and fourpence, and five +shillings and fivepence an ounce, which last price it has scarce ever +exceeded. Though the market price of silver bullion has fallen +considerably since the reformation of the gold coin, it has not fallen +so low as the mint price. + +In the proportion between the different metals in the English coin, as +copper is rated very much above its real value, so silver is rated +somewhat below it. In the market of Europe, in the French coin and in +the Dutch coin, an ounce of fine gold exchanges for about fourteen +ounces of fine silver. In the English coin, it exchanges for about +fifteen ounces, that is, for more silver than it is worth, according to +the common estimation of Europe. But as the price of copper in bars is +not, even in England, raised by the high price of copper in English +coin, so the price of silver in bullion is not sunk by the low rate of +silver in English coin. Silver in bullion still preserves its proper +proportion to gold, for the same reason that copper in bars preserves +its proper proportion to silver. + +Upon the reformation of the silver coin, in the reign of William III., +the price of silver bullion still continued to be somewhat above the +mint price. Mr Locke imputed this high price to the permission of +exporting silver bullion, and to the prohibition of exporting silver +coin. This permission of exporting, he said, rendered the demand for +silver bullion greater than the demand for silver coin. But the number +of people who want silver coin for the common uses of buying and selling +at home, is surely much greater than that of those who want silver +bullion either for the use of exportation or for any other use. There +subsists at present a like permission of exporting gold bullion, and a +like prohibition of exporting gold coin; and yet the price of gold +bullion has fallen below the mint price. But in the English coin, silver +was then, in the same manner as now, under-rated in proportion to gold; +and the gold coin (which at that time, too, was not supposed to require +any reformation) regulated then, as well as now, the real value of the +whole coin. As the reformation of the silver coin did not then reduce +the price of silver bullion to the mint price, it is not very probable +that a like reformation will do so now. + +Were the silver coin brought back as near to its standard weight as the +gold, a guinea, it is probable, would, according to the present +proportion, exchange for more silver in coin than it would purchase in +bullion. The silver coin containing its full standard weight, there +would in this case, be a profit in melting it down, in order, first to +sell the bullion for gold coin, and afterwards to exchange this gold +coin for silver coin, to be melted down in the same manner. Some +alteration in the present proportion seems to be the only method of +preventing this inconveniency. + +The inconveniency, perhaps, would be less, if silver was rated in the +coin as much above its proper proportion to gold as it is at present +rated below it, provided it was at the same time enacted, that silver +should not be a legal tender for more than the change of a guinea, in +the same manner as copper is not a legal tender for more than the change +of a shilling. No creditor could, in this case, be cheated in +consequence of the high valuation of silver in coin; as no creditor can +at present be cheated in consequence of the high valuation of copper. +The bankers only would suffer by this regulation. When a run comes upon +them, they sometimes endeavour to gain time, by paying in sixpences, and +they would be precluded by this regulation from this discreditable +method of evading immediate payment. They would be obliged, in +consequence, to keep at all times in their coffers a greater quantity of +cash than at present; and though this might, no doubt, be a considerable +inconveniency to them, it would, at the same time, be a considerable +security to their creditors. + +Three pounds seventeen shillings and tenpence halfpenny (the mint price +of gold) certainly does not contain, even in our present excellent gold +coin, more than an ounce of standard gold, and it may be thought, +therefore, should not purchase more standard bullion. But gold in coin +is more convenient than gold in bullion; and though, in England, the +coinage is free, yet the gold which is carried in bullion to the mint, +can seldom be returned in coin to the owner till after a delay of +several weeks. In the present hurry of the mint, it could not be +returned till after a delay of several months. This delay is equivalent +to a small duty, and renders gold in coin somewhat more valuable than an +equal quantity of gold in bullion. If, in the English coin, silver was +rated according to its proper proportion to gold, the price of silver +bullion would probably fall below the mint price, even without any +reformation of the silver coin; the value even of the present worn and +defaced silver coin being regulated by the value of the excellent gold +coin for which it can be changed. + +A small seignorage or duty upon the coinage of both gold and silver, +would probably increase still more the superiority of those metals in +coin above an equal quantity of either of them in bullion. The coinage +would, in this case, increase the value of the metal coined in +proportion to the extent of this small duty, for the same reason that +the fashion increases the value of plate in proportion to the price of +that fashion. The superiority of coin above bullion would prevent the +melting down of the coin, and would discourage its exportation. If, upon +any public exigency, it should become necessary to export the coin, the +greater part of it would soon return again, of its own accord. Abroad, +it would sell only for its weight in bullion. At home, it would buy more +than that weight. There would be a profit, therefore, in bringing it +home again. In France, a seignorage of about eight per cent. is imposed +upon the coinage, and the French coin, when exported, is said to return +home again, of its own accord. + +The occasional fluctuations in the market price of gold and silver +bullion arise from the same causes as the like fluctuations in that of +all other commodities. The frequent loss of those metals from various +accidents by sea and land, the continual waste of them in gilding and +plating, in lace and embroidery, in the wear and tear of coin, and in +that of plate, require, in all countries which possess no mines of their +own, a continual importation, in order to repair this lose and this +waste. The merchant importers, like all other merchants, we may believe, +endeavour, as well as they can, to suit their occasional importations to +what they judge is likely to be the immediate demand. With all their +attention, however, they sometimes overdo the business, and sometimes +underdo it. When they import more bullion than is wanted, rather than +incur the risk and trouble of exporting it again, they are sometimes +willing to sell a part of it for something less than the ordinary or +average price. When, on the other hand, they import less than is wanted, +they get something more than this price. But when, under all those +occasional fluctuations, the market price either of gold or silver +bullion continues for several years together steadily and constantly, +either more or less above, or more or less below the mint price, we may +be assured that this steady and constant, either superiority or +inferiority of price, is the effect of something in the state of the +coin, which, at that time, renders a certain quantity of coin either of +more value or of less value than precise quantity of bullion which it +ought to contain. The constancy and steadiness of the effect supposes a +proportionable constancy and steadiness in the cause. + +The money of any particular country is, at any particular time and +place, more or less an accurate measure or value, according as the +current coin is more or less exactly agreeable to its standard, or +contains more or less exactly the precise quantity of pure gold or +silver which it ought to contain. If in England, for example, forty-four +guineas and a half contained exactly a pound weight of standard gold, or +eleven ounces of fine gold, and one ounce of alloy, the gold coin of +England would be as accurate a measure of the actual goods at any +particular time and place as the nature of the thing would admit. But +if, by rubbing and wearing, forty-four guineas and a half generally +contain less than a pound weight of standard gold, the diminution, +however, being greater in some pieces than in others, the measure of +value comes to be liable to the same sort of uncertainty to which all +other weights and measures are commonly exposed. As it rarely happens +that these are exactly agreeable to their standard, the merchant adjusts +the price of his goods as well as he can, not to what those weights and +measures ought to be, but to what, upon an average, he finds, by +experience, they actually are. In consequence of a like disorder in the +coin, the price of goods comes, in the same manner, to be adjusted, not +to the quantity of pure gold or silver which the coin ought to contain, +but to that which, upon an average, it is found, by experience, it +actually does contain. + +By the money price of goods, it is to be observed, I understand always +the quantity of pure gold or silver for which they are sold, without any +regard to the denomination of the coin. Six shillings and eight pence, +for example, in the time of Edward I., I consider as the same money +price with a pound sterling in the present times, because it contained, +as nearly as we can judge, the same quantity of pure silver. + + + + +CHAP. VI. + +OF THE COMPONENT PART OF THE PRICE OF COMMODITIES. + + +In that early and rude state of society which precedes both the +accumulation of stock and the appropriation of land, the proportion +between the quantities of labour necessary for acquiring different +objects, seems to be the only circumstance which can afford any rule for +exchanging them for one another. If among a nation of hunters, for +example, it usually costs twice the labour to kill a beaver which it +does to kill a deer, one beaver should naturally exchange for or be +worth two deer. It is natural that what is usually the produce of two +days or two hours labour, should be worth double of what is usually the +produce of one day's or one hour's labour. + +If the one species of labour should be more severe than the other, some +allowance will naturally be made for this superior hardship; and the +produce of one hour's labour in the one way may frequently exchange for +that of two hour's labour in the other. + +Or if the one species of labour requires an uncommon degree of dexterity +and ingenuity, the esteem which men have for such talents, will +naturally give a value to their produce, superior to what would be due +to the time employed about it. Such talents can seldom be acquired but +in consequence of long application, and the superior value of their +produce may frequently be no more than a reasonable compensation for the +time and labour which must be spent in acquiring them. In the advanced +state of society, allowances of this kind, for superior hardship and +superior skill, are commonly made in the wages of labour; and something +of the same kind must probably have taken place in its earliest and +rudest period. + +In this state of things, the whole produce of labour belongs to the +labourer; and the quantity of labour commonly employed in acquiring or +producing any commodity, is the only circumstance which can regulate the +quantity of labour which it ought commonly to purchase, command, or +exchange for. + +As soon as stock has accumulated in the hands of particular persons, +some of them will naturally employ it in setting to work industrious +people, whom they will supply with materials and subsistence, in order +to make a profit by the sale of their work, or by what their labour adds +to the value of the materials. In exchanging the complete manufacture +either for money, for labour, or for other goods, over and above what +may be sufficient to pay the price of the materials, and the wages of +the workmen, something must be given for the profits of the undertaker +of the work, who hazards his stock in this adventure. The value which +the workmen add to the materials, therefore, resolves itself in this +case into two parts of which the one pays their wages, the other the +profits of their employer upon the whole stock of materials and wages +which he advanced. He could have no interest to employ them, unless he +expected from the sale of their work something more than what was +sufficient to replace his stock to him; and he could have no interest to +employ a great stock rather than a small one, unless his profits were to +bear some proportion to the extent of his stock. + +The profits of stock, it may perhaps be thought, are only a different +name for the wages of a particular sort of labour, the labour of +inspection and direction. They are, however, altogether different, are +regulated by quite different principles, and bear no proportion to the +quantity, the hardship, or the ingenuity of this supposed labour of +inspection and direction. They are regulated altogether by the value of +the stock employed, and are greater or smaller in proportion to the +extent of this stock. Let us suppose, for example, that in some +particular place, where the common annual profits of manufacturing stock +are ten per cent. there are two different manufactures, in each of which +twenty workmen are employed, at the rate of fifteen pounds a year each, +or at the expense of three hundred a-year in each manufactory. Let us +suppose, too, that the coarse materials annually wrought up in the one +cost only seven hundred pounds, while the finer materials in the other +cost seven thousand. The capital annually employed in the one will, in +this case, amount only to one thousand pounds; whereas that employed in +the other will amount to seven thousand three hundred pounds. At the +rate of ten per cent. therefore, the undertaker of the one will expect a +yearly profit of about one hundred pounds only; while that of the other +will expect about seven hundred and thirty pounds. But though their +profits are so very different, their labour of inspection and direction +may be either altogether or very nearly the same. In many great works, +almost the whole labour of this kind is committed to some principal +clerk. His wages properly express the value of this labour of inspection +and direction. Though in settling them some regard is had commonly, not +only to his labour and skill, but to the trust which is reposed in him, +yet they never bear any regular proportion to the capital of which he +oversees the management; and the owner of this capital, though he is +thus discharged of almost all labour, still expects that his profit +should bear a regular proportion to his capital. In the price of +commodities, therefore, the profits of stock constitute a component +part altogether different from the wages of labour, and regulated by +quite different principles. + +In this state of things, the whole produce of labour does not always +belong to the labourer. He must in most cases share it with the owner of +the stock which employs him. Neither is the quantity of labour commonly +employed in acquiring or producing any commodity, the only circumstance +which can regulate the quantity which it ought commonly to purchase, +command or exchange for. An additional quantity, it is evident, must be +due for the profits of the stock which advanced the wages and furnished +the materials of that labour. + +As soon as the land of any country has all become private property, the +landlords, like all other men, love to reap where they never sowed, and +demand a rent even for its natural produce. The wood of the forest, the +grass of the field, and all the natural fruits of the earth, which, when +land was in common, cost the labourer only the trouble of gathering +them, come, even to him, to have an additional price fixed upon them. He +must then pay for the licence to gather them, and must give up to the +landlord a portion of what his labour either collects or produces. This +portion, or, what comes to the same thing, the price of this portion, +constitutes the rent of land, and in the price of the greater part of +commodities, makes a third component part. + +The real value of all the different component parts of price, it must be +observed, is measured by the quantity of labour which they can, each of +them, purchase or command. Labour measures the value, not only of that +part of price which resolves itself into labour, but of that which +resolves itself into rent, and of that which resolves itself into +profit. + +In every society, the price of every commodity finally resolves itself +into some one or other, or all of those three parts; and in every +improved society, all the three enter, more or less, as component parts, +into the price of the far greater part of commodities. + +In the price of corn, for example, one part pays the rent of the +landlord, another pays the wages or maintenance of the labourers and +labouring cattle employed in producing it, and the third pays the profit +of the farmer. These three parts seem either immediately or ultimately +to make up the whole price of corn. A fourth part, it may perhaps be +thought is necessary for replacing the stock of the farmer, or for +compensating the wear and tear of his labouring cattle, and other +instruments of husbandry. But it must be considered, that the price of +any instrument of husbandry, such as a labouring horse, is itself made +up of the same three parts; the rent of the land upon which he is +reared, the labour of tending and rearing him, and the profits of the +farmer, who advances both the rent of this land, and the wages of this +labour. Though the price of the corn, therefore, may pay the price as +well as the maintenance of the horse, the whole price still resolves +itself, either immediately or ultimately, into the same three parts of +rent, labour, and profit. + +In the price of flour or meal, we must add to the price of the corn, the +profits of the miller, and the wages of his servants; in the price of +bread, the profits of the baker, and the wages of his servants; and in +the price of both, the labour of transporting the corn from the house of +the farmer to that of the miller, and from that of the miller to that of +the baker, together with the profits of those who advance the wages of +that labour. + +The price of flax resolves itself into the same three parts as that of +corn. In the price of linen we must add to this price the wages of the +flax-dresser, of the spinner, of the weaver, of the bleacher, &c. +together with the profits of their respective employers. + +As any particular commodity comes to be more manufactured, that part of +the price which resolves itself into wages and profit, comes to be +greater in proportion to that which resolves itself into rent. In the +progress of the manufacture, not only the number of profits increase, +but every subsequent profit is greater than the foregoing; because the +capital from which it is derived must always be greater. The capital +which employs the weavers, for example, must be greater than that which +employs the spinners; because it not only replaces that capital with its +profits, but pays, besides, the wages of the weavers: and the profits +must always bear some proportion to the capital. + +In the most improved societies, however, there are always a few +commodities of which the price resolves itself into two parts only, the +wages of labour, and the profits of stock; and a still smaller number, +in which it consists altogether in the wages of labour. In the price of +sea-fish, for example, one part pays the labour of the fisherman, and +the other the profits of the capital employed in the fishery. Rent very +seldom makes any part of it, though it does sometimes, as I shall shew +hereafter. It is otherwise, at least through the greater part of Europe, +in river fisheries. A salmon fishery pays a rent; and rent, though it +cannot well be called the rent of land, makes a part of the price of a +salmon, as well as wages and profit. In some parts of Scotland, a few +poor people make a trade of gathering, along the sea-shore, those little +variegated stones commonly known by the name of Scotch pebbles. The +price which is paid to them by the stone-cutter, is altogether the wages +of their labour; neither rent nor profit makes any part of it. + +But the whole price of any commodity must still finally resolve itself +into some one or other or all of those three parts; as whatever part of +it remains after paying the rent of the land, and the price of the whole +labour employed in raising, manufacturing, and bringing it to market, +must necessarily be profit to somebody. + +As the price or exchangeable value of every particular commodity, taken +separately, resolves itself into some one or other, or all of those +three parts; so that of all the commodities which compose the whole +annual produce of the labour of every country, taken complexly, must +resolve itself into the same three parts, and be parcelled out among +different inhabitants of the country, either as the wages of their +labour, the profits of their stock, or the rent of their land. The whole +of what is annually either collected or produced by the labour of every +society, or, what comes to the same thing, the whole price of it, is in +this manner originally distributed among some of its different members. +Wages, profit, and rent, are the three original sources of all revenue, +as well as of all exchangeable value. All other revenue is ultimately +derived from some one or other of these. + +Whoever derives his revenue from a fund which is his own, must draw it +either from his labour, from his stock, or from his land. The revenue +derived from labour is called wages; that derived from stock, by the +person who manages or employs it, is called profit; that derived from it +by the person who does not employ it himself, but lends it to another, +is called the interest or the use of money. It is the compensation which +the borrower pays to the lender, for the profit which he has an +opportunity of making by the use of the money. Part of that profit +naturally belongs to the borrower, who runs the risk and takes the +trouble of employing it, and part to the lender, who affords him the +opportunity of making this profit. The interest of money is always a +derivative revenue, which, if it is not paid from the profit which is +made by the use of the money, must be paid from some other source of +revenue, unless perhaps the borrower is a spendthrift, who contracts a +second debt in order to pay the interest of the first. The revenue which +proceeds altogether from land, is called rent, and belongs to the +landlord. The revenue of the farmer is derived partly from his labour, +and partly from his stock. To him, land is only the instrument which +enables him to earn the wages of this labour, and to make the profits of +this stock. All taxes, and all the revenue which is founded upon them, +all salaries, pensions, and annuities of every kind, are ultimately +derived from some one or other of those three original sources of +revenue, and are paid either immediately or mediately from the wages of +labour, the profits of stock, or the rent of land. + +When those three different sorts of revenue belong to different persons, +they are readily distinguished; but when they belong to the same, they +are sometimes confounded with one another, at least in common language. + +A gentleman who farms a part of his own estate, after paying the expense +of cultivation, should gain both the rent of the landlord and the profit +of the farmer. He is apt to denominate, however, his whole gain, profit, +and thus confounds rent with profit, at least in common language. The +greater part of our North American and West Indian planters are in this +situation. They farm, the greater part of them, their own estates; and +accordingly we seldom hear of the rent of a plantation, but frequently +of its profit. + +Common farmers seldom employ any overseer to direct the general +operations of the farm. They generally, too, work a good deal with their +own hands, as ploughmen, harrowers, &c. What remains of the crop, after +paying the rent, therefore, should not only replace to them their stock +employed in cultivation, together with its ordinary profits, but pay +them the wages which are due to them, both as labourers and overseers. +Whatever remains, however, after paying the rent and keeping up the +stock, is called profit. But wages evidently make a part of it. The +farmer, by saving these wages, must necessarily gain them. Wages, +therefore, are in this case confounded with profit. + +An independent manufacturer, who has stock enough both to purchase +materials, and to maintain himself till he can carry his work to market, +should gain both the wages of a journeyman who works under a master, and +the profit which that master makes by the sale of that journeyman's +work. His whole gains, however, are commonly called profit, and wages +are, in this case, too, confounded with profit. + +A gardener who cultivates his own garden with his own hands, unites in +his own person the three different characters, of landlord, farmer, and +labourer. His produce, therefore, should pay him the rent of the first, +the profit of the second, and the wages of the third. The whole, +however, is commonly considered as the earnings of his labour. Both rent +and profit are, in this case, confounded with wages. + +As in a civilized country there are but few commodities of which the +exchangeable value arises from labour only, rent and profit contributing +largely to that of the far greater part of them, so the annual produce +of its labour will always be sufficient to purchase or command a much +greater quantity of labour than what was employed in raising, preparing, +and bringing that produce to market. If the society were annually to +employ all the labour which it can annually purchase, as the quantity of +labour would increase greatly every year, so the produce of every +succeeding year would be of vastly greater value than that of the +foregoing. But there is no country in which the whole annual produce is +employed in maintaining the industrious. The idle everywhere consume a +great part of it; and, according to the different proportions in which +it is annually divided between these two different orders of people, its +ordinary or average value must either annually increase or diminish, or +continue the same from one year to another. + + + + +CHAP. VII. + +OF THE NATURAL AND MARKET PRICE OF COMMODITIES. + + +There is in every society or neighbourhood an ordinary or average rate, +both of wages and profit, in every different employment of labour and +stock. This rate is naturally regulated, as I shall show hereafter, +partly by the general circumstances of the society, their riches or +poverty, their advancing, stationary, or declining condition, and partly +by the particular nature of each employment. + +There is likewise in every society or neighbourhood an ordinary or +average rate of rent, which is regulated, too, as I shall shew +hereafter, partly by the general circumstances of the society or +neighbourhood in which the land is situated, and partly by the natural +improved fertility of the land. + +These ordinary or average rates may be called the natural rates of +wages, profit and rent, at the time and place in which they commonly +prevail. + +When the price of any commodity is neither more nor less than what is +sufficient to pay the rent of the land, the wages of the labour, and the +profits of the stock employed in raising, preparing, and bringing it to +market, according to their natural rates, the commodity is then sold for +what may be called its natural price. + +The commodity is then sold precisely for what it is worth, or for what +it really costs the person who brings it to market; for though, in +common language, what is called the prime cost of any commodity does not +comprehend the profit of the person who is sell it again, yet, if he +sells it at a price which does not allow him the ordinary rate of profit +in his neighbourhood, he is evidently a loser by the trade; since, by +employing his stock in some other way, he might have made that profit. +His profit, besides, is his revenue, the proper fund of his subsistence. +As, while he is preparing and bringing the goods to market, he advances +to his workmen their wages, or their subsistence, so he advances to +himself, in the same manner, his own subsistence, which is generally +suitable to the profit which he may reasonably expect from the sale of +his goods. Unless they yield him this profit, therefore, they do not +repay him what they may very properly be said to have really cost him. + +Though the price, therefore, which leaves him this profit, is not always +the lowest at which a dealer may sometimes sell his goods, it is the +lowest at which he is likely to sell them for any considerable time; at +least where there is perfect liberty, or where he may change his trade +as often as he pleases. + +The actual price at which any commodity is commonly sold, is called its +market price. It may either be above, or below, or exactly the same with +its natural price. + +The market price of every particular commodity is regulated by the +proportion between the quantity which is actually brought to market, and +the demand of those who are willing to pay the natural price of the +commodity, or the whole value of the rent, labour, and profit, which +must be paid in order to bring it thither, Such people may be called the +effectual demanders, and their demand the effectual demand; since it may +be sufficient to effectuate the bringing of the commodity to market. It +is different from the absolute demand. A very poor man may be said, in +some sense, to have a demand for a coach and six; he might like to have +it; but his demand is not an effectual demand, as the commodity can +never he brought to market in order to satisfy it. + +When the quantity of any commodity which is brought to market falls +short of the effectual demand, all those who are willing to pay the +whole value of the rent, wages, and profit, which must he paid in order +to bring it thither, cannot be supplied with the quantity which they +want. Rather than want it altogether, some of them will be willing to +give more. A competition will immediately begin among them, and the +market price will rise more or less above the natural price, according +as either the greatness of the deficiency, or the wealth and wanton +luxury of the competitors, happen to animate more or less the eagerness +of the competition. Among competitors of equal wealth and luxury, the +same deficiency will generally occasion a more or less eager +competition, according as the acquisition of the commodity happens to be +of more or less importance to them. Hence the exorbitant price of the +necessaries of life during the blockade of a town, or in a famine. + +When the quantity brought to market exceeds the effectual demand, it +cannot be all sold to those who are willing to pay the whole value of +the rent, wages, and profit, which must be paid in order to bring it +thither. Some part must be sold to those who are willing to pay less, +and the low price which they give for it must reduce the price of the +whole. The market price will sink more or less below the natural price, +according as the greatness of the excess increases more or less the +competition of the sellers, or according as it happens to be more or +less important to them to get immediately rid of the commodity. The same +excess in the importation of perishable, will occasion a much greater +competition than in that of durable commodities; in the importation of +oranges, for example, than in that of old iron. + +When the quantity brought to market is just sufficient to supply the +effectual demand, and no more, the market price naturally comes to be +either exactly, or as nearly as can be judged of, the same with the +natural price. The whole quantity upon hand can be disposed of for this +price, and cannot be disposed of for more. The competition of the +different dealers obliges them all to accept of this price, but does not +oblige them to accept of less. + +The quantity of every commodity brought to market naturally suits itself +to the effectual demand. It is the interest of all those who employ +their land, labour, or stock, in bringing any commodity to market, that +the quantity never should exceed the effectual demand; and it is the +interest of all other people that it never should fall short of that +demand. + +If at any time it exceeds the effectual demand, some of the component +parts of its price must be paid below their natural rate. If it is rent, +the interest of the landlords will immediately prompt them to withdraw a +part of their land; and if it is wages or profit, the interest of the +labourers in the one case, and of their employers in the other, will +prompt them to withdraw a part of their labour or stock, from this +employment. The quantity brought to market will soon be no more than +sufficient to supply the effectual demand. All the different parts of +its price will rise to their natural rate, and the whole price to its +natural price. + +If, on the contrary, the quantity brought to market should at any time +fall short of the effectual demand, some of the component parts of its +price must rise above their natural rate. If it is rent, the interest of +all other landlords will naturally prompt them to prepare more land for +the raising of this commodity; if it is wages or profit, the interest of +all other labourers and dealers will soon prompt them to employ more +labour and stock in preparing and bringing it to market. The quantity +brought thither will soon be sufficient to supply the effectual demand. +All the different parts of its price will soon sink to their natural +rate, and the whole price to its natural price. + +The natural price, therefore, is, as it were, the central price, to +which the prices of all commodities are continually gravitating. +Different accidents may sometimes keep them suspended a good deal above +it, and sometimes force them down even somewhat below it. But whatever +may be the obstacles which hinder them from settling in this centre of +repose and continuance, they are constantly tending towards it. + +The whole quantity of industry annually employed in order to bring any +commodity to market, naturally suits itself in this manner to the +effectual demand. It naturally aims at bringing always that precise +quantity thither which may be sufficient to supply, and no more than +supply, that demand. + +But, in some employments, the same quantity of industry will, in +different years, produce very different quantities of commodities; +while, in others, it will produce always the same, or very nearly the +same. The same number of labourers in husbandry will, in different +years, produce very different quantities of corn, wine, oil, hops, &c. +But the same number of spinners or weavers will every year produce the +same, or very nearly the same, quantity of linen and woollen cloth. It +is only the average produce of the one species of industry which can be +suited, in any respect, to the effectual demand; and as its actual +produce is frequently much greater, and frequently much less, than its +average produce, the quantity of the commodities brought to market will +sometimes exceed a good deal, and sometimes fall short a good deal, of +the effectual demand. Even though that demand, therefore, should +continue always the same, their market price will be liable to great +fluctuations, will sometimes fall a good deal below, and sometimes rise +a good deal above, their natural price. In the other species of +industry, the produce of equal quantities of labour being always the +same, or very nearly the same, it can be more exactly suited to the +effectual demand. While that demand continues the same, therefore, the +market price of the commodities is likely to do so too, and to be either +altogether, or as nearly as can be judged of, the same with the natural +price. That the price of linen and woollen cloth is liable neither to +such frequent, nor to such great variations, as the price of corn, every +man's experience will inform him. The price of the one species of +commodities varies only with the variations in the demand; that of the +other varies not only with the variations in the demand, but with the +much greater, and more frequent, variations in the quantity of what is +brought to market, in order to supply that demand. + +The occasional and temporary fluctuations in the market price of any +commodity fall chiefly upon those parts of its price which resolve +themselves into wages and profit. That part which resolves itself into +rent is less affected by them. A rent certain in money is not in the +least affected by them, either in its rate or in its value. A rent +which consists either in a certain proportion, or in a certain quantity, +of the rude produce, is no doubt affected in its yearly value by all the +occasional and temporary fluctuations in the market price of that rude +produce; but it is seldom affected by them in its yearly rate. In +settling the terms of the lease, the landlord and farmer endeavour, +according to their best judgment, to adjust that rate, not to the +temporary and occasional, but to the average and ordinary price of the +produce. + +Such fluctuations affect both the value and the rate, either of wages or +of profit, according as the market happens to be either overstocked or +understocked with commodities or with labour, with work done, or with +work to be done. A public mourning raises the price of black cloth (with +which the market is almost always understocked upon such occasions), and +augments the profits of the merchants who possess any considerable +quantity of it. It has no effect upon the wages of the weavers. The +market is understocked with commodities, not with labour, with work +done, not with work to be done. It raises the wages of journeymen +tailors. The market is here understocked with labour. There is an +effectual demand for more labour, for more work to be done, than can be +had. It sinks the price of coloured silks and cloths, and thereby +reduces the profits of the merchants who have any considerable quantity +of them upon hand. It sinks, too, the wages of the workmen employed in +preparing such commodities, for which all demand is stopped for six +months, perhaps for a twelvemonth. The market is here overstocked both +with commodities and with labour. + +But though the market price of every particular commodity is in this +manner continually gravitating, if one may say so, towards the natural +price; yet sometimes particular accidents, sometimes natural causes, and +sometimes particular regulations of police, may, in many commodities, +keep up the market price, for a long time together, a good deal above +the natural price. + +When, by an increase in the effectual demand, the market price of some +particular commodity happens to rise a good deal above the natural +price, those who employ their stocks in supplying that market, are +generally careful to conceal this change. If it was commonly known, +their great profit would tempt so many new rivals to employ their stocks +in the same way, that, the effectual demand being fully supplied, the +market price would soon be reduced to the natural price, and, perhaps, +for some time even below it. If the market is at a great distance from +the residence of those who supply it, they may sometimes be able to keep +the secret for several years together, and may so long enjoy their +extraordinary profits without any new rivals. Secrets of this kind, +however, it must be acknowledged, can seldom be long kept; and the +extraordinary profit can last very little longer than they are kept. + +Secrets in manufactures are capable of being longer kept than secrets in +trade. A dyer who has found the means of producing a particular colour +with materials which cost only half the price of those commonly made use +of, may, with good management, enjoy the advantage of his discovery as +long as he lives, and even leave it as a legacy to his posterity. His +extraordinary gains arise from the high price which is paid for his +private labour. They properly consist in the high wages of that labour. +But as they are repeated upon every part of his stock, and as their +whole amount bears, upon that account, a regular proportion to it, they +are commonly considered as extraordinary profits of stock. + +Such enhancements of the market price are evidently the effects of +particular accidents, of which, however, the operation may sometimes +last for many years together. + +Some natural productions require such a singularity of soil and +situation, that all the land in a great country, which is fit for +producing them, may not be sufficient to supply the effectual demand. +The whole quantity brought to market, therefore, may be disposed of to +those who are willing to give more than what is sufficient to pay the +rent of the land which produced them, together with the wages of the +labour and the profits of the stock which were employed in preparing and +bringing them to market, according to their natural rates. Such +commodities may continue for whole centuries together to be sold at this +high price; and that part of it which resolves itself into the rent of +land, is in this case the part which is generally paid above its natural +rate. The rent of the land which affords such singular and esteemed +productions, like the rent of some vineyards in France of a peculiarly +happy soil and situation, bears no regular proportion to the rent of +other equally fertile and equally well cultivated land in its +neighbourhood. The wages of the labour, and the profits of the stock +employed in bringing such commodities to market, on the contrary, are +seldom out of their natural proportion to those of the other employments +of labour and stock in their neighbourhood. + +Such enhancements of the market price are evidently the effect of +natural causes, which may hinder the effectual demand from ever being +fully supplied, and which may continue, therefore, to operate for ever. + +A monopoly granted either to an individual or to a trading company, has +the same effect as a secret in trade or manufactures. The monopolists, +by keeping the market constantly understocked by never fully supplying +the effectual demand, sell their commodities much above the natural +price, and raise their emoluments, whether they consist in wages or +profit, greatly above their natural rate. + +The price of monopoly is upon every occasion the highest which can be +got. The natural price, or the price of free competition, on the +contrary, is the lowest which can be taken, not upon every occasion +indeed, but for any considerable time together. The one is upon every +occasion the highest which can be squeezed out of the buyers, or which +it is supposed they will consent to give; the other is the lowest which +the sellers can commonly afford to take, and at the same time continue +their business. + +The exclusive privileges of corporations, statutes of apprenticeship, +and all those laws which restrain in particular employments, the +competition to a smaller number than might otherwise go into them, have +the same tendency, though in a less degree. They are a sort of enlarged +monopolies, and may frequently, for ages together, and in whole classes +of employments, keep up the market price of particular commodities above +the natural price, and maintain both wages of the labour and the profits +of the stock employed about them somewhat above their natural rate. + +Such enhancements of the market price may last as long as the +regulations of police which give occasion to them. + +The market price of any particular commodity, though it may continue +long above, can seldom continue long below, its natural price. Whatever +part of it was paid below the natural rate, the persons whose interest +is affected would immediately feel the loss, and would immediately +withdraw either so much land or so much labour, or so much stock, from +being employed about it, that the quantity brought to market would soon +be no more than sufficient to supply the effectual demand. Its market +price, therefore, would soon rise to the natural price; this at least +would be the case where there was perfect liberty. + +The same statutes of apprenticeship and other corporation laws, indeed, +which, when a manufacture is in prosperity, enable the workman to raise +his wages a good deal above their natural rate, sometimes oblige him, +when it decays, to let them down a good deal below it. As in the one +case they exclude many people from his employment, so in the other they +exclude him from many employments. The effect of such regulations, +however, is not near so durable in sinking the workman's wages below, as +in raising them above their natural rate. Their operation in the one way +may endure for many centuries, but in the other it can last no longer +than the lives of some of the workmen who were bred to the business in +the time of prosperity. When they are gone, the number of those who are +afterwards educated to the trade will naturally suit itself to the +effectual demand. The police must be as violent as that of Indostan or +ancient Egypt (where every man was bound by a principle of religion to +follow the occupation of his father, and was supposed to commit the most +horrid sacrilege if he changed it for another), which can in any +particular employment, and for several generations together, sink either +the wages of labour or the profits of stock below their natural rate. + +This is all that I think necessary to be observed at present concerning +the deviations, whether occasional or permanent, of the market price of +commodities from the natural price. + +The natural price itself varies with the natural rate of each of its +component parts, or wages, profit, and rent; and in every society this +rate varies according to their circumstances, according to their riches +and poverty, their advancing, stationary, or declining condition. I +shall, in the four following chapters, endeavour to explain, as fully +and distinctly as I can, the causes of those different variations. + +First, I shall endeavour to explain what are the circumstances which +naturally determine the rate of wages, and in what manner those +circumstances are affected by the riches or poverty, by the advancing, +stationary, or declining state of the society. + +Secondly, I shall endeavour to shew what are the circumstances which +naturally determine the rate of profit; and in what manner, too, those +circumstances are affected by the like variations in the state of the +society. + +Though pecuniary wages and profit are very different in the different +employments of labour and stock; yet a certain proportion seems commonly +to take place between both the pecuniary wages in all the different +employments of labour, and the pecuniary profits in all the different +employments of stock. This proportion, it will appear hereafter, depends +partly upon the nature of the different employments, and partly upon the +different laws and policy of the society in which they are carried on. +But though in many respects dependent upon the laws and policy, this +proportion seems to be little affected by the riches or poverty of that +society, by its advancing, stationary, or declining condition, but to +remain the same, or very nearly the same, in all those different states. +I shall, in the third place, endeavour to explain all the different +circumstances which regulate this proportion. + +In the fourth and last place, I shall endeavour to shew what are the +circumstances which regulate the rent of land, and which either raise or +lower the price of all the different substances which it produces. + + + + +CHAP. VIII. + +OF THE WAGES OF LABOUR. + + +The produce of labour constitutes the natural recompence or wages of +labour. + +In that original state of things which precedes both the appropriation +of land and the accumulation of stock, the whole produce of labour +belongs to the labourer. He has neither landlord nor master to share +with him. + +Had this state continued, the wages of labour would have augmented with +all those improvements in its productive powers, to which the division +of labour gives occasion. All things would gradually have become +cheaper. They would have been produced by a smaller quantity of labour; +and as the commodities produced by equal quantities of labour would +naturally in this state of things be exchanged for one another, they +would have been purchased likewise with the produce of a smaller +quantity. + +But though all things would have become cheaper in reality, in +appearance many things might have become dearer, than before, or have +been exchanged for a greater quantity of other goods. Let us suppose, +for example, that in the greater part of employments the productive +powers of labour had been improved to tenfold, or that a day's labour +could produce ten times the quantity of work which it had done +originally; but that in a particular employment they had been improved +only to double, or that a day's labour could produce only twice the +quantity of work which it had done before. In exchanging the produce of +a day's labour in the greater part of employments for that of a day's +labour in this particular one, ten times the original quantity of work +in them would purchase only twice the original quantity of it. Any +particular quantity in it, therefore, a pound weight, for example, would +appear to be five times dearer than before. In reality, however, it +would be twice as cheap. Though it required five times the quantity of +other goods to purchase it, it would require only half the quantity of +labour either to purchase or to produce it. The acquisition, therefore, +would be twice as easy as before. + +But this original state of things, in which the labourer enjoyed the +whole produce of his own labour, could not last beyond the first +introduction of the appropriation of land and the accumulation of stock. +It was at an end, therefore, long before the most considerable +improvements were made in the productive powers of labour; and it would +be to no purpose to trace further what might have been its effects upon +the recompence or wages of labour. + +As soon as land becomes private property, the landlord demands a share +of almost all the produce which the labourer can either raise or collect +from it. His rent makes the first deduction from the produce of the +labour which is employed upon land. + +It seldom happens that the person who tills the ground has wherewithal +to maintain himself till he reaps the harvest. His maintenance is +generally advanced to him from the stock of a master, the farmer who +employs him, and who would have no interest to employ him, unless he was +to share in the produce of his labour, or unless his stock was to be +replaced to him with a profit. This profit makes a second deduction from +the produce of the labour which is employed upon land. + +The produce of almost all other labour is liable to the like deduction +of profit. In all arts and manufactures, the greater part of the workmen +stand in need of a master, to advance them the materials of their work, +and their wages and maintenance, till it be completed. He shares in the +produce of their labour, or in the value which it adds to the materials +upon which it is bestowed; and in this share consists his profit. + +It sometimes happens, indeed, that a single independent workman has +stock sufficient both to purchase the materials of his work, and to +maintain himself till it be completed. He is both master and workman, +and enjoys the whole produce of his own labour, or the whole value which +it adds to the materials upon which it is bestowed. It includes what are +usually two distinct revenues, belonging to two distinct persons, the +profits of stock, and the wages of labour. + +Such cases, however, are not very frequent; and in every part of Europe +twenty workmen serve under a master for one that is independent, and the +wages of labour are everywhere understood to be, what they usually are, +when the labourer is one person, and the owner of the stock which +employs him another. + +What are the common wages of labour, depends everywhere upon the +contract usually made between those two parties, whose interests are by +no means the same. The workmen desire to get as much, the masters to +give as little, as possible. The former are disposed to combine in order +to raise, the latter in order to lower, the wages of labour. + +It is not, however, difficult to foresee which of the two parties must, +upon all ordinary occasions, have the advantage in the dispute, and +force the other into a compliance with their terms. The masters, being +fewer in number, can combine much more easily: and the law, besides, +authorises, or at least does not prohibit, their combinations, while it +prohibits those of the workmen. We have no acts of parliament against +combining to lower the price of work, but many against combining to +raise it. In all such disputes, the masters can hold out much longer. A +landlord, a farmer, a master manufacturer, or merchant, though they did +not employ a single workman, could generally live a year or two upon the +stocks, which they have already acquired. Many workmen could not subsist +a week, few could subsist a month, and scarce any a year, without +employment. In the long run, the workman may be as necessary to his +master as his master is to him; but the necessity is not so immediate. + +We rarely hear, it has been said, of the combinations of masters, though +frequently of those of workmen. But whoever imagines, upon this account, +that masters rarely combine, is as ignorant of the world as of the +subject. Masters are always and everywhere in a sort of tacit, but +constant and uniform, combination, not to raise the wages of labour +above their actual rate. To violate this combination is everywhere a +most unpopular action, and a sort of reproach to a master among his +neighbors and equals. We seldom, indeed, hear of this combination, +because it is the usual, and, one may say, the natural state of things, +which nobody ever hears of. Masters, too, sometimes enter into +particular combinations to sink the wages of labour even below this +rate. These are always conducted with the utmost silence and secrecy +till the moment of execution; and when the workmen yield, as they +sometimes do without resistance, though severely felt by them, they are +never heard of by other people. Such combinations, however, are +frequently resisted by a contrary defensive combination of the workmen, +who sometimes, too, without any provocation of this kind, combine, of +their own accord, to raise the price of their labour. Their usual +pretences are, sometimes the high price of provisions, sometimes the +great profit which their masters make by their work. But whether their +combinations be offensive or defensive, they are always abundantly heard +of. In order to bring the point to a speedy decision, they have always +recourse to the loudest clamour, and sometimes to the most shocking +violence and outrage. They are desperate, and act with the folly and +extravagance of desperate men, who must either starve, or frighten their +masters into an immediate compliance with their demands. The masters, +upon these occasions, are just as clamorous upon the other side, and +never cease to call aloud for the assistance of the civil magistrate, +and the rigorous execution of those laws which have been enacted with so +much severity against the combination of servants, labourers, and +journeymen. The workmen, accordingly, very seldom derive any advantage +from the violence of those tumultuous combinations, which, partly from +the interposition of the civil magistrate, partly from the superior +steadiness of the masters, partly from the necessity which the greater +part of the workmen are under of submitting for the sake of present +subsistence, generally end in nothing but the punishment or ruin of the +ringleaders. + +But though, in disputes with their workmen, masters must generally have +the advantage, there is, however, a certain rate, below which it seems +impossible to reduce, for any considerable time, the ordinary wages even +of the lowest species of labour. + +A man must always live by his work, and his wages must at least be +sufficient to maintain him. They must even upon most occasions be +somewhat more, otherwise it would be impossible for him to bring up a +family, and the race of such workmen could not last beyond the first +generation. Mr. Cantillon seems, upon this account, to suppose that the +lowest species of common labourers must everywhere earn at least double +their own maintenance, in order that, one with another, they may be +enabled to bring up two children; the labour of the wife, on account of +her necessary attendance on the children, being supposed no more than +sufficient to provide for herself. But one half the children born, it is +computed, die before the age of manhood. The poorest labourers, +therefore, according to this account, must, one with another, attempt to +rear at least four children, in order that two may have an equal chance +of living to that age. But the necessary maintenance of four children, +it is supposed, may be nearly equal to that of one man. The labour of an +able-bodied slave, the same author adds, is computed to be worth double +his maintenance; and that of the meanest labourer, he thinks, cannot be +worth less than that of an able-bodied slave. Thus far at least seems +certain, that, in order to bring up a family, the labour of the husband +and wife together must, even in the lowest species of common labour, be +able to earn something more than what in precisely necessary for their +own maintenance; but in what proportion, whether in that +above-mentioned, or in any other, I shall not take upon me to determine. + +There are certain circumstances, however, which sometimes give the +labourers an advantage, and enable them to raise their wages +considerably above this rate, evidently the lowest which is consistent +with common humanity. + +When in any country the demand for those who live by wages, labourers, +journeymen, servants of every kind, is continually increasing; when +every year furnishes employment for a greater number than had been +employed the year before, the workmen have no occasion to combine in +order to raise their wages. The scarcity of hands occasions a +competition among masters, who bid against one another in order to get +workmen, and thus voluntarily break through the natural combination of +master not to raise wages. + +The demand for those who live by wages, it is evident, cannot increase +but in proportion to the increase of the funds which are destined to +the payment of wages. These funds are of two kinds; first, the revenue +which is over and above what is necessary for the maintenance; and, +secondly, the stock which is over and above what is necessary for the +employment of their masters. + +When the landlord, annuitant, or monied man, has a greater revenue than +what he judges sufficient to maintain his own family, he employs either +the whole or a part of the surplus in maintaining one or more menial +servants. Increase this surplus, and he will naturally increase the +number of those servants. + +When an independent workman, such as a weaver or shoemaker, has got more +stock than what is sufficient to purchase the materials of his own work, +and to maintain himself till he can dispose of it, he naturally employs +one or more journeymen with the surplus, in order to make a profit by +their work. Increase this surplus, and he will naturally increase the +number of his journeymen. + +The demand for those who live by wages, therefore, necessarily increases +with the increase of the revenue and stock of every country, and cannot +possibly increase without it. The increase of revenue and stock is the +increase of national wealth. The demand for those who live by wages, +therefore, naturally increases with the increase of national wealth, and +cannot possibly increase without it. + +It is not the actual greatness of national wealth, but its continual +increase, which occasions a rise in the wages of labour. It is not, +accordingly, in the richest countries, in the most thriving, or in those +which are growing rich the fastest, that the wages of labour are +highest. England is certainly, in the present times, a much richer +country than any part of North America. The wages of labour, however, +are much higher in North America than in any part of England. In the +province of New York, common labourers earn[8] three shillings and +sixpence currency, equal to two shillings sterling, a-day; +ship-carpenters, ten shillings and sixpence currency, with a pint of +rum, worth sixpence sterling, equal in all to six shillings and sixpence +sterling; house-carpenters and bricklayers, eight shillings currency, +equal to four shillings and sixpence sterling; journeymen tailors, five +shillings currency, equal to about two shillings and tenpence sterling. +These prices are all above the London price; and wages are said to be as +high in the other colonies as in New York. The price of provisions is +everywhere in North America much lower than in England. A dearth has +never been known there. In the worst seasons they have always had a +sufficiency for themselves, though less for exportation. If the money +price of labour, therefore, be higher than it is anywhere in the +mother-country, its real price, the real command of the necessaries and +conveniencies of life which it conveys to the labourer, must be higher +in a still greater proportion. + +But though North America is not yet so rich as England, it is much more +thriving, and advancing with much greater rapidity to the further +acquisition of riches. The most decisive mark of the prosperity of any +country is the increase of the number of its inhabitants. In Great +Britain, and most other European countries, they are not supposed to +double in less than five hundred years. In the British colonies in North +America, it has been found that they double in twenty or five-and-twenty +years. Nor in the present times is this increase principally owing to +the continual importation of new inhabitants, but to the great +multiplication of the species. Those who live to old age, it is said, +frequently see there from fifty to a hundred, and sometimes many more, +descendants from their own body. Labour is there so well rewarded, that +a numerous family of children, instead of being a burden, is a source of +opulence and prosperity to the parents. The labour of each child, before +it can leave their house, is computed to be worth a hundred pounds clear +gain to them. A young widow with four or five young children, who, among +the middling or inferior ranks of people in Europe, would have so little +chance for a second husband, is there frequently courted as a sort of +fortune. The value of children is the greatest of all encouragements to +marriage. We cannot, therefore, wonder that the people in North America +should generally marry very young. Notwithstanding the great increase +occasioned by such early marriages, there is a continual complaint of +the scarcity of hands in North America. The demand for labourers, the +funds destined for maintaining them increase, it seems, still faster +than they can find labourers to employ. + +Though the wealth of a country should be very great, yet if it has been +long stationary, we must not expect to find the wages of labour very +high in it. The funds destined for the payment of wages, the revenue and +stock of its inhabitants, may be of the greatest extent; but if they +have continued for several centuries of the same, or very nearly of the +same extent, the number of labourers employed every year could easily +supply, and even more than supply, the number wanted the following year. +There could seldom be any scarcity of hands, nor could the masters be +obliged to bid against one another in order to get them. The hands, on +the contrary, would, in this case, naturally multiply beyond their +employment. There would be a constant scarcity of employment, and the +labourers would be obliged to bid against one another in order to get +it. If in such a country the wages of labour had ever been more than +sufficient to maintain the labourer, and to enable him to bring up a +family, the competition of the labourers and the interest of the masters +would soon reduce them to the lowest rate which is consistent with +common humanity. China has been long one of the richest, that is, one of +the most fertile, best cultivated, most industrious, and most populous, +countries in the world. It seems, however, to have been long stationary. +Marco Polo, who visited it more than five hundred years ago, describes +its cultivation, industry, and populousness, almost in the same terms in +which they are described by travellers in the present times. It had, +perhaps, even long before his time, acquired that full complement of +riches which the nature of its laws and institutions permits it to +acquire. The accounts of all travellers, inconsistent in many other +respects, agree in the low wages of labour, and in the difficulty which +a labourer finds in bringing up a family in China. If by digging the +ground a whole day he can get what will purchase a small quantity of +rice in the evening, he is contented. The condition of artificers is, if +possible, still worse. Instead of waiting indolently in their +work-houses for the calls of their customers, as in Europe, they are +continually running about the streets with the tools of their respective +trades, offering their services, and, as it were, begging employment. +The poverty of the lower ranks of people in China far surpasses that of +the most beggarly nations in Europe. In the neighborhood of Canton, many +hundred, it is commonly said, many thousand families have no habitation +on the land, but live constantly in little fishing-boats upon the rivers +and canals. The subsistence which they find there is so scanty, that +they are eager to fish up the nastiest garbage thrown overboard from any +European ship. Any carrion, the carcase of a dead dog or cat, for +example, though half putrid and stinking, is as welcome to them as the +most wholesome food to the people of other countries. Marriage is +encouraged in China, not by the profitableness of children, but by the +liberty of destroying them. In all great towns, several are every night +exposed in the street, or drowned like puppies in the water. The +performance of this horrid office is even said to be the avowed business +by which some people earn their subsistence. + +China, however, though it may, perhaps, stand still, does not seem to go +backwards. Its towns are nowhere deserted by their inhabitants. The +lands which had once been cultivated, are nowhere neglected. The same, +or very nearly the same, annual labour, must, therefore, continue to be +performed, and the funds destined for maintaining it must not, +consequently, be sensibly diminished. The lowest class of labourers, +therefore, notwithstanding their scanty subsistence, must some way or +other make shift to continue their race so far as to keep up their usual +numbers. + +But it would be otherwise in a country where the funds destined for the +maintenance of labour were sensibly decaying. Every year the demand for +servants and labourers would, in all the different classes of +employments, be less than it had been the year before. Many who had been +bred in the superior classes, not being able to find employment in their +own business, would be glad to seek it in the lowest. The lowest class +being not only overstocked with its own workmen, but with the +overflowings of all the other classes, the competition for employment +would be so great in it, as to reduce the wages of labour to the most +miserable and scanty subsistence of the labourer. Many would not be able +to find employment even upon these hard terms, but would either starve, +or be driven to seek a subsistence, either by begging, or by the +perpetration, perhaps, of the greatest enormities. Want, famine, and +mortality, would immediately prevail in that class, and from thence +extend themselves to all the superior classes, till the number of +inhabitants in the country was reduced to what could easily be +maintained by the revenue and stock which remained in it, and which had +escaped either the tyranny or calamity which had destroyed the rest. +This, perhaps, is nearly the present state of Bengal, and of some other +of the English settlements in the East Indies. In a fertile country, +which had before been much depopulated, where subsistence, consequently, +should not be very difficult, and where, notwithstanding, three or four +hundred thousand people die of hunger in one year, we may be assured +that the funds destined for the maintenance of the labouring poor are +fast decaying. The difference between the genius of the British +constitution, which protects and governs North America, and that of the +mercantile company which oppresses and domineers in the East Indies, +cannot, perhaps, be better illustrated than by the different state of +those countries. + +The liberal reward of labour, therefore, as it is the necessary effect, +so it is the natural symptom of increasing national wealth. The scanty +maintenance of the labouring poor, on the other hand, is the natural +symptom that things are at a stand, and their starving condition, that +they are going fast backwards. + +In Great Britain, the wages of labour seem, in the present times, to be +evidently more than what is precisely necessary to enable the labourer +to bring up a family. In order to satisfy ourselves upon this point, it +will not be necessary to enter into any tedious or doubtful calculation +of what may be the lowest sum upon which it is possible to do this. +There are many plain symptoms, that the wages of labour are nowhere in +this country regulated by this lowest rate, which is consistent with +common humanity. + +First, in almost every part of Great Britain there is a distinction, +even in the lowest species of labour, between summer and winter wages. +Summer wages are always highest. But, on account of the extraordinary +expense of fuel, the maintenance of a family is most expensive in +winter. Wages, therefore, being highest when this expense is lowest, it +seems evident that they are not regulated by what is necessary for this +expense, but by the quantity and supposed value of the work. A labourer, +it may be said, indeed, ought to save part of his summer wages, in order +to defray his winter expense; and that, through the whole year, they do +not exceed what is necessary to maintain his family through the whole +year. A slave, however, or one absolutely dependent on us for immediate +subsistence, would not be treated in this manner. His daily subsistence +would be proportioned to his daily necessities. + +Secondly, the wages of labour do not, in Great Britain, fluctuate with +the price of provisions. These vary everywhere from year to year, +frequently from month to month. But in many places, the money price of +labour remains uniformly the same, sometimes for half a century +together. If, in these places, therefore, the labouring poor can +maintain their families in dear years, they must be at their ease in +times of moderate plenty, and in affluence in those of extraordinary +cheapness. The high price of provisions during these ten years past, has +not, in many parts of the kingdom, been accompanied with any sensible +rise in the money price of labour. It has, indeed, in some; owing, +probably, more to the increase of the demand for labour, than to that of +the price of provisions. + +Thirdly, as the price of provisions varies more from year to year than +the wages of labour, so, on the other hand, the wages of labour vary +more from place to place than the price of provisions. The prices of +bread and butchers' meat are generally the same, or very nearly the +same, through the greater part of the united kingdom. These, and most +other things which are sold by retail, the way in which the labouring +poor buy all things, are generally fully as cheap, or cheaper, in great +towns than in the remoter parts of the country, for reasons which I +shall have occasion to explain hereafter. But the wages of labour in a +great town and its neighbourhood, are frequently a fourth or a fifth +part, twenty or five-and-twenty per cent. higher than at a few miles +distance. Eighteen pence a day may be reckoned the common price of +labour in London and its neighborhood. At a few miles distance, it falls +to fourteen and fifteen pence. Tenpence may be reckoned its price in +Edinburgh and its neighbourhood. At a few miles distance, it falls to +eightpence, the usual price of common labour through the greater part of +the low country of Scotland, where it varies a good deal less than in +England. Such a difference of prices, which, it seems, is not always +sufficient to transport a man from one parish to another, would +necessarily occasion so great a transportation of the most bulky +commodities, not only from one parish to another, but from one end of +the kingdom, almost from one end of the world to the other, as would +soon reduce them more nearly to a level. After all that has been said of +the levity and inconstancy of human nature, it appears evidently from +experience, that man is, of all sorts of luggage, the most difficult to +be transported. If the labouring poor, therefore, can maintain their +families in those parts of the kingdom where the price of labour is +lowest, they must be in affluence where it is highest. + +Fourthly, the variations in the price of labour not only do not +correspond, either in place or time, with those in the price of +provisions, but they are frequently quite opposite. + +Grain, the food of the common people, is dearer in Scotland than in +England, whence Scotland receives almost every year very large supplies. +But English corn must be sold dearer in Scotland, the country to which +it is brought, than in England, the country from which it comes; and it +proportion to its quality it cannot be sold dearer in Scotland than the +Scotch corn that comes to the same market in competition with it. The +quality of grain depends chiefly upon the quantity of flour or meal +which it yields at the mill; and, in this respect, English grain is so +much superior to the Scotch, that though often dearer in appearance, or +in proportion to the measure of its bulk, it is generally cheaper in +reality, or in proportion to its quality, or even to the measure of its +weight. The price of labour, on the contrary, is dearer in England than +in Scotland. If the labouring poor, therefore, can maintain their +families in the one part of the united kingdom, they must be in +affluence in the other. Oatmeal, indeed, supplies the common people in +Scotland with the greatest and the best part of their food, which is, in +general, much inferior to that of their neighbours of the same rank in +England. This difference, however, in the mode of their subsistence, is +not the cause, but the effect, of the difference in their wages; though, +by a strange misapprehension, I have frequently heard it represented as +the cause. It is not because one man keeps a coach, while his neighbour +walks a-foot, that one is rich, and the other poor; but because the one +is rich, he keeps a coach, and because the other is poor, he walks +a-foot. + +During the course of the last century, taking one year with another, +grain was dearer in both parts of the united kingdom than during that of +the present. This is a matter of fact which cannot now admit of any +reasonable doubt; and the proof of it is, if possible, still more +decisive with regard to Scotland than with regard to England. It is in +Scotland supported by the evidence of the public fiars, annual +valuations made upon oath, according to the actual state of the markets, +of all the different sorts of grain in every different county of +Scotland. If such direct proof could require any collateral evidence to +confirm it, I would observe, that this has likewise been the case in +France, and probably in most other parts of Europe. With regard to +France, there is the clearest proof. But though it is certain, that in +both parts of the united kingdom grain was somewhat dearer in the last +century than in the present, it is equally certain that labour was much +cheaper. If the labouring poor, therefore, could bring up their families +then, they must be much more at their ease now. In the last century, the +most usual day-wages of common labour through the greater part of +Scotland were sixpence in summer, and fivepence in winter. Three +shillings a-week, the same price, very nearly still continues to be paid +in some parts of the Highlands and Western islands. Through the greater +part of the Low country, the most usual wages of common labour are now +eightpence a-day; tenpence, sometimes a shilling, about Edinburgh, in +the counties which border upon England, probably on account of that +neighbourhood, and in a few other places where there has lately been a +considerable rise in the demand for labour, about Glasgow, Carron, +Ayrshire, &c. In England, the improvements of agriculture, manufactures, +and commerce, began much earlier than in Scotland. The demand for +labour, and consequently its price, must necessarily have increased with +those improvements. In the last century, accordingly, as well as in the +present, the wages of labour were higher in England than in Scotland. +They have risen, too, considerably since that time, though, on account +of the greater variety of wages paid there in different places, it is +more difficult to ascertain how much. In 1614, the pay of a foot soldier +was the same as in the present times, eightpence a-day. When it was +first established, it would naturally be regulated by the usual wages of +common labourers, the rank of people from which foot soldiers are +commonly drawn. Lord-chief-justice Hales, who wrote in the time of +Charles II. computes the necessary expense of a labourer's family, +consisting of six persons, the father and mother, two children able to +do something, and two not able, at ten shillings a-week, or twenty-six +pounds a-year. If they cannot earn this by their labour, they must make +it up, he supposes, either by begging or stealing. He appears to have +enquired very carefully into this subject[9]. In 1688, Mr Gregory King, +whose skill in political arithmetic is so much extolled by Dr Davenant, +computed the ordinary income of labourers and out-servants to be fifteen +pounds a-year to a family, which he supposed to consist, one with +another, of three and a half persons. His calculation, therefore, though +different in appearance, corresponds very nearly at bottom with that of +Judge Hales. Both suppose the weekly expense of such families to be +about twenty-pence a-head. Both the pecuniary income and expense of such +families have increased considerably since that time through the greater +part of the kingdom, in some places more, and in some less, though +perhaps scarce anywhere so much as some exaggerated accounts of the +present wages of labour have lately represented them to the public. The +price of labour, it must be observed, cannot be ascertained very +accurately anywhere, different prices being often paid at the same place +and for the same sort of labour, not only according to the different +abilities of the workman, but according to the easiness or hardness of +the masters. Where wages are not regulated by law, all that we can +pretend to determine is, what are the most usual; and experience seems +to shew that law can never regulate them properly, though it has often +pretended to do so. + +The real recompence of labour, the real quantity of the necessaries and +conveniencies of life which it can procure to the labourer, has, during +the course of the present century, increased perhaps in a still greater +proportion than its money price. Not only grain has become somewhat +cheaper, but many other things, from which the industrious poor derive +an agreeable and wholesome variety of food, have become a great deal +cheaper. Potatoes, for example, do not at present, through the greater +part of the kingdom, cost half the price which they used to do thirty or +forty years ago. The same thing may be said of turnips, carrots, +cabbages; things which were formerly never raised but by the spade, but +which are now commonly raised by the plough. All sort of garden stuff, +too, has become cheaper. The greater part of the apples, and even of the +onions, consumed in Great Britain, were, in the last century, imported +from Flanders. The great improvements in the coarser manufactories of +both linen and woollen cloth furnish the labourers with cheaper and +better clothing; and those in the manufactories of the coarser metals, +with cheaper and better instruments of trade, as well as with many +agreeable and convenient pieces of household furniture. Soap, salt, +candles, leather, and fermented liquors, have, indeed, become a good +deal dearer, chiefly from the taxes which have been laid upon them. The +quantity of these, however, which the labouring poor are under any +necessity of consuming, is so very small, that the increase in their +price does not compensate the diminution in that of so many other +things. The common complaint, that luxury extends itself even to the +lowest ranks of the people, and that the labouring poor will not now be +contented with the same food, clothing, and lodging, which satisfied +them in former times, may convince us that it is not the money price of +labour only, but its real recompence, which has augmented. + +Is this improvement in the circumstances of the lower ranks of the +people to be regarded as an advantage, or as an inconveniency, to the +society? The answer seems at first abundantly plain. Servants, +labourers, and workmen of different kinds, make up the far greater part +of every great political society. But what improves the circumstances of +the greater part, can never be regarded as any inconveniency to the +whole. No society can surely be flourishing and happy, of which the far +greater part of the members are poor and miserable. It is but equity, +besides, that they who feed, clothe, and lodge the whole body of the +people, should have such a share of the produce of their own labour as +to be themselves tolerably well fed, clothed, and lodged. + +Poverty, though it no doubt discourages, does not always prevent, +marriage. It seems even to be favourable to generation. A half-starved +Highland woman frequently bears more than twenty children, while a +pampered fine lady is often incapable of bearing any, and is generally +exhausted by two or three. Barrenness, so frequent among women of +fashion, is very rare among those of inferior station. Luxury, in the +fair sex, while it inflames, perhaps, the passion for enjoyment, seems +always to weaken, and frequently to destroy altogether, the powers of +generation. + +But poverty, though it does not prevent the generation, is extremely +unfavourable to the rearing of children. The tender plant is produced; +but in so cold a soil, and so severe a climate, soon withers and dies. +It is not uncommon, I have been frequently told, in the Highlands of +Scotland, for a mother who has born twenty children not to have two +alive. Several officers of great experience have assured me, that, so +far from recruiting their regiment, they have never been able to supply +it with drums and fifes, from all the soldiers' children that were born +in it. A greater number of fine children, however, is seldom seen +anywhere than about a barrack of soldiers. Very few of them, it seems, +arrive at the age of thirteen or fourteen. In some places, one half the +children die before they are four years of age, in many places before +they are seven, and in almost all places before they are nine or ten. +This great mortality, however will everywhere be found chiefly among the +children of the common people, who cannot afford to tend them with the +same care as those of better station. Though their marriages are +generally more fruitful than those of people of fashion, a smaller +proportion of their children arrive at maturity. In foundling hospitals, +and among the children brought up by parish charities, the mortality is +still greater than among those of the common people. + +Every species of animals naturally multiplies in proportion to the means +of their subsistence, and no species can ever multiply beyond it. But in +civilized society, it is only among the inferior ranks of people that +the scantiness of subsistence can set limits to the further +multiplication of the human species; and it can do so in no other way +than by destroying a great part of the children which their fruitful +marriages produce. + +The liberal reward of labour, by enabling them to provide better for +their children, and consequently to bring up a greater number, naturally +tends to widen and extend those limits. It deserves to be remarked, too, +that it necessarily does this as nearly as possible in the proportion +which the demand for labour requires. If this demand is continually +increasing, the reward of labour must necessarily encourage in such a +manner the marriage and multiplication of labourers, as may enable them +to supply that continually increasing demand by a continually increasing +population. If the reward should at any time be less than what was +requisite for this purpose, the deficiency of hands would soon raise it; +and if it should at any time be more, their excessive multiplication +would soon lower it to this necessary rate. The market would be so much +understocked with labour in the one case, and so much overstocked in the +other, as would soon force back its price to that proper rate which the +circumstances of the society required. It is in this manner that the +demand for men, like that for any other commodity, necessarily regulates +the production of men, quickens it when it goes on too slowly, and stops +it when it advances too fast. It is this demand which regulates and +determines the state of propagation in all the different countries of +the world; in North America, in Europe, and in China; which renders it +rapidly progressive in the first, slow and gradual in the second, and +altogether stationary in the last. + +The wear and tear of a slave, it has been said, is at the expense of his +master; but that of a free servant is at his own expense. The wear and +tear of the latter, however, is, in reality, as much at the expense of +his master as that of the former. The wages paid to journeymen and +servants of every kind must be such as may enable them, one with another +to continue the race of journeymen and servants, according as the +increasing, diminishing, or stationary demand of the society, may +happen to require. But though the wear and tear of a free servant be +equally at the expense of his master, it generally costs him much less +than that of a slave. The fund destined for replacing or repairing, if I +may say so, the wear and tear of the slave, is commonly managed by a +negligent master or careless overseer. That destined for performing the +same office with regard to the freeman is managed by the freeman +himself. The disorders which generally prevail in the economy of the +rich, naturally introduce themselves into the management of the former; +the strict frugality and parsimonious attention of the poor as naturally +establish themselves in that of the latter. Under such different +management, the same purpose must require very different degrees of +expense to execute it. It appears, accordingly, from the experience of +all ages and nations, I believe, that the work done by freemen comes +cheaper in the end than that performed by slaves. It is found to do so +even at Boston, New-York, and Philadelphia, where the wages of common +labour are so very high. + +The liberal reward of labour, therefore, as it is the effect of +increasing wealth, so it is the cause of increasing population. To +complain of it, is to lament over the necessary cause and effect of the +greatest public prosperity. + +It deserves to be remarked, perhaps, that it is in the progressive +state, while the society is advancing to the further acquisition, rather +than when it has acquired its full complement of riches, that the +condition of the labouring poor, of the great body of the people, seems +to be the happiest and the most comfortable. It is hard in the +stationary, and miserable in the declining state. The progressive state +is, in reality, the cheerful and the hearty state to all the different +orders of the society; the stationary is dull; the declining melancholy. + +The liberal reward of labour, as it encourages the propagation, so it +increases the industry of the common people. The wages of labour are the +encouragement of industry, which, like every other human quality, +improves in proportion to the encouragement it receives. A plentiful +subsistence increases the bodily strength of the labourer, and the +comfortable hope of bettering his condition, and of ending his days, +perhaps, in ease and plenty, animates him to exert that strength to the +utmost. Where wages are high, accordingly, we shall always find the +workmen more active, diligent, and expeditious, than where they are low; +in England, for example, than in Scotland; in the neighbourhood of great +towns, than in remote country places. Some workmen, indeed, when they +can earn in four days what will maintain them through the week, will be +idle the other three. This, however, is by no means the case with the +greater part. Workmen, on the contrary, when they are liberally paid by +the piece, are very apt to overwork themselves, and to ruin their health +and constitution in a few years. A carpenter in London, and in some +other places, is not supposed to last in his utmost vigour above eight +years. Something of the same kind happens in many other trades, in which +the workmen are paid by the piece; as they generally are in +manufactures, and even in country labour, wherever wages are higher than +ordinary. Almost every class of artificers is subject to some peculiar +infirmity occasioned by excessive application to their peculiar species +of work. Ramuzzini, an eminent Italian physician, has written a +particular book concerning such diseases. We do not reckon our soldiers +the most industrious set of people among us; yet when soldiers have been +employed in some particular sorts of work, and liberally paid by the +piece, their officers have frequently been obliged to stipulate with the +undertaker, that they should not be allowed to earn above a certain sum +every day, according to the rate at which they were paid. Till this +stipulation was made, mutual emulation, and the desire of greater gain, +frequently prompted them to overwork themselves, and to hurt their +health by excessive labour. Excessive application, during four days of +the week, is frequently the real cause of the idleness of the other +three, so much and so loudly complained of. Great labour, either of mind +or body, continued for several days together is, in most men, naturally +followed by a great desire of relaxation, which, if not restrained by +force, or by some strong necessity, is almost irresistible. It is the +call of nature, which requires to be relieved by some indulgence, +sometimes of ease only, but sometimes too of dissipation and diversion. +If it is not complied with, the consequences are often dangerous and +sometimes fatal, and such as almost always, sooner or later, bring on +the peculiar infirmity of the trade. If masters would always listen to +the dictates of reason and humanity, they have frequently occasion +rather to moderate, than to animate the application of many of their +workmen. It will be found, I believe, in every sort of trade, that the +man who works so moderately, as to be able to work constantly, not only +preserves his health the longest, but, in the course of the year, +executes the greatest quantity of work. + +In cheap years it is pretended, workmen are generally more idle, and in +dear times more industrious than ordinary. A plentiful subsistence, +therefore, it has been concluded, relaxes, and a scanty one quickens +their industry. That a little more plenty than ordinary may render some +workmen idle, cannot be well doubted; but that it should have this +effect upon the greater part, or that men in general should work better +when they are ill fed, than when they are well fed, when they are +disheartened than when they are in good spirits, when they are +frequently sick than when they are generally in good health, seems not +very probable. Years of dearth, it is to be observed, are generally +among the common people years of sickness and mortality, which cannot +fail to diminish the produce of their industry. + +In years of plenty, servants frequently leave their masters, and trust +their subsistence to what they can make by their own industry. But the +same cheapness of provisions, by increasing the fund which is destined +for the maintenance of servants, encourages masters, farmers especially, +to employ a greater number. Farmers, upon such occasions, expect more +profit from their corn by maintaining a few more labouring servants, +than by selling it at a low price in the market. The demand for servants +increases, while the number of those who offer to supply that demand +diminishes. The price of labour, therefore, frequently rises in cheap +years. + +In years of scarcity, the difficulty and uncertainty of subsistence make +all such people eager to return to service. But the high price of +provisions, by diminishing the funds destined for the maintenance of +servants, disposes masters rather to diminish than to increase the +number of those they have. In dear years, too, poor independent workmen +frequently consume the little stock with which they had used to supply +themselves with the materials of their work, and are obliged to become +journeymen for subsistence. More people want employment than easily get +it; many are willing to take it upon lower terms than ordinary; and the +wages of both servants and journeymen frequently sink in dear years. + +Masters of all sorts, therefore, frequently make better bargains with +their servants in dear than in cheap years, and find them more humble +and dependent in the former than in the latter. They naturally, +therefore, commend the former as more favourable to industry. Landlords +and farmers, besides, two of the largest classes of masters, have +another reason for being pleased with dear years. The rents of the one, +and the profits of the other, depend very much upon the price of +provisions. Nothing can be more absurd, however, than to imagine that +men in general should work less when they work for themselves, than when +they work for other people. A poor independent workman will generally be +more industrious than even a journeyman who works by the piece. The one +enjoys the whole produce of his own industry, the other shares it with +his master. The one, in his separate independent state, is less liable +to the temptations of bad company, which, in large manufactories, so +frequently ruin the morals of the other. The superiority of the +independent workman over those servants who are hired by the month or by +the year, and whose wages and maintenance are the same, whether they do +much or do little, is likely to be still greater. Cheap years tend to +increase the proportion of independent workmen to journeymen and +servants of all kinds, and dear years to diminish it. + +A French author of great knowledge and ingenuity, Mr Messance, receiver +of the tallies in the election of St Etienne, endeavours to shew that +the poor do more work in cheap than in dear years, by comparing the +quantity and value of the goods made upon those different occasions in +three different manufactures; one of coarse woollens, carried on at +Elbeuf; one of linen, and another of silk, both which extend through the +whole generality of Rouen. It appears from his account, which is copied +from the registers of the public offices, that the quantity and value of +the goods made in all those three manufactories has generally been +greater in cheap than in dear years, and that it has always been +greatest in the cheapest, and least in the dearest years. All the three +seem to be stationary manufactures, or which, though their produce may +vary somewhat from year to year, are, upon the whole, neither going +backwards nor forwards. + +The manufacture of linen in Scotland, and that of coarse woollens in the +West Riding of Yorkshire, are growing manufactures, of which the produce +is generally, though with some variations, increasing both in quantity +and value. Upon examining, however, the accounts which have been +published of their annual produce, I have not been able to observe that +its variations have had any sensible connection with the dearness or +cheapness of the seasons. In 1740, a year of great scarcity, both +manufactures, indeed, appear to have declined very considerably. But in +1756, another year of great scarcity, the Scotch manufactures made more +than ordinary advances. The Yorkshire manufacture, indeed, declined, and +its produce did not rise to what it had been in 1755, till 1766, after +the repeal of the American stamp act. In that and the following year, it +greatly exceeded what it had ever been before, and it has continued to +advance ever since. + +The produce of all great manufactures for distant sale must necessarily +depend, not so much upon the dearness or cheapness of the seasons in the +countries where they are carried on, as upon the circumstances which +affect the demand in the countries where they are consumed; upon peace +or war, upon the prosperity or declension of other rival manufactures, +and upon the good or bad humour of their principal customers. A great +part of the extraordinary work, besides, which is probably done in cheap +years, never enters the public registers of manufactures. The +men-servants, who leave their masters, become independent labourers. +The women return to their parents, and commonly spin, in order to make +clothes for themselves and their families. Even the independent workmen +do not always work for public sale, but are employed by some of their +neighbours in manufactures for family use. The produce of their labour, +therefore, frequently makes no figure in those public registers, of +which the records are sometimes published with so much parade, and from +which our merchants and manufacturers would often vainly pretend to +announce the prosperity or declension of the greatest empires. + +Though the variations in the price of labour not only do not always +correspond with those in the price of provisions, but are frequently +quite opposite, we must not, upon this account, imagine that the price +of provisions has no influence upon that of labour. The money price of +labour is necessarily regulated by two circumstances; the demand for +labour, and the price of the necessaries and conveniencies of life. The +demand for labour, according as it happens to be increasing, stationary, +or declining, or to require an increasing, stationary, or declining +population, determines the quantities of the necessaries and +conveniencies of life which must be given to the labourer; and the money +price of labour is determined by what is requisite for purchasing this +quantity. Though the money price of labour, therefore, is sometimes high +where the price of provisions is low, it would be still higher, the +demand continuing the same, if the price of provisions was high. + +It is because the demand for labour increases in years of sudden and +extraordinary plenty, and diminishes in those of sudden and +extraordinary scarcity, that the money price of labour sometimes rises +in the one, and sinks in the other. + +In a year of sudden and extraordinary plenty, there are funds in the +hands of many of the employers of industry, sufficient to maintain and +employ a greater number of industrious people than had been employed the +year before; and this extraordinary number cannot always be had. Those +masters, therefore, who want more workmen, bid against one another, in +order to get them, which sometimes raises both the real and the money +price of their labour. + +The contrary of this happens in a year of sudden and extraordinary +scarcity. The funds destined for employing industry are less than they +had been the year before. A considerable number of people are thrown out +of employment, who bid one against another, in order to get it, which +sometimes lowers both the real and the money price of labour. In 1740, a +year of extraordinary scarcity, many people were willing to work for +bare subsistence. In the succeeding years of plenty, it was more +difficult to get labourers and servants. + +The scarcity of a dear year, by diminishing the demand for labour, tends +to lower its price, as the high price of provisions tends to raise it. +The plenty of a cheap year, on the contrary, by increasing the demand, +tends to raise the price of labour, as the cheapness of provisions tends +to lower it. In the ordinary variations of the prices of provisions, +those two opposite causes seem to counterbalance one another, which is +probably, in part, the reason why the wages of labour are everywhere so +much more steady and permanent than the price of provisions. + +The increase in the wages of labour necessarily increases the price of +many commodities, by increasing that part of it which resolves itself +into wages, and so far tends to diminish their consumption, both at home +and abroad. The same cause, however, which raises the wages of labour, +the increase of stock, tends to increase its productive powers, and to +make a smaller quantity of labour produce a greater quantity of work. +The owner of the stock which employs a great number of labourers +necessarily endeavours, for his own advantage, to make such a proper +division and distribution of employment, that they may be enabled to +produce the greatest quantity of work possible. For the same reason, he +endeavours to supply them with the best machinery which either he or +they can think of. What takes place among the labourers in a particular +workhouse, takes place, for the same reason, among those of a great +society. The greater their number, the more they naturally divide +themselves into different classes and subdivisions of employments. More +heads are occupied in inventing the most proper machinery for executing +the work of each, and it is, therefore, more likely to be invented. +There are many commodities, therefore, which, in consequence of these +improvements, come to be produced by so much less labour than before, +that the increase of its price is more than compensated by the +diminution of its quantity. + + + + +CHAP. IX. + +OF THE PROFITS OF STOCK. + + +The rise and fall in the profits of stock depend upon the same causes +with the rise and fall in the wages of labour, the increasing or +declining state of the wealth of the society; but those causes affect +the one and the other very differently. + +The increase of stock, which raises wages, tends to lower profit. When +the stocks of many rich merchants are turned into the same trade, their +mutual competition naturally tends to lower its profit; and when there +is a like increase of stock in all the different trades carried on in +the same society, the same competition must produce the same effect in +them all. + +It is not easy, it has already been observed, to ascertain what are the +average wages of labour, even in a particular place, and at a particular +time. We can, even in this case, seldom determine more than what are the +most usual wages. But even this can seldom be done with regard to the +profits of stock. Profit is so very fluctuating, that the person who +carries on a particular trade, cannot always tell you himself what is +the average of his annual profit. It is affected, not only by every +variation of price in the commodities which he deals in, but by the good +or bad fortune both of his rivals and of his customers, and by a +thousand other accidents, to which goods, when carried either by sea or +by land, or even when stored in a warehouse, are liable. It varies, +therefore, not only from year to year, but from day to day, and almost +from hour to hour. To ascertain what is the average profit of all the +different trades carried on in a great kingdom, must be much more +difficult; and to judge of what it may have been formerly, or in remote +periods of time, with any degree of precision, must be altogether +impossible. + +But though it may be impossible to determine, with any degree of +precision, what are or were the average profits of stock, either in the +present or in ancient times, some notion may be formed of them from the +interest of money. It may be laid down as a maxim, that wherever a great +deal can be made by the use of money, a great deal will commonly be +given for the use of it; and that, wherever little can be made by it, +less will commonly be given for it. Accordingly, therefore, as the usual +market rate of interest varies in any country, we may be assured that +the ordinary profits of stock must vary with it, must sink as it sinks, +and rise as it rises. The progress of interest, therefore, may lead us +to form some notion of the progress of profit. + +By the 37th of Henry VIII. all interest above ten per cent. was declared +unlawful. More, it seems, had sometimes been taken before that. In the +reign of Edward VI. religious zeal prohibited all interest. This +prohibition, however, like all others of the same kind, is said to have +produced no effect, and probably rather increased than diminished the +evil of usury. The statute of Henry VIII. was revived by the 13th of +Elizabeth, cap. 8. and ten per cent. continued to be the legal rate of +interest till the 21st of James I. when it was restricted to eight per +cent. It was reduced to six per cent. soon after the Restoration, and by +the 12th of Queen Anne, to five per cent. All these different statutory +regulations seem to have been made with great propriety. They seem to +have followed, and not to have gone before, the market rate of interest, +or the rate at which people of good credit usually borrowed. Since the +time of Queen Anne, five per cent. seems to have been rather above than +below the market rate. Before the late war, the government borrowed at +three per cent.; and people of good credit in the capital, and in many +other parts of the kingdom, at three and a-half, four, and four and +a-half per cent. + +Since the time of Henry VIII. the wealth and revenue of the country have +been continually advancing, and in the course of their progress, their +pace seems rather to have been gradually accelerated than retarded. They +seem not only to have been going on, but to have been going on faster +and faster. The wages of labour have been continually increasing during +the same period, and, in the greater part of the different branches of +trade and manufactures, the profits of stock have been diminishing. + +It generally requires a greater stock to carry on any sort of trade in a +great town than in a country village. The great stock employed in every +branch of trade, and the number of rich competitors, generally reduce +the rate of profit in the former below what it is in the latter. But the +wages of labour are generally higher in a great town than in a country +village. In a thriving town, the people who have great stocks to employ, +frequently cannot get the number of workmen they want, and therefore bid +against one another, in order to get as many as they can, which raises +the wages of labour, and lowers the profits of stock. In the remote +parts of the country, there is frequently not stock sufficient to employ +all the people, who therefore bid against one another, in order to get +employment, which lowers the wages of labour, and raises the profits of +stock. + +In Scotland, though the legal rate of interest is the same as in +England, the market rate is rather higher. People of the best credit +there seldom borrow under five per cent. Even private bankers in +Edinburgh give four per cent. upon their promissory-notes, of which +payment, either in whole or in part may be demanded at pleasure. Private +bankers in London give no interest for the money which is deposited with +them. There are few trades which cannot be carried on with a smaller +stock in Scotland than in England. The common rate of profit, therefore, +must be somewhat greater. The wages of labour, it has already been +observed, are lower in Scotland than in England. The country, too, is +not only much poorer, but the steps by which it advances to a better +condition, for it is evidently advancing, seem to be much slower and +more tardy. + +The legal rate of interest in France has not, during the course of the +present century, been always regulated by the market rate[10]. In 1720, +interest was reduced from the twentieth to the fiftieth penny, or from +five to two per cent. In 1724, it was raised to the thirtieth penny, or +to three and a third per cent. In 1725, it was again raised to the +twentieth penny, or to five per cent. In 1766, during the administration +of Mr Laverdy, it was reduced to the twenty-fifth penny, or to four per +cent. The Abbé Terray raised it afterwards to the old rate of five per +cent. The supposed purpose of many of those violent reductions of +interest was to prepare the way for reducing that of the public debts; a +purpose which has sometimes been executed. France is, perhaps, in the +present times, not so rich a country as England; and though the legal +rate of interest has in France frequently been lower than in England, +the market rate has generally been higher; for there, as in other +countries, they have several very safe and easy methods of evading the +law. The profits of trade, I have been assured by British merchants who +had traded in both countries, are higher in France than in England; and +it is no doubt upon this account, that many British subjects chuse +rather to employ their capitals in a country where trade is in disgrace, +than in one where it is highly respected. The wages of labour are lower +in France than in England. When you go from Scotland to England, the +difference which you may remark between the dress and countenance of the +common people in the one country and in the other, sufficiently +indicates the difference in their condition. The contrast is still +greater when you return from France. France, though no doubt a richer +country than Scotland, seems not to be going forward so fast. It is a +common and even a popular opinion in the country, that it is going +backwards; an opinion which I apprehend, is ill-founded, even with +regard to France, but which nobody can possibly entertain with regard to +Scotland, who sees the country now, and who saw it twenty or thirty +years ago. + +The province of Holland, on the other hand, in proportion to the extent +of its territory and the number of its people, is a richer country than +England. The government there borrow at two per cent. and private people +of good credit at three. The wages of labour are said to be higher in +Holland than in England, and the Dutch, it is well known, trade upon +lower profits than any people in Europe. The trade of Holland, it has +been pretended by some people, is decaying, and it may perhaps be true +that some particular branches of it are so; but these symptoms seem to +indicate sufficiently that there is no general decay. When profit +diminishes, merchants are very apt to complain that trade decays, though +the diminution of profit is the natural effect of its prosperity, or of +a greater stock being employed in it than before. During the late war, +the Dutch gained the whole carrying trade of France, of which they still +retain a very large share. The great property which they possess both in +French and English funds, about forty millions, it is said in the latter +(in which, I suspect, however, there is a considerable exaggeration), +the great sums which they lend to private people, in countries where the +rate of interest is higher than in their own, are circumstances which no +doubt demonstrate the redundancy of their stock, or that it has +increased beyond what they can employ with tolerable profit in the +proper business of their own country; but they do not demonstrate that +that business has decreased. As the capital of a private man, though +acquired by a particular trade, may increase beyond what he can employ +in it, and yet that trade continue to increase too, so may likewise the +capital of a great nation. + +In our North American and West Indian colonies, not only the wages of +labour, but the interest of money, and consequently the profits of +stock, are higher than in England. In the different colonies, both the +legal and the market rate of interest run from six to eight per cent. +High wages of labour and high profits of stock, however, are things, +perhaps, which scarce ever go together, except in the peculiar +circumstances of new colonies. A new colony must always, for some time, +be more understocked in proportion to the extent of its territory, and +more underpeopled in proportion to the extent of its stock, than the +greater part of other countries. They have more land than they have +stock to cultivate. What they have, therefore, is applied to the +cultivation only of what is most fertile and most favourably situated, +the land near the sea-shore and along the banks of navigable rivers. +Such land, too, is frequently purchased at a price below the value even +of its natural produce. Stock employed in the purchase and improvement +of such lands, must yield a very large profit, and, consequently, afford +to pay a very large interest. Its rapid accumulation in so profitable an +employment enables the planter to increase the number of his hands +faster than he can find them in a new settlement. Those whom he can +find, therefore, are very liberally rewarded. As the colony increases, +the profits of stock gradually diminish. When the most fertile and best +situated lands have been all occupied, less profit can be made by the +cultivation of what is inferior both in soil and situation, and less +interest can be afforded for the stock which is so employed. In the +greater part of our colonies, accordingly, both the legal and the market +rate of interest have been considerably reduced during the course of the +present century. As riches, improvement, and population, have +increased, interest has declined. The wages of labour do not sink with +the profits of stock. The demand for labour increases with the increase +of stock, whatever be its profits; and after these are diminished, stock +may not only continue to increase, but to increase much faster than +before. It is with industrious nations, who are advancing in the +acquisition of riches, as with industrious individuals. A great stock, +though with small profits, generally increases faster than a small stock +with great profits. Money, says the proverb, makes money. When you have +got a little, it is often easy to get more. The great difficulty is to +get that little. The connection between the increase of stock and that +of industry, or of the demand for useful labour, has partly been +explained already, but will be explained more fully hereafter, in +treating of the accumulation of stock. + +The acquisition of new territory, or of new branches of trade, may +sometimes raise the profits of stock, and with them the interest of +money, even in a country which is fast advancing in the acquisition of +riches. The stock of the country, not being sufficient for the whole +accession of business which such acquisitions present to the different +people among whom it is divided, is applied to those particular branches +only which afford the greatest profit. Part of what had before been +employed in other trades, is necessarily withdrawn from them, and turned +into some of the new and more profitable ones. In all those old trades, +therefore, the competition comes to be less than before. The market +comes to be less fully supplied with many different sorts of goods. +Their price necessarily rises more or less, and yields a greater profit +to those who deal in them, who can, therefore, afford to borrow at a +higher interest. For some time after the conclusion of the late war, not +only private people of the best credit, but some of the greatest +companies in London, commonly borrowed at five per cent. who, before +that, had not been used to pay more than four, and four and a half per +cent. The great accession both of territory and trade by our +acquisitions in North America and the West Indies, will sufficiently +account for this, without supposing any diminution in the capital stock +of the society. So great an accession of new business to be carried on +by the old stock, must necessarily have diminished the quantity employed +in a great number of particular branches, in which the competition being +less, the profits must have been greater. I shall hereafter have +occasion to mention the reasons which dispose me to believe that the +capital stock of Great Britain was not diminished, even by the enormous +expense of the late war. + +The diminution of the capital stock of the society, or of the funds +destined for the maintenance of industry, however, as it lowers the +wages of labour, so it raises the profits of stock, and consequently the +interest of money. By the wages of labour being lowered, the owners of +what stock remains in the society can bring their goods at less expense +to market than before; and less stock being employed in supplying the +market than before, they can sell them dearer. Their goods cost them +less, and they get more for them. Their profits, therefore, being +augmented at both ends, can well afford a large interest. The great +fortunes so suddenly and so easily acquired in Bengal and the other +British settlements in the East Indies, may satisfy us, that as the +wages of labour are very low, so the profits of stock are very high in +those ruined countries. The interest of money is proportionably so. In +Bengal, money is frequently lent to the farmers at forty, fifty, and +sixty per cent. and the succeeding crop is mortgaged for the payment. As +the profits which can afford such an interest must eat up almost the +whole rent of the landlord, so such enormous usury must in its turn eat +up the greater part of those profits. Before the fall of the Roman +republic, a usury of the same kind seems to have been common in the +provinces, under the ruinous administration of their proconsuls. The +virtuous Brutus lent money in Cyprus at eight-and-forty per cent. as we +learn from the letters of Cicero. + +In a country which had acquired that full complement of riches which the +nature of its soil and climate, and its situation with respect to other +countries, allowed it to acquire, which could, therefore, advance no +further, and which was not going backwards, both the wages of labour and +the profits of stock would probably be very low. In a country fully +peopled in proportion to what either its territory could maintain, or +its stock employ, the competition for employment would necessarily be so +great as to reduce the wages of labour to what was barely sufficient to +keep up the number of labourers, and the country being already fully +peopled, that number could never be augmented. In a country fully +stocked in proportion to all the business it had to transact, as great a +quantity of stock would be employed in every particular branch as the +nature and extent of the trade would admit. The competition, therefore, +would everywhere be as great, and, consequently, the ordinary profit as +low as possible. + +But, perhaps, no country has ever yet arrived at this degree of +opulence. China seems to have been long stationary, and had, probably, +long ago acquired that full complement of riches which is consistent +with the nature of its laws and institutions. But this complement may be +much inferior to what, with other laws and institutions, the nature of +its soil, climate, and situation, might admit of. A country which +neglects or despises foreign commerce, and which admits the vessels of +foreign nations into one or two of its ports only, cannot transact the +same quantity of business which it might do with different laws and +institutions. In a country, too, where, though the rich, or the owners +of large capitals, enjoy a good deal of security, the poor, or the +owners of small capitals, enjoy scarce any, but are liable, under the +pretence of justice, to be pillaged and plundered at any time by the +inferior mandarins, the quantity of stock employed in all the different +branches of business transacted within it, can never be equal to what +the nature and extent of that business might admit. In every different +branch, the oppression of the poor must establish the monopoly of the +rich, who, by engrossing the whole trade to themselves, will be able to +make very large profits. Twelve per cent. accordingly, is said to be the +common interest of money in China, and the ordinary profits of stock +must be sufficient to afford this large interest. + +A defect in the law may sometimes raise the rate of interest +considerably above what the condition of the country, as to wealth or +poverty, would require. When the law does not enforce the performance of +contracts, it puts all borrowers nearly upon the same footing with +bankrupts, or people of doubtful credit, in better regulated countries. +The uncertainty of recovering his money makes the lender exact the same +usurious interest which is usually required from bankrupts. Among the +barbarous nations who overran the western provinces of the Roman empire, +the performance of contracts was left for many ages to the faith of the +contracting parties. The courts of justice of their kings seldom +intermeddled in it. The high rate of interest which took place in those +ancient times, may perhaps, be partly accounted for from this cause. + +When the law prohibits interest altogether, it does not prevent it. Many +people must borrow, and nobody will lend without such a consideration +for the use of their money as is suitable, not only to what can be made +by the use of it, but to the difficulty and danger of evading the law. +The high rate of interest among all Mahometan nations is accounted for +by M. Montesquieu, not from their poverty, but partly from this, and +partly from the difficulty of recovering the money. + +The lowest ordinary rate of profit must always be something more than +what is sufficient to compensate the occasional losses to which every +employment of stock is exposed. It is this surplus only which is neat or +clear profit. What is called gross profit, comprehends frequently not +only this surplus, but what is retained for compensating such +extraordinary losses. The interest which the borrower can afford to pay +is in proportion to the clear profit only. + +The lowest ordinary rate of interest must, in the same manner, be +something more than sufficient to compensate the occasional losses to +which lending, even with tolerable prudence, is exposed. Were it not, +mere charity or friendship could be the only motives for lending. + +In a country which had acquired its full complement of riches, where, in +every particular branch of business, there was the greatest quantity of +stock that could be employed in it, as the ordinary rate of clear profit +would be very small, so the usual market rate of interest which could be +afforded out of it would be so low as to render it impossible for any +but the very wealthiest people to live upon the interest of their money. +All people of small or middling fortunes would be obliged to superintend +themselves the employment of their own stocks. It would be necessary +that almost every man should be a man of business, or engage in some +sort of trade. The province of Holland seems to be approaching near to +this state. It is there unfashionable not to be a man of business. +Necessity makes it usual for almost every man to be so, and custom +everywhere regulates fashion. As it is ridiculous not to dress, so is +it, in some measure, not to be employed like other people. As a man of a +civil profession seems awkward in camp or a garrison, and is even in +some danger of being despised there, so does an idle man among men of +business. + +The highest ordinary rate of profit may be such as, in the price of the +greater part of commodities, eats up the whole of what should go to the +rent of the land, and leaves only what is sufficient to pay the labour +of preparing and bringing them to market, according to the lowest rate +at which labour can anywhere be paid, the bare subsistence of the +labourer. The workman must always have been fed in some way or other +while he was about the work, but the landlord may not always have been +paid. The profits of the trade which the servants of the East India +Company carry on in Bengal may not, perhaps, be very far from this rate. + +The proportion which the usual market rate of interest ought to bear to +the ordinary rate of clear profit, necessarily varies as profit rises or +falls. Double interest is in Great Britain reckoned what the merchants +call a good, moderate, reasonable profit; terms which, I apprehend, mean +no more than a common and usual profit. In a country where the ordinary +rate of clear profit is eight or ten per cent. it may be reasonable that +one half of it should go to interest, wherever business is carried on +with borrowed money. The stock is at the risk of the borrower, who, as +it were, insures it to the lender; and four or five per cent. may, in +the greater part of trades, be both a sufficient profit upon the risk of +this insurance, and a sufficient recompence for the trouble of employing +the stock. But the proportion between interest and clear profit might +not be the same in countries where the ordinary rate of profit was +either a good deal lower, or a good deal higher. If it were a good deal +lower, one half of it, perhaps, could not be afforded for interest; and +more might be afforded if it were a good deal higher. + +In countries which are fast advancing to riches, the low rate of profit +may, in the price of many commodities, compensate the high wages of +labour, and enable those countries to sell as cheap as their less +thriving neighbours, among whom the wages of labour may be lower. + +In reality, high profits tend much more to raise the price of work than +high wages. If, in the linen manufacture, for example, the wages of the +different working people, the flax-dressers, the spinners, the weavers, +&c. should all of them be advanced twopence a-day, it would be necessary +to heighten the price of a piece of linen only by a number of twopences +equal to the number of people that had been employed about it, +multiplied by the number of days during which they had been so employed. +That part of the price of the commodity which resolved itself into the +wages, would, through all the different stages of the manufacture, rise +only in arithmetical proportion to this rise of wages. But if the +profits of all the different employers of those working people should be +raised five per cent. that part of the price of the commodity which +resolved itself into profit would, through all the different stages of +the manufacture, rise in geometrical proportion to this rise of profit. +The employer of the flax-dressers would, in selling his flax, require an +additional five per cent. upon the whole value of the materials and +wages which he advanced to his workmen. The employer of the spinners +would require an additional five per cent. both upon the advanced price +of the flax, and upon the wages of the spinners. And the employer of the +weavers would require a like five per cent. both upon the advanced price +of the linen-yarn, and upon the wages of the weavers. In raising the +price of commodities, the rise of wages operates in the same manner as +simple interest does in the accumulation of debt. The rise of profit +operates like compound interest. Our merchants and master manufacturers +complain much of the bad effects of high wages in raising the price, and +thereby lessening the sale of their goods, both at home and abroad. They +say nothing concerning the bad effects of high profits; they are silent +with regard to the pernicious effects of their own gains; they complain +only of those of other people. + + + + +CHAP. X. + +OF WAGES AND PROFIT IN THE DIFFERENT EMPLOYMENTS OF LABOUR AND STOCK. + + +The whole of the advantages and disadvantages of the different +employments of labour and stock, must, in the same neighbourhood, be +either perfectly equal, or continually tending to equality. If, in the +same neighbourhood, there was any employment evidently either more or +less advantageous than the rest, so many people would crowd into it in +the one case, and so many would desert it in the other, that its +advantages would soon return to the level of other employments. This, at +least, would be the case in a society where things were left to follow +their natural course, where there was perfect liberty, and where every +man was perfectly free both to choose what occupation he thought proper, +and to change it as often as he thought proper. Every man's interest +would prompt him to seek the advantageous, and to shun the +disadvantageous employment. + +Pecuniary wages and profit, indeed, are everywhere in Europe extremely +different, according to the different employments of labour and stock. +But this difference arises, partly from certain circumstances in the +employments themselves, which, either really, or at least in the +imagination of men, make up for a small pecuniary gain in some, and +counterbalance a great one in others, and partly from the policy of +Europe, which nowhere leaves things at perfect liberty. + +The particular consideration of those circumstances, and of that policy, +will divide this Chapter into two parts. + + +PART I.--_Inequalities arising from the nature of the employments +themselves._ + +The five following are the principal circumstances which, so far as I +have been able to observe, make up for a small pecuniary gain in some +employments, and counterbalance a great one in others. First, the +agreeableness or disagreeableness of the employments themselves; +secondly, the easiness and cheapness, or the difficulty and expense of +learning them; thirdly, the constancy or inconstancy of employment in +them; fourthly, the small or great trust which must be reposed in those +who exercise them; and, fifthly, the probability or improbability of +success in them. + +First, the wages of labour vary with the ease or hardship, the +cleanliness or dirtiness, the honourableness or dishonourableness, of +the employment. Thus in most places, take the year round, a journeyman +tailor earns less than a journeyman weaver. His work is much easier. A +journeyman weaver earns less than a journeyman smith. His work is not +always easier, but it is much cleanlier. A journeyman blacksmith, though +an artificer, seldom earns so much in twelve hours, as a collier, who is +only a labourer, does in eight. His work is not quite so dirty, is less +dangerous, and is carried on in day-light, and above ground. Honour +makes a great part of the reward of all honourable professions. In point +of pecuniary gain, all things considered, they are generally +under-recompensed, as I shall endeavour to shew by and by. Disgrace has +the contrary effect. The trade of a butcher is a brutal and an odious +business; but it is in most places more profitable than the greater part +of common trades. The most detestable of all employments, that of public +executioner, is, in proportion to the quantity of work done, better paid +than any common trade whatever. + +Hunting and fishing, the most important employments of mankind in the +rude state of society, become, in its advanced state, their most +agreeable amusements, and they pursue for pleasure what they once +followed from necessity. In the advanced state of society, therefore, +they are all very poor people who follow as a trade, what other people +pursue as a pastime. Fishermen have been so since the time of +Theocritus[11]. A poacher is everywhere a very poor man in Great +Britain. In countries where the rigour of the law suffers no poachers, +the licensed hunter is not in a much better condition. The natural taste +for those employments makes more people follow them, than can live +comfortably by them; and the produce of their labour, in proportion to +its quantity, comes always too cheap to market, to afford any thing but +the most scanty subsistence to the labourers. + +Disagreeableness and disgrace affect the profits of stock in the same +manner as the wages of labour. The keeper of an inn or tavern, who is +never master of his own house, and who is exposed to the brutality of +every drunkard, exercises neither a very agreeable nor a very creditable +business. But there is scarce any common trade in which a small stock +yields so great a profit. + +Secondly, the wages of labour vary with the easiness and cheapness, or +the difficulty and expense, of learning the business. + +When any expensive machine is erected, the extraordinary work to be +performed by it before it is worn out, it must be expected, will replace +the capital laid out upon it, with at least the ordinary profits. A man +educated at the expense of much labour and time to any of those +employments which require extraordinary dexterity and skill, may be +compared to one of those expensive machines. The work which he learns to +perform, it must be expected, over and above the usual wages of common +labour, will replace to him the whole expense of his education, with at +least the ordinary profits of an equally valuable capital. It must do +this too in a reasonable time, regard being had to the very uncertain +duration of human life, in the same manner as to the more certain +duration of the machine. + +The difference between the wages of skilled labour and those of common +labour, is founded upon this principle. + +The policy of Europe considers the labour of all mechanics, artificers, +and manufacturers, as skilled labour; and that of all country labourers +as common labour. It seems to suppose that of the former to be of a more +nice and delicate nature than that of the latter. It is so perhaps in +some cases; but in the greater part it is quite otherwise, as I shall +endeavour to shew by and by. The laws and customs of Europe, therefore, +in order to qualify any person for exercising the one species of labour, +impose the necessity of an apprenticeship, though with different degrees +of rigour in different places. They leave the other free and open to +every body. During the continuance of the apprenticeship, the whole +labour of the apprentice belongs to the master. In the meantime he must, +in many cases, be maintained by his parents or relations, and, in almost +all cases, must be clothed by them. Some money, too, is commonly given +to the master for teaching him his trade. They who cannot give money, +give time, or become bound for more than the usual number of years; a +consideration which, though it is not always advantageous to the master, +on account of the usual idleness of apprentices, is always +disadvantageous to the apprentice. In country labour, on the contrary, +the labourer, while he is employed about the easier, learns the more +difficult parts of his business, and his own labour maintains him +through all the different stages of his employment. It is reasonable, +therefore, that in Europe the wages of mechanics, artificers, and +manufacturers, should be somewhat higher than those of common labourers. +They are so accordingly, and their superior gains make them, in most +places, be considered as a superior rank of people. This superiority, +however, is generally very small: the daily or weekly earnings of +journeymen in the more common sorts of manufactures, such as those of +plain linen and woollen cloth, computed at an average, are, in most +places, very little more than the day-wages of common labourers. Their +employment, indeed, is more steady and uniform, and the superiority of +their earnings, taking the whole year together, may be somewhat greater. +It seems evidently, however, to be no greater than what is sufficient to +compensate the superior expense of their education. + +Education in the ingenious arts, and in the liberal professions, is +still more tedious and expensive. The pecuniary recompence, therefore, +of painters and sculptors, of lawyers and physicians, ought to be much +more liberal; and it is so accordingly. + +The profits of stock seem to be very little affected by the easiness or +difficulty of learning the trade in which it is employed. All the +different ways in which stock is commonly employed in great towns seem, +in reality, to be almost equally easy and equally difficult to learn. +One branch, either of foreign or domestic trade, cannot well be a much +more intricate business than another. + +Thirdly, the wages of labour in different occupations vary with the +constancy or inconstancy of employment. + +Employment is much more constant in some trades than in others. In the +greater part of manufactures, a journeyman may be pretty sure of +employment almost every day in the year that he is able to work. A mason +or bricklayer, on the contrary, can work neither in hard frost nor in +foul weather, and his employment at all other times depends upon the +occasional calls of his customers. He is liable, in consequence, to be +frequently without any. What he earns, therefore, while he is employed, +must not only maintain him while he is idle, but make him some +compensation for those anxious and desponding moments which the thought +of so precarious a situation must sometimes occasion. Where the computed +earnings of the greater part of manufacturers, accordingly, are nearly +upon a level with the day-wages of common labourers, those of masons and +bricklayers are generally from one-half more to double those wages. +Where common labourers earn four of five shillings a week, masons and +bricklayers frequently earn seven and eight; where the former earn six, +the latter often earn nine and ten; and where the former earn nine and +ten, as in London, the latter commonly earn fifteen and eighteen. No +species of skilled labour, however, seems more easy to learn than that +of masons and bricklayers. Chairmen in London, during the summer season, +are said sometimes to be employed as bricklayers. The high wages of +those workmen, therefore, are not so much the recompence of their skill, +as the compensation for the inconstancy of their employment. + +A house-carpenter seems to exercise rather a nicer and a more ingenious +trade than a mason. In most places, however, for it is not universally +so, his day-wages are somewhat lower. His employment, though it depends +much, does not depend so entirely upon the occasional calls of his +customers; and it is not liable to be interrupted by the weather. + +When the trades which generally afford constant employment, happen in a +particular place not to do so, the wages of the workmen always rise a +good deal above their ordinary proportion to those of common labour. In +London, almost all journeymen artificers are liable to be called upon +and dismissed by their masters from day to day, and from week to week, +in the same manner as day-labourers in other places. The lowest order of +artificers, journeymen tailors, accordingly, earn their half-a-crown +a-day, though eighteen pence may be reckoned the wages of common labour. +In small towns and country villages, the wages of journeymen tailors +frequently scarce equal those of common labour; but in London they are +often many weeks without employment, particularly during the summer. + +When the inconstancy of employment is combined with the hardship, +disagreeableness, and dirtiness of the work, it sometimes raises the +wages of the most common labour above those of the most skilful +artificers. A collier working by the piece is supposed, at Newcastle, to +earn commonly about double, and, in many parts of Scotland, about three +times, the wages of common labour. His high wages arise altogether from +the hardship, disagreeableness, and dirtiness of his work. His +employment may, upon most occasions, be as constant as he pleases. The +coal-heavers in London exercise a trade which, in hardship, dirtiness, +and disagreeableness, almost equals that of colliers; and, from the +unavoidable irregularity in the arrivals of coal-ships, the employment +of the greater part of them is necessarily very inconstant. If colliers, +therefore, commonly earn double and triple the wages of common labour, +it ought not to seem unreasonable that coal-heavers should sometimes +earn four and five times those wages. In the inquiry made into their +condition a few years ago, it was found that, at the rate at which they +were paid, they could earn from six to ten shillings a-day. Six +shillings are about four times the wages of common labour in London; +and, in every particular trade, the lowest common earnings may always be +considered as those of the far greater number. How extravagant soever +those earnings may appear, if they were more than sufficient to +compensate all the disagreeable circumstances of the business, there +would soon be so great a number of competitors, as, in a a trade which +has no exclusive privilege, would quickly reduce them to a lower rate. + +The constancy or inconstancy of employment cannot affect the ordinary +profits of stock in any particular trade. Whether the stock is or is not +constantly employed, depends, not upon the trade, but the trader. + +Fourthly, the wages of labour vary according to the small or great trust +which must be reposed in the workmen. + +The wages of goldsmiths and jewellers are everywhere superior to those +of many other workmen, not only of equal, but of much superior +ingenuity, on account of the precious materials with which they are +entrusted. + +We trust our health to the physician, our fortune, and sometimes our +life and reputation, to the lawyer and attorney. Such confidence could +not safely be reposed in people of a very mean or low condition. Their +reward must be such, therefore, as may give them that rank in the +society which so important a trust requires. The long time and the great +expense which must be laid out in their education, when combined with +this circumstance, necessarily enhance still further the price of their +labour. + +When a person employs only his own stock in trade, there is no trust; +and the credit which he may get from other people, depends, not upon the +nature of the trade, but upon their opinion of his fortune, probity and +prudence. The different rates of profit, therefore, in the different +branches of trade, cannot arise from the different degrees of trust +reposed in the traders. + +Fifthly, the wages of labour in different employments vary according to +the probability or improbability of success in them. + +The probability that any particular person shall ever be qualified for +the employments to which he is educated, is very different in different +occupations. In the greatest part of mechanic trades, success is almost +certain; but very uncertain in the liberal professions. Put your son +apprentice to a shoemaker, there is little doubt of his learning to make +a pair of shoes; but send him to study the law, it as at least twenty to +one if he ever makes such proficiency as will enable him to live by the +business. In a perfectly fair lottery, those who draw the prizes ought +to gain all that is lost by those who draw the blanks. In a profession, +where twenty fail for one that succeeds, that one ought to gain all that +should have been gained by the unsuccessful twenty. The counsellor at +law, who, perhaps, at near forty years of age, begins to make something +by his profession, ought to receive the retribution, not only of his own +so tedious and expensive education, but of that of more than twenty +others, who are never likely to make any thing by it. How extravagant +soever the fees of counsellors at law may sometimes appear, their real +retribution is never equal to this. Compute, in any particular place, +what is likely to be annually gained, and what is likely to be annually +spent, by all the different workmen in any common trade, such as that of +shoemakers or weavers, and you will find that the former sum will +generally exceed the latter. But make the same computation with regard +to all the counsellors and students of law, in all the different Inns of +court, and you will find that their annual gains bear but a very small +proportion to their annual expense, even though you rate the former as +high, and the latter as low, as can well be done. The lottery of the +law, therefore, is very far from being a perfectly fair lottery; and +that, as well as many other liberal and honourable professions, is, in +point of pecuniary gain, evidently under-recompensed. + +Those professions keep their level, however, with other occupations; +and, notwithstanding these discouragements, all the most generous and +liberal spirits are eager to crowd into them. Two different causes +contribute to recommend them. First, the desire of the reputation which +attends upon superior excellence in any of them; and, secondly, the +natural confidence which every man has, more or less, not only in his +own abilities, but in his own good fortune. + +To excel in any profession, in which but few arrive at mediocrity, it is +the most decisive mark of what is called genius, or superior talents. +The public admiration which attends upon such distinguished abilities +makes always a part of their reward; a greater of smaller, in proportion +as it is higher or lower in degree. It makes a considerable part of that +reward in the profession of physic; a still greater, perhaps, in that of +law; in poetry and philosophy it makes almost the whole. + +There are some very agreeable and beautiful talents, of which the +possession commands a certain sort of admiration, but of which the +exercise, for the sake of gain, is considered, whether from reason or +prejudice, as a sort of public prostitution. The pecuniary recompence, +therefore, of those who exercise them in this manner, must be +sufficient, not only to pay for the time, labour, and expense for +acquiring the talents, but for the discredit which attends the +employment of them as the means of subsistence. The exorbitant rewards +of players, opera-singers, opera-dancers, &c. are founded upon those two +principles; the rarity and beauty of the talent, and the discredit of +employing them in this manner. It seems absurd at first sight, that we +should despise their persons, and yet reward their talents with the most +profuse liberality. While we do the one, however, we must of necessity +do the other. Should the public opinion of prejudice ever alter with +regard to such occupations, their pecuniary recompence would quickly +diminish. More people would apply to them, and the competition would +quickly reduce the price of their labour. Such talents, though far from +being common, are by no means so rare as imagined. Many people possess +them in great perfection, who disdain to make this use of them; and many +more are capable of acquiring them, if any thing could be made +honourably by them. + +The over-weening conceit which the great part of men have of their own +abilities, is an ancient evil remarked by the philosophers and moralists +of all ages. Their absurd presumption in their own good fortune has been +less taken notice of. It is, however, if possible, still more universal. +There is no man living, who, when in tolerable health and spirits, has +not some share of it. The chance of gain is by every man more or less +over-valued, and the chance of loss is by most men under-valued, and by +scarce any man, who is in tolerable health and spirits, valued more than +it is worth. + +That the chance of gain is naturally over-valued, we may learn from the +universal success of lotteries. The world neither ever saw, nor ever +will see, a perfectly fair lottery, or one in which the whole gain +compensated the whole loss; because the undertaker could make nothing by +it. In the state lotteries, the tickets are really not worth the price +which is paid by the original subscribers, and yet commonly sell in the +market for twenty, thirty, and sometimes forty per cent. advance. The +vain hopes of gaining some of the great prizes is the sole cause of this +demand. The soberest people scarce look upon it as a folly to pay a +small sum for the chance of gaining ten or twenty thousand pounds, +though they know that even that small sum is perhaps twenty or thirty +per cent. more than the chance is worth. In a lottery in which no prize +exceeded twenty pounds, though in other respects it approached much +nearer to a perfectly fair one than the common state lotteries, there +would not be the same demand for tickets. In order to have a better +chance for some of the great prizes, some people purchase several +tickets; and others, small shares in a still greater number. There is +not, however, a more certain proposition in mathematics, than that the +more tickets you adventure upon, the more likely you are to be a loser. +Adventure upon all the tickets in the lottery, and you lose for certain; +and the greater the number of your tickets, the nearer your approach to +this certainty. + +That the chance of loss is frequently under-valued, and scarce ever +valued more than it is worth, we may learn from the very moderate profit +of insurers. In order to make insurance, either from fire or sea-risk, a +trade at all, the common premium must be sufficient to compensate the +common losses, to pay the expense of management, and to afford such a +profit as might have been drawn from an equal capital employed in any +common trade. The person who pays no more than this, evidently pays no +more than the real value of the risk, or the lowest price at which he +can reasonably expect to insure it. But though many people have made a +little money by insurance, very few have made a great fortune; and, from +this consideration alone, it seems evident enough that the ordinary +balance of profit and loss is not more advantageous in this than in +other common trades, by which so many people make fortunes. Moderate, +however, as the premium of insurance commonly is, many people despise +the risk too much to care to pay it. Taking the whole kingdom at an +average, nineteen houses in twenty, or rather, perhaps, ninety-nine in a +hundred, are not insured from fire. Sea-risk is more alarming to the +greater part of people; and the proportion of ships insured to those not +insured is much greater. Many sail, however, at all seasons, and even in +time of war, without any insurance. This may sometimes, perhaps, be done +without any imprudence. When a great company, or even a great merchant, +has twenty or thirty ships at sea, they may, as it were, insure one +another. The premium saved up on them all may more than compensate such +losses as they are likely to meet with in the common course of chances. +The neglect of insurance upon shipping, however, in the same manner as +upon houses, is, in most cases, the effect of no such nice calculation, +but of mere thoughtless rashness, and presumptuous contempt of the risk. + +The contempt of risk, and the presumptuous hope of success, are in no +period of life more active than at the age at which young people choose +their professions. How little the fear of misfortune is then capable of +balancing the hope of good luck, appears still more evidently in the +readiness of the common people to enlist as soldiers, or to go to sea, +than in the eagerness of those of better fashion to enter into what are +called the liberal professions. + +What a common soldier may lose is obvious enough. Without regarding the +danger, however, young volunteers never enlist so readily as at the +beginning of a new war; and though they have scarce any chance of +preferment, they figure to themselves, in their youthful fancies, a +thousand occasions of acquiring honour and distinction which never +occur. These romantic hopes make the whole price of their blood. Their +pay is less than that of common labourers, and, in actual service, their +fatigues are much greater. + +The lottery of the sea is not altogether so disadvantageous as that of +the army. The son of a creditable labourer or artificer may frequently +go to sea with his father's consent; but if he enlists as a soldier, it +is always without it. Other people see some chance of his making +something by the one trade; nobody but himself sees any of his making +any thing by the other. The great admiral is less the object of public +admiration than the great general; and the highest success in the sea +service promises a less brilliant fortune and reputation than equal +success in the land. The same difference runs through all the inferior +degrees of preferment in both. By the rules of precedency, a captain in +the navy ranks with a colonel in the army; but he does not rank with him +in the common estimation. As the great prizes in the lottery are less, +the smaller ones must be more numerous. Common sailors, therefore, more +frequently get some fortune and preferment than common soldiers; and the +hope of those prizes is what principally recommends the trade. Though +their skill and dexterity are much superior to that of almost any +artificers: and though their whole life is one continual scene of +hardship and danger; yet for all this dexterity and skill, for all those +hardships and dangers, while they remain in the condition of common +sailors, they receive scarce any other recompence but the pleasure of +exercising the one and of surmounting the other. Their wages are not +greater than those of common labourers at the port which regulates the +rate of seamen's wages. As they are continually going from port to port, +the monthly pay of those who sail from all the different ports of Great +Britain, is more nearly upon a level than that of any other workmen in +those different places; and the rate of the port to and from which the +greatest number sail, that is, the port of London, regulates that of all +the rest. At London, the wages of the greater part of the different +classes of workmen are about double those of the same classes at +Edinburgh. But the sailors who sail from the port of London, seldom earn +above three or four shillings a-month more than those who sail from the +port of Leith, and the difference is frequently not so great. In time of +peace, and in the merchant-service, the London price is from a guinea to +about seven-and-twenty shillings the calendar month. A common labourer +in London, at the rate of nine or ten shillings a-week, may earn in the +calendar month from forty to five-and-forty shillings. The sailor, +indeed, over and above his pay, is supplied with provisions. Their +value, however, may not perhaps always exceed the difference between his +pay and that of the common labourer; and though it sometimes should, the +excess will not be clear gain to the sailor, because he cannot share it +with his wife and family, whom he must maintain out of his wages at +home. + +The dangers and hair-breadth escapes of a life of adventures, instead of +disheartening young people, seem frequently to recommend a trade to +them. A tender mother, among the inferior ranks of people, is often +afraid to send her son to school at a sea-port town, lest the sight of +the ships, and the conversation and adventures of the sailors, should +entice him to go to sea. The distant prospect of hazards, from which we +can hope to extricate ourselves by courage and address, is not +disagreeable to us, and does not raise the wages of labour in any +employment. It is otherwise with those in which courage and address can +be of no avail. In trades which are known to be very unwholesome, the +wages of labour are always remarkably high. Unwholesomeness is a species +of disagreeableness, and its effects upon the wages of labour are to be +ranked under that general head. + +In all the different employments of stock, the ordinary rate of profit +varies more or less with the certainty or uncertainty of the returns. +These are, in general, less uncertain in the inland than in the foreign +trade, and in some branches of foreign trade than in others; in the +trade to North America, for example, than in that to Jamaica. The +ordinary rate of profit always rises more or less with the risk. It does +not, however, seem to rise in proportion to it, or so as to compensate +it completely. Bankruptcies are most frequent in the most hazardous +trades. The most hazardous of all trades, that of a smuggler, though, +when the adventure succeeds, it is likewise the most profitable, is the +infallible road to bankruptcy. The presumptuous hope of success seems to +act here as upon all other occasions, and to entice so many adventurers +into those hazardous trades, that their competition reduces the profit +below what is sufficient to compensate the risk. To compensate it +completely, the common returns ought, over and above the ordinary +profits of stock, not only to make up for all occasional losses, but to +afford a surplus profit to the adventurers, of the same nature with the +profit of insurers. But if the common returns were sufficient for all +this, bankruptcies would not be more frequent in these than in other +trades. + +Of the five circumstances, therefore, which vary the wages of labour, +two only affect the profits of stock; the agreeableness or +disagreeableness of the business, and the risk or security with which it +is attended. In point of agreeableness or disagreeableness, there is +little or no difference in the far greater part of the different +employments of stock, but a great deal in those of labour; and the +ordinary profit of stock, though it rises with the risk, does not always +seem to rise in proportion to it. It should follow from all this, that, +in the same society or neighbourhood, the average and ordinary rates of +profit in the different employments of stock should be more nearly upon +a level than the pecuniary wages of the different sorts of labour. + +They are so accordingly. The difference between the earnings of a common +labourer and those of a well employed lawyer or physician, is evidently +much greater than that between the ordinary profits in any two different +branches of trade. The apparent difference, besides, in the profits of +different trades, is generally a deception arising from our not always +distinguishing what ought to be considered as wages, from what ought to +be considered as profit. + +Apothecaries' profit is become a bye-word, denoting something uncommonly +extravagant. This great apparent profit, however, is frequently no more +than the reasonable wages of labour. The skill of an apothecary is a +much nicer and more delicate matter than that of any artificer whatever; +and the trust which is reposed in him is of much greater importance. He +is the physician of the poor in all cases, and of the rich when the +distress or danger is not very great. His reward, therefore, ought to +be suitable to his skill and his trust; and it arises generally from the +price at which he sells his drugs. But the whole drugs which the best +employed apothecary in a large market-town, will sell in a year, may not +perhaps cost him above thirty or forty pounds. Though he should sell +them, therefore, for three or four hundred, or at a thousand per cent, +profit, this may frequently be no more than the reasonable wages of his +labour, charged, in the only way in which he can charge them, upon the +price of his drugs. The greater part of the apparent profit is real +wages disguised in the garb of profit. + +In a small sea-port town, a little grocer will make forty or fifty per +cent. upon a stock of a single hundred pounds, while a considerable +wholesale merchant in the same place will scarce make eight or ten per +cent. upon a stock of ten thousand. The trade of the grocer may be +necessary for the conveniency of the inhabitants, and the narrowness of +the market may not admit the employment of a larger capital in the +business. The man, however, must not only live by his trade, but live by +it suitably to the qualifications which it requires. Besides possessing +a little capital, he must be able to read, write, and account, and must +be a tolerable judge, too, of perhaps fifty or sixty different sorts of +goods, their prices, qualities, and the markets where they are to be had +cheapest. He must have all the knowledge, in short, that is necessary +for a great merchant, which nothing hinders him from becoming but the +want of a sufficient capital. Thirty or forty pounds a-year cannot be +considered as too great a recompence for the labour of a person so +accomplished. Deduct this from the seemingly great profits of his +capital, and little more will remain, perhaps, than the ordinary profits +of stock. The greater part of the apparent profit is, in this case too, +real wages. + +The difference between the apparent profit of the retail and that of the +wholesale trade, is much less in the capital than in small towns and +country villages. Where ten thousand pounds can be employed in the +grocery trade, the wages of the grocer's labour must be a very trifling +addition to the real profits of so great a stock. The apparent profits +of the wealthy retailer, therefore, are there more nearly upon a level +with these of the wholesale merchant. It is upon this account that goods +sold by retail are generally and frequently much cheaper, in the capital +than in small towns and country villages. Grocery goods, for example, +are generally much cheaper; bread and butchers' meat frequently as +cheap. It costs no more to bring grocery goods to the great town than to +the country village; but it costs a great deal more to bring corn and +cattle, as the greater part of them must be brought from a much greater +distance. The prime cost of grocery goods, therefore, being the same in +both places, they are cheapest where the least profit is charged upon +them. The prime cost of bread and butchers' meat is greater in the great +town than in the country village; and though the profit is less, +therefore they are not always cheaper there, but often equally cheap. In +such articles as bread and butchers' meat, the the same cause which +diminishes apparent profit, increases prime cost. The extent of the +market, by giving employment to greater stocks, diminishes apparent +profit; but by requiring supplies from a greater distance, it increases +prime cost. This diminution of the one and increase of the other, seem, +in most cases, nearly to counterbalance one another, which is probably +the reason that, though the prices of corn and cattle are commonly very +different in different parts of the kingdom, those of bread and +butchers' meat are generally very nearly the same through the greater +part of it. + +Though the profits of stock, both in the wholesale and retail trade, are +generally less in the capital than in small towns and country villages, +yet great fortunes are frequently acquired from small beginnings in the +former, and scarce ever in the latter. In small towns and country +villages, on account of the narrowness of the market, trade cannot +always be extended as stock extends. In such places, therefore, though +the rate of a particular person's profits may be very high, the sum or +amount of them can never be very great, nor consequently that of his +annual accumulation. In great towns, on the contrary, trade can be +extended as stock increases, and the credit of a frugal and thriving man +increases much faster than his stock. His trade is extended in +proportion to the amount of both; and the sum or amount of his profits +is in proportion to the extent of his trade, and his annual accumulation +in proportion to the amount of his profits. It seldom happens, however, +that great fortunes are made, even in great towns, by any one regular, +established, and well-known branch of business, but in consequence of a +long life of industry, frugality, and attention. Sudden fortunes, +indeed, are sometimes made in such places, by what is called the trade +of speculation. The speculative merchant exercises no one regular, +established, or well-known branch of business. He is a corn merchant +this year, and a wine merchant the next, and a sugar, tobacco, or tea +merchant the year after. He enters into every trade, when he foresees +that it is likely to be more than commonly profitable, and he quits it +when he foresees that its profits are likely to return to the level of +other trades. His profits and losses, therefore, can bear no regular +proportion to those of any one established and well-known branch of +business. A bold adventurer may sometimes acquire a considerable fortune +by two or three successful speculations, but is just as likely to lose +one by two or three unsuccessful ones. This trade can be carried on +nowhere but in great towns. It is only in places of the most extensive +commerce and correspondence that the intelligence requisite for it can +he had. + +The five circumstances above mentioned, though they occasion +considerable inequalities in the wages of labour and profits of stock, +occasion none in the whole of the advantages and disadvantages, real or +imaginary, of the different employments of either. The nature of those +circumstances is such, that they make up for a small pecuniary gain in +some, and counterbalance a great one in others. + +In order, however, that this equality may take place in the whole of +their advantages or disadvantages, three things are requisite, even +where there is the most perfect freedom. First, the employments must be +well known and long established in the neighbourhood; secondly, they +must be in their ordinary, or what may be called their natural state; +and, thirdly, they must be the sole or principal employments of those +who occupy them. + +First, This equality can lake place only in those employments which are +well known, and have been long established in the neighbourhood. + +Where all other circumstances are equal, wages are generally higher in +new than in old trades. When a projector attempts to establish a new +manufacture, he must at first entice his workmen from other employments, +by higher wages than they can either earn in their own trades, or than +the nature of his work would otherwise require; and a considerable time +must pass away before he can venture to reduce them to the common level. +Manufactures for which the demand arises altogether from fashion and +fancy, are continually changing, and seldom last long enough to be +considered as old established manufactures. Those, on the contrary, for +which the demand arises chiefly from use or necessity, are less liable +to change, and the same form of fabric may continue in demand for whole +centuries together. The wages of labour, therefore, are likely to be +higher in manufactures of the former, than in those of the latter kind. +Birmingham deals chiefly in manufactures of the former kind; Sheffield +in those of the latter; and the wages of labour in those two different +places are said to be suitable to this difference in the nature of their +manufactures. + +The establishment of any new manufacture, of any new branch of commerce, +or of any new practice in agriculture, is always a speculation from +which the projector promises himself extraordinary profits. These +profits sometimes are very great, and sometimes, more frequently, +perhaps, they are quite otherwise; but, in general, they bear no regular +proportion to those of other old trades in the neighbourhood. If the +project succeeds, they are commonly at first very high. When the trade +or practice becomes thoroughly established and well known, the +competition reduces them to the level of other trades. + +Secondly, this equality in the whole of the advantages and disadvantages +of the different employments of labour and stock, can take place only in +the ordinary, or what may be called the natural state of those +employments. + +The demand for almost every different species of labour is sometimes +greater, and sometimes less than usual. In the one case, the advantages +of the employment rise above, in the other they fall below the common +level. The demand for country labour is greater at hay-time and harvest +than during the greater part of the year; and wages rise with the +demand. In time of war, when forty or fifty thousand sailors are forced +from the merchant service into that of the king, the demand for sailors +to merchant ships necessarily rises with their scarcity; and their +wages, upon such occasions, commonly rise from a guinea and +seven-and-twenty shillings to forty shillings and three pounds a-month. +In a decaying manufacture, on the contrary, many workmen, rather than +quit their own trade, are contented with smaller wages than would be +suitable to the nature of their employment. + +The profits of stock vary with the price of the commodities in which it +is employed. As the price of any commodity rises above the ordinary or +average rate, the profits of at least some part of the stock that is +employed in bringing it to market, rise above their proper level, and as +it falls they sink below it. All commodities are more or less liable to +variations of price, but some are much more so than others. In all +commodities which are produced by human industry, the quantity of +industry annually employed is necessarily regulated by the annual +demand, in such a manner that the average annual produce may, as nearly +as possible, be equal to the average annual consumption. In some +employments, it has already been observed, the same quantity of industry +will always produce the same, or very nearly the same quantity of +commodities. In the linen or woollen manufactures, for example, the same +number of hands will annually work up very nearly the same quantity of +linen and woollen cloth. The variations in the market price of such +commodities, therefore, can arise only from some accidental variation in +the demand. A public mourning raises the price of black cloth. But as +the demand for most sorts of plain linen and woollen cloth is pretty +uniform, so is likewise the price. But there are other employments in +which the same quantity of industry will not always produce the same +quantity of commodities. The same quantity of industry, for example, +will, in different years, produce very different quantities of corn, +wine, hops, sugar, tobacco, &c. The price of such commodities, +therefore, varies not only with the variations of demand, but with the +much greater and more frequent variations of quantity, and is +consequently extremely fluctuating; but the profit of some of the +dealers must necessarily fluctuate with the price of the commodities. +The operations of the speculative merchant are principally employed +about such commodities. He endeavours to buy them up when he foresees +that their price is likely to rise, and to sell them when it is likely +to fall. + +Thirdly, this equality in the whole of the advantages and disadvantages +of the different employments of labour and stock, can take place only in +such as are the sole or principal employments of those who occupy them. + +When a person derives his subsistence from one employment, which does +not occupy the greater part of his time, in the intervals of his leisure +he is often willing to work at another for less wages than would +otherwise suit the nature of the employment. + +There still subsists, in many parts of Scotland, a set of people called +_cottars_ or _cottagers_, though they were more frequent some years ago +than they are now. They are a sort of out-servants of the landlords and +farmers. The usual reward which they receive from their master is a +house, a small garden for pot-herbs, as much grass as will feed a cow, +and, perhaps, an acre or two of bad arable land. When their master has +occasion for their labour, he gives them, besides, two pecks of oatmeal +a-week, worth about sixteen pence sterling. During a great part of the +year, he has little or no occasion for their labour, and the cultivation +of their own little possession is not sufficient to occupy the time +which is left at their own disposal. When such occupiers were more +numerous than they are at present, they are said to have been willing to +give their spare time for a very small recompence to any body, and to +have wrought for less wages than other labourers. In ancient times, they +seem to have been common all over Europe. In countries ill cultivated, +and worse inhabited, the greater part of landlords and farmers could not +otherwise provide themselves with the extraordinary number of hands +which country labour requires at certain seasons. The daily or weekly +recompence which such labourers occasionally received from their +masters, was evidently not the whole price of their labour. Their small +tenement made a considerable part of it. This daily or weekly +recompence, however, seems to have been considered as the whole of it, +by many writers who have collected the prices of labour and provisions +in ancient times, and who have taken pleasure in representing both as +wonderfully low. + +The produce of such labour comes frequently cheaper to market than would +otherwise be suitable to its nature. Stockings, in many parts of +Scotland, are knit much cheaper than they can anywhere be wrought upon +the loom. They are the work of servants and labourers, who derive the +principal part of their subsistence from some other employment. More +than a thousand pair of Shetland stockings are annually imported into +Leith, of which the price is from fivepence to sevenpence a pair. At +Lerwick, the small capital of the Shetland islands, tenpence a-day, I +have been assured, is a common price of common labour. In the same +islands, they knit worsted stockings to the value of a guinea a pair and +upwards. + +The spinning of linen yarn is carried on in Scotland nearly in the same +way as the knitting of stockings, by servants, who are chiefly hired for +other purposes. They earn but a very scanty subsistence, who endeavour +to get their livelihood by either of those trades. In most parts of +Scotland, she is a good spinner who can earn twentypence a-week. + +In opulent countries, the market is generally so extensive, that any one +trade is sufficient to employ the whole labour and stock of those who +occupy it. Instances of people living by one employment, and, at the +same time, deriving some little advantage from another, occur chiefly in +poor countries. The following instance, however, of something of the +same kind, is to be found in the capital of a very rich one. There is no +city in Europe, I believe, in which house-rent is dearer than in London, +and yet I know no capital in which a furnished apartment can be hired so +cheap. Lodging is not only much cheaper in London than in Paris; it is +much cheaper than in Edinburgh, of the same degree of goodness; and, +what may seem extraordinary, the dearness of house-rent is the cause of +the cheapness of lodging. The dearness of house-rent in London arises, +not only from those causes which render it dear in all great capitals, +the dearness of labour, the dearness of all the materials of building, +which must generally be brought from a great distance, and, above all, +the dearness of ground-rent, every landlord acting the part of a +monopolist, and frequently exacting a higher rent for a single acre of +bad land in a town, than can be had for a hundred of the best in the +country, but it arises in part from the peculiar manners and customs of +the people, which oblige every master of a family to hire a whole house +from top to bottom. A dwelling-house in England means every thing that +is contained under the same roof. In France, Scotland, and many other +parts of Europe, it frequently means no more than a single storey. A +tradesman in London is obliged to hire a whole house in that part of the +town where his customers live. His shop is upon the ground floor, and he +and his family sleep in the garret; and he endeavours to pay a part of +his house-rent by letting the two middle storeys to lodgers. He expects +to maintain his family by his trade, and not by his lodgers. Whereas at +Paris and Edinburgh, people who let lodgings have commonly no other +means of subsistence; and the price of the lodging must pay, not only +the rent of the house, but the whole expense of the family. + + +PART II.--_Inequalities occasioned by the Policy of Europe._ + +Such are the inequalities in the whole of the advantages and +disadvantages of the different employments of labour and stock, which +the defect of any of the three requisites above mentioned must occasion, +even where there is the most perfect liberty. But the policy of Europe, +by not leaving things at perfect liberty, occasions other inequalities +of much greater importance. + +It does this chiefly in the three following ways. First, by restraining +the competition in some employments to a smaller number than would +otherwise be disposed to enter into them; secondly, by increasing it in +others beyond what it naturally would be; and, thirdly, by obstructing +the free circulation of labour and stock, both from employment to +employment, and from place to place. + +First, The policy of Europe occasions a very important inequality in the +whole of the advantages and disadvantages of the different employments +of labour and stock, by restraining the competition in some employments +to a smaller number than might otherwise be disposed to enter into them. + +The exclusive privileges of corporations are the principal means it +makes use of for this purpose. + +The exclusive privilege of an incorporated trade necessarily restrains +the competition, in the town where it is established, to those who are +free of the trade. To have served an apprenticeship in the town, under a +master properly qualified, is commonly the necessary requisite for +obtaining this freedom. The bye-laws of the corporation regulate +sometimes the number of apprentices which any master is allowed to have, +and almost always the number of years which each apprentice is obliged +to serve. The intention of both regulations is to restrain the +competition to a much smaller number than might otherwise be disposed to +enter into the trade. The limitation of the number of apprentices +restrains it directly. A long term of apprenticeship restrains it more +indirectly, but as effectually, by increasing the expense of education. + +In Sheffield, no master cutler can have more than one apprentice at a +time, by a bye-law of the corporation. In Norfolk and Norwich, no master +weaver can have more than two apprentices, under pain of forfeiting five +pounds a-month to the king. No master hatter can have more than two +apprentices anywhere in England, or in the English plantations, under +pain of forfeiting five pounds a-month, half to the king, and half to +him who shall sue in any court of record. Both these regulations, though +they have been confirmed by a public law of the kingdom, are evidently +dictated by the same corporation-spirit which enacted the bye-law of +Sheffield. The silk-weavers in London had scarce been incorporated a +year, when they enacted a bye-law, restraining any master from having +more than two apprentices at a time. It required a particular act of +parliament to rescind this bye-law. + +Seven years seem anciently to have been, all over Europe, the usual term +established for the duration of apprenticeships in the greater part of +incorporated trades. All such incorporations were anciently called +universities, which, indeed, is the proper Latin name for any +incorporation whatever. The university of smiths, the university of +tailors, &c. are expressions which we commonly meet with in the old +charters of ancient towns. When those particular incorporations, which +are now peculiarly called universities, were first established, the term +of years which it was necessary to study, in order to obtain the degree +of master of arts, appears evidently to have been copied from the term +of apprenticeship in common trades, of which the incorporations were +much more ancient. As to have wrought seven years under a master +properly qualified, was necessary, in order to entitle any person to +become a master, and to have himself apprentices in a common trade; so +to have studied seven years under a master properly qualified, was +necessary to entitle him to become a master, teacher, or doctor (words +anciently synonymous), in the liberal arts, and to have scholars or +apprentices (words likewise originally synonymous) to study under him. + +By the 5th of Elizabeth, commonly called the Statute of Apprenticeship, +it was enacted, that no person should, for the future, exercise any +trade, craft, or mystery, at that time exercised in England, unless he +had previously served to it an apprenticeship of seven years at least; +and what before had been the bye-law of many particular corporations, +became in England the general and public law of all trades carried on in +market towns. For though the words of the statute are very general, and +seem plainly to include the whole kingdom, by interpretation its +operation has been limited to market towns; it having been held that, in +country villages, a person may exercise several different trades, though +he has not served a seven years apprenticeship to each, they being +necessary for the conveniency of the inhabitants, and the number of +people frequently not being sufficient to supply each with a particular +set of hands. + +By a strict interpretation of the words, too, the operation of this +statute has been limited to those trades which were established in +England before the 5th of Elizabeth, and has never been extended to such +as have been introduced since that time. This limitation has given +occasion to several distinctions, which, considered as rules of police, +appear as foolish as can well be imagined. It has been adjudged, for +example, that a coachmaker can neither himself make nor employ +journeymen to make his coach-wheels, but must buy them of a master +wheel-wright; this latter trade having been exercised in England before +the 5th of Elizabeth. But a wheel-wright, though he has never served an +apprenticeship to a coachmaker, may either himself make or employ +journeymen to make coaches; the trade of a coachmaker not being within +the statute, because not exercised in England at the time when it was +made. The manufactures of Manchester, Birmingham, and Wolverhampton, are +many of them, upon this account, not within the statute, not having been +exercised in England before the 5th of Elizabeth. + +In France, the duration of apprenticeships is different in different +towns and in different trades. In Paris, five years is the term required +in a great number; but, before any person can be qualified to exercise +the trade as a master, he must, in many of them, serve five years more +as a journeyman. During this latter term, he is called the companion of +his master, and the term itself is called his companionship. + +In Scotland, there is no general law which regulates universally the +duration of apprenticeships. The term is different in different +corporations. Where it is long, a part of it may generally be redeemed +by paying a small fine. In most towns, too, a very small fine is +sufficient to purchase the freedom of any corporation. The weavers of +linen and hempen cloth, the principal manufactures of the country, as +well as all other artificers subservient to them, wheel-makers, +reel-makers, &c. may exercise their trades in any town-corporate, +without paying any fine. In all towns-corporate, all persons are free to +sell butchers' meat upon any lawful day of the week. Three years is, in +Scotland, a common term of apprenticeship, even in some very nice +trades; and, in general, I know of no country in Europe, in which +corporation laws are so little oppressive. + +The property which every man has in his own labour, as it is the +original foundation of all other property, so it is the most sacred and +inviolable. The patrimony of a poor man lies in the strength and +dexterity of his hands; and to hinder him from employing this strength +and dexterity in what manner he thinks proper, without injury to his +neighbour, is a plain violation of this most sacred property. It is a +manifest encroachment upon the just liberty, both of the workman, and of +those who might be disposed to employ him. As it hinders the one from +working at what he thinks proper, so it hinders the others from +employing whom they think proper. To judge whether he is fit to be +employed, may surely be trusted to the discretion of the employers, +whose interest it so much concerns. The affected anxiety of the +lawgiver, lest they should employ an improper person, is evidently as +impertinent as it is oppressive. + +The institution of long apprenticeships can give no security that +insufficient workmanship shall not frequently be exposed to public sale. +When this is done, it is generally the effect of fraud, and not of +inability; and the longest apprenticeship can give no security against +fraud. Quite different regulations are necessary to prevent this abuse. +The sterling mark upon plate, and the stamps upon linen and woollen +cloth, give the purchaser much greater security than any statute of +apprenticeship. He generally looks at these, but never thinks it worth +while to enquire whether the workman had served a seven years +apprenticeship. + +The institution of long apprenticeships has no tendency to form young +people to industry. A journeyman who works by the piece is likely to be +industrious, because he derives a benefit from every exertion of his +industry. An apprentice is likely to be idle, and almost always is so, +because he has no immediate interest to be otherwise. In the inferior +employments, the sweets of labour consist altogether in the recompence +of labour. They who are soonest in a condition to enjoy the sweets of +it, are likely soonest to conceive a relish for it, and to acquire the +early habit of industry. A young man naturally conceives an aversion to +labour, when for a long time he receives no benefit from it. The boys +who are put out apprentices from public charities are generally bound +for more than the usual number of years, and they generally turn out +very idle and worthless. + +Apprenticeships were altogether unknown to the ancients. The reciprocal +duties of master and apprentice make a considerable article in every +modern code. The Roman law is perfectly silent with regard to them. I +know no Greek or Latin word (I might venture, I believe, to assert that +there is none) which expresses the idea we now annex to the word +apprentice, a servant bound to work at a particular trade for the +benefit of a master, during a term of years, upon condition that the +master shall teach him that trade. + +Long apprenticeships are altogether unnecessary. The arts, which are +much superior to common trades, such as those of making clocks and +watches, contain no such mystery as to require a long course of +instruction. The first invention of such beautiful machines, indeed, and +even that of some of the instruments employed in making them, must no +no doubt have been the work of deep thought and long time, and may +justly be considered as among the happiest efforts of human ingenuity. +But when both have been fairly invented, and are well understood, to +explain to any young man, in the completest manner, how to apply the +instruments, and how to construct the machines, cannot well require more +than the lessons of a few weeks; perhaps those of a few days might be +sufficient. In the common mechanic trades, those of a few days might +certainly be sufficient. The dexterity of hand, indeed, even in common +trades, cannot be acquired without much practice and experience. But a +young man would practice with much more diligence and attention, if from +the beginning he wrought as a journeyman, being paid in proportion to +the little work which he could execute, and paying in his turn for the +materials which he might sometimes spoil through awkwardness and +inexperience. His education would generally in this way be more +effectual, and always less tedious and expensive. The master, indeed, +would be a loser. He would lose all the wages of the apprentice, which +he now saves, for seven years together. In the end, perhaps, the +apprentice himself would be a loser. In a trade so easily learnt he +would have more competitors, and his wages, when he came to be a +complete workman, would be much less than at present. The same increase +of competition would reduce the profits of the masters, as well as the +wages of workmen. The trades, the crafts, the mysteries, would all be +losers. But the public would be a gainer, the work of all artificers +coming in this way much cheaper to market. + +It is to prevent this reduction of price, and consequently of wages and +profit, by restraining that free competition which would most certainly +occasion it, that all corporations, and the greater part of corporation +laws, have been established. In order to erect a corporation, no other +authority in ancient times was requisite, in many parts of Europe, but +that of the town-corporate in which it was established. In England, +indeed, a charter from the king was likewise necessary. But this +prerogative of the crown seems to have been reserved rather for +extorting money from the subject, than for the defence of the common +liberty against such oppressive monopolies. Upon paying a fine to the +king, the charter seems generally to have been readily granted; and when +any particular class of artificers or traders thought proper to act as a +corporation, without a charter, such adulterine guilds, as they were +called, were not always disfranchised upon that account, but obliged to +fine annually to the king, for permission to exercise their usurped +privileges[12]. The immediate inspection of all corporations, and of the +bye-laws which they might think proper to enact for their own +government, belonged to the town-corporate in which they were +established; and whatever discipline was exercised over them, proceeded +commonly, not from the king, but from that greater incorporation of +which those subordinate ones were only parts or members. + +The government of towns-corporate was altogether in the hands of traders +and artificers, and it was the manifest interest of every particular +class of them, to prevent the market from being overstocked, as they +commonly express it, with their own particular species of industry; +which is in reality to keep it always understocked. Each class was eager +to establish regulations proper for this purpose, and, provided it was +allowed to do so, was willing to consent that every other class should +do the same. In consequence of such regulations, indeed, each class was +obliged to buy the goods they had occasion for from every other within +the town, somewhat dearer than they otherwise might have done. But, in +recompence, they were enabled to sell their own just as much dearer; so +that, so far it was as broad as long, as they say; and in the dealings +of the different classes within the town with one another, none of them +were losers by these regulations. But in their dealings with the country +they were all great gainers; and in these latter dealings consist the +whole trade which supports and enriches every town. + +Every town draws its whole subsistence, and all the materials of its +industry, from the country. It pays for these chiefly in two ways. +First, by sending back to the country a part of those materials wrought +up and manufactured; in which case, their price is augmented by the +wages of the workmen, and the profits of their masters or immediate +employers; secondly, by sending to it a part both of the rude and +manufactured produce, either of other countries, or of distant parts of +the same country, imported into the town; in which case, too, the +original price of those goods is augmented by the wages of the carriers +or sailors, and by the profits of the merchants who employ them. In what +is gained upon the first of those branches of commerce, consists the +advantage which the town makes by its manufactures; in what is gained +upon the second, the advantage of its inland and foreign trade. The +wages of the workmen, and the profits of their different employers, make +up the whole of what is gained upon both. Whatever regulations, +therefore, tend to increase those wages and profits beyond what they +otherwise would be, tend to enable the town to purchase, with a smaller +quantity of its labour, the produce of a greater quantity of the labour +of the country. They give the traders and artificers in the town an +advantage over the landlords, farmers, and labourers, in the country, +and break down that natural equality which would otherwise take place in +the commerce which is carried on between them. The whole annual produce +of the labour of the society is annually divided between these two +different sets of people. By means of those regulations, a greater share +of it is given to the inhabitants of the town than would otherwise fall +to them, and a less to those of the country. + +The price which the town really pays for the provisions and materials +annually imported into it, is the quantity of manufactures and other +goods annually exported from it. The dearer the latter are sold, the +cheaper the former are bought. The industry of the town becomes more, +and that of the country less advantageous. + +That the industry which is carried on in towns is, everywhere in Europe, +more advantageous than that which is carried on in the country, without +entering into any very nice computations, we may satisfy ourselves by +one very simple and obvious observation. In every country of Europe, we +find at least a hundred people who have acquired great fortunes, from +small beginnings, by trade and manufactures, the industry which properly +belongs to towns, for one who has done so by that which properly belongs +to the country, the raising of rude produce by the improvement and +cultivation of land. Industry, therefore, must be better rewarded, the +wages of labour and the profits of stock must evidently be greater, in +the one situation than in the other. But stock and labour naturally seek +the most advantageous employment. They naturally, therefore, resort as +much as they can to the town, and desert the country. + +The inhabitants of a town being collected into one place, can easily +combine together. The most insignificant trades carried on in towns +have, accordingly, in some place or other, been incorporated; and even +where they have never been incorporated, yet the corporation-spirit, the +jealousy of strangers, the aversion to take apprentices, or to +communicate the secret of their trade, generally prevail in them, and +often teach them, by voluntary associations and agreements, to prevent +that free competition which they cannot prohibit by bye-laws. The trades +which employ but a small number of hands, run most easily into such +combinations. Half-a-dozen wool-combers, perhaps, are necessary to keep +a thousand spinners and weavers at work. By combining not to take +apprentices, they can not only engross the employment, but reduce the +whole manufacture into a sort of slavery to themselves, and raise the +price of their labour much above what is due to the nature of their +work. + +The inhabitants of the country, dispersed in distant places, cannot +easily combine together. They have not only never been incorporated, but +the incorporation spirit never has prevailed among them. No +apprenticeship has ever been thought necessary to qualify for husbandry, +the great trade of the country. After what are called the fine arts, and +the liberal professions, however, there is perhaps no trade which +requires so great a variety of knowledge and experience. The innumerable +volumes which have been written upon it in all languages, may satisfy +us, that among the wisest and most learned nations, it has never been +regarded as a matter very easily understood. And from all those volumes +we shall in vain attempt to collect that knowledge of its various and +complicated operations which is commonly possessed even by the common +farmer; how contemptuously soever the very contemptible authors of some +of them may sometimes affect to speak of him. There is scarce any common +mechanic trade, on the contrary, of which all the operations may not be +as completely and distinctly explained in a pamphlet of a very few +pages, as it is possible for words illustrated by figures to explain +them. In the history of the arts, now publishing by the French Academy +of Sciences, several of them are actually explained in this manner. The +direction of operations, besides, which must be varied with every change +of the weather, as well as with many other accidents, requires much more +judgment and discretion, than that of those which are always the same, +or very nearly the same. + +Not only the art of the farmer, the general direction of the operations +of husbandry, but many inferior branches of country labour require much +more skill and experience than the greater part of mechanic trades. The +man who works upon brass and iron, works with instruments, and upon +materials of which the temper is always the same, or very nearly the +same. But the man who ploughs the ground with a team of horses or oxen, +works with instruments of which the health, strength, and temper, are +very different upon different occasions. The condition of the materials +which he works upon, too, is as variable as that of the instruments +which he works with, and both require to be managed with much judgment +and discretion. The common ploughman, though generally regarded as the +pattern of stupidity and ignorance, is seldom defective in this judgment +and discretion. He is less accustomed, indeed, to social intercourse, +than the mechanic who lives in a town. His voice and language are more +uncouth, and more difficult to be understood by those who are not used +to them. His understanding, however, being accustomed to consider a +greater variety of objects, is generally much superior to that of the +other, whose whole attention, from morning till night is commonly +occupied in performing one or two very simple operations. How much the +lower ranks of people in the country are really superior to those of the +town, is well known to every man whom either business or curiosity has +led to converse much with both. In China and Indostan, accordingly, both +the rank and the wages of country labourers are said to be superior to +those of the greater part of artificers and manufacturers. They would +probably be so everywhere, if corporation laws and the corporation +spirit did not prevent it. + +The superiority which the industry of the towns has everywhere in Europe +over that of the country, is not altogether owing to corporations and +corporation laws. It is supported by many other regulations. The high +duties upon foreign manufactures, and upon all goods imported by alien +merchants, all tend to the same purpose. Corporation laws enable the +inhabitants of towns to raise their prices, without fearing to be +undersold by the free competition of their own countrymen. Those other +regulations secure them equally against that of foreigners. The +enhancement of price occasioned by both is everywhere finally paid by +the landlords, farmers, and labourers, of the country, who have seldom +opposed the establishment of such monopolies. They have commonly neither +inclination nor fitness to enter into combinations; and the clamour and +sophistry of merchants and manufacturers easily persuade them, that the +private interest of a part, and of a subordinate part, of the society, +is the general interest of the whole. + +In Great Britain, the superiority of the industry of the towns over that +of the country seems to have been greater formerly than in the present +times. The wages of country labour approach nearer to those of +manufacturing labour, and the profits of stock employed in agriculture +to those of trading and manufacturing stock, than they are said to have +done in the last century, or in the beginning of the present. This +change may be regarded as the necessary, though very late consequence of +the extraordinary encouragement given to the industry of the towns. The +stocks accumulated in them come in time to be so great, that it can no +longer be employed with the ancient profit in that species of industry +which in peculiar to them. That industry has its limits like every +other; and the increase of stock, by increasing the competition, +necessarily reduces the profit. The lowering of profit in the town +forces out stock to the country, where, by creating a new demand for +country labour, it necessarily raises its wages. It then spreads itself, +if I may say so, over the face of the land, and, by being employed in +agriculture, is in part restored to the country, at the expense of +which, in a great measure, it had originally been accumulated in the +town. That everywhere in Europe the greatest improvements of the country +have been owing to such overflowings of the stock originally accumulated +in the towns, I shall endeavour to shew hereafter, and at the same time +to demonstrate, that though some countries have, by this course, +attained to a considerable degree of opulence, it is in itself +necessarily slow, uncertain, liable to be disturbed and interrupted by +innumerable accidents, and, in every respect, contrary to the order of +nature and reason. The interests, prejudices, laws, and customs, which +have given occasion to it, I shall endeavour to explain as fully and +distinctly as I can in the third and fourth books of this Inquiry. + +People of the same trade seldom meet together, even for merriment and +diversion, but the conversation ends in a conspiracy against the public, +or in some contrivance to raise prices. It is impossible, indeed, to +prevent such meetings, by any law which either could be executed, or +would be consistent with liberty and justice. But though the law cannot +hinder people of the same trade from sometimes assembling together, it +ought to do nothing to facilitate such assemblies, much less to render +them necessary. + +A regulation which obliges all those of the same trade in a particular +town to enter their names and places of abode in a public register, +facilitates such assemblies. It connects individuals who might never +otherwise be known to one another, and gives every man of the trade a +direction where to find every other man of it. + +A regulation which enables those of the same trade to tax themselves, in +order to provide for their poor, their sick, their widows and orphans, +by giving them a common interest to manage, renders such assemblies +necessary. + +An incorporation not only renders them necessary, but make the act of +the majority binding upon the whole. In a free trade, an effectual +combination cannot be established but by the unanimous consent of every +single trader, and it cannot last longer than every single trader +continues of the same mind. The majority of a corporation can enact a +bye-law, with proper penalties, which will limit the competition more +effectually and more durably than any voluntary combination whatever. + +The pretence that corporations are necessary for the better government +of the trade, is without any foundation. The real and effectual +discipline which is exercised over a workman, is not that of his +corporation, but that of his customers. It is the fear of losing their +employment which restrains his frauds and corrects his negligence. An +exclusive corporation necessarily weakens the force of this discipline. +A particular set of workmen must then be employed, let them behave well +or ill. It is upon this account that, in many large incorporated towns, +no tolerable workmen are to be found, even in some of the most necessary +trades. If you would have your work tolerably executed, it must be done +in the suburbs, where the workmen, having no exclusive privilege, have +nothing but their character to depend upon, and you must then smuggle it +into the town as well as you can. + +It is in this manner that the policy of Europe, by restraining the +competition in some employments to a smaller number than would otherwise +be disposed to enter into them, occasions a very important inequality in +the whole of the advantages and disadvantages of the different +employments of labour and stock. + +Secondly, The policy of Europe, by increasing the competition in some +employments beyond what it naturally would be, occasions another +inequality, of an opposite kind, in the whole of the advantages and +disadvantages of the different employments of labour and stock. + +It has been considered as of so much importance that a proper number of +young people should be educated for certain professions, that sometimes +the public, and sometimes the piety of private founders, have +established many pensions, scholarships, exhibitions, bursaries, &c. for +this purpose, which draw many more people into those trades than could +otherwise pretend to follow them. In all Christian countries, I believe, +the education of the greater part of churchmen is paid for in this +manner. Very few of them are educated altogether at their own expense. +The long, tedious, and expensive education, therefore, of those who are, +will not always procure them a suitable reward, the church being crowded +with people, who, in order to get employment, are willing to accept of a +much smaller recompence than what such an education would otherwise have +entitled them to; and in this manner the competition of the poor takes +away the reward of the rich. It would be indecent, no doubt, to compare +either a curate or a chaplain with a journeyman in any common trade. The +pay of a curate or chaplain, however, may very properly be considered as +of the same nature with the wages of a journeyman. They are all three +paid for their work according to the contract which they may happen to +make with their respective superiors. Till after the middle of the +fourteenth century, five merks, containing about as much silver as ten +pounds of our present money, was in England the usual pay of a curate or +a stipendiary parish priest, as we find it regulated by the decrees of +several different national councils. At the same period, fourpence +a-day, containing the same quantity of silver as a shilling of our +present money, was declared to be the pay of a master mason; and +threepence a-day, equal to ninepence of our present money, that of a +journeyman mason[13]. The wages of both these labourers, therefore, +supposing them to have been constantly employed, were much superior to +those of the curate. The wages of the master mason, supposing him to +have been without employment one-third of the year, would have fully +equalled them. By the 12th of Queen Anne, c. 12. it is declared, 'That +whereas, for want of sufficient maintenance and encouragement to +curates, the cures have, in several places, been meanly supplied, the +bishop is, therefore, empowered to appoint, by writing under his hand +and seal, a sufficient certain stipend or allowance, not exceeding +fifty, and not less than twenty pounds a-year.' Forty pounds a-year is +reckoned at present very good pay for a curate; and, notwithstanding +this act of parliament, there are many curacies under twenty pounds +a-year. There are journeymen shoemakers in London who earn forty pounds +a-year, and there is scarce an industrious workman of any kind in that +metropolis who does not earn more than twenty. This last sum, indeed, +does not exceed what is frequently earned by common labourers in many +country parishes. Whenever the law has attempted to regulate the wages +of workmen, it has always been rather to lower them than to raise them. +But the law has, upon many occasions, attempted to raise the wages of +curates, and, for the dignity of the church, to oblige the rectors of +parishes to give them more than the wretched maintenance which they +themselves might be willing to accept of. And, in both cases, the law +seems to have been equally ineffectual, and has never either been able +to raise the wages of curates, or to sink those of labourers to the +degree that was intended; because it has never been able to hinder +either the one from being willing to accept of less than the legal +allowance, on account of the indigence of their situation and the +multitude of their competitors, or the other from receiving more, on +account of the contrary competition of those who expected to derive +either profit or pleasure from employing them. + +The great benefices and other ecclesiastical dignities support the +honour of the church, notwithstanding the mean circumstances of some of +its inferior members. The respect paid to the profession, too, makes +some compensation even to them for the meanness of their pecuniary +recompence. In England, and in all Roman catholic countries, the lottery +of the church is in reality much more advantageous than is necessary. +The example of the churches of Scotland, of Geneva, and of several other +protestant churches, may satisfy us, that in so creditable a profession, +in which education is so easily procured, the hopes of much more +moderate benefices will draw a sufficient number of learned, decent, and +respectable men into holy orders. + +In professions in which there are no benefices, such as law and physic, +if an equal proportion of people were educated at the public expense, +the competition would soon be so great as to sink very much their +pecuniary reward. It might then not be worth any man's while to educate +his son to either of those professions at his own expense. They would be +entirely abandoned to such as had been educated by those public +charities, whose numbers and necessities would oblige them in general to +content themselves with a very miserable recompence, to the entire +degradation of the now respectable professions of law and physic. + +That unprosperous race of men, commonly called men of letters, are +pretty much in the situation which lawyers and physicians probably would +be in, upon the foregoing supposition. In every part of Europe, the +greater part of them have been educated for the church, but have been +hindered by different reasons from entering into holy orders. They have +generally, therefore, been educated at the public expense; and their +numbers are everywhere so great, as commonly to reduce the price of +their labour to a very paltry recompence. + +Before the invention of the art of printing, the only employment by +which a man of letters could make any thing by his talents, was that of +a public or private teacher, or by communicating to other people the +curious and useful knowledge which he had acquired himself; and this is +still surely a more honourable, a more useful, and, in general, even a +more profitable employment than that other of writing for a bookseller, +to which the art of printing has given occasion. The time and study, the +genius, knowledge, and application requisite to qualify an eminent +teacher of the sciences, are at least equal to what is necessary for the +greatest practitioners in law and physic. But the usual reward of the +eminent teacher bears no proportion to that of the lawyer or physician, +because the trade of the one is crowded with indigent people, who have +been brought up to it at the public expense; whereas those of the other +two are encumbered with very few who have not been educated at their +own. The usual recompence, however, of public and private teachers, +small as it may appear, would undoubtedly be less than it is, if the +competition of those yet more indigent men of letters, who write for +bread, was not taken out of the market. Before the invention of the art +of printing, a scholar and a beggar seem to have been terms very nearly +synonymous. The different governors of the universities, before that +time, appear to have often granted licences to their scholars to beg. + +In ancient times, before any charities of this kind had been established +for the education of indigent people to the learned professions, the +rewards of eminent teachers appear to have been much more considerable. +Isocrates, in what is called his discourse against the sophists, +reproaches the teachers of his own times with inconsistency. "They make +the most magnificent promises to their scholars," says he, "and +undertake to teach them to be wise, to be happy, and to be just; and, in +return for so important a service, they stipulate the paltry reward of +four or five minæ." "They who teach wisdom," continues he, "ought +certainly to be wise themselves; but if any man were to sell such a +bargain for such a price, he would be convicted of the most evident +folly." He certainly does not mean here to exaggerate the reward, and we +may be assured that it was not less than he represents it. Four minæ +were equal to thirteen pounds six shillings and eightpence; five minæ to +sixteen pounds thirteen shillings and fourpence.--Something not less +than the largest of those two sums, therefore, must at that time have +been usually paid to the most eminent teachers at Athens. Isocrates +himself demanded ten minæ, or L.33 : 6 : 8 from each scholar. When he +taught at Athens, he is said to have had a hundred scholars. I +understand this to be the number whom he taught at one time, or who +attended what we would call one course of lectures; a number which will +not appear extraordinary from so great a city to so famous a teacher, +who taught, too, what was at that time the most fashionable of all +sciences, rhetoric. He must have made, therefore, by each course of +lectures, a thousand minæ, or L.3333 : 6 : 8. A thousand minæ, +accordingly, is said by Plutarch, in another place, to have been his +didactron, or usual price of teaching. Many other eminent teachers in +those times appear to have acquired great fortunes. Georgias made a +present to the temple of Delphi of his own statue in solid gold. We must +not, I presume, suppose that it was as large as the life. His way of +living, as well as that of Hippias and Protagoras, two other eminent +teachers of those times, is represented by Plato as splendid, even to +ostentation. Plato himself is said to have lived with a good deal of +magnificence. Aristotle, after having been tutor to Alexander, and most +munificently rewarded, as it is universally agreed, both by him and his +father, Philip, thought it worth while, notwithstanding, to return to +Athens, in order to resume the teaching of his school. Teachers of the +sciences were probably in those times less common than they came to be +in an age or two afterwards, when the competition had probably somewhat +reduced both the price of their labour and the admiration for their +persons. The most eminent of them, however, appear always to have +enjoyed a degree of consideration much superior to any of the like +profession in the present times. The Athenians sent Carneades the +academic, and Diogenes the stoic, upon a solemn embassy to Rome; and +though their city had then declined from its former grandeur, it was +still an independent and considerable republic. Carneades, too, was a +Babylonian by birth; and as there never was a people more jealous of +admitting foreigners to public offices than the Athenians, their +consideration for him must have been very great. + +This inequality is, upon the whole, perhaps rather advantageous than +hurtful to the public. It may somewhat degrade the profession of a +public teacher; but the cheapness of literary education is surely an +advantage which greatly overbalances this trifling inconveniency. The +public, too, might derive still greater benefit from it, if the +constitution of those schools and colleges, in which education is +carried on, was more reasonable than it is at present through the +greater part of Europe. + +Thirdly, the policy of Europe, by obstructing the free circulation of +labour and stock, both from employment to employment, and from place to +place, occasions, in some cases, a very inconvenient inequality in the +whole of the advantages and disadvantages of their different +employments. + +The statute of apprenticeship obstructs the free circulation of labour +from one employment to another, even in the same place. The exclusive +privileges of corporations obstruct it from one place to another, even +in the same employment. + +It frequently happens, that while high wages are given to the workmen in +one manufacture, those in another are obliged to content themselves with +bare subsistence. The one is in an advancing state, and has therefore a +continual demand for new hands; the other is in a declining state, and +the superabundance of hands is continually increasing. Those two +manufactures may sometimes be in the same town, and sometimes in the +same neighbourhood, without being able to lend the least assistance to +one another. The statute of apprenticeship may oppose it in the one +case, and both that and an exclusive corporation in the other. In many +different manufactures, however, the operations are so much alike, that +the workmen could easily change trades with one another, if those absurd +laws did not hinder them. The arts of weaving plain linen and plain +silk, for example, are almost entirely the same. That of weaving plain +woollen is somewhat different; but the difference is so insignificant, +that either a linen or a silk weaver might become a tolerable workman in +a very few days. If any of those three capital manufactures, therefore, +were decaying, the workmen might find a resource in one of the other two +which was in a more prosperous condition; and their wages would neither +rise too high in the thriving, nor sink too low in the decaying +manufacture. The linen manufacture, indeed, is in England, by a +particular statute, open to every body; but as it is not much cultivated +through the greater part of the country, it can afford no general +resource to the workmen of other decaying manufactures, who, wherever +the statute of apprenticeship takes place, have no other choice, but +either to come upon the parish, or to work as common labourers; for +which, by their habits, they are much worse qualified than for any sort +of manufacture that bears any resemblance to their own. They generally, +therefore, chuse to come upon the parish. + +Whatever obstructs the free circulation of labour from one employment to +another, obstructs that of stock likewise; the quantity of stock which +can be employed in any branch of business depending very much upon that +of the labour which can be employed in it. Corporation laws, however, +give less obstruction to the free circulation of stock from one place to +another, than to that of labour. It is everywhere much easier for a +wealthy merchant to obtain the privilege of trading in a town-corporate, +than for a poor artificer to obtain that of working in it. + +The obstruction which corporation laws give to the free circulation of +labour is common, I believe, to every part of Europe. That which is +given to it by the poor laws is, so far as I know, peculiar to England. +It consists in the difficulty which a poor man finds in obtaining a +settlement, or even in being allowed to exercise his industry in any +parish but that to which he belongs. It is the labour of artificers and +manufacturers only of which the free circulation is obstructed by +corporation laws. The difficulty of obtaining settlements obstructs even +that of common labour. It may be worth while to give some account of the +rise, progress, and present state of this disorder, the greatest, +perhaps, of any in the police of England. + +When, by the destruction of monasteries, the poor had been deprived of +the charity of those religious houses, after some other ineffectual +attempts for their relief, it was enacted, by the 43d of Elizabeth, c. +2. that every parish should be bound to provide for its own poor, and +that overseers of the poor should be annually appointed, who, with the +church-wardens, should raise, by a parish rate, competent sums for this +purpose. + +By this statute, the necessity of providing for their own poor was +indispensably imposed upon every parish. Who were to be considered as +the poor of each parish became, therefore, a question of some +importance. This question, after some variation, was at last determined +by the 13th and 14th of Charles II. when it was enacted, that forty days +undisturbed residence should gain any person a settlement in any parish; +but that within that time it should be lawful for two justices of the +peace, upon complaint made by the church-wardens or overseers of the +poor, to remove any new inhabitant to the parish where he was last +legally settled; unless he either rented a tenement of ten pounds +a-year, or could give such security for the discharge of the parish +where he was then living, as those justices should judge sufficient. + +Some frauds, it is said, were committed in consequence of this statute; +parish officers sometimes bribing their own poor to go clandestinely to +another parish, and, by keeping themselves concealed for forty days, to +gain a settlement there, to the discharge of that to which they properly +belonged. It was enacted, therefore, by the 1st of James II. that the +forty days undisturbed residence of any person necessary to gain a +settlement, should be accounted only from the time of his delivering +notice, in writing, of the place of his abode and the number of his +family, to one of the church-wardens or overseers of the parish where he +came to dwell. + +But parish officers, it seems, were not always more honest with regard +to their own than they had been with regard to other parishes, and +sometimes connived at such intrusions, receiving the notice, and taking +no proper steps in consequence of it. As every person in a parish, +therefore, was supposed to have an interest to prevent as much as +possible their being burdened by such intruders, it was further enacted +by the 3d of William III. that the forty days residence should be +accounted only from the publication of such notice in writing on Sunday +in the church, immediately after divine service. + +"After all," says Doctor Burn, "this kind of settlement, by continuing +forty days after publication of notice in writing, is very seldom +obtained; and the design of the acts is not so much for gaining of +settlements, as for the avoiding of them by persons coming into a parish +clandestinely, for the giving of notice is only putting a force upon the +parish to remove. But if a person's situation is such, that it is +doubtful whether he is actually removable or not, he shall, by giving of +notice, compel the parish either to allow him a settlement uncontested, +by suffering him to continue forty days, or by removing him to try the +right." + +This statute, therefore, rendered it almost impracticable for a poor man +to gain a new settlement in the old way, by forty days inhabitancy. But +that it might not appear to preclude altogether the common people of one +parish from ever establishing themselves with security in another, it +appointed four other ways by which a settlement might be gained without +any notice delivered or published. The first was, by being taxed to +parish rates and paying them; the second, by being elected into an +annual parish office, and serving in it a year; the third, by serving an +apprenticeship in the parish; the fourth, by being hired into service +there for a year, and continuing in the same service during the whole of +it. + +Nobody can gain a settlement by either of the first two ways, but by the +public deed of the whole parish, who are too well aware of the +consequences to adopt any new-comer, who has nothing but his labour to +support him, either by taxing him to parish rates, or by electing him +into a parish office. + +No married man can well gain any settlement in either of the two last +ways. An apprentice is scarce ever married; and it is expressly enacted, +that no married servant shall gain any settlement by being hired for a +year. The principal effect of introducing settlement by service, has +been to put out in a great measure the old fashion of hiring for a year; +which before had been so customary in England, that even at this day, if +no particular term is agreed upon, the law intends that every servant is +hired for a year. But masters are not always willing to give their +servants a settlement by hiring them in this manner; and servants are +not always willing to be so hired, because, as every last settlement +discharges all the foregoing, they might thereby lose their original +settlement in the places of their nativity, the habitation of their +parents and relations. + +No independent workman, it is evident, whether labourer or artificer, is +likely to gain any new settlement, either by apprenticeship or by +service. When such a person, therefore, carried his industry to a new +parish, he was liable to be removed, how healthy and industrious soever, +at the caprice of any church-warden or overseer, unless he either rented +a tenement of ten pounds a-year, a thing impossible for one who has +nothing but his labour to live by, or could give such security for the +discharge of the parish as two justices of the peace should judge +sufficient. + +What security they shall require, indeed, is left altogether to their +discretion; but they cannot well require less than thirty pounds, it +having been enacted, that the purchase even of a freehold estate of less +than thirty pounds value, shall not gain any person a settlement, as not +being sufficient for the discharge of the parish. But this is a security +which scarce any man who lives by labour can give; and much greater +security is frequently demanded. + +In order to restore, in some measure, that free circulation of labour +which those different statutes had almost entirely taken away, the +invention of certificates was fallen upon. By the 8th and 9th of William +III. it was enacted that if any person should bring a certificate from +the parish where he was last legally settled, subscribed by the +church-wardens and overseers of the poor, and allowed by two justices of +the peace, that every other parish should be obliged to receive him; +that he should not be removable merely upon account of his being likely +to become chargeable, but only upon his becoming actually chargeable; +and that then the parish which granted the certificate should be obliged +to pay the expense both of his maintenance, and of his removal. And in +order to give the most perfect security to the parish where such +certificated man should come to reside, it was further enacted by the +same statute, that he should gain no settlement there by any means +whatever, except either by renting a tenement of ten pounds a-year, or +by serving upon his account in an annual parish office for one whole +year; and consequently neither by notice nor by service, nor by +apprenticeship, nor by paying parish rates. By the 12th of Queen Anne, +too, stat. 1, c. 18, it was further enacted, that neither the servants +nor apprentices of such certificated man should gain any settlement in +the parish where he resided under such certificate. + +How far this invention has restored that free circulation of labour, +which the preceding statutes had almost entirely taken away, we may +learn from the following very judicious observation of Doctor Burn. "It +is obvious," says he, "that there are divers good reasons for requiring +certificates with persons coming to settle in any place; namely, that +persons residing under them can gain no settlement, neither by +apprenticeship, nor by service, nor by giving notice, nor by paying +parish rates; that they can settle neither apprentices nor servants; +that if they become chargeable, it is certainly known whither to remove +them, and the parish shall be paid for the removal, and for their +maintenance in the mean time; and that, if they fall sick, and cannot be +removed, the parish which gave the certificate must maintain them, none +of all which can be without a certificate. Which reasons will hold +proportionably for parishes not granting certificates in ordinary cases; +for it is far more than an equal chance, but that they will have the +certificated persons again, and in a worse condition." The moral of this +observation seems to be, that certificates ought always to be required +by the parish where any poor man comes to reside, and that they ought +very seldom to be granted by that which he purposes to leave. "There is +somewhat of hardship in this matter of certificates," says the same very +intelligent author, in his History of the Poor Laws, "by putting it in +the power of a parish officer to imprison a man as it were for life, +however inconvenient it may be for him to continue at that place where +he has had the misfortune to acquire what is called a settlement, or +whatever advantage he may propose to himself by living elsewhere." + +Though a certificate carries along with it no testimonial of good +behaviour, and certifies nothing but that the person belongs to the +parish to which he really does belong, it is altogether discretionary in +the parish officers either to grant or to refuse it. A mandamus was once +moved for, says Doctor Burn, to compel the church-wardens and overseers +to sign a certificate; but the Court of King's Bench rejected the motion +as a very strange attempt. + +The very unequal price of labour which we frequently find in England, in +places at no great distance from one another, is probably owing to the +obstruction which the law of settlements gives to a poor man who would +carry his industry from one parish to another without a certificate. A +single man, indeed, who is healthy and industrious, may sometimes reside +by sufferance without one, but a man with a wife and family who should +attempt to do so, would, in most parishes, be sure of being removed; +and, if the single man should afterwards marry, he would generally be +removed likewise. The scarcity of hands in one parish, therefore, cannot +always be relieved by their superabundance in another, as it is +constantly in Scotland, and, I believe, in all other countries where +there is no difficulty of settlement. In such countries, though wages +may sometimes rise a little in the neighbourhood of a great town, or +wherever else there is an extraordinary demand for labour, and sink +gradually as the distance from such places increases, till they fall +back to the common rate of the country; yet we never meet with those +sudden and unaccountable differences in the wages of neighbouring places +which we sometimes find in England, where it is often more difficult for +a poor man to pass the artificial boundary of a parish, than an arm of +the sea, or a ridge of high mountains, natural boundaries which +sometimes separate very distinctly different rates of wages in other +countries. + +To remove a man who has committed no misdemeanour, from the parish where +he chooses to reside, is an evident violation of natural liberty and +justice. The common people of England, however, so jealous of their +liberty, but like the common people of most other countries, never +rightly understanding wherein it consists, have now, for more than a +century together, suffered themselves to be exposed to this oppression +without a remedy. Though men of reflection, too, have sometimes +complained of the law of settlements as a public grievance; yet it has +never been the object of any general popular clamour, such as that +against general warrants, an abusive practice undoubtedly, but such a +one as was not likely to occasion any general oppression. There is +scarce a poor man in England, of forty years of age, I will venture to +say, who has not, in some part of his life, felt himself most cruelly +oppressed by this ill-contrived law of settlements. + +I shall conclude this long chapter with observing, that though anciently +it was usual to rate wages, first by general laws extending over the +whole kingdom, and afterwards by particular orders of the justices of +peace in every particular county, both these practices have now gone +entirely into disuse "By the experience of above four hundred years," +says Doctor Burn, "it seems time to lay aside all endeavours to bring +under strict regulations, what in its own nature seems incapable of +minute limitation; for if all persons in the same kind of work were to +receive equal wages, there would be no emulation, and no room left for +industry or ingenuity." + +Particular acts of parliament, however, still attempt sometimes to +regulate wages in particular trades, and in particular places. Thus the +8th of George III. prohibits, under heavy penalties, all master tailors +in London, and five miles round it, from giving, and their workmen from +accepting, more than two shillings and sevenpence halfpenny a-day, +except in the case of a general mourning. Whenever the legislature +attempts to regulate the differences between masters and their workmen, +its counsellors are always the masters. When the regulation, therefore, +is in favour of the workmen, it is always just and equitable; but it is +sometimes otherwise when in favour of the masters. Thus the law which +obliges the masters in several different trades to pay their workmen in +money, and not in goods, is quite just and equitable. It imposes no real +hardship upon the masters. It only obliges them to pay that value in +money, which they pretended to pay, but did not always really pay, in +goods. This law is in favour of the workmen; but the 8th of George III. +is in favour of the masters. When masters combine together, in order to +reduce the wages of their workmen, they commonly enter into a private +bond or agreement, not to give more than a certain wage, under a certain +penalty. Were the workmen to enter into a contrary combination of the +same kind, not to accept of a certain wage, under a certain penalty, the +law would punish them very severely, and, if it dealt impartially, it +would treat the masters in the same manner. But the 8th of George III. +enforces by law that very regulation which masters sometimes attempt to +establish by such combinations. The complaint of the workmen, that it +puts the ablest and most industrious upon the same footing with an +ordinary workman, seems perfectly well founded. + +In ancient times, too, it was usual to attempt to regulate the profits +of merchants and other dealers, by regulating the price of provisions +and other goods. The assize of bread is, so far as I know, the only +remnant of this ancient usage. Where there is an exclusive corporation, +it may, perhaps, he proper to regulate the price of the first necessary +of life; but, where there is none, the competition will regulate it much +better than any assize. The method of fixing the assize of bread, +established by the 81st of George II. could not be put in practice in +Scotland, on account of a defect in the law, its execution depending +upon the office of clerk of the market, which does not exist there. This +defect was not remedied till the third of George III. The want of an +assize occasioned no sensible inconveniency; and the establishment of +one in the few places where it has yet taken place has produced no +sensible advantage. In the greater part of the towns in Scotland, +however, there is an incorporation of bakers, who claim exclusive +privileges, though they are not very strictly guarded. + +The proportion between the different rates, both of wages and profit, in +the different employments of labour and stock, seems not to be much +affected, as has already been observed, by the riches or poverty, the +advancing, stationary, or declining state of the society. Such +revolutions in the public welfare, though they affect the general rates +both of wages and profit, must, in the end, affect them equally in all +different employments. The proportion between them, therefore, must +remain the same, and cannot well be altered, as least for any +considerable time, by any such revolutions. + + + + +CHAP. XI. + +OF THE RENT OF LAND. + + +Rent, considered as the price paid for the use of land, is naturally the +highest which the tenant can afford to pay in the actual circumstances +of the land. In adjusting the terms of the lease, the landlord +endeavours to leave him no greater share of the produce than what is +sufficient to keep up the stock from which he furnishes the seed, pays +the labour, and purchases and maintains the cattle and other instruments +of husbandry, together with the ordinary profits of farming stock in the +neighbourhood. This is evidently the smallest share with which the +tenant can content himself, without being a loser, and the landlord +seldom means to leave him any more. Whatever part of the produce, or, +what is the same thing, whatever part of its price, is over and above +this share, he naturally endeavours to reserve to himself as the rent of +his land, which is evidently the highest the tenant can afford to pay in +the actual circumstances of the land. Sometimes, indeed, the liberality, +more frequently the ignorance, of the landlord, makes him accept of +somewhat less than this portion; and sometimes, too, though more rarely, +the ignorance of the tenant makes him undertake to pay somewhat more, or +to content himself with somewhat less, than the ordinary profits of +farming stock in the neighbourhood. This portion, however, may still be +considered as the natural rent of land, or the rent at which it is +naturally meant that land should, for the most part, be let. + +The rent of land, it may be thought, is frequently no more than a +reasonable profit or interest for the stock laid out by the landlord +upon its improvement. This, no doubt, may be partly the case upon some +occasions; for it can scarce ever be more than partly the case. The +landlord demands a rent even for unimproved land, and the supposed +interest or profit upon the expense of improvement is generally an +addition to this original rent. Those improvements, besides, are not +always made by the stock of the landlord, but sometimes by that of the +tenant. When the lease comes to be renewed, however, the landlord +commonly demands the same augmentation of rent as if they had been all +made by his own. + +He sometimes demands rent for what is altogether incapable of human +improvements. Kelp is a species of sea-weed, which, when burnt, yields +an alkaline salt, useful for making glass, soup, and for several other +purposes. It grows in several parts of Great Britain, particularly in +Scotland, upon such rocks only as lie within the high-water mark, which +are twice every day covered with the sea, and of which the produce, +therefore, was never augmented by human industry. The landlord, however, +whose estate is bounded by a kelp shore of this kind, demands a rent for +it as much as for his corn-fields. + +The sea in the neighbourhood of the islands of Shetland is more than +commonly abundant in fish, which makes a great part of the subsistence +of their inhabitants. But, in order to profit by the produce of the +water, they must have a habitation upon the neighbouring land. The rent +of the landlord is in proportion, not to what the farmer can make by the +land, but to what he can make both by the land and the water. It is +partly paid in sea-fish; and one of the very few instances in which rent +makes a part of the price of that commodity, is to be found in that +country. + +The rent of land, therefore, considered as the price paid for the use of +the land, is naturally a monopoly price. It is not at all proportioned +to what the landlord may have laid out upon the improvement of the land, +or to what he can afford to take, but to what the farmer can afford to +give. + +Such parts only of the produce of land can commonly be brought to +market, of which the ordinary price is sufficient to replace the stock +which must be employed in bringing them thither, together with its +ordinary profits. If the ordinary price is more than this, the surplus +part of it will naturally go to the rent of the land. If it is not more, +though the commodity may be brought to market, it can afford no rent to +the landlord. Whether the price is, or is not more, depends upon the +demand. + +There are some parts of the produce of land, for which the demand must +always be such as to afford a greater price than what is sufficient to +bring them to market, and there are others for which it either may or +may not be such as to afford this greater price. The former must always +afford a rent to the landlord. The latter sometimes may and sometimes +may not, according to different circumstances. + +Rent, it is to be observed, therefore, enters into the composition of +the price of commodities in a different way from wages and profit. High +or low wages and profit are the causes of high or low price; high or low +rent is the effect of it. It is because high or low wages and profit +must be paid, in order to bring a particular commodity to market, that +its price is high or low. But it is because its price is high or low, a +great deal more, or very little more, or no more, than what is +sufficient to pay those wages and profit, that it affords a high rent, +or a low rent, or no rent at all. + +The particular consideration, first, of those parts of the produce of +land which always afford some rent; secondly, of those which sometimes +may and sometimes may not afford rent; and, thirdly, of the variations +which, in the different periods of improvement, naturally take place in +the relative value of those two different sorts of rude produce, when +compared both with one another and with manufactured commodities, will +divide this chapter into three parts. + + +PART I.--_Of the Produce of Land which always affords Rent._ + +As men, like all other animals, naturally multiply in proportion to the +means of their subsistence, food is always more or less in demand. It +can always purchase or command a greater or smaller quantity of labour, +and somebody can always be found who is willing to do something in order +to obtain it. The quantity of labour, indeed, which it can purchase, is +not always equal to what it could maintain, if managed in the most +economical manner, on account of the high wages which are sometimes +given to labour; but it can always purchase such a quantity of labour as +it can maintain, according to the rate at which that sort of labour is +commonly maintained in the neighbourhood. + +But land, in almost any situation, produces a greater quantity of food +than what is sufficient to maintain all the labour necessary for +bringing it to market, in the most liberal way in which that labour is +ever maintained. The surplus, too, is always more than sufficient to +replace the stock which employed that labour, together with its profit. +Something, therefore, always remains for a rent to the landlord. + +The most desert moors in Norway and Scotland produce some sort of +pasture for cattle, of which the milk and the increase are always more +than sufficient, not only to maintain all the labour necessary for +tending them, and to pay the ordinary profit to the farmer or the owner +of the herd or flock, but to afford some small rent to the landlord. The +rent increases in proportion to the goodness of the pasture. The same +extent of ground not only maintains a greater number of cattle, but as +they are brought within a smaller compass, less labour becomes requisite +to tend them, and to collect their produce. The landlord gains both +ways; by the increase of the produce, and by the diminution of the +labour which must be maintained out of it. + +The rent of land not only varies with its fertility, whatever be its +produce, but with its situation, whatever be its fertility. Land in the +neighbourhood of a town gives a greater rent than land equally fertile +in a distant part of the country. Though it may cost no more labour to +cultivate the one than the other, it must always cost more to bring the +produce of the distant land to market. A greater quantity of labour, +therefore, must be maintained out of it; and the surplus, from which are +drawn both the profit of the farmer and the rent of the landlord, must +be diminished. But in remote parts of the country, the rate of profit, +as has already been shewn, is generally higher than in the neighbourhood +of a large town. A smaller proportion of this diminished surplus, +therefore, must belong to the landlord. + +Good roads, canals, and navigable rivers, by diminishing the expense of +carriage, put the remote parts of the country more nearly upon a level +with those in the neighbourhood of the town. They are upon that account +the greatest of all improvements. They encourage the cultivation of the +remote, which must always be the most extensive circle of the country. +They are advantageous to the town by breaking down the monopoly of the +country in its neighbourhood. They are advantageous even to that part of +the country. Though they introduce some rival commodities into the old +market, they open many new markets to its produce. Monopoly, besides, is +a great enemy to good management, which can never be universally +established, but in consequence of that free and universal competition +which forces every body to have recourse to it for the sake of +self-defence. It is not more than fifty years ago, that some of the +counties in the neighbourhood of London petitioned the parliament +against the extension of the turnpike roads into the remoter counties. +Those remoter counties, they pretended, from the cheapness of labour, +would be able to sell their grass and corn cheaper in the London market +than themselves, and would thereby reduce their rents, and ruin their +cultivation. Their rents, however, have risen, and their cultivation has +been improved since that time. + +A corn field of moderate fertility produces a much greater quantity of +food for man, than the best pasture of equal extent. Though its +cultivation requires much more labour, yet the surplus which remains +after replacing the seed and maintaining all that labour, is likewise +much greater. If a pound of butcher's meat, therefore, was never +supposed to be worth more than a pound of bread, this greater surplus +would everywhere be of greater value and constitute a greater fund, both +for the profit of the farmer and the rent of the landlord. It seems to +have done so universally in the rude beginnings of agriculture. + +But the relative values of those two different species of food, bread +and butcher's meat, are very different in the different periods of +agriculture. In its rude beginnings, the unimproved wilds, which then +occupy the far greater part of the country, are all abandoned to cattle. +There is more butcher's meat than bread; and bread, therefore, is the +food for which there is the greatest competition, and and which +consequently brings the greatest price. At Buenos Ayres, we are told by +Ulloa, four reals, one-and-twenty pence halfpenny sterling, was, forty +or fifty years ago, the ordinary price of an ox, chosen from a herd of +two or three hundred. He says nothing of the price of bread, probably +because he found nothing remarkable about it. An ox there, he says, +costs little more than the labour of catching him. But corn can nowhere +be raised without a great deal of labour; and in a country which lies +upon the river Plate, at that time the direct road from Europe to the +silver mines of Potosi, the money-price of labour could be very cheap. +It is otherwise when cultivation is extended over the greater part of +the country. There is then more bread than butcher's meat. The +competition changes its direction, and the price of butcher's meat +becomes greater than the price of bread. + +By the extension, besides, of cultivation, the unimproved wilds become +insufficient to supply the demand for butcher's meat. A great part of +the cultivated lands must be employed in rearing and fattening cattle; +of which the price, therefore, must be sufficient to pay, not only the +labour necessary for tending them, but the rent, which the landlord, and +the profit which the farmer, could have drawn from such land employed in +tillage. The cattle bred upon the most uncultivated moors, when brought +to the same market, are, in proportion to their weight or goodness, sold +at the same price as these which are reared upon the most improved land. +The proprietors of those moors profit by it, and raise the rent of their +land in proportion to the price of their cattle. It is not more than a +century ago, that in many parts of the Highlands of Scotland, butcher's +meat was as cheap or cheaper than even bread made of oatmeal. The Union +opened the market of England to the Highland cattle. Their ordinary +price, at present, is about three times greater than at the beginning +of the century, and the rents of many Highland estates have been tripled +and quadrupled in the same time. In almost every part of Great Britain, +a pound of the best butcher's meat is, in the present times generally +worth more than two pounds of the best white bread; and in plentiful +years it is sometimes worth three or four pounds. + +It is thus that, in the progress of improvement, the rent and profit of +unimproved pasture come to be regulated in some measure by the rent and +profit of what is improved, and these again by the rent and profit of +corn. Corn is an annual crop; butcher's meat, a crop which requires four +or five years to grow. As an acre of land, therefore, will produce a +much smaller quantity of the one species of food than of the other, the +inferiority of the quantity must be compensated by the superiority of +the price. If it was more than compensated, more corn-land would be +turned into pasture; and if it was not compensated, part of what was in +pasture would be brought back into corn. + +This equality, however, between the rent and profit of grass and those +of corn; of the land of which the immediate produce is food for cattle, +and of that of which the immediate produce is food for men, must be +understood to take place only through the greater part of the improved +lands of a great country. In some particular local situations it is +quite otherwise, and the rent and profit of grass are much superior to +what can be made by corn. + +Thus, in the neighbourhood of a great town, the demand for milk, and for +forage to horses, frequently contribute, together with the high price of +butcher's meat, to raise the value of grass above what may be called its +natural proportion to that of corn. This local advantage, it is evident, +cannot be communicated to the lands at a distance. + +Particular circumstances have sometimes rendered some countries so +populous, that the whole territory, like the lands in the neighbourhood +of a great town, has not been sufficient to produce both the grass and +the corn necessary for the subsistence of their inhabitants. Their +lands, therefore, have been principally employed in the production of +grass, the more bulky commodity, and which cannot be so easily brought +from a great distance; and corn, the food of the great body of the +people, has been chiefly imported from foreign countries. Holland is at +present in this situation; and a considerable part of ancient Italy +seems to have been so during the prosperity of the Romans. To feed well, +old Cato said, as we are told by Cicero, was the first and most +profitable thing in the management of a private estate; to feed +tolerably well, the second; and to feed ill, the third. To plough, he +ranked only in the fourth place of profit and advantage. Tillage, +indeed, in that part of ancient Italy which lay in the neighbourhood of +Rome, must have been very much discouraged by the distributions of corn +which were frequently made to the people, either gratuitously, or at a +very low price. This corn was brought from the conquered provinces, of +which several, instead of taxes, were obliged to furnish a tenth part of +their produce at a stated price, about sixpence a-peck, to the republic. +The low price at which this corn was distributed to the people, must +necessarily have sunk the price of what could be brought to the Roman +market from Latium, or the ancient territory of Rome, and must have +discouraged its cultivation in that country. + +In an open country, too, of which the principal produce is corn, a +well-inclosed piece of grass will frequently rent higher than any corn +field in its neighbourhood. It is convenient for the maintenance of the +cattle employed in the cultivation of the corn; and its high rent is, in +this case, not so properly paid from the value of its own produce, as +from that of the corn lands which are cultivated by means of it. It is +likely to fall, if ever the neighbouring lands are completely inclosed. +The present high rent of inclosed land in Scotland seems owing to the +scarcity of inclosure, and will probably last no longer than that +scarcity. The advantage of inclosure is greater for pasture than for +corn. It saves the labour of guarding the cattle, which feed better, +too, when they are not liable to be disturbed by their keeper or his +dog. + +But where these is no local advantage of this kind, the rent and profit +of corn, or whatever else is the common vegetable food of the people, +must naturally regulate upon the land which is fit for producing it, the +rent and profit of pasture. + +The use of the artificial grasses, of turnips, carrots, cabbages, and +the other expedients which have been fallen upon to make an equal +quantity of land feed a greater number of cattle than when in natural +grass, should somewhat reduce, it might be expected, the superiority +which, in an improved country, the price of butcher's meat naturally has +over that of bread. It seems accordingly to have done so, and there is +some reason for believing that, at least in the London market, the price +of butcher's meat, in proportion to the price of bread, is a good deal +lower in the present times than it was in the beginning of the last +century. + +In the Appendix to the life of Prince Henry, Doctor Birch has given us +an account of the prices of butcher's meat as commonly paid by that +prince. It is there said, that the four quarters of an ox, weighing six +hundred pounds, usually cost him nine pounds ten shillings, or +thereabouts; that is thirty-one shillings and eight-pence per hundred +pounds weight. Prince Henry died on the 6th of November 1612, in the +nineteenth year of his age. + +In March 1764, there was a parliamentary inquiry into the causes of the +high price of provisions at that time. It was then, among other proof to +the same purpose, given in evidence by a Virginia merchant, that in +March 1763, he had victualled his ships for twenty-four or twenty-five +shillings the hundred weight of beef, which he considered as the +ordinary price; whereas, in that dear year, he had paid twenty-seven +shillings for the same weight and sort. This high price in 1764 is, +however, four shillings and eight-pence cheaper than the ordinary price +paid by Prince Henry; and it is the best beef only, it must be observed, +which is fit to be salted for those distant voyages. + +The price paid by Prince Henry amounts to 3d. 4-5ths per pound weight of +the whole carcase, coarse and choice pieces taken together; and at that +rate the choice pieces could not have been sold by retail for less than +4-1/2d. or 5d. the pound. + +In the parliamentary inquiry in 1764, the witnesses stated the price of +the choice pieces of the best beef to be to the consumer 4d. and 4-1/2d. +the pound; and the coarse pieces in general to be from seven farthings +to 2-1/2d. and 2-3/4d.; and this, they said, was in general one +halfpenny dearer than the same sort of pieces had usually been sold in +the month of March. But even this high price is still a good deal +cheaper than what we can well suppose the ordinary retail price to have +been in the time of Prince Henry. + +During the first twelve years of the last century, the average price of +the best wheat at the Windsor market was L.1 : 18 : 3-1/2d. the quarter +of nine Winchester bushels. + +But in the twelve years preceding 1764, including that year, the average +price of the same measure of the best wheat at the same market was +L.2 : 1 : 9-1/2d. + +In the first twelve years of the last century, therefore, wheat appears +to have been a good deal cheaper, and butcher's meat a good deal dearer, +than in the twelve years preceding 1764, including that year. + +In all great countries, the greater part of the cultivated lands are +employed in producing either food for men or food for cattle. The rent +and profit of these regulate the rent and profit of all other cultivated +land. If any particular produce afforded less, the land would soon be +turned into corn or pasture; and if any afforded more, some part of the +lands in corn or pasture would soon be turned to that produce. + +Those productions, indeed, which require either a greater original +expense of improvement, or a greater annual expense of cultivation in +order to fit the land for them, appear commonly to afford, the one a +greater rent, the other a greater profit, than corn pasture. This +superiority, however, will seldom be found to amount to more than a +reasonable interest or compensation for this superior expense. + +In a hop garden, a fruit garden, a kitchen garden, both the rent of the +landlord, and the profit of the farmer, are generally greater than in a +corn or grass field. But to bring the ground into this condition +requires more expense. Hence a greater rent becomes due to the landlord. +It requires, too, a more attentive and skilful management. Hence a +greater profit becomes due to the farmer. The crop, too, at least in the +hop and fruit garden, is more precarious. Its price, therefore, besides +compensating all occasional losses, must afford something like the +profit of insurance. The circumstances of gardeners, generally mean, and +always moderate, may satisfy us that their great ingenuity is not +commonly over-recompensed. Their delightful art is practised by so many +rich people for amusement, that little advantage is to be made by these +who practise it for profit; because the persons who should naturally be +their best customers, supply themselves with all their most precious +productions. + +The advantage which the landlord derives from such improvements, seems +at no time to have been greater than what was sufficient to compensate +the original expense of making them. In the ancient husbandry, after the +vineyard, a well-watered kitchen garden seems to have been the part of +the farm which was supposed to yield the most valuable produce. But +Democritus, who wrote upon husbandry about two thousand years ago, and +who was regarded by the ancients as one of the fathers the of the art, +thought they did not act wisely who inclosed a kitchen garden. The +profit, he said, would not compensate the expense of a stone-wall: and +bricks (he meant, I suppose, bricks baked in the sun) mouldered with the +rain and the winter-storm, and required continual repairs. Columella, +who reports this judgment of Democritus, does not controvert it, but +proposes a very frugal method of inclosing with a hedge of brambles and +briars, which he says he had found by experience to be both a lasting +and an impenetrable fence; but which, it seems, was not commonly known +in the time of Democritus. Palladius adopts the opinion of Columella, +which had before been recommended by Varro. In the judgment of these +ancient improvers, the produce of a kitchen garden had, it seems, been +little more than sufficient to pay the extraordinary culture and the +expense of watering; for in countries so near the sun, it was thought +proper, in those times as in the present, to have the command of a +stream of water, which could be conducted to every bed in the garden. +Through the greater part of Europe, a kitchen garden is not at present +supposed to deserve a better inclosure than that recommended by +Columella. In Great Britain, and some other northern countries, the +finer fruits cannot be brought to perfection but by the assistance of a +wall. Their price, therefore, in such countries, must be sufficient to +pay the expense of building and maintaining what they cannot be had +without. The fruit-wall frequently surrounds the kitchen garden, which +thus enjoys the benefit of an inclosure which its own produce could +seldom pay for. + +That the vineyard, when properly planted and brought to perfection, was +the most valuable part of the farm, seems to have been an undoubted +maxim in the ancient agriculture, as it is in the modern, through all +the wine countries. But whether it was advantageous to plant a new +vineyard, was a matter of dispute among the ancient Italian husbandmen, +as we learn from Columella. He decides, like a true lover of all curious +cultivation, in favour of the vineyard; and endeavours to shew, by a +comparison of the profit and expense, that it was a most advantageous +improvement. Such comparisons, however, between the profit and expense +of new projects are commonly very fallacious; and in nothing more so +than in agriculture. Had the gain actually made by such plantations been +commonly as great as he imagined it might have been, there could have +been no dispute about it. The same point is frequently at this day a +matter of controversy in the wine countries. Their writers on +agriculture, indeed, the lovers and promoters of high cultivation, seem +generally disposed to decide with Columella in favour of the vineyard. +In France, the anxiety of the proprietors of the old vineyards to +prevent the planting of any new ones, seems to favour their opinion, and +to indicate a consciousness in those who must have the experience, that +this species of cultivation is at present in that country more +profitable than any other. It seems, at the same time, however, to +indicate another opinion, that this superior profit can last no longer +than the laws which at present restrain the free cultivation of the +vine. In 1731, they obtained an order of council, prohibiting both the +planting of new vineyards, and the renewal of these old ones, of which +the cultivation had been interrupted for two years, without a particular +permission from the king, to be granted only in consequence of an +information from the intendant of the province, certifying that he had +examined the land, and that it was incapable of any other culture. The +pretence of this order was the scarcity of corn and pasture, and the +superabundance of wine. But had this superabundance been real, it would, +without any order of council, have effectually prevented the plantation +of new vineyards, by reducing the profits of this species of cultivation +below their natural proportion to those of corn and pasture. With regard +to the supposed scarcity of corn occasioned by the multiplication of +vineyards, corn is nowhere in France more carefully cultivated than in +the wine provinces, where the land is fit for producing it: as in +Burgundy, Guienne, and the Upper Languedoc. The numerous hands employed +in the one species of cultivation necessarily encourage the other, by +affording a ready market for its produce. To diminish the number of +those who are capable of paying it, is surely a most unpromising +expedient for encouraging the cultivation of corn. It is like the policy +which would promote agriculture, by discouraging manufactures. + +The rent and profit of those productions, therefore, which require +either a greater original expense of improvement in order to fit the +land for them, or a greater annual expense of cultivation, though often +much superior to those of corn and pasture, yet when they do no more +than compensate such extraordinary expense, are in reality regulated by +the rent and profit of those common crops. + +It sometimes happens, indeed, that the quantity of land which can be +fitted for some particular produce, is too small to supply the effectual +demand. The whole produce can be disposed of to those who are willing to +give somewhat more than what is sufficient to pay the whole rent, wages, +and profit, necessary for raising and bringing it to market, according +to their natural rates, or according to the rates at which they are paid +in the greater part of other cultivated land. The surplus part of the +price which remains after defraying the whole expense of improvement and +cultivation, may commonly, in this case, and in this case only, bear no +regular proportion to the like surplus in corn or pasture, but may +exceed it in almost any degree; and the greater part of this excess +naturally goes to the rent of the landlord. + +The usual and natural proportion, for example, between the rent and +profit of wine, and those of corn and pasture, must be understood to +take place only with regard to those vineyards which produce nothing but +good common wine, such as can be raised almost anywhere, upon any light, +gravelly, or sandy soil, and which has nothing to recommend it but its +strength and wholesomeness. It is with such vineyards only, that the +common land of the country can be brought into competition; for with +those of a peculiar quality it is evident that it cannot. + +The vine is more affected by the difference of soils than any other +fruit-tree. From some it derives a flavour which no culture or +management can equal, it is supposed, upon any other. This flavour, real +or imaginary, is sometimes peculiar to the produce of a few vineyards; +sometimes it extends through the greater part of a small district, and +sometimes through a considerable part of a large province. The whole +quantity of such wines that is brought to market falls short of the +effectual demand, or the demand of those who would be willing to pay +the whole rent, profit, and wages, necessary for preparing and bringing +them thither, according to the ordinary rate, or according to the rate +at which they are paid in common vineyards. The whole quantity, +therefore, can be disposed of to those who are willing to pay more, +which necessarily raises their price above that of common wine. The +difference is greater or less, according as the fashionableness and +scarcity of the wine render the competition of the buyers more or less +eager. Whatever it be, the greater part of it goes to the rent of the +landlord. For though such vineyards are in general more carefully +cultivated than most others, the high price of the wine seems to be, not +so much the effect, as the cause of this careful cultivation. In so +valuable a produce, the loss occasioned by negligence is so great, as to +force even the most careless to attention. A small part of this high +price, therefore, is sufficient to pay the wages of the extraordinary +labour bestowed upon their cultivation, and the profits of the +extraordinary stock which puts that labour into motion. + +The sugar colonies possessed by the European nations in the West Indies +may be compared to those precious vineyards. Their whole produce falls +short of the effectual demand of Europe, and can be disposed of to those +who are willing to give more than what is sufficient to pay the whole +rent, profit, and wages, necessary for preparing and bringing it to +market, according to the rate at which they are commonly paid by any +other produce. In Cochin China, the finest white sugar generally sells +for three piastres the quintal, about thirteen shillings and sixpence of +our money, as we are told by Mr Poivre[14], a very careful observer of +the agriculture of that country. What is there called the quintal, +weighs from a hundred and fifty to two hundred Paris pounds, or a +hundred and seventy-five Paris pounds at a medium, which reduces the +price of the hundred weight English to about eight shillings sterling; +not a fourth part of what is commonly paid for the brown or muscovada +sugars imported from our colonies, and not a sixth part of what is paid +for the finest white sugar. The greater part of the cultivated lands in +Cochin China are employed in producing corn and rice, the food of the +great body of the people. The respective prices of corn, rice, and +sugar, are there probably in the natural proportion, or in that which +naturally takes place in the different crops of the greater part of +cultivated land, and which recompenses the landlord and farmer, as +nearly as can be computed, according to what is usually the original +expense of improvement, and the annual expense of cultivation. But in +our sugar colonies, the price of sugar bears no such proportion to that +of the produce of a rice or corn field either in Europe or America. It +is commonly said that a sugar planter expects that the rum and the +molasses should defray the whole expense of his cultivation, and that +his sugar should be all clear profit. If this be true, for I pretend not +to affirm it, it is as if a corn farmer expected to defray the expense +of his cultivation with the chaff and the straw, and that the grain +should be all clear profit. We see frequently societies of merchants in +London, and other trading towns, purchase waste lands in our sugar +colonies, which they expect to improve and cultivate with profit, by +means of factors and agents, notwithstanding the great distance and the +uncertain returns, from the defective administration of justice in those +countries. Nobody will attempt to improve and cultivate in the same +manner the most fertile lands of Scotland, Ireland, or the corn +provinces of North America, though, from the more exact administration +of justice in these countries, more regular returns might be expected. + +In Virginia and Maryland, the cultivation of tobacco is preferred, as +most profitable, to that of corn. Tobacco might be cultivated with +advantage through the greater part of Europe; but, in almost every part +of Europe, it has become a principal subject of taxation; and to collect +a tax from every different farm in the country where this plant might +happen to be cultivated, would be more difficult, it has been supposed, +than to levy one upon its importation at the custom-house. The +cultivation of tobacco has, upon this account, been most absurdly +prohibited through the greater part of Europe, which necessarily gives a +sort of monopoly to the countries where it is allowed; and as Virginia +and Maryland produce the greatest quantity of it, they share largely, +though with some competitors, in the advantage of this monopoly. The +cultivation of tobacco, however, seems not to be so advantageous as that +of sugar. I have never even heard of any tobacco plantation that was +improved and cultivated by the capital of merchants who resided in Great +Britain; and our tobacco colonies send us home no such wealthy planters +as we see frequently arrive from our sugar islands. Though, from the +preference given in those colonies to the cultivation of tobacco above +that of corn, it would appear that the effectual demand of Europe for +tobacco is not completely supplied, it probably is more nearly so than +that for sugar; and though the present price of tobacco is probably more +than sufficient to pay the whole rent, wages, and profit, necessary for +preparing and bringing it to market, according to the rate at which they +are commonly paid in corn land, it must not be so much more as the +present price of sugar. Our tobacco planters, accordingly, have shewn +the same fear of the superabundance of tobacco, which the proprietors of +the old vineyards in France have of the superabundance of wine. By act +of assembly, they have restrained its cultivation to six thousand +plants, supposed to yield a thousand weight of tobacco, for every negro +between sixteen and sixty years of age. Such a negro, over and above +this quantity of tobacco, can manage, they reckon, four acres of Indian +corn. To prevent the market from being overstocked, too, they have +sometimes, in plentiful years, we are told by Dr Douglas[15] (I suspect +he has been ill informed), burnt a certain quantity of tobacco for every +negro, in the same manner as the Dutch are said to do of spices. If such +violent methods are necessary to keep up the present price of tobacco, +the superior advantage of its culture over that of corn, if it still has +any, will not probably be of long continuance. + +It is in this manner that the rent of the cultivated land, of which the +produce is human food, regulates the rent of the greater part of other +cultivated land. No particular produce can long afford less, because the +land would immediately be turned to another use; and if any particular +produce commonly affords more, it is because the quantity of land which +can be fitted for it is too small to supply the effectual demand. + +In Europe, corn is the principal produce of land, which serves +immediately for human food. Except in particular situations, therefore, +the rent of corn land regulates in Europe that of all other cultivated +land. Britain need envy neither the vineyards of France, nor the olive +plantations of Italy. Except in particular situations, the value of +these is regulated by that of corn, in which the fertility of Britain is +not much inferior to that of either of those two countries. + +If, in any country, the common and favourite vegetable food of the +people should be drawn from a plant, of which the most common land, with +the same, or nearly the same culture, produced a much greater quantity +than the most fertile does of corn; the rent of the landlord, or the +surplus quantity of food which would remain to him, after paying the +labour, and replacing the stock of the farmer, together with its +ordinary profits, would necessarily be much greater. Whatever was the +rate at which labour was commonly maintained in that country, this +greater surplus could always maintain a greater quantity of it, and, +consequently, enable the landlord to purchase or command a greater +quantity of it. The real value of his rent, his real power and +authority, his command of the necessaries and conveniencies of life with +which the labour of other people could supply him, would necessarily be +much greater. + +A rice field produces a much greater quantity of food than the most +fertile corn field. Two crops in the year, from thirty to sixty bushels +each, are said to be the ordinary produce of an acre. Though its +cultivation, therefore, requires more labour, a much greater surplus +remains after maintaining all that labour. In those rice countries, +therefore, where rice is the common and favourite vegetable food of the +people, and where the cultivators are chiefly maintained with it, a +greater share of this greater surplus should belong to the landlord than +in corn countries. In Carolina, where the planters, as in other British +colonies, are generally both farmers and landlords, and where rent, +consequently, is confounded with profit, the cultivation of rice is +found to be more profitable than that of corn, though their fields +produce only one crop in the year, and though, from the prevalence of +the customs of Europe, rice is not there the common and favourite +vegetable food of the people. + +A good rice field is a bog at all seasons, and at one season a bog +covered with water. It is unfit either for corn, or pasture, or +vineyard, or, indeed, for any other vegetable produce that is very +useful to men; and the lands which are fit for those purposes are not +fit for rice. Even in the rice countries, therefore, the rent of rice +lands cannot regulate the rent of the other cultivated land which can +never be turned to that produce. + +The food produced by a field of potatoes is not inferior in quantity to +that produced by a field of rice, and much superior to what is produced +by a field of wheat. Twelve thousand weight of potatoes from an acre of +land is not a greater produce than two thousand weight of wheat. The +food or solid nourishment, indeed, which can be drawn from each of those +two plants, is not altogether in proportion to their weight, on account +of the watery nature of potatoes. Allowing, however, half the weight of +this root to go to water, a very large allowance, such an acre of +potatoes will still produce six thousand weight of solid nourishment, +three times the quantity produced by the acre of wheat. An acre of +potatoes is cultivated with less expense than an acre of wheat; the +fallow, which generally precedes the sowing of wheat, more than +compensating the hoeing and other extraordinary culture which is always +given to potatoes. Should this root ever become in any part of Europe, +like rice in some rice countries, the common and favourite vegetable +food of the people, so as to occupy the same proportion of the lands in +tillage, which wheat and other sorts of grain for human food do at +present, the same quantity of cultivated land would maintain a much +greater number of people; and the labourers being generally fed with +potatoes, a greater surplus would remain after replacing all the stock, +and maintaining all the labour employed in cultivation. A greater share +of this surplus, too, would belong to the landlord. Population would +increase, and rents would rise much beyond what they are at present. + +The land which is fit for potatoes, is fit for almost every other useful +vegetable. If they occupied the same proportion of cultivated land which +corn does at present, they would regulate, in the same manner, the rent +of the greater part of other cultivated land. + +In some parts of Lancashire, it is pretended, I have been told, that +bread of oatmeal is a heartier food for labouring people than wheaten +bread, and I have frequently heard the same doctrine held in Scotland. I +am, however, somewhat doubtful of the truth of it. The common people in +Scotland, who are fed with oatmeal, are in general neither so strong nor +so handsome as the same rank of people in England, who are fed with +wheaten bread. They neither work so well, nor look so well; and as there +is not the same difference between the people of fashion in the two +countries, experience would seem to shew, that the food of the common +people in Scotland is not so suitable to the human constitution as that +of their neighbours of the same rank in England. But it seems to be +otherwise with potatoes. The chairmen, porters, and coal-heavers in +London, and those unfortunate women who live by prostitution, the +strongest men and the most beautiful women perhaps in the British +dominions, are said to be, the greater part of them, from the lowest +rank of people in Ireland, who are generally fed with this root. No food +can afford a more decisive proof of its nourishing quality, or of its +being peculiarly suitable to the health of the human constitution. + +It is difficult to preserve potatoes through the year, and impossible to +store them like corn, for two or three years together. The fear of not +being able to sell them before they rot, discourages their cultivation, +and is, perhaps, the chief obstacle to their ever becoming in any great +country, like bread, the principal vegetable food of all the different +ranks of the people. + + +PART II.--_Of the Produce of Land, which sometimes does, and sometimes +does not, afford Rent._ + +Human food seems to be the only produce of land, which always and +necessarily affords some rent to the landlord. Other sorts of produce +sometimes may, and sometimes may not, according to different +circumstances. + +After food, clothing and lodging are the two great wants of mankind. + +Land, in its original rude state, can afford the materials of clothing +and lodging to a much greater number of people than it can feed. In its +improved state, it can sometimes feed a greater number of people than it +can supply with those materials; at least in the way in which they +require them, and are willing to pay for them. In the one state, +therefore, there is always a superabundance of those materials, which +are frequently, upon that account, of little or no value. In the other, +there is often a scarcity, which necessarily augments their value. In +the one state, a great part of them is thrown away as useless; and the +price of what is used is considered as equal only to the labour and +expense of fitting it for use, and can, therefore, afford no rent to the +landlord. In the other, they are all made use of, and there is +frequently a demand for more than can be had. Somebody is always willing +to give more for every part of them, than what is sufficient to pay the +expense of bringing them to market. Their price, therefore, can always +afford some rent to the landlord. + +The skins of the larger animals were the original materials of clothing. +Among nations of hunters and shepherds, therefore, whose food consists +chiefly in the flesh of those animals, every man, by providing himself +with food, provides himself with the materials of more clothing than he +can wear. If there was no foreign commerce, the greater part of them +would be thrown away as things of no value. This was probably the case +among the hunting nations of North America, before their country was +discovered by the Europeans, with whom they now exchange their surplus +peltry, for blankets, fire-arms, and brandy, which gives it some value. +In the present commercial state of the known world, the most barbarous +nations, I believe, among whom land property is established, have some +foreign commerce of this kind, and find among their wealthier neighbours +such a demand for all the materials of clothing, which their land +produces, and which can neither be wrought up nor consumed at home, as +raises their price above what it costs to send them to those wealthier +neighbors. It affords, therefore, some rent to the landlord. When the +greater part of the Highland cattle were consumed on their own hills, +the exportation of their hides made the most considerable article of the +commerce of that country, and what they were exchanged for afforded some +addition to the rent of the Highland estates. The wool of England, which +in old times, could neither be consumed nor wrought up at home, found a +market in the then wealthier and more industrious country of Flanders, +and its price afforded something to the rent of the land which produced +it. In countries not better cultivated than England was then, or than +the Highlands of Scotland are now, and which had no foreign commerce, +the materials of clothing would evidently be so superabundant, that a +great part of them would be thrown away as useless, and no part could +afford any rent to the landlord. + +The materials of lodging cannot always be transported to so great a +distance as those of clothing, and do not so readily become an object of +foreign commerce. When they are superabundant in the country which +produces them, it frequently happens, even in the present commercial +state of the world, that they are of no value to the landlord. A good +stone quarry in the neighbourhood of London would afford a considerable +rent. In many parts of Scotland and Wales it affords none. Barren timber +for building is of great value in a populous and well-cultivated +country, and the land which produces it affords a considerable rent. But +in many parts of North America, the landlord would be much obliged to +any body who would carry away the greater part of his large trees. In +some parts of the Highlands of Scotland, the bark is the only part of +the wood which, for want of roads and water-carriage, can be sent to +market; the timber is left to rot upon the ground. When the materials of +lodging are so superabundant, the part made use of is worth only the +labour and expense of fitting it for that use. It affords no rent to the +landlord, who generally grants the use of it to whoever takes the +trouble of asking it. The demand of wealthier nations, however, +sometimes enables him to get a rent for it. The paving of the streets of +London has enabled the owners of some barren rocks on the coast of +Scotland to draw a rent from what never afforded any before. The woods +of Norway, and of the coasts of the Baltic, find a market in many parts +of Great Britain, which they could not find at home, and thereby afford +some rent to their proprietors. + +Countries are populous, not in proportion to the number of people whom +their produce can clothe and lodge, but in proportion to that of those +whom it can feed. When food is provided, it is easy to find the +necessary clothing and lodging. But though these are at hand, it may +often be difficult to find food. In some parts of the British dominions, +what is called a house may be built by one day's labour of one man. The +simplest species of clothing, the skins of animals, require somewhat +more labour to dress and prepare them for use. They do not, however, +require a great deal. Among savage or barbarous nations, a hundredth, or +little more than a hundredth part of the labour of the whole year, will +be sufficient to provide them with such clothing and lodging as satisfy +the greater part of the people. All the other ninety-nine parts are +frequently no more than enough to provide them with food. + +But when, by the improvement and cultivation of land, the labour of one +family can provide food for two, the labour of half the society becomes +sufficient to provide food for the whole. The other half, therefore, or +at least the greater part of them, can be employed in providing other +things, or in satisfying the other wants and fancies of mankind. +Clothing and lodging, household furniture, and what is called equipage, +are the principal objects of the greater part of those wants and +fancies. The rich man consumes no more food than his poor neighbour. In +quality it may be very different, and to select and prepare it may +require more labour and art; but in quantity it is very nearly the same. +But compare the spacious palace and great wardrobe of the one, with the +hovel and the few rags of the other, and you will be sensible that the +difference between their clothing, lodging, and household furniture, is +almost as great in quantity as it is in quality. The desire of food is +limited in every man by the narrow capacity of the human stomach; but +the desire of the conveniencies and ornaments of building, dress, +equipage, and household furniture, seems to have no limit or certain +boundary. Those, therefore, who have the command of more food than they +themselves can consume, are always willing to exchange the surplus, or, +what is the same thing, the price of it, for gratifications of this +other kind. What is over and above satisfying the limited desire, is +given for the amusement of those desires which cannot be satisfied, but +seem to be altogether endless. The poor, in order to obtain food, exert +themselves to gratify those fancies of the rich; and to obtain it more +certainly, they vie with one another in the cheapness and perfection of +their work. The number of workmen increases with the increasing quantity +of food, or with the growing improvement and cultivation of the lands; +and as the nature of their business admits of the utmost subdivisions of +labour, the quantity of materials which they can work up, increases in a +much greater proportion than their numbers. Hence arises a demand for +every sort of material which human invention can employ, either usefully +or ornamentally, in building, dress, equipage, or household furniture; +for the fossils and minerals contained in the bowels of the earth, the +precious metals, and the precious stones. + +Food is, in this manner, not only the original source of rent, but every +other part of the produce of land which afterwards affords rent, derives +that part of its value from the improvement of the powers of labour in +producing food, by means of the improvement and cultivation of land. + +Those other parts of the produce of land, however, which afterwards +afford rent, do not afford it always. Even in improved and cultivated +countries, the demand for them is not always such as to afford a greater +price than what is sufficient to pay the labour, and replace, together +with its ordinary profits, the stock which must be employed in bringing +them to market. Whether it is or is not such, depends upon different +circumstances. + +Whether a coal mine, for example, can afford any rent, depends partly +upon its fertility, and partly upon its situation. + +A mine of any kind may be said to be either fertile or barren, according +as the quantity of mineral which can be brought from it by a certain +quantity of labour, as greater or less than what can be brought by an +equal quantity from the greater part of other mines of the same kind. + +Some coal mines, advantageously situated, cannot be wrought on account +of their barrenness. The produce does not pay the expense. They can +afford neither profit nor rent. + +There are some, of which the produce is barely sufficient to pay the +labour, and replace, together with its ordinary profits, the stock +employed in working them. They afford some profit to the undertaker of +the work, but no rent to the landlord. They can be wrought +advantageously by nobody but the landlord, who, being himself the +undertaker of the work, gets the ordinary profit of the capital which he +employs in it. Many coal mines in Scotland are wrought in this manner, +and can be wrought in no other. The landlord will allow nobody else to +work them without paying some rent, and nobody can afford to pay any. + +Other coal mines in the same country, sufficiently fertile, cannot be +wrought on account of their situation. A quantity of mineral, sufficient +to defray the expense of working, could be brought from the mine by the +ordinary, or even less than the ordinary quantity of labour: but in an +inland country, thinly inhabited, and without either good roads or +water-carriage, this quantity could not be sold. + +Coals are a less agreeable fuel than wood: they are said too to be less +wholesome. The expense of coals, therefore, at the place where they are +consumed, must generally be somewhat less than that of wood. + +The price of wood, again, varies with the state of agriculture, nearly +in the same manner, and exactly for the same reason, as the price of +cattle. In its rude beginnings, the greater part of every country is +covered with wood, which is then a mere incumbrance, of no value to the +landlord, who would gladly give it to any body for the cutting. As +agriculture advances, the woods are partly cleared by the progress of +tillage, and partly go to decay in consequence of the increased number +of cattle. These, though they do not increase in the same proportion as +corn, which is altogether the acquisition of human industry, yet +multiply under the care and protection of men, who store up in the +season of plenty what may maintain them in that of scarcity; who, +through the whole year, furnish them with a greater quantity of food +than uncultivated nature provides for them; and who, by destroying and +extirpating their enemies, secure them in the free enjoyment of all that +she provides. Numerous herds of cattle, when allowed to wander through +the woods, though they do not destroy the old trees, hinder any young +ones from coming up; so that, in the course of a century or two, the +whole forest goes to ruin. The scarcity of wood then raises its price. +It affords a good rent; and the landlord sometimes finds that he can +scarce employ his best lands more advantageously than in growing barren +timber, of which the greatness of the profit often compensates the +lateness of the returns. This seems, in the present times, to be nearly +the state of things in several parts of Great Britain, where the profit +of planting is found to be equal to that of either corn or pasture. The +advantage which the landlord derives from planting can nowhere exceed, +at least for any considerable time, the rent which these could afford +him; and in an inland country, which is highly cultivated, it will +frequently not fall much short of this rent. Upon the sea-coast of a +well-improved country, indeed, if coals can conveniently be had for +fuel, it may sometimes be cheaper to bring barren timber for building +from less cultivated foreign countries than to raise it at home. In the +new town of Edinburgh, built within these few years, there is not, +perhaps, a single stick of Scotch timber. + +Whatever may be the price of wood, if that of coals is such that the +expense of a coal fire is nearly equal to that of a wood one, we may be +assured, that at that place, and in these circumstances, the price of +coals is as high as it can be. It seems to be so in some of the inland +parts of England, particularly in Oxfordshire, where it is usual, even +in the fires of the common people, to mix coals and wood together, and +where the difference in the expense of those two sorts of fuel cannot, +therefore, be very great. Coals, in the coal countries, are everywhere +much below this highest price. If they were not, they could not bear the +expense of a distant carriage, either by land or by water. A small +quantity only could be sold; and the coal masters and the coal +proprietors find it more for their interest to sell a great quantity at +a price somewhat above the lowest, than a small quantity at the highest. +The most fertile coal mine, too, regulates the price of coals at all the +other mines in its neighbourhood. Both the proprietor and the undertaker +of the work find, the one that he can get a greater rent, the other that +he can get a greater profit, by somewhat underselling all their +neighbours. Their neighbours are soon obliged to sell at the same price, +though they cannot so well afford it, and though it always diminishes, +and sometimes takes away altogether, both their rent and their profit. +Some works are abandoned altogether; others can afford no rent, and can +be wrought only by the proprietor. + +The lowest price at which coals can be sold for any considerable time, +is, like that of all other commodities, the price which is barely +sufficient to replace, together with its ordinary profits, the stock +which must be employed in bringing them to market. At a coal mine for +which the landlord can get no rent, but which he must either work +himself or let it alone altogether, the price of coals must generally be +nearly about this price. + +Rent, even where coals afford one, has generally a smaller share in +their price than in that of most other parts of the rude produce of +land. The rent of an estate above ground, commonly amounts to what is +supposed to be a third of the gross produce; and it is generally a rent +certain and independent of the occasional variations in the crop. In +coal mines, a fifth of the gross produce is a very great rent, a tenth +the common rent; and it is seldom a rent certain, but depends upon the +occasional variations in the produce. These are so great, that in a +country where thirty years purchase is considered as a moderate price +for the property of a landed estate, ten years purchase is regarded as a +good price for that of a coal mine. + +The value of a coal mine to the proprietor, frequently depends as much +upon its situation as upon its fertility. That of a metallic mine +depends more upon its fertility, and less upon its situation. The +coarse, and still more the precious metals, when separated from the ore, +are so valuable, that they can generally bear the expense of a very long +land, and of the most distant sea carriage. Their market is not confined +to the countries in the neighbourhood of the mine, but extends to the +whole world. The copper of Japan makes an article of commerce in Europe; +the iron of Spain in that of Chili and Peru. The silver of Peru finds +its way, not only to Europe, but from Europe to China. + +The price of coals in Westmoreland or Shropshire can have little effect +on their price at Newcastle; and their price in the Lionnois can have +none at all. The productions of such distant coal mines can never be +brought into competition with one another. But the productions of the +most distant metallic mines frequently may, and in fact commonly are. + +The price, therefore, of the coarse, and still more that of the precious +metals, at the most fertile mines in the world, must necessarily more or +less affect their price at every other in it. The price of copper in +Japan must have some influence upon its price at the copper mines in +Europe. The price of silver in Peru, or the quantity either of labour or +of other goods which it will purchase there, must have some influence on +its price, not only at the silver mines of Europe, but at those of +China. After the discovery of the mines of Peru, the silver mines of +Europe were, the greater part of them, abandoned. The value of silver +was so much reduced, that their produce could no longer pay the expense +of working them, or replace, with a profit, the food, clothes, lodging, +and other necessaries which were consumed in that operation. This was +the case, too, with the mines of Cuba and St. Domingo, and even with the +ancient mines of Peru, after the discovery of those of Potosi. + +The price of every metal, at every mine, therefore, being regulated in +some measure by its price at the most fertile mine in the world that is +actually wrought, it can, at the greater part of mines, do very little +more than pay the expense of working, and can seldom afford a very high +rent to the landlord. Rent accordingly, seems at the greater part of +mines to have but a small share in the price of the coarse, and a still +smaller in that of the precious metals. Labour and profit make up the +greater part of both. + +A sixth part of the gross produce may be reckoned the average rent of +the tin mines of Cornwall, the most fertile that are known in the world, +as we are told by the Rev. Mr. Borlace, vice-warden of the stannaries. +Some, he says, afford more, and some do not afford so much. A sixth part +of the gross produce is the rent, too, of several very fertile lead +mines in Scotland. + +In the silver mines of Peru, we are told by Frezier and Ulloa, the +proprietor frequently exacts no other acknowledgment from the undertaker +of the mine, but that he will grind the ore at his mill, paying him the +ordinary multure or price of grinding. Till 1736, indeed, the tax of the +king of Spain amounted to one fifth of the standard silver, which till +then might be considered as the real rent of the greater part of the +silver mines of Peru, the richest which have been known in the world. If +there had been no tax, this fifth would naturally have belonged to the +landlord, and many mines might have been wrought which could not then be +wrought, because they could not afford this tax. The tax of the duke of +Cornwall upon tin is supposed to amount to more than five per cent. or +one twentieth part of the value; and whatever may be his proportion, it +would naturally, too, belong to the proprietor of the mine, if tin was +duty free. But if you add one twentieth to one sixth, you will find that +the whole average rent of the tin mines of Cornwall, was to the whole +average rent of the silver mines of Peru, as thirteen to twelve. But the +silver mines of Peru are not now able to pay even this low rent; and the +tax upon silver was, in 1736, reduced from one fifth to one tenth. Even +this tax upon silver, too, gives more temptation to smuggling than the +tax of one twentieth upon tin; and smuggling must be much easier in the +precious than in the bulky commodity. The tax of the king of Spain, +accordingly, is said to be very ill paid, and that of the duke of +Cornwall very well. Rent, therefore, it is probable, makes a greater +part of the price of tin at the must fertile tin mines than it does of +silver at the most fertile silver mines in the world. After replacing +the stock employed in working those different mines, together with its +ordinary profits, the residue which remains to the proprietor is +greater, it seems, in the coarse, than in the precious metal. + +Neither are the profits of the undertakers of silver mines commonly very +great in Peru. The same most respectable and well-informed authors +acquaint us, that when any person undertakes to work a new mine in Peru, +he is universally looked upon as a man destined to bankruptcy and ruin, +and is upon that account shunned and avoided by every body.--Mining, it +seems, is considered there in the same light as here, as a lottery, in +which the prizes do not compensate the blanks, though the greatness of +some tempts many adventurers to throw away their fortunes in such +unprosperous projects. + +As the sovereign, however, derives a considerable part of his revenue +from the produce of silver mines, the law in Peru gives every possible +encouragement to the discovery and working of new ones. Whoever +discovers a new mine, is entitled to measure off two hundred and +forty-six feet in length, according to what he supposes to be the +direction of the vein, and half as much in breadth. He becomes +proprietor of this portion of the mine, and can work it without paying +any acknowledgment to the landlord. The interest of the duke of Cornwall +has given occasion to a regulation nearly of the same kind in that +ancient dutchy. In waste and uninclosed lands, any person who discovers +a tin mine may mark out its limits to a certain extent, which is called +bounding a mine. The bounder becomes the real proprietor of the mine, +and may either work it himself, or give it in lease to another, without +the consent of the owner of the land, to whom, however, a very small +acknowledgment must be paid upon working it. In both regulations, the +sacred rights of private property are sacrificed to the supposed +interests of public revenue. + +The same encouragement is given in Peru to the discovery and working of +new gold mines; and in gold the king's tax amounts only to a twentieth +part of the standard rental. It was once a fifth, and afterwards a +tenth, as in silver; but it was found that the work could not bear even +the lowest of these two taxes. If it is rare, however, say the same +authors, Frezier and Ulloa, to find a person who has made his fortune by +a silver, it is still much rarer to find one who has done so by a gold +mine. This twentieth part seems to be the whole rent which is paid by +the greater part of the gold mines of Chili and Peru. Gold, too, is much +more liable to be smuggled than even silver; not only on account of the +superior value of the metal in proportion to its bulk, but on account of +the peculiar way in which nature produces it. Silver is very seldom +found virgin, but, like most other metals, is generally mineralized with +some other body, from which it is impossible to separate it in such +quantities as will pay for the expense, but by a very laborious and +tedious operation, which cannot well be carried on but in work-houses +erected for the purpose, and, therefore, exposed to the inspection of +the king's officers. Gold, on the contrary, is almost always found +virgin. It is sometimes found in pieces of some bulk; and, even when +mixed, in small and almost insensible particles, with sand, earth, and +other extraneous bodies, it can be separated from them by a very short +and simple operation, which can be carried on in any private house by +any body who is possessed of a small quantity of mercury. If the king's +tax, therefore, is but ill paid upon silver, it is likely to be much +worse paid upon gold; and rent must make a much smaller part of the +price of gold than that of silver. + +The lowest price at which the precious metals can be sold, or the +smallest quantity of other goods for which they can be exchanged, during +any considerable time, is regulated by the same principles which fix the +lowest ordinary price of all other goods. The stock which must commonly +be employed, the food, clothes, and lodging, which must commonly be +consumed in bringing them from the mine to the market, determine it. It +must at least be sufficient to replace that stock, with the ordinary +profits. + +Their highest price, however, seems not to be necessarily determined by +any thing but the actual scarcity or plenty of these metals themselves. +It is not determined by that of any other commodity, in the same manner +as the price of coals is by that of wood, beyond which no scarcity can +ever raise it. Increase the scarcity of gold to a certain degree, and +the smallest bit of it may become more precious than a diamond, and +exchange for a greater quantity of other goods. + +The demand for those metals arises partly from their utility, and partly +from their beauty. If you except iron, they are more useful than, +perhaps, any other metal. As they are less liable to rust and impurity, +they can more easily be kept clean; and the utensils, either of the +table or the kitchen, are often, upon that account, more agreeable when +made of them. A silver boiler is more cleanly than a lead, copper, or +tin one; and the same quality would render a gold boiler still better +than a silver one. Their principal merit, however, arises from their +beauty, which renders them peculiarly fit for the ornaments of dress and +furniture. No paint or dye can give so splendid a colour as gilding. The +merit of their beauty is greatly enhanced by their scarcity. With the +greater part of rich people, the chief enjoyment of riches consists in +the parade of riches; which, in their eye, is never so complete as when +they appear to possess those decisive marks of opulence which nobody can +possess but themselves. In their eyes, the merit of an object, which is +in any degree either useful or beautiful, is greatly enhanced by its +scarcity, or by the great labour which it requires to collect any +considerable quantity of it; a labour which nobody can afford to pay but +themselves. Such objects they are willing to purchase at a higher price +than things much more beautiful and useful, but more common. These +qualities of utility, beauty, and scarcity, are the original foundation +of the high price of those metals, or of the great quantity of other +goods for which they can everywhere be exchanged. This value was +antecedent to, and independent of their being employed as coin, and was +the quality which fitted them for that employment. That employment, +however, by occasioning a new demand, and by diminishing the quantity +which could be employed in any other way, may have afterwards +contributed to keep up or increase their value. + +The demand for the precious stones arises altogether from their beauty. +They are of no use but as ornaments; and the merit of their beauty is +greatly enhanced by their scarcity, or by the difficulty and expense of +getting them from the mine. Wages and profit accordingly make up, upon +most occasions, almost the whole of the high price. Rent comes in but +for a very small share, frequently for no share; and the most fertile +mines only afford any considerable rent. When Tavernier, a jeweller, +visited the diamond mines of Golconda and Visiapour, he was informed +that the sovereign of the country, for whose benefit they were wrought, +had ordered all of them to be shut up except those which yielded the +largest and finest stones. The other, it seems, were to the proprietor +not worth the working. + +As the prices, both of the precious metals and of the precious stones, +is regulated all over the world by their price at the most fertile mine +in it, the rent which a mine of either can afford to its proprietor is +in proportion, not to its absolute, but to what may be called its +relative fertility, or to its superiority over other mines of the same +kind. If new mines were discovered, as much superior to those of Potosi, +as they were superior to those of Europe, the value of silver might be +so much degraded as to render even the mines of Potosi not worth the +working. Before the discovery of the Spanish West Indies, the most +fertile mines in Europe may have afforded as great a rent to their +proprietors as the richest mines in Peru do at present. Though the +quantity of silver was much less, it might have exchanged for an equal +quantity of other goods, and the proprietor's share might have enabled +him to purchase or command an equal quantity either of labour or of +commodities. + +The value, both of the product and of the rent, the real revenue which +they afforded, both to the public and to the proprietor, might have been +the same. + +The most abundant mines, either of the precious metals, or of the +precious stones, could add little to the wealth of the world. A produce, +of which the value is principally derived from its scarcity, is +necessarily degraded by its abundance. A service of plate, and the other +frivolous ornaments of dress and furniture, could be purchased for a +smaller quantity of labour, or for a smaller quantity of commodities; +and in this would consist the sole advantage which the world could +derive from that abundance. + +It is otherwise in estates above ground. The value, both of their +produce and of their rent, is in proportion to their absolute, and not +to their relative fertility. The land which produces certain quantity of +food, clothes, and lodging, can always feed, clothe, and lodge, a +certain number of people; and whatever may be the proportion of the +landlord, it will always give him a proportionable command of the labour +of those people, and of the commodities with which that labour can +supply him. The value of the most barren land is not diminished by the +neighbourhood of the most fertile. On the contrary, it is generally +increased by it. The great number of people maintained by the fertile +lands afford a market to many parts of the produce of the barren, which +they could never have found among those whom their own produce could +maintain. + +Whatever increases the fertility of land in producing food, increases +not only the value of the lands upon which the improvement is bestowed, +but contributes likewise to increase that or many other lands, by +creating a new demand for their produce. That abundance of food, of +which, in consequence of the improvement of land, many people have the +disposal beyond what they themselves can consume, is the great cause of +the demand, both for the precious metals and the precious stones, as +well as for every other conveniency and ornament of dress, lodging, +household furniture, and equipage. Food not only constitutes the +principal part of the riches of the world, but it is the abundance of +food which gives the principal part of their value to many other sorts +of riches. The poor inhabitants of Cuba and St. Domingo, when they were +first discovered by the Spaniards, used to wear little bits of gold as +ornaments in their hair and other parts of their dress. They seemed to +value them as we would do any little pebbles of somewhat more than +ordinary beauty, and to consider them as just worth the picking up, but +not worth the refusing to any body who asked them. They gave them to +their new guests at the first request, without seeming to think that +they had made them any very valuable present. They were astonished to +observe the rage of the Spaniards to obtain them; and had no notion that +there could anywhere be a country in which many people had the disposal +of so great a superfluity of food; so scanty always among themselves, +that, for a very small quantity of those glittering baubles, they would +willingly give as much as might maintain a whole family for many years. +Could they have been made to understand this, the passion of the +Spaniards would not have surprised them. + + +PART III.--_Of the variations in the Proportion between the respective +Values of that sort of Produce which always affords Rent, and of that +which sometimes does, and sometimes does not, afford Rent._ + +The increasing abundance of food, in consequence of the increasing +improvement and cultivation, must necessarily increase the demand for +every part of the produce of land which is not food, and which can be +applied either to use or to ornament. In the whole progress of +improvement, it might, therefore, be expected there should be only one +variation in the comparative values of those two different sorts of +produce. The value of that sort which sometimes does, and sometimes does +not afford rent, should constantly rise in proportion to that which +always affords some rent. As art and industry advance, the materials of +clothing and lodging, the useful fossils and materials of the earth, the +precious metals and the precious stones, should gradually come to be +more and more in demand, should gradually exchange for a greater and a +greater quantity of food; or, in other words, should gradually become +dearer and dearer. This, accordingly, has been the case with most of +these things upon most occasions, and would have been the case with all +of them upon all occasions, if particular accidents had not, upon some +occasions, increased the supply of some of them in a still greater +proportion than the demand. + +The value of a free-stone quarry, for example, will necessarily increase +with the increasing improvement and population of the country round +about it, especially if it should be the only one in the neighbourhood. +But the value of a silver mine, even though there should not be another +within a thousand miles of it, will not necessarily increase with the +improvement of the country in which it is situated. The market for the +produce of a free-stone quarry can seldom extend more than a few miles +round about it, and the demand must generally be in proportion to the +improvement and population of that small district; but the market for +the produce of a silver mine may extend over the whole known world. +Unless the world in general, therefore, be advancing in improvement and +population, the demand for silver might not be at all increased by the +improvement even of a large country in the neighbourhood of the mine. +Even though the world in general were improving, yet if, in the course +of its improvements, new mines should be discovered, much more fertile +than any which had been known before, though the demand for silver would +necessarily increase, yet the supply might increase in so much a greater +proportion, that the real price of that metal might gradually fall; that +is, any given quantity, a pound weight of it, for example, might +gradually purchase or command a smaller and a smaller quantity of +labour, or exchange for a smaller and a smaller quantity of corn, the +principal part of the subsistence of the labourer. + +The great market for silver is the commercial and civilized part of the +world. + +If, by the general progress of improvement, the demand of this market +should increase, while, at the same time, the supply did not increase in +the same proportion, the value of silver would gradually rise in +proportion to that of corn. Any given quantity of silver would exchange +for a greater and a greater quantity of corn; or, in other words, the +average money price of corn would gradually become cheaper and cheaper. + +If, on the contrary, the supply, by some accident, should increase, for +many years together, in a greater proportion than the demand, that metal +would gradually become cheaper and cheaper; or, in other words, the +average money price of corn would, in spite of all improvements, +gradually become dearer and dearer. + +But if, on the other hand, the supply of that metal should increase +nearly in the same proportion as the demand, it would continue to +purchase or exchange for nearly the same quantity of corn; and the +average money price of corn would, in spite of all improvements, +continue very nearly the same. + +These three seem to exhaust all the possible combinations of events +which can happen in the progress of improvement; and during the course +of the four centuries preceding the present, if we may judge by what has +happened both in France and Great Britain, each of those three different +combinations seems to have taken place in the European market, and +nearly in the same order, too, in which I have here set them down. + + +_Digression concerning the Variations in the value of Silver during the +Course of the Four last Centuries._ + +_First Period._--In 1350, and for some time before, the average price of +the quarter of wheat in England seems not to have been estimated lower +than four ounces of silver, Tower weight, equal to about twenty +shillings of our present money. From this price it seems to have fallen +gradually to two ounces of silver, equal to about ten shillings of our +present money, the price at which we find it estimated in the beginning +of the sixteenth century, and at which it seems to have continued to be +estimated till about 1570. + +In 1350, being the 25th of Edward III. was enacted what is called the +Statute of Labourers. In the preamble, it complains much of the +insolence of servants, who endeavoured to raise their wages upon their +masters. It therefore ordains, that all servants and labourers should, +for the future, be contented with the same wages and liveries (liveries +in those times signified not only clothes, but provisions) which they +had been accustomed to receive in the 20th year of the king, and the +four preceding years; that, upon this account, their livery-wheat should +nowhere be estimated higher than tenpence a-bushel, and that it should +always be in the option of the master to deliver them either the wheat +or the money. Tenpence a-bushel, therefore, had, in the 25th of Edward +III. been reckoned a very moderate price of wheat, since it required a +particular statute to oblige servants to accept of it in exchange for +their usual livery of provisions; and it had been reckoned a reasonable +price ten years before that, or in the 16th year of the king, the term +to which the statute refers. But in the 16th year of Edward III. +tenpence contained about half an ounce of silver, Tower weight, and was +nearly equal to half-a-crown of our present money. Four ounces of +silver, Tower weight, therefore, equal to six shillings and eightpence +of the money of those times, and to near twenty shillings of that of the +present, must have been reckoned a moderate price for the quarter of +eight bushels. + +This statute is surely a better evidence of what was reckoned, in those +times, a moderate price of grain, than the prices of some particular +years, which have generally been recorded by historians and other +writers, on account of their extraordinary dearness or cheapness, and +from which, therefore, it is difficult to form any judgment concerning +what may have been the ordinary price. There are, besides, other reasons +for believing that, in the beginning of the fourteenth century, and for +some time before, the common price of wheat was not less than four +ounces of silver the quarter, and that of other grain in proportion. + +In 1309, Ralph de Born, prior of St. Augustine's, Canterbury, gave a +feast upon his installation-day, of which William Thorn has preserved, +not only the bill of fare, but the prices of many particulars. In that +feast were consumed, 1st, fifty-three quarters of wheat, which cost +nineteen pounds, or seven shillings and twopence a-quarter, equal to +about one-and-twenty shillings and sixpence of our present money; 2dly, +fifty-eight quarters of malt, which cost seventeen pounds ten shillings, +or six shillings a-quarter, equal to about eighteen shillings of our +present money; 3dly, twenty quarters of oats, which cost four pounds, or +four shillings a-quarter, equal to about twelve shillings of our present +money. The prices of malt and oats seem here to be higher than their +ordinary proportion to the price of wheat. + +These prices are not recorded, on account of their extraordinary +dearness or cheapness, but are mentioned accidentally, as the prices +actually paid for large quantities of grain consumed at a feast, which +was famous for its magnificence. + +In 1262, being the 51st of Henry III. was revived an ancient statute, +called _the assize of bread and ale_, which, the king says in the +preamble, had been made in the times of his progenitors, some time kings +of England. It is probably, therefore, as old at least as the time of +his grandfather, Henry II. and may have been as old as the Conquest. It +regulates the price of bread according as the prices of wheat may happen +to be, from one shilling to twenty shillings the quarter of the money of +those times. But statutes of this kind are generally presumed to provide +with equal care for all deviations from the middle price, for those +below it, as well as for those above it. Ten shillings, therefore, +containing six ounces of silver, Tower weight, and equal to about thirty +shillings of our present money, must, upon this supposition, have been +reckoned the middle price of the quarter of wheat when this statute was +first enacted, and must have continued to be so in the 51st of Henry +III. We cannot, therefore, be very wrong in supposing that the middle +price was not less than one-third of the highest price at which this +statute regulates the price of bread, or than six shillings and +eightpence of the money of those times, containing four ounces of +silver, Tower weight. + +From these different facts, therefore, we seem to have some reason to +conclude that, about the middle of the fourteenth century, and for a +considerable time before, the average or ordinary price of the quarter +of wheat was not supposed to be less than four ounces of silver, Tower +weight. + +From about the middle of the fourteenth to the beginning of the +sixteenth century, what was reckoned the reasonable and moderate, that +is, the ordinary or average price of wheat, seems to have sunk gradually +to about one half of this price; so as at last to have fallen to about +two ounces of silver, Tower weight, equal to about ten shillings of our +present money. It continued to be estimated at this price till about +1570. + +In the household book of Henry, the fifth earl of Northumberland, drawn +up in 1512, there are two different estimations of wheat. In one of them +it is computed at six shillings and eightpence the quarter, in the other +at five shillings and eightpence only. In 1512, six shillings and +eightpence contained only two ounces of silver, Tower weight, and were +equal to about ten shillings of our present money. + +From the 25th of Edward III. to the beginning of the reign of Elizabeth, +during the space of more than two hundred years, six shillings and +eightpence, it appears from several different statutes, had continued to +be considered as what is called the moderate and reasonable, that is, +the ordinary or average price of wheat. The quantity of silver, however, +contained in that nominal sum was, during the course of this period, +continually diminishing, in consequence of some alterations which were +made in the coin. But the increase of the value of silver had, it seems, +so far compensated the diminution of the quantity of it contained in the +same nominal sum, that the legislature did not think it worth while to +attend to this circumstance. + +Thus, in 1436, it was enacted, that wheat might be exported without a +licence when the price was so low as six shillings and eightpence: and +in 1463, it was enacted, that no wheat should be imported if the price +was not above six shillings and eightpence the quarter. The legislature +had imagined, that when the price was so low, there could be no +inconveniency in exportation, but that when it rose higher, it became +prudent to allow of importation. Six shillings and eightpence, +therefore, containing about the same quantity of silver as thirteen +shillings and fourpence of our present money (one-third part less than +the same nominal sum contained in the time of Edward III.), had, in +those times, been considered as what is called the moderate and +reasonable price of wheat. + +In 1554, by the 1st and 2d of Philip and Mary, and in 1558, by the 1st +of Elizabeth, the exportation of wheat was in the same manner +prohibited, whenever the price of the quarter should exceed six +shillings and eightpence, which did not then contain two penny worth +more silver than the same nominal sum does at present. But it had soon +been found, that to restrain the exportation of wheat till the price was +so very low, was, in reality, to prohibit it altogether. In 1562, +therefore, by the 5th of Elizabeth, the exportation of wheat was allowed +from certain ports, whenever the price of the quarter should not exceed +ten shillings, containing nearly the same quantity of silver as the like +nominal sum does at present. This price had at this time, therefore, +been considered as what is called the moderate and reasonable price of +wheat. It agrees nearly with the estimation of the Northumberland book +in 1512. + +That in France the average price of grain was, in the same manner, much +lower in the end of the fifteenth and beginning of the sixteenth +century, than in the two centuries preceding, has been observed both by +Mr Dupré de St Maur, and by the elegant author of the Essay on the +Policy of Grain. Its price, during the same period, had probably sunk in +the same manner through the greater part of Europe. + +This rise in the value of silver, in proportion to that of corn, may +either have been owing altogether to the increase of the demand for that +metal, in consequence of increasing improvement and cultivation, the +supply, in the mean time, continuing the same as before; or, the demand +continuing the same as before, it may have been owing altogether to the +gradual diminution of the supply: the greater part of the mines which +were then known in the world being much exhausted, and, consequently, +the expense of working them much increased; or it may have been owing +partly to the one, and partly to the other of those two circumstances. +In the end of the fifteenth and beginning of the sixteenth centuries, +the greater part of Europe was approaching towards a more settled form +of government than it had enjoyed for several ages before. The increase +of security would naturally increase industry and improvement; and the +demand for the precious metals, as well as for every other luxury and +ornament, would naturally increase with the increase of riches. A +greater annual produce would require a greater quantity of coin to +circulate it; and a greater number of rich people would require a +greater quantity of plate and other ornaments of silver. It is natural +to suppose, too, that the greater part of the mines which then supplied +the European market with silver might be a good deal exhausted, and have +become more expensive in the working. They had been wrought, many of +them, from the time of the Romans. + +It has been the opinion, however, of the greater part of those who have +written upon the prices of commodities in ancient times, that, from the +Conquest, perhaps from the invasion of Julius Cæsar, till the discovery +of the mines of America, the value of silver was continually +diminishing. This opinion they seem to have been led into, partly by the +observations which they had occasion to make upon the prices both of +corn and of some other parts of the rude produce of land, and partly by +the popular notion, that as the quantity of silver naturally increases +in every country with the increase of wealth, so its value diminishes as +its quantity increases. + +In their observations upon the prices of corn, three different +circumstances seem frequently to have misled them. + +First, in ancient times, almost all rents were paid in kind; in a +certain quantity of corn, cattle, poultry, &c. It sometimes happened, +however, that the landlord would stipulate, that he should be at liberty +to demand of the tenant, either the annual payment in kind or a certain +sum of money instead of it. The price at which the payment in kind was +in this manner exchanged for a certain sum of money, is in Scotland +called the conversion price. As the option is always in the landlord to +take either the substance or the price, it is necessary, for the safety +of the tenant, that the conversion price should rather be below than +above the average market price. In many places, accordingly, it is not +much above one half of this price. Through the greater part of Scotland +this custom still continues with regard to poultry, and in some places +with regard to cattle. It might probably have continued to take place, +too, with regard to corn, had not the institution of the public fiars +put an end to it. These are annual valuations, according to the judgment +of an assize, of the average price of all the different sorts of grain, +and of all the different qualities of each, according to the actual +market price in every different county. This institution rendered it +sufficiently safe for the tenant, and much more convenient for the +landlord, to convert, as they call it, the corn rent, rather at what +should happen to be the price of the fiars of each year, than at any +certain fixed price. But the writers who have collected the prices of +corn in ancient times seem frequently to have mistaken what is called in +Scotland the conversion price for the actual market price. Fleetwood +acknowledges, upon one occasion, that he had made this mistake. As he +wrote his book, however, for a particular purpose, he does not think +proper to make this acknowledgment till after transcribing this +conversion price fifteen times. The price is eight shillings the quarter +of wheat. This sum in 1423, the year at which he begins with it, +contained the same quantity of silver as sixteen shillings of our +present money. But in 1562, the year at which he ends with it, it +contained no more than the same nominal sum does at present. + +Secondly, they have been misled by the slovenly manner in which some +ancient statutes of assize had been sometimes transcribed by lazy +copiers, and sometimes, perhaps, actually composed by the legislature. + +The ancient statutes of assize seem to have begun always with +determining what ought to be the price of bread and ale when the price +of wheat and barley were at the lowest; and to have proceeded gradually +to determine what it ought to be, according as the prices of those two +sorts of grain should gradually rise above this lowest price. But the +transcribers of those statutes seem frequently to have thought it +sufficient to copy the regulation as far as the three or four first and +lowest prices; saving in this manner their own labour, and judging, I +suppose, that this was enough to show what proportion ought to be +observed in all higher prices. + +Thus, in the assize of bread and ale, of the 51st of Henry III. the +price of bread was regulated according to the different prices of wheat, +from one shilling to twenty shillings the quarter of the money of those +times. But in the manuscripts from which all the different editions of +the statutes, preceding that of Mr Ruffhead, were printed, the copiers +had never transcribed this regulation beyond the price of twelve +shillings. Several writers, therefore, being misled by this faulty +transcription, very naturally conclude that the middle price, or six +shillings the quarter, equal to about eighteen shillings of our present +money, was the ordinary or average price of wheat at that time. + +In the statute of Tumbrel and Pillory, enacted nearly about the same +time, the price of ale is regulated according to every sixpence rise in +the price of barley, from two shillings, to four shillings the quarter. +That four shillings, however, was not considered as the highest price to +which barley might frequently rise in those times and that these prices +were only given as an example of the proportion which ought to be +observed in all other prices, whether higher or lower, we may infer from +the last words of the statute: "_Et sic deinceps crescetur vel +diminuetur per sex denarios._" The expression is very slovenly, but the +meaning is plain enough, "that the price of ale is in this manner to be +increased or diminished according to every sixpence rise or fall in the +price of barley." In the composition of this statute, the legislature +itself seems to have been as negligent as the copiers were in the +transcription of the other. + +In an ancient manuscript of the Regiam Majestatem, an old Scotch law +book, there is a statute of assize, in which the price of bread is +regulated according to all the different prices of wheat, from tenpence +to three shillings the Scotch boll, equal to about half an English +quarter. Three shillings Scotch, at the time when this assize is +supposed to have been enacted, were equal to about nine shillings +sterling of our present money. Mr Ruddiman seems[16] to conclude from +this, that three shillings was the highest price to which wheat ever +rose in those times, and that tenpence, a shilling, or at most two +shillings, were the ordinary prices. Upon consulting the manuscript, +however, it appears evidently, that all these prices are only set down +as examples of the proportion which ought to be observed between the +respective prices of wheat and bread. The last words of the statute are +"_reliqua judicabis secundum præscripta, habendo respectum ad pretium +bladi_."--"You shall judge of the remaining cases, according to what is +above written, having respect to the price of corn." + +Thirdly, they seem to have been misled too, by the very low price at +which wheat was sometimes sold in very ancient times; and to have +imagined, that as its lowest price was then much lower than in later +times its ordinary price must likewise have been much lower. They might +have found, however, that in those ancient times its highest price was +fully as much above, as its lowest price was below any thing that had +ever been known in later times. Thus, in 1270, Fleetwood gives us two +prices of the quarter of wheat. The one is four pounds sixteen shillings +of the money of those times, equal to fourteen pounds eight shillings of +that of the present; the other is six pounds eight shillings, equal to +nineteen pounds four shillings of our present money. No price can be +found in the end of the fifteenth, or beginning of the sixteenth +century, which approaches to the extravagance of these. The price of +corn, though at all times liable to variation, varies most in those +turbulent and disorderly societies, in which the interruption of all +commerce and communication hinders the plenty of one part of the country +from relieving the scarcity of another. In the disorderly state of +England under the Plantagenets, who governed it from about the middle of +the twelfth till towards the end of the fifteenth century, one district +might be in plenty, while another, at no great distance, by having its +crop destroyed, either by some accident of the seasons, or by the +incursion of some neighbouring baron, might be suffering all the horrors +of a famine; and yet if the lands of some hostile lord were interposed +between them, the one might not be able to give the least assistance to +the other. Under the vigorous administration of the Tudors, who governed +England during the latter part of the fifteenth, and through the whole +of the sixteenth century, no baron was powerful enough to dare to +disturb the public security. + +The reader will find at the end of this chapter all the prices of wheat +which have been collected by Fleetwood, from 1202 to 1597, both +inclusive, reduced to the money of the present times, and digested, +according to the order of time, into seven divisions of twelve years +each. At the end of each division, too, he will find the average price +of the twelve years of which it consists. In that long period of time, +Fleetwood has been able to collect the prices of no more than eighty +years; so that four years are wanting to make out the last twelve years. +I have added, therefore, from the accounts of Eton college, the prices +of 1598, 1599, 1600, and 1601. It is the only addition which I have +made. The reader will see, that from the beginning of the thirteenth +till after the middle of the sixteenth century, the average price of +each twelve years grows gradually lower and lower; and that towards the +and of the sixteenth century it begins to rise again. The prices, +indeed, which Fleetwood has been able to collect, seem to have been +those chiefly which were remarkable for extraordinary dearness or +cheapness; and I do not pretend that any very certain conclusion can be +drawn from them. So far, however, as they prove any thing at all, they +confirm the account which I have been endeavouring to give. Fleetwood +himself, however, seems, with most other writers, to have believed, +that, during all this period, the value of silver, in consequence of its +increasing abundance, was continually diminishing. The prices of corn, +which he himself has collected, certainly do not agree with this +opinion. They agree perfectly with that of Mr Dupré de St Maur, and with +that which I have been endeavouring to explain. Bishop Fleetwood and Mr +Dupré de St Maur are the two authors who seem to have collected, with +the greatest diligence and fidelity, the prices of things in ancient +times. It is somewhat curious that, though their opinions are so very +different, their facts, so far as they relate to the price of corn at +least, should coincide so very exactly. + +It is not, however, so much from the low price of corn, as from that of +some other parts of the rude produce of land, that the most judicious +writers have inferred the great value of silver in those very ancient +times. Corn, it has been said, being a sort of manufacture, was, in +those rude ages, much dearer in proportion than the greater part of +other commodities; it is meant, I suppose, than the greater part of +unmanufactured commodities, such as cattle, poultry, game of all kinds, +&c. That in those times of poverty and barbarism these were +proportionably much cheaper than corn, is undoubtedly true. But this +cheapness was not the effect of the high value of silver, but of the low +value of those commodities. It was not because silver would in such time +purchase or represent a greater quantity of labour, but because such +commodities would purchase or represent a much smaller quantity than in +times of more opulence and improvement. Silver must certainly be cheaper +in Spanish America than in Europe; in the country where it is produced, +than in the country to which it is brought, at the expense of a long +carriage both by land and by sea, of a freight, and an insurance. +One-and-twenty pence halfpenny sterling, however, we are told by Ulloa, +was, not many years ago, at Buenos Ayres, the price of an ox chosen from +a herd of three or four hundred. Sixteen shillings sterling, we are told +by Mr Byron, was the price of a good horse in the capital of Chili. In a +country naturally fertile, but of which the far greater part is +altogether uncultivated, cattle, poultry, game of all kinds, &c. as they +can be acquired with a very small quantity of labour, so they will +purchase or command but a very small quantity. The low money price for +which they may be sold, is no proof that the real value of silver is +there very high, but that the real value of those commodities is very +low. + +Labour, it must always be remembered, and not any particular commodity, +or set of commodities, is the real measure of the value both of silver +and of all other commodities. + +But in countries almost waste, or but thinly inhabited, cattle, poultry, +game of all kinds, &c. as they are the spontaneous productions of +Nature, so she frequently produces them in much greater quantities than +the consumption of the inhabitants requires. In such a state of things, +the supply commonly exceeds the demand. In different states of society, +in different states of improvement, therefore, such commodities will +represent, or be equivalent, to very different quantities of labour. + +In every state of society, in every stage of improvement, corn is the +production of human industry. But the average produce of every sort of +industry is always suited, more or less exactly, to the average +consumption; the average supply to the average demand. In every +different stage of improvement, besides, the raising of equal quantities +of corn in the same soil and climate, will, at an average, require +nearly equal quantities of labour; or, what comes to the same thing, the +price of nearly equal quantities; the continual increase of the +productive powers of labour, in an improved state of cultivation, being +more or less counterbalanced by the continual increasing price of +cattle, the principal instruments of agriculture. Upon all these +accounts, therefore, we may rest assured, that equal quantities of corn +will, in every state of society, in every stage of improvement, more +nearly represent, or be equivalent to, equal quantities of labour, than +equal quantities of any other part of the rude produce of land. Corn, +accordingly, it has already been observed, is, in all the different +stages of wealth and improvement, a more accurate measure of value than +any other commodity or set of commodities. In all those different +stages, therefore, we can judge better of the real value of silver, by +comparing it with corn, than by comparing it with any other commodity or +set of commodities. + +Corn, besides, or whatever else is the common and favourite vegetable +food of the people, constitutes, in every civilized country, the +principal part of the subsistence of the labourer. In consequence of the +extension of agriculture, the land of every country produces a much +greater quantity of vegetable than of animal food, and the labourer +everywhere lives chiefly upon the wholesome food that is cheapest and +most abundant. Butcher's meat, except in the most thriving countries, or +where labour is most highly rewarded, makes but an insignificant part of +his subsistence; poultry makes a still smaller part of it, and game no +part of it. In France, and even in Scotland, where labour is somewhat +better rewarded than in France, the labouring poor seldom eat butcher's +meat, except upon holidays, and other extraordinary occasions. The money +price of labour, therefore, depends much more upon the average money +price of corn, the subsistence of the labourer, than upon that of +butcher's meat, or of any other part of the rude produce of land. The +real value of gold and silver, therefore, the real quantity of labour +which they can purchase or command, depends much more upon the quantity +of corn which they can purchase or command, than upon that of butcher's +meat, or any other part of the rude produce of land. + +Such slight observations, however, upon the prices either of corn or of +other commodities, would not probably have misled so many intelligent +authors, had they not been influenced at the same time by the popular +notion, that as the quantity of silver naturally increases in every +country with the increase of wealth, so its value diminishes as its +quantity increases. This notion, however, seems to be altogether +groundless. + +The quantity of the precious metals may increase in any country from two +different causes; either, first, from the increased abundance of the +mines which supply it; or, secondly, from the increased wealth of the +people, from the increased produce of their annual labour. The first of +these causes is no doubt necessarily connected with the diminution of +the value of the precious metals; but the second is not. + +When more abundant mines are discovered, a greater quantity of the +precious metals is brought to market; and the quantity of the +necessaries and conveniencies of life for which they must be exchanged +being the same as before, equal quantities of the metals must be +exchanged for smaller quantities of commodities. So far, therefore, as +the increase of the quantity of the precious metals in any country +arises from the increased abundance of the mines, it is necessarily +connected with some diminution of their value. + +When, on the contrary, the wealth of any country increases, when the +annual produce of its labour becomes gradually greater and greater, a +greater quantity of coin becomes necessary in order to circulate a +greater quantity of commodities: and the people, as they can afford it, +as they have more commodities to give for it, will naturally purchase a +greater and a greater quantity of plate. The quantity of their coin will +increase from necessity; the quantity of their plate from vanity and +ostentation, or from the same reason that the quantity of fine statues, +pictures, and of every other luxury and curiosity, is likely to increase +among them. But as statuaries and painters are not likely to be worse +rewarded in times of wealth and prosperity, than in times of poverty +and depression, so gold and silver are not likely to be worse paid for. + +The price of gold and silver, when the accidental discovery of more +abundant mines does not keep it down, as it naturally rises with the +wealth of every country; so, whatever be the state of the mines, it is +at all times naturally higher in a rich than in a poor country. Gold and +silver, like all other commodities, naturally seek the market where the +best price is given for them, and the best price is commonly given for +every thing in the country which can best afford it. Labour, it must be +remembered, is the ultimate price which is paid for every thing; and in +countries where labour is equally well rewarded, the money price of +labour will be in proportion to that of the subsistence of the labourer. +But gold and silver will naturally exchange for a greater quantity of +subsistence in a rich than in a poor country; in a country which abounds +with subsistence, than in one which is but indifferently supplied with +it. If the two countries are at a great distance, the difference may be +very great; because, though the metals naturally fly from the worse to +the better market, yet it may be difficult to transport them in such +quantities as to bring their price nearly to a level in both. If the +countries are near, the difference will be smaller, and may sometimes be +scarce perceptible; because in this case the transportation will be +easy. China is a much richer country than any part of Europe, and the +difference between the price of subsistence in China and in Europe is +very great. Rice in China is much cheaper than wheat is anywhere in +Europe. England is a much richer country than Scotland, but the +difference between the money price of corn in those two countries is +much smaller, and is but just perceptible. In proportion to the quantity +or measure, Scotch corn generally appears to be a good deal cheaper than +English; but, in proportion to its quality, it is certainly somewhat +dearer. Scotland receives almost every year very large supplies from +England, and every commodity must commonly be somewhat dearer in the +country to which it is brought than in that from which it comes. English +corn, therefore, must be dearer in Scotland than in England; and yet in +proportion to its quality, or to the quantity and goodness of the flour +or meal which can be made from it, it cannot commonly be sold higher +there than the Scotch corn which comes to market in competition with it. + +The difference between the money price of labour in China and in Europe, +is still greater than that between the money price of subsistence; +because the real recompence of labour is higher in Europe than in China, +the greater part of Europe being in an improving state, while China +seems to be standing still. The money price of labour is lower in +Scotland than in England, because the real recompence of labour is much +lower: Scotland, though advancing to greater wealth, advances much more +slowly than England. The frequency of emigration from Scotland, and the +rarity of it from England, sufficiently prove that the demand for labour +is very different in the two countries. The proportion between the real +recompence of labour in different countries, it must be remembered, is +naturally regulated, not by their actual wealth or poverty, but by their +advancing, stationary, or declining condition. + +Gold and silver, as they are naturally of the greatest value among the +richest, so they are naturally of the least value among the poorest +nations. Among savages, the poorest of all nations, they are scarce of +any value. + +In great towns, corn is always dearer than in remote parts of the +country. This, however, is the effect, not of the real cheapness of +silver, but of the real dearness of corn. It does not cost less labour +to bring silver to the great town than to the remote parts of the +country; but it costs a great deal more to bring corn. + +In some very rich and commercial countries, such as Holland and the +territory of Genoa, corn is dear for the same reason that it is dear in +great towns. They do not produce enough to maintain their inhabitants. +They are rich in the industry and skill of their artificers and +manufacturers, in every sort of machinery which can facilitate and +abridge labour; in shipping, and in all the other instruments and means +of carriage and commerce: but they are poor in corn, which, as it must +be brought to them from distant countries, must, by an addition to its +price, pay for the carriage from these countries. It does not cost less +labour to bring silver to Amsterdam than to Dantzic; but it costs a +great deal more to bring corn. The real cast of silver must be nearly +the same in both places; but that of corn must be very different. +Diminish the real opulence either of Holland or of the territory of +Genoa, while the number of their inhabitants remains the same; diminish +their power of supplying themselves from distant countries; and the +price of corn, instead of sinking with that diminution in the quantity +of their silver, which must necessarily accompany this declension, +either as its cause or as its effect, will rise to the price of a +famine. When we are in want of necessaries, we must part with all +superfluities, of which the value, as it rises in times of opulence and +prosperity, so it sinks in times of poverty and distress. It is +otherwise with necessaries. Their real price, the quantity of labour +which they can purchase or command, rises in times of poverty and +distress, and sinks in times of opulence and prosperity, which are +always times of great abundance; for they could not otherwise be times +of opulence and prosperity Corn is a necessary, silver is only a +superfluity. + +Whatever, therefore, may have been the increase in the quantity of the +precious metals, which, during the period between the middle of the +fourteenth and that of the sixteenth century, arose from the increase of +wealth and improvement, it could have no tendency to diminish their +value, either in Great Britain, or in any other part of Europe. If those +who have collected the prices of things in ancient times, therefore, +had, during this period, no reason to infer the diminution of the value +of silver from any observations which they had made upon the prices +either of corn, or of other commodities, they had still less reason to +infer it from any supposed increase of wealth and improvement. + + +_Second Period._--But how various soever may have been the opinions of +the learned concerning the progress of the value of silver during the +first period, they are unanimous concerning it during the second. + +From about 1570 to about 1640, during a period of about seventy years, +the variation in the proportion between the value of silver and that of +corn held a quite opposite course. Silver sunk in its real value, or +would exchange for a smaller quantity of labour than before; and corn +rose in its nominal price, and, instead of being commonly sold for about +two ounces of silver the quarter, or about ten shillings of our present +money, came to be sold for six and eight ounces of silver the quarter, +or about thirty and forty shillings of our present money. + +The discovery of the abundant mines of America seems to have been the +sole cause of this diminution in the value of silver, in proportion to +that of corn. It is accounted for, accordingly, in the same manner by +every body; and there never has been any dispute, either about the fact, +or about the cause of it. The greater part of Europe was, during this +period, advancing in industry and improvement, and the demand for silver +must consequently have been increasing; but the increase of the supply +had, it seems, so far exceeded that of the demand, that the value of +that metal sunk considerably. The discovery of the mines of America, it +is to be observed, does not seem to have had any very sensible effect +upon the prices of things in England, till after 1570; even though the +mines of Potosi had been discovered more than twenty years before. + +From 1595 to 1620, both inclusive, the average price of the quarter of +nine bushels of the best wheat, at Windsor market, appears, from the +accounts of Eton college, to have been L.2 : 1 : 6-9/13. From which sum, +neglecting the fraction, and deducting a ninth, or 4s. 7-1/3d., the +price of the quarter of eight bushels comes out to have been +L.1 : 16 : 10-2/3. And from this sum, neglecting likewise the fraction, +and deducting a ninth, or 4s. 1-1/9d., for the difference between the +price of the best wheat and that of the middle wheat, the price of the +middle wheat comes out to have been about L.1 : 12 : 8-8/9, or about six +ounces and one-third of an ounce of silver. + +From 1621 to 1636, both inclusive, the average price of the same measure +of the best wheat, at the same market, appears, from the same accounts, +to have been L.2 : 10s.; from which, making the like deductions as in +the foregoing case, the average price of the quarter of eight bushels of +middle wheat comes out to have been L.1 : 19 : 6, or about seven ounces +and two-thirds of an ounce of silver. + + +_Third Period._--Between 1630 and 1640, or about 1636, the effect of the +discovery of the mines of America, is reducing the value of silver, +appears to have been completed, and the value of that metal seems never +to have sunk lower in proportion to that of corn than it was about that +time. It seems to have risen somewhat in the course of the present +century, and it had probably begun to do so, even some time before the +end of the last. + +From 1637 to 1700, both inclusive, being the sixty-four last years of +the last century, the average price of the quarter of nine bushels of +the best wheat, at Windsor market, appears, from the same accounts, to +have been L.2 : 11 : 0-1/3, which is only 1s. 0-1/3d. dearer than it +had been during the sixteen years before. But, in the course of these +sixty-four years, there happened two events, which must have produced a +much greater scarcity of corn than what the course of the seasons would +otherwise have occasioned, and which, therefore, without supposing any +further reduction in the value of silver, will much more than account +for this very small enhancement of price. + +The first of these events was the civil war, which, by discouraging +tillage and interrupting commerce, must have raised the price of corn +much above what the course of the seasons would otherwise have +occasioned. It must have had this effect, more or less, at all the +different markets in the kingdom, but particularly at those in the +neighborhood of London, which require to be supplied from the greatest +distance. In 1648, accordingly, the price of the best wheat, at Windsor +market, appears, from the same accounts, to have been L.4 : 5s., and, in +1649, to have been L.4, the quarter of nine bushels. The excess of those +two years above L.2 10s. (the average price of the sixteen years +preceding 1637) is L.3 5s., which, divided among the sixty-four last +years of the last century, will alone very nearly account for that small +enhancement of price which seems to have taken place in them. These, +however, though the highest, are by no means the only high prices which +seem to have been occasioned by the civil wars. + +The second event was the bounty upon the exportation of corn, granted in +1688. The bounty, it has been thought by many people, by encouraging +tillage, may, in a long course of years, have occasioned a greater +abundance, and, consequently, a greater cheapness of corn in the home +market, than what would otherwise have taken place there. How far the +bounty could produce this effect at any time I shall examine hereafter: +I shall only observe at present, that between 1688 and 1700, it had not +time to produce any such effect. During this short period, its only +effect must have been, by encouraging the exportation of the surplus +produce of every year, and thereby hindering the abundance of one year +from compensating the scarcity of another, to raise the price in the +home market. The scarcity which prevailed in England, from 1693 to 1699, +both inclusive, though no doubt principally owing to the badness of the +seasons, and, therefore, extending through a considerable part of +Europe, must have been somewhat enhanced by the bounty. In 1699, +accordingly, the further exportation of corn was prohibited for nine +months. + +There was a third event which occurred in the course of the same period, +and which, though it could not occasion any scarcity of corn, nor, +perhaps, any augmentation in the real quantity of silver which was +usually paid for it, must necessarily have occasioned some augmentation +in the nominal sum. This event was the great debasement of the silver +coin, by clipping and wearing. This evil had begun in the reign of +Charles II. and had gone on continually increasing till 1695; at which +time, as we may learn from Mr Lowndes, the current silver coin was, at +an average, near five-and-twenty per cent. below its standard value. But +the nominal sum which constitutes the market price of every commodity is +necessarily regulated, not so much by the quantity of silver, which, +according to the standard, ought to be contained in it, as by that +which, it is found by experience, actually is contained in it. This +nominal sum, therefore, is necessarily higher when the coin is much +debased by clipping and wearing, than when near to its standard value. + +In the course of the present century, the silver coin has not at any +time been more below its standard weight than it is at present. But +though very much defaced, its value has been kept up by that of the gold +coin, for which it is exchanged. For though, before the late recoinage, +the gold coin was a good deal defaced too, it was less so than the +silver. In 1695, on the contrary, the value of the silver coin was not +kept up by the gold coin; a guinea then commonly exchanging for thirty +shillings of the worn and clipt silver. Before the late recoinage of the +gold, the price of silver bullion was seldom higher than five shillings +and sevenpence an ounce, which is but fivepence above the mint price. +But in 1695, the common price of silver bullion was six shillings and +fivepence an ounce,[17] which is fifteen pence above the mint price. +Even before the late recoinage of the gold, therefore, the coin, gold +and silver together, when compared with silver bullion, was not supposed +to be more than eight per cent below its standard value. In 1695, on the +contrary, it had been supposed to be near five-and-twenty per cent. +below that value. But in the beginning of the present century, that is, +immediately after the great recoinage in King William's time, the +greater part of the current silver coin must have been still nearer to +its standard weight than it is at present. In the course of the present +century, too, there has been no great public calamity, such as a civil +war, which could rather discourage, or interrupt the interior commerce +of the country. And though the bounty which has taken place through the +greater part of this century, must always raise the price of corn +somewhat higher than it otherwise would be in the actual state of +tillage; yet, as in the course of this century, the bounty has had full +time to produce all the good effects commonly imputed to it to encourage +tillage, and thereby to increase the quantity of corn in the home +market, it may, open the principles of a system which I shall explain +and examine hereafter, be supposed to have done something to lower the +price of that commodity the one way, as well as to raise it the other. +It is by many people supposed to have done more. In the sixty-four years +of the present century, accordingly, the average price of the quarter of +nine bushels of the best wheat, at Windsor market, appears, by the +accounts of Eton college, to have been L.2 : 0 : 6-10/32, which is about +ten shillings and sixpence, or more than five-and-twenty per cent. +cheaper than it had been during the sixty-four last years of the last +century; and about nine shillings and sixpence cheaper than is had been +during the sixteen years preceding 1636, when the discovery of the +abundant mines of America may be supposed to have produced its full +effect; and about one shilling cheaper than it had been in the +twenty-six years preceding 1620, before that discovery can well be +supposed to have produced its full effect. According to this account, +the average price of middle wheat, during these sixty-four first years +of the present century, comes out to have been about thirty-two +shillings the quarter of eight bushels. + +The value of silver, therefore, seems to have risen somewhat in +proportion to that of corn during the course of the present century, and +it had probably begun to do so even some time before the end of the +last. + +In 1687, the price of the quarter of nine bushels of the best wheat, at +Windsor market, was L.1 : 5 : 2, the lowest price at which it had ever +been from 1595. + +In 1688, Mr Gregory King, a man famous for his knowledge in matters of +this kind, estimated the average price of wheat, in years of moderate +plenty, to be to the grower 3s. 6d. the bushel, or eight-and-twenty +shillings the quarter. The grower's price I understand to be the same +with what is sometimes called the contract price, or the price at which +a farmer contracts for a certain number of years to deliver a certain +quantity of corn to a dealer. As a contract of this kind saves the +farmer the expense and trouble of marketing, the contract price is +generally lower than what is supposed to be the average market price. Mr +King had judged eight-and-twenty shillings the quarter to be at that +time the ordinary contract price in years of moderate plenty. Before the +scarcity occasioned by the late extraordinary course of bad seasons, it +was, I have been assured, the ordinary contract price in all common +years. + +In 1688 was granted the parliamentary bounty upon the exportation of +corn. The country gentlemen, who then composed a still greater +proportion of the legislature than they do at present, had felt that the +money price of corn was falling. The bounty was an expedient to raise it +artificially to the high price at which it had frequently been sold in +times of Charles I. and II. It was to take place, therefore, till wheat +was so high as forty-eight shillings the quarter; that is, twenty +shillings, or 5-7ths dearer than Mr King had, in that very year, +estimated the grower's price to be in times of moderate plenty. If his +calculations deserve any part of the reputation which they have obtained +very universally, eight-and-forty shillings the quarter was a price +which, without some such expedient as the bounty, could not at that time +be expected, except in years of extraordinary scarcity. But the +government of King William was not then fully settled. It was in no +condition to refuse any thing to the country gentlemen, from whom it +was, at that very time, soliciting the first establishment of the annual +land-tax. + +The value of silver, therefore, in proportion to that of corn, had +probably risen somewhat before the end of the last century, and it seems +to have continued to do so during the course of the greater part of the +present, though the necessary operation of the bounty must have hindered +that time from being so sensible as it otherwise would have been in the +actual state of tillage. + +In plentiful years, the bounty, by occasioning an extraordinary +exportation, necessarily raises the price of corn above what it +otherwise would be in those years. To encourage tillage, by keeping up +the price of corn, even in the most plentiful years, was the avowed end +of the institution. + +In years of great scarcity, indeed, the bounty has generally been +suspended. It must, however, have had some effect upon the prices of +many of these years. By the extraordinary exportation which it occasions +in years of plenty, it must frequently hinder the plenty of one year +from compensating the scarcity of another. + +Both in years of plenty and in years of scarcity, therefore, the bounty +raises the price of corn above what it naturally would be in the actual +state of tillage. If during the sixty-four first years of the present +century, therefore, the average price has been lower than during the +sixty-four last years of the last century, it must, in the same state of +tillage, have been much more so, had it not been for this operation of +the bounty. + +But, without the bounty, it maybe said the state of tillage would not +have been the same. What may have been the effects of this institution +upon the agriculture of the country, I shall endeavour to explain +hereafter, when I come to treat particularly of bounties. I shall only +observe at present, that this rise in the value of silver, in proportion +to that of corn, has not been peculiar to England. It has been observed +to have taken place in France during the same period, and nearly in the +same proportion, too, by three very faithful, diligent, and laborious +collectors of the prices of corn, Mr Dupré de St Maur, Mr Messance, and +the author of the Essay on the Police of Grain. But in France, till +1764, the exportation of grain was by law prohibited; and it is somewhat +difficult to suppose, that nearly the same diminution of price which +took place in one country, notwithstanding this prohibition, should, in +another, be owing to the extraordinary encouragement given to +exportation. + +It would be more proper, perhaps, to consider this variation in the +average money price of corn as the effect rather of some gradual rise in +the real value of silver in the European market, than of any fall in the +real average value of corn. Corn, it has already been observed, is, at +distant periods of time, a more accurate measure of value than either +silver or, perhaps, any other commodity. When, after the discovery of +the abundant mines of America, corn rose to three and four times its +former money price, this change was universally ascribed, not to any +rise in the real value of corn, but to a fall in the real value of +silver. If, during the sixty-four first years of the present century, +therefore, the average money price of corn has fallen somewhat below +what it had been during the greater part of the last century, we should, +in the same manner, impute this change, not to any fall in the real +value of corn, but to some rise in the real value of silver in the +European market. + +The high price of corn during these ten or twelve years past, indeed, +has occasioned a suspicion that the real value of silver still continues +to fall in the European market. This high price of corn, however, seems +evidently to have been the effect of the extraordinary unfavourableness +of the seasons, and ought, therefore, to be regarded, not as a +permanent, but as a transitory and occasional event. The seasons, for +these ten or twelve years past, have been unfavourable through the +greater part of Europe; and the disorders of Poland have very much +increased the scarcity in all those countries, which, in dear years, +used to be supplied from that market. So long a course of bad seasons, +though not a very common event, is by no means a singular one; and +whoever has inquired much into the history of the prices of corn in +former times, will be at no loss to recollect several other examples of +the same kind. Ten years of extraordinary scarcity, besides, are not +more wonderful than ten years of extraordinary plenty. The low price of +corn, from 1741 to 1750, both inclusive, may very well be set in +opposition to its high price during these last eight or ten years. From +1741 to 1750, the average price of the quarter of nine bushels of the +best wheat, at Windsor market, it appears from the accounts of Eton +College, was only L.1 : 13 : 9-4/5, which is nearly 6s. 3d. below the +average price of the sixty-four first years of the present century. The +average price of the quarter of eight bushels of middle wheat comes out, +according to this account, to have been, during these ten years, only +L.1 : 6 : 8. + +Between 1741 and 1750, however, the bounty must have hindered the price +of corn from falling so low in the home market as it naturally would +have done. During these ten years, the quantity of all sorts of grain +exported, it appears from the custom-house books, amounted to no less +than 8,029,156 quarters, one bushel. The bounty paid for this amounted +to L.1,514,962 : 17 : 4-1/2. In 1749, accordingly, Mr Pelham, at that +time prime minister, observed to the house of commons, that, for the +three years preceding, a very extraordinary sum had been paid as +bounty for the exportation of corn. He had good reason to make this +observation, and in the following year he might have had still +better. In that single year, the bounty paid amounted to no less than +L.324,176 : 10 : 6.[18] It is unnecessary to observe how much this +forced exportation must have raised the price of corn above what it +otherwise would have been in the home market. + +At the end of the accounts annexed to this chapter the reader will find +the particular account of those ten years separated from the rest. He +will find there, too, the particular account of the preceding ten years, +of which the average is likewise below, though not so much below, the +general average of the sixty-four first years of the century. The year +1740, however, was a year of extraordinary scarcity. These twenty years +preceding 1750 may very well be set in opposition to the twenty +preceding 1770. As the former were a good deal below the general average +of the century, notwithstanding the intervention of one or two dear +years; so the latter have been a good deal above it, notwithstanding the +intervention of one or two cheap ones, of 1759, for example. If the +former have not been as much below the general average as the latter +have been above it, we ought probably to impute it to the bounty. The +change has evidently been too sudden to be ascribed to any change in the +value of silver, which is always slow and gradual. The suddenness of the +effect can be accounted for only by a cause which can operate suddenly, +the accidental variations of the seasons. + +The money price of labour in Great Britain has, indeed, risen during the +course of the present century. This, however, seems to be the effect, +not so much of any diminution in the value of silver in the European +market, as of an increase in the demand for labour in Great Britain, +arising from the great, and almost universal prosperity of the country. +In France, a country not altogether so prosperous, the money price of +labour has, since the middle of the last century, been observed to sink +gradually with the average money price of corn. Both in the last century +and in the present, the day wages of common labour are there said to +have been pretty uniformly about the twentieth part of the average price +of the septier of wheat; a measure which contains a little more than +four Winchester bushels. In Great Britain, the real recompence of +labour, it has already been shewn, the real quantities of the +necessaries and conveniencies of life which are given to the labourer, +has increased considerably during the course of the present century. The +rise in its money price seems to have been the effect, not of any +diminution of the value of silver in the general market of Europe, but +of a rise in the real price of labour, in the particular market of Great +Britain, owing to the peculiarly happy circumstances of the country. + +For some time after the first discovery of America, silver would +continue to sell at its former, or not much below its former price. The +profits of mining would for some time be very great, and much above +their natural rate. Those who imported that metal into Europe, however, +would soon find that the whole annual importation could not be disposed +of at this high price. Silver would gradually exchange for a smaller and +a smaller quantity of goods. Its price would sink gradually lower and +lower, till it fell to its natural price; or to what was just sufficient +to pay, according to their natural rates, the wages of the labour, the +profits of the stock, and the rent of the land, which must be paid in +order to bring it from the mine to the market. In the greater part of +the silver mines of Peru, the tax of the king of Spain, amounting to a +tenth of the gross produce, eats up, it has already been observed, the +whole rent of the land. This tax was originally a half; it soon +afterwards fell to a third, then to a fifth, and at last to a tenth, at +which rate it still continues. In the greater part of the silver mines +of Peru, this, it seems, is all that remains, after replacing the stock +of the undertaker of the work, together with its ordinary profits; and +it seems to be universally acknowledged that these profits, which were +once very high, are now as low as they can well be, consistently with +carrying on the works. + +The tax of the king of Spain was reduced to a fifth of the registered +silver in 1504[19], one-and-forty years before 1545, the date of the the +discovery of the mines of Potosi. In the course of ninety years, or +before 1636, these mines, the most fertile in all America, had time +sufficient to produce their full effect, or to reduce the value of +silver in the European market as low as it could well fall, while it +continued to pay this tax to the king of Spain. Ninety years is time +sufficient to reduce any commodity, of which there is no monopoly, to +its natural price, or to the lowest price at which, while it pays a +particular tax, it can continue to be sold for any considerable time +together. + +The price of silver in the European market might, perhaps, have fallen +still lower, and it might have become necessary either to reduce the tax +upon it, not only to one-tenth, as in 1736, but to one twentieth, in the +same manner as that upon gold, or to give up working the greater part of +the American mines which are now wrought. The gradual increase of the +demand for silver, or the gradual enlargement of the market for the +produce of the silver mines of America, is probably the cause which has +prevented this from happening, and which has not only kept up the value +of silver in the European market, but has perhaps even raised it +somewhat higher than it was about the middle of the last century. + +Since the first discovery of America, the market for the produce of its +silver mines has been growing gradually more and more extensive. + +First, the market of Europe has become gradually more and more +extensive. Since the discovery of America, the greater part of Europe +has been much improved. England, Holland, France, and Germany; even +Sweden, Denmark, and Russia, have all advanced considerably, both in +agriculture and in manufactures. Italy seems not to have gone backwards. +The fall of Italy preceded the conquest of Peru. Since that time it +seems rather to have recovered a little. Spain and Portugal, indeed, are +supposed to have gone backwards. Portugal, however, is but a very small +part of Europe, and the declension of Spain is not, perhaps, so great as +is commonly imagined. In the beginning of the sixteenth century, Spain +was a very poor country, even in comparison with France, which has been +so much improved since that time. It was the well known remark of the +emperor Charles V. who had travelled so frequently through both +countries, that every thing abounded in France, but that every thing was +wanting in Spain. The increasing produce of the agriculture and +manufactures of Europe must necessarily have required a gradual increase +in the quantity of silver coin to circulate it; and the increasing +number of wealthy individuals must have required the like increase in +the quantity of their plate and other ornaments of silver. + +Secondly, America is itself a new market, for the produce of its own +silver mines; and as its advances in agriculture, industry, and +population, are much more rapid than those of the most thriving +countries in Europe, its demand must increase much more rapidly. The +English colonies are altogether a new market, which, partly for coin, +and partly for plate, requires a continual augmenting supply of silver +through a great continent where there never was any demand before. The +greater part, too, of the Spanish and Portuguese colonies, are +altogether new markets. New Granada, the Yucatan, Paraguay, and the +Brazils, were, before discovered by the Europeans, inhabited by savage +nations, who had neither arts nor agriculture. A considerable degree of +both has now been introduced into all of them. Even Mexico and Peru, +though they cannot be considered as altogether new markets, are +certainly much more extensive ones than they ever were before. After all +the wonderful tales which have been published concerning the splendid +state of those countries in ancient times, whoever reads, with any +degree of sober judgment, the history of their first discovery and +conquest, will evidently discern that, in arts, agriculture, and +commerce, their inhabitants were much more ignorant than the Tartars of +the Ukraine are at present. Even the Peruvians, the more civilized +nation of the two, though they made use of gold and silver as ornaments, +had no coined money of any kind. Their whole commerce was carried on by +barter, and there was accordingly scarce any division of labour among +them. Those who cultivated the ground, were obliged to build their own +houses, to make their own household furniture, their own clothes, shoes, +and instruments of agriculture. The few artificers among them are said +to have been all maintained by the sovereign, the nobles, and the +priests, and were probably their servants or slaves. All the ancient +arts of Mexico and Peru have never furnished one single manufacture to +Europe. The Spanish armies, though they scarce ever exceeded five +hundred men, and frequently did not amount to half that number, found +almost everywhere great difficulty in procuring subsistence. The famines +which they are said to have occasioned almost wherever they went, in +countries, too, which at the same time are represented as very populous +and well cultivated, sufficiently demonstrate that the story of this +populousness and high cultivation is in a great measure fabulous. The +Spanish colonies are under a government in many respects less favourable +to agriculture, improvement, and population, than that of the English +colonies. They seem, however, to be advancing in all those much more +rapidly than any country in Europe. In a fertile soil and happy climate, +the great abundance and cheapness of land, a circumstance common to all +new colonies, is, it seems, so great an advantage, as to compensate many +defects in civil government. Frezier, who visited Peru in 1713, +represents Lima as containing between twenty-five and twenty-eight +thousand inhabitants. Ulloa, who resided in the same country between +1740 and 1746, represents it as containing more than fifty thousand. The +difference in their accounts of the populousness of several other +principal towns of Chili and Peru is nearly the same; and as there seems +to be no reason to doubt of the good information of either, it marks an +increase which is scarce inferior to that of the English colonies. +America, therefore, is a new market for the produce of its own silver +mines, of which the demand must increase much more rapidly than that of +the most thriving country in Europe. + +Thirdly, the East Indies is another market for the produce of the silver +mines of America, and a market which, from the time of the first +discovery of those mines, has been continually taking off a greater and +a greater quantity of silver. Since that time, the direct trade between +America and the East Indies, which is carried on by means of the +Acapulco ships, has been continually augmenting, and the indirect +intercourse by the way of Europe has been augmenting in a still greater +proportion. During the sixteenth century, the Portuguese were the only +European nation who carried on any regular trade to the East Indies. In +the last years of that century, the Dutch began to encroach upon this +monopoly, and in a few years expelled them from their principal +settlements in India. During the greater part of the last century, those +two nations divided the most considerable part of the East India trade +between them; the trade of the Dutch continually augmenting in a still +greater proportion than that of the Portuguese declined. The English and +French carried on some trade with India in the last century, but it has +been greatly augmented in the course of the present. The East India +trade of the Swedes and Danes began in the course of the present +century. Even the Muscovites now trade regularly with China, by a sort +of caravans which go over land through Siberia and Tartary to Pekin. The +East India trade of all these nations, if we except that of the French, +which the last war had well nigh annihilated, has been almost +continually augmenting. The increasing consumptions of East India goods +in Europe is, it seems, so great, as to afford a gradual increase of +employment to them all. Tea, for example, was a drug very little used in +Europe, before the middle of the last century. At present, the value of +the tea annually imported by the English East India company, for the use +of their own countrymen, amounts to more than a million and a half a +year; and even this is not enough; a great deal more being constantly +smuggled into the country from the ports of Holland, from Gottenburgh in +Sweden, and from the coast of France, too, as long as the French East +India company was in prosperity. The consumption of the porcelain of +China, of the spiceries of the Moluccas, of the piece goods of Bengal, +and of innumerable other articles, has increased very nearly in a like +proportion. The tonnage, accordingly, of all the European shipping +employed in the East India trade, at any one time during the last +century, was not, perhaps, much greater than that of the English East +India company before the late reduction of their shipping. + +But in the East Indies, particularly in China and Indostan, the value of +the precious metals, when the Europeans first began to trade to those +countries, was much higher than in Europe; and it still continues to be +so. In rice countries, which generally yield two, sometimes three crops +in the year, each of them more plentiful than any common crop of corn, +the abundance of food must be much greater than in any corn country of +equal extent. Such countries are accordingly much more populous. In +them, too, the rich, having a greater superabundance of food to dispose +of beyond what they themselves can consume, have the means of purchasing +a much greater quantity of the labour of other people. The retinue of a +grandee in China or Indostan accordingly is, by all accounts, much more +numerous and splendid than that of the richest subjects in Europe. The +same superabundance of food, of which they have the disposal, enables +them to give a greater quantity of it for all those singular and rare +productions which nature furnishes but in very small quantities; such as +the precious metals and the precious stones, the great objects of the +competition of the rich. Though the mines, therefore, which supplied +the Indian market, had been as abundant as those which supplied the +European, such commodities would naturally exchange for a greater +quantity of food in India than in Europe. But the mines which supplied +the Indian market with the precious metals seem to have been a good deal +less abundant, and those which supplied it with the precious stones a +good deal more so, than the mines which supplied the European. The +precious metals, therefore, would naturally exchange in India for a +somewhat greater quantity of the precious stones, and for a much greater +quantity of food than in Europe. The money price of diamonds, the +greatest of all superfluities, would be somewhat lower, and that of +food, the first of all necessaries, a great deal lower in the one +country than in the other. But the real price of labour, the real +quantity of the necessaries of life which is given to the labourer, it +has already been observed, is lower both in China and Indostan, the two +great markets of India, than it is through the greater part of Europe. +The wages of the labourer will there purchase a smaller quantity of +food: and as the money price of food is much lower in India than in +Europe, the money price of labour is there lower upon a double account; +upon account both of the small quantity of food which it will purchase, +and of the low price of that food. But in countries of equal art and +industry, the money price of the greater part of manufactures will be in +proportion to the money price of labour; and in manufacturing art and +industry, China and Indostan, though inferior, seem not to be much +inferior to any part of Europe. The money price of the the greater part +of manufactures, therefore, will naturally be much lower in those great +empires than it is anywhere in Europe. Through the greater part of +Europe, too, the expense of land-carriage increases very much both the +and real and nominal price of most manufactures. It costs more labour, +and therefore more money, to bring first the materials, and afterwards +the complete manufacture to market. In China and Indostan, the extent +and variety of inland navigations save the greater part of this labour, +and consequently of this money, and thereby reduce still lower both the +real and the nominal price of the greater part of their manufactures. +Upon all these accounts, the precious metals are a commodity which it +always has been, and still continues to be, extremely advantageous to +carry from Europe to India. There is scarce any commodity which brings a +better price there; or which, in proportion to the quantity of labour +and commodities which it costs in Europe, will purchase or command a +greater quantity of labour and commodities in India. It is more +advantageous, too, to carry silver thither than gold; because in China, +and the greater part of the other markets of India, the proportion +between fine silver and fine gold is but as ten, or at most as twelve to +one; whereas in Europe it is as fourteen or fifteen to one. In China, +and the greater part of the other markets of India, ten, or at most +twelve ounces of silver, will purchase an ounce of gold; in Europe, it +requires from fourteen to fifteen ounces. In the cargoes, therefore, of +the greater part of European ships which sail to India, silver has +generally been one of the most valuable articles. It is the most +valuable article in the Acapulco ships which sail to Manilla. The silver +of the new continent seems, in this manner, to be one of the principal +commodities by which the commerce between the two extremities of the old +one is carried on; and it is by means of it, in a great measure, that +those distant parts of the world are connected with one another. + +In order to supply so very widely extended a market, the quantity of +silver annually brought from the mines must not only be sufficient to +support that continued increase, both of coin and of plate, which is +required in all thriving countries; but to repair that continual waste +and consumption of silver which takes place in all countries where that +metal is used. + +The continual consumption of the precious metals in coin by wearing, and +in plate both by wearing and cleaning, is very sensible; and in +commodities of which the use is so very widely extended, would alone +require a very great annual supply. The consumption of those metals in +some particular manufactures, though it may not perhaps be greater upon +the whole than this gradual consumption, is, however, much more +sensible, as it is much more rapid. In the manufactures of Birmingham +alone, the quantity of gold and silver annually employed in gilding and +plating, and thereby disqualified from ever afterwards appearing in the +shape of those metals, is said to amount to more than fifty thousand +pounds sterling. We may from thence form some notion how great must be +the annual consumption in all the different parts of the world, either +in manufactures of the same kind with those of Birmingham, or in laces, +embroideries, gold and silver stuffs, the gilding of books, furniture, +&c. A considerable quantity, too, must be annually lost in transporting +those metals from one place to another both by sea and by land. In the +greater part of the governments of Asia, besides, the almost universal +custom of concealing treasures in the bowels of the earth, of which the +knowledge frequently dies with the person who makes the concealment, +must occasion the loss of a still greater quantity. + +The quantity of gold and silver imported at both Cadiz and Lisbon +(including not only what comes under register, but what may be supposed +to be smuggled) amounts, according to the best accounts, to about six +millions sterling a-year. + +According to Mr Meggens[20], the annual importation of the precious +metals into Spain, at an average of six years, viz. from 1748 to 1753, +both inclusive, and into Portugal, at an average of seven years, viz. +from 1747 to 1753, both inclusive, amounted in silver to 1,101,107 +pounds weight, and in gold to 49,940 pounds weight. The silver, at +sixty-two shillings the pound troy, amounts to L.3,413,431 : 10s. +sterling. The gold, at forty-four guineas and a half the pound troy, +amounts to L.2,333,446 : 14s. sterling. Both together amount to +L.5,746,878 : 4s. sterling. The account of what was imported under +register, he assures us, is exact. He gives us the detail of the +particular places from which the gold and silver were brought, and of +the particular quantity of each metal, which, according to the register, +each of them afforded. He makes an allowance, too, for the quantity of +each metal which, he supposes, may have been smuggled. The great +experience of this judicious merchant renders his opinion of +considerable weight. + +According to the eloquent, and sometimes well-informed, author of the +Philosophical and Political History of the Establishment of the +Europeans in the two Indies, the annual importation of registered gold +and silver into Spain, at an average of eleven years, viz. from 1754 to +1764, both inclusive, amounted to 13,984,185-3/5 piastres of ten reals. +On account of what may have been smuggled, however, the whole annual +importation, he supposes, may have amounted to seventeen millions of +piastres, which, at 4s. 6d. the piastre, is equal to L.3,825,000 +sterling. He gives the detail, too, of the particular places from which +the gold and silver were brought, and of the particular quantities of +each metal, which according to the register, each of them afforded. He +informs us, too, that if we were to judge of the quantity of gold +annually imported from the Brazils to Lisbon, by the amount of the tax +paid to the king of Portugal, which it seems, is one-fifth of the +standard metal, we might value it at eighteen millions of cruzadoes, or +forty-five millions of French livres, equal to about twenty millions +sterling. On account of what may have been smuggled, however, we may +safely, he says, add to this sum an eighth more, or L.250,000 sterling, +so that the whole will amount to L.2,250,000 sterling. According to this +account, therefore, the whole annual importation of the precious metals +into both Spain and Portugal, amounts to about L.6,075,000 sterling. + +Several other very well authenticated, though manuscript accounts, I +have been assured, agree in making this whole annual importation amount, +at an average, to about six millions sterling; sometimes a little more, +sometimes a little less. + +The annual importation of the precious metals into Cadiz and Lisbon, +indeed, is not equal to the whole annual produce of the mines of +America. Some part is sent annually by the Acapulco ships to Manilla; +some part is employed in a contraband trade, which the Spanish colonies +carry on with those of other European nations; and some part, no doubt, +remains in the country. The mines of America, besides, are by no means +the only gold and silver mines in the world. They, are, however, by far +the most abundant. The produce of all the other mines which are known is +insignificant, it is acknowledged, in comparison with their's; and the +far greater part of their produce, it is likewise acknowledged, is +annually imported into Cadiz and Lisbon. But the consumption of +Birmingham alone, at the rate of fifty thousand pounds a-year, is equal +to the hundred-and-twentieth part of this annual importation, at the +rate of six millions a-year. The whole annual consumption of gold and +silver, therefore, in all the different countries of the world where +those metals are used, may, perhaps, be nearly equal to the whole annual +produce. The remainder may be no more than sufficient to supply the +increasing demand of all thriving countries. It may even have fallen so +far short of this demand, as somewhat to raise the price of those metals +in the European market. + +The quantity of brass and iron annually brought from the mine to the +market, is out of all proportion greater than that of gold and silver. +We do not, however, upon this account, imagine that those coarse metals +are likely to multiply beyond the demand, or to become gradually cheaper +and cheaper. Why should we imagine that the precious metals are likely +to do so? The course metals, indeed, though harder, are put to much +harder uses, and, as they are of less value, less care is employed in +their preservation. The precious metals, however, are not necessarily +immortal any more than they, but are liable, too, to be lost, wasted, +and consumed, in a great variety of ways. + +The price of all metals, though liable to slow and gradual variations, +varies less from year to year than that of almost any other part of the +rude produce of land: and the price of the precious metals is even less +liable to sudden variations than that of the coarse ones. The +durableness of metals is the foundation of this extraordinary steadiness +of price. The corn which was brought to market last year will be all, or +almost all, consumed, long before the end of this year. But some part of +the iron which was brought from the mine two or three hundred years +ago, may be still in use, and, perhaps, some part of the gold which was +brought from it two or three thousand years ago. The different masses of +corn, which, in different years, must supply the consumption of the +world, will always be nearly in proportion to the respective produce of +those different years. But the proportion between the different masses +of iron which may be in use in two different years, will be very little +affected by any accidental difference in the produce of the iron mines +of those two years; and the proportion between the masses of gold will +be still less affected by any such difference in the produce of the gold +mines. Though the produce of the greater part of metallic mines, +therefore, varies, perhaps, still more from year to year than that of +the greater part of corn fields, these variations have not the same +effect upon the price of the species of commodities as upon that of the +other. + + +_Variations in the Proportion between the respective Values of Gold and +Silver._ + +Before the discovery of the mines of America, the value of fine gold to +fine silver was regulated in the different mines of Europe, between the +proportions of one to ten and one to twelve; that is, an ounce of fine +gold was supposed to be worth from ten to twelve ounces of fine silver. +About the middle of the last century, it came to be regulated, between +the proportions of one to fourteen and one to fifteen; that is, an ounce +of fine gold came to be supposed worth between fourteen and fifteen +ounces of fine silver. Gold rose in its nominal value, or in the +quantity of silver which was given for it. Both metals sunk in their +real value, or in the quantity of labour which they could purchase; but +silver sunk more than gold. Though both the gold and silver mines of +America exceeded in fertility all those which had ever been known +before, the fertility of the silver mines had, it seems, been +proportionally still greater than that of the gold ones. + +The great quantities of silver carried annually from Europe to India, +have, in some of of the English settlements, gradually reduced the value +of that metal in proportion to gold. In the mint of Calcutta, an ounce +of fine gold is supposed to be worth fifteen ounces of fine silver, in +the same manner as in Europe. It is in the mint, perhaps, rated too high +for the value which it bears in the market of Bengal. In China, the +proportion of gold to silver still continues as one to ten, or one to +twelve. In Japan, it is said to be as one to eight. + +The proportion between the quantities of gold and silver annually +imported into Europe, according to Mr Meggens' account, is as one to +twenty-two nearly; that is, for one ounce of gold there are imported a +little more than twenty-two ounces of silver. The great quantity of +silver sent annually to the East Indies reduces, he supposes, the +quantities of those metals which remain in Europe to the proportion of +one to fourteen or fifteen, the proportion of their values. The +proportion between their values, he seems to think, must necessarily be +the same as that between their quantities, and would therefore be as one +to twenty-two, were it not for this greater exportation of silver. + +But the ordinary proportion between the respective values of two +commodities is not necessarily the same as that between the quantities +of them which are commonly in the market. The price of an ox, reckoned +at ten guineas, is about three score times the price of a lamb, reckoned +at 3s. 6d. It would be absurd, however, to infer from thence, that there +are commonly in the market three score lambs for one ox; and it would be +just as absurd to infer, because an ounce of gold will commonly purchase +from fourteen or fifteen ounces of silver, that there are commonly in +the market only fourteen or fifteen ounces of silver for one ounce of +gold. + +The quantity of silver commonly in the market, it is probable, is much +greater in proportion to that of gold, than the value of a certain +quantity of gold is to that of an equal quantity of silver. The whole +quantity of a cheap commodity brought to market is commonly not only +greater, but of greater value, than the whole quantity of a dear one. +The whole quantity of bread annually brought to market, is not only +greater, but of greater value, than the whole quantity of butcher's +meat; the whole quantity of butcher's meat, than the whole quantity of +poultry; and the whole quantity of poultry, than the whole quantity of +wild fowl. There are so many more purchasers for the cheap than for the +dear commodity, that, not only a greater quantity of it, but a greater +value can commonly be disposed of. The whole quantity, therefore, of the +cheap commodity, must commonly be greater in proportion to the whole +quantity of the dear one, than the value of a certain quantity of the +dear one, is to the value of an equal quantity of the cheap one. When we +compare the precious metals with one another, silver is a cheap, and +gold a dear commodity. We ought naturally to expect, therefore, that +there should always be in the market, not only a greater quantity, but a +greater value of silver than of gold. Let any man, who has a little of +both, compare his own silver with his gold plate, and he will probably +find, that not only the quantity, but the value of the former, greatly +exceeds that of the latter. Many people, besides, have a good deal of +silver who have no gold plate, which, even with those who have it, is +generally confined to watch-cases, snuff-boxes, and such like trinkets, +of which the whole amount is seldom of great value. In the British +coin, indeed, the value of the gold preponderates greatly, but it is not +so in that of all countries. In the coin of some countries, the value of +the two metals is nearly equal. In the Scotch coin, before the union +with England, the gold preponderated very little, though it did +somewhat[21], as it appears by the accounts of the mint. In the coin of +many countries the silver preponderates. In France, the largest sums are +commonly paid in that metal, and it in there difficult to get more gold +than what is necessary to carry about in your pocket. The superior +value, however, of the silver plate above that of the gold, which takes +place in all countries, will much more than compensate the preponderancy +of the gold coin above the silver, which takes place only in some +countries. + +Though, in one sense of the word, silver always has been, and probably +always will be, much cheaper than gold; yet, in another sense, gold may +perhaps, in the present state of the Spanish market, be said to be +somewhat cheaper than silver. A commodity may be said to be dear or +cheap not only according to the absolute greatness or smallness of its +usual price, but according as that price is more or less above the +lowest for which it is possible to bring it to market for any +considerable time together. This lowest price is that which barely +replaces, with a moderate profit, the stock which must be employed in +bringing of the commodity thither. It is the price which affords nothing +to the landlord, of which rent makes not any component part, but which +resolves itself altogether into wages and profit. But, in the present +state of the Spanish market, gold is certainly somewhat nearer to this +lowest price than silver. The tax of the king of Spain upon gold is only +one-twentieth part of the standard metal, or five per cent.; whereas his +tax upon silver amounts to one-tenth part of it, or to ten per cent. In +these taxes, too, it has already been observed, consists the whole rent +of the greater part of the gold and silver mines of Spanish America; and +that upon gold is still worse paid than that upon silver. The profits of +the undertakers of gold mines, too, as they more rarely make a fortune, +must, in general, be still more moderate than those of the undertakers +of silver mines. The price of Spanish gold, therefore, as it affords +both less rent and less profit, must, in the Spanish market, be somewhat +nearer to the lowest price for which it is possible to bring it thither, +than the price of Spanish silver. When all expenses are computed, the +whole quantity of the one metal, it would seem, cannot, in the Spanish +market, be disposed of so advantageously as the whole quantity of the +other. The tax, indeed, of the king of Portugal upon the gold of the +Brazils, is the same with the ancient tax of the king of Spain upon the +silver of Mexico and Peru; or one-fifth part of the standard metal. It +may therefore be uncertain, whether, to the general market of Europe, +the whole mass of American gold comes at a price nearer to the lowest +for which it is possible to bring it thither, than the whole mass of +American silver. + +The price of diamonds and other precious stones may, perhaps, be still +nearer to the lowest price at which it is possible to bring them to +market, than even the price of gold. + +Though it is not very probable that any part of a tax, which is not only +imposed upon one of the most proper subjects of taxation, a mere luxury +and superfluity, but which affords so very important a revenue as the +tax upon silver, will ever be given up us long as it is possible to pay +it; yet the same impossibility of paying it, which, in 1736, made it +necessary to reduce it from one-fifth to one-tenth, may in time make it +necessary to reduce it still further; in the same manner as it made it +necessary to reduce the tax upon gold to one-twentieth. That the silver +mines of Spanish America, like all other mines, become gradually more +expensive in the working, on account of the greater depths at which it +is necessary to carry on the works, and of the greater expense of +drawing out the water, and of supplying them with fresh air at those +depths, is acknowledged by every body who has inquired into the state of +those mines. + +These causes, which are equivalent to a growing scarcity of silver (for +a commodity may be said to grow scarcer when it becomes more difficult +and expensive to collect a certain quantity of it), must, in time, +produce one or other of the three following events: The increase of the +expense must either, first, be compensated altogether by a +proportionable increase in the price of the metal; or, secondly, it must +be compensated altogether by a proportionable diminution of the tax upon +silver; or thirdly, it must be compensated partly by the one and partly +by the other of those two expedients. This third event is very possible. +As gold rose in its price in proportion to silver, notwithstanding a +great diminution of the tax upon gold, so silver might rise in its price +in proportion to labour and commodities, notwithstanding an equal +diminution of the tax upon silver. + +Such successive reductions of the tax, however, though they may not +prevent altogether, must certainly retard, more or less, the rise of the +value of silver in the European market. In consequence of such +reductions, many mines may be wrought which could not be wrought before, +because they could not afford to pay the old tax; and the quantity of +silver annually brought to market, must always be somewhat greater, and, +therefore, the value of any given quantity somewhat less, than it +otherwise would have been. In consequence of the reduction in 1736, the +value of silver in the European market, though it may not at this day be +lower than before that reduction, is, probably, at least ten per cent. +lower than it would have been, had the court of Spain continued to exact +the old tax. + +That, notwithstanding this reduction, the value of silver has, during +the course of the present century, begun to rise somewhat in the +European market, the facts and arguments which have been alleged above, +dispose me to believe, or more properly to suspect and conjecture; for +the best opinion which I can form upon this subject, scarce, perhaps, +deserves the name of belief. The rise, indeed, supposing there has been +any, has hitherto been so very small, that after all that has been said, +it may, perhaps, appear to many people uncertain, not only whether this +event has actually taken place, but whether the contrary may not have +taken place, or whether the value of silver may not still continue to +fall in the European market. + +It must be observed, however, that whatever may be the supposed annual +importation of gold and silver, there must be a certain period at which +the annual consumption of those metals will be equal to that annual +importation. Their consumption must increase as their mass increases, or +rather in a much greater proportion. As their mass increases, their +value diminishes. They are more used, and less cared for, and their +consumption consequently increases in a greater proportion than their +mass. After a certain period, therefore, the annual consumption of these +metals must, in this manner, become equal to their annual importation, +provided that importation is not continually increasing; which, in the +present times, is not supposed to be the case. + +If, when the annual consumption has become equal to the annual +importation, the annual importation should gradually diminish, the +annual consumption may, for some time, exceed the annual importation. +The mass of those metals may gradually and insensibly diminish, and +their value gradually and insensibly rise, till the annual importation +becoming again stationary, the annual consumption will gradually and +insensibly accommodate itself to what that annual importation can +maintain. + + +_Grounds of the suspicion that the Value of Silver still continues to +decrease._ + +The increase of the wealth of Europe, and the popular action, that as +the quantity of the precious metals naturally increases with the +increase of wealth, so their value diminishes as their quantity +increases, may, perhaps, dispose many people to believe that their value +still continues to fall in the European market; and the still gradually +increasing price of many parts of the rude produce of land may confirm +them still farther in this opinion. + +That that increase in the quantity of the precious metals, which arises +in any country from the increase of wealth, has no tendency to diminish +their value, I have endeavoured to shew already. Gold and silver +naturally resort to a rich country, for the same reason that all sorts +of luxuries and curiosities resort to it; not because they are cheaper +there than in poorer countries, but because they are dearer, or because +a better price is given for them. It is the superiority of price which +attracts them; and as soon as that superiority ceases, they necessarily +cease to go thither. + +If you except corn, and such other vegetables as are raised altogether +by human industry, that all other sorts of rude produce, cattle, +poultry, game of all kinds, the useful fossils and minerals of the +earth, &c. naturally grow dearer, as the society advances in wealth and +improvement, I have endeavoured to shew already. Though such +commodities, therefore, come to exchange for a greater quantity of +silver than before, it will not from thence follow that silver has +become really cheaper, or will purchase less labour than before; but +that such commodities have become really dearer, or will purchase more +labour than before. It is not their nominal price only, but their real +price, which rises in the progress of improvement. The rise of their +nominal price is the effect, not of any degradation of the value of +silver, but of the rise in their real price. + + +_Different Effects of the Progress of Improvement upon three different +sorts of rude Produce._ + +These different sorts of rude produce may be divided into three classes. +The first comprehends those which it is scarce in the power of human +industry to multiply at all. The second, those which it can multiply in +proportion to the demand. The third, those in which the efficacy of +industry is either limited or uncertain. In the progress of wealth and +improvement, the rent price of the first may rise to any degree of +extravagance, and seems not to be limited by any certain boundary. That +of the second, though it may rise greatly, has, however, a certain +boundary, beyond which it cannot well pass for any considerable time +together. That of the third, though its natural tendency is to rise in +the progress of improvement, yet in the same degree of improvement it +may sometimes happen even to fall, some times to continue the same, and +sometimes to rise more or less, according as different accidents render +the efforts of human industry, in multiplying this sort of rude produce, +more or less successful. + + +_First Sort._--The first sort of rude produce, of which the price rises +in the progress of improvement, is that which it is scarce in the power +of human industry to multiply at all. It consists in those things which +nature produces only in certain quantities, and which being of a very +perishable nature, it is impossible to accumulate together the produce +of many different seasons. Such are the greater part of rare and +singular birds and fishes, many different sorts of game, almost all +wild-fowl, all birds of passage in particular, as well as many other +things. When wealth, and the luxury which accompanies it, increase, the +demand for these is likely to increase with them, and no effort of human +industry may be able to increase the supply much beyond what it was +before this increase of the demand. The quantity of such commodities, +therefore, remaining the same, or nearly the same, while the competition +to purchase them is continually increasing, their price may rise to any +degree of extravagance, and seems not to be limited by any certain +boundary. If woodcocks should become so fashionable as to sell for +twenty guineas a-piece, no effort of human industry could increase the +number of those brought to market, much beyond what it is at present. +The high price paid by the Romans, in the time of their greatest +grandeur, for rare birds and fishes, may in this manner easily be +accounted for. These prices were not the effects of the low value of +silver in those times, but of the high value of such rarities and +curiosities as human industry could not multiply at pleasure. The real +value of silver was higher at Rome, for some time before, and after the +fall of the republic, than it is through the greater part of Europe at +present. Three sestertii equal to about sixpence sterling, was the price +which the republic paid for the modius or peck of the tithe wheat of +Sicily. This price, however, was probably below the average market +price, the obligation to deliver their wheat at this rate being +considered as a tax upon the Sicilian farmers. When the Romans, +therefore, had occasion to order more corn than the tithe of wheat +amounted to, they were bound by capitulation to pay for the surplus at +the rate of four sestertii, or eightpence sterling the peck; and this +had probably been reckoned the moderate and reasonable, that is, the +ordinary or average contract price of those times; it is equal to about +one-and-twenty shillings the quarter. Eight-and-twenty shillings the +quarter was, before the late years of scarcity, the ordinary contract +price of English wheat, which in quality is inferior to the Sicilian, +and generally sells for a lower price in the European market. The value +of silver, therefore, in those ancient times, must have been to its +value in the present, as three to four inversely; that is, three ounces +of silver would then have purchased the same quantity of labour and +commodities which four ounces will do at present. When we read in Pliny, +therefore, that Seius[22] bought a white nightingale, as a present for +the empress Agrippina, at the price of six thousand sestertii, equal to +about fifty pounds of our present money; and that Asinius Celer[23] +purchased a surmullet at the price of eight thousand sestertii, equal to +about sixty-six pounds thirteen shillings and fourpence of our present +money; the extravagance of those prices, how much soever it may surprise +us, is apt, notwithstanding, to appear to us about one third less than +it really was. Their real price, the quantity of labour and subsistence +which was given away for them, was about one-third more than their +nominal price is apt to express to us in the present times. Seius gave +for the nightingale the command of a quantity or labour and subsistence, +equal to what L.66 : 13 : 4d. would purchase in the present times; and +Asinius Celer gave for a surmullet the command of a quantity equal to +what L.88 : 17 : 9d. would purchase. What occasioned the extravagance of +those high prices was, not so much the abundance of silver, as the +abundance of labour and subsistence, of which those Romans had the +disposal, beyond what was necessary for their own use. The quantity of +silver, of which they had the disposal, was a good deal less than what +the command of the same quantity of labour and subsistence would have +procured to them in the present times. + + +_Second sort._--The second sort of rude produce, of which the price +rises in the progress of improvement, is that which human industry can +multiply in proportion to the demand. It consists in those useful plants +and animals, which, in uncultivated countries, nature produces with such +profuse abundance, that they are of little or no value, and which, as +cultivation advances, are therefore forced to give place to some more +profitable produce. During a long period in the progress of improvement, +the quantity of these is continually diminishing, while, at the same +time, the demand for them is continually increasing. Their real value, +therefore, the real quantity of labour which they will purchase or +command, gradually rises, till at last it gets so high as to render them +as profitable a produce as any thing else which human industry can raise +upon the most fertile and best cultivated land. When it has got so high, +it cannot well go higher. If it did, more land and more industry would +soon be employed to increase their quantity. + +When the price of cattle, for example, rises so high, that it is as +profitable to cultivate land in order to raise food for them as in order +to raise food for man, it cannot well go higher. If it did, more corn +land would soon be turned into pasture. The extension of tillage, by +diminishing the quantity of wild pasture, diminishes the quantity of +butcher's meat, which the country naturally produces without labour or +cultivation; and, by increasing the number of those who have either +corn, or, what comes to the same thing, the price of corn, to give in +exchange for it, increases the demand. The price of butcher's meat, +therefore, and, consequently, of cattle, must gradually rise, till it +gets so high, that it becomes as profitable to employ the most fertile +and best cultivated lands in raising food for them as in raising corn. +But it must always be late in the progress of improvement before tillage +can be so far extended as to raise the price of cattle to this height; +and, till it has got to this height, if the country is advancing at all, +their price must be continually rising. There are, perhaps, some parts +of Europe in which the price of cattle has not yet got to this height. +It had not got to this height in any part of Scotland before the Union. +Had the Scotch cattle been always confined to the market of Scotland, in +a country in which the quantity of land, which can be applied to no +other purpose but the feeding of cattle, is so great in proportion to +what can be applied to other purposes, it is scarce possible, perhaps, +that their price could ever have risen so high as to render it +profitable to cultivate land for the sake of feeding them. In England, +the price of cattle, it has already been observed, seems, in the +neighbourhood of London, to have got to this height about the beginning +of the last century; but it was much later, probably, before it got +through the greater part of the remoter counties, in some of which, +perhaps, it may scarce yet have got to it. Of all the different +substances, however, which compose this second sort of rude produce, +cattle is, perhaps, that of which the price, in the progress of +improvement, rises first to this height. + +Till the price of cattle, indeed, has got to this height, it seems +scarce possible that the greater part, even of those lands which are +capable of the highest cultivation, can be completely cultivated. In all +farms too distant from any town to carry manure from it, that is, in the +far greater part of those of every extensive country, the quantity of +well cultivated land must be in proportion to the quantity of manure +which the farm itself produces; and this, again, must be in proportion +to the stock of cattle which are maintained upon it. The land is +manured, either by pasturing the cattle upon it, or by feeding them in +the stable, and from thence carrying out their dung to it. But unless +the price of the cattle be sufficient to pay both the rent and profit of +cultivated land, the farmer cannot afford to pasture them upon it; and +he can still less afford to feed them in the stable. It is with the +produce of improved and cultivated land only that cattle can be fed in +the stable; because, to collect the scanty and scattered produce of +waste and unimproved lands, would require too much labour, and be too +expensive. If the price of the cattle, therefore, is not sufficient to +pay for the produce of improved and cultivated land, when they are +allowed to pasture it, that price will be still less sufficient to pay +for that produce, when it must be collected with a good deal of +additional labour, and brought into the stable to them. In these +circumstances, therefore, no more cattle can with profit be fed in the +stable than what are necessary for tillage. But these can never afford +manure enough for keeping constantly in good condition all the lands +which they are capable of cultivating. What they afford, being +insufficient for the whole farm, will naturally be reserved for the +lands to which it can be most advantageously or conveniently applied; +the most fertile, or those, perhaps, in the neighbourhood of the +farm-yard. These, therefore, will be kept constantly in good condition, +and fit for tillage. The rest will, the greater part of them, be allowed +to lie waste, producing scarce any thing but some miserable pasture, +just sufficient to keep alive a few straggling, half-starved cattle; the +farm, though much overstocked in proportion to what would be necessary +for its complete cultivation, being very frequently overstocked in +proportion to its actual produce. A portion of this waste land, however, +after having been pastured in this wretched manner for six or seven +years together, may be ploughed up, when it will yield, perhaps, a poor +crop or two of bad oats, or of some other coarse grain; and then, being +entirely exhausted, it must be rested and pastured again as before, and +another portion ploughed up, to be in the same manner exhausted and +rested again in its turn. Such, accordingly, was the general system of +management all over the low country of Scotland before the Union. The +lands which were kept constantly well manured and in good condition +seldom exceeded a third or fourth part of the whole farm, and sometimes +did not amount to a fifth or a sixth part of it. The rest were never +manured, but a certain portion of them was in its turn, notwithstanding, +regularly cultivated and exhausted. Under this system of management, it +is evident, even that part of the lands of Scotland which is capable of +good cultivation, could produce but little in comparison of what it may +be capable of producing. But how disadvantageous soever this system may +appear, yet, before the Union, the low price of cattle seems to have +rendered it almost unavoidable. If, notwithstanding a great rise in the +price, it still continues to prevail through a considerable part of the +country, it is owing in many places, no doubt, to ignorance and +attachment to old customs, but, in most places, to the unavoidable +obstructions which the natural course of things opposes to the +immediate or speedy establishment of a better system: first, to the +poverty of the tenants, to their not having yet had time to acquire a +stock of cattle sufficient to cultivate their lands more completely, the +same rise of price, which would render it advantageous for them to +maintain a greater stock, rendering it more difficult for them to +acquire it; and, secondly, to their not having yet had time to put their +lands in condition to maintain this greater stock properly, supposing +they were capable of acquiring it. The increase of stock and the +improvement of land are two events which must go hand in hand, and of +which the one can nowhere much outrun the other. Without some increase +of stock, there can be scarce any improvement of land, but there can be +no considerable increase of stock, but in consequence of a considerable +improvement of land; because otherwise the land could not maintain it. +These natural obstructions to the establishment of a better system, +cannot be removed but by a long course of frugality and industry; and +half a century or a century more, perhaps, must pass away before the old +system, which is wearing out gradually, can be completely abolished +through all the different parts of the country. Of all the commercial +advantages, however, which Scotland has derived from the Union with +England, this rise in the price of cattle is, perhaps, the greatest. It +has not only raised the value of all highland estates, but it has, +perhaps, been the principal cause of the improvement of the low country. + +In all new colonies, the great quantity of waste land, which can for +many years be applied to no other purpose but the feeding of cattle, +soon renders them extremely abundant; and in every thing great cheapness +is the necessary consequence of great abundance. Though all the cattle +of the European colonies in America were originally carried from Europe, +they soon multiplied so much there, and became of so little value, that +even horses were allowed to run wild in the woods, without any owner +thinking it worth while to claim them. It must be a long time after the +first establishment of such colonies, before it can become profitable to +feed cattle upon the produce of cultivated land. The same causes, +therefore, the want of manure, and the disproportion between the stock +employed in cultivation and the land which it is destined to cultivate, +are likely to introduce there a system of husbandry, not unlike that +which still continues to take place in so many parts of Scotland. Mr +Kalm, the Swedish traveller, when he gives an account of the husbandry +of some of the English colonies in North America, as he found it in +1749, observes, accordingly, that he can with difficulty discover there +the character of the English nation, so well skilled in all the +different branches of agriculture. They make scarce any manure for their +corn fields, he says; but when one piece of ground has been exhausted by +continual cropping, they clear and cultivate another piece of fresh +land; and when that is exhausted, proceed to a third. Their cattle are +allowed to wander through the woods and other uncultivated grounds, +where they are half-starved; having long ago extirpated almost all the +annual grasses, by cropping them too early in the spring, before they +had time to form their flowers, or to shed their seeds.[24] The annual +grasses were, it seems, the best natural grasses in that part of North +America; and when the Europeans first settled there, they used to grow +very thick, and to rise three or four feet high. A piece of ground +which, when he wrote, could not maintain one cow, would in former times, +he was assured, have maintained four, each of which would have given +four times the quantity of milk which that one was capable of giving. +The poorness of the pasture had, in his opinion, occasioned the +degradation of their cattle, which degenerated sensibly from one +generation to another. They were probably not unlike that stunted breed +which was common all over Scotland thirty or forty years ago, and which +is now so much mended through the greater part of the low country, not +so much by a change of the breed, though that expedient has been +employed in some places, as by a more plentiful method of feeding them. + +Though it is late, therefore, in the progress of improvement, before +cattle can bring such a price as to render it profitable to cultivate +land for the sake of feeding them; yet of all the different parts which +compose this second sort of rude produce, they are perhaps the first +which bring this price; because, till they bring it, it seems impossible +that improvement can be brought near even to that degree of perfection +to which it has arrived in many parts of Europe. + +As cattle are among the first, so perhaps venison is among the last +parts of this sort of rude produce which bring this price. The price of +venison in Great Britain, how extravagant soever it may appear, is not +near sufficient to compensate the expense of a deer park, as is well +known to all those who have had any experience in the feeding of deer. +If it was otherwise, the feeding of deer would soon become an article of +common farming, in the same manner as the feeding of those small birds, +called turdi, was among the ancient Romans. Varro and Columella assure +us, that it was a most profitable article. The fattening of ortolans, +birds of passage which arrive lean in the country, is said to be so in +some parts of France. If venison continues in fashion, and the wealth +and luxury of Great Britain increase as they have done for some time +past, its price may very probably rise still higher than it is at +present. + +Between that period in the progress of improvement, which brings to its +height the price of so necessary an article as cattle, and that which +brings to it the price of such a superfluity as venison, there is a very +long interval, in the course of which many other sorts of rude produce +gradually arrive at their highest price, some sooner and some later, +according to different circumstances. + +Thus, in every farm, the offals of the barn and stable will maintain a +certain number of poultry. These, as they are fed with what would +otherwise be lost, are a mere save-all; and as they cost the farmer +scarce any thing, so he can afford to sell them for very little. Almost +all that he gets is pure gain, and their price can scarce be so low as +to discourage him from feeding this number. But in countries ill +cultivated, and therefore but thinly inhabited, the poultry, which are +thus raised without expense, are often fully sufficient to supply the +whole demand. In this state of things, therefore, they are often as +cheap as butcher's meat, or any other sort of animal food. But the whole +quantity of poultry which the farm in this manner produces without +expense, must always be much smaller than the whole quantity of +butcher's meat which is reared upon it; and in times of wealth and +luxury, what is rare, with only nearly equal merit, is always preferred +to what is common. As wealth and luxury increase, therefore, in +consequence of improvement and cultivation, the price of poultry +gradually rises above that of butcher's meat, till at last it gets so +high, that it becomes profitable to cultivate land for the sake of +feeding them. When it has got to this height, it cannot well go higher. +If it did, more land would soon be turned to this purpose. In several +provinces of France, the feeding of poultry is considered as a very +important article in rural economy, and sufficiently profitable to +encourage the farmer to raise a considerable quantity of Indian corn and +buckwheat for this purpose. A middling farmer will there sometimes have +four hundred fowls in his yard. The feeding of poultry seems scarce yet +to be generally considered as a matter of so much importance in England. +They are certainly, however, dearer in England than in France, as +England receives considerable supplies from France. In the progress of +improvements, the period at which every particular sort of animal food +in dearest, must naturally be that which immediately precedes the +general practice of cultivating land for the sake of raising it. For +some time before this practice becomes general, the scarcity must +necessarily raise the price. After it has become general, new methods of +feeding are commonly fallen upon, which enable the farmer to raise upon +the same quantity of ground a much greater quantity of that particular +sort of animal food. The plenty not only obliges him to sell cheaper, +but, in consequence of these improvements, he can afford to sell +cheaper; for if he could not afford it, the plenty would not be of long +continuance. It has been probably in this manner that the introduction +of clover, turnips, carrots, cabbages, &c. has contributed to sink the +common price of butcher's meat in the London market, somewhat below what +it was about the beginning of the last century. + +The hog, that finds his food among ordure, and greedily devours many +things rejected by every other useful animal, is, like poultry, +originally kept as a save-all. As long as the number of such animals, +which can thus be reared at little or no expense, is fully sufficient to +supply the demand, this sort of butcher's meat comes to market at a much +lower price than any other. But when the demand rises beyond what this +quantity can supply, when it becomes necessary to raise food on purpose +for feeding and fattening hogs, in the same manner as for feeding and +fattening other cattle, the price necessarily rises, and becomes +proportionably either higher or lower than that of other butcher's meat, +according as the nature of the country, and the state of its +agriculture, happen to render the feeding of hogs more or less expensive +than that of other cattle. In France, according to Mr Buffon, the price +of pork is nearly equal to that of beef. In most parts of Great Britain +it is at present somewhat higher. + +The great rise in the price both of hogs and poultry, has, in Great +Britain, been frequently imputed to the diminution of the number of +cottagers and other small occupiers of land; an event which has in every +part of Europe been the immediate forerunner of improvement and better +cultivation, but which at the same time may have contributed to raise +the price of those articles, both somewhat sooner and somewhat faster +than it would otherwise have risen. As the poorest family can often +maintain a cat or a dog without any expense, so the poorest occupiers of +land can commonly maintain a few poultry, or a sow and a few pigs, at +very little. The little offals of their own table, their whey, skimmed +milk, and butter milk, supply those animals with a part of their food, +and they find the rest in the neighbouring fields, without doing any +sensible damage to any body. By diminishing the number of those small +occupiers, therefore, the quantity of this sort of provisions, which is +thus produced at little or no expense, must certainly have been a good +deal diminished, and their price must consequently have been raised both +sooner and faster than it would otherwise have risen. Sooner or later, +however, in the progress of improvement, it must at any rate have risen +to the utmost height to which it is capable of rising; or to the price +which pays the labour and expense of cultivating the land which +furnishes them with food, as well as these are paid upon the greater +part of other cultivated land. + +The business of the dairy, like the feeding of hogs and poultry, is +originally carried on as a save-all. The cattle necessarily kept upon +the farm produce more milk than either the rearing of their own young, +or the consumption of the farmer's family requires; and they produce +most at one particular season. But of all the productions of land, milk +is perhaps the most perishable. In the warm season, when it is most +abundant, it will scarce keep four-and-twenty hours. The farmer, by +making it into fresh butter, stores a small part of it for a week; by +making it into salt butter, for a year; and by making it into cheese, he +stores a much greater part of it for several years. Part of all these is +reserved for the use of his own family, the rest goes to market, in +order to find the best price which is to be had, and which can scarce be +so low as to discourage him from sending thither whatever is over and +above the use of his own family. If it is very low indeed, he will be +likely to manage his dairy in a very slovenly and dirty manner, and will +scarce, perhaps, think it worth while to have a particular room or +building on purpose for it, but will suffer the business to be carried +on amidst the smoke, filth, and nastiness of his own kitchen, as was the +case of almost all the farmers' dairies in Scotland thirty or forty +years ago, and as is the case of many of them still. The same causes +which gradually raise the price of butcher's meat, the increase of the +demand, and, in consequence of the improvement of the country, the +diminution of the quantity which can be fed at little or no expense, +raise, in the same manner, that of the produce of the dairy, of which +the price naturally connects with that of butcher's meat, or with the +expense of feeding cattle. The increase of price pays for more labour, +care, and cleanliness. The dairy becomes more worthy of the farmer's +attention, and the quality of its produce gradually improves. The price +at last gets so high, that it become worth while to employ some of the +most fertile and best cultivated lands in feeding cattle merely for the +purpose of the dairy; and when it has got to this height, it cannot well +go higher. If it did, more land would soon be turned to this purpose. It +seems to have got to this height through the greater part of England, +where much good land is commonly employed in this manner. If you except +the neighbourhood of a few considerable towns, it seems not yet to have +got to this height anywhere in Scotland, where common farmers seldom +employ much good land in raising food for cattle, merely for the purpose +of the dairy. The price of the produce, though it has risen very +considerably within these few years, is probably still too low to admit +of it. The inferiority of the quality, indeed, compared with that of the +produce of English dairies, is fully equal to that of the price. But +this inferiority of quality is, perhaps, rather the effect of this +lowness of price, than the cause of it. Though the quality was much +better, the greater part of what is brought to market could not, I +apprehend, in the present circumstances of the country, be disposed of +at a much better price; and the present price, it is probable, would not +pay the expense of the land and labour necessary for producing a much +better quality. Through the greater part of England, notwithstanding the +superiority of price, the dairy is not reckoned a more profitable +employment of land than the raising of corn, or the fattening of cattle, +the two great objects of agriculture. Through the greater part of +Scotland, therefore, it cannot yet be even so profitable. + +The lands of no country, it is evident, can ever be completely +cultivated and improved, till once the price of every produce, which +human industry in obliged to raise upon them, has got so high as to pay +for the expense of complete improvement and cultivation. In order to do +this, the price of each particular produce must be sufficient, first, to +pay the rent of good corn land, as it is that which regulates the rent +of the greater part of other cultivated land; and, secondly, to pay the +labour and expense of the farmer, as well as they are commonly paid upon +good corn land; or, in other words, to replace with the ordinary profits +the stock which he employs about it. This rise in the price of each +particular produce, must evidently be previous to the improvement and +cultivation of the land which is destined for raising it. Gain is the +end of all improvement; and nothing could deserve that name, of which +loss was to be the necessary consequence. But loss must be the necessary +consequence of improving land for the sake of a produce of which the +price could never bring back the expense. If the complete improvement +and cultivation of the country be, as it most certainly is, the greatest +of all public advantages, this rise in the price of all those different +sorts of rude produce, instead of being considered as a public calamity, +ought to be regarded as the necessary forerunner and attendant of the +greatest of all public advantages. + +This rise, too, in the nominal or money price of all these different +sorts of rude produce, has been the effect, not of any degradation in +the value of silver, but of a rise in their real price. They have become +worth, not only a greater quantity of silver, but a greater quantity of +labour and subsistence than before. As it costs a greater quantity of +labour and subsistence to bring them to market, so, when they are +brought thither they represent, or are equivalent to a greater +quantity. + + +_Third Sort._--The third and last sort of rude produce, of which the +price naturally rises in the progress of improvement, is that in which +the efficacy of human industry, in augmenting the quantity, is either +limited or uncertain. Though the real price of this sort of rude +produce, therefore, naturally tends to rise in the progress of +improvement, yet, according as different accidents happen to render the +efforts of human industry more or less successful in augmenting the +quantity, it may happen sometimes even to fall, sometimes to continue +the same, in very different periods of improvement, and sometimes to +rise more or less in the same period. + +There are some sorts of rude produce which nature has rendered a kind of +appendages to other sorts; so that the quantity of the one which any +country can afford, is necessarily limited by that of the other. The +quantity of wool or of raw hides, for example, which any country can +afford, is necessarily limited by the number of great and small cattle +that are kept in it. The state of its improvement, and the nature of its +agriculture, again necessarily determine this number. + +The same causes which, in the progress of improvement, gradually raise +the price of butcher's meat, should have the same effect, it may be +thought, upon the prices of wool and raw hides, and raise them, too, +nearly in the same proportion. It probably would be so, if, in the rude +beginnings of improvement, the market for the latter commodities was +confined within as narrow bounds as that for the former. But the extent +of their respective markets is commonly extremely different. + +The market for butcher's meat is almost everywhere confined to the +country which produces it. Ireland, and some part of British America, +indeed, carry on a considerable trade in salt provisions; but they are, +I believe, the only countries in the commercial world which do so, or +which export to other countries any considerable part of their butcher's +meat. + +The market for wool and raw hides, on the contrary, is, in the rude +beginnings of improvement, very seldom confined to the country which +produces them. They can easily be transported to distant countries; wool +without any preparation, and raw hides with very little; and as they are +the materials of many manufactures, the industry of other countries may +occasion a demand for them, though that of the country which produces +them might not occasion any. + +In countries ill cultivated, and therefore but thinly inhabited, the +price of the wool and the hide bears always a much greater proportion to +that of the whole beast, than in countries where, improvement and +population being further advanced, there is more demand for butcher's +meat. Mr Hume observes, that in the Saxon times, the fleece was +estimated at two-fifths of the value of the whole sheep, and that this +was much above the proportion of its present estimation. In some +provinces of Spain, I have been assured, the sheep is frequently killed +merely for the sake of the fleece and the tallow. The carcase is often +left to rot upon the ground, or to be devoured by beasts and birds of +prey. If this sometimes happens even in Spain, it happens almost +constantly in Chili, at Buenos Ayres, and in many other parts of Spanish +America, where the horned cattle are almost constantly killed merely for +the sake of the hide and the tallow. This, too, used to happen almost +constantly in Hispaniola, while it was infested by the buccaneers, and +before the settlement, improvement, and populousness of the French +plantations (which now extend round the coast of almost the whole +western half of the island) had given some value to the cattle of the +Spaniards, who still continue to possess, not only the eastern part of +the coast, but the whole inland mountainous part of the country. + +Though, in the progress of improvement and population, the price of the +whole beast necessarily rises, yet the price of the carcase is likely to +be much more affected by this rise than that of the wool and the hide. +The market for the carcase being in the rude state of society confined +always to the country which produces it, must necessarily be extended in +proportion to the improvement and population of that country. But the +market for the wool and the hides, even of a barbarous country, often +extending to the whole commercial world, it can very seldom be enlarged +in the same proportion. The state of the whole commercial world can +seldom be much affected by the improvement of any particular country; +and the market for such commodities may remain the same, or very nearly +the same, after such improvements, as before. It should, however, in the +natural course of things, rather, upon the whole, be somewhat extended +in consequence of them. If the manufactures, especially, of which those +commodities are the materials, should ever come to flourish in the +country, the market, though it might not be much enlarged, would at +least be brought much nearer to the place of growth than before; and the +price of those materials might at least be increased by what had usually +been the expense of transporting them to distant countries. Though it +might not rise, therefore, in the same proportion as that of butcher's +meat, it ought naturally to rise somewhat, and it ought certainly not to +fall. + +In England, however, notwithstanding the flourishing state of its +woollen manufacture, the price of English wool has fallen very +considerably since the time of Edward III. There are many authentic +records which demonstrate that, during the reign of that prince +(towards the middle of the fourteenth century, or about 1339), what was +reckoned the moderate and reasonable price of the tod, or twenty-eight +pounds of English wool, was not less than ten shillings of the money of +those times[25], containing, at the rate of twenty-pence the ounce, six +ounces of silver, Tower weight, equal to about thirty shillings of our +present money. In the present times, one-and-twenty shillings the tod +may be reckoned a good price for very good English wool. The money price +of wool, therefore, in the time of Edward III. was to its money price in +the present times as ten to seven. The superiority of its real price was +still greater. At the rate of six shillings and eightpence the quarter, +ten shillings was in those ancient times the price of twelve bushels of +wheat. At the rate of twenty-eight shillings the quarter, one-and-twenty +shillings is in the present times the price of six bushels only. The +proportion between the real price of ancient and modern times, +therefore, is as twelve to six, or as two to one. In those ancient +times, a tod of wool would have purchased twice the quantity of +subsistence which it will purchase at present, and consequently twice +the quantity of labour, if the real recompence of labour had been the +same in both periods. + +This degradation, both in the real and nominal value of wool, could +never have happened in consequence of the natural course of things. It +has accordingly been the effect of violence and artifice. First, of the +absolute prohibition of exporting wool from England: secondly, of the +permission of importing it from Spain, duty free: thirdly, of the +prohibition of exporting it from Ireland to any other country but +England. In consequence of these regulations, the market for English +wool, instead of being somewhat extended, in consequence of the +improvement of England, has been confined to the home market, where the +wool of several other countries is allowed to come into competition with +it, and where that of Ireland is forced into competition with it. As the +woollen manufactures, too, of Ireland, are fully as much discouraged as +is consistent with justice and fair dealing, the Irish can work up but a +smaller part of their own wool at home, and are therefore obliged to +send a greater proportion of it to Great Britain, the only market they +are allowed. + +I have not been able to find any such authentic records concerning the +price of raw hides in ancient times. Wool was commonly paid as a subsidy +to the king, and its valuation in that subsidy ascertains, at least in +some degree, what was its ordinary price. But this seems not to have +been the case with raw hides. Fleetwood, however, from an account in +1425, between the prior of Burcester Oxford and one of his canons, gives +us their price, at least as it was stated upon that particular ocassion, +viz. five ox hides at twelve shillings; five cow hides at seven +shillings and threepence; thirty-six sheep skins of two years old at +nine shillings; sixteen calf skins at two shillings. In 1425, twelve +shillings contained about the same quantity of silver as four-and-twenty +shillings of our present money. An ox hide, therefore, was in this +account valued at the same quantity of silver as 4s. 4/5ths of our +present money. Its nominal price was a good deal lower than at present. +But at the rate of six shillings and eightpence the quarter, twelve +shillings would in those times have purchased fourteen bushels and +four-fifths of a bushel of wheat, which, at three and sixpence the +bushel, would in the present times cost 51s. 4d. An ox hide, therefore, +would in those times have purchased as much corn as ten shillings and +threepence would purchase at present. Its real value was equal to ten +shillings and threepence of our present money. In those ancient times, +when the cattle were half starved during the greater part of the winter, +we cannot suppose that they were of a very large size. An ox hide which +weighs four stone of sixteen pounds of avoirdupois, is not in the +present times reckoned a bad one; and in those ancient times would +probably have been reckoned a very good one. But at half-a-crown the +stone, which at this moment (February 1773) I understand to be the +common price, such a hide would at present cost only ten +shillings.--Though its nominal price, therefore, is higher in the +present than it was in those ancient times, its real price, the real +quantity of subsistence which it will purchase or command, is rather +somewhat lower. The price of cow hides, as stated in the above account, +is nearly in the common proportion to that of ox hides. That of sheep +skins is a good deal above it. They had probably been sold with the +wool. That of calves skins, on the contrary, is greatly below it. In +countries where the price of cattle is very low, the calves, which are +not intended to be reared in order to keep up the stock, are generally +killed very young, as was the case in Scotland twenty or thirty years +ago. It saves the milk, which their price would not pay for. Their +skins, therefore, are commonly good for little. + +The price of raw hides is a good deal lower at present than it was a few +years ago; owing probably to the taking off the duty upon seal skins, +and to the allowing, for a limited time, the importation of raw hides +from Ireland, and from the plantations, duty free, which was done in +1769. Take the whole of the present century at an average, their real +price has probably been somewhat higher than it was in those ancient +times. The nature of the commodity renders it not quite so proper for +being transported to distant markets as wool. It suffers more by +keeping. A salted hide is reckoned inferior to a fresh one, and sells +for a lower price. This circumstance must necessarily have some tendency +to sink the price of raw hides produced in a country which does not +manufacture them, but is obliged to export them, and comparatively to +raise that of those produced in a country which does manufacture them. +It must have some tendency to sink their price in a barbarous, and to +raise it in an improved and manufacturing country. It must have had some +tendency, therefore, to sink it in ancient, and to raise it in modern +times. Our tanners, besides, have not been quite so successful as our +clothiers, in convincing the wisdom of the nation, that the safety of +the commonwealth depends upon the prosperity of their particular +manufacture. They have accordingly been much less favoured. The +exportation of raw hides has, indeed, been prohibited, and declared a +nuisance; but their importation from foreign countries has been +subjected to a duty; and though this duty has been taken off from those +of Ireland and the plantations (for the limited time of five years +only), yet Ireland has not been confined to the market of Great Britain +for the sale of its surplus hides, or of these which are not +manufactured at home. The hides of common cattle have, but within these +few years, been put among the enumerated commodities which the +plantations can send nowhere but to the mother country; neither has the +commerce of Ireland been in this case oppressed hitherto, in order to +support the manufactures of Great Britain. + +Whatever regulations tend to sink the price, either of wool or of raw +hides, below what it naturally would be, must, in an improved and +cultivated country, have some tendency to raise the price of butcher's +meat. The price both of the great and small cattle, which are fed on +improved and cultivated land, must be sufficient to pay the rent which +the landlord, and the profit which the farmer, has reason to expect from +improved and cultivated land. If it is not, they will soon cease to feed +them. Whatever part of this price, therefore, is not paid by the wool +and the hide, must be paid by the carcase. The less there is paid for +the one, the more must be paid for the other. In what manner this price +is to be divided upon the different parts of the beast, is indifferent +to the landlords and farmers, provided it is all paid to them. In an +improved and more cultivated country, therefore, their interest as +landlords and farmers cannot be much affected by such regulations, +though their interest as consumers may, by the rise in the price of +provisions. It would be quite otherwise, however, in an unimproved and +uncultivated country, where the greater part of the lands could be +applied to no other purpose but the feeding of cattle, and where the +wool and the hide made the principal part of the value of those cattle. +Their interest as landlords and farmers would in this case be very +deeply affected by such regulations, and their interest as consumers +very little. The fall in the price of the wool and the hide would not in +this case raise the price of the carcase; because the greater part of +the lands of the country being applicable to no other purpose but the +feeding of cattle, the same number would still continue to be fed. The +same quantity of butcher's meat would still come to market. The demand +for it would be no greater than before. Its price, therefore, would be +the same as before. The whole price of cattle would fall, and along with +it both the rent and the profit of all those lands of which cattle was +the principal produce, that is, of the greater part of the lands of the +country. The perpetual prohibition of the exportation of wool, which is +commonly, but very falsely, ascribed to Edward III., would, in the then +circumstances of the country, have been the most destructive regulation +which could well have been thought of. It would not only have reduced +the actual value of the greater part of the lands in the kingdom, but by +reducing the price of the most important species of small cattle, it +would have retarded very much its subsequent improvement. + +The wool of Scotland fell very considerably in its price in consequence +of the union with England, by which it was excluded from the great +market of Europe, and confined to the narrow one of Great Britain. The +value of the greater part of the lands in the southern counties of +Scotland, which are chiefly a sheep country, would have been very deeply +affected by this event, had not the rise in the price of butcher's meat +fully compensated the fall in the price of wool. + +As the efficacy of human industry, in increasing the quantity either of +wool or of raw hides, is limited, so far as it depends upon the produce +of the country where it is exerted; so it is uncertain so far as it +depends upon the produce of other countries. It so far depends not so +much upon the quantity which they produce, as upon that which they do +not manufacture; and upon the restraints which they may or may not think +proper to impose upon the exportation of this sort of rude produce. +These circumstances, as they are altogether independent of domestic +industry, so they necessarily render the efficiency of its efforts more +or less uncertain. In multiplying this sort of rude produce, therefore, +the efficacy of human industry is not only limited, but uncertain. + +In multiplying another very important sort of rude produce, the quantity +of fish that is brought to market, it is likewise both limited and +uncertain. It is limited by the local situation of the country, by the +proximity or distance of its different provinces from the sea, by the +number of its lakes and rivers, and by what may be called the fertility +or barrenness of those seas, lakes, and rivers, as to this sort of rude +produce. As population increases, as the annual produce of the land and +labour of the country grows greater and greater, there come to be more +buyers of fish; and those buyers, too, have a greater quantity and +variety of other goods, or, what is the same thing, the price of a +greater quantity and variety of other goods, to buy with. But it will +generally be impossible to supply the great and extended market, without +employing a quantity of labour greater than in proportion to what had +been requisite for supplying the narrow and confined one. A market +which, from requiring only one thousand, comes to require annually ten +thousand ton of fish, can seldom be supplied, without employing more +than ten times the quantity of labour which had before been sufficient +to supply it. The fish must generally be sought for at a greater +distance, larger vessels must be employed, and more expensive machinery +of every kind made use of. The real price of this commodity, therefore, +naturally rises in the progress of improvement. It has accordingly done +so, I believe, more or less in every country. + +Though the success of a particular day's fishing may be a very uncertain +matter, yet the local situation of the country being supposed, the +general efficacy of industry in bringing a certain quantity of fish to +market, taking the course of a year, or of several years together, it +may, perhaps, be thought is certain enough; and it, no doubt, is so. As +it depends more, however, upon the local situation of the country, than +upon the state of its wealth and industry; as upon this account it may +in different countries be the same in very different periods of +improvement, and very different in the same period; its connection with +the state of improvement is uncertain; and it is of this sort of +uncertainty that I am here speaking. + +In increasing the quantity of the different minerals and metals which +are drawn from the bowels of the earth, that of the more precious ones +particularly, the efficacy of human industry seems not to be limited, +but to be altogether uncertain. + +The quantity of the precious metals which is to be found in any country, +is not limited by any thing in its local situation, such as the +fertility or barrenness of its own mines. Those metals frequently abound +in countries which possess no mines. Their quantity, in every particular +country, seems to depend upon two different circumstances; first, upon +its power of purchasing, upon the state of its industry, upon the annual +produce of its land and labour, in consequence of which it can afford to +employ a greater or a smaller quantity of labour and subsistence, in +bringing or purchasing such superfluities as gold and silver, either +from its own mines, or from those of other countries; and, secondly, +upon the fertility or barrenness of the mines which may happen at any +particular time to supply the commercial world with those metals. The +quantity of those metals in the countries most remote from the mines, +must be more or less affected by this fertility or barrenness, on +account of the easy and cheap transportation of those metals, of their +small bulk and great value. Their quantity in China and Indostan must +have been more or less affected by the abundance of the mines of +America. + +So far as their quantity in any particular country depends upon the +former of those two circumstances (the power of purchasing), their real +price, like that of all other luxuries and superfluities, is likely to +rise with the wealth and improvement of the country, and to fall with +its poverty and depression. Countries which have a great quantity of +labour and subsistence to spare, can afford to purchase any particular +quantity of those metals at the expense of a greater quantity of labour +and subsistence, than countries which have less to spare. + +So far as their quantity in any particular country depends upon the +latter of those two circumstances (the fertility or barrenness of the +mines which happen to supply the commercial world), their real price, +the real quantity of labour and subsistence which they will purchase or +exchange for, will, no doubt, sink more or less in proportion to the +fertility, and rise in proportion to the barrenness of those mines. + +The fertility or barrenness of the mines, however, which may happen at +any particular time to supply the commercial world, is a circumstance +which, it is evident, may have no sort of connection with the state of +industry in a particular country. It seems even to have no very +necessary connection with that of the world in general. As arts and +commerce, indeed, gradually spread themselves over a greater and a +greater part of the earth, the search for new mines, being extended over +a wider surface, may have somewhat a better chance for being successful +than when confined within narrower bounds. The discovery of new mines, +however, as the old ones come to be gradually exhausted, is a matter of +the greatest uncertainty, and such as no human skill or industry can +insure. All indications, it is acknowledged, are doubtful; and the +actual discovery and successful working of a new mine can alone +ascertain the reality of its value, or even of its existence. In this +search there seem to be no certain limits, either to the possible +success, or to the possible disappointment of human industry. In the +course of a century or two, it is possible that new mines may be +discovered, more fertile than any that have ever yet been known, and it +is just equally possible, that the most fertile mine then known may be +more barren than any that was wrought before the discovery of the mines +of America. Whether the one or the other of those two events may happen +to take place, is of very little importance to the real wealth and +prosperity of the world, to the real value of the annual produce of the +land and labour of mankind. Its nominal value, the quantity of gold and +silver by which this annual produce could be expressed or represented, +would, no doubt, be very different; but its real value, the real +quantity of labour which it could purchase or command, would be +precisely the same. A shilling might, in the one case, represent no more +labour than a penny does at present; and a penny, in the other, might +represent as much as a shilling does now. But in the one case, he who +had a shilling in his pocket would be no richer than he who has a penny +at present; and in the other, he who had a penny would be just as rich +as he who has a shilling now. The cheapness and abundance of gold and +silver plate would be the sole advantage which the world could derive +from the one event; and the dearness and scarcity of those trifling +superfluities, the only inconveniency it could suffer from the other. + + +_Conclusion of the Digression concerning the Variations in the Value of +Silver._ + +The greater part of the writers who have collected the money price of +things in ancient times, seem to have considered the low money price of +corn, and of goods in general, or, in other words, the high value of +gold and silver, as a proof, not only of the scarcity of those metals, +but of the poverty and barbarism of the country at the time when it took +place. This notion is connected with the system of political economy, +which represents national wealth as consisting in the abundance and +national poverty in the scarcity, of gold and silver; a system which I +shall endeavour to explain and examine at great length in the fourth +book of this Inquiry. I shall only observe at present, that the high +value of the precious metals can be no proof of the poverty or barbarism +of any particular country at the time when it took place. It is a proof +only of the barrenness of the mines which happened at that time to +supply the commercial world. A poor country, as it cannot afford to buy +more, so it can as little afford to pay dearer for gold and silver than +a rich one; and the value of those metals, therefore, is not likely to +be higher in the former than in the latter. In China, a country much +richer than any part of Europe, the value of the precious metals is much +higher than in any part of Europe. As the wealth of Europe, indeed, has +increased greatly since the discovery of the mines of America, so the +value of gold and silver has gradually diminished. This diminution of +their value, however, has not been owing to the increase of the real +wealth of Europe, of the annual produce of its land and labour, but to +the accidental discovery of more abundant mines than any that were known +before. The increase of the quantity of gold and silver in Europe, and +the increase of its manufactures and agriculture, are two events which, +though they have happened nearly about the same time, yet have arisen +from very different causes, and have scarce any natural connection with +one another. The one has arisen from a mere accident, in which neither +prudence nor policy either had or could have any share; the other, from +the fall of the feudal system, and from the establishment of a +government which afforded to industry the only encouragement which it +requires, some tolerable security that it shall enjoy the fruits of its +own labour. Poland, where the feudal system still continues to take +place, is at this day as beggarly a country as it was before the +discovery of America. The money price of corn, however, has risen; the +real value of the precious metals has fallen in Poland, in the same +manner as in other parts of Europe. Their quantity, therefore, must have +increased there as in other places, and nearly in the same proportion to +the annual produce of its land and labour. This increase of the quantity +of those metals, however, has not, it seems, increased that annual +produce, has neither improved the manufactures and agriculture of the +country, nor mended the circumstances of its inhabitants. Spain and +Portugal, the countries which possess the mines, are, after Poland, +perhaps the two most beggarly countries in Europe. The value of the +precious metals, however, must be lower in Spain and Portugal than in +any other part of Europe, as they come from those countries to all other +parts of Europe, loaded, not only with a freight and an insurance, but +with the expense of smuggling, their exportation being either prohibited +or subjected to a duty. In proportion to the annual produce of the land +and labour, therefore, their quantity must be greater in those countries +than in any other part of Europe; those countries, however, are poorer +than the greater part of Europe. Though the feudal system has been +abolished in Spain and Portugal, it has not been succeeded by a much +better. + +As the low value of gold and silver, therefore, is no proof of the +wealth and flourishing state of the country where it takes place; so +neither is their high value, or the low money price either of goods in +general, or of corn in particular, any proof of its poverty and +barbarism. + +But though the low money price, either of goods in general, or of corn +in particular, be no proof of the poverty or barbarism of the times, the +low money price, of some particular sorts of goods, such as cattle, +poultry game of all kinds, &c. in proportion to that of corn, is a most +decisive one. It clearly demonstrates, first, their great abundance in +proportion to that of corn, and, consequently, the great extent of the +land which they occupied in proportion to what was occupied by corn; +and, secondly, the low value of this land in proportion to that of corn +land, and, consequently, the uncultivated and unimproved state of the +far greater part of the lands of the country. It clearly demonstrates, +that the stock and population of the country did not bear the same +proportion to the extent of its territory, which they commonly do in +civilized countries; and that society was at that time, and in that +country, but in its infancy. From the high or low money price, either of +goods in general, or of corn in particular, we can infer only, that the +mines, which at that time happened to supply the commercial world with +gold and silver, were fertile or barren, not that the country was rich +or poor. But from the high or low money price of some sorts of goods in +proportion to that of others, we infer, with a degree of probability +that approaches almost to certainty, that it was rich or poor, that the +greater part of its lands were improved or unimproved, and that it was +either in a more or less barbarous state, or in a more or less civilised +one. + +Any rise in the money price of goods which proceeded altogether from the +degradation of the value of silver, would affect all sorts of goods +equally, and raise their price universally, a third, or a fourth, or a +fifth part higher, according as silver happened to lose a third, or a +fourth, or a fifth part of its former value. But the rise in the price +of provisions, which has been the subject of so much reasoning and +conversation, does not affect all sorts of provisions equally. Taking +the course of the present century at an average, the price of corn, it +is acknowledged, even by those who account for this rise by the +degradation of the value of silver, has risen much less than that of +some other sorts of provisions. The rise in the price of those other +sorts of provisions, therefore, cannot be owing altogether to the +degradation of the value of silver. Some other causes must be taken into +the account; and those which have been above assigned, will, perhaps, +without having recourse to the supposed degradation of the value of +silver, sufficiently explain this rise in those particular sorts of +provisions, of which the price has actually risen in proportion to that +of corn. + +As to the price of corn itself, it has, during the sixty-four first +years of the present century, and before the late extraordinary course +of bad seasons, been somewhat lower than was during the sixty-four last +years of the preceding century. This fact is attested, not only by the +accounts of Windsor market, but by the public fiars of all the different +counties of Scotland, and by the accounts of several different markets +in France, which have been collected with great diligence and fidelity +by Mr Messance, and by Mr Dupré de St Maur. The evidence is more +complete than could well have been expected in a matter which is +naturally so very difficult to be ascertained. + +As to the high price of corn during these last ten or twelve years, it +can be sufficiently accounted for from the badness of the seasons, +without supposing any degradation in the value of silver. + +The opinion, therefore, that silver is continually sinking in its value, +seems not to be founded upon any good observations, either upon the +prices of corn, or upon those of other provisions. + +The same quantity of silver, it may perhaps be said, will, in the +present times, even according to the account which has been here given, +purchase a much smaller quantity of several sorts of provisions than it +would have done during some part of the last century; and to ascertain +whether this change be owing to a rise in the value of those goods, or +to a fall in the value of silver, is only to establish a vain and +useless distinction, which can be of no sort of service to the man who +has only a certain quantity of silver to go to market with, or a certain +fixed revenue in money. I certainly do not pretend that the knowledge of +this distinction will enable him to buy cheaper. It may not, however, +upon that account be altogether useless. + +It may be of some use to the public, by affording an easy proof of the +prosperous condition of the country. If the rise in the price of some +sorts of provisions be owing altogether to a fall in the value of +silver, it is owing to a circumstance, from which nothing can be +inferred but the fertility of the American mines. The real wealth of the +country, the annual produce of its land and labour, may, notwithstanding +this circumstance, be either gradually declining, as in Portugal and +Poland; or gradually advancing, as in most other parts of Europe. But if +this rise in the price of some sorts of provisions be owing to a rise in +the real value of the land which produces them, to its increased +fertility, or, in consequence of more extended improvement and good +cultivation, to its having been rendered fit for producing corn; it is +owing to a circumstance which indicates, in the clearest manner, the +prosperous and advancing state of the country. The land constitutes by +far the greatest, the most important, and the most durable part of the +wealth of every extensive country. It may surely be of some use, or, at +least, it may give some satisfaction to the public, to have so decisive +a proof of the increasing value of by far the greatest, the most +important, and the most durable part of its wealth. + +It may, too, be of some use to the public, in regulating the pecuniary +reward of some of its inferior servants. If this rise in the price of +some sorts of provisions be owing to a fall in the value of silver, +their pecuniary reward, provided it was not too large before, ought +certainly to be augmented in proportion to the extent of this fall. If +it is not augmented, their real recompence will evidently be so much +diminished. But if this rise of price is owing in the increased value, +in consequence of the improved fertility of the land which produces such +provisions, it becomes a much nicer matter to judge, either in what +proportion any pecuniary reward ought to be augmented, or whether it +ought to be augmented at all. The extension of improvement and +cultivation, as it necessarily raises more or less, in proportion to the +price of corn, that of every sort of animal food, so it as necessarily +lowers that of, I believe, every sort of vegetable food. It raises the +price of animal food; because a great part of the land which produces +it, being rendered fit for producing corn, must afford to the landlord +and farmer the rent and profit of corn land. It lowers the price of +vegetable food; because, by increasing the fertility of the land, it +increases its abundance. The improvements of agriculture, too, introduce +many sorts of vegetable food, which requiring less land, and not more +labour than corn, come much cheaper to market. Such are potatoes and +maize, or what is called Indian corn, the two most important +improvements which the agriculture of Europe, perhaps, which Europe +itself, has received from the great extension of its commerce and +navigation. Many sorts of vegetable food, besides, which in the rude +state of agriculture are confined to the kitchen-garden, and raised only +by the spade, come, in its improved state, to be introduced into common +fields, and to be raised by the plough; such as turnips, carrots, +cabbages, &c. If, in the progress of improvement, therefore, the real +price of one species of food necessarily rises, that of another as +necessarily falls; and it becomes a matter of more nicety to judge how +far the rise in the one may be compensated by the fall in the other. +When the real price of butcher's meat has once got to its height (which, +with regard to every sort, except perhaps that of hogs flesh, it seems +to have done through a great part of England more than a century ago), +any rise which can afterwards happen in that of any other sort of animal +food, cannot much affect the circumstances of the inferior ranks of +people. The circumstances of the poor, through a great part of England, +cannot surely be so much distressed by any rise in the price of poultry, +fish, wild-fowl, or venison, as they must he relieved by the fall in +that of potatoes. + +In the present season of scarcity, the high price of corn no doubt +distresses the poor. But in times of moderate plenty, when corn is at +its ordinary or average price, the natural rise in the price of any +other sort of rude produce cannot much affect them. They suffer more, +perhaps, by the artificial rise which has been occasioned by taxes in +the price of some manufactured commodities, as of salt, soap, leather, +candles, malt, beer, ale, &c. + + +_Effects of the Progress of Improvement upon the real Price of +Manufactures._ + +It is the natural effect of improvement, however, to diminish gradually +the real price of almost all manufactures. That of the manufacturing +workmanship diminishes, perhaps, in all of them without exception. In +consequence of better machinery, of greater dexterity, and of a more +proper division and distribution of work, all of which are the natural +effects of improvement, a much smaller quantity of labour becomes +requisite for executing any particular piece of work; and though, in +consequence of the flourishing circumstances of the society, the real +price of labour should rise very considerably, yet the great diminution +of the quantity will generally much more than compensate the greatest +rise which can happen in the price. + +There are, indeed, a few manufactures, in which the necessary rise in +the real price of the rude materials will more than compensate all the +advantages which improvement can introduce into the execution of the +work. In carpenters' and joiners' work, and in the coarser sort of +cabinet work, the necessary rise in the real price of barren timber, in +consequence of the improvement of land, will more than compensate all +the advantages which can be derived from the best machinery, the +greatest dexterity, and the most proper division and distribution of +work. + +But in all cases in which the real price of the rude material either +does not rise at all, or does not rise very much, that of the +manufactured commodity sinks very considerably. + +This diminution of price has, in the course of the present and preceding +century, been most remarkable in these manufactures of which the +materials are the coarser metals. A better movement of a watch, than +about the middle of the last century could have been bought for twenty +pounds, may now perhaps be had for twenty shillings. In the work of +cutlers and locksmiths, in all the toys which are made of the coarser +metals, and in all those goods which are commonly known by the name of +Birmingham and Sheffield ware, there has been, during the same period, a +very great reduction of price, though not altogether so great as in +watch-work. It has, however, been sufficient to astonish the workmen of +every other part of Europe, who in many cases acknowledge that they can +produce no work of equal goodness for double or even for triple the +price. There are perhaps no manufactures, in which the division of +labour can be carried further, or in which the machinery employed admits +of a greater variety of improvements, than those of which the materials +are the coarser metals. + +In the clothing manufacture there has, during the same period, been no +such sensible reduction of price. The price of superfine cloth, I have +been assured, on the contrary, has, within these five-and-twenty or +thirty years, risen somewhat in proportion to its quality, owing, it was +said, to a considerable rise in the price of the material, which +consists altogether of Spanish wool. That of the Yorkshire cloth, which +is made altogether of English wool, is said, indeed, during the course +of the present century, to have fallen a good deal in proportion to its +quality. Quality, however, is so very disputable a matter, that I look +upon all information of this kind as somewhat uncertain. In the clothing +manufacture, the division of labour is nearly the same now as it was a +century ago, and the machinery employed is not very different. There +may, however, have been some small improvements in both, which may have +occasioned some reduction of price. + +But the reduction will appear much more sensible and undeniable, if we +compare the price of this manufacture in the present times with what it +was in a much remoter period, towards the end of the fifteenth century, +when the labour was probably much less subdivided, and the machinery +employed much more imperfect, than it is at present. + +In 1487, being the 4th of Henry VII., it was enacted, that "whosoever +shall sell by retail a broad yard of the finest scarlet grained, or of +other grained cloth of the finest making, above sixteen shillings, shall +forfeit forty shillings for every yard so sold." Sixteen shillings, +therefore, containing about the same quantity of silver as +four-and-twenty shillings of our present money, was, at that time, +reckoned not an unreasonable price for a yard of the finest cloth; and +as this is a sumptuary law, such cloth, it is probable, had usually been +sold somewhat dearer. A guinea may be reckoned the highest price in the +present times. Even though the quality of the cloths, therefore, should +be supposed equal, and that of the present times is most probably much +superior, yet, even upon this supposition, the money price of the finest +cloth appears to have been considerably reduced since the end of the +fifteenth century. But its real price has been much more reduced. Six +shillings and eightpence was then, and long afterwards, reckoned the +average price of a quarter of wheat. Sixteen shillings, therefore, was +the price of two quarters and more than three bushels of wheat. Valuing +a quarter of wheat in the present times at eight-and-twenty shillings, +the real price of a yard of fine cloth must, in those times, have been +equal to at least three pounds six shillings and sixpence of our present +money. The man who bought it must have parted with the command of a +quantity of labour and subsistence equal to what that sum would purchase +in the present times. + +The reduction in the real price of the coarse manufacture, though +considerable, has not been so great as in that of the fine. + +In 1463, being the 3d of Edward IV. it was enacted, that "no servant in +husbandry nor common labourer, nor servant to any artificer inhabiting +out of a city or burgh, shall use or wear in their clothing any cloth +above two shillings the broad yard." In the 3d of Edward IV., two +shillings contained very nearly the same quantity of silver as four of +our present money. But the Yorkshire cloth which is now sold at four +shillings the yard, is probably much superior to any that was then made +for the wearing of the very poorest order of common servants. Even the +money price of their clothing, therefore, may, in proportion to the +quality, be somewhat cheaper in the present than it was in those ancient +times. The real price is certainly a good deal cheaper. Tenpence was +then reckoned what is called the moderate and reasonable price of a +bushel of wheat. Two shillings, therefore, was the price of two bushels +and near two pecks of wheat, which in the present times, at three +shillings and sixpence the bushel, would be worth eight shillings and +ninepence. For a yard of this cloth the poor servant must have parted +with the power of purchasing a quantity of subsistence equal to what +eight shillings and ninepence would purchase in the present times. This +is a sumptuary law, too, restraining the luxury and extravagance of the +poor. Their clothing, therefore, had commonly been much more expensive. + +The same order of people are, by the same law, prohibited from wearing +hose, of which the price should exceed fourteen-pence the pair, equal to +about eight-and-twenty pence of our present money. But fourteen-pence +was in those times the price of a bushel and near two pecks of wheat; +which in the present times, at three and sixpence the bushel, would cost +five shillings and threepence. We should in the present times consider +this a very high price for a pair of stockings to a servant of the +poorest and lowest order. He must, however, in these times, have paid +what was really equivalent to this price for them. + +In the time of Edward IV. the art of knitting stockings was probably not +known in any part of Europe. Their hose were made of common cloth, which +may have been one of the causes of their dearness. The first person that +wore stockings in England is said to have been Queen Elizabeth. She +received them as a present from the Spanish ambassador. + +Both in the coarse and in the fine woollen manufacture, the machinery +employed was much more imperfect in those ancient, than it is in the +present times. It has since received three very capital improvements, +besides, probably, many smaller ones, of which it may be difficult to +ascertain either the number or the importance. The three capital +improvements are, first, the exchange of the rock and spindle for the +spinning-wheel, which, with the same quantity of labour, will perform +more than double the quantity of work. Secondly, the use of several very +ingenious machines, which facilitate and abridge, in a still greater +proportion, the winding of the worsted and woollen yarn, or the proper +arrangement of the warp and woof before they are put into the loom, an +operation which, previous to the invention of those machines, must have +been extremely tedious and troublesome.--Thirdly, the employment of the +fulling-mill for thickening the cloth, instead of treading it in water. +Neither wind nor water mills of any kind were known in England so early +as the beginning of the sixteenth century, nor, so far as I know, in any +other part of Europe north of the Alps. They had been introduced into +Italy some time before. + +The consideration of these circumstances may, perhaps, in some measure, +explain to us why the real price both of the course and of the fine +manufacture was so much higher in those ancient than it is in the +present times. It cost a greater quantity of labour to bring the goods +to market. When they were brought thither, therefore, they must have +purchased, or exchanged for the price of, a greater quantity. + +The coarse manufacture probably was, in these ancient times, carried on +in England in the same manner as it always has been in countries where +arts and manufactures are in their infancy. It was probably a household +manufacture, in which every different part of the work was occasionally +performed by all the different members of almost every private family, +but so as to be their work only when they had nothing else to do, and +not to be the principal business from which any of them derived the +greater part of their subsistence. The work which is performed in this +manner, it has already been observed, comes always much cheaper to +market than that which is the principal or sole fund of the workman's +subsistence. The fine manufacture, on the other hand, was not, in those +times, carried on in England, but in the rich and commercial country of +Flanders; and it was probably conducted then, in the same manner as now, +by people who derived the whole, or the principal part of their +subsistence from it. It was, besides, a foreign manufacture, and must +have paid some duty, the ancient custom of tonnage and poundage at +least, to the king. This duty, indeed, would not probably be very great. +It was not then the policy of Europe to restrain, by high duties, the +importation of foreign manufactures, but rather to encourage it, in +order that merchants might be enabled to supply, at as easy a rate as +possible, the great men with the conveniencies and luxuries which they +wanted, and which the industry of their own country could not afford +them. + +The consideration of these circumstances may, perhaps, in some measure +explain to us why, in those ancient times, the real price of the coarse +manufacture was, in proportion to that of the fine, so much lower than +in the present times. + + +_Conclusion of the Chapter._ + +I shall conclude this very long chapter with observing, that every +improvement in the circumstances of the society tends, either directly +or indirectly, to raise the real rent of land, to increase the real +wealth of the landlord, his power of purchasing the labour, or the +produce of the labour of other people. + +The extension of improvement and cultivations tends to raise it +directly. The landlord's share of the produce necessarily increases with +the increase of the produce. + +That rise in the real price of these parts of the rude produce of land, +which is first the effect of the extended improvement and cultivation, +and afterwards the cause of their being still further extended, the rise +in the price of cattle, for example, tends, too, to raise the rent of +land directly, and in a still greater proportion. The real value of the +landlord's share, his real command of the labour of other people, not +only rises with the real value of the produce, but the proportion of his +share to the whole produce rises with it. + +That produce, after the rise in its real price, requires no more labour +to collect it than before. A smaller proportion of it will, therefore, +be sufficient to replace, with the ordinary profit, the stock which +employs that labour. A greater proportion of it must consequently belong +to the landlord. + +All those improvements in the productive powers of labour, which tend +directly to reduce the rent price of manufactures, tend indirectly to +raise the real rent of land. The landlord exchanges that part of his +rude produce, which is over and above his own consumption, or, what +comes to the same thing, the price of that part of it, for manufactured +produce. Whatever reduces the real price of the latter, raises that of +the former. An equal quantity of the former becomes thereby equivalent +to a greater quantity of the latter; and the landlord is enabled to +purchase a greater quantity of the conveniencies, ornaments, or luxuries +which he has occasion for. + +Every increase in the real wealth of the society, every increase in the +quantity of useful labour employed within it, tends indirectly to raise +the real rent of land. A certain proportion of this labour naturally +goes to the land. A greater number of men and cattle are employed in its +cultivation, the produce increases with the increase of the stock which +is thus employed in raising it, and the rent increases with the produce. + +The contrary circumstances, the neglect of cultivation and improvement, +the fall in the real price of any part of the rude produce of land, the +rise in the real price of manufactures from the decay of manufacturing +art and industry, the declension of the real wealth of the society, all +tend, on the other hand, to lower the real rent of land, to reduce the +real wealth of the landlord, to diminish his power of purchasing either +the labour, or the produce of the labour, of other people. + +The whole annual produce of the land and labour of every country, or, +what comes to the same thing, the whole price of that annual produce, +naturally divides itself, it has already been observed, into three +parts; the rent of land, the wages of labour, and the profits of stock; +and constitutes a revenue to three different orders of people; to those +who live by rent, to these who live by wages, and to those who live by +profit. These are the three great, original, and constituent, orders of +every civilized society, from whose revenue that of every other order is +ultimately derived. + +The interest of the first of those three great orders, it appears from +what has been just now said, is strictly and inseparably connected with +the general interest of the society. Whatever either promotes or +obstructs the one, necessarily promotes or obstructs the other. When the +public deliberates concerning any regulation of commerce or police, the +proprietors of land never can mislead it, with a view to promote the +interest of their own particular order; at least, if they have any +tolerable knowledge of that interest. They are, indeed, too often +defective in this tolerable knowledge. They are the only one of the +three orders whose revenue costs them neither labour nor care, but comes +to them, as it were, of its own accord, and independent of any plan or +project of their own. That indolence which is the natural effect of the +ease and security of their situation, renders them too often, not only +ignorant, but incapable of that application of mind, which is necessary +in order to foresee and understand the consequence of any public +regulation. + +The interest of the second order, that of those who live by wages, is as +strictly connected with the interest of the society as that of the +first. The wages of the labourer, it has already been shewn, are never +so high as when the demand for labour is continually rising, or when the +quantity employed is every year increasing considerably. When this real +wealth of the society becomes stationary, his wages are soon reduced to +what is barely enough to enable him to bring up a family, or to continue +the race of labourers. When the society declines, they fall even below +this. The order of proprietors may perhaps gain more by the prosperity +of the society than that of labourers; but there is no order that +suffers so cruelly from its decline. But though the interest of the +labourer is strictly connected with that of the society, he is incapable +either of comprehending that interest, or of understanding its connexion +with his own. His condition leaves him no time to receive the necessary +information, and his education and habits are commonly such as to render +him unfit to judge, even though he was fully informed. In the public +deliberations, therefore, his voice is little heard, and less regarded; +except upon particular occasions, when his clamour is animated, set on, +and supported by his employers, not for him, but their own particular +purposes. + +His employers constitute the third order, that of those who live by +profit. It is the stock that is employed for the sake of profit, which +puts into motion the greater part of the useful labour of every society. +The plans and projects of the employers of stock regulate and direct all +the most important operations of labour, and profit is the end proposed +by all those plans and projects. But the rate of profit does not, like +rent and wages, rise with the prosperity, and fall with the declension +of the society. On the contrary, it is naturally low in rich, and high +in poor countries, and it is always highest in the countries which are +going fastest to ruin. The interest of this third order, therefore, has +not the same connexion with the general interest of the society, as that +of the other two. Merchants and master manufacturers are, in this order, +the two classes of people who commonly employ the largest capitals, and +who by their wealth draw to themselves the greatest share of the public +consideration. As during their whole lives they are engaged in plans and +projects, they have frequently more acuteness of understanding than the +greater part of country gentlemen. As their thoughts, however, are +commonly exercised rather about the interest of their own particular +branch of business than about that of the society, their judgment, even +when given with the greatest candour (which it has not been upon every +occasion), is much more to be depended upon with regard to the former of +those two objects, than with regard to the latter. Their superiority +over the country gentleman is, not so much in their knowledge of the +public interest, as in their having a better knowledge of their own +interest than he has of his. It is by this superior knowledge of their +own interest that they have frequently imposed upon his generosity, and +persuaded him to give up both his own interest and that of the public, +from a very simple but honest conviction, that their interest, and not +his, was the interest of the public. The interest of the dealers, +however, in any particular branch of trade or manufactures, is always in +some respects different from, and even opposite to, that of the public. +To widen the market, and to narrow the competition, is always the +interest of the dealers. To widen the market may frequently be agreeable +enough to the interest of the public; but to narrow the competition must +always be against it, and can only serve to enable the dealers, by +raising their profits above what they naturally would be, to levy, for +their own benefit, an absurd tax upon the rest of their fellow-citizens. +The proposal of any new law or regulation of commerce which comes from +this order, ought always to be listened to with great precaution, and +ought never to be adopted till after having been long and carefully +examined, not only with the most scrupulous, but with the most +suspicious attention. It comes from an order of men, whose interest is +never exactly the same with that of the public, who have generally an +interest to deceive and even to oppress the public, and who accordingly +have, upon many occasions, both deceived and oppressed it. + + + + +PRICES OF WHEAT. + + + ===================================================================== + | Price of the | Average of | The Average + Years | Quarter of | the different | Price of each + XII. | Wheat each | Prices of the | Year in Money + | Year. | same Year. | of the present + | | | times. + -----------+-------------------+-------------------+----------------- + | L. s. d. | L. s. d. | L. s. d. + 1202 | 0 12 0 | - - - | 1 16 0 + | | | + | {0 12 0} | | + 1205 | {0 13 4} | 0 13 5 | 2 0 3 + | {0 15 0} | | + | | | + 1223 | 0 12 0 | - - - | 1 16 0 + 1237 | 0 3 4 | - - - | 0 10 0 + 1243 | 0 2 0 | - - - | 0 6 0 + 1244 | 0 2 0 | - - - | 0 6 0 + 1246 | 0 16 0 | - - - | 2 8 0 + 1247 | 0 13 5 | - - - | 2 0 0 + 1257 | 1 4 0 | - - - | 3 12 0 + | | | + | {1 0 0} | | + 1258 | {0 15 0} | 0 17 0 | 2 11 0 + | {0 16 0} | | + | | | + | {4 16 0} | | + 1270 | {6 8 0} | 5 12 0 | 16 16 0 + | | | + 1286 | {0 2 8} | 0 9 4 | 1 8 0 + | {0 16 0} | | + | | | + | | +----------------- + | | Total, 35 9 3 + | | ----------------- + | | Average price, 2 19 1-1/4 + ===================================================================== + | | | + 1287 | 0 3 4 | - - - | 0 10 0 + | | | + | {0 0 8} | | + | {0 1 0} | | + | {0 1 4} | | + 1288 | {0 1 6} | 0 3 0-1/4 | 0 9 1-3/4 + | {0 1 8} | | + | {0 2 0} | | + | {0 3 4} | | + | {0 9 4} | | + | | | + | {0 12 0} | | + | {0 6 0} | | + 1289 | {0 2 0} | 0 10 1-1/2 | 1 10 4-1/2 + | {0 10 8} | | + | {1 0 0} | | + | | | + 1290 | 0 16 0 | - - - | 2 8 0 + 1294 | 0 16 0 | - - - | 2 8 0 + 1302 | 0 4 0 | - - - | 0 12 0 + 1309 | 0 7 2 | - - - | 1 1 6 + 1315 | 1 0 0 | - - - | 3 0 0 + | | | + | {1 0 0} | | + | {1 10 0} | | + 1316 | {1 12 0} | 1 10 6 | 4 11 6 + | {2 0 0} | | + | | | + | {2 4 0} | | + | {0 14 0} | | + 1317 | {2 13 0} | 1 19 6 | 5 18 6 + | {4 0 0} | | + | {0 6 8} | | + | | | + 1336 | 0 2 0 | - - - | 0 6 0 + 1338 | 0 3 4 | - - - | 0 10 0 + | | +----------------- + | | Total, 23 4 11-1/4 + | | ----------------- + | | Average price, 1 18 8 + ===================================================================== + | | | + 1339 | 0 9 0 | - - - | 1 7 0 + 1349 | 0 2 0 | - - - | 0 5 2 + 1359 | 1 6 8 | - - - | 3 2 2 + 1361 | 0 2 0 | - - - | 0 4 8 + 1363 | 0 15 0 | - - - | 1 15 0 + | | | + 1369 | {1 0 0} | 1 2 0 | 2 9 4 + | {1 4 0} | | + | | | + 1379 | 0 4 0 | - - - | 0 9 4 + 1387 | 0 2 0 | - - - | 0 4 8 + | | | + | {0 13 4} | | + 1390 | {0 14 0} | 0 14 5 | 1 13 7 + | {0 16 0} | | + | | | + 1401 | 0 16 0 | - - - | 1 17 6 + | | | + | {0 4 4-3/4}| | + 1407 | {0 3 4 }| 0 3 10 | 0 8 11 + | | | + 1416 | 0 16 0 | - - - | 1 12 0 + | | +----------------- + | | Total, 15 9 4 + | | ----------------- + | | Aver. price, 1 5 9-1/2 + ===================================================================== + | | | + 1423 | 0 8 0 | - - - | 0 16 0 + 1425 | 0 4 0 | - - - | 0 8 0 + 1434 | 1 6 8 | - - - | 2 13 4 + 1435 | 0 5 4 | - - - | 0 10 8 + | | | + | {1 0 0} | 1 3 4 | 2 6 8 + 1439 | {1 6 8} | | + | | | + 1440 | 1 4 0 | - - - | 2 8 0 + | | | + | {0 4 4} | - - - | 2 8 0 + 1444 | {0 4 0} | 0 4 2 | 0 8 4 + | | | + 1445 | 0 4 6 | - - - | 0 9 0 + 1447 | 0 8 0 | - - - | 0 16 0 + 1448 | 0 6 8 | - - - | 0 13 4 + 1449 | 0 5 0 | - - - | 0 10 0 + 1451 | 0 8 0 | - - - | 0 16 0 + | | +----------------- + | | Total, 12 15 4 + | | ----------------- + | | Aver. price, 1 1 3-1/3 + ===================================================================== + | | | + 1453 | 0 5 4 | - - - | 0 10 8 + 1455 | 0 1 2 | - - - | 0 2 4 + 1457 | 0 7 8 | - - - | 0 15 4 + 1459 | 0 5 0 | - - - | 0 10 0 + 1460 | 0 8 0 | - - - | 0 16 0 + | | | + | {0 2 0} | | + 1463 | {0 1 8} | 0 1 10 | 0 3 8 + | | | + 1464 | 0 6 8 | - - - | 0 10 0 + 1486 | 1 4 0 | - - - | 1 17 0 + 1491 | 0 14 8 | - - - | 1 2 0 + 1494 | 0 4 0 | - - - | 0 6 0 + 1495 | 0 3 4 | - - - | 0 5 0 + 1497 | 1 0 0 | - - - | 1 11 0 + | | +----------------- + | | Total, 8 9 0 + | | ----------------- + | | Aver. price, 0 14 1 + ===================================================================== + | | | + 1499 | 0 4 0 | - - - | 0 6 0 + 1504 | 0 5 8 | - - - | 0 8 6 + 1521 | 1 0 0 | - - - | 1 10 0 + 1551 | 0 8 0 | - - - | 0 8 0 + 1553 | 0 8 0 | - - - | 0 8 0 + 1554 | 0 8 0 | - - - | 0 8 0 + 1555 | 0 8 0 | - - - | 0 8 0 + 1556 | 0 8 0 | - - - | 0 8 0 + | | | + | {0 4 0} | | + 1957 | {0 5 0} | 0 17 8-1/2 | 0 17 8-1/2 + | {0 8 0} | | + | {2 13 4} | | + | | | + 1558 | 0 8 0 | - - - | 0 8 0 + 1559 | 0 8 0 | - - - | 0 8 0 + 1560 | 0 8 0 | - - - | 0 8 0 + | | +----------------- + | | Total, 6 0 2-1/2 + | | ----------------- + | | Average price, 0 10 0-5/12 + ===================================================================== + | | | + 1561 | 0 8 0 | - - - | 0 8 0 + 1562 | 0 8 0 | - - - | 0 8 0 + | | | + 1574 | {2 16 0} | 2 0 0 | 2 0 0 + | {1 4 0} | | + | | | + 1587 | 3 4 0 | - - - | 3 4 0 + 1594 | 2 16 0 | - - - | 2 16 0 + 1595 | 2 13 0 | - - - | 2 13 0 + 1596 | 4 0 0 | - - - | 4 0 0 + | | | + 1597 | {5 4 0} | 4 12 0 | 4 12 0 + | {4 0 0} | | + | | | + 1598 | 2 16 8 | - - - | 2 16 8 + 1599 | 1 19 2 | - - - | 1 19 2 + 1600 | 1 17 8 | - - - | 1 17 8 + 1601 | 1 14 10 | - - - | 1 14 10 + | | +----------------- + | | Total, 28 9 4 + | | ----------------- + | | Average price, 2 7 5-1/3 + ===================================================================== + + + + +PRICES OF THE QUARTER OF NINE BUSHELS OF THE BEST OR HIGHEST PRICED +WHEAT AT WINDSOR MARKET, ON LADY-DAY AND MICHAELMAS, FROM 1595 TO 1764, +BOTH INCLUSIVE; THE PRICE OF EACH YEAR BEING THE MEDIUM BETWEEN THE +HIGHEST PRICES OF THOSE TWO MARKET-DAYS. + + + Wheat per Quarter. + Years. L. s. d. + 1595 2 0 0 + 1596 2 8 0 + 1597 3 9 6 + 1598 2 16 8 + 1599 1 19 2 + 1600 1 17 8 + 1601 1 14 10 + 1602 1 9 4 + 1603 1 15 4 + 1604 1 10 8 + 1605 1 15 10 + 1606 1 13 0 + 1607 1 16 8 + 1608 2 16 8 + 1609 2 10 0 + 1610 1 15 10 + 1611 1 18 8 + 1612 2 2 4 + 1613 2 8 8 + 1614 2 1 8-1/2 + 1615 1 18 8 + 1616 2 0 4 + 1617 2 8 8 + 1618 2 6 8 + 1619 1 15 4 + 1620 1 10 4 + ----------- + 26)54 0 6-1/2 + ----------- + 2 1 6-9/13 + + + Wheat per Quarter. + Years. L. s. d. + 1621 1 10 4 + 1622 2 18 8 + 1623 2 12 0 + 1624 2 8 0 + 1625 2 12 0 + 1626 2 9 4 + 1627 1 16 0 + 1628 1 8 0 + 1629 2 2 0 + 1630 2 15 8 + 1631 3 8 0 + 1632 2 13 4 + 1633 2 18 0 + 1634 2 16 0 + 1635 2 16 0 + 1636 2 16 8 + ----------- + 16)40 0 0 + ----------- + 2 10 0 + + + Wheat per Quarter. + Years. L. s. d. + 1637 2 13 0 + 1638 2 17 4 + 1639 2 4 10 + 1640 2 4 8 + 1641 2 8 0 + 1642[26] 0 0 0 + 1643[26] 0 0 0 + 1644[26] 0 0 0 + 1645[26] 0 0 0 + 1646 2 8 0 + 1647 3 13 0 + 1648 4 5 0 + 1649 4 0 0 + 1650 3 16 8 + 1651 3 13 4 + 1652 2 9 6 + 1653 1 15 6 + 1654 1 6 0 + 1655 1 13 4 + 1656 2 3 0 + 1657 2 6 8 + 1658 3 5 0 + 1659 3 6 0 + 1660 2 16 6 + 1661 3 10 0 + 1662 3 14 0 + 1663 2 17 0 + 1664 2 0 6 + 1665 2 9 4 + 1666 1 16 0 + 1667 1 16 0 + 1668 2 0 0 + 1669 2 4 4 + 1670 2 1 8 + 1671 2 2 0 + 1672 2 1 0 + 1673 2 6 8 + 1674 3 8 8 + 1675 3 4 8 + 1676 1 18 0 + 1677 2 2 0 + 1678 2 19 0 + 1679 3 0 0 + 1680 2 5 0 + 1681 2 6 8 + 1682 2 4 0 + 1683 2 0 0 + 1684 2 4 0 + 1685 2 6 8 + 1686 1 14 0 + 1687 1 5 2 + 1688 2 6 0 + 1689 1 10 0 + 1690 1 14 8 + 1691 1 14 0 + 1692 2 6 8 + 1693 3 7 8 + 1694 3 4 0 + 1695 2 13 0 + 1696 3 11 0 + 1697 3 0 0 + 1698 3 8 4 + 1699 3 4 0 + 1700 2 0 0 + ------------ + 60)153 1 8 + ------------ + 2 11 0-1/2 + + + Wheat per Quarter. + Years. L. s. d. + 1701 1 17 8 + 1702 1 9 6 + 1703 1 16 0 + 1704 2 6 6 + 1705 1 10 0 + 1706 1 6 0 + 1707 1 8 6 + 1708 2 1 6 + 1709 3 18 6 + 1710 3 18 0 + 1711 2 14 0 + 1712 2 6 4 + 1713 2 11 0 + 1714 2 10 4 + 1715 2 3 0 + 1716 2 8 0 + 1717 2 5 8 + 1718 1 18 10 + 1719 1 15 0 + 1720 1 17 0 + 1721 1 17 6 + 1722 1 16 0 + 1723 1 14 8 + 1724 1 17 0 + 1725 2 8 6 + 1726 2 6 0 + 1727 2 2 0 + 1728 2 14 6 + 1729 2 6 10 + 1730 1 16 6 + 1731 1 12 10 + 1732 1 6 8 + 1733 1 8 4 + 1734 1 18 10 + 1735 2 3 0 + 1736 2 0 4 + 1737 1 18 0 + 1738 1 15 6 + 1739 1 18 6 + 1740 2 10 8 + 1741 2 6 8 + 1742 1 14 0 + 1743 1 4 10 + 1744 1 4 10 + 1745 1 7 6 + 1746 1 19 0 + 1747 1 14 10 + 1748 1 17 0 + 1749 1 17 0 + 1750 1 12 6 + 1751 1 18 6 + 1752 2 1 10 + 1753 2 4 8 + 1754 1 14 8 + 1755 1 13 10 + 1756 2 5 3 + 1757 3 0 0 + 1758 2 10 0 + 1759 1 19 10 + 1760 1 16 6 + 1761 1 10 3 + 1762 1 19 0 + 1763 2 0 9 + 1764 2 6 9 + ------------ + 64)129 13 6 + ------------ + 2 0 6-18/64 + + + Wheat per Quarter. + Years. L. s. d. + 1731 1 12 10 + 1732 1 6 8 + 1733 1 8 4 + 1734 1 18 10 + 1735 2 3 0 + 1736 2 0 4 + 1737 1 18 0 + 1738 1 15 6 + 1739 1 18 6 + 1740 2 10 8 + ----------- + 10)18 12 8 + ----------- + 1 17 3-1/5 + + + Wheat per Quarter. + Years. L. s. d. + 1741 2 6 8 + 1742 1 14 0 + 1743 1 4 10 + 1744 1 4 10 + 1745 1 7 6 + 1746 1 19 0 + 1747 1 14 10 + 1748 1 17 0 + 1749 1 17 0 + 1750 1 12 6 + ----------- + 10)16 18 2 + ----------- + 1 13 9-4/5 + + + + +BOOK II. + + +OF THE NATURE, ACCUMULATION, AND EMPLOYMENT OF STOCK. + + + + +INTRODUCTION. + + +In that rude state of society, in which there is no division of labour, +in which exchanges are seldom made, and in which every man provides +every thing for himself, it is not necessary that any stock should be +accumulated, or stored up before-hand, in order to carry on the business +of the society. Every man endeavours to supply, by his own industry, his +own occasional wants, as they occur. When he is hungry, he goes to the +forest to hunt; when his coat is worn out, he clothes himself with the +skin of the first large animal he kills; and when his hut begins to go +to ruin, he repairs it, as well as he can, with the trees and the turf +that are nearest it. + +But when the division of labour has once been thoroughly introduced, the +produce of a man's own labour can supply but a very small part of his +occasional wants. The far greater part of them are supplied by the +produce of other men's labour, which he purchases with the produce, or, +what is the same thing, with the price of the produce, of his own. But +this purchase cannot be made till such time as the produce of his own +labour has not only been completed, but sold. A stock of goods of +different kinds, therefore, must be stored up somewhere, sufficient to +maintain him, and to supply him with the materials and tools of his +work, till such time at least as both these events can be brought about. +A weaver cannot apply himself entirely to his peculiar business, unless +there is before-hand stored up somewhere, either in his own possession, +or in that of some other person, a stock sufficient to maintain him, and +to supply him with the materials and tools of his work, till he has not +only completed, but sold his web. This accumulation must evidently be +previous to his applying his industry for so long a time to such a +peculiar business. + +As the accumulation of stock must, in the nature of things, be previous +to the division of labour, so labour can be more and more subdivided in +proportion only as stock is previously more and more accumulated. The +quantity of materials which the same number of people can work up, +increases in a great proportion as labour comes to be more and more +subdivided; and as the operations of each workman are gradually reduced +to a greater degree of simplicity, a variety of new machines come to be +invented for facilitating and abridging these operations. As the +division of labour advances, therefore, in order to give constant +employment to an equal number of workman, an equal stock of provisions, +and a greater stock of materials and tools than what would have been +necessary in a ruder state of things, must be accumulated before-hand. +But the number of workmen in every branch of business generally +increases with the division of labour in that branch; or rather it is +the increase of their number which enables them to class and subdivide +themselves in this manner. + +As the accumulation of stock is previously necessary for carrying on +this great improvement in the productive powers of labour, so that +accumulation naturally leads to this improvement. The person who employs +his stock in maintaining labour, necessarily wishes to employ it in such +a manner as to produce as great a quantity of work as possible. He +endeavours, therefore, both to make among his workmen the most proper +distribution of employment, and to furnish them with the best machines +which he can either invent or afford to purchase. His abilities, in both +these respects, are generally in proportion to the extent of his stock, +or to the number of people whom it can employ. The quantity of industry, +therefore, not only increases in every country with the increase of the +stock which employs it, but, in consequence of that increase, the same +quantity of industry produces a much greater quantity of work. + +Such are in general the effects of the increase of stock upon industry +and its productive powers. + +In the following book, I have endeavoured to explain the nature of +stock, the effects of its accumulation into capital of different kinds, +and the effects of the different employments of those capitals. This +book is divided into five chapters. In the first chapter, I have +endeavoured to shew what are the different parts or branches into which +the stock, either of an individual, or of a great society, naturally +divides itself. In the second, I have endeavoured to explain the nature +and operation of money, considered as a particular branch of the general +stock of the society. The stock which is accumulated into a capital, may +either be employed by the person to whom it belongs, or it may be lent +to some other person. In the third and fourth chapters, I have +endeavoured to examine the manner in which it operates in both these +situations. The fifth and last chapter treats of the different effects +which the different employments of capital immediately produce upon the +quantity, both of national industry, and of the annual produce of land +and labour. + + + + +CHAP. I. + +OF THE DIVISION OF STOCK. + + +When the stock which a man possesses is no more than sufficient to +maintain him for a few days or a few weeks, he seldom thinks of deriving +any revenue from it. He consumes it as sparingly as he can, and +endeavours, by his labour, to acquire something which may supply its +place before it be consumed altogether. His revenue is, in this case, +derived from his labour only. This is the state of the greater part of +the labouring poor in all countries. + +But when he possesses stock sufficient to maintain him for months or +years, he naturally endeavours to derive a revenue from the greater part +of it, reserving only so much for his immediate consumption as may +maintain him till this revenue begins to come in. His whole stock, +therefore, is distinguished into two parts. That part which he expects +is to afford him this revenue is called his capital. The other is that +which supplies his immediate consumption, and which consists either, +first, in that portion of his whole stock which was originally reserved +for this purpose; or, secondly, in his revenue, from whatever source +derived, as it gradually comes in; or, thirdly, in such things as had +been purchased by either of these in former years, and which are not yet +entirely consumed, such as a stock of clothes, household furniture, and +the like. In one or other, or all of these three articles, consists the +stock which men commonly reserve for their own immediate consumption. + +There are two different ways in which a capital may be employed so as to +yield a revenue or profit to its employer. + +First, it may be employed in raising, manufacturing, or purchasing +goods, and selling them again with a profit. The capital employed in +this manner yields no revenue or profit to its employer, while it either +remains in his possession, or continues in the same shape. The goods of +the merchant yield him no revenue or profit till he sells them for +money, and the money yields him as little till it is again exchanged for +goods. His capital is continually going from him in one shape, and +returning to him in another; and it is only by means of such +circulation, or successive changes, that it can yield him any profit. +Such capitals, therefore, may very properly be called circulating +capitals. + +Secondly, it may be employed in the improvement of land, in the purchase +of useful machines and instruments of trade, or in such like things as +yield a revenue or profit without changing masters, or circulating any +further. Such capitals, therefore, may very properly be called fixed +capitals. + +Different occupations require very different proportions between the +fixed and circulating capitals employed in them. + +The capital of a merchant, for example, is altogether a circulating +capital. He has occasion for no machines or instruments of trade, unless +his shop or warehouse be considered as such. + +Some part of the capital of every master artificer or manufacturer must +be fixed in the instruments of his trade. This part, however, is very +small in some, and very great in others. A master tailor requires no +other instruments of trade but a parcel of needles. Those of the master +shoemaker are a little, though but a very little, more expensive. Those +of the weaver rise a good deal above those of the shoemaker. The far +greater part of the capital of all such master artificers, however, is +circulated either in the wages of their workmen, or in the price of +their materials, and repaid, with a profit, by the price of the work. + +In other works a much greater fixed capital is required. In a great +iron-work, for example, the furnace for melting the ore, the forge, the +slit-mill, are instruments of trade which cannot be erected without a +very great expense. In coal works, and mines of every kind, the +machinery necessary, both for drawing out the water, and for other +purposes, is frequently still more expensive. + +That part of the capital of the farmer which is employed in the +instruments of agriculture is a fixed, that which is employed in the +wages and maintenance of his labouring servants is a circulating +capital. He makes a profit of the one by keeping it in his own +possession, and of the other by parting with it. The price or value of +his labouring cattle is a fixed capital, in the same manner as that of +the instruments of husbandry; their maintenance is a circulating +capital, in the same manner as that of the labouring servants. The +farmer makes his profit by keeping the labouring cattle, and by parting +with their maintenance. Both the price and the maintenance of the cattle +which are bought in and fattened, not for labour, but for sale, are a +circulating capital. The farmer makes his profit by parting with them. A +flock of sheep or a herd of cattle, that, in a breeding country, is +brought in neither for labour nor for sale, but in order to make a +profit by their wool, by their milk, and by their increase, is a fixed +capital. The profit is made by keeping them. Their maintenance is a +circulating capital. The profit is made by parting with it; and it comes +back with both its own profit and the profit upon the whole price of the +cattle, in the price of the wool, the milk, and the increase. The whole +value of the seed, too, is properly a fixed capital. Though it goes +backwards and forwards between the ground and the granary, it never +changes masters, and therefore does not properly circulate. The farmer +makes his profit, not by its sale, but by its increase. + +The general stock of any country or society is the same with that of all +its inhabitants or members; and, therefore, naturally divides itself +into the same three portions, each of which has a distinct function or +office. + +The first is that portion which is reserved for immediate consumption, +and of which the characteristic is, that it affords no revenue or +profit. It consists in the stock of food, clothes, household furniture, +&c. which have been purchased by their proper consumers, but which are +not yet entirely consumed. The whole stock of mere dwelling-houses, too, +subsisting at any one time in the country, make a part of this first +portion. The stock that is laid out in a house, if it is to be the +dwelling-house of the proprietor, ceases from that moment to serve in +the function of a capital, or to afford any revenue to its owner. A +dwelling-house, as such, contributes nothing to the revenue of its +inhabitant; and though it is, no doubt, extremely useful to him, it is +as his clothes and household furniture are useful to him, which, +however, make a part of his expense, and not of his revenue. If it is to +be let to a tenant for rent, as the house itself can produce nothing, +the tenant must always pay the rent out of some other revenue, which he +derives, either from labour, or stock, or land. Though a house, +therefore, may yield a revenue to its proprietor, and thereby serve in +the function of a capital to him, it cannot yield any to the public, nor +serve in the function of a capital to it, and the revenue of the whole +body of the people can never be in the smallest degree increased by it. +Clothes and household furniture, in the same manner, sometimes yield a +revenue, and thereby serve in the function of a capital to particular +persons. In countries where masquerades are common, it is a trade to let +out masquerade dresses for a night. Upholsterers frequently let +furniture by the month or by the year. Undertakers let the furniture of +funerals by the day and by the week. Many people let furnished houses, +and get a rent, not only for the use of the house, but for that of the +furniture. The revenue, however, which is derived from such things, must +always be ultimately drawn from some other source of revenue. Of all +parts of the stock, either of an individual or of a society, reserved +for immediate consumption, what is laid out in houses is most slowly +consumed. A stock of clothes may last several years; a stock of +furniture half a century or a century; but a stock of houses, well built +and properly taken care of, may last many centuries. Though the period +of their total consumption, however, is more distant, they are still as +really a stock reserved for immediate consumption as either clothes or +household furniture. + +The second of the three portions into which the general stock of the +society divides itself, is the fixed capital; of which the +characteristic is, that it affords a revenue or profit without +circulating or changing masters. It consists chiefly of the four +following articles. + +First, of all useful machines and instruments of trade, which facilitate +and abridge labour. + +Secondly, of all those profitable buildings which are the means of +procuring a revenue, not only to the proprietor who lets them for a +rent, but to the person who possesses them, and pays that rent for them; +such as shops, warehouses, workhouses, farm-houses, with all their +necessary buildings, stables, granaries, &c. These are very different +from mere dwelling-houses. They are a sort of instruments of trade, and +may be considered in the same light. + +Thirdly, of the improvements of land, of what has been profitably laid +out in clearing, draining, inclosing, manuring, and reducing it into the +condition most proper for tillage and culture. An improved farm may very +justly be regarded in the same light as those useful machines which +facilitate and abridge labour, and by means of which an equal +circulating capital can afford a much greater revenue to its employer. +An improved farm is equally advantageous and more durable than any of +those machines, frequently requiring no other repairs than the most +profitable application of the farmer's capital employed in cultivating +it. + +Fourthly, of the acquired and useful abilities of all the inhabitants +and members of the society. The acquisition of such talents, by the +maintenance of the acquirer during his education, study, or +apprenticeship, always costs a real expense, which is a capital fixed +and realised, as it were, in his person. Those talents, as they make a +part of his fortune, so do they likewise that of the society to which he +belongs. The improved dexterity of a workman may be considered in the +same light as a machine or instrument of trade which facilitates and +abridges labour, and which, though it costs a certain expense, repays +that expense with a profit. + +The third and last of the three portions into which the general stock of +the society naturally divides itself, is the circulating capital, of +which the characteristic is, that it affords a revenue only by +circulating or changing masters. It is composed likewise of four parts. + +First, of the money, by means of which all the other three are +circulated and distributed to their proper consumers. + +Secondly, of the stock of provisions which are in the possession of the +butcher, the grazier, the farmer, the corn-merchant, the brewer, &c. and +from the sale of which they expect to derive a profit. + +Thirdly, of the materials, whether altogether rude, or more or less +manufactured, of clothes, furniture, and building which are not yet made +up into any of those three shapes, but which remain in the hands of the +growers, the manufacturers, the mercers, and drapers, the +timber-merchants, the carpenters and joiners, the brick-makers, &c. + +Fourthly, and lastly, of the work which is made up and completed, but +which is still in the hands of the merchant and manufacturer, and not +yet disposed of or distributed to the proper consumers; such as the +finished work which we frequently find ready made in the shops of the +smith, the cabinet-maker, the goldsmith, the jeweller, the +china-merchant, &c. The circulating capital consists, in this manner, of +the provisions, materials, and finished work of all kinds that are in +the hands of their respective dealers, and of the money that is +necessary for circulating and distributing them to those who are finally +to use or to consume them. + +Of these four parts, three--provisions, materials, and finished work, +are either annually or in a longer or shorter period, regularly +withdrawn from it, and placed either in the fixed capital, or in the +stock reserved for immediate consumption. + +Every fixed capital is both originally derived from, and requires to be +continually supported by, a circulating capital. All useful machines and +instruments of trade are originally derived from a circulating capital, +which furnishes the materials of which they are made, and the +maintenance of the workmen who make them. They require, too, a capital +of the same kind to keep them in constant repair. + +No fixed capital can yield any revenue but by means of a circulating +capital. The most useful machines and instruments of trade will produce +nothing, without the circulating capital, which affords the materials +they are employed upon, and the maintenance of the workmen who employ +them. Land, however improved, will yield no revenue without a +circulating capital, which maintains the labourers who cultivate and +collect its produce. + +To maintain and augment the stock which may be reserved for immediate +consumption, is the sole end and purpose both of the fixed and +circulating capitals. It is this stock which feeds, clothes, and lodges +the people. Their riches or poverty depend upon the abundant or sparing +supplies which those two capitals can afford to the stock reserved for +immediate consumption. + +So great a part of the circulating capital being continually withdrawn +from it, in order to be placed in the other two branches of the general +stock of the society, it must in its turn require continual supplies +without which it would soon cease to exist. These supplies are +principally drawn from three sources; the produce of land, of mines, and +of fisheries. These afford continual supplies of provisions and +materials, of which part is afterwards wrought up into finished work and +by which are replaced the provisions, materials, and finished work, +continually withdrawn from the circulating capital. From mines, too, is +drawn what is necessary for maintaining and augmenting that part of it +which consists in money. For though, in the ordinary course of business, +this part is not, like the other three, necessarily withdrawn from it, +in order to be placed in the other two branches of the stock of the +society, it must, however, like all other things, be wasted and worn out +at last, and sometimes, too, be either lost or sent abroad, and must, +therefore, require continual, though no doubt much smaller, supplies. + +Lands, mines, and fisheries, require all both a fixed and circulating +capital to cultivate them; and their produce replaces, with a profit not +only those capitals, but all the others in the society. Thus the farmer +annually replaces to the manufacturer the provisions which he had +consumed, and the materials which he had wrought up the year before; and +the manufacturer replaces to the farmer the finished work which he had +wasted and worn out in the same time. This is the real exchange that is +annually made between those two orders of people, though it seldom +happens that the rude produce of the one, and the manufactured produce +of the other, are directly bartered for one another; because it seldom +happens that the farmer sells his corn and his cattle, his flax and his +wool, to the very same person of whom he chuses to purchase the clothes, +furniture, and instruments of trade, which he wants. He sells, +therefore, his rude produce for money, with which he can purchase, +wherever it is to be had, the manufactured produce he has occasion for. +Land even replaces, in part at least, the capitals with which fisheries +and mines are cultivated. It is the produce of land which draws the fish +from the waters; and it is the produce of the surface of the earth which +extracts the minerals from its bowels. + +The produce of land, mines, and fisheries, when their natural fertility +is equal, is in proportion to the extent and proper application of the +capitals employed about them. When the capitals are equal, and equally +well applied, it is in proportion to their natural fertility. + +In all countries where there is a tolerable security, every man of +common understanding will endeavour to employ whatever stock he can +command, in procuring either present enjoyment or future profit. If it +is employed in procuring present enjoyment, it is a stock reserved for +immediate consumption. If it is employed in procuring future profit, it +must procure this profit either by staying with him, or by going from +him. In the one case it is a fixed, in the other it is a circulating +capital. A man must be perfectly crazy, who, where there is a tolerable +security, does not employ all the stock which he commands, whether it be +his own, or borrowed of other people, in some one or other of those +three ways. + +In those unfortunate countries, indeed, where men are continually afraid +of the violence of their superiors, they frequently bury or conceal a +great part of their stock, in order to have it always at hand to carry +with them to some place of safety, in case of their being threatened +with any of those disasters to which they consider themselves at all +times exposed. This is said to be a common practice in Turkey, in +Indostan, and, I believe, in most other governments of Asia. It seems to +have been a common practice among our ancestors during the violence of +the feudal government. Treasure-trove was, in these times, considered as +no contemptible part of the revenue of the greatest sovereigns in +Europe. It consisted in such treasure as was found concealed in the +earth, and to which no particular person could prove any right. This was +regarded, in those times, as so important an object, that it was always +considered as belonging to the sovereign, and neither to the finder nor +to the proprietor of the land, unless the right to it had been conveyed +to the latter by an express clause in his charter. It was put upon the +same footing with gold and silver mines, which, without a special clause +in the charter, were never supposed to be comprehended in the general +grant of the lands, though mines of lead, copper, tin, and coal were, as +things of smaller consequence. + + + + +CHAP II. + +OF MONEY, CONSIDERED AS A PARTICULAR BRANCH OF THE GENERAL STOCK OF THE +SOCIETY, OR OF THE EXPENSE OF MAINTAINING THE NATIONAL CAPITAL. + + +It has been shown in the First Book, that the price of the greater part +of commodities resolves itself into three parts, of which one pays the +wages of the labour, another the profits of the stock, and a third the +rent of the land which had been employed in producing and bringing them +to market: that there are, indeed, some commodities of which the price +is made up of two of those parts only, the wages of labour, and the +profits of stock; and a very few in which it consists altogether in one, +the wages of labour; but that the price of every commodity necessarily +resolves itself into some one or other, or all, of those three parts; +every part of it which goes neither to rent nor to wages, being +necessarily profit to somebody. + +Since this is the case, it has been observed, with regard to every +particular commodity, taken separately, it must be so with regard to all +the commodities which compose the whole annual produce of the land and +labour of every country, taken complexly. The whole price or +exchangeable value of that annual produce must resolve itself into the +same three parts, and be parcelled out among the different inhabitants +of the country, either as the wages of their labour, the profits of +their their stock, or the rent of their land. + +But though the whole value of the annual produce of the land and labour +of every country, is thus divided among, and constitutes a revenue to, +its different inhabitants; yet, as in the rent of a private estate, we +distinguish between the gross rent and the neat rent, so may we likewise +in the revenue of all the inhabitants of a great country. + +The gross rent of a private estate comprehends whatever is paid by the +farmer; the neat rent, what remains free to the landlord, after +deducting the expense of management, of repairs, and all other necessary +charges; or what, without hurting his estate, he can afford to place in +his stock reserved for immediate consumption, or to spend upon his +table, equipage, the ornaments of his house and furniture, his private +enjoyments and amusements. His real wealth is in proportion, not to his +gross, but to his neat rent. + +The gross revenue of all the inhabitants of a great country comprehends +the whole annual produce of their land and labour; the neat revenue, +what remains free to them, after deducting the expense of maintaining, +first, their fixed, and, secondly, their circulating capital, or what, +without encroaching upon their capital, they can place in their stock +reserved for immediate consumption, or spend upon their subsistence, +conveniencies, and amusements. Their real wealth, too, is in proportion, +not to their gross, but to their neat revenue. + +The whole expense of maintaining the fixed capital must evidently be +excluded from the neat revenue of the society. Neither the materials +necessary for supporting their useful machines and instruments of trade, +their profitable buildings, &c. nor the produce of the labour necessary +for fashioning those materials into the proper form, can ever make any +part of it. The price of that labour may indeed make a part of it; as +the workmen so employed may place the whole value of their wages in +their stock reserved for immediate consumption. But in other sorts of +labour, both the price and the produce go to this stock; the price to +that of the workmen, the produce to that of other people, whose +subsistence, conveniencies, and amusements, are augmented by the labour +of those workmen. + +The intention of the fixed capital is to increase the productive powers +of labour, or to enable the same number of labourers to perform a much +greater quantity of work. In a farm where all the necessary buildings, +fences, drains, communications, &c. are in the most perfect good order, +the same number of labourers and labouring cattle will raise a much +greater produce, than in one of equal extent and equally good ground, +but not furnished with equal conveniencies. In manufactures, the same +number of hands, assisted with the best machinery, will work up a much +greater quantity of goods than with more imperfect instruments of trade. +The expense which is properly laid out upon a fixed capital of any kind, +is always repaid with great profit, and increases the annual produce by +a much greater value than that of the support which such improvements +require. This support, however, still requires a certain portion of that +produce. A certain quantity of materials, and the labour of a certain +number of workmen, both of which might have been immediately employed to +augment the food, clothing, and lodging, the subsistence and +conveniencies of the society, are thus diverted to another employment, +highly advantageous indeed, but still different from this one. It is +upon this account that all such improvements in mechanics, as enable the +same number of workmen to perform an equal quantity of work with cheaper +and simpler machinery than had been usual before, are always regarded as +advantageous to every society. A certain quantity of materials, and the +labour of a certain number of workmen, which had before been employed in +supporting a more complex and expensive machinery, can afterwards be +applied to augment the quantity of work which that or any other +machinery is useful only for performing. The undertaker of some great +manufactory, who employs a thousand a-year in the maintenance of his +machinery, if he can reduce this expense to five hundred, will naturally +employ the other five hundred in purchasing an additional quantity of +materials, to be wrought up by an additional number of workmen. The +quantity of that work, therefore, which his machinery was useful only +for performing, will naturally be augmented, and with it all the +advantage and conveniency which the society can derive from that work. + +The expense of maintaining the fixed capital in a great country, may +very properly be compared to that of repairs in a private estate. The +expense of repairs may frequently be necessary for supporting the +produce of the estate, and consequently both the gross and the neat rent +of the landlord. When by a more proper direction, however, it can be +diminished without occasioning any diminution of produce, the gross rent +remains at least the same as before, and the neat rent is necessarily +augmented. + +But though the whole expense of maintaining the fixed capital is thus +necessarily excluded from the neat revenue of the society, it is not the +same case with that of maintaining the circulating capital. Of the four +parts of which this latter capital is composed, money, provisions, +materials, and finished work, the three last, it has already been +observed, are regularly withdrawn from it, and placed either in the +fixed capital of the society, or in their stock reserved for immediate +consumption. Whatever portion of those consumable goods is not employed +in maintaining the former, goes all to the latter, and makes a part of +the neat revenue of the society. The maintenance of those three parts of +the circulating capital, therefore, withdraws no portion of the annual +produce from the neat revenue of the society, besides what is necessary +for maintaining the fixed capital. + +The circulating capital of a society is in this respect different from +that of an individual. That of an individual is totally excluded from +making any part of his neat revenue, which must consist altogether in +his profits. But though the circulating capital of every individual +makes a part of that of the society to which he belongs, it is not upon +that account totally excluded from making a part likewise of their neat +revenue. Though the whole goods in a merchant's shop must by no means be +placed in his own stock reserved for immediate consumption, they may in +that of other people, who, from a revenue derived from other funds, may +regularly replace their value to him, together with its profits, without +occasioning any diminution either of his capital or of theirs. + +Money, therefore, is the only part of the circulating capital of a +society, of which the maintenance can occasion any diminution in their +neat revenue. + +The fixed capital, and that part of the circulating capital which +consists in money, so far as they affect the revenue of the society, +bear a very great resemblance to one another. + +First, as those machines and instruments of trade, &c. require a certain +expense, first to erect them, and afterwards to support them, both which +expenses, though they make a part of the gross, are deductions from the +neat revenue of the society; so the stock of money which circulates in +any country must require a certain expense, first to collect it, and +afterwards to support it; both which expenses, though they make a part +of the gross, are, in the same manner, deductions from the neat revenue +of the society. A certain quantity of very valuable materials, gold and +silver, and of very curious labour, instead of augmenting the stock +reserved for immediate consumption, the subsistence, conveniencies, and +amusements of individuals, is employed in supporting that great but +expensive instrument of commerce, by means of which every individual in +the society has his subsistence, conveniencies, and amusements, +regularly distributed to him in their proper proportions. + +Secondly, as the machines and instruments of trade, &c. which compose +the fixed capital either of an individual or of a society, make no part +either of the gross or of the neat revenue of either; so money, by means +of which the whole revenue of the society is regularly distributed among +all its different members, makes itself no part of that revenue. The +great wheel of circulation is altogether different from the goods which +are circulated by means of it. The revenue of the society consists +altogether in those goods, and not in the wheel which circulates them. +In computing either the gross or the neat revenue of any society, we +must always, from the whole annual circulation of money and goods, +deduct the whole value of the money, of which not a single farthing can +ever make any part of either. + +It is the ambiguity of language only which can make this proposition +appear either doubtful or paradoxical. When properly explained and +understood, it is almost self-evident. + +When we talk of any particular sum of money, we sometimes mean nothing +but the metal pieces of which it is composed, and sometimes we include +in our meaning some obscure reference to the goods which can be had in +exchange for it, or to the power of purchasing which the possession of +it conveys. Thus, when we say that the circulating money of England has +been computed at eighteen millions, we mean only to express the amount +of the metal pieces, which some writers have computed, or rather have +supposed, to circulate in that country. But when we say that a man is +worth fifty or a hundred pounds a-year, we mean commonly to express, not +only the amount of the metal pieces which are annually paid to him, but +the value of the goods which he can annually purchase or consume; we +mean commonly to assertain what is or ought to be his way of living, or +the quantity and quality of the necessaries and conveniencies of life in +which he can with propriety indulge himself. + +When, by any particular sum of money, we mean not only to express the +amount of the metal pieces of which it is composed, but to include in +its signification some obscure reference to the goods which can be had +in exchange for them, the wealth or revenue which it in this case +denotes, is equal only to one of the two values which are thus intimated +somewhat ambiguously by the same word, and to the latter more properly +than to the former, to the money's worth more properly than to the +money. + +Thus, if a guinea be the weekly pension of a particular person, he can +in the course of the week purchase with it a certain quantity of +subsistence, conveniencies, and amusements. In proportion as this +quantity is great or small, so are his real riches, his real weekly +revenue. His weekly revenue is certainly not equal both to the guinea +and to what can be purchased with it, but only to one or other of those +two equal values, and to the latter more properly than to the former, to +the guinea's worth rather than to the guinea. + +If the pension of such a person was paid to him, not in gold, but in a +weekly bill for a guinea, his revenue surely would not so properly +consist in the piece of paper, as in what he could get for it. A guinea +may be considered as a bill for a certain quantity of necessaries and +conveniencies upon all the tradesmen in the neighbourhood. The revenue +of the person to whom it is paid, does not so properly consist in the +piece of gold, as in what he can get for it, or in what he can exchange +it for. If it could be exchanged for nothing, it would, like a bill upon +a bankrupt, be of no more value than the most useless piece of paper. + +Though the weekly or yearly revenue of all the different inhabitants of +any country, in the same manner, may be, and in reality frequently is, +paid to them in money, their real riches, however, the real weekly or +yearly revenue of all of them taken together, must always be great or +small, in proportion to the quantity of consumable goods which they can +all of them purchase with this money. The whole revenue of all of them +taken together is evidently not equal to both the money and the +consumable goods, but only to one or other of those two values, and to +the latter more properly than to the former. + +Though we frequently, therefore, express a person's revenue by the metal +pieces which are annually paid to him, it is because the amount of those +pieces regulates the extent of his power of purchasing, or the value of +the goods which he can annually afford to consume. We still consider his +revenue as consisting in this power of purchasing or consuming, and not +in the pieces which convey it. + +But if this is sufficiently evident, even with regard to an individual, +it is still more so with regard to a society. The amount of the metal +pieces which are annually paid to an individual, is often precisely +equal to his revenue, and is upon that account the shortest and best +expression of its value. But the amount of the metal pieces which +circulate in a society, can never be equal to the revenue of all its +members. As the same guinea which pays the weekly pension of one man +to-day, may pay that of another to-morrow, and that of a third the day +thereafter, the amount of the metal pieces which annually circulate in +any country, must always be of much less value than the whole money +pensions annually paid with them. But the power of purchasing, or the +goods which can successively be bought with the whole of those money +pensions, as they are successively paid, must always be precisely of the +same value with those pensions; as must likewise be the revenue of the +different persons to whom they are paid. That revenue, therefore, cannot +consist in those metal pieces, of which the amount is so much inferior +to its value, but in the power of purchasing, in the goods which can +successively be bought with them as they circulate from hand to hand. + +Money, therefore, the great wheel of circulation, the great instrument +of commerce, like all other instruments of trade, though it makes a +part, and a very valuable part, of the capital, makes no part of the +revenue of the society to which it belongs; and though the metal pieces +of which it is composed, in the course of their annual circulation, +distribute to every man the revenue which properly belongs to him, they +make themselves no part of that revenue. + +Thirdly, and lastly, the machines and instruments of trade, &c. which +compose the fixed capital, bear this further resemblance to that part of +the circulating capital which consists in money; that as every saving in +the expense of erecting and supporting those machines, which does not +diminish the introductive powers of labour, is an improvement of the +neat revenue of the society; so every saving in the expense of +collecting and supporting that part of the circulating capital which +consists in money is an improvement of exactly the same kind. + +It is sufficiently obvious, and it has partly, too, been explained +already, in what manner every saving in the expense of supporting the +fixed capital is an improvement of the neat revenue of the society. The +whole capital of the undertaker of every work is necessarily divided +between his fixed and his circulating capital. While his whole capital +remains the same, the smaller the one part, the greater must necessarily +be the other. It is the circulating capital which furnishes the +materials and wages of labour, and puts industry into motion. Every +saving, therefore, in the expense of maintaining the fixed capital, +which does not diminish the productive powers of labour, must increase +the fund which puts industry into motion, and consequently the annual +produce of land and labour, the real revenue of every society. + +The substitution of paper in the room of gold and silver money, replaces +a very expensive instrument of commerce with one much less costly, and +sometimes equally convenient. Circulation comes to be carried on by a +new wheel, which it costs less both to erect and to maintain than the +old one. But in what manner this operation is performed, and in what +manner it tends to increase either the gross or the neat revenue of the +society, is not altogether so obvious, and may therefore require some +further explication. + +There are several different sorts of paper money; but the circulating +notes of banks and bankers are the species which is best known, and +which seems best adapted for this purpose. + +When the people of any particular country have such confidence in the +fortune, probity and prudence of a particular banker, as to believe that +he is always ready to pay upon demand such of his promissory notes as +are likely to be at any time presented to him, those notes come to have +the same currency as gold and silver money, from the confidence that +such money can at any time be had for them. + +A particular banker lends among his customers his own promissory notes, +to the extent, we shall suppose, of a hundred thousand pounds. As those +notes serve all the purposes of money, his debtors pay him the same +interest as if he had lent them so much money. This interest is the +source of his gain. Though some of those notes are continually coming +back upon him for payment, part of them continue to circulate for months +and years together. Though he has generally in circulation, therefore, +notes to the extent of a hundred thousand pounds, twenty thousand pounds +in gold and silver may, frequently, be a sufficient provision for +answering occasional demands. By this operation, therefore, twenty +thousand pounds in gold and silver perform all the functions which a +hundred thousand could otherwise have performed. The same exchanges may +be made, the same quantity of consumable goods may be circulated and +distributed to their proper consumers, by means of his promissory notes, +to the value of a hundred thousand pounds, as by an equal value of gold +and silver money. Eighty thousand pounds of gold and silver, therefore, +can in this manner be spared from the circulation of the country; and if +different operations of the same kind should, at the same time, be +carried on by many different banks and bankers, the whole circulation +may thus be conducted with a fifth part only of the gold and silver +which would otherwise have been requisite. + +Let us suppose, for example, that the whole circulating money of some +particular country amounted, at a particular time, to one million +sterling, that sum being then sufficient for circulating the whole +annual produce of their land and labour; let us suppose, too, that some +time thereafter, different banks and bankers issued promissory notes +payable to the bearer, to the extent of one million, reserving in their +different coffers two hundred thousand pounds for answering occasional +demands; there would remain, therefore, in circulation, eight hundred +thousand pounds in gold and silver, and a million of bank notes, or +eighteen hundred thousand pounds of paper and money together. But the +annual produce of the land and labour of the country had before required +only one million to circulate and distribute it to its proper consumers, +and that annual produce cannot be immediately augmented by those +operations of banking. One million, therefore, will be sufficient to +circulate it after them. The goods to be bought and sold being precisely +the same as before, the same quantity of money will be sufficient for +buying and selling them. The channel of circulation, if I may be allowed +such an expression, will remain precisely the same as before. One +million we have supposed sufficient to fill that channel. Whatever, +therefore, is poured into it beyond this sum, cannot run into it, but +must overflow. One million eight hundred thousand pounds are poured into +it. Eight hundred thousand pounds, therefore, must overflow, that sum +being over and above what can be employed in the circulation of the +country. But though this sum cannot be employed at home, it is too +valuable to be allowed to lie idle. It will, therefore, be sent abroad, +in order to seek that profitable employment which it cannot find at +home. But the paper cannot go abroad; because at a distance from the +banks which issue it, and from the country in which payment of it can be +exacted by law, it will not be received in common payments. Gold and +silver, therefore, to the amount of eight hundred thousand pounds, will +be sent abroad, and the channel of home circulation will remain filled +with a million of paper instead of a million of those metals which +filled it before. + +But though so great a quantity of gold and silver is thus sent abroad, +we must not imagine that it is sent abroad for nothing, or that its +proprietors make a present of it to foreign nations. They will exchange +it for foreign goods of some kind or another, in order to supply the +consumption either of some other foreign country, or of their own. + +If they employ it in purchasing goods in one foreign country, in order +to supply the consumption of another, or in what is called the carrying +trade, whatever profit they make will be in addition to the neat revenue +of their own country. It is like a new fund, created for carrying on a +new trade; domestic business being now transacted by paper, and the gold +and silver being converted into a fund for this new trade. + +If they employ it in purchasing foreign goods for home consumption, they +may either, first, purchase such goods as are likely to be consumed by +idle people, who produce nothing, such as foreign wines, foreign silks, +&c.; or, secondly, they may purchase an additional stock of materials, +tools, and provisions, in order to maintain and employ an additional +number of industrious people, who reproduce, with a profit, the value of +their annual consumption. + +So far as it is employed in the first way, is promotes prodigality, +increases expense and consumption, without increasing production, or +establishing any permanent fund for supporting that expense, and is in +every respect hurtful to the society. + +So far as it is employed in the second way, it promotes industry; and +though it increases the consumption of the society, it provides a +permanent fund for supporting that consumption; the people who consume +reproducing, with a profit, the whole value of their annual consumption. +The gross revenue of the society, the annual produce of their land and +labour, is increased by the whole value which the labour of these +workmen adds to the materials upon which they are employed, and their +neat revenue by what remains of this value, after deducting what is +necessary for supporting the tools and instruments of their trade. + +That the greater part of the gold and silver which being forced abroad +by those operations of banking, is employed in purchasing foreign goods +for home consumption, is, and must be, employed in purchasing those of +this second kind, seems not only probable, but almost unavoidable. +Though some particular men may sometimes increase their expense very +considerably, though their revenue does not increase at all, we may be +assured that no class or order of men ever does so; because, though the +principles of common prudence do not always govern the conduct of every +individual, they always influence that of the majority of every class or +order. But the revenue of idle people, considered as a class or order, +cannot, in the smallest degree, be increased by those operations of +banking. Their expense in general, therefore, cannot be much increased +by them, though that of a few individuals among them may, and in reality +sometimes is. The demand of idle people, therefore, for foreign goods, +being the same, or very nearly the same as before, a very small part of +the money which, being forced abroad by those operations of banking, is +employed in purchasing foreign goods for home consumption, is likely to +be employed in purchasing those for their use. The greater part of it +will naturally be destined for the employment of industry, and not for +the maintenance of idleness. + +When we compute the quantity of industry which the circulating capital +of any society can employ, we must always have regard to those parts of +it only which consist in provisions, materials, and finished work; the +other, which consists in money, and which serves only to circulate those +three, must always be deducted. In order to put industry into motion, +three things are requisite; materials to work upon, tools to work with, +and the wages or recompence for the sake of which the work is done. +Money is neither a material to work upon, nor a tool to work with; and +though the wages of the workman are commonly paid to him in money, his +real revenue, like that of all other men, consists, not in the money, +but in the money's worth; not in the metal pieces, but in what can be +got for them. + +The quantity of industry which any capital can employ, must evidently be +equal to the number of workmen whom it can supply with materials, tools, +and a maintenance suitable to the nature of the work. Money may be +requisite for purchasing the materials and tools of the work, as well as +the maintenance of the workmen; but the quantity of industry which the +whole capital can employ, is certainly not equal both to the money which +purchases, and to the materials, tools, and maintenance, which are +purchased with it, but only to one or other of those two values, and to +the latter more properly than to the former. + +When paper is substituted in the room of gold and silver money, the +quantity of the materials, tools, and maintenance, which the whole +circulating capital can supply, may be increased by the whole value of +gold and silver which used to be employed in purchasing them. The whole +value of the great wheel of circulation and distribution is added to the +goods which are circulated and distributed by means of it. The +operation, in some measure, resembles that of the undertaker of some +great work, who, in consequence of some improvement in mechanics, takes +down his old machinery, and adds the difference between its price and +that of the new to his circulating capital, to the fund from which he +furnishes materials and wages to his workmen. + +What is the proportion which the circulating money of any country bears +to the whole value of the annual produce circulated by means of it, it +is perhaps impossible to determine. It has been computed by different +authors at a fifth, at a tenth, at a twentieth, and at a thirtieth, part +of that value. But how small soever the proportion which the circulating +money may bear to the whole value of the annual produce, as but a part, +and frequently but a small part, of that produce, is ever destined for +the maintenance of industry, it must always bear a very considerable +proportion to that part. When, therefore, by the substitution of paper, +the gold and silver necessary for circulation is reduced to, perhaps, a +fifth part of the former quantity, if the value of only the greater part +of the other four-fifths be added to the funds which are destined for +the maintenance of industry, it must make a very considerable addition +to the quantity of that industry, and, consequently, to the value of the +annual produce of land and labour. + +An operation of this kind has, within these five-and-twenty or thirty +years, been performed in Scotland, by the erection of new banking +companies in almost every considerable town, and even in some country +villages. The effects of it have been precisely those above described. +The business of the country is almost entirely carried on by means of +the paper of those different banking companies, with which purchases and +payments of all kinds are commonly made. Silver very seldom appears, +except in the change of a twenty shilling bank note, and gold still +seldomer. But though the conduct of all those different companies has +not been unexceptionable, and has accordingly required an act of +parliament to regulate it, the country, notwithstanding, has evidently +derived great benefit from their trade. I have heard it asserted, that +the trade of the city of Glasgow doubled in about fifteen years after +the first erection of the banks there; and that the trade of Scotland +has more than quadrupled since the first erection of the two public +banks at Edinburgh; of which the one, called the Bank of Scotland, was +established by act of parliament in 1695, and the other, called the +Royal Bank, by royal charter in 1727. Whether the trade, either of +Scotland in general, or of the city of Glasgow in particular, has really +increased in so great a proportion, during so short a period, I do not +pretend to know. If either of them has increased in this proportion, it +seems to be an effect too great to be accounted for by the sole +operation of this cause. That the trade and industry of Scotland, +however, have increased very considerably during this period, and that +the banks have contributed a good deal to this increase, cannot be +doubted. + +The value of the silver money which circulated in Scotland before the +Union in 1707, and which, immediately after it, was brought into the +Bank of Scotland, in order to be recoined, amounted to £411,117 : 10 : 9 +sterling. No account has been got of the gold coin; but it appears from +the ancient accounts of the mint of Scotland, that the value of the gold +annually coined somewhat exceeded that of the silver[27]. There were a +good many people, too, upon this occasion, who, from a diffidence of +repayment, did not bring their silver into the Bank of Scotland; and +there was, besides, some English coin, which was not called in. The +whole value of the gold and silver, therefore, which circulated in +Scotland before the Union, cannot be estimated at less than a million +sterling. It seems to have constituted almost the whole circulation of +that country; for though the circulation of the Bank of Scotland, which +had then no rival, was considerable, it seems to have made but a very +small part of the whole. In the present times, the whole circulation of +Scotland cannot be estimated at less than two millions, of which that +part which consists in gold and silver, most probably, does not amount +to half a million. But though the circulating gold and silver of +Scotland have suffered so great a diminution during this period, its +real riches and prosperity do not appear to have suffered any. Its +agriculture, manufactures, and trade, on the contrary, the annual +produce of its land and labour, have evidently been augmented. + +It is chiefly by discounting bills of exchange, that is, by advancing +money upon them before they are due, that the greater part of banks and +bankers issue their promissory notes. They deduct always, upon whatever +sum they advance, the legal interest till the bill shall become due. The +payment of the bill, when it becomes due, replaces to the bank the value +of what had been advanced, together with a clear profit of the interest. +The banker, who advances to the merchant whose bill he discounts, not +gold and silver, but his own promissory notes, has the advantage of +being able to discount to a greater amount by the whole value of his +promissory notes, which he finds, by experience, are commonly in +circulation. He is thereby enabled to make his clear gain of interest on +so much a larger sum. + +The commerce of Scotland, which at present is not very great, was still +more inconsiderable when the two first banking companies were +established; and those companies would have had but little trade, had +they confined their business to the discounting of bills of exchange. +They invented, therefore, another method of issuing their promissory +notes; by granting what they called cash accounts, that is, by giving +credit, to the extent of a certain sum (two or three thousand pounds for +example), to any individual who could procure two persons of undoubted +credit and good landed estate to become surety for him, that whatever +money should be advanced to him, within the sum for which the credit had +been given, should be repaid upon demand, together with the legal +interest. Credits of this kind are, I believe, commonly granted by banks +and bankers in all different parts of the world. But the easy terms upon +which the Scotch banking companies accept of repayment are, so far as I +know, peculiar to them, and have, perhaps, been the principal cause, +both of the great trade of those companies, and of the benefit which the +country has received from it. + +Whoever has a credit of this kind with one of those companies, and +borrows a thousand pounds upon it, for example, may repay this sum +piece-meal, by twenty and thirty pounds at a time, the company +discounting a proportionable part of the interest of the great sum, from +the day on which each of those small sums is paid in, till the whole be +in this manner repaid. All merchants, therefore, and almost all men of +business, find it convenient to keep such cash accounts with them, and +are thereby interested to promote the trade of those companies, by +readily receiving their notes in all payments, and by encouraging all +those with whom they have any influence to do the same. The banks, when +their customers apply to them for money, generally advance it to them in +their own promissory notes. These the merchants pay away to the +manufacturers for goods, the manufacturers to the farmers for materials +and provisions, the farmers to their landlords for rent; the landlords +repay them to the merchants for the conveniencies and luxuries with +which they supply them, and the merchants again return them to the banks +in order to balance their cash accounts, or to replace what they may +have borrowed of them; and thus almost the whole money business of the +country is transacted by means of them. Hence the great trade of those +companies. + +By means of those cash accounts, every merchant can, without imprudence, +carry on a greater trade than he otherwise could do. If there are two +merchants, one in London and the other in Edinburgh, who employ equal +stocks in the same branch of trade, the Edinburgh merchant can, without +imprudence, carry on a greater trade, and give employment to a greater +number of people, than the London merchant. The London merchant must +always keep by him a considerable sum of money, either in his own +coffers, or in those of his banker, who gives him no interest for it, in +order to answer the demands continually coming upon him for payment of +the goods which he purchases upon credit. Let the ordinary amount of +this sum be supposed five hundred pounds; the value of the goods in his +warehouse must always be less, by five hundred pounds, than it would +have been, had he not been obliged to keep such a sum unemployed. Let us +suppose that he generally disposes of his whole stock upon hand, or of +goods to the value of his whole stock upon hand, once in the year. By +being obliged to keep so great a sum unemployed, he must sell in a year +five hundred pounds worth less goods than he might otherwise have done. +His annual profits must be less by all that he could have made by the +sale of five hundred pounds worth more goods; and the number of people +employed in preparing his goods for the market must be less by all those +that five hundred pounds more stock could have employed. The merchant in +Edinburgh, on the other hand, keeps no money unemployed for answering +such occasional demands. When they actually come upon him, he satisfies +them from his cash account with the bank, and gradually replaces the sum +borrowed with the money or paper which comes in from the occasional +sales of his goods. With the same stock, therefore, he can, without +imprudence, have at all times in his warehouse a larger quantity of +goods than the London merchant; and can thereby both make a greater +profit himself, and give constant employment to a greater number of +industrious people who prepare those goods for the market. Hence the +great benefit which the country has derived from this trade. + +The facility of discounting bills of exchange, it may be thought, +indeed, gives the English merchants a conveniency equivalent to the cash +accounts of the Scotch merchants. But the Scotch merchants, it must be +remembered, can discount their bills of exchange as easily as the +English merchants; and have, besides, the additional conveniency of +their cash accounts. + +The whole paper money of every kind which can easily circulate in any +country, never can exceed the value of the gold and silver, of which it +supplies the place, or which (the commerce being supposed the same) +would circulate there, if there was no paper money. If twenty shilling +notes, for example, are the lowest paper money current in Scotland, the +whole of that currency which can easily circulate there, cannot exceed +the sum of gold and silver which would be necessary for transacting the +annual exchanges of twenty shillings value and upwards usually +transacted within that country. Should the circulating paper at any time +exceed that sum, as the excess could neither be sent abroad nor be +employed in the circulation of the country, it must immediately return +upon the banks, to be exchanged for gold and silver. Many people would +immediately perceive that they had more of this paper than was necessary +for transacting their business at home; and as they could not send it +abroad, they would immediately demand payment for it from the banks. +When this superfluous paper was converted into gold and silver, they +could easily find a use for it, by sending it abroad; but they could +find none while it remained in the shape of paper. There would +immediately, therefore, be a run upon the banks to the whole extent of +this superfluous paper, and if they showed any difficulty or +backwardness in payment, to a much greater extent; the alarm which this +would occasion necessarily increasing the run. + +Over and above the expenses which are common to every branch of trade, +such as the expense of house-rent, the wages of servants, clerks, +accountants, &c. the expenses peculiar to a bank consist chiefly in two +articles: first, in the expense of keeping at all times in its coffers, +for answering the occasional demands of the holders of its notes, a +large sum of money, of which it loses the interest; and, secondly, in +the expense of replenishing those coffers as fast as they are emptied by +answering such occasional demands. + +A banking company which issues more paper than can be employed in the +circulation of the country, and of which the excess is continually +returning upon them for payment, ought to increase the quantity of gold +and silver which they keep at all times in their coffers, not only in +proportion to this excessive increase of their circulation, but in a +much greater proportion; their notes returning upon them much faster +than in proportion to the excess of their quantity. Such a company, +therefore, ought to increase the first article of their expense, not +only in proportion to this forced increase of their business, but in a +much greater proportion. + +The coffers of such a company, too, though they ought to be filled much +fuller, yet must empty themselves much faster than if their business was +confined within more reasonable bounds, and must require not only a more +violent, but a more constant and uninterrupted exertion of expense, in +order to replenish them. The coin, too, which is thus continually drawn +in such large quantities from their coffers, cannot be employed in the +circulation of the country. It comes in place of a paper which is over +and above what can be employed in that circulation, and is, therefore, +over and above what can be employed in it too. But as that coin will not +be allowed to lie idle, it must, in one shape or another, be sent +abroad, in order to find that profitable employment which it cannot find +at home; and this continual exportation of gold and silver, by enhancing +the difficulty, must necessarily enhance still farther the expense of +the bank, in finding new gold and silver in order to replenish those +coffers, which empty themselves so very rapidly. Such a company, +therefore, must in proportion to this forced increase of their business, +increase the second article of their expense still more than the first. + +Let us suppose that all the paper of a particular bank, which the +circulation of the country can easily absorb and employ, amounts exactly +to forty thousand pounds, and that, for answering occasional demands, +this bank is obliged to keep at all times in its coffers ten thousand +pounds in gold and silver. Should this bank attempt to circulate +forty-four thousand pounds, the four thousand pounds which are over and +above what the circulation can easily absorb and employ, will return +upon it almost as fast as they are issued. For answering occasional +demands, therefore, this bank ought to keep at all times in its coffers, +not eleven thousand pounds only, but fourteen thousand pounds. It will +thus gain nothing by the interest of the four thousand pounds excessive +circulation; and it will lose the whole expense of continually +collecting four thousand pounds in gold and silver, which will be +continually going out of its coffers as fast as they are brought into +them. + +Had every particular banking company always understood and attended to +its own particular interest, the circulation never could have been +overstocked with paper money. But every particular banking company has +not always understood or attended to its own particular interest, and +the circulation has frequently been overstocked with paper money. + +By issuing too great a quantity of paper, of which the excess was +continually returning, in order to be exchanged for gold and silver, the +Bank of England was for many years together obliged to coin gold to the +extent of between eight hundred thousand pounds and a million a-year; +or, at an average, about eight hundred and fifty thousand pounds. For +this great coinage, the bank (in consequence of the worn and degraded +state into which the gold coin had fallen a few years ago) was +frequently obliged to purchase gold bullion at the high price of four +pounds an ounce, which it soon after issued in coin at L.3 : 17 : 10-1/2 +an ounce, losing in this manner between two and a half and three per +cent. upon the coinage of so very large a sum. Though the bank, +therefore, paid no seignorage, though the government was properly at the +expense of this coinage, this liberality of government did not prevent +altogether the expense of the bank. + +The Scotch banks, in consequence of an excess of the same kind, were all +obliged to employ constantly agents at London to collect money for them, +at an expense which was seldom below one and a half or two per cent. +This money was sent down by the waggon, and insured by the carriers at +an additional expense of three quarters per cent. or fifteen shillings +on the hundred pounds. Those agents were not always able to replenish +the coffers of their employers so fast as they were emptied. In this +case, the resource of the banks was, to draw upon their correspondents +in London bills of exchange, to the extent of the sum which they wanted. +When those correspondents afterwards drew upon them for the payment of +this sum, together with the interest and commission, some of those +banks, from the distress into which their excessive circulation had +thrown them, had sometimes no other means of satisfying this draught, +but by drawing a second set of bills, either upon the same, or upon some +other correspondents in London; and the same sum, or rather bills for +the same sum, would in this manner make sometimes more than two or three +journeys; the debtor bank paying always the interest and commission upon +the whole accumulated sum. Even those Scotch banks which never +distinguished themselves by their extreme imprudence, were sometimes +obliged to employ this ruinous resource. + +The gold coin which was paid out, either by the Bank of England or by +the Scotch banks, in exchange for that part of their paper which was +over and above what could be employed in the circulation of the country, +being likewise over and above what could be employed in that +circulation, was sometimes sent abroad in the shape of coin, sometimes +melted down and sent abroad in the shape of bullion, and sometimes +melted down and sold to the Bank of England at the high price of four +pounds an ounce. It was the newest, the heaviest, and the best pieces +only, which were carefully picked out of the whole coin, and either sent +abroad or melted down. At home, and while they remained in the shape of +coin, these heavy pieces were of no more value than the light; but they +were of more value abroad, or when melted down into bullion at home. The +Bank of England, notwithstanding their great annual coinage, found, to +their astonishment, that there was every year the same scarcity of coin +as there had been the year before; and that, notwithstanding the great +quantity of good and new coin which was every year issued from the bank, +the state of the coin, instead of growing better and better, became +every year worse and worse. Every year they found themselves under the +necessity of coining nearly the same quantity of gold as they had coined +the year before; and from the continual rise in the price of gold +bullion, in consequence of the continual wearing and clipping of the +coin, the expense of this great annual coinage became, every year, +greater and greater. The Bank of England, it is to be observed, by +supplying its own coffers with coin, is indirectly obliged to supply the +whole kingdom, into which coin is continually flowing from those coffers +in a great variety of ways. Whatever coin, therefore, was wanted to +support this excessive circulation both of Scotch and English paper +money, whatever vacuities this excessive circulation occasioned in the +necessary coin of the kingdom, the Bank of England was obliged to supply +them. The Scotch banks, no doubt, paid all of them very dearly for their +own imprudence and inattention: but the Bank of England paid very +dearly, not only for its own imprudence, but for the much greater +imprudence of almost all the Scotch banks. + +The over-trading of some bold projectors in both parts of the united +kingdom, was the original cause of this excessive circulation of paper +money. + +What a bank can with propriety advance to a merchant or undertaker of +any kind, is not either the whole capital with which he trades, or even +any considerable part of that capital; but that part of it only which he +would otherwise be obliged to keep by him unemployed and in ready money, +for answering occasional demands. If the paper money which the bank +advances never exceeds this value, it can never exceed the value of the +gold and silver which would necessarily circulate in the country if +there was no paper money; it can never exceed the quantity which the +circulation of the country can easily absorb and employ. + +When a bank discounts to a merchant a real bill of exchange, drawn by a +real creditor upon a real debtor, and which, as soon as it becomes due, +is really paid by that debtor; it only advances to him a part of the +value which he would otherwise be obliged to keep by him unemployed and +in ready money, for answering occasional demands. The payment of the +bill, when it becomes due, replaces to the bank the value of what it had +advanced, together with the interest. The coffers of the bank, so far as +its dealings are confined to such customers, resemble a water-pond, from +which, though a stream is continually running out, yet another is +continually running in, fully equal to that which runs out; so that, +without any further care or attention, the pond keeps always equally, or +very near equally full. Little or no expense can ever be necessary for +replenishing the coffers of such a bank. + +A merchant, without over-trading, may frequently have occasion for a sum +of ready money, even when he has no bills to discount. When a bank, +besides discounting his bills, advances him likewise, upon such +occasions, such sums upon his cash account, and accepts of a piece-meal +repayment, as the money comes in from the occasional sale of his goods, +upon the easy terms of the banking companies of Scotland; it dispenses +him entirely from the necessity of keeping any part of his stock by him +unemployed and in ready money for answering occasional demands. When +such demands actually come upon him, he can answer them sufficiently +from his cash account. The bank, however, in dealing with such +customers, ought to observe with great attention, whether, in the course +of some short period (of four, five, six, or eight months, for example), +the sum of the repayments which it commonly receives from them, is, or +is not, fully equal to that of the advances which it commonly makes to +them. If, within the course of such short periods, the sum of the +repayments from certain customers is, upon most occasions, fully equal +to that of the advances, it may safely continue to deal with such +customers. Though the stream which is in this case continually running +out from its coffers may be very large, that which is continually +running into them must be at least equally large: so that, without any +further care or attention, those coffers are likely to be always equally +or very near equally full, and scarce ever to require any extraordinary +expense to replenish them. If, on the contrary, the sum of the +repayments from certain other customers, falls commonly very much short +of the advances which it makes to them, it cannot with any safety +continue to deal with such customers, at least if they continue to deal +with it in this manner. The stream which is in this case continually +running out from its coffers, is necessarily much larger than that which +is continually running in; so that, unless they are replenished by some +great and continual effort of expense, those coffers must soon be +exhausted altogether. + +The banking companies of Scotland, accordingly, were for a long time +very careful to require frequent and regular repayments from all their +customers, and did not care to deal with any person, whatever might be +his fortune or credit, who did not make, what they called, frequent and +regular operations with them. By this attention, besides saving almost +entirely the extraordinary expense of replenishing their coffers, they +gained two other very considerable advantages. + +First, by this attention they were enabled to make some tolerable +judgment concerning the thriving or declining circumstances of their +debtors, without being obliged to look out for any other evidence +besides what their own books afforded them; men being, for the most +part, either regular or irregular in their repayments, according as +their circumstances are either thriving or declining. A private man who +lends out his money to perhaps half a dozen or a dozen of debtors, may, +either by himself or his agents, observe and inquire both constantly and +carefully into the conduct and situation of each of them. But a banking +company, which lends money to perhaps five hundred different people, and +of which the attention is continually occupied by objects of a very +different kind, can have no regular information concerning the conduct +and circumstances of the greater part of its debtors, beyond what its +own books afford it. In requiring frequent and regular repayments from +all their customers, the banking companies of Scotland had probably this +advantage in view. + +Secondly, by this attention they secured themselves from the possibility +of issuing more paper money than what the circulation of the country +could easily absorb and employ. When they observed, that within moderate +periods of time, the repayments of a particular customer were, upon most +occasions, fully equal to the advances which they had made to him, they +might he assured that the paper money which they had advanced to him +had not, at any time, exceeded the quantity of gold and silver which he +would otherwise have been obliged to keep by him for answering +occasional demands; and that, consequently, the paper money, which they +had circulated by his means, had not at any time exceeded the quantity +of gold and silver which would have circulated in the country, had there +been no paper money. The frequency, regularity, and amount of his +repayments, would sufficiently demonstrate that the amount of their +advances had at no time exceeded that part of his capital which he would +otherwise have been obliged to keep by him unemployed, and in ready +money, for answering occasional demands; that is, for the purpose of +keeping the rest of his capital in constant employment. It is this part +of his capital only which, within moderate periods of time, is +continually returning in every dealer in the shape of money, whether +paper or coin, and continually going from him in the same shape. If the +advances of the bank had commonly exceeded this part of his capital, the +ordinary amount of his repayments could not, within moderate periods of +time, have equalled the ordinary amount of its advances. The stream +which, by means of his dealings, was continually running into the +coffers of the bank, could not have been equal to the stream which, by +means of the same dealings was continually running out. The advances of +the bank paper, by exceeding the quantity of gold and silver which, had +there been no such advances, he would have been obliged to keep by him +for answering occasional demands, might soon come to exceed the whole +quantity of gold and silver which (the commerce being supposed the same) +would have circulated in the country, had there been no paper money; +and, consequently, to exceed the quantity which the circulation of the +country could easily absorb and employ; and the excess of this paper +money would immediately have returned upon the bank, in order to be +exchanged for gold and silver. This second advantage, though equally +real, was not, perhaps, so well understood by all the different banking +companies in Scotland as the first. + +When, partly by the conveniency of discounting bills, and partly by that +of cash accounts, the creditable traders of any country can be dispensed +from the necessity of keeping any part of their stock by them +unemployed, and in ready money, for answering occasional demands, they +can reasonably expect no farther assistance from banks and bankers, who, +when they have gone thus far, cannot, consistently with their own +interest and safety, go farther. A bank cannot, consistently with its +own interest, advance to a trader the whole, or even the greater part of +the circulating capital with which he trades; because, though that +capital is continually returning to him in the shape of money, and going +from him in the same shape, yet the whole of the returns is too distant +from the whole of the outgoings, and the sum of his the repayments could +not equal the sum of his advances within much moderate periods of time +as suit the conveniency of a bank. Still less could a bank afford to +advance him any considerable part of his fixed capital; of the capital +which the undertaker of an iron forge, for example, employs in erecting +his forge and smelting-houses, his work-houses, and warehouses, the +dwelling-houses of his workmen, &c.; of the capital which the undertaker +of a mine employs in sinking his shafts, in erecting engines for drawing +out the water, in making roads and waggon-ways, &c.; of the capital +which the person who undertakes to improve land employs in clearing, +draining, inclosing, manuring, and ploughing waste and uncultivated +fields; in building farm-houses, with all their necessary appendages of +stables, granaries, &c. The returns of the fixed capital are, in almost +all cases, much slower than those of the circulating capital: and such +expenses, even when laid out with the greatest prudence and judgment, +mean very seldom return to the undertaker till after period of many +years, a period by far too distant to suit the conveniency of a bank. +Traders and other undertakers may, no doubt with great propriety, carry +on a very considerable part of their projects with borrowed money. In +justice to their creditors, however, their own capital ought in this +case to be sufficient to insure, if I may say so, the capital of those +creditors; or to render it extremely improbable that those creditors +should incur any loss, even though the success of the project should +fall very much short of the expectation of the projectors. Even with +this precaution, too, the money which is borrowed, and which it is meant +should not be repaid till after a period of several years, ought not to +be borrowed of a bank, but ought to be borrowed upon bond or mortgage, +of such private people as propose to live upon the interest of their +money, without taking the trouble themselves to employ the capital, and +who are, upon that account, willing to lend that capital to such people +of good credit as are likely lo keep it for several years. A bank, +indeed, which lends its money without the expense of stamped paper, or +of attorneys' fees for drawing bonds and mortgages, and which accepts of +repayment upon the easy terms of the banking companies of Scotland, +would, no doubt, be a very convenient creditor to such traders and +undertakers. But such traders and undertakers would surely be most +inconvenient debtors to such a bank. + +It is now more than five and twenty years since the paper money issued +by the different banking companies of Scotland was fully equal, or +rather was somewhat more than fully equal, to what the circulation of +the country could easily absorb and employ. Those companies, therefore, +had so long ago given all the assistance to the traders and other +undertakers of Scotland which it is possible for banks and bankers, +consistently with their own interest, to give. They had even done +somewhat more. They had over-traded a little, and had brought upon +themselves that loss, or at least that diminution of profit, which, in +this particular business, never fails to attend the smallest degree of +over-trading. Those traders and other undertakers, having got so much +assistance from banks and bankers, wished to get still more. The banks, +they seem to have thought, could extend their credits to whatever sum +might be wanted, without incurring any other expense besides that of a +few reams of paper. They complained of the contracted views and +dastardly spirit of the directors of those banks, which did not, they +said, extend their credits in proportion to the extension of the trade +of the country; meaning, no doubt, by the extension of that trade, the +extension of their own projects beyond what they could carry on either +with their own capital, or with what they had credit to borrow of +private people in the usual way of bond or mortgage. The banks, they +seem to have thought, were in honour bound to supply the deficiency, and +to provide them with all the capital which they wanted to trade with. +The banks, however, were of a different opinion and upon their refusing +to extend their credits, some of those traders had recourse to an +expedient which, for a time, served their purpose, though at a much +greater expense, yet as effectually as the utmost extension of bank +credits could have done. This expedient was no other than the well known +shift of drawing and redrawing; the shift to which unfortunate traders +have sometimes recourse, when they are upon the brink of bankruptcy. The +practice of raising money in this manner had been long known in England; +and, during the course of the late war, when the high profits of trade +afforded a great temptation to over-trading, is said to have been +carried on to a very great extent. From England it was brought into +Scotland, where, in proportion to the very limited commerce, and to the +very moderate capital of the country, it was soon carried on to a much +greater extent than it ever had been in England. + +The practice of drawing and redrawing is so well known to all men of +business, that it may, perhaps, be thought unnecessary to give any +account of it. But as this book may come into the hands of many people +who are not men of business, and as the effects of this practice upon +the banking trade are not, perhaps, generally understood, even by men of +business themselves, I shall endeavour to explain it as distinctly as I +can. + +The customs of merchants, which were established when the barbarous laws +of Europe did not enforce the performance of their contracts, and which, +during the course of the two last centuries, have been adopted into the +laws of all European nations, have given such extraordinary privileges +to bills of exchange, that money is more readily advanced upon them than +upon any other species of obligation; especially when they are made +payable within so short a period as two or three months after their +date. If, when the bill becomes due, the acceptor does not pay it as +soon as it is presented, he becomes from that moment a bankrupt. The +bill is protested, and returns upon the drawer, who, if he does not +immediately pay it, becomes likewise a bankrupt. If, before it came to +the person who presents it to the acceptor for payment, it had passed +through the hands of several other persons, who had successively +advanced to one another the contents of it, either in money or goods, +and who, to express that each of them had in his turn received those +contents, had all of them in their order indorsed, that is, written +their names upon the back of the bill; each indorser becomes in his turn +liable to the owner of the bill for those contents, and, if he fails to +pay, he becomes too, from that moment, a bankrupt. Though the drawer, +acceptor, and indorsers of the bill, should all of them be persons of +doubtful credit; yet, still the shortness of the date gives some +security to the owner of the bill. Though all of them may be very likely +to become bankrupts, it is a chance if they all become so in so short a +time. The house is crazy, says a weary traveller to himself, and will +not stand very long; but it is a chance if it falls to-night, and I will +venture, therefore, to sleep in it to-night. + +The trader A in Edinburgh, we shall suppose, draws a bill upon B in +London, payable two months after date. In reality B in London owes +nothing to A in Edinburgh; but he agrees to accept of A's bill, upon +condition, that before the term of payment he shall redraw upon A in +Edinburgh for the same sum, together with the interest and a commission, +another bill, payable likewise two months after date. B accordingly, +before the expiration of the first two months, redraws this bill upon A +in Edinburgh; who, again before the expiration of the second two months, +draws a second bill upon B in London, payable likewise two months after +date; and before the expiration of the third two months, B in London +redraws upon A in Edinburgh another bill payable also two months after +date. This practice has sometimes gone on, not only for several months, +but for several years together, the bill always returning upon A in +Edinburgh with the accumulated interest and commission of all the former +bills. The interest was five per cent. in the year, and the commission +was never less than one half per cent. on each draught. This commission +being repeated more than six times in the year, whatever money A might +raise by this expedient might necessarily have cost him something more +than eight per cent in the year and sometimes a great deal more, when +either the price of the commission happened to rise, or when he was +obliged to pay compound interest upon the interest and commission of +former bills. This practice was called raising money by circulation. + +In a country where the ordinary profits of stock, in the greater part of +mercantile projects, are supposed to run between six and ten per cent. +it must have been a very fortunate speculation, of which the returns +could not only repay the enormous expense at which the money was thus +borrowed for carrying it on, but afford, besides, a good surplus profit +to the projector. Many vast and extensive projects, however, were +undertaken, and for several years carried on, without any other fund to +support them besides what was raised at this enormous expense. The +projectors, no doubt, had in their golden dreams the most distinct +vision of this great profit. Upon their awakening, however, either at +the end of their projects, or when they were no longer able to carry +them on, they very seldom, I believe, had the good fortune to find +it.[28] + +The bills which A in Edinburgh drew upon B in London, he regularly +discounted two months before they were due, with some bank or banker in +Edinburgh; and the bills which B in London redrew upon A in Edinburgh, +he as regularly discounted, either with the Bank of England, or with +some other banker in London. Whatever was advanced upon such circulating +bills was in Edinburgh advanced in the paper of the Scotch banks; and in +London, when they were discounted at the Bank of England in the paper of +that bank. Though the bills upon which this paper had been advanced were +all of them repaid in their turn as soon as they became due, yet the +value which had been really advanced upon the last bill was never really +returned to the banks which advanced it, because, before each bill +became due, another bill was always drawn to somewhat a greater amount +than the bill which was soon to be paid: and the discounting of this +other bill was essentially necessary towards the payment of that which +was soon to be due. This payment, therefore, was altogether fictitious. +The stream which, by means of those circulating bills of exchange, had +once been made to run out from the coffers of the banks, was never +replaced by any stream which really run into them. + +The paper which was issued upon those circulating bills of exchange +amounted, upon many occasions, to the whole fund destined for carrying +on some vast and extensive project of agriculture, commerce, or +manufactures; and not merely to that part of it which, had there been no +paper money, the projector would have been obliged to keep by him +unemployed, and in ready money, for answering occasional demands. The +greater part of this paper was, consequently, over and above the value +of the gold and silver which would have circulated in the country, had +there been no paper money. It was over and above, therefore, what the +circulation of the country could easily absorb and employ, and upon that +account, immediately returned upon the banks, in order to be exchanged +for gold and silver, which they were to find as they could. It was a +capital which those projectors had very artfully contrived to draw from +those banks, not only without their knowledge or deliberate consent, but +for some time, perhaps, without their having the most distant suspicion +that they had really advanced it. + +When two people, who are continually drawing and redrawing upon one +another, discount their bills always with the same banker, he must +immediately discover what they are about, and see clearly that they are +trading, not with any capital of their own, but with the capital which +he advances to them. But this discovery is not altogether so easy when +they discount their bills sometimes with one banker, and sometimes with +another, and when the two same persons do not constantly draw and redraw +upon one another, but occasionally run the round of a great circle of +projectors, who find it for their interest to assist one another in this +method of raising money and to render it, upon that account, as +difficult as possible to distinguish between a real and a fictitious +bill of exchange, between a bill drawn by a real creditor upon a real +debtor, and a bill for which there was properly no real creditor but the +bank which discounted it, nor any real debtor but the projector who made +use of the money. When a banker had even made this discovery, he might +sometimes make it too late, and might find that he had already +discounted the bills of those projectors to so great an extent, that, by +refusing to discount any more, he would necessarily make them all +bankrupts; and thus by ruining them, might perhaps ruin himself. For his +own interest and safety, therefore, he might find it necessary, in this +very perilous situation, to go on for some time, endeavouring, however, +to withdraw gradually, and, upon that account, making every day greater +and greater difficulties about discounting, in order to force these +projectors by degrees to have recourse, either to other bankers, or to +other methods of raising money: so as that he himself might, as soon as +possible, get out of the circle. The difficulties, accordingly, which +the Bank of England, which the principal bankers in London, and which +even the more prudent Scotch banks began, after a certain time, and when +all of them had already gone too far, to make about discounting, not +only alarmed, but enraged, in the highest degree, those projectors. +Their own distress, of which this prudent and necessary reserve of the +banks was, no doubt, the immediate occasion, they called the distress of +the country; and this distress of the country, they said, was altogether +owing to the ignorance, pusillanimity, and bad conduct of the banks, +which did not give a sufficiently-liberal aid to the spirited +undertakings of those who exerted themselves in order to beautify, +improve, and enrich the country. It was the duty of the banks, they +seemed to think, to lend for as long a time, and to as great an extent, +as they might wish to borrow. The banks, however, by refusing in this +manner to give more credit to those to whom they had already given a +great deal too much, took the only method by which it was now possible +to save either their own credit, or the public credit of the country. + +In the midst of this clamour and distress, a new bank was established in +Scotland, for the express purpose of relieving the distress of the +country. The design was generous; but the execution was imprudent, and +the nature and causes of the distress which it meant to relieve, were +not, perhaps, well understood. This bank was more liberal then any other +had ever been, both in granting cash-accounts, and in discounting bills +of exchange. With regard to the latter, it seems to have made scarce any +distinction between real and circulating bills, but to have discounted +all equally. It was the avowed principle of this bank to advance upon +any reasonable security, the whole capita, which was to be employed in +those improvements of which the returns are the most slow and distant, +such as the improvements of land. To promote such improvements was even +said to be the chief or the public-spirited purposes for which it was +instituted. By its liberality in granting cash-accounts, and in +discounting bills of exchange, it, no doubt, issued great quantities of +its bank notes. But those bank notes being, the greater part of them, +over and above what the circulation of the country could easily absorb +and employ, returned upon it, in order to be exchanged for gold and +silver, as fast as they were issued. Its coffers were never well filled. +The capital which had been subscribed to this bank, at two different +subscriptions, amounted to one hundred and sixty thousand pounds, of +which eighty per cent. only was paid up. This sum ought to have been +paid in at several different instalments. A great part of the +proprietors, when they paid in their first instalment, opened a +cash-account with the bank; and the directors, thinking themselves +obliged to treat their own proprietors with the same liberality with +which they treated all other man, allowed many of them to borrow upon +this cash-account what they paid in upon all their subsequent +instalments. Such payments, therefore, only put into one coffer what had +the moment before been taken out of another. But had the coffers of this +bank been filled ever so well, its excessive circulation must have +emptied them faster than they could have been replenished by any other +expedient but the ruinous one of drawing upon London; and when the bill +became due, paying it, together with interest and commission, by another +draught upon the same place. Its coffers having been filled so very ill, +it is said to have been driven to this resource within a very few months +after it began to do business. The estates of the proprietors of this +bank were worth several millions, and, by their subscription to the +original bond or contract of the bank, were really pledged for answering +all its engagements. By means of the great credit which so great a +pledge necessarily gave it, it was, notwithstanding its too liberal +conduct, enabled to entry on business for more than two years. When it +was obliged to stop, it had in the circulation about two hundred +thousand pounds in bank notes. In order to support the circulation of +those notes, which were continually returning upon it as fast as they +were issued, it had been constantly in the practice of drawing bills of +exchange upon London, of which the number and value were continually +increasing, and, when it stopt, amounted to upwards of six hundred +thousand pounds. This bank, therefore, had, in little more than the +course of two years, advanced to different people upwards of eight +hundred thousand pounds at five per cent. Upon the two hundred thousand +pounds which it circulated in bank notes, this five per cent. might +perhaps be considered as a clear gain, without any other deduction +besides the expense of management. But upon upwards of six hundred +thousand pounds, for which it was continually drawing bills of exchange +upon London, it was paying, in the way of interest and commission, +upwards of eight per cent. and was consequently losing more than three +per cent. upon more than three-fourths of all its dealings. + +The operations of this bank seem to have produced effects quite opposite +to those which were intended by the particular persons who planned and +directed it. They seem to have intended to support the spirited +undertakings, for as such they considered them, which were at that time +carrying on in different parts of the country; and, at the some time, by +drawing the whole banking business to themselves, to supplant all the +other Scotch banks, particularly those established at Edinburgh, whose +backwardness in discounting bills of exchange had given some offence. +This bank, no doubt, gave some temporary relief to those projectors, and +enabled them to carry on their projects for about two years longer than +they could otherwise have done. But it thereby only enabled them to get +so much deeper into debt; so that, when rain came, it fell so much the +heavier both upon them and upon their their creditors. The operations of +this bank, therefore, instead of relieving, in reality aggravated in the +long-run the distress which those projectors had brought both upon +themselves and upon their country. It would have been much better for +themselves, their creditors, and their country, had the greater part of +them been obliged to stop two years sooner than they actually did. The +temporary relief, however, which this bank afforded to those projectors, +proved a real and permanent relief to the other Scotch banks. All the +dealers in circulating bills of exchange, which those other banks had +become so backward in discounting, had recourse to this new bank, where +they were received with open arms. Those other banks, therefore, were +enabled to get very easily out of that fatal circle, from which they +could not otherwise have disengaged themselves without incurring a +considerable loss, and perhaps, too, even some degree of discredit. + +In the long-run, therefore, the operations of this bank increased the +real distress of the country, which it meant to relieve; and effectually +relieved, from a very great distress, those rivals whom it meant to +supplant. + +At the first setting out of this bank, it was the opinion of some +people, that how fast soever its coffers might be emptied, it might +easily replenish them, by raising money upon the securities of those to +whom it had advanced its paper. Experience, I believe, soon convinced +them that this method of raising money was by much too slow to answer +their purpose; and that coffers which originally were so ill filled, and +which emptied themselves so very fast, could be replenished by no other +expedient but the ruinous one of drawing bills upon London, and when +they became due, paying them by other draughts on the same place, with +accumulated interest and commission. But though they had been able by +this method to raise money as fast as they wanted it, yet, instead of +making a profit, they must have suffered a loss of every such operation; +so that in the long-run they must have ruined themselves as a mercantile +company, though perhaps not so soon as by the more expensive practice of +drawing and redrawing. They could still have made nothing by the +interest of the paper, which, being over and above what the circulation +of the country could absorb and employ, returned upon them in order to +be exchanged for gold and silver, as fast as they issued it; and for the +payment of which they were themselves continually obliged to borrow +money. On the contrary, the whole expense of this borrowing, of +employing agents to look out for people who had money to lend, of +negotiating with those people, and of drawing the proper bond or +assignment, must have fallen upon them, and have been so much clear loss +upon the balance of their accounts. The project of replenishing their +coffers in this manner may be compared to that of a man who had a +water-pond from which a stream was continually running out, and into +which no stream was continually running, but who proposed to keep it +always equally full, by employing a number of people to go continually +with buckets to a well at some miles distance, in order to bring water +to replenish it. + +But though this operation had proved not only practicable, but +profitable to the bank, as a mercantile company; yet the country could +have derived no benefit from it, but, on the contrary, must have +suffered a very considerable loss by it. This operation could not +augment, in the smallest degree, the quantity of money to be lent. It +could only have erected this bank into a sort of general loan office for +the whole country. Those who wanted to borrow must have applied to this +bank, instead of applying to the private persons who had lent it their +money. But a bank which lends money, perhaps to five hundred different +people, the greater part of whom its directors can know very little +about, is not likely to be more judicious in the choice of its debtors +than a private person who lends out his money among a few people whom he +knows, and in whose sober and frugal conduct he thinks he has good +reason to confide. The debtors of such a bank as that whose conduct I +have been giving some account of were likely, the greater part of them, +to be chimerical projectors, the drawers and redrawers of circulating +bills of exchange, who would employ the money in extravagant +undertakings, which, with all the assistance that could be given them, +they would probably never be able to complete, and which, if they should +be completed, would never repay the expense which they had really cost, +would never afford a fund capable of maintaining a quantity of labour +equal to that which had been employed about them. The sober and frugal +debtors of private persons, on the contrary, would be more likely to +employ the money borrowed in sober undertakings which were proportioned +to their capitals, and which, though they might have less of the grand +and the marvellous, would have more of the solid and the profitable; +which would repay with a large profit whatever had been laid out upon +them, and which would thus afford a fund capable of maintaining a much +greater quantity of labour than that which had been employed about them. +The success of this operation, therefore, without increasing in the +smallest degree the capital of the country, would only have transferred +a great part of it from prudent and profitable to imprudent and +unprofitable undertakings. + +That the industry of Scotland languished for want of money to employ it, +was the opinion of the famous Mr Law. By establishing a bank of a +particular kind, which he seems to have imagined might issue paper to +the amount of the whole value of all the lands in the country, he +proposed to remedy this want of money. The parliament of Scotland, when +he first proposed his project, did not think proper to adopt it. It was +afterwards adopted, with some variations, by the Duke of Orleans, at +that time regent of France. The idea of the possibility of multiplying +paper money to almost any extent was the real foundation of what is +called the Mississippi scheme, the most extravagant project, both of +banking and stock-jobbing, that perhaps the world ever saw. The +different operations of this scheme are explained so fully, so clearly, +and with so much order and distinctness, by Mr Du Verney, in his +Examination of the Political Reflections upon commerce and finances of +Mr Du Tot, that I shall not give any account of them. The principles +upon which it was founded are explained by Mr Law himself, in a +discourse concerning money and trade, which he published in Scotland +when he first proposed his project. The splendid but visionary ideas +which are set forth in that and some other works upon the same +principles, still continue to make an impression upon many people, and +have, perhaps, in part, contributed to that excess of banking, which has +of late been complained of, both in Scotland and in other places. + +The Bank of England is the greatest bank of circulation in Europe. It +was incorporated, in pursuance of an act of parliament, by a charter +under the great seal, dated the 27th of July 1694. It at that time +advanced to government the sum of L.1,200,000 for an annuity of +L.100,000, or for L.96,000 a-year, interest at the rate of eight per +cent. and L.4,000 a-year for the expense of management. The credit of +the new government, established by the Revolution, we may believe, must +have been very low, when it was obliged to borrow at so high an +interest. + +In 1697, the bank was allowed to enlarge its capital stock, by an +ingraftment of L.1,001,171 : 10s. Its whole capital stock, therefore, +amounted at this time to L.2,201,171 : 10s. This ingraftment is said to +have been for the support of public credit. In 1696, tallies had been at +forty, and fifty, and sixty per cent. discount, and bank notes at twenty +per cent.[29] During the great re-coinage of the silver, which was going +on at this time, the bank had thought proper to discontinue the payment +of its notes, which necessarily occasioned their discredit. + +In pursuance of the 7th Anne, c. 7, the bank advanced and paid into the +exchequer the sum of L.400,000; making in all the sum of L.1,600,000, +which it had advanced upon its original annuity of L.96,000 interest, +and L.4,000 for expense of management. In 1708, therefore, the credit of +government was as good as that of private persons, since it could borrow +at six per cent. interest, the common legal and market rate of those +times. In pursuance of the same act, the bank cancelled exchequer bills +to the amount of L.1,775,027 17s. 10-1/2d. at six per cent. interest, +and was at the same time allowed to take in subscriptions for doubling +its capital. In 1708, therefore, the capital of the bank amounted +to L.4,402,343; and it had advanced to government the sum of +L.3,375,027 : 17 : 10-1/2. + +By a call of fifteen per cent. in 1709, there was paid in, and made +stock, L.656,204 : 1 : 9d.; and by another of ten per cent. in 1710, +L.501,448 : 12 : 11. In consequence of those two calls, therefore, the +bank capital amounted to L.5,559,995 : 14 : 8. + +In pursuance of the 3d George I. c. 8, the bank delivered up two +millions of exchequer bills to be cancelled. It had at this time, +therefore, advanced to government L.5,375,027 : 17 : 10d. In pursuance +of the 8th George I. c. 21, the bank purchased of the South-sea company, +stock to the amount of L.4,000,000; and in 1722, in consequence of the +subscriptions which it had taken in for enabling it to make this +purchase, its capital stock was increased by L.3,400,000. At this +time, therefore, the bank had advanced to the public L.9,375,027 17s. +10-1/2d.; and its capital stock amounted only to L.8,959,995 : 14 : 8. +It was upon this occasion that the sum which the bank had advanced to +the public, and for which it received interest, began first to exceed +its capital stock, or the sum for which it paid a dividend to the +proprietors of bank stock; or, in other words, that the bank began to +have an undivided capital, over and above its divided one. It has +continued to have an undivided capital of the same kind ever since. In +1746, the bank had, upon different occasions, advanced to the public +L.11,686,800, and its divided capital had been raised by different calls +and subscriptions to L.10,780,000. The state of those two sums has +continued to be the same ever since. In pursuance of the 4th of George +III. c. 25, the bank agreed to pay to government for the renewal of its +charter L.110,000, without interest or re-payment. This sum, therefore +did not increase either of these two other sums. + +The dividend of the bank has varied according to the variations in the +rate of the interest which it has, at different times, received for the +money it had advanced to the public, as well as according to other +circumstances. This rate of interest has gradually been reduced from +eight to three per cent. For some years past, the bank dividend has been +at five and a half per cent. + +The stability of the bank of England is equal to that of the British +government. All that it has advanced to the public must be lost before +its creditors can sustain any loss. No other banking company in England +can be established by act of parliament, or can consist of more than six +members. It acts, not only as an ordinary bank, but as a great engine of +state. It receives and pays the greater part of the annuities which are +due to the creditors of the public; it circulates exchequer bills; and +it advances to government the annual amount of the land and malt taxes, +which are frequently not paid up till some years thereafter. In these +different operations, its duty to the public may sometimes have obliged +it, without any fault of its directors, to overstock the circulation +with paper money. It likewise discounts merchants' bills, and has upon +several different occasions, supported the credit of the principal +houses, not only of England, but of Hamburgh and Holland. Upon one +occasion, in 1768, it is said to have advanced for this purpose, in one +week, about L.1,600,000, a great part of it in bullion. I do not, +however, pretend to warrant either the greatness of the sum, or the +shortness of the time. Upon other occasions, this great company has been +reduced to the necessity of paying in sixpences. + +It is not by augmenting the capital of the country, but by rendering a +greater part of that capital active and productive than would otherwise +be so, that the must judicious operations of banking can increase the +industry of the country. That part of his capital which a dealer is +obliged to keep by him unemployed and in ready money, for answering +occasional demands, is so much dead stock, which, so long as it remains +in this situation, produces nothing, either to him or to his country. +The judicious operations of banking enable him to convert this dead +stock into active and productive stock; into materials to work upon; +into tools to work with and into provisions and subsistence to work for; +into stock which produces something both to himself and to his country. +The gold and silver money which circulates in any country, and by means +of which, the produce of its land and labour is annually circulated and +distributed to the proper consumers, is, in the same manner as the ready +money of the dealer, all dead stock. It is a very valuable part of the +capital of the country, which produces nothing to the country. The +judicious operations of banking, by substituting paper in the room of a +great part of this gold and silver, enable the country to convert a +great part of this dead stock into active and productive stock; into +stock which produces something to the country. The gold and silver money +which circulates in any country may very properly be compared to a +highway, which, while it circulates and carries to market all the grass +and corn of the country, produces itself not a single pile of either. +The judicious operations of banking, by providing, if I may be allowed +so violent a metaphor, a sort of waggon-way through the air, enable the +country to convert, as it were, a great part of its highways into good +pastures, and corn fields, and thereby to increase, very considerably, +the annual produce of its land and labour. The commerce and industry of +the country, however, it must be acknowledged, though they may be +somewhat augmented, cannot be altogether so secure, when they are thus, +as it were, suspended upon the Dædalian wings of paper money, as when +they travel about upon the solid ground of gold and silver. Over and +above the accidents to which they are exposed from the unskilfulness of +the conductors of this paper money, they are liable to several others, +from which no prudence or skill of those conductors can guard them. + +An unsuccessful war, for example, in which the enemy got possession of +the capital, and consequently of that treasure which supported the +credit of the paper money, would occasion much greater confusion in a +country where the whole circulation was carried on by paper, than in one +where the greater part of it was carried on by gold and silver. The +usual instrument of commerce having lost its value, no exchanges could +be made but either by barter or upon credit. All taxes having been +usually paid in paper money, the prince would not have wherewithal +either to pay his troops, or to furnish his magazines; and the state of +the country would be much more irretrievable than if the greater part of +its circulation had consisted in gold and silver. A prince, anxious to +maintain his dominions at all times in the state in which he can most +easily defend them, ought upon this account to guard not only against +that excessive multiplication of paper money which ruins the very banks +which issue it, but even against that multiplication of it which enables +them to fill the greater part of the circulation of the country with it. + +The circulation of every country may be considered as divided into two +different branches; the circulation of the dealers with one another, and +the circulation between the dealers and the consumers. Though the same +pieces of money, whether paper or metal, may be employed sometimes in +the one circulation and sometimes in the other; yet as both are +constantly going on at the same time, each requires a certain stock of +money, of one kind or another, to carry it on. The value of the goods +circulated between the different dealers never can exceed the value of +those circulated between the dealers and the consumers; whatever is +bought by the dealers being ultimately destined to be sold to the +consumers. The circulation between the dealers, as it is carried on by +wholesale, requires generally a pretty large sum for every particular +transaction. That between the dealers and the consumers, on the +contrary, as it is generally carried on by retail, frequently requires +but very small ones, a shilling, or even a halfpenny, being often +sufficient. But small sums circulate much faster than large ones. A +shilling changes masters more frequently than a guinea, and a halfpenny +more frequently than a shilling. Though the annual purchases of all the +consumers, therefore, are at least equal in value to those of all the +dealers, they can generally be transacted with a much smaller quantity +of money; the same pieces, by a more rapid circulation, serving as the +instrument of many more purchases of the one kind than of the other. + +Paper money may be so regulated as either to confine itself very much to +the circulation between the different dealers, or to extend itself +likewise to a great part of that between the dealers and the consumers. +Where no bank notes are circulated under £10 value, as in London, paper +money confines itself very much to the circulation between the dealers. +When a ten pound bank note comes into the hands of a consumer, he is +generally obliged to change it at the first shop where he has occasion +to purchase five shillings worth of goods; so that it often returns into +the hands of a dealer before the consumer has spent the fortieth part of +the money. Where bank notes are issued for so small sums as 20s. as in +Scotland, paper money extends itself to considerable part of the +circulation between dealers and consumers. Before the act of parliament +which put a stop to the circulation of ten and five shilling notes, it +filled a still greater part of that circulation. In the currencies of +North America, paper was commonly issued for so small a sum as a +shilling, and filled almost the whole of that circulation. In some paper +currencies of Yorkshire, it was issued even for so small a sum as a +sixpence. + +Where the issuing of bank notes for such very small sums is allowed, and +commonly practised, many mean people are both enabled and encouraged to +become bankers. A person whose promissory note for £5, or even for 20s. +would be rejected by everybody, will get it to be received without +scruple when it is issued for so small a sum as a sixpence. But the +frequent bankruptcies to which such beggarly bankers must be liable, may +occasion a very considerable inconveniency, and sometimes even a very +great calamity, to many poor people who had received their notes in +payment. + +It were better, perhaps, that no bank notes were issued in any part of +the kingdom for a smaller sum than £5. Paper money would then, probably, +confine itself, in every part of the kingdom, to the circulation between +the different dealers, as much as it does at present in London, where no +bank notes are issued under L.10 value; L.5 being, in most part of the +kingdom, a sum which, though it will purchase, perhaps, little more than +half the quantity of goods, is as much considered, and is as seldom +spent all at once, as L.10 are amidst the profuse expense of London. + +Where paper money, it is to be observed, is pretty much confined to the +circulation between dealers and dealers, as at London, there is always +plenty of gold and silver. Where it extends itself to a considerable +part of the circulation between dealers and consumers, as in Scotland, +and still more in North America, it banishes gold and silver almost +entirely from the country; almost all the ordinary transactions of its +interior commerce being thus carried on by paper. The suppression of ten +and five shilling bank notes, somewhat relieved the scarcity of gold and +silver in Scotland; and the suppression of twenty shilling notes will +probably relieve it still more. Those metals are said to have become +more abundant in America, since the suppression or some of their paper +currencies. They are said, likewise, to have been more abundant before +the institution of those currencies. + +Though paper money should be pretty much confined to the circulation +between dealers and dealers, yet banks and bankers might still be able +to give nearly the same assistance to the industry and commerce of the +country, as they had done when paper money filled almost the whole +circulation. The ready money which a dealer is obliged to keep by him, +for answering occasional demands, is destined altogether for the +circulation between himself and other dealers of whom he buys goods. He +has no occasion to keep any by him for the circulation between himself +and the consumers, who are his customers, and who bring ready money to +him, instead of taking any from him. Though no paper money, therefore, +was allowed to be issued, but for such sums as would confine it pretty +much to the circulation between dealers and dealers; yet partly by +discounting real bills of exchange, and partly by lending upon +cash-accounts, banks and bankers might still be able to relieve the +greater part of those dealers from the necessity of keeping any +considerable part of their stock by them unemployed, and in ready money, +for answering occasional demands. They might still be able to give the +utmost assistance which banks and bankers can with propriety give to +traders of every kind. + +To restrain private people, it may be said, from receiving in payment +the promissory notes of a banker for any sum, whether great or small, +when they themselves are willing to receive them; or, to restrain a +banker from issuing such notes, when all his neighbours are willing to +accept of them, is a manifest violation of that natural liberty, which +it is the proper business of law not to infringe, but to support. Such +regulations may, no doubt, be considered as in some respect a violation +of natural liberty. But those exertions of the natural liberty of a few +individuals, which might endanger the security of the whole society, +are, and ought to be, restrained by the laws of all governments; of the +most free, as well as of the most despotical. The obligation of building +party walls, in order to prevent the communication of fire, is a +violation of natural liberty, exactly of the same kind with the +regulations of the banking trade which are here proposed. + +A paper money, consisting in bank notes, issued by people of undoubted +credit, payable upon demand, without any condition, and, in fact, always +readily paid as soon as presented, is, in every respect, equal in value +to gold and silver money, since gold and silver money can at any time be +had for it. Whatever is either bought or sold for such paper, must +necessarily be bought or sold as cheap as it could have been for gold +and silver. + +The increase of paper money, it has been said, by augmenting the +quantity, and consequently diminishing the value, of the whole currency, +necessarily augments the money price of commodities. But as the quantity +of gold and silver, which is taken from the currency, is always equal to +the quantity of paper which is added to it, paper money does not +necessarily increase the quantity of the whole currency. From the +beginning of the last century to the present time, provisions never were +cheaper in Scotland than in 1759, though, from the circulation of ten +and five shilling bank notes, there was then more paper money in the +country than at present. The proportion between the price of provisions +in Scotland and that in England is the same now as before the great +multiplication of banking companies in Scotland. Corn is, upon most +occasions, fully as cheap in England as in France, though there is a +great deal of paper money in England, and scarce any in France. In 1751 +and 1752, when Mr Hume published his Political Discourses, and soon +after the great multiplication of paper money in Scotland, there was a +very sensible rise in the price of provisions, owing, probably, to the +badness of the seasons, and not to the multiplication of paper money. + +It would be otherwise, indeed, with a paper money, consisting in +promissory notes, of which the immediate payment depended, in any +respect, either upon the good will of those who issued them, or upon a +condition which the holder of the notes might not always have it in his +power to fulfil, or of which the payment was not exigible till after a +certain number of years, and which, in the meantime, bore no interest. +Such a paper money would, no doubt, fall more or less below the value of +gold and silver, according as the difficulty or uncertainty of obtaining +immediate payment was supposed to be greater or less, or according to +the greater or less distance of time at which payment was exigible. + +Some years ago the different banking companies of Scotland were in the +practice of inserting into their bank notes, what they called an +optional clause; by which they promised payment to the bearer, either as +soon as the note should be presented, or, in the option of the +directors, six months after such presentment, together with the legal +interest for the said six months. The directors of some of those banks +sometimes took advantage of this optional clause, and sometimes +threatened those who demanded gold and silver in exchange for a +considerable number of their notes, that they would take advantage of +it, unless such demanders would content themselves with a part of what +they demanded. The promissory notes of those banking companies +constituted, at that time, the far greater part of the currency of +Scotland, which this uncertainty of payment necessarily degraded below +the value of gold and silver money. During the continuance of this abuse +(which prevailed chiefly in 1762, 1763, and 1764), while the exchange +between London and Carlisle was at par, that between London and Dumfries +would sometimes be four per cent. against Dumfries, though this town is +not thirty miles distant from Carlisle. But at Carlisle, bills were paid +in gold and silver; whereas at Dumfries they were paid in Scotch bank +notes; and the uncertainty of getting those bank notes exchanged for +gold and silver coin, had thus degraded them four per cent. below the +value of that coin. The same act of parliament which suppressed ten and +five shilling bank notes, suppressed likewise this optional clause, and +thereby restored the exchange between England and Scotland to its +natural rate, or to what the course of trade and remittances might +happen to make it. + +In the paper currencies of Yorkshire, the payment of so small a sum as +6d. sometimes depended upon the condition, that the holder of the note +should bring the change of a guinea to the person who issued it; a +condition which the holders of such notes might frequently find it very +difficult to fulfil, and which must have degraded this currency below +the value of gold and silver money. An act of parliament, accordingly, +declared all such clauses unlawful, and suppressed, in the same manner +as in Scotland, all promissory notes, payable to the bearer, under 20s. +value. + +The paper currencies of North America consisted, not in bank notes +payable to the bearer on demand, but in a government paper, of which the +payment was not exigible till several years after it was issued; and +though the colony governments paid no interest to the holders of this +paper, they declared it to be, and in fact rendered it, a legal tender +of payment for the full value for which it was issued. But allowing the +colony security to be perfectly good, L.100, payable fifteen years +hence, for example, in a country where interest is at six per cent., is +worth little more than L.40 ready money. To oblige a creditor, +therefore, to accept of this as full payment for a debt of L.100, +actually paid down in ready money, was an act of such violent injustice, +as has scarce, perhaps, been attempted by the government of any other +country which pretended to be free. It bears the evident marks of having +originally been, what the honest and downright Doctor Douglas assures us +it was, a scheme of fraudulent debtors to cheat their creditors. The +government of Pennsylvania, indeed, pretended, upon their first emission +of paper money, in 1722, to render their paper of equal value with gold +and silver, by enacting penalties against all those who made any +difference in the price of their goods when they sold them for a colony +paper, and when they sold them for gold and silver; a regulation equally +tyrannical, but much less effectual, than that which it was meant to +support. A positive law may render a shilling a legal tender for a +guinea, because it may direct the courts of justice to discharge the +debtor who has made that tender; but no positive law can oblige a person +who sells goods, and who is at liberty to sell or not to sell as he +pleases, to accept of a shilling as equivalent to a guinea in the price +of them. Notwithstanding any regulation of this kind, it appeared, by +the course of exchange with Great Britain, that L.100 sterling was +occasionally considered an equivalent, in some of the colonies, to +L.130, and in others to so great a sum as L.1100 currency; this +difference in the value arising from the difference in the quantity of +paper emitted in the different colonies, and in the distance and +probability of the term of its final discharge and redemption. + +No law, therefore, could be more equitable than the act of parliament, +so unjustly complained of in the colonies, which declared, that no paper +currency to be emitted there in time coming, should be a legal tender of +payment. + +Pennsylvania was always more moderate in its emissions of paper money +than any other of our colonies. Its paper currency, accordingly, is said +never to have sunk below the value of the gold and silver which was +current in the colony before the first emission of its paper money. +Before that emission, the colony had raised the denomination of its +coin, and had, by act of assembly, ordered 5s. sterling to pass in the +colonies for 6s. 3d., and afterwards for 6s. 8d. A pound, colony +currency, therefore, even when that currency was gold and silver, was +more than thirty per cent. below the value of L.1 sterling; and when +that currency was turned into paper, it was seldom much more than thirty +per cent. below that value. The pretence for raising the denomination of +the coin was to prevent the exportation of gold and silver, by making +equal quantities of those metals pass for greater sums in the colony +than they did in the mother country. It was found, however, that the +price of all goods from the mother country rose exactly in proportion as +they raised the denomination of their coin, so that their gold and +silver were exported as fast as ever. + +The paper of each colony being received in the payment of the provincial +taxes, for the full value for which it had been issued, it necessarily +derived from this use some additional value, over and above what it +would have had, from the real or supposed distance of the term of its +final discharge and redemption. This additional value was greater or +less, according as the quantity of paper issued was more or less above +what could be employed in the payment of the taxes of the particular +colony which issued it. It was in all the colonies very much above what +could be employed in this manner. + +A prince, who should enact that a certain proportion of his taxes should +be paid in a paper money of a certain kind, might thereby give a certain +value to this paper money, even though the term of its final discharge +and redemption should depend altogether upon the will of the prince. If +the bank which issued this paper was careful to keep the quantity of it +always somewhat below what could easily be employed in this manner, the +demand for it might be such as to make it even bear a premium, or sell +for somewhat more in the market than the quantity of gold or silver +currency for which it was issued. Some people account in this manner for +what is called the agio of the bank of Amsterdam, or for the superiority +of bank money over current money, though this bank money, as they +pretend, cannot be taken out of the bank at the will of the owner. The +greater part of foreign bills of exchange must be paid in bank money, +that is, by a transfer in the books of the bank, and the directors of +the bank, they allege, are careful to keep the whole quantity of bank +money always below what this use occasions a demand for. It is upon this +account, they say, the bank money sells for a premium, or bears an agio +of four or five per cent. above the same nominal sum of the gold and +silver currency of the country. This account of the bank of Amsterdam, +however, it will appear hereafter, is in a great measure chimerical. + +A paper currency which falls below the value of gold and silver coin, +does not thereby sink the value of those metals, or occasion equal +quantities of them to exchange for a smaller quantity of goods of any +other kind. The proportion between the value of gold and silver and that +of goods of any other kind, depends in all cases, not upon the nature +and quantity of any particular paper money, which may be current in any +particular country, but upon the richness or poverty of the mines, which +happen at any particular time to supply the great market of the +commercial world with those metals. It depends upon the proportion +between the quantity of labour which is necessary in order to bring a +certain quantity of gold and silver to market, and that which is +necessary in order to bring thither a certain quantity of any other sort +of goods. + +If bankers are restrained from issuing any circulating bank notes, or +notes payable to the bearer, for less than a certain sum; and if they +are subjected to the obligation of an immediate and unconditional +payment of such bank notes as soon as presented, their trade may, with +safety to the public, be rendered in all other respects perfectly free. +The late multiplication of banking companies in both parts of the united +kingdom, an event by which many people have been much alarmed, instead +of diminishing, increases the security of the public. It obliges all of +them to be more circumspect in their conduct, and, by not extending +their currency beyond its due proportion to their cash, to guard +themselves against those malicious runs, which the rivalship of so many +competitors is always ready to bring upon them. It restrains the +circulation of each particular company within a narrower circle, and +reduces their circulating notes to a smaller number. By dividing the +whole circulation into a greater number of parts, the failure of any one +company, an accident which, in the course of things, must sometimes +happen, becomes of less consequence to the public. This free +competition, too, obliges all bankers to be more liberal in their +dealings with their customers, lest their rivals should carry them away. +In general, if any branch of trade, or any division of labour, be +advantageous to the public, the freer and more general the competition, +it will always be the more so. + + + + +CHAP. III. + +OF THE ACCUMULATION OF CAPITAL, OR OF PRODUCTIVE AND UNPRODUCTIVE +LABOUR. + + +There is one sort of labour which adds to the value of the subject upon +which it is bestowed; there is another which has no such effect. The +former as it produces a value, may be called productive, the latter, +unproductive[30] labour. Thus the labour of a manufacturer adds +generally to the value of the materials which he works upon, that of his +own maintenance, and of his master's profit. The labour of a menial +servant, on the contrary, adds to the value of nothing. Though the +manufacturer has his wages advanced to him by his master, he in reality +costs him no expense, the value of those wages being generally restored, +together with a profit, in the improved value of the subject upon which +his labour is bestowed. But the maintenance of a menial servant never is +restored. A man grows rich by employing a multitude of manufacturers; he +grows poor by maintaining a multitude of menial servants. The labour of +the latter, however, has its value, and deserves its reward as well as +that of the former. But the labour of the manufacturer fixes and +realizes itself in some particular subject or vendible commodity, which +lasts for some time at least after that labour is past. It is, as it +were, a certain quantity of labour stocked and stored up, to be +employed, if necessary, upon some other occasion. That subject, or, what +is the same thing, the price of that subject, can afterwards, if +necessary, put into motion a quantity of labour equal to that which had +originally produced it. The labour of the menial servant, on the +contrary, does not fix or realize itself in any particular subject or +vendible commodity. His services generally perish in the very instant of +their performance, and seldom leave any trace of value behind them, for +which an equal quantity of service could afterwards be procured. + +The labour of some of the most respectable orders in the society is, +like that of menial servants, unproductive of any value, and does not +fix or realize itself in any permanent subject, or vendible commodity, +which endures after that labour is past, and for which an equal quantity +of labour could afterwards be procured. The sovereign, for example, with +all the officers both of justice and war who serve under him, the whole +army and navy, are unproductive labourers. They are the servants of the +public, and are maintained by a part of the annual produce of the +industry of other people. Their service, how honourable, how useful, or +how necessary soever, produces nothing for which an equal quantity of +service can afterwards be procured. The protection, security, and +defence, of the commonwealth, the effect of their labour this year, will +not purchase its protection, security, and defence, for the year to +come. In the same class must be ranked, some both of the gravest and +most important, and some of the most frivolous professions; churchmen, +lawyers, physicians, men of letters of all kinds; players, buffoons, +musicians, opera-singers, opera-dancers, &c. The labour of the meanest +of these has a certain value, regulated by the very same principles +which regulate that of every other sort of labour; and that of the +noblest and most useful produces nothing which could afterwards purchase +or procure an equal quantity of labour. Like the declamation of the +actor, the harangue of the orator, or the tune of the musician, the work +of all of them perishes in the very instant of its production. + +Both productive and unproductive labourers, and those who do not labour +at all, are all equally maintained by the annual produce of the land and +labour of the country. This produce, how great soever, can never be +infinite, but must have certain limits. According, therefore, as a +smaller or greater proportion of it is in any one year employed in +maintaining unproductive hands, the more in the one case, and the less +in the other, will remain for the productive, and the next year's +produce will be greater or smaller accordingly; the whole annual +produce, if we except the spontaneous productions of the earth, being +the effect of productive labour. + +Though the whole annual produce of the land and labour of every country +is no doubt ultimately destined for supplying the consumption of its +inhabitants, and for procuring a revenue to them; yet when it first +comes either from the ground, or from the hands of the productive +labourers, it naturally divides itself into two parts. One of them, and +frequently the largest, is, in the first place, destined for replacing a +capital, or for renewing the provisions, materials, and finished work, +which had been withdrawn from a capital; the other for constituting a +revenue either to the owner of this capital, as the profit of his stock, +or to some other person, as the rent of his land. Thus, of the produce +of land, one part replaces the capital of the farmer; the other pays his +profit and the rent of the landlord; and thus constitutes a revenue both +to the owner of this capital, as the profits of his stock, and to some +other person as the rent of his land. Of the produce of a great +manufactory, in the same manner, one part, and that always the largest, +replaces the capital of the undertaker of the work; the other pays his +profit, and thus constitutes a revenue to the owner of this capital. + +That part of the annual produce of the land and labour of any country +which replaces a capital, never is immediately employed to maintain any +but productive hands. It pays the wages of productive labour only. That +which is immediately destined for constituting a revenue, either as +profit or as rent, may maintain indifferently either productive or +unproductive hands. + +Whatever part of his stock a man employs as a capital, he always expects +it to be replaced to him with a profit. He employs it, therefore, in +maintaining productive hands only; and after having served in the +function of a capital to him, it constitutes a revenue to them. Whenever +he employs any part of it in maintaining unproductive hands of any kind, +that part is from that moment withdrawn from his capital, and placed in +his stock reserved for immediate consumption. + +Unproductive labourers, and those who do not labour at all, are all +maintained by revenue; either, first, by that part of the annual produce +which is originally destined for constituting a revenue to some +particular persons, either as the rent of land, or as the profits of +stock; or, secondly, by that part which, though originally destined for +replacing a capital, and for maintaining productive labourers only, yet +when it comes into their hands, whatever part of it is over and above +their necessary subsistence, may be employed in maintaining +indifferently either productive or unproductive hands. Thus, not only +the great landlord or the rich merchant, but even the common workman, if +his wages are considerable, may maintain a menial servant; or he may +sometimes go to a play or a puppet-show, and so contribute his share +towards maintaining one set of unproductive labourers; or he may pay +some taxes, and thus help to maintain another set, more honourable and +useful, indeed, but equally unproductive. No part of the annual produce, +however, which had been originally destined to replace a capital, is +ever directed towards maintaining unproductive hands, till after it has +put into motion its full complement of productive labour, or all that it +could put into motion in the way in which it was employed. The workman +must have earned his wages by work done, before he can employ any part +of them in this manner. That part, too, is generally but a small one. +It is his spare revenue only, of which productive labourers have seldom +a great deal. They generally have some, however; and in the payment of +taxes, the greatness of their number may compensate, in some measure, +the smallness of their contribution. The rent of land and the profits of +stock are everywhere, therefore, the principal sources from which +unproductive hands derive their subsistence. These are the two sorts of +revenue of which the owners have generally most to spare. They might +both maintain indifferently, either productive or unproductive hands. +They seem, however, to have some predilection for the latter. The +expense of a great lord feeds generally more idle than industrious +people. The rich merchant, though with his capital he maintains +industrious people only, yet by his expense, that is, by the employment +of his revenue, he feeds commonly the very same sort as the great lord. + +The proportion, therefore, between the productive and unproductive +hands, depends very much in every country upon the proportion between +that part of the annual produce, which, as soon as it comes either from +the ground, or from the hands of the productive labourers, is destined +for replacing a capital, and that which is destined for constituting a +revenue, either as rent or as profit. This proportion is very different +in rich from what it is in poor countries. + +Thus, at present, in the opulent countries of Europe, every large, +frequently the largest, portion of the produce of the land, is destined +for replacing the capital of the rich and independent farmer; the other +for paying his profits, and the rent of the landlord. But anciently, +during the prevalency of the feudal government, a very small portion of +the produce was sufficient to replace the capital employed in +cultivation. It consisted commonly in a few wretched cattle, maintained +altogether by the spontaneous produce of uncultivated land, and which +might, therefore, be considered as a part of that spontaneous produce. +It generally, too, belonged to the landlord, and was by him advanced to +the occupiers of the land. All the rest of the produce properly belonged +to him too, either as rent for his land, or as profit upon this paltry +capital. The occupiers of land were generally bondmen, whose persons and +effects were equally his property. Those who were not bondmen were +tenants at will; and though the rent which they paid was often nominally +little more than a quit-rent, it really amounted to the whole produce of +the land. Their lord could at all times command their labour in peace +and their service in war. Though they lived at a distance from his +house, they were equally dependent upon him as his retainers who lived +in it. But the whole produce of the land undoubtedly belongs to him, who +can dispose of the labour and service of all those whom it maintains. In +the present state of Europe, the share of the landlord seldom exceeds a +third, sometimes not a fourth part of the whole produce of the land. The +rent of land, however, in all the improved parts of the country, has +been tripled and quadrupled since those ancient times; and this third or +fourth part of the annual produce is, it seems, three or four times +greater than the whole had been before. In the progress of improvement, +rent, though it increases in proportion to the extent, diminishes in +proportion to the produce of the land. + +In the opulent countries of Europe, great capitals are at present +employed in trade and manufactures. In the ancient state, the little +trade that was stirring, and the few homely and coarse manufactures that +were carried on, required but very small capitals. These, however, must +have yielded very large profits. The rate of interest was nowhere less +than ten per cent. and their profits must have been sufficient to afford +this great interest. At present, the rate of interest, in the improved +parts of Europe, is nowhere higher than six per cent.; and in some of +the most improved, it is so low as four, three, and two per cent. Though +that part of the revenue of the inhabitants which is derived from the +profits of stock, is always much greater in rich than in poor countries, +it is because the stock is much greater; in proportion to the stock, the +profits are generally much less. + +That part of the annual produce, therefore, which, as soon as it comes +either from the ground, or from the hands of the productive labourers, +is destined for replacing a capital, is not only much greater in rich +than in poor countries, but bears a much greater proportion to that +which is immediately destined for constituting a revenue either as rent +or as profit. The funds destined for the maintenance of productive +labour are not only much greater in the former than in the latter, but +bear a much greater proportion to those which, though they may be +employed to maintain either productive or unproductive hands, have +generally a predilection for the latter. + +The proportion between those different funds necessarily determines in +every country the general character of the inhabitants as to industry or +idleness. We are more industrious than our forefathers, because, in the +present times, the funds destined for the maintenance of industry are +much greater in proportion to those which are likely to be employed in +the maintenance of idleness, than they were two or three centuries ago. +Our ancestors were idle for want of a sufficient encouragement to +industry. It is better, says the proverb, to play for nothing, than to +work for nothing. In mercantile and manufacturing towns, where the +inferior ranks of people are chiefly maintained by the employment of +capital, they are in general industrious, sober, and thriving; as in +many English, and in most Dutch towns. In those towns which are +principally supported by the constant or occasional residence of a +court, and in which the inferior ranks of people are chiefly maintained +by the spending of revenue, they are in general idle, dissolute, and +poor; as at Rome, Versailles, Compeigne, and Fontainbleau. If you except +Rouen and Bourdeaux, there is little trade or industry in any of the +parliament towns of France; and the inferior ranks of people, being +chiefly maintained by the expense of the members of the courts of +justice, and of those who come to plead before them, are in general idle +and poor. The great trade of Rouen and Bourdeaux seems to be altogether +the effect of their situation. Rouen is necessarily the entrepot of +almost all the goods which are brought either from foreign countries, or +from the maritime provinces of France, for the consumption of the great +city of Paris. Bourdeaux is, in the same manner, the entrepot of the +wines which grow upon the banks of the Garronne, and of the rivers which +run into it, one of the richest wine countries in the world, and which +seems to produce the wine fittest for exportation, or best suited to the +taste of foreign nations. Such advantageous situations necessarily +attract a great capital by the great employment which they afford it; +and the employment of this capital is the cause of the industry of those +two cities. In the other parliament towns of France, very little more +capital seems to be employed than what is necessary for supplying their +own consumption; that is, little more than the smallest capital which +can be employed in them. The same thing may be said of Paris, Madrid, +and Vienna. Of those three cities, Paris is by far the most industrious, +but Paris itself is the principal market of all the manufactures +established at Paris, and its own consumption is the principal object of +all the trade which it carries on. London, Lisbon, and Copenhagen, are, +perhaps, the only three cities in Europe, which are both the constant +residence of a court, and can at the same time be considered as trading +cities, or as cities which trade not only for their own consumption, but +for that of other cities and countries. The situation of all the three +is extremely advantageous, and naturally fits them to be the entrepots +of a great part of the goods destined for the consumption of distant +places. In a city where a great revenue is spent, to employ with +advantage a capital for any other purpose than for supplying the +consumption of that city, is probably more difficult than in one in +which the inferior ranks of people have no other maintenance but what +they derive from the employment of such a capital. The idleness of the +greater part of the people who are maintained by the expense of revenue, +corrupts, it is probable, the industry of those who ought to be +maintained by the employment of capital, and renders it less +advantageous to employ a capital there than in other places. There was +little trade or industry in Edinburgh before the Union. When the Scotch +parliament was no longer to be assembled in it, when it ceased to be the +necessary residence of the principal nobility and gentry of Scotland, it +became a city of some trade and industry. It still continues, however, +to be the residence of the principal courts of justice in Scotland, of +the boards of customs and excise, &c. A considerable revenue, therefore, +still continues to be spent in it. In trade and industry, it is much +inferior to Glasgow, of which the inhabitants are chiefly maintained by +the employment of capital. The inhabitants of a large village, it has +sometimes been observed, after having made considerable progress in +manufactures, have become idle and poor, in consequence of a great +lord's having taken up his residence in their neighbourhood. + +The proportion between capital and revenue, therefore, seems everywhere +to regulate the proportion between industry and idleness. Wherever +capital predominates, industry prevails; wherever revenue, idleness. +Every increase or diminution of capital, therefore, naturally tends to +increase or diminish the real quantity of industry, the number of +productive hands, and consequently the exchangeable value of the annual +produce of the land and labour of the country, the real wealth and +revenue of all its inhabitants. + +Capitals are increased by parsimony, and diminished by prodigality and +misconduct. + +Whatever a person saves from his revenue he adds to his capital, and +either employs it himself in maintaining an additional number of +productive hands, or enables some other person to do so, by lending it +to him for an interest, that is, for a share of the profits. As the +capital of an individual can be increased only by what he saves from his +annual revenue or his annual gains, so the capital of a society, which +is the same with that of all the individuals who compose it, can be +increased only in the same manner. + +Parsimony, and not industry, is the immediate cause of the increase of +capital. Industry, indeed, provides the subject which parsimony +accumulates; but whatever industry might acquire, if parsimony did not +save and store up, the capital would never be the greater. + +Parsimony, by increasing the fund which is destined for the maintenance +of productive hands, tends to increase the number of those hands whose +labour adds to the value of the subject upon which it is bestowed. It +tends, therefore, to increase the exchangeable value of the annual +produce of the land and labour of the country. It puts into motion an +additional quantity of industry, which gives an additional value to the +annual produce. + +What is annually saved, is as regularly consumed as what is annually +spent, and nearly in the same time too; but it is consumed by a +different set of people. That portion of his revenue which a rich man +annually spends, is, in most cases, consumed by idle guests and menial +servants, who leave nothing behind them in return for their consumption. +That portion which he annually saves, as, for the sake of the profit, it +is immediately employed as a capital, is consumed in the same manner, +and nearly in the same time too, but by a different set of people: by +labourers, manufacturers, and artificers, who re-produce, with a profit, +the value of their annual consumption. His revenue, we shall suppose, is +paid him in money. Had he spent the whole, the food, clothing, and +lodging, which the whole could have purchased, would have been +distributed among the former set of people. By saving a part of it, as +that part is, for the sake of the profit, immediately employed as a +capital, either by himself or by some other person, the food, clothing, +and lodging, which may be purchased with it, are necessarily reserved +for the latter. The consumption is the same, but the consumers are +different. + +By what a frugal man annually saves, he not only affords maintenance to +an additional number of productive hands, for that of the ensuing year, +but like the founder of a public work-house he establishes, as it were, +a perpetual fund for the maintenance of an equal number in all times to +come. The perpetual allotment and destination of this fund, indeed, is +not always guarded by any positive law, by any trust-right or deed of +mortmain. It is always guarded, however, by a very powerful principle, +the plain and evident interest of every individual to whom any share of +it shall ever belong. No part of it can ever afterwards be employed to +maintain any but productive hands, without an evident loss to the person +who thus perverts it from its proper destination. + +The prodigal perverts it in this manner: By not confining his expense +within his income, he encroaches upon his capital. Like him who perverts +the revenues of some pious foundation to profane purposes, he pays the +wages of idleness with those funds which the frugality of his +forefathers had, as it were, consecrated to the maintenance of industry. +By diminishing the funds destined for the employment of productive +labour, he necessarily diminishes, so far as it depends upon him, the +quantity of that labour which adds a value to the subject upon which it +is bestowed, and, consequently, the value of the annual produce of the +land and labour of the whole country, the real wealth and revenue of its +inhabitants. If the prodigality of some was not compensated by the +frugality of others, the conduct of every prodigal, by feeding the idle +with the bread of the industrious, tends not only to beggar himself, but +to impoverish his country. + +Though the expense of the prodigal should be altogether in home made, +and no part of it in foreign commodities, its effect upon the productive +funds of the society would still be the same. Every year there would +still be a certain quantity of food and clothing, which ought to have +maintained productive, employed in maintaining unproductive hands. Every +year, therefore, there would still be some diminution in what would +otherwise have been the value of the annual produce of the land and +labour of the country. + +This expense, it may be said, indeed, not being in foreign goods, and +not occasioning any exportation of gold and silver, the same quantity of +money would remain in the country as before. But if the quantity of food +and clothing, which were thus consumed by unproductive, had been +distributed among productive hands, they would have reproduced, together +with a profit, the full value of their consumption. The same quantity of +money would, in this case, equally have remained in the country, and +there would, besides, have been a reproduction of an equal value of +consumable goods. There would have been two values instead of one. + +The same quantity of money, besides, cannot long remain in any country +in which the value of the annual produce diminishes. The sole use of +money is to circulate consumable goods. By means of it, provisions, +materials, and finished work, are bought and sold, and distributed to +their proper consumers. The quantity of money, therefore, which can be +annually employed in any country, must be determined by the value of the +consumable goods annually circulated within it. These must consist, +either in the immediate produce of the land and labour of the country +itself, or in something which had been purchased with some part of that +produce. Their value, therefore, must diminish as the value of that +produce diminishes, and along with it the quantity of money which can be +employed in circulating them. But the money which, by this annual +diminution of produce, is annually thrown out of domestic circulation, +will not be allowed to lie idle. The interest of whoever possesses it +requires that it should be employed; but having no employment at home, +it will, in spite of all laws and prohibitions, be sent abroad, and +employed in purchasing consumable goods, which may be of some use at +home. Its annual exportation will, in this manner, continue for some +time to add something to the annual consumption of the country beyond +the value of its own annual produce. What in the days of its prosperity +had been saved from that annual produce, and employed in purchasing gold +and silver will contribute, for some little time, to support its +consumption in adversity. The exportation of gold and silver is, in this +case, not the cause, but the effect of its declension, and may even, for +some little time, alleviate the misery of that declension. + +The quantity of money, on the contrary, must in every country naturally +increase as the value of the annual produce increases. The value of the +consumable goods annually circulated within the society being greater, +will require a greater quantity of money to circulate them. A part of +the increased produce, therefore, will naturally be employed in +purchasing, wherever it is to be had, the additional quantity of gold +and silver necessary for circulating the rest. The increase of those +metals will, in this case, be the effect, not the cause, of the public +prosperity. Gold and silver are purchased everywhere in the same manner. +The food, clothing, and lodging, the revenue and maintenance, of all +those whose labour or stock is employed in bringing them from the mine +to the market, is the price paid for them in Peru as well as in England. +The country which has this price to pay, will never be long without the +quantity of those metals which it has occasion for; and no country will +ever long retain a quantity which it has no occasion for. + +Whatever, therefore, we may imagine the real wealth and revenue of a +country to consist in, whether in the value of the annual produce of its +land and labour, as plain reason seems to dictate, or in the quantity of +the precious metals which circulate within it, as vulgar prejudices +suppose; in either view of the matter, every prodigal appears to be a +public enemy, and every frugal man a public benefactor. + +The effects of misconduct are often the same as those of prodigality. +Every injudicious and unsuccessful project in agriculture, mines, +fisheries, trade, or manufactures, tends in the same manner to diminish +the funds destined for the maintenance of productive labour. In every +such project, though the capital is consumed by productive hands only, +yet as, by the injudicious manner in which they are employed, they do +not reproduce the full value of their consumption, there must always be +some diminution in what would otherwise have been the productive funds +of the society. + +It can seldom happen, indeed, that the circumstances of a great nation +can be much affected either by the prodigality or misconduct of +individuals; the profusion or imprudence of some being always more than +compensated by the frugality and good conduct of others. + +With regard to profusion, the principle which prompts to expense is the +passion for present enjoyment; which, though sometimes violent and very +difficult to be restrained, is in general only momentary occasional. But +the principle which prompts to save, is the desire of bettering our +condition; a desire which, though generally calm and dispassionate, +comes with us from the womb, and never leaves us till we go into the +grave. In the whole interval which separates those two moments, there is +scarce, perhaps, a single instance, in which any man is so perfectly and +completely satisfied with his situation, as to be without any wish of +alteration or improvement of any kind. An augmentation of fortune is the +means by which the greater part of men propose and wish to better their +condition. It is the means the most vulgar and the most obvious; and the +most likely way of augmenting their fortune, is to save and accumulate +some part of what they acquire, either regularly and annually, or upon +some extraordinary occasion. Though the principle of expense, therefore, +prevails in almost all men upon some occasions, and in some men upon +almost all occasions; yet in the greater part of men, taking the whole +course of their life at an average, the principle of frugality seems not +only to predominate, but to predominate very greatly. + +With regard to misconduct, the number of prudent and successful +undertakings is everywhere much greater than that of injudicious and +unsuccessful ones. After all our complaints of the frequency of +bankruptcies, the unhappy men who fall into this misfortune, make but a +very small part of the whole number engaged in trade, and all other +sorts of business; not much more, perhaps, than one in a thousand. +Bankruptcy is, perhaps, the greatest and most humiliating calamity which +can befal an innocent man. The greater part of men, therefore, are +sufficiently careful to avoid it. Some, indeed, do not avoid it; as some +do not avoid the gallows. + +Great nations are never impoverished by private, though they sometimes +are by public prodigality and misconduct. The whole, or almost the whole +public revenue is, in most countries, employed in maintaining +unproductive hands. Such are the people who compose a numerous and +splendid court, a great ecclesiastical establishment, great fleets and +armies, who in time of peace produce nothing, and in time of war acquire +nothing which can compensate the expense of maintaining them, even while +the war lasts. Such people, as they themselves produce nothing, are all +maintained by the produce of other men's labour. When multiplied, +therefore, to an unnecessary number, they may in a particular year +consume so great a share of this produce, as not to leave a sufficiency +for maintaining the productive labourers, who should reproduce it next +year. The next year's produce, therefore, will be less than that of the +foregoing; and if the same disorder should continue, that of the third +year will be still less than that of the second. Those unproductive +hands who should be maintained by a part only of the spare revenue of +the people, may consume so great a share of their whole revenue, and +thereby oblige so great a number to encroach upon their capitals, upon +the funds destined for the maintenance of productive labour, that all +the frugality and good conduct of individuals may not be able to +compensate the waste and degradation of produce occasioned by this +violent and forced encroachment. + +This frugality and good conduct, however, is upon most occasions, it +appears from experience, sufficient to compensate, not only the private +prodigality and misconduct of individuals, but the public extravagance +of government. The uniform, constant, and uninterrupted effort of every +man to better his condition, the principle from which public and +national, as well as private opulence is originally derived, is +frequently powerful enough to maintain the natural progress of things +towards improvement, in spite both of the extravagance of government, +and of the greatest errors of administration. Like the unknown principle +of animal life, it frequently restores health and vigour to the +constitution, in spite not only of the disease, but of the absurd +prescriptions of the doctor. + +The annual produce of the land and labour of any nation can be +increasing in its value by no other means, but by increasing either the +number of its productive labourers, or the productive powers of those +labourers who had before been employed. The number of its productive +labourers, it is evident, can never be much increased, but in +consequence of an increase of capital, or of the funds destined for +maintaining them. The productive powers of the same number of labourers +cannot be increased, but in consequence either of some addition and +improvement to those machines and instruments which facilitate and +abridge labour, or of more proper division and distribution of +employment. In either case, an additional capital is almost always +required. It is by means of an additional capital only, that the +undertaker of any work can either provide his workmen with better +machinery, or make a more proper distribution of employment among them. +When the work to be done consists of a number of parts, to keep every +man constantly employed in one way, requires a much greater capital than +where every man is occasionally employed in every different part of the +work. When we compare, therefore, the state of a nation at two different +periods, and find that the annual produce of its land and labour is +evidently greater at the latter than at the former, that its lands are +better cultivated, its manufactures more numerous and more flourishing, +and its trade more extensive; we may be assured that its capital must +have increased during the interval between those two periods, and that +more must have been added to it by the good conduct of some, than had +been taken from it either by the private misconduct of others, or by the +public extravagance of government. But we shall find this to have been +the case of almost all nations, in all tolerably quiet and peaceable +times, even of those who have not enjoyed the most prudent and +parsimonious governments. To form a right judgment of it, indeed, we +must compare the state of the country at periods somewhat distant from +one another. The progress is frequently so gradual, that, at near +periods, the improvement is not only not sensible, but, from the +declension either of certain branches of industry, or of certain +districts of the country, things which sometimes happen, though the +country in general is in great prosperity, there frequently arises a +suspicion, that the riches and industry of the whole are decaying. + +The annual produce of the land and labour of England, for example, is +certainly much greater than it was a little more than a century ago, at +the restoration of Charles II. Though at present few people, I believe, +doubt of this, yet during this period five years have seldom passed +away, in which some book or pamphlet has not been published, written, +too, with such abilities as to gain some authority with the public, and +pretending to demonstrate that the wealth of the nation was fast +declining; that the country was depopulated, agriculture neglected, +manufactures decaying, and trade undone. Nor have these publications +been all party pamphlets, the wretched offspring of falsehood and +venality. Many of them have been written by very candid and very +intelligent people, who wrote nothing but what they believed, and for no +other reason but because they believed it. + +The annual produce of the land and labour of England, again, was +certainly much greater at the Restoration than we can suppose it to have +been about a hundred years before, at the accession of Elizabeth. At +this period, too, we have all reason to believe, the country was much +more advanced in improvement, than it had been about a century before, +towards the close of the dissensions between the houses of York and +Lancaster. Even then it was, probably, in a better condition than it had +been at the Norman conquest: and at the Norman conquest, than during the +confusion of the Saxon heptarchy. Even at this early period, it was +certainly a more improved country than at the invasion of Julius Cæsar, +when its inhabitants were nearly in the same state with the savages in +North America. + +In each of those periods, however, there was not only much private and +public profusion, many expensive and unnecessary wars, great perversion +of the annual produce from maintaining productive to maintain +unproductive hands; but sometimes, in the confusion of civil discord, +such absolute waste and destruction of stock, as might he supposed, not +only to retard, as it certainly did, the natural accumulation of +riches, but to have left the country, at the end of the period, poorer +than at the beginning, Thus, in the happiest and most fortunate period +of them all, that which has passed since the Restoration, how many +disorders and misfortunes have occurred, which, could they have been +foreseen, not only the impoverishment, but the total ruin of the country +would have been expected from them? The fire and the plague of London, +the two Dutch wars, the disorders of the revolution, the war in Ireland, +the four expensive French wars of 1688, 1701, 1742, and 1756, together +with the two rebellions of 1715 and 1745. In the course of the four +French wars, the nation has contracted more than L.145,000,000 of debt, +over and above all the other extraordinary annual expense which they +occasioned; so that the whole cannot be computed at less than +L.200,000,000. So great a share of the annual produce of the land and +labour of the country, has, since the Revolution, been employed upon +different occasions, in maintaining an extraordinary number of +unproductive hands. But had not those wars given this particular +direction to so large a capital, the greater part of it would naturally +have been employed in maintaining productive hands, whose labour would +have replaced, with a profit, the whole value of their consumption. The +value of the annual produce of the land and labour of the country would +have been considerably increased by it every year, and every year's +increase would have augmented still more that of the following year. +More houses would have been built, more lands would have been improved, +and those which had been improved before would have been better +cultivated; more manufactures would have been established, and those +which had been established before would have been more extended; and to +what height the real wealth and revenue of the country might by this +time have been raised, it is not perhaps very easy even to imagine. + +But though the profusion of government must undoubtedly have retarded +the natural progress of England towards wealth and improvement, it has +not been able to stop it. The annual produce of its land and labour is +undoubtedly much greater at present than it was either at the +Restoration or at the Revolution. The capital, therefore, annually +employed in cultivating this land, and in maintaining this labour, must +likewise be much greater. In the midst of all the exactions of +government, this capital has been silently and gradually accumulated by +the private frugality and good conduct of individuals, by their +universal, continual, and uninterrupted effort to better their own +condition. It is this effort, protected by law, and allowed by liberty +to exert itself in the manner that is most advantageous, which has +maintained the progress of England towards opulence and improvement in +almost all former times, and which, it is to be hoped, will do so in all +future times. England, however, as it has never been blessed with a very +parsimonious government, so parsimony has at no time been the +characteristic virtue of its inhabitants. It is the highest impertinence +and presumption, therefore, in kings and ministers to pretend to watch +over the economy of private people, and to restrain their expense, +either by sumptuary laws, or by prohibiting the importation of foreign +luxuries. They are themselves always, and without any exception, the +greatest spendthrifts in the society. Let them look well after their own +expense, and they may safely trust private people with theirs. If their +own extravagance does not ruin the state, that of the subject never +will. + +As frugality increases, and prodigality diminishes, the public capital, +so the conduct of those whose expense just equals their revenue, without +either accumulating or encroaching, neither increases nor diminishes it. +Some modes of expense, however, seem to contribute more to the growth of +public opulence than others. + +The revenue of an individual may be spent, either in things which are +consumed immediately, and in which one day's expense can neither +alleviate nor support that of another; or it may be spent in things more +durable, which can therefore be accumulated, and in which every every +day's expense may, as he chooses, either alleviate, or support and +heighten, the effect of that of the following day. A man of fortune, for +example, may either spend his revenue in a profuse and sumptuous table, +and in maintaining a great number of menial servants, and a multitude of +dogs and horses; or, contenting himself with a frugal table, and few +attendants, he may lay out the greater part of it in adorning his house +or his country villa, in useful or ornamental buildings, in useful or +ornamental furniture, in collecting books, statues, pictures; or in +things more frivolous, jewels, baubles, ingenious trinkets of different +kinds; or, what is must trifling of all, in amassing a great wardrobe of +fine clothes, like the favourite and minister of a great prince who died +a few years ago. Were two men of equal fortune to spend their revenue, +the one chiefly in the one way, the other in the other, the magnificence +of the person whose expense had been chiefly in durable commodities, +would be continually increasing, every day's expense contributing +something to support and heighten the effect of that of the following +day; that of the other, on the contrary, would be no greater at the end +of the period than at the beginning. The former too would, at the end of +the period, be the richer man of the two. He would have a stock of goods +of some kind or other, which, though it might not be worth all that it +cost, would always be worth something. No trace or vestige of the +expense of the latter would remain, and the effects of ten or twenty +years' profusion would be as completely annihilated as if they had never +existed. + +As the one mode of expense is more favourable than the other to the +opulence of an individual, so is it likewise to that of a nation. The +houses, the furniture, the clothing of the rich, in a little time, +become useful to the inferior and middling ranks of people. They are +able to purchase them when their superiors grow weary of them; and the +general accommodation of the whole people is thus gradually improved, +when this mode of expense becomes universal among men of fortune. In +countries which have long been rich, you will frequently find the +inferior ranks of people in possession both of houses and furniture +perfectly good and entire, but of which neither the one could have been +built, nor the other have been made for their use. What was formerly a +seat of the family of Seymour, is now an inn upon the Bath road. The +marriage-bed of James I. of Great Britain, which his queen brought with +her from Denmark, as a present fit for a sovereign to make to a +sovereign, was, a few years ago, the ornament of an alehouse at +Dunfermline. In some ancient cities, which either have been long +stationary, or have gone somewhat to decay, you will sometimes scarce +find a single house which could have been built for its present +inhabitants. If you go into those houses, too, you will frequently find +many excellent, though antiquated pieces of furniture, which are still +very fit for use, and which could as little have been made for them. +Noble palaces, magnificent villas, great collections of books, statues, +pictures, and other curiosities, are frequently both an ornament and an +honour, not only to the neighbourhood, but to the whole country to which +they belong. Versailles is an ornament and an honour to France, Stowe +and Wilton to England. Italy still continues to command some sort of +veneration, by the number of monuments of this kind which it possesses, +though the wealth which produced them has decayed, and though the genius +which planned them seems to be extinguished, perhaps from not having the +same employment. + +The expense, too, which is laid out in durable commodities, is +favourable not only to accumulation, but to frugality. If a person +should at any time exceed in it, he can easily reform without exposing +himself to the censure of the public. To reduce very much the number of +his servants, to reform his table from great profusion to great +frugality, to lay down his equipage after he has once set it up, are +changes which cannot escape the observation of his neighbours, and which +are supposed to imply some acknowledgment of preceding bad conduct. Few, +therefore, of those who have once been so unfortunate as to launch out +too far into this sort of expense, have afterwards the courage to +reform, till ruin and bankruptcy oblige them. But if a person has, at +any time, been at too great an expense in building, in furniture, in +books, or pictures, no imprudence can be inferred from his changing his +conduct. These are things in which further expense is frequently +rendered unnecessary by former expense; and when a person stops short, +he appears to do so, not because he has exceeded his fortune, but +because he has satisfied his fancy. + +The expense, besides, that is laid out in durable commodities, gives +maintenance, commonly, to a greater number of people than that which is +employed in the most profuse hospitality. Of two or three hundred weight +of provisions, which may sometimes be served up at a great festival, one +half, perhaps, is thrown to the dunghill, and there is always a great +deal wasted and abused. But if the expense of this entertainment had +been employed in setting to work masons, carpenters, upholsterers, +mechanics, &c. a quantity of provisions of equal value would have been +distributed among a still greater number of people, who would have +bought them in pennyworths and pound weights, and not have lost or +thrown away a single ounce of them. In the one way, besides, this +expense maintains productive, in the other unproductive hands. In the +one way, therefore, it increases, in the other it does not increase the +exchangeable value of the annual produce of the land and labour of the +country. + +I would not, however, by all this, be understood to mean, that the one +species of expense always betokens a more liberal or generous spirit +than the other. When a man of fortune spends his revenue chiefly in +hospitality, he shares the greater part of it with his friends and +companions; but when he employs it in purchasing such durable +commodities, he often spends the whole upon his own person, and gives +nothing to any body without an equivalent. The latter species of +expense, therefore, especially when directed towards frivolous objects, +the little ornaments of dress and furniture, jewels, trinkets, gewgaws, +frequently indicates, not only a trifling, but a base and selfish +disposition. All that I mean is, that the one sort of expense, as it +always occasions some accumulation of valuable commodities, as it is +more favourable to private frugality, and, consequently, to the increase +of the public capital, and as it maintains productive rather than +unproductive hands, conduces more than the other to the growth of public +opulence. + + + + +CHAP. IV. + +OF STOCK LENT AT INTEREST. + + +The stock which is lent at interest is always considered as a capital by +the lender. He expects that in due time it is to be restored to him, and +that, in the mean time, the borrower is to pay him a certain annual rent +for the use of it. The borrower may use it either as a capital, or as a +stock reserved for immediate consumption. If he uses it as a capital, he +employs it in the maintenance of productive labourers, who reproduce the +value, with a profit. He can, in this case, both restore the capital, +and pay the interest, without alienating or encroaching upon any other +source of revenue. If he uses it as a stock reserved for immediate +consumption, he acts the part of a prodigal, and dissipates, in the +maintenance of the idle, what was destined for the support of the +industrious. He can, in this case, neither restore the capital nor pay +the interest, without either alienating or encroaching upon some other +source of revenues such as the property or the rent of land. + +The stock which is lent at interest is, no doubt, occasionally employed +in both these ways, but in the former much more frequently than in the +latter. The man who borrows in order to spend will soon be ruined, and +he who lends to him will generally have occasion to repent of his folly. +To borrow or to lend for such a purpose, therefore, is, in all cases, +where gross usury is out of the question, contrary to the interest of +both parties; and though it no doubt happens sometimes, that people do +both the one and the other, yet, from the regard that all men have for +their own interest, we may be assured, that it cannot happen so very +frequently as we are sometimes apt to imagine. Ask any rich man of +common prudence, to which of the two sorts of people he has lent the +greater part of his stock, to those who he thinks will employ it +profitably, or to those who will spend it idly, and he will laugh at you +for proposing the question. Even among borrowers, therefore, not the +people in the world most famous for frugality, the number of the frugal +and industrious surpasses considerably that of the prodigal and idle. + +The only people to whom stock is commonly lent, without their being +expected to make any very profitable use of it, are country gentlemen, +who borrow upon mortgage. Even they scarce ever borrow merely to spend. +What they borrow, one may say, is commonly spent before they borrow it. +They have generally consumed so great a quantity of goods, advanced to +them upon credit by shop-keepers and tradesmen, that they find it +necessary to borrow at interest, in order to pay the debt. The capital +borrowed replaces the capitals of those shop-keepers and tradesmen which +the country gentlemen could not have replaced from the rents of their +estates. It is not properly borrowed in order to be spent, but in order +to replace a capital which had been spent before. + +Almost all loans at interest are made in money, either of paper, or of +gold and silver; but what the borrower really wants, and what the lender +readily supplies him with, is not the money, but the money's worth, or +the goods which it can purchase. If he wants it as a stock for immediate +consumption, it is those goods only which he can place in that stock. If +he wants it as a capital for employing industry, it is from those goods +only that the industrious can be furnished with the tools, materials, +and maintenance necessary for carrying on their work. By means of the +loan, the lender, as it were, assigns to the borrower his right to a +certain portion of the annual produce of the land and labour of the +country, to be employed as the borrower pleases. + +The quantity of stock, therefore, or, as it is commonly expressed, of +money, which can be lent at interest in any country, is not regulated by +the value of the money, whether paper or coin, which serves as the +instrument of the different loans made in that country, but by the value +of that part of the annual produce, which, as soon as it comes either +from the ground, or from the hands of the productive labourers, is +destined, not only for replacing a capital, but such a capital as the +owner does not care to be at the trouble of employing himself. As such +capitals are commonly lent out and paid back in money, they constitute +what is called the monied interest. It is distinct, not only from the +landed, but from the trading and manufacturing interests, as in these +last the owners themselves employ their own capitals. Even in the monied +interest, however, the money is, as it were, but the deed or assignment, +which conveys from one hand to another those capitals which the owners +do not care to employ themselves. Those capitals may be greater, in +almost any proportion, than the amount of the money which serves as the +instrument of their conveyance; the same pieces of money successively +serving for many different loans, as well as for many different +purchases. A, for example, lends to W L.1000, with which W immediately +purchases of B L.1000 worth of goods. B having no occasion for the money +himself, lends the identical pieces to X, with which X immediately +purchases of C another L.1000 worth of goods. C, in the same manner, and +for the same reason, lends them to Y, who again purchases goods with +them of D. In this manner, the same pieces, either of coin or of paper, +may, in the course of a few days, serve as the instrument of three +different loans, and of three different purchases, each of which is, in +value, equal to the whole amount of those pieces. What the three monied +men, A, B, and C, assigned to the three borrowers, W, X, and Y, is the +power of making those purchases. In this power consist both the value +and the use of the loans. The stock lent by the three monied men is +equal to the value of the goods which can be purchased with it, and is +three times greater than that of the money with which the purchases are +made. Those loans, however, may be all perfectly well secured, the goods +purchased by the different debtors being so employed as, in due time, to +bring back, with a profit, an equal value either of coin or of paper. +And as the same pieces of money can thus serve as the instrument of +different loans to three, or, for the same reason, to thirty times their +value, so they may likewise successively serve as the instrument of +repayment. + +A capital lent at interest may, in this manner, be considered as an +assignment, from the lender to the borrower, of a certain considerable +portion of the annual produce, upon condition that the borrower in +return shall, during the continuation of the loan, annually assign to +the lender a small portion, called the interest; and, at the end of it, +a portion equally considerable with that which had originally been +assigned to him, called the repayment. Though money, either coin or +paper, serves generally as the deed of assignment, both to the smaller +and to the more considerable portion, it is itself altogether different +from what is assigned by it. + +In proportion as that share of the annual produce which, as soon as it +comes either from the ground, or from the hands of the productive +labourers, is destined for replacing a capital, increases in any +country, what is called the monied interest naturally increases with it. +The increase of those particular capitals from which the owners wish to +derive a revenue, without being at the trouble of employing them +themselves, naturally accompanies the general increase of capitals; or, +in other words, as stock increases, the quantity of stock to be lent at +interest grows gradually greater and greater. + +As the quantity of stock to be lent at interest increases, the interest, +or the price which must be paid for the use of that stock, necessarily +diminishes, not only from those general causes which make the market +price of things commonly diminish as their quantity increases, but from +other causes which are peculiar to this particular case. As capitals +increase in any country, the profits which can be made by employing them +necessarily diminish. It becomes gradually more and more difficult to +find within the country a profitable method of employing any new +capital. There arises, in consequence, a competition between different +capitals, the owner of one endeavouring to get possession of that +employment which is occupied by another; but, upon most occasions, he +can hope to justle that other out of this employment by no other means +but by dealing upon more reasonable terms. He must not only sell what he +deals in somewhat cheaper, but, in order to get it to sell, he must +sometimes, too, buy it dearer. The demand for productive labour, by the +increase of the funds which are destined for maintaining it, grows every +day greater and greater. Labourers easily find employment; but the +owners of capitals find it difficult to get labourers to employ. Their +competition raises the wages of labour, and sinks the profits of stock. +But when the profits which can be made by the use of a capital are in +this manner diminished, as it were, at both ends, the price which can be +paid for the use of it, that is, the rate of interest, must necessarily +be diminished with them. + +Mr Locke, Mr Lawe, and Mr Montesquieu, as well as many other writers, +seem to have imagined that the increase of the quantity of gold and +silver, in consequence of the discovery of the Spanish West Indies, was +the real cause of the lowering of the rate of interest through the +greater part of Europe. Those metals, they say, having become of less +value themselves, the use of any particular portion of them necessarily +became of less value too, and, consequently, the price which could be +paid for it. This notion, which at first sight seems so plausible, has +been so fully exposed by Mr Hume, that it is, perhaps, unnecessary to +say any thing more about it. The following very short and plain +argument, however, may serve to explain more distinctly the fallacy +which seems to have misled those gentlemen. + +Before the discovery of the Spanish West Indies, ten per cent. seems to +have been the common rate of interest through the greater part of +Europe. It has since that time, in different countries, sunk to six, +five, four, and three per cent. Let us suppose, that in every particular +country the value of silver has sunk precisely in the same proportion as +the rate of interest; and that in those countries, for example, where +interest has been reduced from ten to five per cent. the same quantity +of silver can now purchase just half the quantity of goods which it +could have purchased before. This supposition will not, I believe, be +found anywhere agreeable to the truth; but it is the most favourable to +the opinion which we are going to examine; and, even upon this +supposition, it is utterly impossible that the lowering of the value of +silver could have the smallest tendency to lower the rate of interest. +If £100 are in those countries now of no more value than £50 were then, +£10 must now be of no more value than £5 were then. Whatever were the +causes which lowered the value of the capital, the same must necessarily +have lowered that of the interest, and exactly in the same proportion. +The proportion between the value of the capital and that of the interest +must have remained the same, though the rate had never been altered. By +altering the rate, on the contrary, the proportion between those two +values is necessarily altered. If L.100 now are worth no more than L.50 +were then, L.5 now can be worth no more than L.2, 10s. were then. By +reducing the rate of interest, therefore, from ten to five per cent. we +give for the use of a capital, which is supposed to be equal to one half +of its former value, an interest which is equal to one fourth only of +the value of the former interest. + +An increase in the quantity of silver, while that of the commodities +circulated by means of it remained the same, could have no other effect +than to diminish the value of that metal. The nominal value of all sorts +of goods would be greater, but their real value would be precisely the +same as before. They would be exchanged for a greater number of pieces +of silver; but the quantity of labour which they could command, the +number of people whom they could maintain and employ, would be precisely +the same. The capital of the country would be the same, though a greater +number of pieces might be requisite for conveying any equal portion of +it from one hand to another. The deeds of assignment, like the +conveyances of a verbose attorney, would be more cumbersome; but the +thing assigned would be precisely the same as before, and could produce +only the same effects. The funds for maintaining productive labour being +the same, the demand for it would be the same. Its price or wages, +therefore, though nominally greater, would really be the same. They +would be paid in a greater number of pieces of silver, but they would +purchase only the same quantity of goods. The profits of stock would be +the same, both nominally and really. The wages of labour are commonly +computed by the quantity of silver which is paid to the labourer. When +that is increased, therefore, his wages appear to be increased, though +they may sometimes be no greater than before. But the profits of stock +are not computed by the number of pieces of silver with which they are +paid, but by the proportion which those pieces bear to the whole capital +employed. Thus, in a particular country, 5s. a-week are said to be the +common wages of labour, and ten per cent. the common profits of stock; +but the whole capital of the country being the same as before, the +competition between the different capitals of individuals into which it +was divided would likewise be the same. They would all trade with the +same advantages and disadvantages. The common proportion between capital +and profit, therefore, would be the same, and consequently the common +interest of money; what can commonly be given for the use of money being +necessarily regulated by what can commonly be made by the use of it. + +Any increase in the quantity of commodities annually circulated within +the country, while that of the money which circulated them remained the +same, would, on the contrary, produce many other important effects, +besides that of raising the value of the money. The capital of the +country, though it might nominally be the same, would really be +augmented. It might continue to be expressed by the same quantity of +money, but it would command a greater quantity of labour. The quantity +of productive labour which it could maintain and employ would be +increased, and consequently the demand for that labour. Its wages would +naturally rise with the demand, and yet might appear to sink. They might +be paid with a smaller quantity of money, but that smaller quantity +might purchase a greater quantity of goods than a greater had done +before. The profits of stock would be diminished, both really and in +appearance. The whole capital of the country being augmented, the +competition between the different capitals of which it was composed +would naturally be augmented along with it. The owners of those +particular capitals would be obliged to content themselves with a +smaller proportion of the produce of that labour which their respective +capitals employed. The interest of money, keeping pace always with the +profits of stock, might, in this manner, be greatly diminished, though +the value of money, or the quantity of goods which any particular sum +could purchase, was greatly augmented. + +In some countries the interest of money has been prohibited by law. But +as something can everywhere be made by the use of money, something ought +everywhere to be paid for the use of it. This regulation, instead of +preventing, has been found from experience to increase the evil of +usury. The debtor being obliged to pay, not only for the use of the +money, but for the risk which his creditor runs by accepting a +compensation for that use, he is obliged, if one may say so, to insure +his creditor from the penalties of usury. + +In countries where interest is permitted, the law in order to prevent +the extortion of usury, generally fixes the highest rate which can be +taken without incurring a penalty. This rate ought always to be somewhat +above the lowest market price, or the price which is commonly paid for +the use of money by those who can give the most undoubted security. If +this legal rate should be fixed below the lowest market rate, the +effects of this fixation must be nearly the same as those of a total +prohibition of interest. The creditor will not lend his money for less +than the use of it is worth, and the debtor must pay him for the risk +which he runs by accepting the full value of that use. If it is fixed +precisely at the lowest market price, it ruins, with honest people who +respect the laws of their country, the credit of all those who cannot +give the very best security, and obliges them to have recourse to +exorbitant usurers. In a country such as Great Britain, where money is +lent to government at three per cent. and to private people, upon good +security, at four and four and a-half, the present legal rate, five per +cent. is perhaps as proper as any. + +The legal rate, it is to be observed, though it ought to be somewhat +above, ought not to be much above the lowest market rate. If the legal +rate of interest in Great Britain, for example, was fixed so high as +eight or ten per cent. the greater part of the money which was to be +lent, would be lent to prodigals and projectors, who alone would be +willing to give this high interest. Sober people, who will give for the +use of money no more than a part of what they are likely to make by the +use of it, would not venture into the competition. A great part of the +capital of the country would thus be kept out of the hands which were +most likely to make a profitable and advantageous use of it, and thrown +into those which were most likely to waste and destroy it. Where the +legal rate of interest, on the contrary, is fixed but a very little +above the lowest market rate, sober people are universally preferred, as +borrowers, to prodigals and projectors. The person who lends money gets +nearly as much interest from the former as he dares to take from the +latter, and his money is much safer in the hands of the one set of +people than in those of the other. A great part of the capital of the +country is thus thrown into the hands in which it is most likely to be +employed with advantage. + +No law can reduce the common rate of interest below the lowest ordinary +market rate at the time when that law is made. Notwithstanding the edict +of 1766, by which the French king attempted to reduce the rate of +interest from five to four per cent. money continued to be lent in +France at five per cent. the law being evaded in several different ways. + +The ordinary market price of land, it is to be observed, depends +everywhere upon the ordinary market rate of interest. The person who has +a capital from which he wishes to derive a revenue, without taking the +trouble to employ it himself, deliberates whether he should buy land +with it, or lend it out at interest. The superior security of land, +together with some other advantages which almost everywhere attend upon +this species of property, will generally dispose him to content himself +with a smaller revenue from land, than what he might have by lending out +his money at interest. These advantages are sufficient to compensate a +certain difference of revenue; but they will compensate a certain +difference only; and if the rent of land should fall short of the +interest of money by a greater difference, nobody would buy land, which +would soon reduce its ordinary price. On the contrary, if the advantages +should much more than compensate the difference, everybody would buy +land, which again would soon raise its ordinary price. When interest was +at ten per cent. land was commonly sold for ten or twelve years +purchase. As interest sunk to six, five, and four per cent. the price of +land rose to twenty, five-and-twenty, and thirty years purchase. The +market rate of interest is higher in France than in England, and the +common price of land is lower. In England it commonly sells at thirty, +in France at twenty years purchase. + + + + +CHAP. V. + +OF THE DIFFERENT EMPLOYMENTS OF CAPITALS. + + +Though all capitals are destined for the maintenance of productive +labour only, yet the quantity of that labour which equal capitals are +capable of putting into motion, varies extremely according to the +diversity of their employment; as does likewise the value which that +employment adds to the annual produce of the land and labour of the +country. + +A capital may be employed in four different ways; either, first, in +procuring the rude produce annually required for the use and consumption +of the society; or, secondly, in manufacturing and preparing that rude +produce for immediate use and consumption; or, thirdly in transporting +either the rude or manufactured produce from the places where they +abound to those where they are wanted; or, lastly, in dividing +particular portions of either into such small parcels as suit the +occasional demands of those who want them. In the first way are employed +the capitals of all those who undertake improvement or cultivation of +lands, mines, or fisheries; in the second, those of all master +manufacturers; in the third, those of all wholesale merchants; and in +the fourth, those of all retailers. It is difficult to conceive that a +capital should be employed in any way which may not be classed under +some one or other of these four. + +Each of those four methods of employing a capital is essentially +necessary, either to the existence or extension of the other three, or +to the general conveniency of the society. + +Unless a capital was employed in furnishing rude produce to a certain +degree of abundance, neither manufactures nor trade of any kind could +exist. + +Unless a capital was employed in manufacturing that part of the rude +produce which requires a good deal of preparation before it can be fit +for use and consumption, it either would never he produced, because +there could be no demand for it; or if it was produced spontaneously, it +would be of no value in exchange, and could add nothing to the wealth of +the society. + +Unless a capital was employed in transporting either the rude or +manufactured produce from the places where it abounds to those where it +is wanted, no more of either could be produced than was necessary for +the consumption of the neighbourhood. The capital of the merchant +exchanges the surplus produce of one place for that of another, and thus +encourages the industry, and increases the enjoyments of both. + +Unless a capital was employed in breaking and dividing certain portions +either of the rude or manufactured produce into such small parcels as +suit the occasional demands of those who want them, every man would be +obliged to purchase a greater quantity of the goods he wanted than his +immediate occasions required. If there was no such trade as a butcher, +for example, every man would be obliged to purchase a whole ox or a +whole sheep at a time. This would generally be inconvenient to the rich, +and much more so to the poor. If a poor workman was obliged to purchase +a month's or six months' provisions at a time, a great part of the stock +which he employs as a capital in the instruments of his trade, or in the +furniture of his shop, and which yields him a revenue, he would be +forced to place in that part of his stock which is reserved for +immediate consumption, and which yields him no revenue. Nothing can be +more convenient for such a person than to be able to purchase his +subsistence from day to day, or even from hour to hour, as he wants it. +He is thereby enabled to employ almost his whole stock as a capital. He +is thus enabled to furnish work to a greater value; and the profit which +he makes by it in this way much more than compensates the additional +price which the profit of the retailer imposes upon the goods. The +prejudices of some political writers against shopkeepers and tradesmen +are altogether without foundation. So far is it from being necessary +either to tax them, or to restrict their numbers, that they can never be +multiplied so as to hurt the public, though they may so as to hurt one +another. The quantity of grocery goods, for example, which can be sold +in a particular town, is limited by the demand of that town and its +neighbourhood. The capital, therefore, which can be employed in the +grocery trade, cannot exceed what is sufficient to purchase that +quantity. If this capital is divided between two different grocers, +their competition will tend to make both of them sell cheaper than if it +were in the hands of one only; and if it were divided among twenty, +their competition would be just so much the greater, and the chance of +their combining together, in order to raise the price, just so much the +less. Their competition might, perhaps, ruin some of themselves; but to +take care of this, is the business of the parties concerned, and it may +safely be trusted to their discretion. It can never hurt either the +consumer or the producer; on the contrary, it must tend to make the +retailers both sell cheaper and buy dearer, than if the whole trade was +monopolized by one or two persons. Some of them, perhaps, may sometimes +decoy a weak customer to buy what he has no occasion for. This evil, +however, is of too little importance to deserve the public attention, +nor would it necessarily be prevented by restricting their numbers. It +is not the multitude of alehouses, to give the most suspicious example, +that occasions a general disposition to drunkenness among the common +people; but that disposition, arising from other causes, necessarily +gives employment to a multitude of alehouses. + +The persons whose capitals are employed in any of those four ways, are +themselves productive labourers. Their labour, when properly directed, +fixes and realizes itself in the subject or vendible commodity upon +which it is bestowed, and generally adds to its price the value at least +of their own maintenance and consumption. The profits of the farmer, of +the manufacturer, of the merchant, and retailer, are all drawn from the +price of the goods which the two first produce, and the two last buy and +sell. Equal capitals, however, employed in each of those four different +ways, will immediately put into motion very different quantities of +productive labour; and augment, too, in very different proportions, the +value of the annual produce of the land and labour of the society to +which they belong. + +The capital of the retailer replaces, together with its profits, that of +the merchant of whom he purchases goods, and thereby enables him to +continue his business. The retailer himself is the only productive +labourer whom it immediately employs. In his profit consists the whole +value which its employment adds to the annual produce of the land and +labour of the society. + +The capital of the wholesale merchant replaces, together with their +profits, the capitals of the farmers and manufacturers of whom he +purchases the rude and manufactured produce which he deals in, and +thereby enables them to continue their respective trades. It is by this +service chiefly that he contributes indirectly to support the productive +labour of the society, and to increase the value of its annual produce. +His capital employs, too, the sailors and carriers who transport his +goods from one place to another; and it augments the price of those +goods by the value, not only of his profits, but of their wages. This is +all the productive labour which it immediately puts into motion, and all +the value which it immediately adds to the annual produce. Its operation +in both these respects is a good deal superior to that of the capital of +the retailer. + +Part of the capital of the master manufacturer is employed as a fixed +capital in the instruments of his trade, and replaces, together with its +profits, that of some other artificer of whom he purchases them. Part of +his circulating capital is employed in purchasing materials, and +replaces, with their profits, the capitals of the farmers and miners of +whom he purchases them. But a great part of it is always, either +annually, or in a much shorter period, distributed among the different +workmen whom he employs. It augments the value of these materials by +their wages, and by their masters' profits upon the whole stock of +wages, materials, and instruments of trade employed in the business. It +puts immediately into motion, therefore, a much greater quantity of +productive labour, and adds a much greater value to the annual produce +of the land and labour of the society, than an equal capital in the +hands of any wholesale merchant. + +No equal capital puts into motion a greater quantity of productive +labour than that of the farmer. Not only his labouring servants, but his +labouring cattle, are productive labourers. In agriculture, too, Nature +labours along with man; and though her labour cost no expense, its +produce has its value, as well as that of the must expensive workmen. +The most important operations of agriculture seem intended, not so much +to increase, though they do that too, as to direct the fertility of +Nature towards the production of the plants must profitable to man. A +field overgrown with briars and brambles, may frequently produce as +great a quantity of vegetables as the best cultivated vineyard or corn +field. Planting and tillage frequently regulate more than they animate +the active fertility of Nature; and after all their labour, a great part +of the work always remains to be done by her. The labourers and +labouring cattle, therefore, employed in agriculture, not only occasion, +like the workmen in manufactures, the reproduction of a value equal to +their own consumption, or to the capital which employs them, together +with its owner's profits, but of a much greater value. Over and above +the capital of the farmer, and all its profits, they regularly occasion +the reproduction of the rent of the landlord. This rent may be +considered as the produce of those powers of Nature, the use of which +the landlord lends to the farmer. It is greater or smaller, according to +the supposed extent of those powers, or, in other words, according to +the supposed natural or improved fertility of the land. It is the work +of Nature which remains, after deducting or compensating every thing +which can be regarded as the work of man. It is seldom less than a +fourth, and frequently more than a third, of the whole produce. No equal +quantity of productive labour employed in manufactures, can ever +occasion so great reproduction. In them Nature does nothing; man does +all; and the reproduction must always be in proportion to the strength +of the agents that occasion it. The capital employed in agriculture, +therefore, not only puts into motion a greater quantity of productive +labour than any equal capital employed in manufactures; but in +proportion, too, to the quantity of productive labour which it employs, +it adds a much greater value to the annual produce of the land and +labour of the country, to the real wealth and revenue of its +inhabitants. Of all the ways in which a capital can be employed, it is +by far the most advantageous to society. + +The capitals employed in the agriculture and in the retail trade of any +society, must always reside within that society. Their employment is +confined almost to a precise spot, to the farm, and to the shop of the +retailer. They must generally, too, though there are some exceptions to +this, belong to resident members of the society. + +The capital of a wholesale merchant, on the contrary, seems to have no +fixed or necessary residence anywhere, but may wander about from place +to place, according as it can either buy cheap or sell dear. + +The capital of the manufacturer must, no doubt, reside where the +manufacture is carried on; but where this shall be, is not always +necessarily determined. It may frequently be at a great distance, both +from the place where the materials grow, and from that where the +complete manufacture is consumed. Lyons is very distant, both from the +places which afford the materials of its manufactures, and from those +which consume them. The people of fashion in Sicily are clothed in silks +made in other countries, from the materials which their own produces. +Part of the wool of Spain is manufactured in Great Britain, and some +part of that cloth is afterwards sent back to Spain. + +Whether the merchant whose capital exports the surplus produce of any +society, be a native or a foreigner, is of very little importance. If he +is a foreigner, the number of their productive labourers is necessarily +less than if he had been a native, by one man only; and the value of +their annual produce, by the profits of that one man. The sailors or +carriers whom he employs, may still belong indifferently either to his +country, or to their country, or to some third country, in the same +manner as if he had been a native. The capital of a foreigner gives a +value to their surplus produce equally with that of a native, by +exchanging it for something for which there is a demand at home. It as +effectually replaces the capital of the person who produces that +surplus, and as effectually enables him to continue his business, the +service by which the capital of a wholesale merchant chiefly contributes +to support the productive labour, and to augment the value of the annual +produce of the society to which he belongs. + +It is of more consequence that the capital of the manufacturer should +reside within the country. It necessarily puts into motion a greater +quantity of productive labour, and adds a greater value to the annual +produce of the land and labour of the society. It may, however, be very +useful to the country, though it should not reside within it. The +capitals of the British manufacturers who work up the flax and hemp +annually imported from the coasts of the Baltic, are surely very useful +to the countries which produce them. Those materials are a part of the +surplus produce of those countries, which, unless it was annually +exchanged for something which is in demand there, would be of no value, +and would soon cease to be produced. The merchants who export it, +replace the capitals of the people who produce it, and thereby encourage +them to continue the production; and the British manufacturers replace +the capitals of those merchants. + +A particular country, in the same manner as a particular person, may +frequently not have capital sufficient both to improve cultivate all its +lands, to manufacture and prepare their whole rude produce for immediate +use and consumption, and to transport the surplus part either of the +rude or manufactured produce to those distant markets, where it can be +exchanged for something for which there is a demand at home. The +inhabitants of many different parts of Great Britain have not capital +sufficient to improve and cultivate all their lands. The wool of the +southern counties of Scotland is, a great part of it, after a long land +carriage through very bad roads, manufactured in Yorkshire, for want of +a capital to manufacture it at home. There are many little manufacturing +towns in Great Britain, of which the inhabitants have not capital +sufficient to transport the produce of their own industry to those +distant markets where there is demand and consumption for it. If there +are any merchants among them, they are, properly, only the agents of +wealthier merchants who reside in some of the great commercial cities. + +When the capital of any country is not sufficient for all those three +purposes, in proportion as a greater share of it is employed in +agriculture, the greater will be the quantity of productive labour which +it puts into motion within the country; as will likewise be the value +which its employment adds to the annual produce of the land and labour +of the society. After agriculture, the capital employed in manufactures +puts into motion the greatest quantity of productive labour, and adds +the greatest value to the annual produce. That which is employed in the +trade of exportation has the least effect of any of the three. + +The country, indeed, which has not capital sufficient for all those +three purposes, has not arrived at that degree of opulence for which it +seems naturally destined. To attempt, however, prematurely, and with an +insufficient capital, to do all the three, is certainly not the shortest +way for a society, no more than it would be for an individual, to +acquire a sufficient one. The capital of all the individuals of a nation +has its limits, in the same manner as that of a single individual, and +is capable of executing only certain purposes. The capital of all the +individuals of a nation is increased in the same manner as that of a +single individual, by their continually accumulating and adding to it +whatever they save out of their revenue. It is likely to increase the +fastest, therefore, when it is employed in the way that affords the +greatest revenue to all the inhabitants of the country, as they will +thus be enabled to make the greatest savings. But the revenue of all the +inhabitants of the country is necessarily in proportion to the value of +the annual produce of their land and labour. + +It has been the principal cause of the rapid progress of our American +colonies towards wealth and greatness, that almost their whole capitals +have hitherto been employed in agriculture. They have no manufactures, +those household and coarser manufactures excepted, which necessarily +accompany the progress of agriculture, and which are the work of the +women and children in every private family. The greater part, both of +the exportation and coasting trade of America, is carried on by the +capitals of merchants who reside in Great Britain. Even the stores and +warehouses from which goods are retailed in some provinces, particularly +in Virginia and Maryland, belong many of them to merchants who reside in +the mother country, and afford one of the few instances of the retail +trade of a society being carried on by the capitals of those who are not +resident members of it. Were the Americans, either by combination, or by +any other sort of violence, to stop the importation of European +manufactures, and, by thus giving a monopoly to such of their own +countrymen as could manufacture the like goods, divert any considerable +part of their capital into this employment, they would retard, instead +of accelerating, the further increase in the value of their annual +produce, and would obstruct, instead of promoting, the progress of their +country towards real wealth and greatness. This would be still more the +case, were they to attempt, in the same manner, to monopolize to +themselves their whole exportation trade. + +The course of human prosperity, indeed, seems scarce ever to have been +of so long continuance as to enable any great country to acquire capital +sufficient for all those three purposes; unless, perhaps, we give credit +to the wonderful accounts of the wealth and cultivation of China, of +those of ancient Egypt, and of the ancient state of Indostan. Even those +three countries, the wealthiest, according to all accounts, that ever +were in the world, are chiefly renowned for their superiority in +agriculture and manufactures. They do not appear to have been eminent +for foreign trade. The ancient Egyptians had a superstitious antipathy +to the sea; a superstition nearly of the same kind prevails among the +Indians; and the Chinese have never excelled in foreign commerce. The +greater part of the surplus produce of all those three countries seems +to have been always exported by foreigners, who gave in exchange for it +something else, for which they found a demand there, frequently gold and +silver. + +It is thus that the same capital will in any country put into motion a +greater or smaller quantity of productive labour, and add a greater or +smaller value to the annual produce of its land and labour, according to +the different proportions in which it is employed in agriculture, +manufactures, and wholesale trade. The difference, too, is very great, +according to the different sorts of wholesale trade in which any part of +it is employed. + +All wholesale trade, all buying in order to sell again by wholesale, may +be reduced to three different sorts: the home trade, the foreign trade +of consumption, and the carrying trade. The home trade is employed in +purchasing in one part of the same country, and selling in another, the +produce of the industry of that country. It comprehends both the inland +and the coasting trade. The foreign trade of consumption is employed in +purchasing foreign goods for home consumption. The carrying trade is +employed in transacting the commerce of foreign countries, or in +carrying the surplus produce of one to another. + +The capital which is employed in purchasing in one part of the country, +in order to sell in another, the produce of the industry of that +country, generally replaces, by every such operation, two distinct +capitals, that had both been employed in the agriculture or manufactures +of that country, and thereby enables them to continue that employment. +When it sends out from the residence of the merchant a certain value of +commodities, it generally brings back in return at least an equal value +of other commodities. When both are the produce of domestic industry, it +necessarily replaces, by every such operation, two distinct capitals, +which had both been employed in supporting productive labour, and +thereby enables them to continue that support. The capital which sends +Scotch manufactures to London, and brings back English corn and +manufactures to Edinburgh, necessarily replaces, by every such +operation, two British capitals, which had both been employed in the +agriculture or manufactures of Great Britain. + +The capital employed in purchasing foreign goods for home consumption, +when this purchase is made with the produce of domestic industry, +replaces, too, by every such operation, two distinct capitals; but one +of them only is employed in supporting domestic industry. The capital +which sends British goods to Portugal, and brings back Portuguese goods +to Great Britain, replaces, by every such operation, only one British +capital. The other is a Portuguese one. Though the returns, therefore, +of the foreign trade of consumption, should be as quick as those of the +home trade, the capital employed in it will give but one half the +encouragement to the industry or productive labour of the country. + +But the returns of the foreign trade of consumption are very seldom so +quick as those of the home trade. The returns of the home trade +generally come in before the end of the year, and sometimes three or +four times in the year. The returns of the foreign trade of consumption +seldom come in before the end of the year, and sometimes not till after +two or three years. A capital, therefore, employed in the home trade, +will sometimes make twelve operations, or be sent out and returned +twelve times, before a capital employed in the foreign trade of +consumption has made one. If the capitals are equal, therefore, the one +will give four-and-twenty times more encouragement and support to the +industry of the country than the other. + +The foreign goods for home consumption may sometimes be purchased, not +with the produce of domestic industry, but with some other foreign +goods. These last, however, must have been purchased, either immediately +with the produce of domestic industry, or with something else that had +been purchased with it; for, the case of war and conquest excepted, +foreign goods can never be acquired, but in exchange for something that +had been produced at home, either immediately, or after two or more +different exchanges. The effects, therefore, of a capital employed in +such a round-about foreign trade of consumption, are, in every respect, +the same as those of one employed in the most direct trade of the same +kind, except that the final returns are likely to be still more distant, +as they must depend upon the returns of two or three distinct foreign +trades. If the hemp and flax of Riga are purchased with the tobacco of +Virginia, which had been purchased with British manufactures, the +merchant must wait for the returns of two distinct foreign trades, +before he can employ the same capital in repurchasing a like quantity of +British manufactures. If the tobacco of Virginia had been purchased, +not with British manufactures, but with the sugar and rum of Jamaica, +which had been purchased with those manufactures, he must wait for the +returns of three. If those two or three distinct foreign trades should +happen to be carried on by two or three distinct merchants, of whom the +second buys the goods imported by the first, and the third buys those +imported by the second, in order to export them again, each merchant, +indeed, will, in this case, receive the returns of his own capital more +quickly; but the final returns of the whole capital employed in the +trade will be just as slow as ever. Whether the whole capital employed +in such a round-about trade belong to one merchant or to three, can make +no difference with regard to the country, though it may with regard to +the particular merchants. Three times a greater capital must in both +cases be employed, in order to exchange a certain value of British +manufactures for a certain quantity of flax and hemp, than would have +been necessary, had the manufactures and the flax and hemp been directly +exchanged for one another. The whole capital employed, therefore, in +such a round-about foreign trade of consumption, will generally give +less encouragement and support to the productive labour of the country, +than an equal capital employed in a more direct trade of the same kind. + +Whatever be the foreign commodity with which the foreign goods for home +consumption are purchased, it can occasion no essential difference, +either in the nature of the trade, or in the encouragement and support +which it can give to the productive labour of the country from which it +is carried on. If they are purchased with the gold of Brazil, for +example, or with the silver of Peru, this gold and silver, like the +tobacco of Virginia, must have been purchased with something that either +was the produce of the industry of the country, or that had been +purchased with something else that was so. So far, therefore, as the +productive labour of the country is concerned, the foreign trade of +consumption, which is carried on by means of gold and silver, has all +the advantages and all the inconveniences of any other equally +round-about foreign trade of consumption; and will replace, just as +fast, or just as slow, the capital which is immediately employed in +supporting that productive labour. It seems even to have one advantage +over any other equally round-about foreign trade. The transportation of +those metals from one place to another, on account of their small bulk +and great value, is less expensive than that of almost any other foreign +goods of equal value. Their freight is much less, and their insurance +not greater; and no goods, besides, are less liable to suffer by the +carriage. An equal quantity of foreign goods, therefore, may frequently +be purchased with a smaller quantity of the produce of domestic +industry, by the intervention of gold and silver, than by that of any +other foreign goods. The demand of the country may frequently, in this +manner, be supplied more completely, and at a smaller expense, than in +any other. Whether, by the continual exportation of those metals, a +trade of this kind is likely to impoverish the country from which it is +carried on in any other way, I shall have occasion to examine at great +length hereafter. + +That part of the capital of any country which is employed in the +carrying trade, is altogether withdrawn from supporting the productive +labour of that particular country, to support that of some foreign +countries. Though it may replace, by every operation, two distinct +capitals, yet neither of them belongs to that particular country. The +capital of the Dutch merchant, which carries the corn of Poland to +Portugal, and brings back the fruits and wines of Portugal to Poland, +replaces by every such operation two capitals, neither of which had been +employed in supporting the productive labour of Holland; but one of them +in supporting that of Poland, and the other that of Portugal. The +profits only return regularly to Holland, and constitute the whole +addition which this trade necessarily makes to the annual produce of the +land and labour of that country. When, indeed, the carrying trade of any +particular country is carried on with the ships and sailors of that +country, that part of the capital employed in it which pays the freight +is distributed among, and puts into motion, a certain number of +productive labourers of that country. Almost all nations that have had +any considerable share of the carrying trade have, in fact, carried it +on in this manner. The trade itself has probably derived its name from +it, the people of such countries being the carriers to other countries. +It does not, however, seem essential to the nature of the trade that it +should be so. A Dutch merchant may, for example, employ his capital in +transacting the commerce of Poland and Portugal, by carrying part of the +surplus produce of the one to the other, not in Dutch, but in British +bottoms. It may be presumed, that he actually does so upon some +particular occasions. It is upon this account, however, that the +carrying trade has been supposed peculiarly advantageous to such a +country as Great Britain, of which the defence and security depend upon +the number of its sailors and shipping. But the same capital may employ +as many sailors and shipping, either in the foreign trade of +consumption, or even in the home trade, when carried on by coasting +vessels, as it could in the carrying trade. The number of sailors and +shipping which any particular capital can employ, does not depend upon +the nature of the trade, but partly upon the bulk of the goods, in +proportion to their value, and partly upon the distance of the ports +between which they are to be carried; chiefly upon the former of those +two circumstances. The coal trade from Newcastle to London, for example, +employs more shipping than all the carrying trade of England, though the +ports are at no great distance. To force, therefore, by extraordinary +encouragements, a larger share of the capital of any country into the +carrying trade, than what would naturally go to it, will not always +necessarily increase the shipping of that country. + +The capital, therefore, employed in the home trade of any country, will +generally give encouragement and support to a greater quantity of +productive labour in that country, and increase the value of its annual +produce, more than an equal capital employed in the foreign trade of +consumption; and the capital employed in this latter trade has, in both +these respects, a still greater advantage over an equal capital employed +in the carrying trade. The riches, and so far as power depends upon +riches, the power of every country must always be in proportion to the +value of its annual produce, the fund from which all taxes must +ultimately be paid. But the great object of the political economy of +every country, is to increase the riches and power of that country. It +ought, therefore, to give no preference nor superior encouragement to +the foreign trade of consumption above the home trade, nor to the +carrying trade above either of the other two. It ought neither to force +nor to allure into either of those two channels a greater share of the +capital of the country, than what would naturally flow into them of its +own accord. + +Each of those different branches of trade, however, is not only +advantageous, but necessary and unavoidable, when the course of things, +without any constraint or violence, naturally introduces it. + +When the produce of any particular branch of industry exceeds what the +demand of the country requires, the surplus must be sent abroad, and +exchanged for something for which there is a demand at home. Without +such exportation, a part of the productive labour of the country must +cease, and the value of its annual produce diminish. The land and labour +of Great Britain produce generally more corn, woollens, and hardware, +than the demand of the home market requires. The surplus part of them, +therefore, must be sent abroad, and exchanged for something for which +there is a demand at home. It is only by means of such exportation, that +this surplus can acquire a value sufficient to compensate the labour and +expense of producing it. The neighbourhood of the sea-coast, and the +banks of all navigable rivers, are advantageous situations for industry, +only because they facilitate the exportation and exchange of such +surplus produce for something else which is more in demand there. + +When the foreign goods which are thus purchased with the surplus produce +of domestic industry exceed the demand of the home market, the surplus +part of them must be sent abroad again, and exchanged for something more +in demand at home. About 96,000 hogsheads of tobacco are annually +purchased in Virginia and Maryland with a part of the surplus produce of +British industry. But the demand of Great Britain does not require, +perhaps, more than 14,000. If the remaining 82,000, therefore, could not +be sent abroad, and exchanged for something more in demand at home, the +importation of them must cease immediately, and with it the productive +labour of all those inhabitants of Great Britain who are at present +employed in preparing the goods with which these 82,000 hogsheads are +annually purchased. Those goods, which are part of the produce of the +land and labour of Great Britain, having no market at home, and being +deprived of that which they had abroad, must cease to be produced. The +most round-about foreign trade of consumption, therefore, may, upon some +occasions, be as necessary for supporting the productive labour of the +country, and the value of its annual produce, as the most direct. + +When the capital stock of any country is increased to such a degree that +it cannot be all employed in supplying the consumption, and supporting +the productive labour of that particular country, the surplus part of it +naturally disgorges itself into the carrying trade, and is employed in +performing the same offices to other countries. The carrying trade is +the natural effect and symptom of great national wealth; but it does not +seem to be the natural cause of it. Those statesmen who have been +disposed to favour it with particular encouragement, seem to have +mistaken the effect and symptom for the cause. Holland, in proportion to +the extent of the land and the number of its inhabitants, by far the +richest country in Europe, has accordingly the greatest share of the +carrying trade of Europe. England, perhaps the second richest country of +Europe, is likewise supposed to have a considerable share in it; though +what commonly passes for the carrying trade of England will frequently, +perhaps, be found to be no more than a round-about foreign trade of +consumption. Such are, in a great measure, the trades which carry the +goods of the East and West Indies and of America to the different +European markets. Those goods are generally purchased, either +immediately with the produce of British industry, or with something else +which had been purchased with that produce, and the final returns of +those trades are generally used or consumed in Great Britain. The trade +which is carried on in British bottoms between the different ports of +the Mediterranean, and some trade of the same kind carried on by British +merchants between the different parts of India, make, perhaps, the +principal branches of what is properly the carrying trade of Great +Britain. + +The extent of the home trade, and of the capital which can be employed +in it, is necessarily limited by the value of the surplus produce of all +those distant places within the country which have occasion to exchange +their respective productions with one another; that of the foreign trade +of consumption, by the value of the surplus produce of the whole +country, and of what can be purchased with it; that of the carrying +trade, by the value of the surplus produce of all the different +countries in the world. Its possible extent, therefore, is in a manner +infinite in comparison of that of the other two, and is capable of +absorbing the greatest capitals. + +The consideration of his own private profit is the sole motive which +determines the owner of any capital to employ it either in agriculture, +in manufactures, or in some particular branch of the wholesale or retail +trade. The different quantities of productive labour which it may put +into motion, and the different values which it may add to the annual +produce of the land and labour of the society, according as it is +employed in one or other of those different ways, never enter into his +thoughts. In countries, therefore, where agriculture is the most +profitable of all employments, and farming and improving the most direct +roads to a splendid fortune, the capitals of individuals will naturally +be employed in the manner most advantageous to the whole society. The +profits of agriculture, however, seem to have no superiority over those +of other employments in any part of Europe. Projectors, indeed, in every +corner of it, have, within these few years, amused the public with most +magnificent accounts of the profits to be made by the cultivation and +improvement of land. Without entering into any particular discussion of +their calculations, a very simple observation may satisfy us that the +result of them must be false. We see, every day, the most splendid +fortunes, that have been acquired in the course of a single life, by +trade and manufactures, frequently from a very small capital, sometimes +from no capital. A single instance of such a fortune, acquired by +agriculture in the same time, and from such a capital, has not, perhaps, +occurred in Europe, during the course of the present century. In all the +great countries of Europe, however, much good land still remains +uncultivated; and the greater part of what is cultivated, is far from +being improved to the degree of which it is capable. Agriculture, +therefore, is almost everywhere capable of absorbing a much greater +capital than has ever yet been employed in it. What circumstances in the +policy of Europe have given the trades which are carried on in towns so +great an advantage over that which is carried on in the country, that +private persons frequently find it more for their advantage to employ +their capitals in the most distant carrying trades of Asia and America, +than in the improvement and cultivation of the most fertile fields in +their own neighbourhood, I shall endeavour to explain at full length in +the two following books. + + + + +BOOK III. + + +OF THE DIFFERENT PROGRESS OF OPULENCE IN DIFFERENT NATIONS + + + + +CHAP. I. + +OF THE NATURAL PROGRESS OF OPULENCE. + + +The great commerce of every civilized society is that carried on between +the inhabitants of the town and those of the country. It consists in the +exchange of rude for manufactured produce, either immediately, or by the +intervention of money, or of some sort of paper which represents money. +The country supplies the town with the means of subsistence and the +materials of manufacture. The town repays this supply, by sending back a +part of the manufactured produce to the inhabitants of the country. The +town, in which there neither is nor can be any reproduction of +substances, may very properly be said to gain its whole wealth and +subsistence from the country. We must not, however, upon this account, +imagine that the gain of the town is the loss of the country. The gains +of both are mutual and reciprocal, and the division of labour is in +this, as in all other cases, advantageous to all the different persons +employed in the various occupations into which it is subdivided. The +inhabitants of the country purchase of the town a greater quantity of +manufactured goods with the produce of a much smaller quantity of their +own labour, than they must have employed had they attempted to prepare +them themselves. The town affords a market for the surplus produce of +the country, or what is over and above the maintenance of the +cultivators; and it is there that the inhabitants of the country +exchange it for something else which is in demand among them. The +greater the number and revenue of the inhabitants of the town, the more +extensive is the market which it affords to those of the country; and +the more extensive that market, it is always the more advantageous to a +great number. The corn which grows within a mile of the town, sells +there for the same price with that which comes from twenty miles +distance. But the price of the latter must, generally, not only pay the +expense of raising it and bringing it to market, but afford, too, the +ordinary profits of agriculture to the farmer. The proprietors and +cultivators of the country, therefore, which lies in the neighbourhood +of the town, over and above the ordinary profits of agriculture, gain, +in the price of what they sell, the whole value of the carriage of the +like produce that is brought from more distant parts; and they save, +besides, the whole value of this carriage in the price of what they buy. +Compare the cultivation of the lands in the neighbourhood of any +considerable town, with that of those which lie at some distance from +it, and you will easily satisfy yourself how much the country is +benefited by the commerce of the town. Among all the absurd speculations +that have been propagated concerning the balance of trade, it has never +been pretended that either the country loses by its commerce with the +town, or the town by that with the country which maintains it. + +As subsistence is, in the nature of things, prior to conveniency and +luxury, so the industry which procures the former, must necessarily be +prior to that which ministers to the latter. The cultivation and +improvement of the country, therefore, which affords subsistence, must, +necessarily, be prior to the increase of the town, which furnishes only +the means of conveniency and luxury. It is the surplus produce of the +country only, or what is over and above the maintenance of the +cultivators, that constitutes the subsistence of the town, which can +therefore increase only with the increase of the surplus produce. The +town, indeed, may not always derive its whole subsistence from the +country in its neighbourhood, or even from the territory to which it +belongs, but from very distant countries; and this, though it forms no +exception from the general rule, has occasioned considerable variations +in the progress of opulence in different ages and nations. + +That order of things which necessity imposes, in general, though not in +every particular country, is in every particular country promoted by +the natural inclinations of man. If human institutions had never +thwarted those natural inclinations, the towns could nowhere have +increased beyond what the improvement and cultivation of the territory +in which they were situated could support; till such time, at least, as +the whole of that territory was completely cultivated and improved. Upon +equal, or nearly equal profits, most men will choose to employ their +capitals, rather in the improvement and cultivation of land, than either +in manufactures or in foreign trade. The man who employs his capital in +land, has it more under his view and command; and his fortune is much +less liable to accidents than that of the trader, who is obliged +frequently to commit it, not only to the winds and the waves, but to the +more uncertain elements of human folly and injustice, by giving great +credits, in distant countries, to men with whose character and situation +he can seldom be thoroughly acquainted. The capital of the landlord, on +the contrary, which is fixed in the improvement of his land, seems to be +as well secured as the nature of human affairs can admit of. The beauty +of the country, besides, the pleasure of a country life, the +tranquillity of mind which it promises, and, wherever the injustice of +human laws does not disturb it, the independency which it really +affords, have charms that, more or less, attract everybody; and as to +cultivate the ground was the original destination of man, so, in every +stage of his existence, he seems to retain a predilection for this +primitive employment. + +Without the assistance of some artificers, indeed, the cultivation of +land cannot be carried on, but with great inconveniency and continual +interruption. Smiths, carpenters, wheelwrights and ploughwrights, masons +and bricklayers, tanners, shoemakers, and tailors, are people whose +service the farmer has frequent occasion for. Such artificers, too, +stand occasionally in need of the assistance of one another; and as +their residence is not, like that of the farmer, necessarily tied down +to a precise spot, they naturally settle in the neighbourhood of one +another, and thus form a small town or village. The butcher, the brewer, +and the baker, soon join them, together with many other artificers and +retailers, necessary or useful for supplying their occasional wants, and +who contribute still further to augment the town. The inhabitants of the +town, and those of the country, are mutually the servants of one +another. The town is a continual fair or market, to which the +inhabitants of the country resort, in order to exchange their rude for +manufactured produce. It is this commerce which supplies the inhabitants +of the town, both with the materials of their work, and the means of +their subsistence. The quantity of the finished work which they sell to +the inhabitants of the country, necessarily regulates the quantity of +the materials and provisions which they buy. Neither their employment +nor subsistence, therefore, can augment, but in proportion to the +augmentation of the demand from the country for finished work; and this +demand can augment only in proportion to the extension of improvement +and cultivation. Had human institutions, therefore, never disturbed the +natural course of things, the progressive wealth and increase of the +towns would, in every political society, be consequential, and in +proportion to the improvement and cultivation of the territory or +country. + +In our North American colonies, where uncultivated land is still to be +had upon easy terms, no manufactures for distant sale have ever yet been +established in any of their towns. When an artificer has acquired a +little more stock than is necessary for carrying on his own business in +supplying the neighbouring country, he does not, in North America, +attempt to establish with it a manufacture for more distant sale, but +employs it in the purchase and improvement of uncultivated land. From +artificer he becomes planter; and neither the large wages nor the easy +subsistence which that country affords to artificers, can bribe him +rather to work for other people than for himself. He feels that an +artificer is the servant of his customers, from whom he derives his +subsistence; but that a planter who cultivates his own land, and derives +his necessary subsistence from the labour of his own family, is really a +master, and independent of all the world. + +In countries, on the contrary, where there is either no uncultivated +land, or none that can be had upon easy terms, every artificer who has +acquired more stock than he can employ in the occasional jobs of the +neighbourhood, endeavours to prepare work for more distant sale. The +smith erects some sort of iron, the weaver some sort of linen or woollen +manufactory. Those different manufactures come, in process of time, to +be gradually subdivided, and thereby improved and refined in a great +variety of ways, which may easily be conceived, and which it is +therefore unnecessary to explain any further. + +In seeking for employment to a capital, manufactures are, upon equal or +nearly equal profits, naturally preferred to foreign commerce, for the +same reason that agriculture is naturally preferred to manufactures. As +the capital of the landlord or farmer is more secure than that of the +manufacturer, so the capital of the manufacturer, being at all times +more within his view and command, is more secure than that of the +foreign merchant. In every period, indeed, of every society, the surplus +part both of the rude and manufactured produce, or that for which there +is no demand at home, must be sent abroad, in order to be exchanged for +something for which there is some demand at home. But whether the +capital which carries this surplus produce abroad be a foreign or a +domestic one, is of very little importance. If the society has not +acquired sufficient capital, both to cultivate all its lands, and to +manufacture in the completest manner the whole of its rude produce, +there is even a considerable advantage that the rude produce should be +exported by a foreign capital, in order that the whole stock of the +society may be employed in more useful purposes. The wealth of ancient +Egypt, that of China and Indostan, sufficiently demonstrate that a +nation may attain a very high degree of opulence, though the greater +part of its exportation trade be carried on by foreigners. The progress +of our North American and West Indian colonies, would have been much +less rapid, had no capital but what belonged to themselves been employed +in exporting their surplus produce. + +According to the natural course of things, therefore, the greater part +of the capital of every growing society is, first, directed to +agriculture, afterwards to manufactures, and, last of all, to foreign +commerce. This order of things is so very natural, that in every society +that had any territory, it has always, I believe, been in some degree +observed. Some of their lands must have been cultivated before any +considerable towns could be established, and some sort of coarse +industry of the manufacturing kind must have been carried on in those +towns, before they could well think of employing themselves in foreign +commerce. + +But though this natural order of things must have taken place in some +degree in every such society, it has, in all the modern states of +Europe, been in many respects entirely inverted. The foreign commerce of +some of their cities has introduced all their finer manufactures, or +such as were fit for distant sale; and manufactures and foreign commerce +together have given birth to the principal improvements of agriculture. +The manners and customs which the nature of their original government +introduced, and which remained after that government was greatly +altered, necessarily forced them into this unnatural and retrograde +order. + + + + +CHAP. II. + +OF THE DISCOURAGEMENT OF AGRICULTURE IN THE ANCIENT STATE OF EUROPE, +AFTER THE FALL OF THE ROMAN EMPIRE. + + +When the German and Scythian nations overran the western provinces of +the Roman empire, the confusions which followed so great a revolution +lasted for several centuries. The rapine and violence which the +barbarians exercised against the ancient inhabitants, interrupted the +commerce between the towns and the country. The towns were deserted, and +the country was left uncultivated; and the western provinces of Europe, +which had enjoyed a considerable degree of opulence under the Roman +empire, sunk into the lowest state of poverty and barbarism. During the +continuance of those confusions, the chiefs and principal leaders of +those nations acquired, or usurped to themselves, the greater part of +the lands of those countries. A great part of them was uncultivated; but +no part of them, whether cultivated or uncultivated, was left without a +proprietor. All of them were engrossed, and the greater part by a few +great proprietors. + +This original engrossing of uncultivated lands, though a great, might +have been but a transitory evil. They might soon have been divided +again, and broke into small parcels, either by succession or by +alienation. The law of primogeniture hindered them from being divided by +succession; the introduction of entails prevented their being broke into +small parcels by alienation. + +When land, like moveables, is considered as the means only of +subsistence and enjoyment, the natural law of succession divides it, +like them, among all the children of the family; of all of whom the +subsistence and enjoyment may be supposed equally dear to the father. +This natural law of succession, accordingly, took place among the +Romans, who made no more distinction between elder and younger, between +male and female, in the inheritance of lands, than we do in the +distribution of moveables. But when land was considered as the means, +not of subsistence merely, but of power and protection, it was thought +better that it should descend undivided to one. In those disorderly +times, every great landlord was a sort of petty prince. His tenants were +his subjects. He was their judge, and in some respects their legislator +in peace and their leader in war. He made war according to his own +discretion, frequently against his neighbours, and sometimes against his +sovereign. The security of a landed estate, therefore, the protection +which its owner could afford to those who dwelt on it, depended upon its +greatness. To divide it was to ruin it, and to expose every part of it +to be oppressed and swallowed up by the incursions of its neighbours. +The law of primogeniture, therefore, came to take place, not immediately +indeed, but in process of time, in the succession of landed estates, for +the same reason that it has generally taken place in that of monarchies, +though not always at their first institution. That the power, and +consequently the security of the monarchy, may not be weakened by +division, it must descend entire to one of the children. To which of +them so important a preference shall be given, must be determined by +some general rule, founded not upon the doubtful distinctions of +personal merit, but upon some plain and evident difference which can +admit of no dispute. Among the children of the same family there can be +no indisputable differences but that of sex, and that of age. The male +sex is universally preferred to the female; and when all other things +are equal, the elder everywhere takes place of the younger. Hence the +origin of the right of primogeniture, and of what is called lineal +succession. + +Laws frequently continue in force long after the circumstances which +first gave occasion to them, and which could alone render them +reasonable, are no more. In the present state of Europe, the proprietor +of a single acre of land is as perfectly secure in his possession as the +proprietor of 100,000. The right of primogeniture, however, still +continues to be respected; and as of all institutions it is the fittest +to support the pride of family distinctions, it is still likely to +endure for many centuries. In every other respect, nothing can be more +contrary to the real interest of a numerous family, than a right which, +in order to enrich one, beggars all the rest of the children. + +Entails are the natural consequences of the law of primogeniture. They +were introduced to preserve a certain lineal succession, of which the +law of primogeniture first gave the idea, and to hinder any part of the +original estate from being carried out of the proposed line, either by +gift, or device, or alienation; either by the folly, or by the +misfortune of any of its successive owners. They were altogether unknown +to the Romans. Neither their substitutions, nor fidei-commisses, bear +any resemblance to entails, though some French lawyers have thought +proper to dress the modern institution in the language and garb of those +ancient ones. + +When great landed estates were a sort of principalities, entails might +not be unreasonable. Like what are called the fundamental laws of some +monarchies, they might frequently hinder the security of thousands from +being endangered by the caprice or extravagance of one man. But in the +present state of Europe, when small as well as great estates derive +their security from the laws of their country, nothing can be more +completely absurd. They are founded upon the most absurd of all +suppositions, the supposition that every successive generation of men +have not an equal right to the earth, and to all that it possesses; but +that the property of the present generation should be restrained and +regulated according to the the fancy of those who died, perhaps five +hundred years ago. Entails, however, are still respected, through the +greater part of Europe; in those countries, particularly, in which noble +birth is a necessary qualification for the enjoyment either of civil or +military honours. Entails are thought necessary for maintaining this +exclusive privilege of the nobility to the great offices and honours of +their country; and that order having usurped one unjust advantage over +the rest of their fellow-citizens, lest their poverty should render it +ridiculous, it is thought reasonable that they should have another. The +common law of England, indeed, is said to abhor perpetuities, and they +are accordingly more restricted there than in any other European +monarchy; though even England is not altogether without them. In +Scotland, more than one fifth, perhaps more one third part of the whole +lands in the country, are at present supposed to be under strict entail. + +Great tracts of uncultivated land were in this manner not only engrossed +by particular families, but the possibility of their being divided again +was as much as possible precluded for ever. It seldom happens, however, +that a great proprietor is a great improver. In the disorderly times +which gave birth to those barbarous institutions, the great proprietor +was sufficiently employed in defending his own territories, or in +extending his jurisdiction and authority over those of his neighbours. +He had no leisure to attend to the cultivation and improvement of land. +When the establishment of law and order afforded this leisure, he often +wanted the inclination, and almost always the requisite abilities. If +the expense of his house and person either equalled or exceeded his +revenue, as it did very frequently, he had no stock to employ in this +manner. If he was an economist, he generally found it more profitable to +employ his annual savings in new purchases than in the improvement of +his old estate. To improve land with profit, like all other commercial +projects, requires an exact attention to small savings and small gains, +of which a man born to a great fortune, even though naturally frugal, is +very seldom capable. The situation of such a person naturally disposes +him to attend rather to ornament, which pleases his fancy, than to +profit, for which he has so little occasion. The elegance of his dress, +of his equipage, of his house and household furniture, are objects +which, from his infancy, he has been accustomed to have some anxiety +about. The turn of mind which this habit naturally forms, follows him +when he comes to think of the improvement of land. He embellishes, +perhaps, four or five hundred acres in the neighbourhood of his house, +at ten times the expense which the land is worth after all his +improvements; and finds, that if he was to improve his whole estate in +the same manner, and he has little taste for any other, he would be a +bankrupt before he had finished the tenth part of it. There still +remain, in both parts of the united kingdom, some great estates which +have continued, without interruption, in the hands of the same family +since the times of feudal anarchy. Compare the present condition of +those estates with the possessions of the small proprietors in their +neighbourhood, and you will require no other argument to convince you +how unfavourable such extensive property is to improvement. + +If little improvement was to be expected from such great proprietors, +still less was to be hoped for from those who occupied the land under +them. In the ancient state of Europe, the occupiers of land were all +tenants at will. They were all, or almost all, slaves, but their slavery +was of a milder kind than that known among the ancient Greeks and +Romans, or even in our West Indian colonies. They were supposed to +belong more directly to the land than to their master. They could, +therefore, be sold with it, but not separately. They could marry, +provided it was with the consent of their master; and he could not +afterwards dissolve the marriage by selling the man and wife to +different persons. If he maimed or murdered any of them, he was liable +to some penalty, though generally but to a small one. They were not, +however, capable of acquiring property. Whatever they acquired was +acquired to their master, and he could take it from them at pleasure. +Whatever cultivation and improvement could be carried on by means of +such slaves, was properly carried on by their master. It was at his +expense. The seed, the cattle, and the instruments of husbandry, were +all his. It was for his benefit. Such slaves could acquire nothing but +their daily maintenance. It was properly the proprietor himself, +therefore, that in this case occupied his own lands, and cultivated them +by his own bondmen. This species of slavery still subsists in Russia, +Poland, Hungary, Bohemia, Moravia, and other parts of Germany. It is +only in the western and south-western provinces of Europe that it has +gradually been abolished altogether. + +But if great improvements are seldom to be expected from great +proprietors, they are least of all to be expected when they employ +slaves for their workmen. The experience of all ages and nations, I +believe, demonstrates that the work done by slaves, though it appears to +cost only their maintenance, is in the end the dearest of any. A person +who can acquire no property can have no other interest but to eat as +much and to labour as little as possible. Whatever work he does beyond +what is sufficient to purchase his own maintenance, can be squeezed out +of him by violence only, and not by any interest of his own. In ancient +Italy, how much the cultivation of corn degenerated, how unprofitable it +became to the master, when is fell under the management of slaves, is +remarked both by Pliny and Columella. In the time of Aristotle, it had +not been much better in ancient Greece. Speaking of the ideal republic +described in the laws of Plato, to maintain 5000 idle men (the number of +warriors supposed necessary for its defence), together with their women +and servants, would require, he says, a territory of boundless extent +and fertility, like the plains of Babylon. + +The pride of man makes him love to domineer, and nothing mortifies him +to much as to be obliged to condescend to persuade his inferiors. +Wherever the law allows it, and the nature of the work can afford it, +therefore, he will generally prefer the service of slaves to that of +freemen. The planting of sugar and tobacco can afford the expense of +slave cultivation. The raising of corn, it seems, in the present times, +cannot. In the English colonies, of which the principal produce is corn, +the far greater part of the work is done by freemen. The late resolution +of the Quakers in Pennsylvania, to set at liberty all their negro +slaves, may satisfy us that their number cannot be very great. Had they +made any considerable part of their property, such a resolution could +never have been agreed to. In our sugar colonies, on the contrary, the +whole work is done by slaves, and in our tobacco colonies a very great +part of it. The profits of a sugar plantation in any of our West Indian +colonies, are generally much greater than those of any other cultivation +that is known either in Europe or America; and the profits of a tobacco +plantation, though inferior to those of sugar, are superior to those of +corn, as has already been observed. Both can afford the expense of slave +cultivation, but sugar can afford it still better than tobacco. The +number of negroes, accordingly, is much greater, in proportion to that +of whites, in our sugar than in our tobacco colonies. + +To the slave cultivators of ancient times, gradually succeeded a species +of farmers, known at present in France by the name of metayers. They are +called in Latin _Coloni Partiarii_. They have been so long in disuse in +England, that at present I know no English name for them. The proprietor +furnished them with the seed, cattle, and instruments of husbandry, the +whole stock, in short, necessary for cultivating the farm. The produce +was divided equally between the proprietor and the farmer, after setting +aside what was judged necessary for keeping up the stock, which was +restored to the proprietor, when the farmer either quitted or was turned +out of the farm. + +Land occupied by such tenants is properly cultivated at the expense of +the proprietors, as much as that occupied by slaves. There is, however, +one very essential difference between them. Such tenants being freemen, +are capable of acquiring property; and having a certain proportion of +the produce of the land, they have a plain interest that the whole +produce should be as great as possible, in order that their own +proportion may be so. A slave, on the contrary, who can acquire nothing +but his maintenance, consults his own ease, by making the land produce +as little as possible over and above that maintenance. It is probable +that it was partly upon account of this advantage, and partly upon +account of the encroachments which the sovereigns, always jealous of the +great lords, gradually encouraged their villains to make upon their +authority, and which seem, at least, to have been such as rendered this +species of servitude altogether inconvenient, that tenure in villanage +gradually wore out through the greater part of Europe. The time and +manner, however, in which so important a revolution was brought about, +is one of the most obscure points in modern history. The church of Rome +claims great merit in it; and it is certain, that so early as the +twelfth century, Alexander III. published a bull for the general +emancipation of slaves. It seems, however, to have been rather a pious +exhortation, than a law to which exact obedience was required from the +faithful. Slavery continued to take place almost universally for several +centuries afterwards, till it was gradually abolished by the joint +operation of the two interests above mentioned; that of the proprietor +on the one hand, and that of the sovereign on the other. A villain, +enfranchised, and at the same time allowed to continue in possession of +the land, having no stock of his own, could cultivate it only by means +of what the landlord advanced to him, and must therefore have been what +the French call a metayer. + +It could never, however, be the interest even of this last species of +cultivators, to lay out, in the further improvement of the land, any +part of the little stock which they might save from their own share of +the produce; because the landlord, who laid out nothing, was to get one +half of whatever it produced. The tithe, which is but a tenth of the +produce, is found to be a very great hindrance to improvement. A tax, +therefore, which amounted to one half, must have been an effectual bar +to it. It might be the interest of a metayer to make the land produce as +much as could be brought out of it by means of the stock furnished by +the proprietor; but it could never be his interest to mix any part of +his own with it. In France, where five parts out of six of the whole +kingdom are said to be still occupied by this species of cultivators, +the proprietors complain, that their metayers take every opportunity of +employing their master's cattle rather in carriage than in cultivation; +because, in the one case, they get the whole profits to themselves, in +the other they share them with their landlord. This species of tenants +still subsists in some parts of Scotland. They are called steel-bow +tenants. Those ancient English tenants, who are said by Chief-Baron +Gilbert and Dr Blackstone to have been rather bailiffs of the landlord +than farmers, properly so called, were probably of the same kind. + +To this species of tenantry succeeded, though by very slow degrees, +farmers, properly so called, who cultivated the land with their own +stock, paying a rent certain to the landlord. When such farmers have a +lease for a term of years, they may sometimes find it for their interest +to lay out part of their capital in the further improvement of the farm; +because they may sometimes expect to recover it, with a large profit, +before the expiration of the lease. The possession, even of such +farmers, however, was long extremely precarious, and still is so in many +parts of Europe. They could, before the expiration of their term, be +legally ousted of their leases by a new purchaser; in England, even, by +the fictitious action of a common recovery. If they were turned out +illegally by the violence of their master, the action by which they +obtained redress was extremely imperfect. It did not always reinstate +them in the possession of the land, but gave them damages, which never +amounted to a real loss. Even in England, the country, perhaps of +Europe, where the yeomanry has always been most respected, it was not +till about the 14th of Henry VII. that the action of ejectment was +invented, by which the tenant recovers, not damages only, but +possession, and in which his claim is not necessarily concluded by the +uncertain decision of a single assize. This action has been found so +effectual a remedy, that, in the modern practice, when the landlord has +occasion to sue for the possession of the land, he seldom makes use of +the actions which properly belong to him as a landlord, the writ of +right or the writ of entry, but sues in the name of his tenant, by the +writ of ejectment. In England, therefore the security of the tenant is +equal to that of the proprietor. In England, besides, a lease for life +of forty shillings a-year value is a freehold, and entitles the lessee +to a vote for a member of parliament; and as a great part of the +yeomanry have freeholds of this kind, the whole order becomes +respectable to their landlords, on account of the political +consideration which this gives them. There is, I believe, nowhere in +Europe, except in England, any instance of the tenant building upon the +land of which he had no lease, and trusting that the honour of his +landlord would take no advantage of so important an improvement. Those +laws and customs, so favourable to the yeomanry, have perhaps +contributed more to the present grandeur of England, than all their +boasted regulations of commerce taken together. + +The law which secures the longest leases against successors of every +kind, is, so far as I know, peculiar to Great Britain. It was introduced +into Scotland so early as 1449, by a law of James II. Its beneficial +influence, however, has been much obstructed by entails; the heirs of +entail being generally restrained from letting leases for any long term +of years, frequently for more than one year. A late act of parliament +has, in this respect, somewhat slackened their fetters, though they are +still by much too strait. In Scotland, besides, as no leasehold gives a +vote for a member of parliament, the yeomanry are upon this account less +respectable to their landlords than in England. + +In other parts of Europe, after it was found convenient to secure +tenants both against heirs and purchasers, the term of their security +was still limited to a very short period; in France, for example, to +nine years from the commencement of the lease. It has in that country, +indeed, been lately extended to twenty-seven, a period still too short +to encourage the tenant to make the most important improvements. The +proprietors of land were anciently the legislators of every part of +Europe. The laws relating to land, therefore, were all calculated for +what they supposed the interest of the proprietor. It was for his +interest, they had imagined, that no lease granted by any of his +predecessors should hinder him from enjoying, during a long term of +years, the full value of his land. Avarice and injustice are always +short-sighted, and they did not foresee how much this regulation must +obstruct improvement, and thereby hurt, in the long-run, the real +interest of the landlord. + +The farmers, too, besides paying the rent, were anciently, it was +supposed, bound to perform a great number of services to the landlord, +which were seldom either specified in the lease, or regulated by any +precise rule, but by the use and wont of the manor or barony. These +services, therefore, being almost entirely arbitrary, subjected the +tenant to many vexations. In Scotland the abolition of all services not +precisely stipulated in the lease, has, in the course of a few years, +very much altered for the better the condition of the yeomanry of that +country. + +The public services to which the yeomanry were bound, were not less +arbitrary than the private ones. To make and maintain the high roads, a +servitude which still subsists, I believe, everywhere, though with +different degrees of oppression in different countries, was not the only +one. When the king's troops, when his household, or his officers of any +kind, passed through any part of the country, the yeomanry were bound to +provide them with horses, carriages, and provisions, at a price +regulated by the purveyor. Great Britain is, I believe, the only +monarchy in Europe where the oppression of purveyance has been entirely +abolished. It still subsists in France and Germany. + +The public taxes, to which they were subject, were as irregular and +oppressive as the services. The ancient lords, though extremely +unwilling to grant, themselves, any pecuniary aid to their sovereign, +easily allowed him to tallage, as they called it, their tenants, and had +not knowledge enough to foresee how much this must, in the end, affect +their own revenue. The taille, as it still subsists in France, may serve +as an example of those ancient tallages. It is a tax upon the supposed +profits of the farmer, which they estimate by the stock that he has upon +the farm. It is his interest, therefore, to appear to have as little as +possible, and consequently to employ as little as possible in its +cultivation, and none in its improvement. Should any stock happen to +accumulate in the hands of a French farmer, the taille is almost equal +to a prohibition of its ever being employed upon the land. This tax, +besides, is supposed to dishonour whoever is subject to it, and to +degrade him below, not only the rank of a gentleman, but that of a +burgher; and whoever rents the lands of another becomes subject to it. +No gentleman, nor even any burgher, who has stock, will submit to this +degradation. This tax, therefore, not only hinders the stock which +accumulates upon the land from being employed in its improvement, but +drives away all other stock from it. The ancient tenths and fifteenths, +so usual in England in former times, seem, so far as they affected the +land, to have been taxes of the same nature with the taille. + +Under all these discouragements, little improvement could be expected +from the occupiers of land. That order of people, with all the liberty +and security which law can give, must always improve under great +disadvantage. The farmer, compared with the proprietor, is as a merchant +who trades with borrowed money, compared with one who trades with his +own. The stock of both may improve; but that of the one, with only equal +good conduct, must always improve more slowly than that of the other, on +account of the large share of the profits which is consumed by the +interest of the loan. The lands cultivated by the farmer must, in the +same manner, with only equal good conduct, be improved more slowly than +those cultivated by the proprietor, on account of the large share of the +produce which is consumed in the rent, and which, had the farmer been +proprietor, he might have employed in the further improvement of the +land. The station of a farmer, besides, is, from the nature of things, +inferior to that of a proprietor. Through the greater part of Europe, +the yeomanry are regarded as an inferior rank of people, even to the +better sort of tradesmen and mechanics, and in all parts of Europe to +the great merchants and master manufacturers. It can seldom happen, +therefore, that a man of any considerable stock should quit the +superior, in order to place himself in an inferior station. Even in the +present state of Europe, therefore, little stock is likely to go from +any other profession to the improvement of land in the way of farming. +More does, perhaps, in Great Britain than in any other country, though +even there the great stocks which are in some places employed in +farming, have generally been acquired by farming, the trade, perhaps, in +which, of all others, stock is commonly acquired most slowly. After +small proprietors, however, rich and great farmers are in every country +the principal improvers. There are more such, perhaps, in England than +in any other European monarchy. In the republican governments of +Holland, and of Berne in Switzerland, the farmers are said to be not +inferior to those of England. + +The ancient policy of Europe was, over and above all this, unfavourable +to the improvement and cultivation of land, whether carried on by the +proprietor or by the farmer; first, by the general prohibition of the +exportation of corn, without a special licence, which seems to have been +a very universal regulation; and, secondly, by the restraints which were +laid upon the inland commerce, not only of corn, but of almost every +other part of the produce of the farm, by the absurd laws against +engrossers, regraters, and forestallers, and by the privileges of fairs +and markets. It has already been observed in what manner the prohibition +of the exportation of corn, together with some encouragement given to +the importation of foreign corn, obstructed the cultivation of ancient +Italy, naturally the most fertile country in Europe, and at that time +the seat of the greatest empire in the world. To what degree such +restraints upon the inland commerce of this commodity, joined to the +general prohibition of exportation, must have discouraged the +cultivation of countries less fertile, and less favourably +circumstanced, it is not, perhaps, very easy to imagine. + + + + +CHAP. III. + +OF THE RISE AND PROGRESS OF CITIES AND TOWNS, AFTER THE FALL OF THE +ROMAN EMPIRE. + + +The inhabitants of cities and towns were, after the fall of the Roman +empire, not more favoured than those of the country. They consisted, +indeed, of a very different order of people from the first inhabitants +of the ancient republics of Greece and Italy. These last were composed +chiefly of the proprietors of lands, among whom the public territory was +originally divided, and who found it convenient to build their houses in +the neighbourhood of one another, and to surround them with a wall, for +the sake of common defence. After the fall of the Roman empire, on the +contrary, the proprietors of land seem generally to have lived in +fortified castles on their own estates, and in the midst of their own +tenants and dependents. The towns were chiefly inhabited by tradesmen +and mechanics, who seem, in those days, to have been of servile, or very +nearly of servile condition. The privileges which we find granted by +ancient charters to the inhabitants of some of the principal towns in +Europe, sufficiently show what they were before those grants. The people +to whom it is granted as a privilege, that they might give away their +own daughters in marriage without the consent of their lord, that upon +their death their own children, and not their lord, should succeed to +their goods, and that they might dispose of their own effects by will, +must, before those grants, have been either altogether, or very nearly, +in the same state of villanage with the occupiers of land in the +country. + +They seem, indeed, to have been a very poor, mean set of people, who +seemed to travel about with their goods from place to place and from +fair to fair, like the hawkers and pedlars of the present times. In all +the different countries of Europe then, in the same manner as in several +of the Tartar governments of Asia at present, taxes used to be levied +upon the persons and goods of travellers, when they passed through +certain manors, when they went over certain bridges, when they carried +about their goods from place to place in a fair, when they erected in it +a booth or stall to sell them in. These different taxes were known in +England by the names of passage, pontage, lastage, and stallage. +Sometimes the king, sometimes a great lord, who had, it seems, upon some +occasions, authority to do this, would grant to particular traders, to +such particularly as lived in their own demesnes, a general exemption +from such taxes. Such traders, though in other respects of servile, or +very nearly of servile condition, were upon this account called free +traders. They, in return, usually paid to their protector a sort of +annual poll-tax. In those days protection was seldom granted without a +valuable consideration, and this tax might perhaps be considered as +compensation for what their patrons might lose by their exemption from +other taxes. At first, both those poll-taxes and those exemptions seem +to have been altogether personal, and to have affected only particular +individuals, during either their lives, or the pleasure of their +protectors. In the very imperfect accounts which have been published +from Doomsday-book, of several of the towns of England, mention is +frequently made, sometimes of the tax which particular burghers paid, +each of them, either to the king, or to some other great lord, for this +sort of protection, and sometimes of the general amount only of all +those taxes.[31] + +But how servile soever may have been originally the condition of the +inhabitants of the towns, it appears evidently, that they arrived at +liberty and independency much earlier than the occupiers of land in the +country. That part of the king's revenue which arose from such +poll-taxes in any particular town, used commonly to be let in farm, +during a term of years, for a rent certain, sometimes to the sheriff of +the county, and sometimes to other persons. The burghers themselves +frequently got credit enough to be admitted to farm the revenues of this +sort which arose out of their own town, they becoming jointly and +severally answerable for the whole rent.[32] To let a farm in this +manner, was quite agreeable to the usual economy of, I believe, the +sovereigns of all the different countries of Europe, who used frequently +to let whole manors to all the tenants of those manors, they becoming +jointly and severally answerable for the whole rent; but in return being +allowed to collect it in their own way, and to pay it into the king's +exchequer by the hands of their own bailiff, and being thus altogether +freed from the insolence of the king's officers; a circumstance in those +days regarded as of the greatest importance. + +At first, the farm of the town was probably let to the burghers, in the +same manner as it had been to other farmers, for a term of years only. +In process of time, however, it seems to have become the general +practice to grant it to them in fee, that is for ever, reserving a rent +certain, never afterwards to be augmented. The payment having thus +became perpetual, the exemptions, in return, for which it was made, +naturally became perpetual too. Those exemptions, therefore, ceased to +be personal, and could not afterwards be considered as belonging to +individuals, as individuals, but as burghers of a particular burgh, +which, upon this account, was called a free burgh, for the same reason +that they had been called free burghers or free traders. + +Along with this grant, the important privileges, above mentioned, that +they might give away their own daughters in marriage, that their +children should succeed to them, and that they might dispose of their +own effects by will, were generally bestowed upon the burghers of the +town to whom it was given. Whether such privileges had before been +usually granted, along with the freedom of trade, to particular +burghers, as individuals, I know not. I reckon it not improbable that +they were, though I cannot produce any direct evidence of it. But +however this may have been, the principal attributes of villanage and +slavery being thus taken away from them, they now at least became really +free, in our present sense of the word freedom. + +Nor was this all. They were generally at the same time erected into a +commonalty or corporation, with the privilege of having magistrates and +a town-council of their own, of making bye-laws for their own +government, of building walls for their own defence, and of reducing all +their inhabitants under a sort of military discipline, by obliging them +to watch and ward; that is, as anciently understood, to guard and defend +those walls against all attacks and surprises, by night as well as by +day. In England they were generally exempted from suit to the hundred +and county courts; and all such pleas as should arise among them, the +pleas of the crown excepted, were left to the decision of their own +magistrates. In other countries, much greater and more extensive +jurisdictions were frequently granted to them.[33] + +It might, probably, be necessary to grant to such towns as were admitted +to farm their own revenues, some sort of compulsive jurisdiction to +oblige their own citizens to make payment. In those disorderly times, it +might have been extremely inconvenient to have left them to seek this +sort of justice from any other tribunal. But it must seem extraordinary, +that the sovereigns of all the different countries of Europe should have +exchanged in this manner for a rent certain, never more to be augmented, +that branch of their revenue, which was, perhaps, of all others, the +most likely to be improved by the natural course of things, without +either expense or attention of their own; and that they should, besides, +have in this manner voluntarily erected a sort of independent republics +in the heart of their own dominions. + +In order to understand this, it must be remembered, that, in those days, +the sovereign of perhaps no country in Europe was able to protect, +through the whole extent of his dominions, the weaker part of his +subjects from the oppression of the great lords. Those whom the law +could not protect, and who were not strong enough to defend themselves, +were obliged either to have recourse to the protection of some great +lord, and in order to obtain it, to become either his slaves or vassals; +or to enter into a league of mutual defence for the common protection of +one another. The inhabitants of cities and burghs, considered as single +individuals, had no power to defend themselves; but by entering into a +league of mutual defence with their neighbours, they were capable of +making no contemptible resistance. The lords despised the burghers, whom +they considered not only as a different order, but as a parcel of +emancipated slaves, almost of a different species from themselves. The +wealth of the burghers never failed to provoke their envy and +indignation, and they plundered them upon every occasion without mercy +or remorse. The burghers naturally hated and feared the lords. The king +hated and feared them too; but though, perhaps, he might despise, he had +no reason either to hate or fear the burghers. Mutual interest, +therefore, disposed them to support the king, and the king to support +them against the lords. They were the enemies of his enemies, and it was +his interest to render them as secure and independent of those enemies +as he could. By granting them magistrates of their own, the privilege of +making bye-laws for their own government, that of building walls for +their own defence, and that of reducing all their inhabitants under a +sort of military discipline, he gave them all the means of security and +independency of the barons which it was in his power to bestow. Without +the establishment of some regular government of this kind, without some +authority to compel their inhabitants to act according to some certain +plan or system, no voluntary league of mutual defence could either have +afforded them any permanent security, or have enabled them to give the +king any considerable support. By granting them the farm of their own +town in fee, he took away from those whom he wished to have for his +friends, and, if one may say so, for his allies, all ground of jealousy +and suspicion, that he was ever afterwards to oppress them, either by +raising the farm-rent of their town, or by granting it to some other +farmer. + +The princes who lived upon the worst terms with their barons, seem +accordingly to have been the most liberal in grants of this kind to +their burghs. King John of England, for example, appears to have been a +most munificent benefactor to his towns.[34] Philip I. of France lost +all authority over his barons. Towards the end of his reign, his son +Lewis, known afterwards by the name of Lewis the Fat, consulted, +according to Father Daniel, with the bishops of the royal demesnes, +concerning the most proper means of restraining the violence of the +great lords. Their advice consisted of two different proposals. One was +to erect a new order of jurisdiction, by establishing magistrates and a +town-council in every considerable town of his demesnes. The other was +to form a new militia, by making the inhabitants of those towns, under +the command of their own magistrates, march out upon proper occasions to +the assistance of the king. It is from this period, according to the +French antiquarians, that we are to date the institution of the +magistrates and councils of cities in France. It was during the +unprosperous reigns of the princes of the house of Suabia, that the +greater part of the free towns of Germany received the first grants of +their privileges, and that the famous Hanseatic league first became +formidable.[35] + +The militia of the cities seems, in those times, not to have been +inferior to that of the country; and as they could be more readily +assembled upon any sudden occasion, they frequently had the advantage in +their disputes with the neighbouring lords. In countries such as Italy +or Switzerland, in which, on account either of their distance from the +principal seat of government, of the natural strength of the country +itself, or of some other reason, the sovereign came to lose the whole of +his authority; the cities generally became independent republics, and +conquered all the nobility in their neighbourhood; obliging them to pull +down their castles in the country, and to live, like other peaceable +inhabitants, in the city. This is the short history of the republic of +Berne, as well as of several other cities in Switzerland. If you except +Venice, for of that city the history is somewhat different, it is the +history of all the considerable Italian republics, of which so great a +number arose and perished between the end of the twelfth and the +beginning of the sixteenth century. + +In countries such as France and England, where the authority of the +sovereign, though frequently very low, never was destroyed altogether, +the cities had no opportunity of becoming entirely independent. They +became, however, so considerable, that the sovereign could impose no tax +upon them, besides the stated farm-rent of the town, without their own +consent. They were, therefore, called upon to send deputies to the +general assembly of the states of the kingdom, where they might join +with the clergy and the barons in granting, upon urgent occasions, some +extraordinary aid to the king. Being generally, too, more favourable to +his power, their deputies seem sometimes to have been employed by him as +a counterbalance in these assemblies to the authority of the great +lords. Hence the origin of the representation of burghs in the +states-general of all great monarchies in Europe. + +Order and good government, and along with them the liberty and security +of individuals, were in this manner established in cities, at a time +when the occupiers of land in the country, were exposed to every sort of +violence. But men in this defenceless state naturally content themselves +with their necessary subsistence; because, to acquire more, might only +tempt the injustice of their oppressors. On the contrary, when they are +secure of enjoying the fruits of their industry, they naturally exert it +to better their condition, and to acquire not only the necessaries, but +the conveniencies and elegancies of life. That industry, therefore, +which aims at something more than necessary subsistence, was +established in cities long before it was commonly practised by the +occupiers of land in the country. If, in the hands of a poor cultivator, +oppressed with the servitude of villanage, some little stock should +accumulate, he would naturally conceal it with great care from his +master, to whom it would otherwise have belonged, and take the first +opportunity of running away to a town. The law was at that time so +indulgent to the inhabitants of towns, and so desirous of diminishing +the authority of the lords over those of the country, that if he could +conceal himself there from the pursuit of his lord for a year, he was +free for ever. Whatever stock, therefore, accumulated in the hands of +the industrious part of the inhabitants of the country, naturally took +refuge in cities, as the only sanctuaries in which it could be secure to +the person that acquired it. + +The inhabitants of a city, it is true, must always ultimately derive +their subsistence, and the whole materials and means of their industry, +from the country. But those of a city, situated near either the +sea-coast or the banks of a navigable river, are not necessarily +confined to derive them from the country in their neighbourhood. They +have a much wider range, and may draw them from the most remote corners +of the world, either in exchange for the manufactured produce of their +own industry, or by performing the office of carriers between distant +countries, and exchanging the produce of one for that of another. A city +might, in this manner, grow up to great wealth and splendour, while not +only the country in its neighbourhood, but all those to which it traded, +were in poverty and wretchedness. Each of those countries, perhaps, +taken singly, could afford it but a small part, either of its +subsistence or of its employment; but all of them taken together, could +afford it both a great subsistence and a great employment. There were, +however, within the narrow circle of the commerce of those times, some +countries that were opulent and industrious. Such was the Greek empire +as long as it subsisted, and that of the Saracens during the reigns of +the Abassides. Such, too, was Egypt till it was conquered by the Turks, +some part of the coast of Barbary, and all those provinces of Spain +which were under the government of the Moors. + +The cities of Italy seem to have been the first in Europe which were +raised by commerce to any considerable degree of opulence. Italy lay in +the centre of what was at that time the improved and civilized part of +the world. The crusades, too, though, by the great waste of stock and +destruction of inhabitants which they occasioned, they must necessarily +have retarded the progress of the greater part of Europe, were extremely +favourable to that of some Italian cities. The great armies which +marched from all parts to the conquest of the Holy Land, gave +extraordinary encouragement to the shipping of Venice, Genoa, and Pisa, +sometimes in transporting them thither, and always in supplying them +with provisions. They were the commissaries, if one may say so, of those +armies; and the most destructive frenzy that ever befel the European +nations, was a source of opulence to those republics. + +The inhabitants of trading cities, by importing the improved +manufactures and expensive luxuries of richer countries, afforded some +food to the vanity of the great proprietors, who eagerly purchased them +with great quantities of the rude produce of their own lands. The +commerce of a great part of Europe in those times, accordingly, +consisted chiefly in the exchange of their own rude, for the +manufactured produce of more civilized nations. Thus the wool of England +used to be exchanged for the wines of France, and the fine cloths of +Flanders, in the same manner as the corn in Poland is at this day, +exchanged for the wines and brandies of France, and for the silks and +velvets of France and Italy. + +A taste for the finer and more improved manufactures was, in this +manner, introduced by foreign commerce into countries where no such +works were carried on. But when this taste became so general as to +occasion a considerable demand, the merchants, in order to save the +expense of carriage, naturally endeavoured to establish some +manufactures of the same kind in their own country. Hence the origin of +the first manufactures for distant sale, that seem to have been +established in the western provinces of Europe, after the fall of the +Roman empire. + +No large country, it must be observed, ever did or could subsist without +some sort of manufactures being carried on in it; and when it is said of +any such country that it has no manufactures, it must always be +understood of the finer and more improved, or of such as are fit for +distant sale. In every large country, both the clothing and household +furniture of the far greater part of the people, are the produce of +their own industry. This is even more universally the case in those poor +countries which are commonly said to have no manufactures, than in those +rich ones that are said to abound in them. In the latter you will +generally find, both in the clothes and household furniture of the +lowest rank of people, a much greater proportion of foreign productions +than in the former. + +Those manufactures which are fit for distant sale, seem to have been +introduced into different countries in two different ways. + +Sometimes they have been introduced in the manner above mentioned, by +the violent operation, if one may say so, of the stocks of particular +merchants and undertakers, who established them in imitation of some +foreign manufactures of the same kind. Such manufactures, therefore, +are the offspring of foreign commerce; and such seem to have been the +ancient manufactures of silks, velvets, and brocades, which flourished +in Lucca during the thirteenth century. They were banished from thence +by the tyranny of one of Machiavel's heroes, Castruccio Castracani. In +1810, nine hundred families were driven out of Lucca, of whom thirty-one +retired to Venice, and offered to introduce there the silk +manufacture.[36] Their offer was accepted, many privileges were +conferred upon them, and they began the manufacture with three hundred +workmen. Such, too, seem to have been the manufactures of fine cloths +that anciently flourished in Flanders, and which were introduced into +England in the beginning of the reign of Elizabeth, and such are the +present silk manufactures of Lyons and Spitalfields. Manufactures +introduced in this manner are generally employed upon foreign materials, +being imitations of foreign manufactures. When the Venetian manufacture +was first established, the materials were all brought from Sicily and +the Levant. The more ancient manufacture of Lucca was likewise carried +on with foreign materials. The cultivation of mulberry trees, and the +breeding of silk-worms, seem not to have been common in the northern +parts of Italy before the sixteenth century. Those arts were not +introduced into France till the reign of Charles IX. The manufactures of +Flanders were carried on chiefly with Spanish and English wool. Spanish +wool was the material, not of the first woollen manufacture of England, +but of the first that was fit for distant sale. More than one half the +materials of the Lyons manufacture is at this day foreign silk; when it +was first established, the whole, or very nearly the whole, was so. No +part of the materials of the Spitalfields manufacture is ever likely to +be the produce of England. The seat of such manufactures, as they are +generally introduced by the scheme and project of a few individuals, is +sometimes established in a maritime city, and sometimes in an inland +town, according as their interest, judgment, or caprice, happen to +determine. + +At other times, manufactures for distant sale grow up naturally, and as +it were of their own accord, by the gradual refinement of those +household and coarser manufactures which must at all times be carried on +even in the poorest and rudest countries. Such manufactures are +generally employed upon the materials which the country produces, and +they seem frequently to have been first refined and improved in such +inland countries as were not, indeed, at a very great, but at a +considerable distance from the sea-coast, and sometimes even from all +water carriage. An inland country, naturally fertile and easily +cultivated, produces a great surplus of provisions beyond what is +necessary for maintaining the cultivators; and on account of the expense +of land carriage, and inconveniency of river navigation, it may +frequently be difficult to send this surplus abroad. Abundance, +therefore, renders provisions cheap, and encourages a great number of +workmen to settle in the neighbourhood, who find that their industry can +there procure them more of the necessaries and conveniences of life than +in other places. They work up the materials of manufacture which the +land produces, and exchange their finished work, or, what is the same +thing, the price of it, for more materials and provisions. They give a +new value to the surplus part of the rude produce, by saving the expense +of carrying it to the water-side, or to some distant market; and they +furnish the cultivators with something in exchange for it, that is +either useful or agreeable to them, upon easier terms than they could +have obtained it before. The cultivators get a better price for their +surplus produce, and can purchase cheaper other conveniences which they +have occasion for. They are thus both encouraged and enabled to increase +this surplus produce by a further improvement and better cultivation of +the land; and as the fertility of the land had given birth to the +manufacture, so the progress of the manufacture re-acts upon the land, +and increases still further its fertility. The manufacturers first +supply the neighbourhood, and afterwards, as their work improves and +refines, more distant markets. For though neither the rude produce, nor +even the coarse manufacture, could, without the greatest difficulty, +support the expense of a considerable land-carriage, the refined and +improved manufacture easily may. In a small bulk it frequently contains +the price of a great quantity of rude produce. A piece of fine cloth, +for example which weighs only eighty pounds, contains in it the price, +not only of eighty pounds weight of wool, but sometimes of several +thousand weight of corn, the maintenance of the different working +people, and of their immediate employers. The corn which could with +difficulty have been carried abroad in its own shape, is in this manner +virtually exported in that of the complete manufacture, and may easily +be sent to the remotest corners of the world. In this manner have grown +up naturally, and, as it were, of their own accord, the manufactures of +Leeds, Halifax, Sheffield, Birmingham, and Wolverhampton. Such +manufactures are the offspring of agriculture. In the modern history of +Europe, their extension and improvement have generally been posterior to +those which were the offspring of foreign commerce. England was noted +for the manufacture of fine cloths made of Spanish wool, more than a +century before any of those which now flourish in the places above +mentioned were fit for foreign sale. The extension and improvement of +these last could not take place but in consequence of the extension and +improvement of agriculture, the last and greatest effect of foreign +commerce, and of the manufactures immediately introduced by it, and +which I shall now proceed to explain. + + + + +CHAP. IV. + +HOW THE COMMERCE OF TOWNS CONTRIBUTED TO THE IMPROVEMENT OF THE COUNTRY. + + +The increase and riches of commercial and manufacturing towns +contributed to the improvement and cultivation of the countries to which +they belonged, in three different ways: + +First, by affording a great and ready market for the rude produce of the +country, they gave encouragement to its cultivation and further +improvement. This benefit was not even confined to the countries in +which they were situated, but extended more or less to all those with +which they had any dealings. To all of them they afforded a market for +some part either of their rude or manufactured produce, and, +consequently, gave some encouragement to the industry and improvement of +all. Their own country, however, on account of its neighbourhood, +necessarily derived the greatest benefit from this market. Its rude +produce being charged with less carriage, the traders could pay the +growers a better price for it, and yet afford it as cheap to the +consumers as that of more distant countries. + +Secondly, the wealth acquired by the inhabitants of cities was +frequently employed in purchasing such lands as were to be sold, of +which a great part would frequently be uncultivated. Merchants are +commonly ambitious of becoming country gentlemen, and, when they do, +they are generally the best of all improvers. A merchant is accustomed +to employ his money chiefly in profitable projects; whereas a mere +country gentleman is accustomed to employ it chiefly in expense. The one +often sees his money go from him, and return to him again with a profit; +the other, when once he parts with it, very seldom expects to see any +more of it. Those different habits naturally affect their temper and +disposition in every sort of business. The merchant is commonly a bold, +a country gentleman a timid undertaker. The one is not afraid to lay out +at once a large capital upon the improvement of his land, when he has a +probable prospect of raising the value of it in proportion to the +expense; the other, if he has any capital, which is not always the case, +seldom ventures to employ it in this manner. If he improves at all, it +is commonly not with a capital, but with what he can save out of his +annual revenue. Whoever has had the fortune to live in a mercantile +town, situated in an unimproved country, must have frequently observed +how much more spirited the operations of merchants were in this way, +than those of mere country gentlemen. The habits, besides, of order, +economy, and attention, to which mercantile business naturally forms a +merchant, render him much fitter to execute, with profit and success, +any project of improvement. + +Thirdly, and lastly, commerce and manufactures gradually introduced +order and good government, and with them the liberty and security of +individuals, among the inhabitants of the country, who had before lived +almost in a continual state of war with their neighbours, and of servile +dependency upon their superiors. This, though it has been the least +observed, is by far the most important of all their effects. Mr Hume is +the only writer who, so far as I know, has hitherto taken notice of it. + +In a country which has neither foreign commerce nor any of the finer +manufactures, a great proprietor, having nothing for which he can +exchange the greater part of the produce of his lands which is over and +above the maintenance of the cultivators, consumes the whole in rustic +hospitality at home. If this surplus produce is sufficient to maintain a +hundred or a thousand men, he can make use of it in no other way than by +maintaining a hundred or a thousand men. He is at all times, therefore, +surrounded with a multitude of retainers and dependents, who, having no +equivalent to give in return for their maintenance, but being fed +entirely by his bounty, must obey him, for the same reason that soldiers +obey the prince who pays them. Before the extension of commerce and +manufactures in Europe, the hospitality of the rich and the great, from +the sovereign down to the smallest baron, exceeded every thing which, in +the present times, we can easily form a notion of. Westminster-hall was +the dining-room of William Rufus, and might frequently, perhaps, not be +too large for his company. It was reckoned a piece of magnificence in +Thomas Becket, that he strewed the floor of his hall with clean hay or +rushes in the season, in order that the knights and squires, who could +not get seats, might not spoil their fine clothes when they sat down on +the floor to eat their dinner. The great Earl of Warwick is said to have +entertained every day, at his different manors, 30,000 people; and +though the number here may have been exaggerated, it must, however, have +been very great to admit of such exaggeration. A hospitality nearly of +the same kind was exercised not many years ago in many different parts +of the Highlands of Scotland. It seems to be common in all nations to +whom commerce and manufactures are little known. I have seen, says +Doctor Pocock, an Arabian chief dine in the streets of a town where he +had come to sell his cattle, and invited all passengers, even common +beggars, to sit down with him and partake of his banquet. + +The occupiers of land were in every respect as dependent upon the great +proprietor as his retainers. Even such of them as were not in a state of +villanage, were tenants at will, who paid a rent in no respect +equivalent to the subsistence which the land afforded them. A crown, +half a crown, a sheep, a lamb, was some years ago, in the Highlands of +Scotland, a common rent for lands which maintained a family. In some +places it is so at this day; nor will money at present purchase a +greater quantity of commodities there than in other places. In a country +where the surplus produce of a large estate must be consumed upon the +estate itself, it will frequently be more convenient for the proprietor, +that part of it be consumed at a distance from his own house, provided +they who consume it are as dependent upon him as either his retainers or +his menial servants. He in thereby saved from the embarrassment of +either too large a company, or too large a family. A tenant at will, who +possesses land sufficient to maintain his family for little more than a +quit-rent, is as dependent upon the proprietor as any servant or +retainer whatever, and must obey him with as little reserve. Such a +proprietor, as he feeds his servants and retainers at his own house, so +he feeds his tenants at their houses. The subsistence of both is derived +from his bounty, and its continuance depends upon his good pleasure. + +Upon the authority which the great proprietors necessarily had, in such +a state of things, over their tenants and retainers, was founded the +power of the ancient barons. They necessarily became the judges in +peace, and the leaders in war, of all who dwelt upon their estates. They +could maintain order, and execute the law, within their respective +demesnes, because each of them could there turn the whole force of all +the inhabitants against the injustice of any one. No other person had +sufficient authority to do this. The king, in particular, had not. In +those ancient times, he was little more than the greatest proprietor in +his dominions, to whom, for the sake of common defence against their +common enemies, the other great proprietors paid certain respects. To +have enforced payment of a small debt within the lands of a great +proprietor, where all the inhabitants were armed, and accustomed to +stand by one another, would have cost the king, had he attempted it by +his own authority, almost the same effort as to extinguish a civil war. +He was, therefore, obliged to abandon the administration of justice, +through the greater part of the country, to those who were capable of +administering it; and, for the same reason, to leave the command of the +country militia to those whom that militia would obey. + +It is a mistake to imagine that those territorial jurisdictions took +their origin from the feudal law. Not only the highest jurisdictions, +both civil and criminal, but the power of levying troops, of coining +money, and even that of making bye-laws for the government of their own +people, were all rights possessed allodially by the great proprietors of +land, several centuries before even the name of the feudal law was known +in Europe. The authority and jurisdiction of the Saxon lords in England +appear to have been as great before the Conquest as that of any of the +Norman lords after it. But the feudal law is not supposed to have become +the common law of England till after the Conquest. That the most +extensive authority and jurisdictions were possessed by the great lords +in France allodially, long before the feudal law was introduced into +that country, is a matter of fact that admits of no doubt. That +authority, and those jurisdictions, all necessarily flowed from the +state of property and manners just now described. Without remounting to +the remote antiquities of either the French or English monarchies, we +may find, in much later times, many proofs that such effects must always +flow from such causes. It is not thirty years ago since Mr Cameron of +Lochiel, a gentleman of Lochaber in Scotland, without any legal warrant +whatever, not being what was then called a lord of regality, nor even a +tenant in chief, but a vassal of the Duke of Argyll, and without being +so much as a justice of peace, used, notwithstanding, to exercise the +highest criminal jurisdictions over his own people. He is said to have +done so with great equity, though without any of the formalities of +justice; and it is not improbable that the state of that part of the +country at that time made it necessary for him to assume this authority, +in order to maintain the public peace. That gentleman, whose rent never +exceeded L.500 a-year, carried, in 1745, 800 of his own people into the +rebellion with him. + +The introduction of the feudal law, so far from extending, may be +regarded as an attempt to moderate, the authority of the great allodial +lords. It established a regular subordination, accompanied with a long +train of services and duties, from the king down to the smallest +proprietor. During the minority of the proprietor, the rent, together +with the management of his lands, fell into the hands of his immediate +superior; and, consequently, those of all great proprietors into the +hands of the king, who was charged with the maintenance and education of +the pupil, and who, from his authority as guardian, was supposed to have +a right of disposing of him in marriage, provided it was in a manner not +unsuitable to his rank. But though this institution necessarily tended +to strengthen the authority of the king, and to weaken that of the +great proprietors, it could not do either sufficiently for establishing +order and good government among the inhabitants of the country; because +it could not alter sufficiently that state of property and manners from +which the disorders arose. The authority of government still continued +to be, as before, too weak in the head, and too strong in the inferior +members; and the excessive strength of the inferior members was the +cause of the weakness of the head. After the institution of feudal +subordination, the king was as incapable of restraining the violence of +the great lords as before. They still continued to make war according to +their own discretion, almost continually upon one another, and very +frequently upon the king; and the open country still continued to be a +scene of violence, rapine, and disorder. + +But what all the violence of the feudal institutions could never have +effected, the silent and insensible operation of foreign commerce and +manufactures gradually brought about. These gradually furnished the +great proprietors with something for which they could exchange the whole +surplus produce of their lands, and which they could consume themselves, +without sharing it either with tenants or retainers. All for ourselves, +and nothing for other people, seems, in every age of the world, to have +been the vile maxim of the masters of mankind. As soon, therefore, as +they could find a method of consuming the whole value of their rents +themselves, they had no disposition to share them with any other +persons. For a pair of diamond buckles, perhaps, or for something as +frivolous and useless, they exchanged the maintenance, or, what in the +same thing, the price of the maintenance of 1000 men for a year, and +with it the whole weight and authority which it could give them. The +buckles, however, were to be all their own, and no other human creature +was to have any share of them; whereas, in the more ancient method of +expense, they must have shared with at least 1000 people. With the +judges that were to determine the preference, this difference was +perfectly decisive; and thus, for the gratification of the most +childish, the meanest, and the most sordid of all vanities they +gradually bartered their whole power and authority. + +In a country where there is no foreign commerce, nor any of the finer +manufactures, a man of L.10,000 a-year cannot well employ his revenue in +any other way than in maintaining, perhaps, 1000 families, who are all +of them necessarily at his command. In the present state of Europe, a +man of L.10,000 a-year can spend his whole revenue, and he generally +does so, without directly maintaining twenty people, or being able to +command more than ten footmen, not worth the commanding. Indirectly, +perhaps, he maintains as great, or even a greater number of people, than +he could have done by the ancient method of expense. For though the +quantity of precious productions for which he exchanges his whole +revenue be very small, the number of workmen employed in collecting and +preparing it must necessarily have been very great. Its great price +generally arises from the wages of their labour, and the profits of all +their immediate employers. By paying that price, he indirectly pays all +those wages and profits, and thus indirectly contributes to the +maintenance of all the workmen and their employers. He generally +contributes, however, but a very small proportion to that of each; to a +very few, perhaps, not a tenth, to many not a hundredth, and to some not +a thousandth, or even a ten thousandth part of their whole annual +maintenance. Though he contributes, therefore, to the maintenance of +them all, they are all more or less independent of him, because +generally they can all be maintained without him. + +When the great proprietors of land spend their rents in maintaining +their tenants and retainers, each of them maintains entirely all his own +tenants and all his own retainers. But when they spend them in +maintaining tradesmen and artificers, they may, all of them taken +together, perhaps maintain as great, or, on account of the waste which +attends rustic hospitality, a greater number of people than before. Each +of them, however, taken singly, contributes often but a very small share +to the maintenance of any individual of this greater number. Each +tradesman or artificer derives his subsistence from the employment, not +of one, but of a hundred or a thousand different customers. Though in +some measure obliged to them all, therefore, he is not absolutely +dependent upon any one of them. + +The personal expense of the great proprietors having in this manner +gradually increased, it was impossible that the number of their +retainers should not as gradually diminish, till they were at last +dismissed altogether. The same cause gradually led them to dismiss the +unnecessary part of their tenants. Farms were enlarged, and the +occupiers of land, notwithstanding the complaints of depopulation, +reduced to the number necessary for cultivating it, according to the +imperfect state of cultivation and improvement in those times. By the +removal of the unnecessary mouths, and by exacting from the farmer the +full value of the farm, a greater surplus, or, what is the same thing, +the price of a greater surplus, was obtained for the proprietor, which +the merchants and manufacturers soon furnished him with a method of +spending upon his own person, in the same manner as he had done the +rest. The cause continuing to operate, he was desirous to raise his +rents above what his lands, in the actual state of their improvement, +could afford. His tenants could agree to this upon one condition only, +that they should be secured in their possession for such a term of years +as might give them time to recover, with profit, whatever they should +lay out in the further improvement of the land. The expensive vanity of +the landlord made him willing to accept of this condition; and hence the +origin of long leases. + +Even a tenant at will, who pays the full value of the land, is not +altogether dependent upon the landlord. The pecuniary advantages which +they receive from one another are mutual and equal, and such a tenant +will expose neither his life nor his fortune in the service of the +proprietor. But if he has a lease for a long term of years, he is +altogether independent; and his landlord must not expect from him even +the most trifling service, beyond what is either expressly stipulated in +the lease, or imposed upon him by the common and known law of the +country. + +The tenants having in this manner become independent, and the retainers +being dismissed, the great proprietors were no longer capable of +interrupting the regular execution of justice, or of disturbing the +peace of the country. Having sold their birth-right, not like Esau, for +a mess of pottage in time of hunger and necessity, but, in the +wantonness of plenty, for trinkets and baubles, fitter to be the +playthings of children than the serious pursuits of men, they became as +insignificant as any substantial burgher or tradesmen in a city. A +regular government was established in the country as well as in the +city, nobody having sufficient power to disturb its operations in the +one, any more than in the other. + +It does not, perhaps, relate to the present subject, but I cannot help +remarking it, that very old families, such as have possessed some +considerable estate from father to son for many successive generations, +are very rare in commercial countries. In countries which have little +commerce, on the contrary, such as Wales, or the Highlands of Scotland, +they are very common. The Arabian histories seem to be all full of +genealogies; and there is a history written by a Tartar Khan, which has +been translated into several European languages, and which contains +scarce any thing else; a proof that ancient families are very common +among those nations. In countries where a rich man can spend his revenue +in no other way than by maintaining as many people as it can maintain, +he is apt to run out, and his benevolence, it seems, is seldom so +violent as to attempt to maintain more than he can afford. But where he +can spend the greatest revenue upon his own person, he frequently has no +bounds to his expense, because he frequently has no bounds to his +vanity, or to his affection for his own person. In commercial countries, +therefore, riches, in spite of the most violent regulations of law to +prevent their dissipation, very seldom remain long in the same family. +Among simple nations, on the contrary, they frequently do, without any +regulations of law; for among nations of shepherds, such as the Tartars +and Arabs, the consumable nature of their property necessarily renders +all such regulations impossible. + +A revolution of the greatest importance to the public happiness, was in +this manner brought about by two different orders of people, who had not +the least intention to serve the public. To gratify the most childish +vanity was the sole motive of the great proprietors. The merchants and +artificers, much less ridiculous, acted merely from a view to their own +interest, and in pursuit of their own pedlar principle of turning a +penny wherever a penny was to be got. Neither of them had either +knowledge or foresight of that great revolution which the folly of the +one, and the industry of the other, was gradually bringing about. + +It was thus, that, through the greater part of Europe, the commerce and +manufactures of cities, instead of being the effect, have been the cause +and occasion of the improvement and cultivation of the country. + +This order, however, being contrary to the natural course of things, is +necessarily both slow and uncertain. Compare the slow progress of those +European countries of which the wealth depends very much upon their +commerce and manufactures, with the rapid advances of our North American +colonies, of which the wealth is founded altogether in agriculture. +Through the greater part of Europe, the number of inhabitants is not +supposed to double in less than five hundred years. In several of our +North American colonies, it is found to double in twenty or +five-and-twenty years. In Europe, the law of primogeniture, and +perpetuities of different kinds, prevent the division of great estates, +and thereby hinder the multiplication of small proprietors. A small +proprietor, however, who knows every part of his little territory, views +it with all the affection which property, especially small property, +naturally inspires, and who upon that account takes pleasure, not only +in cultivating, but in adorning it, is generally of all improvers the +most industrious, the most intelligent, and the most successful. The +same regulations, besides, keep so much land out of the market, that +there are always more capitals to buy than there is land to sell, so +that what is sold always sells at a monopoly price. The rent never pays +the interest of the purchase money, and is, besides, burdened with +repairs and other occasional charges, to which the interest of money is +not liable. To purchase land, is, everywhere in Europe, a most +unprofitable employment of a small capital. For the sake of the superior +security, indeed, a man of moderate circumstances, when he retires from +business, will sometimes choose to lay out his little capital in land. +A man of profession, too, whose revenue is derived from another source, +often loves to secure his savings in the same way. But a young man, who, +instead of applying to trade or to some profession, should employ a +capital of two or three thousand pounds in the purchase and cultivation +of a small piece of land, might indeed expect to live very happily and +very independently, but must bid adieu for ever to all hope of either +great fortune or great illustration, which, by a different employment of +his stock, he might have had the same chance of acquiring with other +people. Such a person, too, though he cannot aspire at being a +proprietor, will often disdain to be a farmer. The small quantity of +land, therefore, which is brought to market, and the high price of what +is brought thither, prevents a great number of capitals from being +employed in its cultivation and improvement, which would otherwise have +taken that direction. In North America, on the contrary, fifty or sixty +pounds is often found a sufficient stock to begin a plantation with. The +purchase and improvement of uncultivated land is there the most +profitable employment of the smallest as well as of the greatest +capitals, and the most direct road to all the fortune and illustration +which can be acquired in that country. Such land, indeed, is in North +America to be had almost for nothing, or at a price much below the value +of the natural produce; a thing impossible in Europe, or indeed in any +country where all lands have long been private property. If landed +estates, however, were divided equally among all the children, upon the +death of any proprietor who left a numerous family, the estate would +generally be sold. So much land would come to market, that it could no +longer sell at a monopoly price. The free rent of the land would go no +nearer to pay the interest of the purchase-money, and a small capital +might be employed in purchasing land as profitable as in any other way. + +England, on account of the natural fertility of the soil, of the great +extent of the sea-coast in proportion to that of the whole country, and +of the many navigable rivers which run through it, and afford the +conveniency of water carriage to some of the most inland parts of it, is +perhaps as well fitted by nature as any large country in Europe to be +the seat of foreign commerce, of manufactures for distant sale, and of +all the improvements which these can occasion. From the beginning of the +reign of Elizabeth, too, the English legislature has been peculiarly +attentive to the interest of commerce and manufactures, and in reality +there is no country in Europe, Holland itself not excepted, of which the +law is, upon the whole, more favourable to this sort of industry. +Commerce and manufactures have accordingly been continually advancing +during all this period. The cultivation and improvement of the country +has, no doubt, been gradually advancing too; but it seems to have +followed slowly, and at a distance, the more rapid progress of commerce +and manufactures. The greater part of the country must probably have +been cultivated before the reign of Elizabeth; and a very great part of +it still remains uncultivated, and the cultivation of the far greater +part much inferior to what it might be. The law of England, however, +favours agriculture, not only indirectly, by the protection of commerce, +but by several direct encouragements. Except in times of scarcity, the +exportation of corn is not only free, but encouraged by a bounty. In +times of moderate plenty, the importation of foreign corn is loaded with +duties that amount to a prohibition. The importation of live cattle, +except from Ireland, is prohibited at all times; and it is but of late +that it was permitted from thence. Those who cultivate the land, +therefore, have a monopoly against their countrymen for the two greatest +and most important articles of land produce, bread and butcher's meat. +These encouragements, though at bottom, perhaps, as I shall endeavour to +show hereafter, altogether illusory, sufficiently demonstrate at least +the good intention of the legislature to favour agriculture. But what is +of much more importance than all of them, the yeomanry of England are +rendered as secure, as independent, and as respectable, as law can make +them. No country, therefore, in which the right of primogeniture takes +place, which pays tithes, and where perpetuities, though contrary to the +spirit of the law, are admitted in some cases, can give more +encouragement to agriculture than England. Such, however, +notwithstanding, is the state of its cultivation. What would it have +been, had the law given no direct encouragement to agriculture besides +what arises indirectly from the progress of commerce, and had left the +yeomanry in the same condition as in most other countries of Europe? It +is now more than two hundred years since the beginning of the reign of +Elizabeth, a period as long as the course of human prosperity usually +endures. + +France seems to have had a considerable share of foreign commerce, near +a century before England was distinguished as a commercial country. The +marine of France was considerable, according to the notions of the +times, before the expedition of Charles VIII. to Naples. The cultivation +and improvement of France, however, is, upon the whole, inferior to that +of England. The law of the country has never given the same direct +encouragement to agriculture. + +The foreign commerce of Spain and Portugal to the other parts of Europe, +though chiefly carried on in foreign ships, is very considerable. That +to their colonies is carried on in their own, and is much greater, on +account of the great riches and extent of those colonies. But it has +never introduced any considerable manufactures for distant sale into +either of those countries, and the greater part of both still remains +uncultivated. The foreign commerce of Portugal is of older standing than +that of any great country in Europe, except Italy. + +Italy is the only great country of Europe which seems to have been +cultivated and improved in every part, by means of foreign commerce and +manufactures for distant sale. Before the invasion of Charles VIII., +Italy, according to Guicciardini, was cultivated not less in the most +mountainous and barren parts of the country, than in the plainest and +most fertile. The advantageous situation of the country, and the great +number of independent states which at that time subsisted in it, +probably contributed not a little to this general cultivation. It is not +impossible, too, notwithstanding this general expression of one of the +most judicious and reserved of modern historians, that Italy was not at +that time better cultivated than England is at present. + +The capital, however, that is acquired to any country by commerce and +manufactures, is always a very precarious and uncertain possession, till +some part of it has been secured and realized in the cultivation and +improvement of its lands. A merchant, it has been said very properly, is +not necessarily the citizen of any particular country. It is in a great +measure indifferent to him from what place he carries on his trade; and +a very trifling disgust will make him remove his capital, and, together +with it, all the industry which it supports, from one country to +another. No part of it can be said to belong to any particular country, +till it has been spread, as it were, over the face of that country, +either in buildings, or in the lasting improvement of lands. No vestige +now remains of the great wealth said to have been possessed by the +greater part of the Hanse Towns, except in the obscure histories of the +thirteenth and fourteenth centuries. It is even uncertain where some of +them were situated, or to what towns in Europe the Latin names given to +some of them belong. But though the misfortunes of Italy, in the end of +the fifteenth and beginning of the sixteenth centuries, greatly +diminished the commerce and manufactures of the cities of Lombardy and +Tuscany, those countries still continue to be among the most populous +and best cultivated in Europe. The civil wars of Flanders, and the +Spanish government which succeeded them, chased away the great commerce +of Antwerp, Ghent, and Bruges. But Flanders still continues to be one of +the richest, best cultivated, and most populous provinces of Europe. The +ordinary revolutions of war and government easily dry up the sources of +that wealth which arises from commerce only. That which arises from the +more solid improvements of agriculture is much more durable, and cannot +be destroyed but by those more violent convulsions occasioned by the +depredations of hostile and barbarous nations continued for a century or +two together; such as those that happened for some time before and after +the fall of the Roman empire in the western provinces of Europe. + + + + +BOOK IV. + + +OF SYSTEMS OF POLITICAL ECONOMY. + + + + +INTRODUCTION. + + +Political economy, considered as a branch of the science of a statesman +or legislator, proposes two distinct objects; first, to provide a +plentiful revenue or subsistence for the people, or, more properly, to +enable them to provide such a revenue or subsistence for themselves; and +secondly, to supply the state or commonwealth with a revenue sufficient +for the public services. It proposes to enrich both the people and the +sovereign. + +The different progress of opulence in different ages and nations, has +given occasion to two different systems of political economy, with +regard to enriching the people. The one may be called the system of +commerce, the other that of agriculture. I shall endeavour to explain +both as fully and distinctly as I can, and shall begin with the system +of commerce. It is the modern system, and is best understood in our own +country and in our own times. + + + + +CHAP. I. + +OF THE PRINCIPLE OF THE COMMERCIAL OR MERCANTILE SYSTEM. + + +That wealth consists in money, or in gold and silver, is a popular +notion which naturally arises from the double function of money, as the +instrument of commerce, and as the measure of value. In consequence of +its being the instrument of commerce, when we have money we can more +readily obtain whatever else we have occasion for, than by means of any +other commodity. The great affair, we always find, is to get money. When +that is obtained, there is no difficulty in making any subsequent +purchase. In consequence of its being the measure of value, we estimate +that of all other commodities by the quantity of money which they will +exchange for. We say of a rich man, that he is worth a great deal, and +of a poor man, that he is worth very little money. A frugal man, or a +man eager to be rich, is said to love money; and a careless, a generous, +or a profuse man, is said to be indifferent about it. To grow rich is to +get money; and wealth and money, in short, are, in common language, +considered as in every respect synonymous. + +A rich country, in the same manner as a rich man, is supposed to be a +country abounding in money; and to heap up gold and silver in any +country is supposed to be the readiest way to enrich it. For some time +after the discovery of America, the first inquiry of the Spaniards, when +they arrived upon any unknown coast, used to be, if there was any gold +or silver to be found in the neighbourhood? By the information which +they received, they judged whether it was worth while to make a +settlement there, or if the country was worth the conquering. Plano +Carpino, a monk sent ambassador from the king of France to one of the +sons of the famous Gengis Khan, says, that the Tartars used frequently +to ask him, if there was plenty of sheep and oxen in the kingdom of +France? Their inquiry had the same object with that of the Spaniards. +They wanted to know if the country was rich enough to be worth the +conquering. Among the Tartars, as among all other nations of shepherds, +who are generally ignorant of the use of money, cattle are the +instruments of commerce and the measures of value. Wealth, therefore, +according to them, consisted in cattle, as, according to the Spaniards, +it consisted in gold and silver. Of the two, the Tartar notion, perhaps, +was the nearest to the truth. + +Mr Locke remarks a distinction between money and other moveable goods. +All other moveable goods, he says, are of so consumable a nature, that +the wealth which consists in them cannot be much depended on; and a +nation which abounds in them one year may, without any exportation, but +merely by their own waste and extravagance, be in great want of them the +next. Money, on the contrary, is a steady friend, which, though it may +travel about from hand to hand, yet if it can be kept from going out of +the country, is not very liable to be wasted and consumed. Gold and +silver, therefore, are, according to him, the most solid and substantial +part of the moveable wealth of a nation; and to multiply those metals +ought, he thinks, upon that account, to be the great object of its +political economy. + +Others admit, that if a nation could be separated from all the world, it +would be of no consequence how much or how little money circulated in +it. The consumable goods, which were circulated by means of this money, +would only be exchanged for a greater or a smaller number of pieces; but +the real wealth or poverty of the country, they allow, would depend +altogether upon the abundance or scarcity of those consumable goods. But +it is otherwise, they think, with countries which have connections with +foreign nations, and which are obliged to carry on foreign wars, and to +maintain fleets and armies in distant countries. This, they say, cannot +be done, but by sending abroad money to pay them with; and a nation +cannot send much money abroad, unless it has a good deal at home. Every +such nation, therefore, must endeavour, in time of peace, to accumulate +gold and silver, that when occasion requires, it may have wherewithal to +carry on foreign wars. + +In consequence of these popular notions, all the different nations of +Europe have studied, though to little purpose, every possible means of +accumulating gold and silver in their respective countries. Spain and +Portugal, the proprietors of the principal mines which supply Europe +with those metals, have either prohibited their exportation under the +severest penalties, or subjected it to a considerable duty. The like +prohibition seems anciently to have made a part of the policy of most +other European nations. It is even to be found, where we should least of +all expect to find it, in some old Scotch acts of Parliament, which +forbid, under heavy penalties, the carrying gold or silver _forth of the +kingdom_. The like policy anciently took place both in France and +England. + +When those countries became commercial, the merchants found this +prohibition, upon many occasions, extremely inconvenient. They could +frequently buy more advantageously with gold and silver, than with any +other commodity, the foreign goods which they wanted, either to import +into their own, or to carry to some other foreign country. They +remonstrated, therefore, against this prohibition as hurtful to trade. + +They represented, first, that the exportation of gold and silver, in +order to purchase foreign goods, did not always diminish the quantity of +those metals in the kingdom; that, on the contrary, it might frequently +increase the quantity; because, if the consumption of foreign goods was +not thereby increased in the country, those goods might be re-exported +to foreign countries, and being there sold for a large profit, might +bring back much more treasure than was originally sent out to purchase +them. Mr Mun compares this operation of foreign trade to the seed-time +and harvest of agriculture. 'If we only behold,' says he, 'the actions +of the husbandman in the seed-time, when he casteth away much good corn +into the ground, we shall account him rather a madman than a husbandman. +But when we consider his labours in the harvest, which is the end of his +endeavours, we shall find the worth and plentiful increase of his +actions.' + +They represented, secondly, that this prohibition could not hinder the +exportation of gold and silver, which, on account of the smallness of +their bulk in proportion to their value, could easily be smuggled +abroad. That this exportation could only be prevented by a proper +attention to what they called the balance of trade. That when the +country exported to a greater value than it imported, a balance became +due to it from foreign nations, which was necessarily paid to it in gold +and silver, and thereby increased the quantity of those metals in the +kingdom. But that when it imported to a greater value than it exported, +a contrary balance became due to foreign nations, which was necessarily +paid to them in the same manner, and thereby diminished that quantity: +that in this case, to prohibit the exportation of those metals, could +not prevent it, but only, by making it more dangerous, render it more +expensive: that the exchange was thereby turned more against the country +which owed the balance, than it otherwise might have been; the merchant +who purchased a bill upon the foreign country being obliged to pay the +banker who sold it, not only for the natural risk, trouble, and expense +of sending the money thither, but for the extraordinary risk arising +from the prohibition; but that the more the exchange was against any +country, the more the balance of trade became necessarily against it; +the money of that country becoming necessarily of so much less value, in +comparison with that of the country to which the balance was due. That +if the exchange between England and Holland, for example, was five per +cent. against England, it would require 105 ounces of silver in England +to purchase a bill for 100 ounces of silver in Holland: that 105 ounces +of silver in England, therefore, would be worth only 100 ounces of +silver in Holland, and would purchase only a proportionable quantity of +Dutch goods; but that 100 ounces of silver in Holland, on the contrary, +would be worth 105 ounces in England, and would purchase a +proportionable quantity of English goods; that the English goods which +were sold to Holland would be sold so much cheaper, and the Dutch goods +which were sold to England so much dearer, by the difference of the +exchange: that the one would draw so much less Dutch money to England, +and the other so much more English money to Holland, as this difference +amounted to: and that the balance of trade, therefore, would necessarily +be so much more against England, and would require a greater balance of +gold and silver be exported to Holland. + +Those arguments were partly solid and some partly sophistical. They were +solid, so far as they asserted that the exportation of gold and silver +in trade might frequently be advantageous to the country. They were +solid, too, in asserting that no prohibition could prevent their +exportation, when private people found any advantage in exporting them. +But they were sophistical, in supposing, that either to preserve or to +augment the quantity of those metals required more the attention of +government, than to preserve or to augment the quantity of any other +useful commodities, which the freedom of trade, without any such +attention, never fails to supply in the proper quantity. They were +sophistical, too, perhaps, in asserting that the high price of exchange +necessarily increased what they called the unfavourable balance of +trade, or occasioned the exportation of a greater quantity of gold and +silver. That high price, indeed, was extremely disadvantageous to the +merchants who had any money to pay in foreign countries. They paid so +much dearer for the bills which their bankers granted them upon those +countries. But though the risk arising from the prohibition might +occasion some extraordinary expense to the bankers, it would not +necessarily carry any more money out of the country. This expense would +generally be all laid out in the country, in smuggling the money out of +it, and could seldom occasion the exportation of a single sixpence +beyond the precise sum drawn for. The high price of exchange, too, would +naturally dispose the merchants to endeavour to make their exports +nearly balance their imports, in order that they might have this high +exchange to pay upon as small a sum as possible. The high price of +exchange, besides, must necessarily have operated as a tax, in raising +the price of foreign goods, and thereby diminishing their consumption. +It would tend, therefore, not to increase, but to diminish, what they +called the unfavourable balance of trade, and consequently the +exportation of gold and silver. + +Such as they were, however, those arguments convinced the people to whom +they were addressed. They were addressed by merchants to parliaments and +to the councils of princes, to nobles, and to country gentlemen; by +those who were supposed to understand trade, to those who were conscious +to themselves that they knew nothing about the matter. That foreign +trade enriched the country, experience demonstrated to the nobles and +country gentlemen, as well as to the merchants; but how, or in what +manner, none of them well knew. The merchants knew perfectly in what +manner it enriched themselves, it was their business to know it. But to +know in what manner it enriched the country, was no part of their +business. The subject never came into their consideration, but when they +had occasion to apply to their country for some change in the laws +relating to foreign trade. It then became necessary to say something +about the beneficial effects of foreign trade, and the manner in which +those effects were obstructed by the laws as they then stood. To the +judges who were to decide the business, it appeared a most satisfactory +account of the matter, when they were told that foreign trade brought +money into the country, but that the laws in question hindered it from +bringing so much as it otherwise would do. Those arguments, therefore, +produced the wished-for effect. The prohibition of exporting gold and +silver was, in France and England, confined to the coin of those +respective countries. The exportation of foreign coin and of bullion was +made free. In Holland, and in some other places, this liberty was +extended even to the coin of the country. The attention of government +was turned away from guarding against the exportation of gold and +silver, to watch over the balance of trade, as the only cause which +could occasion any augmentation or diminution of these metals. From one +fruitless care, it was turned away to another care much more intricate, +much more embarrassing, and just equally fruitless. The title of Mun's +book, England's Treasure in Foreign Trade, became a fundamental maxim in +the political economy, not of England only, but of all other commercial +countries. The inland or home trade, the most important of all, the +trade in which an equal capital affords the greatest revenue, and +creates the greatest employment to the people of the country, was +considered as subsidiary only to foreign trade. It neither brought money +into the country, it was said, nor carried any out of it. The country, +therefore, could never become either richer or poorer by means of it, +except so far as its prosperity or decay might indirectly influence the +state of foreign trade. + +A country that has no mines of its own, must undoubtedly draw its gold +and silver from foreign countries, in the same manner as one that has no +vineyards of its own must draw its wines. It does not seem necessary, +however, that the attention of government should be more turned towards +the one than towards the other object. A country that has wherewithal to +buy wine, will always get the wine which it has occasion for; and a +country that has wherewithal to buy gold and silver, will never be in +want of those metals. They are to be bought for a certain price, like +all commodities; and as they are the price of all other commodities, so +all other commodities are the price of those metals. We trust, with +perfect security, that the freedom of trade, without any attention of +government, will always supply us with the wine which we have occasion +for; and we may trust, with equal security, that it will always supply +us with all the gold and silver which we can afford to purchase or to +employ, either in circulating our commodities or in other uses. + +The quantity of every commodity which human industry can either purchase +or produce, naturally regulates itself in every country according to the +effectual demand, or according to the demand of those who are willing to +pay the whole rent, labour, and profits, which must be paid in order to +prepare and bring it to market. But no commodities regulate themselves +more easily or more exactly, according to this effectual demand, than +gold and silver; because, on account of the small bulk and great value +of those metals, no commodities can be more easily transported from one +place to another; from the places where they are cheap, to those where +they are dear; from the places where they exceed, to those where they +fall short of this effectual demand. If there were in England, for +example, an effectual demand for an additional quantity of gold, a +packet-boat could bring from Lisbon, or from wherever else it was to be +had, fifty tons of gold, which could be coined into more than five +millions of guineas. But if there were an effectual demand for grain to +the same value, to import it would require, at five guineas a-ton, a +million of tons of shipping, or a thousand ships of a thousand tons +each. The navy of England would not be sufficient. + +When the quantity of gold and silver imported into any country exceeds +the effectual demand, no vigilance of government can prevent their +exportation. All the sanguinary laws of Spain and Portugal are not able +to keep their gold and silver at home. The continual importations from +Peru and Brazil exceed the effectual demand of those countries, and sink +the price of those metals there below that in the neighbouring +countries. If, on the contrary, in any particular country, their +quantity fell short of the effectual demand, so as to raise their price +above that of the neighbouring countries, the government would have no +occasion to take any pains to import them. If it were even to take pains +to prevent their importation, it would not be able to effectuate it. +Those metals, when the Spartans had got wherewithal to purchase them, +broke through all the barriers which the laws of Lycurgus opposed to +their entrance into Lacedæmon. All the sanguinary laws of the customs +are not able to prevent the importation of the teas of the Dutch and +Gottenburg East India companies; because somewhat cheaper than those of +the British company. A pound of tea, however, is about a hundred times +the bulk of one of the highest prices, sixteen shillings, that is +commonly paid for it in silver, and more than two thousand times the +bulk of the same price in gold, and, consequently, just so many times +more difficult to smuggle. + +It is partly owing to the easy transportation of gold and silver, from +the places where they abound to those where they are wanted, that the +price of those metals does not fluctuate continually, like that of the +greater part of other commodities, which are hindered by their bulk from +shifting their situation, when the market happens to be either over or +understocked with them. The price of those metals, indeed, is not +altogether exempted from variation; but the changes to which it is +liable are generally slow, gradual, and uniform. In Europe, for example, +it is supposed, without much foundation, perhaps, that during the course +of the present and preceding century, they have been constantly, but +gradually, sinking in their value, on account of the continual +importations from the Spanish West Indies. But to make any sudden change +in the price of gold and silver, so as to raise or lower at once, +sensibly and remarkably, the money price of all other commodities, +requires such a revolution in commerce as that occasioned by the +discovery of America. + +If, notwithstanding all this, gold and silver should at any time fall +short in a country which has wherewithal to purchase them, there are +more expedients for supplying their place, than that of almost any other +commodity. If the materials of manufacture are wanted, industry must +stop. If provisions are wanted, the people must starve. But if money is +wanted, barter will supply its place, though with a good deal of +inconveniency. Buying and selling upon credit, and the different dealers +compensating their credits with one another, once a-month, or once +a-year, will supply it with less inconveniency. A well-regulated +paper-money will supply it not only without any inconveniency, but, in +some cases, with some advantage. Upon every account, therefore, the +attention of government never was so unnecessarily employed, as when +directed to watch over the preservation or increase of the quantity of +money in any country. + +No complaint, however, is more common than that of a scarcity of money. +Money, like wine, must always be scarce with those who have neither +wherewithal to buy it, nor credit to borrow it. Those who have either, +will seldom be in want either of the money, or of the wine which they +have occasion for. This complaint, however, of the scarcity of money, is +not always confined to improvident spendthrifts. It is sometimes general +through a whole mercantile town and the country in its neighbourhood. +Over-trading is the common cause of it. Sober men, whose projects have +been disproportioned to their capitals, are as likely to have neither +wherewithal to buy money, nor credit to borrow it, as prodigals, whose +expense has been disproportioned to their revenue. Before their projects +can be brought to bear, their stock is gone, and credit with it. They +run about everywhere to borrow money, and everybody tells them that they +have none to lend. Even such general complaints of the scarcity of money +do not always prove that the usual number of gold and silver pieces are +not circulating in the country, but that many people want those pieces +who have nothing to give for them. When the profits of trade happen to +be greater than ordinary over-trading becomes a general error, both +among great and small dealers. They do not always send more money abroad +than usual, but they buy upon credit, both at home and abroad, an +unusual quantity of goods, which they send to some distant market, in +hopes that the returns will come in before the demand for payment. The +demand comes before the returns, and they have nothing at hand with +which they can either purchase money or give solid security for +borrowing. It is not any scarcity of gold and silver, but the difficulty +which such people find in borrowing, and which their creditor find in +getting payment, that occasions the general complaint of the scarcity of +money. + +It would be too ridiculous to go about seriously to prove, that wealth +does not consist in money, or in gold and silver; but in what money +purchases, and is valuable only for purchasing. Money, no doubt, makes +always a part of the national capital; but it has already been shown +that it generally makes but a small part, and always the most +unprofitable part of it. + +It is not because wealth consists more essentially in money than in +goods, that the merchant finds it generally more easy to buy goods with +money, than to buy money with goods; but because money is the known and +established instrument of commerce, for which every thing is readily +given in exchange, but which is not always with equal readiness to be +got in exchange for every thing. The greater part of goods, besides, are +more perishable than money, and he may frequently sustain a much greater +loss by keeping them. When his goods are upon hand, too, he is more +liable to such demands for money as he may not be able to answer, than +when he has got their price in his coffers. Over and above all this, his +profit arises more directly from selling than from buying; and he is, +upon all these accounts, generally much more anxious to exchange his +goods for money than his money for goods. But though a particular +merchant, with abundance of goods in his warehouse, may sometimes be +ruined by not being able to sell them in time, a nation or country is +not liable to the same accident. The whole capital of a merchant +frequently consists in perishable goods destined for purchasing money. +But it is but a very small part of the annual produce of the land and +labour of a country, which can ever be destined for purchasing gold and +silver from their neighbours. The far greater part is circulated and +consumed among themselves; and even of the surplus which is sent abroad, +the greater part is generally destined for the purchase of other foreign +goods. Though gold and silver, therefore, could not be had in exchange +for the goods destined to purchase them, the nation would not be ruined. +It might, indeed, suffer some loss and inconveniency, and be forced upon +some of those expedients which are necessary for supplying the place of +money. The annual produce of its land and labour, however, would be the +same, or very nearly the same as usual; because the same, or very nearly +the same consumable capital would be employed in maintaining it. And +though goods do not always draw money so readily as money draws goods, +in the long-run they draw it more necessarily than even it draws them. +Goods can serve many other purposes besides purchasing money, but money +can serve no other purpose besides purchasing goods. Money, therefore, +necessarily runs after goods, but goods do not always necessarily run +after money. The man who buys, does not always mean to sell again, but +frequently to use or to consume; whereas he who sells always means to +buy again. The one may frequently have done the whole, but the other can +never have done more than the one half of his business. It is not for +its own sake that men desire money, but for the sake of what they can +purchase with it. + +Consumable commodities, it is said, are soon destroyed; whereas gold and +silver are of a the more durable nature, and were it not for this +continual exportation, might be accumulated for ages together, to the +incredible augmentation of the real wealth of the country. Nothing, +therefore, it is pretended, can be more disadvantageous to any country, +than the trade which consists in the exchange of such lasting for such +perishable commodities. We do not, however, reckon that trade +disadvantageous, which consists in the exchange of the hardware of +England for the wines of France, and yet hardware is a very durable +commodity, and were it not for this continual exportation, might too be +accumulated for ages together, to the incredible augmentation of the +pots and pans of the country. But it readily occurs, that the number of +such utensils is in every country necessarily limited by the use which +there is for them; that it would be absurd to have more pots and pans +than were necessary for cooking the victuals usually consumed there; +and that, if the quantity of victuals were to increase, the number of +pots and pans would readily increase along with it; a part of the +increased quantity of victuals being employed in purchasing them, or in +maintaining an additional number of workmen whose business it was to +make them. It should as readily occur, that the quantity of gold and +silver is in every country limited by the use which there is for those +metals; that their use consists in circulating commodities, as coin, and +in affording a species of household furniture, as plate; that the +quantity of coin in every country is regulated by the value of the +commodities which are to be circulated by it; increase that value, and +immediately a part of it will be sent abroad to purchase, wherever it is +to be had, the additional quantity of coin requisite for circulating +them: that the quantity of plate is regulated by the number and wealth +of those private families who choose to indulge themselves in that sort +of magnificence; increase the number and wealth of such families, and a +part of this increased wealth will most probably be employed in +purchasing, wherever it is to be found, an additional quantity of plate; +that to attempt to increase the wealth of any country, either by +introducing or by detaining in it an unnecessary quantity of gold and +silver, is as absurd as it would be to attempt to increase the good +cheer of private families, by obliging them to keep an unnecessary +number of kitchen utensils. As the expense of purchasing those +unnecessary utensils would diminish, instead of increasing, either the +quantity or goodness of the family provisions; so the expense of +purchasing an unnecessary quantity of gold and silver must, in every +country, as necessarily diminish the wealth which feeds, clothes, and +lodges, which maintains and employs the people. Gold and silver, whether +in the shape of coin or of plate, are utensils, it must be remembered, +as much as the furniture of the kitchen. Increase the use of them, +increase the consumable commodities which are to be circulated, managed, +and prepared by means of them, and you will infallibly increase the +quantity; but if you attempt by extraordinary means to increase the +quantity, you will as infallibly diminish the use, and even the quantity +too, which in these metals can never he greater than what the use +requires. Were they ever to be accumulated beyond this quantity, their +transportation is so easy, and the loss which attends their lying idle +and unemployed so great, that no law could prevent their being +immediately sent out of the country. + +It is not always necessary to accumulate gold and silver, in order to +enable a country to carry on foreign wars, and to maintain fleets and +armies in distant countries. Fleets and armies are maintained, not with +gold and silver, but with consumable goods. The nation which, from the +annual produce of its domestic industry, from the annual revenue arising +out of its lands, and labour, and consumable stock, has wherewithal to +purchase those consumable goods in distant countries, can maintain +foreign wars there. + +A nation may purchase the pay and provisions of an army in a distant +country three different ways; by sending abroad either, first, some part +of its accumulated gold and silver; or, secondly, some part of the +annual produce of its manufactures; or, last of all, some part of its +annual rude produce. + +The gold and silver which can properly be considered as accumulated, or +stored up in any country, may be distinguished into three parts; first, +the circulating money; secondly, the plate of private families; and, +last of all, the money which may have been collected by many years +parsimony, and laid up in the treasury of the prince. + +It can seldom happen that much can be spared from the circulating money +of the country; because in that there can seldom be much redundancy. The +value of goods annually bought and sold in any country requires a +certain quantity of money to circulate and distribute them to their +proper consumers, and can give employment to no more. + + +The channel of circulation necessarily draws to itself a sum sufficient +to fill it, and never admits any more. Something, however, is generally +withdrawn from this channel in the case of foreign war. By the great +number of people who are maintained abroad, fewer are maintained at +home. Fewer goods are circulated there, and less money becomes necessary +to circulate them. An extraordinary quantity of paper money of some sort +or other, too, such as exchequer notes, navy bills, and bank bills, in +England, is generally issued upon such occasions, and, by supplying the +place of circulating gold and silver, gives an opportunity of sending a +greater quantity of it abroad. All this, however, could afford but a +poor resource for maintaining a foreign war, of great expense, and +several years duration. + +The melting down of the plate of private families has, upon every +occasion, been found a still more insignificant one. The French, in the +beginning of the last war, did not derive so much advantage from this +expedient as to compensate the loss of the fashion. + +The accumulated treasures of the prince have in former times afforded a +much greater and more lasting resource. In the present times, if you +except the king of Prussia, to accumulate treasure seems to be no part +of the policy of European princes. + +The funds which maintained the foreign wars of the present century, the +most expensive perhaps which history records, seem to have had little +dependency upon the exportation either of the circulating money, or of +the plate of private families, or of the treasure of the prince. The +last French war cost Great Britain upwards of £90,000,000, including not +only the £75,000,000 of new debt that was contracted, but the additional +2s. in the pound land-tax, and what was annually borrowed of the sinking +fund. More than two-thirds of this expense were laid out in distant +countries; in Germany, Portugal, America, in the ports of the +Mediterranean, in the East and West Indies. The kings of England had no +accumulated treasure. We never heard of any extraordinary quantity of +plate being melted down. The circulating gold and silver of the country +had not been supposed to exceed L.18,000,000. Since the late recoinage +of the gold, however, it is believed to have been a good deal +under-rated. Let us suppose, therefore, according to the most +exaggerated computation which I remember to have either seen or heard +of, that, gold and silver together, it amounted to L.30,000,000. Had the +war been carried on by means of our money, the whole of it must, even +according to this computation, have been sent out and returned again, at +least twice in a period of between six and seven years. Should this be +supposed, it would afford the most decisive argument, to demonstrate how +unnecessary it is for government to watch over the preservation of +money, since, upon this supposition, the whole money of the country must +have gone from it, and returned to it again, two different times in so +short a period, without any body's knowing any thing of the matter. The +channel of circulation, however, never appeared more empty than usual +during any part of this period. Few people wanted money who had +wherewithal to pay for it. The profits of foreign trade, indeed, were +greater than usual during the whole war, but especially towards the end +of it. This occasioned, what it always occasions, a general over-trading +in all the ports of Great Britain; and this again occasioned the usual +complaint of the scarcity of money, which always follows over-trading. +Many people wanted it, who had neither wherewithal to buy it, nor credit +to borrow it; and because the debtors found it difficult to borrow, the +creditors found it difficult to get payment. Gold and silver, however, +were generally to be had for their value, by those who had that value to +give for them. + +The enormous expense of the late war, therefore, must have been chiefly +defrayed, not by the exportation of gold and silver, but by that of +British commodities of some kind or other. When the government, or those +who acted under them, contracted with a merchant for a remittance to +some foreign country, he would naturally endeavour to pay his foreign +correspondent, upon whom he granted a bill, by sending abroad rather +commodities than gold and silver. If the commodities of Great Britain +were not in demand in that country, he would endeavour to send them to +some other country in which he could purchase a bill upon that country. +The transportation of commodities, when properly suited to the market, +is always attended with a considerable profit; whereas that of gold and +silver is scarce ever attended with any. When those metals are sent +abroad in order to purchase foreign commodities, the merchant's profit +arises, not from the purchase, but from the sale of the returns. But +when they are sent abroad merely to pay a debt, he gets no returns, and +consequently no profit. He naturally, therefore, exerts his invention to +find out a way of paying his foreign debts, rather by the exportation of +commodities, than by that of gold and silver. The great quantity of +British goods, exported during the course of the late war, without +bringing back any returns, is accordingly remarked by the author of the +Present State of the Nation. + +Besides the three sorts of gold and silver above mentioned, there is in +all great commercial countries a good deal of bullion alternately +imported and exported, for the purposes of foreign trade. This bullion, +as it circulates among different commercial countries, in the same +manner as the national coin circulates in every country, may be +considered as the money of the great mercantile republic. The national +coin receives its movement and direction from the commodities circulated +within the precincts of each particular country; the money in the +mercantile republic, from those circulated between different countries. +Both are employed in facilitating exchanges, the one between different +individuals of the same, the other between those of different nations. +Part of this money of the great mercantile republic may have been, and +probably was, employed in carrying on the late war. In time of a general +war, it is natural to suppose that a movement and direction should be +impressed upon it, different from what it usually follows in profound +peace, that it should circulate more about the seat of the war, and be +more employed in purchasing there, and in the neighbouring countries, +the pay and provisions of the different armies. But whatever part of +this money of the mercantile republic Great Britain may have annually +employed in this manner, it must have been annually purchased, either +with British commodities, or with something else that had been purchased +with them; which still brings us back to commodities, to the annual +produce of the land and labour of the country, as the ultimate resources +which enabled us to carry on the war. It is natural, indeed, to suppose, +that so great an annual expense must have been defrayed from a great +annual produce. The expense of 1761, for example, amounted to more than +£19,000,000. No accumulation could have supported so great an annual +profusion. There is no annual produce, even of gold and silver, which +could have supported it. The whole gold and silver annually imported +into both Spain and Portugal, according to the best accounts, does not +commonly much exceed £6,000,000 sterling, which, in some years, would +scarce have paid four months expense of the late war. + +The commodities most proper for being transported to distant countries, +in order to purchase there either the pay and provisions of an army, or +some part of the money of the mercantile republic to be employed in +purchasing them, seem to be the finer and more improved manufactures; +such as contain a great value in a small bulk, and can therefore be +exported to a great distance at little expense. A country whose industry +produces a great annual surplus of such manufactures, which are usually +exported to foreign countries, may carry on for many years a very +expensive foreign war, without either exporting any considerable +quantity of gold and silver, or even having any such quantity to export. +A considerable part of the annual surplus of its manufactures must, +indeed, in this case, be exported without bringing back any returns to +the country, though it does to the merchant; the government purchasing +of the merchant his bills upon foreign countries, in order to purchase +there the pay and provisions of an army. Some part of this surplus, +however, may still continue to bring back a return. The manufacturers +during the war will have a double demand upon them, and be called upon +first to work up goods to be sent abroad, for paying the bills drawn +upon foreign countries for the pay and provisions of the army; and, +secondly, to work up such as are necessary for purchasing the common +returns that had usually been consumed in the country. In the midst of +the most destructive foreign war, therefore, the greater part of +manufactures may frequently flourish greatly; and, on the contrary, they +may decline on the return of peace. They may flourish amidst the ruin of +their country, and begin to decay upon the return of its prosperity. The +different state of many different branches of the British manufactures +during the late war, and for some time after the peace, may serve as an +illustration of what has been just now said. + +No foreign war, of great expense or duration, could conveniently be +carried on by the exportation of the rude produce of the soil. The +expense of sending such a quantity of it into a foreign country as might +purchase the pay and provisions of an army would be too great. Few +countries, too, produce much more rude produce than what is sufficient +for the subsistence of their own inhabitants. To send abroad any great +quantity of it, therefore, would be to send abroad a part of the +necessary subsistence of the people. It is otherwise with the +exportation of manufactures. The maintenance of the people employed in +them is kept at home, and only the surplus part of their work is +exported. Mr Hume frequently takes notice of the inability of the +ancient kings of England to carry on, without interruption, any foreign +war of long duration. The English in those days had nothing wherewithal +to purchase the pay and provisions of their armies in foreign countries, +but either the rude produce of the soil, of which no considerable part +could be spared from the home consumption, or a few manufactures of the +coarsest kind, of which, as well as of the rude produce, the +transportation was too expensive. This inability did not arise from the +want of money, but of the finer and more improved manufactures. Buying +and selling was transacted by means of money in England then as well as +now. The quantity of circulating money must have borne the same +proportion to the number and value of purchases and sales usually +transacted at that time, which it does to those transacted at present; +or, rather, it must have borne a greater proportion, because there was +then no paper, which now occupies a great part of the employment of gold +and silver. Among nations to whom commerce and manufactures are little +known, the sovereign, upon extraordinary occasions, can seldom draw any +considerable aid from his subjects, for reasons which shall be explained +hereafter. It is in such countries, therefore, that he generally +endeavours to accumulate a treasure, as the only resource against such +emergencies. Independent of this necessity, he is, in such a situation, +naturally disposed to the parsimony requisite for accumulation. In that +simple state, the expense even of a sovereign is not directed by the +vanity which delights in the gaudy finery of a court, but is employed in +bounty to his tenants, and hospitality to his retainers. But bounty and +hospitality very seldom lead to extravagance; though vanity almost +always does. Every Tartar chief, accordingly, has a treasure. The +treasures of Mazepa, chief of the Cossacks in the Ukraine, the famous +ally of Charles XII., are said to have been very great. The French kings +of the Merovingian race had all treasures. When they divided their +kingdom among their different children, they divided their treasure too. +The Saxon princes, and the first kings after the Conquest, seem likewise +to have accumulated treasures. The first exploit of every new reign was +commonly to seize the treasure of the preceding king, as the most +essential measure for securing the succession. The sovereigns of +improved and commercial countries are not under the same necessity of +accumulating treasures, because they can generally draw from their +subjects extraordinary aids upon extraordinary occasions. They are +likewise less disposed to do so. They naturally, perhaps necessarily, +follow the mode of the times; and their expense comes to be regulated by +the same extravagant vanity which directs that of all the other great +proprietors in their dominions. The insignificant pageantry of their +court becomes every day more brilliant; and the expense of it not only +prevents accumulation, but frequently encroaches upon the funds destined +for more necessary expenses. What Dercyllidas said of the court of +Persia, may be applied to that of several European princes, that he saw +there much splendour, but little strength, and many servants, but few +soldiers. + +The importation of gold and silver is not the principal, much less the +sole benefit, which a nation derives from its foreign trade. Between +whatever places foreign trade is carried on, they all of them derive two +distinct benefits from it. It carries out that surplus part of the +produce of their land and labour for which there is no demand among +them, and brings back in return for it something else for which there is +a demand. It gives a value to their superfluities, by exchanging them +for something else, which may satisfy a part of their wants and increase +their enjoyments. By means of it, the narrowness of the home market does +not hinder the division of labour in any particular branch of art or +manufacture from being carried to the highest perfection. By opening a +more extensive market for whatever part of the produce of their labour +may exceed the home consumption, it encourages them to improve its +productive power, and to augment its annual produce to the utmost, and +thereby to increase the real revenue and wealth of the society. These +great and important services foreign trade is continually occupied in +performing to all the different countries between which it is carried +on. They all derive great benefit from it, though that in which the +merchant resides generally derives the greatest, as he is generally more +employed in supplying the wants, and carrying out the superfluities of +his own, than of any other particular country. To import the gold and +silver which may be wanted into the countries which have no mines, is, +no doubt, a part of the business of foreign commerce. It is, however, a +most insignificant part of it. A country which carried on foreign trade +merely upon this account, could scarce have occasion to freight a ship +in a century. + +It is not by the importation of gold and silver that the discovery of +America has enriched Europe. By the abundance of the American mines, +those metals have become cheaper. A service of plate can now be +purchased for about a third part of the corn, or a third part of the +labour, which it would have cost in the fifteenth century. With the same +annual expense of labour and commodities, Europe can annually purchase +about three times the quantity of plate which it could have purchased at +that time. But when a commodity comes to be sold for a third part of +what had been its usual price, not only those who purchased it before +can purchase three times their former quantity, but it is brought down +to the level of a much greater number of purchasers, perhaps to more +than ten, perhaps to more than twenty times the former number. So that +there may be in Europe at present, not only more than three times, but +more than twenty or thirty times the quantity of plate which would have +been in it, even in its present state of improvement, had the discovery +of the American mines never been made. So far Europe has, no doubt, +gained a real conveniency, though surely a very trifling one. The +cheapness of gold and silver renders those metals rather less fit for +the purposes of money than they were before. In order to make the same +purchases, we must load ourselves with a greater quantity of them, and +carry about a shilling in our pocket, where a groat would have done +before. It is difficult to say which is most trifling, this +inconveniency, or the opposite conveniency. Neither the one nor the +other could have made any very essential change in the state of Europe. +The discovery of America, however, certainly made a most essential one. +By opening a new and inexhaustible market to all the commodities of +Europe, it gave occasion to new divisions of labour and improvements of +art, which in the narrow circle of the ancient commerce could never have +taken place, for want of a market to take off the greater part of their +produce. The productive powers of labour were improved, and its produce +increased in all the different countries of Europe, and together with it +the real revenue and wealth of the inhabitants. The commodities of +Europe were almost all new to America, and many of those of America were +new to Europe. A new set of exchanges, therefore, began to take place, +which had never been thought of before, and which should naturally have +proved as advantageous to the new, as it certainly did to the old +continent. The savage injustice of the Europeans rendered an event, +which ought to have been beneficial to all, ruinous and destructive to +several of those unfortunate countries. + +The discovery of a passage to the East Indies by the Cape of Good Hope, +which happened much about the same time, opened perhaps a still more +extensive range to foreign commerce, than even that of America, +notwithstanding the greater distance. There were but two nations in +America, in any respect, superior to the savages, and these were +destroyed almost as soon as discovered. The rest were mere savages. But +the empires of China, Indostan, Japan, as well as several others in the +East Indies, without having richer mines of gold or silver, were, in +every other respect, much richer, better cultivated, and more advanced +in all arts and manufactures, than either Mexico or Peru, even though we +should credit, what plainly deserves no credit, the exaggerated +accounts of the Spanish writers concerning the ancient state of those +empires. But rich and civilized nations can always exchange to a much +greater value with one another, than with savages and barbarians. +Europe, however, has hitherto derived much less advantage from its +commerce with the East Indies, than from that with America. The +Portuguese monopolized the East India trade to themselves for about a +century; and it was only indirectly, and through them, that the other +nations of Europe could either send out or receive any goods from that +country. When the Dutch, in the beginning of the last century, began to +encroach upon them, they vested their whole East India commerce in an +exclusive company. The English, French, Swedes, and Danes, have all +followed their example; so that no great nation of Europe has ever yet +had the benefit of a free commerce to the East Indies. No other reason +need be assigned why it has never been so advantageous as the trade to +America, which, between almost every nation of Europe and its own +colonies, is free to all its subjects. The exclusive privileges of those +East India companies, their great riches, the great favour and +protection which these have procured them from their respective +governments, have excited much envy against them. This envy has +frequently represented their trade as altogether pernicious, on account +of the great quantities of silver which it every year exports from the +countries from which it is carried on. The parties concerned have +replied, that their trade by this continual exportation of silver, might +indeed tend to impoverish Europe in general, but not the particular +country from which it was carried on; because, by the exportation of a +part of the returns to other European countries, it annually brought +home a much greater quantity of that metal than it carried out. Both the +objection and the reply are founded in the popular notion which I have +been just now examining. It is therefore unnecessary to say any thing +further about either. By the annual exportation of silver to the East +Indies, plate is probably somewhat dearer in Europe than it otherwise +might have been; and coined silver probably purchases a larger quantity +both of labour and commodities. The former of these two effects is a +very small loss, the latter a very small advantage; both too +insignificant to deserve any part of the public attention. The trade to +the East Indies, by opening a market to the commodities of Europe, or, +what comes nearly to the same thing, to the gold and silver which is +purchased with those commodities, must necessarily tend to increase the +annual production of European commodities, and consequently the real +wealth and revenue of Europe. That it has hitherto increased them so +little, is probably owing to the restraints which it everywhere labours +under. + +I thought it necessary, though at the hazard of being tedious, to +examine at full length this popular notion, that wealth consists in +money or in gold and silver. Money, in common language, as I have +already observed, frequently signifies wealth; and this ambiguity of +expression has rendered this popular notion so familiar to us, that even +they who are convinced of its absurdity, are very apt to forget their +own principles, and, in the course of their reasonings, to take it for +granted as a certain and undeniable truth. Some of the best English +writers upon commerce set out with observing, that the wealth of a +country consists, not in its gold and silver only, but in its lands, +houses, and consumable goods of all different kinds. In the course of +their reasonings, however, the lands, houses, and consumable goods, seem +to slip out of their memory; and the strain of their argument frequently +supposes that all wealth consists in gold and silver, and that to +multiply those metals is the great object of national industry and +commerce. + +The two principles being established, however, that wealth consisted in +gold and silver, and that those metals could be brought into a country +which had no mines, only by the balance of trade, or by exporting to a +greater value than it imported; it necessarily became the great object +of political economy to diminish as much as possible the importation of +foreign goods for home consumption, and to increase as much as possible +the exportation of the produce of domestic industry. Its two great +engines for enriching the country, therefore, were restraints upon +importation, and encouragement to exportation. + +The restraints upon importation were of two kinds. + +First, restraints upon the importation of such foreign goods for home +consumption as could be produced at home, from whatever country they +were imported. + +Secondly, restraints upon the importation of goods of almost all kinds, +from those particular countries with which the balance of trade was +supposed to be disadvantageous. + +Those different restraints consisted sometimes in high duties, and +sometimes in absolute prohibitions. + +Exportation was encouraged sometimes by drawbacks, sometimes by +bounties, sometimes by advantageous treaties of commerce with foreign +states, and sometimes by the establishment of colonies in distant +countries. + +Drawbacks were given upon two different occasions. When the home +manufactures were subject to any duty or excise, either the whole or a +part of it was frequently drawn back upon their exportation; and when +foreign goods liable to a duty were imported, in order to be exported +again, either the whole or a part of this duty was sometimes given back +upon such exportation. + +Bounties were given for the encouragement, either of some beginning +manufactures, or of such sorts of industry of other kinds as were +supposed to deserve particular favour. + +By advantageous treaties of commerce, particular privileges were +procured in some foreign state for the goods and merchants of the +country, beyond what were granted to those of other countries. + +By the establishment of colonies in distant countries, not only +particular privileges, but a monopoly was frequently procured for the +goods and merchants of the country which established them. + +The two sorts of restraints upon importation above mentioned, together +with these four encouragements to exportation, constitute the six +principal means by which the commercial system proposes to increase the +quantity of gold and silver in any country, by turning the balance of +trade in its favour. I shall consider each of them in a particular +chapter, and, without taking much farther notice of their supposed +tendency to bring money into the country, I shall examine chiefly what +are likely to be the effects of each of them upon the annual produce of +its industry. According as they tend either to increase or diminish the +value of this annual produce, they must evidently tend either to +increase or diminish the real wealth and revenue of the country. + + + + +CHAP. II. + +OF RESTRAINTS UPON IMPORTATION FROM FOREIGN COUNTRIES OF SUCH GOODS AS +CAN BE PRODUCED AT HOME. + + +By restraining, either by high duties, or by absolute prohibitions, the +importation of such goods from foreign countries as can be produced at +home, the monopoly of the home market is more or less secured to the +domestic industry employed in producing them. Thus the prohibition of +importing either live cattle or salt provisions from foreign countries, +secures to the graziers of Great Britain the monopoly of the home market +for butcher's meat. The high duties upon the importation of corn, which, +in times of moderate plenty, amount to a prohibition, give a like +advantage to the growers of that commodity. The prohibition of the +importation of foreign woollens is equally favourable to the woollen +manufacturers. The silk manufacture, though altogether employed upon +foreign materials, has lately obtained the same advantage. The linen +manufacture has not yet obtained it, but is making great strides towards +it. Many other sorts of manufactures have, in the same manner obtained +in Great Britain, either altogether, or very nearly, a monopoly against +their countrymen. The variety of goods, of which the importation into +Great Britain is prohibited, either absolutely, or under certain +circumstances, greatly exceeds what can easily be suspected by those who +are not well acquainted with the laws of the customs. + +That this monopoly of the home market frequently gives great +encouragement to that particular species of industry which enjoys it, +and frequently turns towards that employment a greater share of both the +labour and stock of the society than would otherwise have gone to it, +cannot be doubted. But whether it tends either to increase the general +industry of the society, or to give it the most advantageous direction, +is not, perhaps, altogether so evident. + +The general industry of the society can never exceed what the capital of +the society can employ. As the number of workmen that can be kept in +employment by any particular person must bear a certain proportion to +his capital, so the number of those that can be continually employed by +all the members of a great society must bear a certain proportion to the +whole capital of the society, and never can exceed that proportion. No +regulation of commerce can increase the quantity of industry in any +society beyond what its capital can maintain. It can only divert a part +of it into a direction into which it might not otherwise have gone; and +it is by no means certain that this artificial direction is likely to be +more advantageous to the society, than that into which it would have +gone of its own accord. + +Every individual is continually exerting himself to find out the most +advantageous employment for whatever capital he can command. It is his +own advantage, indeed, and not that of the society, which he has in +view. But the study of his own advantage naturally, or rather +necessarily, leads him to prefer that employment which is most +advantageous to the society. + +First, every individual endeavours to employ his capital as near home as +he can, and consequently as much as he can in the support of domestic +industry, provided always that he can thereby obtain the ordinary, or +not a great deal less than the ordinary profits of stock. + +Thus, upon equal, or nearly equal profits, every wholesale merchant +naturally prefers the home trade to the foreign trade of consumption, +and the foreign trade of consumption to the carrying trade. In the home +trade, his capital is never so long out of his sight as it frequently is +in the foreign trade of consumption. He can know better the character +and situation of the persons whom he trusts; and if he should happen to +be deceived, he knows better the laws of the country from which he must +seek redress. In the carrying trade, the capital of the merchant is, as +it were, divided between two foreign countries, and no part of it is +ever necessarily brought home, or placed under his own immediate view +and command. The capital which an Amsterdam merchant employs in carrying +corn from Koningsberg to Lisbon, and fruit and wine from Lisbon to +Koningsberg, must generally be the one half of it at Koningsberg, and +the other half at Lisbon. No part of it need ever come to Amsterdam. The +natural residence of such a merchant should either be at Koningsberg or +Lisbon; and it can only be some very particular circumstances which can +make him prefer the residence of Amsterdam. The uneasiness, however, +which he feels at being separated so far from his capital, generally +determines him to bring part both of the Koningsberg goods which he +destines for the market of Lisbon, and of the Lisbon goods which he +destines for that of Koningsberg, to Amsterdam; and though this +necessarily subjects him to a double charge of loading and unloading as +well as to the payment of some duties and customs, yet, for the sake of +having some part of his capital always under his own view and command, +he willingly submits to this extraordinary charge; and it is in this +manner that every country which has any considerable share of the +carrying trade, becomes always the emporium, or general market, for the +goods of all the different countries whose trade it carries on. The +merchant, in order to save a second loading and unloading, endeavours +always to sell in the home market, as much of the goods of all those +different countries as he can; and thus, so far as he can, to convert +his carrying trade into a foreign trade of consumption. A merchant, in +the same manner, who is engaged in the foreign trade of consumption, +when he collects goods for foreign markets, will always be glad, upon +equal or nearly equal profits, to sell as great a part of them at home +as he can. He saves himself the risk and trouble of exportation, when, +so far as he can, he thus converts his foreign trade of consumption into +a home trade. Home is in this manner the centre, if I may say so, round +which the capitals of the inhabitants of every country are continually +circulating, and towards which they are always tending, though, by +particular causes, they may sometimes be driven off and repelled from it +towards more distant employments. But a capital employed in the home +trade, it has already been shown, necessarily puts into motion a greater +quantity of domestic industry, and gives revenue and employment to a +greater number of the inhabitants of the country, than an equal capital +employed in the foreign trade of consumption; and one employed in the +foreign trade of consumption has the same advantage over an equal +capital employed in the carrying trade. Upon equal, or only nearly equal +profits, therefore, every individual naturally inclines to employ his +capital in the manner in which it is likely to afford the greatest +support to domestic industry, and to give revenue and employment to the +greatest number of people of his own country. + +Secondly, every individual who employs his capital in the support of +domestic industry, necessarily endeavours so to direct that industry, +that its produce may be of the greatest possible value. + +The produce of industry is what it adds to the subject or materials upon +which it is employed. In proportion as the value of this produce is +great or small, so will likewise be the profits of the employer. But it +is only for the sake of profit that any man employs a capital in the +support of industry; and he will always, therefore, endeavour to employ +it in the support of that industry of which the produce is likely to be +of the greatest value, or to exchange for the greatest quantity either +of money or of other goods. + +But the annual revenue of every society is always precisely equal to the +exchangeable value of the whole annual produce of its industry, or +rather is precisely the same thing with that exchangeable value. As +every individual, therefore, endeavours as much as he can, both to +employ his capital in the support of domestic industry, and so to direct +that industry that its produce may be of the greatest value; every +individual necessarily labours to render the annual revenue of the +society as great as he can. He generally, indeed, neither intends to +promote the public interest, nor knows how much he is promoting it. By +preferring the support of domestic to that of foreign industry, he +intends only his own security; and by directing that industry in such a +manner as its produce may be of the greatest value, he intends only his +own gain; and he is in this, as in many other cases, led by an invisible +hand to promote an end which was no part of his intention. Nor is it +always the worse for the society that it was no part of it. By pursuing +his own interest, he frequently promotes that of the society more +effectually than when he really intends to promote it. I have never +known much good done by those who affected to trade for the public good. +It is an affectation, indeed, not very common among merchants, and very +few words need be employed in dissuading them from it. + +What is the species of domestic industry which his capital can employ, +and of which the produce is likely to be of the greatest value, every +individual, it is evident, can in his local situation judge much better +than any statesman or lawgiver can do for him. The statesman, who should +attempt to direct private people in what manner they ought to employ +their capitals, would not only load himself with a most unnecessary +attention, but assume an authority which could safely be trusted, not +only to no single person, but to no council or senate whatever, and +which would nowhere be as dangerous as in the hands of a man who had +folly and presumption enough to fancy himself fit to exercise it. + +To give the monopoly of the home market to the produce of domestic +industry, in any particular art or manufacture, is in some measure to +direct private people in what manner they ought to employ their +capitals, and must in almost all cases be either a useless or a hurtful +regulation. If the produce of domestic can be brought there as cheap as +that of foreign industry, the regulation is evidently useless. If it +cannot, it must generally be hurtful. It is the maxim of every prudent +master of a family, never to attempt to make at home what it will cost +him more to make than to buy. The tailor does not attempt to make his +own shoes, but buys them of the shoemaker. The shoemaker does not +attempt to make his own clothes, but employs a tailor. The farmer +attempts to make neither the one nor the other, but employs those +different artificers. All of them find it for their interest to employ +their whole industry in a way in which they have some advantage over +their neighbours, and to purchase with a part of its produce, or, what +is the same thing, with the price of a part of it, whatever else they +have occasion for. + +What is prudence in the conduct of every private family, can scarce be +folly in that of a great kingdom. If a foreign country can supply us +with a commodity cheaper than we ourselves can make it, better buy it of +them with some part of the produce of our own industry, employed in a +way in which we have some advantage. The general industry of the country +being always in proportion to the capital which employs it, will not +thereby be diminished, no more than that of the above-mentioned +artificers; but only left to find out the way in which it can be +employed with the greatest advantage. It is certainly not employed to +the greatest advantage, when it is thus directed towards an object which +it can buy cheaper than it can make. The value of its annual produce is +certainly more or less diminished, when it is thus turned away from +producing commodities evidently of more value than the commodity which +it is directed to produce. According to the supposition, that commodity +could be purchased from foreign countries cheaper than it can be made at +home; it could therefore have been purchased with a part only of the +commodities, or, what is the same thing, with a part only of the price +of the commodities, which the industry employed by an equal capital +would have produced at home, had it been left to follow its natural +course. The industry of the country, therefore, is thus turned away from +a more to a less advantageous employment; and the exchangeable value of +its annual produce, instead of being increased, according to the +intention of the lawgiver, must necessarily be diminished by every such +regulation. + +By means of such regulations, indeed, a particular manufacture may +sometimes be acquired sooner than it could have been otherwise, and +after a certain time may be made at home as cheap, or cheaper, than in +the foreign country. But though the industry of the society may be thus +carried with advantage into a particular channel sooner than it could +have been otherwise, it will by no means follow that the sum-total, +either of its industry, or of its revenue, can ever be augmented by any +such regulation. The industry of the society can augment only in +proportion as its capital augments, and its capital can augment only in +proportion to what can be gradually saved out of its revenue. But the +immediate effect of every such regulation is to diminish its revenue; +and what diminishes its revenue is certainly not very likely to augment +its capital faster than it would have augmented of its own accord, had +both capital and industry been left to find out their natural +employments. + +Though, for want of such regulations, the society should never acquire +the proposed manufacture, it would not upon that account necessarily be +the poorer in any one period of its duration. In every period of its +duration its whole capital and industry might still have been employed, +though upon different objects, in the manner that was most advantageous +at the time. In every period its revenue might have been the greatest +which its capital could afford, and both capital and revenue might have +been augmented with the greatest possible rapidity. + +The natural advantages which one country has over another, in producing +particular commodities, are sometimes so great, that it is acknowledged +by all the world to be in vain to struggle with them. By means of +glasses, hot-beds, and hot-walls, very good grapes can be raised in +Scotland, and very good wine, too, be made of them, at about thirty +times the expense for which at least equally good can be brought from +foreign countries. Would it be a reasonable law to prohibit the +importation of all foreign wines, merely to encourage the making of +claret and Burgundy in Scotland? But if there would be a manifest +absurdity in turning towards any employment thirty times more of the +capital and industry of the country than would be necessary to purchase +from foreign countries an equal quantity of the commodities wanted, +there must be an absurdity, though not altogether so glaring, yet +exactly of the same kind, in turning towards any such employment a +thirtieth, or even a three hundredth part more of either. Whether the +advantages which one country has over another be natural or acquired, is +in this respect of no consequence. As long as the one country has those +advantages, and the other wants them, it will always be more +advantageous for the latter rather to buy of the former than to make. It +is an acquired advantage only, which one artificer has over his +neighbour, who exercises another trade; and yet they both find it more +advantageous to buy of one another, than to make what does not belong to +their particular trades. + +Merchants and manufacturers are the people who derive the greatest +advantage from this monopoly of the home market. The prohibition of the +importation of foreign cattle and of salt provisions, together with the +high duties upon foreign corn, which in times of moderate plenty amount +to a prohibition, are not near so advantageous to the graziers and +farmers of Great Britain, as other regulations of the same kind are to +its merchants and manufacturers. Manufactures, those of the finer kind +especially, are more easily transported from one country to another than +corn or cattle. It is in the fetching and carrying manufactures, +accordingly, that foreign trade is chiefly employed. In manufactures, a +very small advantage will enable foreigners to undersell our own +workmen, even in the home market. It will require a very great one to +enable them to do so in the rude produce of the soil. If the free +importation of foreign manufactures were permitted, several of the home +manufactures would probably suffer, and some of them perhaps go to ruin +altogether, and a considerable part of the stock and industry at present +employed in them, would be forced to find out some other employment. But +the freest importation of the rude produce of the soil could have no +such effect upon the agriculture of the country. + +If the importation of foreign cattle, for example, were made ever so +free, so few could be imported, that the grazing trade of Great Britain +could be little affected by it. Live cattle are, perhaps, the only +commodity of which the transportation is more expensive by sea than by +land. By land they carry themselves to market. By sea, not only the +cattle, but their food and their water too, must be carried at no small +expense and inconveniency. The short sea between Ireland and Great +Britain, indeed, renders the importation of Irish cattle more easy. But +though the free importation of them, which was lately permitted only for +a limited time, were rendered perpetual, it could have no considerable +effect upon the interest of the graziers of Great Britain. Those parts +of Great Britain which border upon the Irish sea are all grazing +countries. Irish cattle could never be imported for their use, but must +be drove through those very extensive countries, at no small expense and +inconveniency, before they could arrive at their proper market. Fat +cattle could not be drove so far. Lean cattle, therefore, could only be +imported; and such importation could interfere not with the interest of +the feeding or fattening countries, to which, by reducing the price of +lean cattle it would rather be advantageous, but with that of the +breeding countries only. The small number of Irish cattle imported since +their importation was permitted, together with the good price at which +lean cattle still continue to sell, seem to demonstrate, that even the +breeding countries of Great Britain are never likely to be much affected +by the free importation of Irish cattle. The common people of Ireland, +indeed, are said to have sometimes opposed with violence the exportation +of their cattle. But if the exporters had found any great advantage in +continuing the trade, they could easily, when the law was on their side, +have conquered this mobbish opposition. + +Feeding and fattening countries, besides, must always be highly +improved, whereas breeding countries are generally uncultivated. The +high price of lean cattle, by augmenting the value of uncultivated land, +is like a bounty against improvement. To any country which was highly +improved throughout, it would be more advantageous to import its lean +cattle than to breed them. The province of Holland, accordingly, is said +to follow this maxim at present. The mountains of Scotland, Wales, and +Northumberland, indeed, are countries not capable of much improvement, +and seem destined by nature to be the breeding countries of Great +Britain. The freest importation of foreign cattle could have no other +effect than to hinder those breeding countries from taking advantage of +the increasing population and improvement of the rest of the kingdom, +from raising their price to an exorbitant height, and from laying a real +tax upon all the more improved and cultivated parts of the country. + +The freest importation of salt provisions, in the same manner, could +have as little effect upon the interest of the graziers of Great Britain +as that of live cattle. Salt provisions are not only a very bulky +commodity, but when compared with fresh meat they are a commodity both +of worse quality, and, as they cost more labour and expense, of higher +price. They could never, therefore, come into competition with the fresh +meat, though they might with the salt provisions of the country. They +might be used for victualling ships for distant voyages, and such like +uses, but could never make any considerable part of the food of the +people. The small quantity of salt provisions imported from Ireland +since their importation was rendered free, is an experimental proof that +our graziers have nothing to apprehend from it. It does not appear that +the price of butcher's meat has ever been sensibly affected by it. + +Even the free importation of foreign corn could very little affect the +interest of the farmers of Great Britain. Corn is a much more bulky +commodity than butcher's meat. A pound of wheat at a penny is as dear as +a pound of butcher's meat at fourpence. The small quantity of foreign +corn imported even in times of the greatest scarcity, may satisfy our +farmers that they can have nothing to fear from the freest importation. +The average quantity imported, one year with another, amounts only, +according to the very well informed author of the Tracts upon the Corn +Trade, to 23,728 quarters of all sorts of grain, and does not exceed the +five hundredth and seventy-one part of the annual consumption. But as +the bounty upon corn occasions a greater exportation in years of plenty, +so it must, of consequence, occasion a greater importation in years of +scarcity, than in the actual state of tillage would otherwise take +place. By means of it, the plenty of one year does not compensate the +scarcity of another; and as the average quantity exported is necessarily +augmented by it, so must likewise, in the actual state of tillage, the +average quantity imported. If there were no bounty, as less corn would +be exported, so it is probable that, one year with another, less would +be imported than at present. The corn-merchants, the fetchers and +carriers of corn between Great Britain and foreign countries, would have +much less employment, and might suffer considerably; but the country +gentlemen and farmers could suffer very little. It is in the +corn-merchants, accordingly, rather than the country gentlemen and +farmers, that I have observed the greatest anxiety for the renewal and +continuation of the bounty. + +Country gentlemen and farmers are, to their great honour, of all people, +the least subject to the wretched spirit of monopoly. The undertaker of +a great manufactory is sometimes alarmed if another work of the same +kind is established within twenty miles of him; the Dutch undertaker of +the woollen manufacture at Abbeville, stipulated that no work of the +same kind should be established within thirty leagues of that city. +Farmers and country gentlemen, on the contrary, are generally disposed +rather to promote, than to obstruct, the cultivation and improvement of +their neighbours farms and estates. They have no secrets, such as those +of the greater part of manufacturers, but are generally rather fond of +communicating to their neighbours, and of extending as far as possible +any new practice which they may have found to be advantageous. _Pius +quæstus_, says old Cato, _stabilissimusque, minimeque invidiosus; +minimeque male cogitantes sunt, qui in eo studio occupati sunt._ Country +gentlemen and farmers, dispersed in different parts of the country, +cannot so easily combine as merchants and manufacturers, who being +collected into towns, and accustomed to that exclusive corporation +spirit which prevails in them, naturally endeavour to obtain, against +all their countrymen, the same exclusive privilege which they generally +possess against the inhabitants of their respective towns. They +accordingly seem to have been the original inventors of those restraints +upon the importation of foreign goods, which secure to them the monopoly +of the home market. It was probably in imitation of them, and to put +themselves upon a level with those who, they found, were disposed to +oppress them, that the country gentlemen and farmers of Great Britain so +far forgot the generosity which is natural to their station, as to +demand the exclusive privilege of supplying their countrymen with corn +and butcher's meat. They did not, perhaps, take time to consider how +much less their interest could be affected by the freedom of trade, than +that of the people whose example they followed. + +To prohibit, by a perpetual law, the importation of foreign corn and +cattle, is in reality to enact, that the population and industry of the +country shall, at no time, exceed what the rude produce of its own soil +can maintain. + +There seem, however, to be two cases, in which it will generally be +advantageous to lay some burden upon foreign, for the encouragement of +domestic industry. + +The first is, when some particular sort of industry is necessary for the +defence of the country. The defence of Great Britain, for example, +depends very much upon the number of its sailors and shipping. The act +of navigation, therefore, very properly endeavours to give the sailors +and shipping of Great Britain the monopoly of the trade of their own +country, in some cases, by absolute prohibitions, and in others, by +heavy burdens upon the shipping of foreign countries. The following are +the principal dispositions of this act. + +First, All ships, of which the owners, masters, and three-fourths of the +mariners, are not British subjects, are prohibited, upon pain of +forfeiting ship and cargo, from trading to the British settlements and +plantations, or from being employed in the coasting trade of Great +Britain. + +Secondly, A great variety of the most bulky articles of importation can +be brought into Great Britain only, either in such ships as are above +described, or in ships of the country where those goods are produced, +and of which the owners, masters, and three-fourths of the mariners, are +of that particular country; and when imported even in ships of this +latter kind, they are subject to double aliens duty. If imported in +ships of any other country, the penalty is forfeiture of ship and goods. +When this act was made, the Dutch were, what they still are, the great +carriers of Europe; and by this regulation they were entirely excluded +from being the carriers to Great Britain, or from importing to us the +goods of any other European country. + +Thirdly, A great variety of the most bulky articles of importation are +prohibited from being imported, even in British ships, from any country +but that in which they are produced, under pain of forfeiting ship and +cargo. This regulation, too, was probably intended against the Dutch. +Holland was then, as now, the great emporium for all European goods; and +by this regulation, British ships were hindered from loading in Holland +the goods of any other European country. + +Fourthly, Salt fish of all kinds, whale-fins, whalebone, oil, and +blubber, not caught by and cured on board British vessels, when imported +into Great Britain, are subject to double aliens duty. The Dutch, as +they are still the principal, were then the only fishers in Europe that +attempted to supply foreign nations with fish. By this regulation, a +very heavy burden was laid upon their supplying Great Britain. + +When the act of navigation was made, though England and Holland were not +actually at war, the most violent animosity subsisted between the two +nations. It had begun during the government of the long parliament, +which first framed this act, and it broke out soon after in the Dutch +wars, during that of the Protector and of Charles II. It is not +impossible, therefore, that some of the regulations of this famous act +may have proceeded from national animosity. They are as wise, however, +as if they had all been dictated by the most deliberate wisdom. National +animosity, at that particular time, aimed at the very same object which +the most deliberate wisdom would have recommended, the diminution of the +naval power of Holland, the only naval power which could endanger the +security of England. + +The act of navigation is not favourable to foreign commerce, or to the +growth of that opulence which can arise from it. The interest of a +nation, in its commercial relations to foreign nations, is, like that of +a merchant with regard to the different people with whom he deals, to +buy as cheap, and to sell as dear as possible. But it will be most +likely to buy cheap, when, by the most perfect freedom of trade, it +encourages all nations to bring to it the goods which it has occasion to +purchase; and, for the same reason, it will be most likely to sell dear, +when its markets are thus filled with the greatest number of buyers. The +act of navigation, it is true, lays no burden upon foreign ships that +come to export the produce of British industry. Even the ancient aliens +duty, which used to be paid upon all goods, exported as well as +imported, has, by several subsequent acts, been taken off from the +greater part of the articles of exportation. But if foreigners, either +by prohibitions or high duties, are hindered from coming to sell, they +cannot always afford to come to buy; because, coming without a cargo, +they must lose the freight from their own country to Great Britain. By +diminishing the number of sellers, therefore, we necessarily diminish +that of buyers, and are thus likely not only to buy foreign goods +dearer, but to sell our own cheaper, than if there was a more perfect +freedom of trade. As defence, however, is of much more importance than +opulence, the act of navigation is, perhaps, the wisest of all the +commercial regulations of England. + +The second case, in which it will generally be advantageous to lay some +burden upon foreign for the encouragement of domestic industry, is when +some tax is imposed at home upon the produce of the latter. In this +case, it seems reasonable that an equal tax should be imposed upon the +like produce of the former. This would not give the monopoly of the home +market to domestic industry, nor turn towards a particular employment a +greater share of the stock and labour of the country, than what would +naturally go to it. It would only hinder any part of what would +naturally go to it from being turned away by the tax into a less natural +direction, and would leave the competition between foreign and domestic +industry, after the tax, as nearly as possible upon the same footing as +before it. In Great Britain, when any such tax is laid upon the produce +of domestic industry, it is usual, at the same time, in order to stop +the clamorous complaints of our merchants and manufacturers, that they +will be undersold at home, to lay a much heavier duty upon the +importation of all foreign goods of the same kind. + +This second limitation of the freedom of trade, according to some +people, should, upon most occasions, be extended much farther than to +the precise foreign commodities which could come into competition with +those which had been taxed at home. When the necessaries of life have +been taxed in any country, it becomes proper, they pretend, to tax not +only the like necessaries of life imported from other countries, but all +sorts of foreign goods which can come into competition with any thing +that is the produce of domestic industry. Subsistence, they say, becomes +necessarily dearer in consequence of such taxes; and the price of labour +must always rise with the price of the labourer's subsistence. Every +commodity, therefore, which is the produce of domestic industry, though +not immediately taxed itself, becomes dearer in consequence of such +taxes, because the labour which produces it becomes so. Such taxes, +therefore, are really equivalent, they say, to a tax upon every +particular commodity produced at home. In order to put domestic upon the +same footing with foreign industry, therefore, it becomes necessary, +they think, to lay some duty upon every foreign commodity, equal to +this enhancement of the price of the home commodities with which it can +come into competition. + +Whether taxes upon the necessaries of life, such as those in Great +Britain upon soap, salt, leather, candles, &c. necessarily raise the +price of labour, and consequently that of all other commodities, I shall +consider hereafter, when I come to treat of taxes. Supposing, however, +in the mean time, that they have this effect, and they have it +undoubtedly, this general enhancement of the price of all commodities, +in consequence of that labour, is a case which differs in the two +following respects from that of a particular commodity, of which the +price was enhanced by a particular tax immediately imposed upon it. + +_First_, It might always be known with great exactness, how far the +price of such a commodity could be enhanced by such a tax, but how far +the general enhancement of the price of labour might affect that of +every different commodity about which labour was employed, could never +be known with any tolerable exactness. It would be impossible, +therefore, to proportion, with any tolerable exactness, the tax of every +foreign, to the enhancement of the price of every home commodity. + +_Secondly_, Taxes upon the necessaries of life have nearly the same +effect upon the circumstances of the people as a poor soil and a bad +climate. Provisions are thereby rendered dearer, in the same manner as +if it required extraordinary labour and expense to raise them. As, in +the natural scarcity arising from soil and climate, it would be absurd +to direct the people in what manner they ought to employ their capitals +and industry, so is it likewise in the artificial scarcity arising from +such taxes. To be left to accommodate, as well as they could, their +industry to their situation, and to find out those employments in which, +notwithstanding their unfavourable circumstances, they might have some +advantage either in the home or in the foreign market, is what, in both +cases, would evidently be most for their advantage. To lay a new tax +upon them, because they are already overburdened with taxes, and because +they already pay too dear for the necessaries of life, to make them +likewise pay too dear for the greater part of other commodities, is +certainly a most absurd way of making amends. + +Such taxes, when they have grown up to a certain height, are a curse +equal to the barrenness of the earth, and the inclemency of the heavens, +and yet it is in the richest and most industrious countries that they +have been most generally imposed. No other countries could support so +great a disorder. As the strongest bodies only can live and enjoy health +under an unwholesome regimen, so the nations only, that in every sort of +industry have the greatest natural and acquired advantages, can subsist +and prosper under such taxes. Holland is the country in Europe in which +they abound most, and which, from peculiar circumstances, continues to +prosper, not by means of them, as has been most absurdly supposed, but +in spite of them. + +As there are two cases in which it will generally be advantageous to lay +some burden upon foreign for the encouragement of domestic industry, so +there are two others in which it may sometimes be a matter of +deliberation, in the one, how far it is proper to continue the free +importation of certain foreign goods; and, in the other, how far, or in +what manner, it may be proper to restore that free importation, after it +has been for some time interrupted. + +The case in which it may sometimes be a matter of deliberation how far +it is proper to continue the free importation of certain foreign goods, +is when some foreign nation restrains, by high duties or prohibitions, +the importation of some of our manufactures into their country. Revenge, +in this case, naturally dictates retaliation, and that we should impose +the like duties and prohibitions upon the importation of some or all of +their manufactures into ours. Nations, accordingly, seldom fail to +retaliate in this manner. The French have been particularly forward to +favour their own manufactures, by restraining the importation of such +foreign goods as could come into competition with them. In this +consisted a great part of the policy of Mr. Colbert, who, +notwithstanding his great abilities, seems in this case to have been +imposed upon by the sophistry of merchants and manufacturers, who are +always demanding a monopoly against their countrymen. It is at present +the opinion of the most intelligent men in France, that his operations +of this kind have not been beneficial to his country. That minister, by +the tariff of 1667, imposed very high duties upon a great number of +foreign manufactures. Upon his refusing to moderate them in favour of +the Dutch, they, in 1671, prohibited the importation of the wines, +brandies, and manufactures of France. The war of 1672 seems to have been +in part occasioned by this commercial dispute. The peace of Nimeguen put +an end to it in 1678, by moderating some of those duties in favour of +the Dutch, who in consequence took off their prohibition. It was about +the same time that the French and English began mutually to oppress each +other's industry, by the like duties and prohibitions, of which the +French, however, seem to have set the first example. The spirit of +hostility which has subsisted between the two nations ever since, has +hitherto hindered them from being moderated on either side. In 1697, the +English prohibited the importation of bone lace, the manufacture of +Flanders. The government of that country, at that time under the +domination of Spain, prohibited, in return, the importation of English +woollens. In 1700, the prohibition of importing bone lace into England +was taken off, upon condition that the importation of English woollens +into Flanders should be put on the same footing as before. + +There may be good policy in retaliations of this kind, when there is a +probability that they will procure the repeal of the high duties or +prohibitions complained of. The recovery of a great foreign market will +generally more than compensate the transitory inconveniency of paying +dearer during a short time for some sorts of goods. To judge whether +such retaliations are likely to produce such an effect, does not, +perhaps, belong so much to the science of a legislator, whose +deliberations ought to be governed by general principles, which are +always the same, as to the skill of that insidious and crafty animal +vulgarly called a statesman or politician, whose councils are directed +by the momentary fluctuations of affairs. When there is no probability +that any such repeal can be procured, it seems a bad method of +compensating the injury done to certain classes of our people, to do +another injury ourselves, not only to those classes, but to almost all +the other classes of them. When our neighbours prohibit some manufacture +of ours, we generally prohibit, not only the same, for that alone would +seldom affect them considerably, but some other manufacture of theirs. +This may, no doubt, give encouragement to some particular class of +workmen among ourselves, and, by excluding some of their rivals, may +enable them to raise their price in the home market. Those workmen +however, who suffered by our neighbours prohibition, will not be +benefited by ours. On the contrary, they, and almost all the other +classes of our citizens, will thereby be obliged to pay dearer than +before for certain goods. Every such law, therefore, imposes a real tax +upon the whole country, not in favour of that particular class of +workmen who were injured by our neighbours prohibitions, but of some +other class. + +The case in which it may sometimes be a matter of deliberation, how far, +or in what manner, it is proper to restore the free importation of +foreign goods, after it has been for some time interrupted, is when +particular manufactures, by means of high duties or prohibitions upon +all foreign goods which can come into competition with them, have been +so far extended as to employ a great multitude of hands. Humanity may in +this case require that the freedom of trade should be restored only by +slow gradations, and with a good deal of reserve and circumspection. +Were those high duties and prohibitions taken away all at once, cheaper +foreign goods of the same kind might be poured so fast into the home +market, as to deprive all at once many thousands of our people of their +ordinary employment and means of subsistence. The disorder which this +would occasion might no doubt be very considerable. It would in all +probability, however, be much less than is commonly imagined, for the +two following reasons. + +_First_, All those manufactures of which any part is commonly exported +to other European countries without a bounty, could be very little +affected by the freest importation of foreign goods. Such manufactures +must be sold as cheap abroad as any other foreign goods of the same +quality and kind, and consequently must be sold cheaper at home. They +would still, therefore, keep possession of the home market; and though a +capricious man of fashion might sometimes prefer foreign wares, merely +because they were foreign, to cheaper and better goods of the same kind +that were made at home, this folly could, from the nature of things, +extend to so few, that it could make no sensible impression upon the +general employment of the people. But a great part of all the different +branches of our woollen manufacture, of our tanned leather, and of our +hardware, are annually exported to other European countries without any +bounty, and these are the manufactures which employ the greatest number +of hands. The silk, perhaps, is the manufacture which would suffer the +most by this freedom of trade, and after it the linen, though the latter +much less than the former. + +_Secondly_, Though a great number of people should, by thus restoring +the freedom of trade, be thrown all at once out of their ordinary +employment and common method of subsistence, it would by no means follow +that they would thereby be deprived either of employment or subsistence. +By the reduction of the army and navy at the end of the late war, more +than 100,000 soldiers and seamen, a number equal to what is employed in +the greatest manufactures, were all at once thrown out of their ordinary +employment: but though they no doubt suffered some inconveniency, they +were not thereby deprived of all employment and subsistence. The greater +part of the seamen, it is probable, gradually betook themselves to the +merchant service as they could find occasion, and in the mean time both +they and the soldiers were absorbed in the great mass of the people, and +employed in a great variety of occupations. Not only no great +convulsion, but no sensible disorder, arose from so great a change in +the situation of more than 100,000 men, all accustomed to the use of +arms, and many of them to rapine and plunder. The number of vagrants was +scarce anywhere sensibly increased by it; even the wages of labour were +not reduced by it in any occupation, so far as I have been able to +learn, except in that of seamen in the merchant service. But if we +compare together the habits of a soldier and of any sort of +manufacturer, we shall find that those of the latter do not tend so +much to disqualify him from being employed in a new trade, as those of +the former from being employed in any. The manufacturer has always been +accustomed to look for his subsistence from his labour only; the soldier +to expect it from his pay. Application and industry have been familiar +to the one; idleness and dissipation to the other. But it is surely much +easier to change the direction of industry from one sort of labour to +another, than to turn idleness and dissipation to any. To the greater +part of manufactures, besides, it has already been observed, there are +other collateral manufactures of so similar a nature, that a workman can +easily transfer his industry from one of them to another. The greater +part of such workmen, too, are occasionally employed in country labour. +The stock which employed them in a particular manufacture before, will +still remain in the country, to employ an equal number of people in some +other way. The capital of the country remaining the same, the demand for +labour will likewise be the same, or very nearly the same, though it may +be exerted in different places, and for different occupations. Soldiers +and seamen, indeed, when discharged from the king's service, are at +liberty to exercise any trade within any town or place of Great Britain +or Ireland. Let the same natural liberty of exercising what species of +industry they please, be restored to all his Majesty's subjects, in the +same manner as to soldiers and seamen; that is, break down the exclusive +privileges of corporations, and repeal the statute of apprenticeship, +both which are really encroachments upon natural liberty, and add to +those the repeal of the law of settlements, so that a poor workman, when +thrown out of employment, either in one trade or in one place, may seek +for it in another trade or in another place, without the fear either of +a prosecution or of a removal; and neither the public nor the +individuals will suffer much more from the occasional disbanding some +particular classes of manufacturers, than from that of the soldiers. Our +manufacturers have no doubt great merit with their country, but they +cannot have more than those who defend it with their blood, nor deserve +to be treated with more delicacy. + +To expect, indeed, that the freedom of trade should ever be entirely +restored in Great Britain, is as absurd as to expect that an Oceana or +Utopia should ever be established in it. Not only the prejudices of the +public, but, what is much more unconquerable, the private interests of +many individuals, irresistibly oppose it. Were the officers of the army +to oppose, with the same zeal and unanimity, any reduction in the number +of forces, with which master manufacturers set themselves against every +law that is likely to increase the number of their rivals in the home +market; were the former to animate their soldiers, in the same manner as +the latter inflame their workmen, to attack with violence and outrage +the proposers of any such regulation; to attempt to reduce the army +would be as dangerous as it has now become to attempt to diminish, in +any respect, the monopoly which our manufacturers have obtained against +us. This monopoly has so much increased the number of some particular +tribes of them, that, like an overgrown standing army, they have become +formidable to the government, and, upon many occasions, intimidate the +legislature. The member of parliament who supports every proposal for +strengthening this monopoly, is sure to acquire not only the reputation +of understanding trade, but great popularity and influence with an order +of men whose numbers and wealth render them of great importance. If he +opposes them, on the contrary, and still more, if he has authority +enough to be able to thwart them, neither the most acknowledged probity, +nor the highest rank, nor the greatest public services, can protect him +from the most infamous abuse and detraction, from personal insults, nor +sometimes from real danger, arising from the insolent outrage of furious +and disappointed monopolists. + +The undertaker of a great manufacture, who, by the home markets being +suddenly laid open to the competition of foreigners, should be obliged +to abandon his trade, would no doubt suffer very considerably. That part +of his capital which had usually been employed in purchasing materials, +and in paying his workmen, might, without much difficulty, perhaps, find +another employment; but that part of it which was fixed in workhouses, +and in the instruments of trade, could scarce be disposed of without +considerable loss. The equitable regard, therefore, to his interest, +requires that changes of this kind should never be introduced suddenly, +but slowly, gradually, and after a very long warning. The legislature, +were it possible that its deliberations could be always directed, not by +the clamorous importunity of partial interests, but by an extensive view +of the general good, ought, upon this very account, perhaps, to be +particularly careful, neither to establish any new monopolies of this +kind, nor to extend further those which are already established. Every +such regulation introduces some degree of real disorder into the +constitution of the state, which it will be difficult afterwards to cure +without occasioning another disorder. + +How far it may be proper to impose taxes upon the importation of foreign +goods, in order not to prevent their importation, but to raise a revenue +for government, I shall consider hereafter when I come to treat of +taxes. Taxes imposed with a view to prevent, or even to diminish +importation, are evidently as destructive of the revenue of the customs +as of the freedom of trade. + + + + +CHAP. III. + +OF THE EXTRAORDINARY RESTRAINTS UPON THE IMPORTATION OF GOODS OF ALMOST +ALL KINDS, FROM THOSE COUNTRIES WITH WHICH THE BALANCE IS SUPPOSED TO BE +DISADVANTAGEOUS. + + +PART I.--_Of the Unreasonableness of those Restraints, even upon the +Principles of the Commercial System._ + +To lay extraordinary restraints upon the importation of goods of almost +all kinds, from these particular countries with which the balance of +trade is supposed to be disadvantageous, is the second expedient by +which the commercial system proposes to increase the quantity of gold +and silver. Thus, in Great Britain, Silesia lawns may be imported for +home consumption, upon paying certain duties; but French cambrics and +lawns are prohibited to be imported, except into the port of London, +there to be warehoused for exportation. Higher duties are imposed upon +the wines of France than upon those of Portugal, or indeed of any other +country. By what is called the impost 1692, a duty of five-and-twenty +per cent. of the rate or value, was laid upon all French goods; while +the goods of other nations were, the greater part of them, subjected to +much lighter duties, seldom exceeding five per cent. The wine, brandy, +salt, and vinegar of France, were indeed excepted; these commodities +being subjected to other heavy duties, either by other laws, or by +particular clauses of the same law. In 1696, a second duty of +twenty-five per cent. the first not having been thought a sufficient +discouragement, was imposed upon all French goods, except brandy; +together with a new duty of five-and-twenty pounds upon the ton of +French wine, and another of fifteen pounds upon the ton of French +vinegar. French goods have never been omitted in any of those general +subsidies or duties of five per cent. which have been imposed upon all, +or the greater part, of the goods enumerated in the book of rates. If we +count the one-third and two-third subsidies as making a complete subsidy +between them, there have been five of these general subsidies; so that, +before the commencement of the present war, seventy-five per cent. may +be considered as the lowest duty to which the greater part of the goods +of the growth, produce, or manufacture of France, were liable. But upon +the greater part of goods, those duties are equivalent to a prohibition. +The French, in their turn, have, I believe, treated our goods and +manufactures just as hardly; though I am not so well acquainted with the +particular hardships which they have imposed upon them. Those mutual +restraints have put an end to almost all fair commerce between the two +nations; and smugglers are now the principal importers, either of +British goods into France, or of French goods into Great Britain. The +principles which I have been examining, in the foregoing chapter, took +their origin from private interest and the spirit of monopoly; those +which I am going to examine in this, from national prejudice and +animosity. They are, accordingly, as might well be expected, still more +unreasonable. They are so, even upon the principles of the commercial +system. + +_First_, Though it were certain that in the case of a free trade between +France and England, for example, the balance would be in favour of +France, it would by no means follow that such a trade would be +disadvantageous to England, or that the general balance of its whole +trade would thereby be turned more against it. If the wines of France +are better and cheaper than these of Portugal, or its linens than those +of Germany, it would be more advantageous for Great Britain to purchase +both the wine and the foreign linen which it had occasion for of France, +than of Portugal and Germany. Though the value of the annual +importations from France would thereby be greatly augmented, the value +of the whole annual importations would be diminished, in proportion as +the French goods of the same quality were cheaper than those of the +other two countries. This would be the case, even upon the supposition +that the whole French goods imported were to be consumed in Great +Britain. + +But, _Secondly_, A great part of them might be re-exported to other +countries, where, being sold with profit, they might bring back a +return, equal in value, perhaps, to the prime cost of the whole French +goods imported. What has frequently been said of the East India trade, +might possibly be true of the French; that though the greater part of +East India goods were bought with gold and silver, the re-exportation of +a part of them to other countries brought back more gold and silver to +that which carried on the trade, than the prime cost of the whole +amounted to. One of the most important branches of the Dutch trade at +present, consists in the carriage of French goods to other European +countries. Some part even of the French wine drank in Great Britain, is +clandestinely imported from Holland and Zealand. If there was either a +free trade between France and England, or if French goods could be +imported upon paying only the same duties as those of other European +nations, to be drawn back upon exportation, England might have some +share of a trade which is found so advantageous to Holland. + +_Thirdly_, and _lastly_, There is no certain criterion by which we can +determine on which side what is called the balance between any two +countries lies, or which of them exports to the greatest value. National +prejudice and animosity, prompted always by the private interest of +particular traders, are the principles which generally direct our +judgment upon all questions concerning it. There are two criterions, +however, which have frequently been appealed to upon such occasions, the +custom-house books and the course of exchange. The custom-house books, I +think, it is now generally acknowledged, are a very uncertain criterion, +on account of the inaccuracy of the valuation at which the greater part +of goods are rated in them. The course of exchange is, perhaps, almost +equally so. + +When the exchange between two places, such as London and Paris, is at +par, it is said to be a sign that the debts due from London to Paris are +compensated by those due from Paris to London. On the contrary, when a +premium is paid at London for a bill upon Paris, it is said to be a sign +that the debts due from London to Paris are not compensated by those due +from Paris to London, but that a balance in money must be sent out from +the latter place; for the risk, trouble, and expense, of exporting +which, the premium is both demanded and given. But the ordinary state of +debt and credit between those two cities must necessarily be regulated, +it is said, by the ordinary course of their dealings with one another. +When neither of them imports from the other to a greater amount than it +exports to that other, the debts and credits of each may compensate one +another. But when one of them imports from the other to a greater value +than it exports to that other, the former necessarily becomes indebted +to the latter in a greater sum than the latter becomes indebted to it: +the debts and credits of each do not compensate one another, and money +must be sent out from that place of which the debts overbalance the +credits. The ordinary course of exchange, therefore, being an indication +of the ordinary state of debt and credit between two places, must +likewise be an indication of the ordinary course of their exports and +imports, as these necessarily regulate that state. + +But though the ordinary course of exchange shall be allowed to be a +sufficient indication of the ordinary state of debt and credit between +any two places, it would not from thence follow, that the balance of +trade was in favour of that place which had the ordinary state of debt +and credit in its favour. The ordinary state of debt and credit between +any two places is not always entirely regulated by the ordinary course +of their dealings with one another, but is often influenced by that of +the dealings of either with many other places. If it is usual, for +example, for the merchants of England to pay for the goods which they +buy of Hamburg, Dantzic, Riga, &c. by bills upon Holland, the ordinary +state of debt and credit between England and Holland will not be +regulated entirely by the ordinary course of the dealings of those two +countries with one another, but will be influenced by that of the +dealings in England with those other places. England may he obliged to +send out every year money to Holland, though its annual exports to that +country may exceed very much the annual value of its imports from +thence, and though what is called the balance of trade may be very much +in favour of England. + +In the way, besides, in which the par of exchange has hitherto been +computed, the ordinary course of exchange can afford no sufficient +indication that the ordinary state of debt and credit is in favour of +that country which seems to have, or which is supposed to have, the +ordinary course of exchange in its favour; or, in other words, the real +exchange may be, and in fact often is, so very different from the +computed one, that, from the course of the latter, no certain conclusion +can, upon many occasions, be drawn concerning that of the former. + +When for a sum of money paid in England, containing, according to the +standard of the English mint, a certain number of ounces of pure silver, +you receive a bill for a sum of money to be paid in France, containing, +according to the standard of the French mint, an equal number of ounces +of pure silver, exchange is said to be at par between England and +France. When you pay more, you are supposed to given premium, and +exchange is said to be against England, and in favour of France. When +you pay less, you are supposed to get a premium, and exchange is said to +be against France, and in favour of England. + +But, _first_, We cannot always judge of the value of the current money +of different countries by the standard of their respective mints. In +some it is more, in others it in less worn, clipt, and otherwise +degenerated from that standard. But the value of the current coin of +every country, compared with that of any other country, is in +proportion, not to the quantity of pure silver which it ought to +contain, but to that which it actually does contain. Before the +reformation of the silver coin in King William's time, exchange between +England and Holland, computed in the usual manner, according to the +standard of their respective mints, was five-and-twenty per cent. +against England. But the value of the current coin of England, as we +learn from Mr Lowndes, was at that time rather more than five-and-twenty +per cent. below its standard value. The real exchange, therefore, may +even at that time have been in favour of England, notwithstanding the +computed exchange so much against it; a smaller number of ounces of pure +silver, actually paid in England, may have purchased a bill for a +greater number of ounces of pure silver to be paid in Holland, and the +man who was supposed to give, may in reality have got the premium. The +French coin was, before the late reformation of the English gold coin, +much less wore than the English, and was perhaps two or three per cent. +nearer its standard. If the computed exchange with France, therefore, +was not more than two or three per cent. against England, the real +exchange might have been in its favour. Since the reformation of the +gold coin, the exchange has been constantly in favour of England, and +against France. + +_Secondly_, In some countries the expense of coinage is defrayed by the +government; in others, it is defrayed by the private people, who carry +their bullion to the mint, and the government even derives some revenue +from the coinage. In England it is defrayed by the government; and if +you carry a pound weight of standard silver to the mint, you get back +sixty-two shillings, containing a pound weight of the like standard +silver. In France a duty of eight per cent. is deducted for the coinage, +which not only defrays the expense of it, but affords a small revenue to +the government. In England, as the coinage costs nothing, the current +coin can never be much more valuable than the quantity of bullion which +it actually contains. In France, the workmanship, as you pay for it, +adds to the value, in the same manner as to that of wrought plate. A sum +of French money, therefore, containing an equal weight of pure silver, +is more valuable than a sum of English money containing an equal weight +of pure silver, and must require more bullion, or other commodities, to +purchase it. Though the current coin of the two countries, therefore, +were equally near the standards of their respective mints, a sum of +English money could not well purchase a sum of French money containing +an equal number of ounces of pure silver, nor consequently, a bill upon +France for such a sum. If, for such a bill, no more additional money was +paid than what was sufficient to compensate the expense of the French +coinage, the real exchange might be at par between the two countries; +their debts and credits might mutually compensate one another, while the +computed exchange was considerably in favour of France. If less than +this was paid, the real exchange might be in favour of England, while +the computed was in favour of France. + +_Thirdly_, and _lastly_, In some places, as at Amsterdam, Hamburg, +Venice, &c. foreign bills of exchange are paid in what they call bank +money; while in others, as at London, Lisbon, Antwerp, Leghorn, &c. they +are paid in the common currency of the country. What is called bank +money, is always of more value than the same nominal sum of common +currency. A thousand guilders in the bank of Amsterdam, for example, are +of more value than a thousand guilders of Amsterdam currency. The +difference between them is called the agio of the bank, which at +Amsterdam is generally about five per cent. Supposing the current money +of the two countries equally near to the standard of their respective +mints, and that the one pays foreign bills in this common currency, +while the other pays them in bank money, it is evident that the computed +exchange may be in favour of that which pays in bank money, though the +real exchange should be in favour of that which pays in current money; +for the same reason that the computed exchange may be in favour of that +which pays in better money, or in money nearer to its own standard, +though the real exchange should be in favour of that which pays in +worse. The computed exchange, before the late reformation of the gold +coin, was generally against London with Amsterdam, Hamburg, Venice, and, +I believe, with all other places which pay in what is called bank money. +It will by no means follow, however, that the real exchange was against +it. Since the reformation of the gold coin, it has been in favour of +London, even with those places. The computed exchange has generally been +in favour of London with Lisbon, Antwerp, Leghorn, and, if you except +France, I believe with most other parts of Europe that pay in common +currency; and it is not improbable that the real exchange was so too. + + +_Digression concerning Banks of Deposit, particularly concerning that of +Amsterdam._ + +The currency of a great state, such as France or England, generally +consists almost entirely of its own coin. Should this currency, +therefore, be at any time worn, clipt, or otherwise degraded below its +standard value, the state, by a reformation of its coin, can effectually +re-establish its currency. But the currency of a small state, such as +Genoa or Hamburg, can seldom consist altogether in its own coin, but +must be made up, in a great measure, of the coins of all the +neighbouring states with which its inhabitants have a continual +intercourse. Such a state, therefore, by reforming its coin, will not +always be able to reform its currency. If foreign bills of exchange are +paid in this currency, the uncertain value of any sum, of what is in its +own nature so uncertain, must render the exchange always very much +against such a state, its currency being in all foreign states +necessarily valued even below what it is worth. + +In order to remedy the inconvenience to which this disadvantageous +exchange must have subjected their merchants, such small states, when +they began to attend to the interest of trade, have frequently enacted, +that foreign bills of exchange of a certain value should be paid, not +in common currency, but by an order upon, or by a transfer in the books +of a certain bank, established upon the credit, and under the protection +of the state, this bank being always obliged to pay, in good and true +money, exactly according to the standard of the state. The banks of +Venice, Genoa, Amsterdam, Hamburg, and Nuremberg, seem to have been all +originally established with this view, though some of them may have +afterwards been made subservient to other purposes. The money of such +banks, being better than the common currency of the country, necessarily +bore an agio, which was greater or smaller, according as the currency +was supposed to be more or less degraded below the standard of the +state. The agio of the bank of Hamburg, for example, which is said to be +commonly about fourteen per cent. is the supposed difference between the +good standard money of the state, and the clipt, worn, and diminished +currency, poured into it from all the neighbouring states. + +Before 1609, the great quantity of clipt and worn foreign coin which the +extensive trade of Amsterdam brought from all parts of Europe, reduced +the value of its currency about nine per cent. below that of good money +fresh from the mint. Such money no sooner appeared, than it was melted +down or carried away, as it always is in such circumstances. The +merchants, with plenty of currency, could not always find a sufficient +quantity of good money to pay their bills of exchange; and the value of +those bills, in spite of several regulations which were made to prevent +it, became in a great measure uncertain. + +In order to remedy these inconveniences, a bank was established in 1609, +under the guarantee of the city. This bank received both foreign coin, +and the light and worn coin of the country, at its real intrinsic value +in the good standard money of the country, deducting only so much as was +necessary for defraying the expense of coinage and the other necessary +expense of management. For the value which remained after this small +deduction was made, it gave a credit in its books. This credit was +called bank money, which, as it represented money exactly according to +the standard of the mint, was always of the same real value, and +intrinsically worth more than current money. It was at the same time +enacted, that all bills drawn upon or negociated at Amsterdam, of the +value of 600 guilders and upwards, should be paid in bank money, which +at once took away all uncertainty in the value of those bills. Every +merchant, in consequence of this regulation, was obliged to keep an +account with the bank, in order to pay his foreign bills of exchange, +which necessarily occasioned a certain demand for bank money. + +Bank money, over and above both its intrinsic superiority to currency, +and the additional value which this demand necessarily gives it, has +likewise some other advantages. It is secure from fire, robbery, and +other accidents; the city of Amsterdam is bound for it; it can be paid +away by a simple transfer, without the trouble of counting, or the risk +of transporting it from one place to another. In consequence of those +different advantages, it seems from the beginning to have borne an agio; +and it is generally believed that all the money originally deposited in +the bank, was allowed to remain there, nobody caring to demand payment +of a debt which he could sell for a premium in the market. By demanding +payment of the bank, the owner of a bank credit would lose this premium. +As a shilling fresh from the mint will buy no more goods in the market +than one of our common worn shillings, so the good and true money which +might be brought from the coffers of the bank into those of a private +person, being mixed and confounded with the common currency of the +country, would be of no more value than that currency, from which it +could no longer be readily distinguished. While it remained in the +coffers of the bank, its superiority was known and ascertained. When it +had come into those of a private person, its superiority could not well +be ascertained without more trouble than perhaps the difference was +worth. By being brought from the coffers of the bank, besides, it lost +all the other advantages of bank money; its security, its easy and safe +transferability, its use in paying foreign bills of exchange. Over and +above all this, it could not be brought from those coffers, as will +appear by and by, without previously paying for the keeping. + +Those deposits of coin, or those deposits which the bank was bound to +restore in coin, constituted the original capital of the bank, or the +whole value of what was represented by what is called bank money. At +present they are supposed to constitute but a very small part of it. In +order to facilitate the trade in bullion, the bank has been for these +many years in the practice of giving credit in its books, upon deposits +of gold and silver bullion. This credit is generally about five per +cent. below the mint price of such bullion. The bank grants at the same +time what is called a recipice or receipt, entitling the person who +makes the deposit, or the bearer, to take out the bullion again at any +time within six months, upon transferring to the bank a quantity of bank +money equal to that for which credit had been given in its books when +the deposit was made, and upon paying one-fourth per cent. for the +keeping, if the deposit was in silver; and one-half per cent. if it was +in gold; but at the same time declaring, that in default of such +payment, and upon the expiration of this term, the deposit should belong +to the bank, at the price at which it had been received, or for which +credit had been given in the transfer books. What is thus paid for the +keeping of the deposit may be considered as a sort of warehouse rent; +and why this warehouse rent should be so much dearer for gold than for +silver, several different reasons have been assigned. The fineness of +gold, it has been said, is more difficult to be ascertained than that of +silver. Frauds are more easily practised, and occasion a greater loss in +the most precious metal. Silver, besides, being the standard metal, the +state, it has been said, wishes to encourage more the making of deposits +of silver than those of gold. + +Deposits of bullion are most commonly made when the price is somewhat +lower than ordinary, and they are taken out again when it happens to +rise. In Holland the market price of bullion is generally above the mint +price, for the same reason that it was so in England before the late +reformation of the gold coin. The difference is said to be commonly from +about six to sixteen stivers upon the mark, or eight ounces of silver, +of eleven parts of fine and one part alloy. The bank price, or the +credit which the bank gives for the deposits of such silver (when made +in foreign coin, of which the fineness is well known and ascertained, +such as Mexico dollars), is twenty-two guilders the mark; the mint price +is about twenty-three guilders, and the market price is from +twenty-three guilders six, to twenty-three guilders sixteen stivers, or +from two to three per cent. above the mint price.[37] The proportions +between the bank price, the mint price, and the market price of gold +bullion, are nearly the same. A person can generally sell his receipt +for the difference between the mint price of bullion and the market +price. A receipt for bullion is almost always worth something, and it +very seldom happens, therefore, that anybody suffers his receipts to +expire, or allows his bullion to fall to the bank at the price at which +it had been received, either by not taking it out before the end of the +six months, or by neglecting to pay one fourth or one half per cent. in +order to obtain a new receipt for another six months. This, however, +though it happens seldom, is said to happen sometimes, and more +frequently with regard to gold than with regard to silver, on account of +the higher warehouse rent which is paid for the keeping of the more +precious metal. + +The person who, by making a deposit of bullion, obtains both a bank +credit and a receipt, pays his bills of exchange as they become due, +with his bank credit; and either sells or keeps his receipt, according +as he judges that the price of bullion is likely to rise or to fall. The +receipt and the bank credit seldom keep long together, and there is no +occasion that they should. The person who has a receipt, and who wants +to take out bullion, finds always plenty of bank credits, or bank money, +to buy at the ordinary price, and the person who has bank money, and +wants to take out bullion, finds receipts always in equal abundance. + +The owners of bank credits, and the holders of receipts, constitute two +different sorts of creditors against the bank. The holder of a receipt +cannot draw out the bullion for which it is granted, without +re-assigning to the bank a sum of bank money equal to the price at which +the bullion had been received. If he has no bank money of his own, he +must purchase it of those who have it. The owner of bank money cannot +draw out bullion, without producing to the bank receipts for the +quantity which he wants. If he has none of his own, he must buy them of +those who have them. The holder of a receipt, when he purchases bank +money, purchases the power of taking out a quantity of bullion, of which +the mint price is five per cent. above the bank price. The agio of five +per cent. therefore, which he commonly pays for it, is paid, not for an +imaginary, but for a real value. The owner of bank money, when he +purchases a receipt, purchases the power of taking out a quantity of +bullion, of which the market price is commonly from two to three per +cent. above the mint price. The price which he pays for it, therefore, +is paid likewise for a real value. The price of the receipt, and the +price of the bank money, compound or make up between them the full value +or price of the bullion. + +Upon deposits of the coin current in the country, the bank grant +receipts likewise, as well as bank credits; but those receipts are +frequently of no value and will bring no price in the market. Upon +ducatoons, for example, which in the currency pass for three guilders +three stivers each, the bank gives a credit of three guilders only, or +five per cent. below their current value. It grants a receipt likewise, +entitling the bearer to take out a number of ducatoons deposited at any +time within six months, upon paying one fourth per cent. for the +keeping. This receipt will frequently bring no price in the market. +Three guilders, bank money, generally sell in the market for three +guilders three stivers, the full value of the ducatoons, if they were +taken out of the bank; and before they can be taken out, one-fourth per +cent. must be paid for the keeping, which would be mere loss to the +holder of the receipt. If the agio of the bank, however, should at any +time fall to three per cent. such receipts might bring some price in the +market, and might sell for one and three-fourths per cent. But the agio +of the bank being now generally about five per cent. such receipts are +frequently allowed to expire, or, as they express it, to fall to the +bank. The receipts which are given for deposits of gold ducats fall to +it yet more frequently, because a higher warehouse rent, or one half per +cent. must be paid for the keeping of them, before they can be taken out +again. The five per cent. which the bank gains, when deposits either of +coin or bullion are allowed to fall to it, may be considered as the +warehouse rent for the perpetual keeping of such deposits. + +The sum of bank money, for which the receipts are expired, must be very +considerable. It must comprehend the whole original capital of the bank, +which, it is generally supposed, has been allowed to remain there from +the time it was first deposited, nobody caring either to renew his +receipt, or to take out his deposit, as, for the reasons already +assigned, neither the one nor the other could be done without loss. But +whatever may be the amount of this sum, the proportion which it bears to +the whole mass of bank money is supposed to be very small. The bank of +Amsterdam has, for these many years past, been the great warehouse of +Europe for bullion, for which the receipts are very seldom allowed to +expire, or, as they express it, to fall to the bank. The far greater +part of the bank money, or of the credits upon the books of the bank, is +supposed to have been created, for these many years past, by such +deposits, which the dealers in bullion are continually both making and +withdrawing. + +No demand can be made upon the bank, but by means of a recipice or +receipt. The smaller mass of bank money, for which the receipts are +expired, is mixed and confounded with the much greater mass for which +they are still in force; so that, though there may be a considerable sum +of bank money, for which there are no receipts, there is no specific sum +or portion of it which may not at any time be demanded by one. The bank +cannot be debtor to two persons for the same thing; and the owner of +bank money who has no receipt, cannot demand payment of the bank till he +buys one. In ordinary and quiet times, he can find no difficulty in +getting one to buy at the market price, which generally corresponds with +the price at which he can sell the coin or bullion it entitles him to +take out of the bank. + +It might be otherwise during a public calamity; an invasion, for +example, such as that of the French in 1672. The owners of bank money +being then all eager to draw it out of the bank, in order to have it in +their own keeping, the demand for receipts might raise their price to an +exorbitant height. The holders of them might form extravagant +expectations, and, instead of two or three per cent. demand half the +bank money for which credit had been given upon the deposits that the +receipts had respectively been granted for. The enemy, informed of the +constitution of the bank, might even buy them up, in order to prevent +the carrying away of the treasure. In such emergencies, the bank, it is +supposed, would break through its ordinary rule of making payment only +to the holders of receipts. The holders of receipts, who had no bank +money, must have received within two or three per cent. of the value of +the deposit for which their respective receipts had been granted. The +bank, therefore, it is said, would in this case make no scruple of +paying, either with money or bullion, the full value of what the owners +of bank money, who could get no receipts, were credited for in its +books; paying, at the same time, two or three per cent. to such holders +of receipts as had no bank money, that being the whole value which, in +this state of things, could justly be supposed due to them. + +Even in ordinary and quiet times, it is the interest of the holders of +receipts to depress the agio, in order either to buy bank money (and +consequently the bullion which their receipts would then enable them to +take out of the bank) so much cheaper, or to sell their receipts to +these who have bank money, and who want to take out bullion, so much +dearer; the price of a receipt being generally equal to the difference +between the market price of bank money and that of the coin or bullion +for which the receipt had been granted. It is the interest of the owners +of bank money, on the contrary, to raise the agio, in order either to +sell their bank money so much dearer, or to buy a receipt so much +cheaper. To prevent the stock-jobbing tricks which those opposite +interests might sometimes occasion, the bank has of late years come to +the resolution, to sell at all times bank money for currency at five per +cent. agio, and to buy it in again at four per cent. agio. In +consequence of this resolution, the agio can never either rise above +five, or sink below four per cent.; and the proportion between the +market price of bank and that of current money is kept at all times very +near the proportion between their intrinsic values. Before this +resolution was taken, the market price of bank money used sometimes to +rise so high as nine per cent. agio, and sometimes to sink so low as +par, according as opposite interests happened to influence the market. + +The bank of Amsterdam professes to lend out no part of what is deposited +with it, but, for every guilder for which it gives credit in its books, +to keep in its repositories the value of a guilder either in money or +bullion. That it keeps in its repositories all the money or bullion for +which there are receipts in force, for which it is at all times liable +to be called upon, and which in reality is continually going from it, +and returning to it again, cannot well be doubted. But whether it does +so likewise with regard to that part of its capital for which the +receipts are long ago expired, for which, in ordinary and quiet times, +it cannot be called upon, and which, in reality, is very likely to +remain with it for ever, or as long as the states of the United +Provinces subsist, may perhaps appear more uncertain. At Amsterdam, +however, no point of faith is better established than that, for every +guilder circulated as bank money, there is a correspondent guilder in +gold or silver to be found in the treasures of the bank. The city is +guarantee that it should be so. The bank is under the direction of the +four reigning burgomasters, who are changed every year. Each new set of +burgomasters visits the treasure, compares it with the books, receives +it upon oath, and delivers it over, with the same awful solemnity, to +the set which succeeds; and in that sober and religious country, oaths +are not yet disregarded. A rotation of this kind seems alone a +sufficient security against any practices which cannot be avowed. Amidst +all the revolutions which faction has ever occasioned in the government +of Amsterdam, the prevailing party has at no time accused their +predecessors of infidelity in the administration of the bank. No +accusation could have affected more deeply the reputation and fortune of +the disgraced party; and if such an accusation could have been +supported, we may be assured that it would have been brought. In 1672, +when the French king was at Utrecht, the bank of Amsterdam paid so +readily, as left no doubt of the fidelity with which it had observed its +engagements. Some of the pieces which were then brought from its +repositories, appeared to have been scorched with the fire which +happened in the town-house soon after the bank was established. Those +pieces, therefore, must have lain there from that time. + +What may be the amount of the treasure in the bank, is a question which +has long employed the speculations of the curious. Nothing but +conjecture can be offered concerning it. It is generally reckoned, that +there are about 2000 people who keep accounts with the bank; and +allowing them to have, one with another, the value of L.1500 sterling +lying upon their respective accounts (a very large allowance), the whole +quantity of bank money, and consequently of treasure in the bank, will +amount to about L.3,000,000 sterling, or, at eleven guilders the pound +sterling, 33,000,000 of guilders; a great sum, and sufficient to carry +on a very extensive circulation, but vastly below the extravagant ideas +which some people have formed of this treasure. + +The city of Amsterdam derives a considerable revenue from the bank. +Besides what may be called the warehouse rent above mentioned, each +person, upon first opening an account with the bank, pays a fee of ten +guilders; and for every new account, three guilders three stivers; for +every transfer, two stivers; and if the transfer is for less than 300 +guilders, six stivers, in order to discourage the multiplicity of small +transactions. The person who neglects to balance his account twice in +the year, forfeits twenty-five guilders. The person who orders a +transfer for more than is upon his account, is obliged to pay three per +cent. for the sum overdrawn, and his order is set aside into the +bargain. The bank is supposed, too, to make a considerable profit by the +sale of the foreign coin or bullion which sometimes falls to it by the +expiring of receipts, and which is always kept till it can be sold with +advantage. It makes a profit, likewise, by selling bank money at five +per cent. agio, and buying it in at four. These different emoluments +amount to a good deal more than what is necessary for paying the +salaries of officers, and defraying the expense of management. What is +paid for the keeping of bullion upon receipts, is alone supposed to +amount to a neat annual revenue of between 150,000 and 200,000 guilders. +Public utility, however, and not revenue, was the original object of +this institution. Its object was to relieve the merchants from the +inconvenience of a disadvantageous exchange. The revenue which has +arisen from it was unforeseen, and may be considered as accidental. But +it is now time to return from this long digression, into which I have +been insensibly led, in endeavouring to explain the reasons why the +exchange between the countries which pay in what is called bank money, +and those which pay in common currency, should generally appear to be in +favour of the former, and against the latter. The former pay in a +species of money, of which the intrinsic value is always the same, and +exactly agreeable to the standard of their respective mints; the latter +is a species of money, of which the intrinsic value is continually +varying, and is almost always more or less below that standard. + + +PART II.--_Of the Unreasonableness of those extraordinary Restraints, +upon other Principles._ + +In the foregoing part of this chapter, I have endeavoured to show, even +upon the principles of the commercial system, how unnecessary it is to +lay extraordinary restraints upon the importation of goods from those +countries with which the balance of trade is supposed to be +disadvantageous. + +Nothing, however, can be more absurd than this whole doctrine of the +balance of trade, upon which, not only these restraints, but almost all +the other regulations of commerce, are founded. When two places trade +with one another, this doctrine supposes that, if the balance be even, +neither of them either loses or gains; but if it leans in any degree to +one side, that one of them loses, and the other gains, in proportion to +its declension from the exact equilibrium. Both suppositions are false. +A trade, which is forced by means of bounties and monopolies, may be, +and commonly is, disadvantageous to the country in whose favour it is +meant to be established, as I shall endeavour to show hereafter. But +that trade which, without force or constraint, is naturally and +regularly carried on between any two places, is always advantageous, +though not always equally so, to both. + +By advantage or gain, I understand, not the increase of the quantity of +gold or silver, but that of the exchangeable value of the annual produce +of the land and labour of the country, or the increase of the annual +revenue of its inhabitants. + +If the balance be even, and if the trade between the two places consist +altogether in the exchange of their native commodities, they will, upon +most occasions, not only both gain, but they will gain equally, or very +nearly equally; each will, in this case, afford a market for a part of +the surplus produce of the other; each will replace a capital which had +been employed in raising and preparing for the market this part of the +surplus produce of the other, and which had been distributed among, and +given revenue and maintenance to, a certain number of its inhabitants. +Some part of the inhabitants of each, therefore, will directly derive +their revenue and maintenance from the other. As the commodities +exchanged, too, are supposed to be of equal value, so the two capitals +employed in the trade will, upon most occasions, be equal or very nearly +equal; and both being employed in raising the native commodities of the +two countries, the revenue and maintenance which their distribution will +afford to the inhabitants of each will be equal, or very nearly equal. +This revenue and maintenance, this mutually afforded, will be greater or +smaller, in proportion to the extent of their dealings. If these should +annually amount to L.100,000, for example, or to L.1,000,000, on each +side, each of them will afford an annual revenue, in the one case, of +L.100,000, and, in the other, of L.1,000,000, to the inhabitants of the +other. + +If their trade should be of such a nature, that one of them exported to +the other nothing but native commodities, while the returns of that +other consisted altogether in foreign goods; the balance, in this case, +would still be supposed even, commodities being paid for with +commodities. They would, in this case too, both gain, but they would not +gain equally; and the inhabitants of the country which exported nothing +but native commodities, would derive the greatest revenue from the +trade. If England, for example, should import from France nothing but +the native commodities of that country, and not having such commodities +of its own as were in demand there, should annually repay them by +sending thither a large quantity of foreign goods, tobacco, we shall +suppose, and East India goods; this trade, though it would give some +revenue to the inhabitants of both countries, would give more to those +of France than to those of England. The whole French capital annually +employed in it would annually be distributed among the people of France; +but that part of the English capital only, which was employed in +producing the English commodities with which those foreign goods were +purchased, would be annually distributed among the people of England. +The greater part of it would replace the capitals which had been +employed in Virginia, Indostan, and China, and which had given revenue +and maintenance to the inhabitants of those distant countries. If the +capitals were equal, or nearly equal, therefore, this employment of the +French capital would augment much more the revenue of the people of +France, than that of the English capital would the revenue of the people +of England. France would, in this case, carry on a direct foreign trade +of consumption with England; whereas England would carry on a +round-about trade of the same kind with France. The different effects of +a capital employed in the direct, and of one employed in the round-about +foreign trade of consumption, have already been fully explained. + +There is not, probably, between any two countries, a trade which +consists altogether in the exchange, either of native commodities on +both sides, or of native commodities on one side, and of foreign goods +on the other. Almost all countries exchange with one another, partly +native and partly foreign goods. That country, however, in whose cargoes +there is the greatest proportion of native, and the least of foreign +goods, will always be the principal gainer. + +If it was not with tobacco and East India goods, but with gold and +silver, that England paid for the commodities annually imported from +France, the balance, in this case, would be supposed uneven, commodities +not being paid for with commodities, but with gold and silver. The +trade, however, would in this case, as in the foregoing, give some +revenue to the inhabitants of both countries, but more to those of +France than to those of England. It would give some revenue to those of +England. The capital which had been employed in producing the English +goods that purchased this gold and silver, the capital which had been +distributed among, and given revenue to, certain inhabitants of England, +would thereby be replaced, and enabled to continue that employment. The +whole capital of England would no more be diminished by this exportation +of gold and silver, than by the exportation of an equal value of any +other goods. On the contrary, it would, in most cases, be augmented. No +goods are sent abroad but those for which the demand is supposed to be +greater abroad than at home, and of which the returns, consequently, it +is expected, will be of more value at home than the commodities +exported. If the tobacco which in England is worth only L.100,000, when +sent to France, will purchase wine which is in England worth L.110,000, +the exchange will equally augment the capital of England by L.10,000. If +L.100,000 of English gold, in the same manner, purchase French wine, +which in England is worth L.110,000, this exchange will equally augment +the capital of England by L.10,000. As a merchant, who has L.110,000 +worth of wine in his cellar, is a richer man than he who has only +L.100,000 worth of tobacco in his warehouse, so is he likewise a richer +man than he who has only L.100,000 worth of gold in his coffers. He can +put into motion a greater quantity of industry, and give revenue, +maintenance, and employment, to a greater number of people, than either +of the other two. But the capital of the country is equal to the capital +of all its different inhabitants; and the quantity of industry which can +be annually maintained in it is equal to what all those different +capitals can maintain. Both the capital of the country, therefore, and +the quantity of industry which can be annually maintained in it, must +generally be augmented by this exchange. It would, indeed, be more +advantageous for England that it could purchase the wines of France with +its own hardware and broad cloth, than with either the tobacco of +Virginia, or the gold and silver of Brazil and Peru. A direct foreign +trade of consumption is always more advantageous than a round-about one. +But a round-about foreign trade of consumption, which is carried on with +gold and silver, does not seem to be less advantageous than any other +equally round-about one. Neither is a country which has no mines, more +likely to be exhausted of gold and silver by this annual exportation of +those metals, than one which does not grow tobacco by the like annual +exportation of that plant. As a country which has wherewithal to buy +tobacco will never be long in want of it, so neither will one be long in +want of gold and silver which has wherewithal to purchase those metals. + +It is a losing trade, it is said, which a workman carries on with the +alehouse; and the trade which a manufacturing nation would naturally +carry on with a wine country, may be considered as a trade of the same +nature. I answer, that the trade with the alehouse is not necessarily a +losing trade. In its own nature it is just as advantageous as any other, +though, perhaps, somewhat more liable to be abused. The employment of a +brewer, and even that of a retailer of fermented liquors, are as +necessary divisions of labour as any other. It will generally be more +advantageous for a workman to buy of the brewer the quantity he has +occasion for, than to brew it himself; and if he is a poor workman, it +will generally be more advantageous for him to buy it by little and +little of the retailer, than a large quantity of the brewer. He may no +doubt buy too much of either, as he may of any other dealers in his +neighbourhood; of the butcher, if he is a glutton; or of the draper, if +he affects to be a beau among his companions. It is advantageous to the +great body of workmen, notwithstanding, that all these trades should be +free, though this freedom may be abused in all of them, and is more +likely to be so, perhaps, in some than in others. Though individuals, +besides, may sometimes ruin their fortunes by an excessive consumption +of fermented liquors, there seems to be no risk that a nation should do +so. Though in every country there are many people who spend upon such +liquors more than they can afford, there are always many more who spend +less. It deserves to be remarked, too, that if we consult experience, +the cheapness of wine seems to be a cause, not of drunkenness, but of +sobriety. The inhabitants of the wine countries are in general the +soberest people of Europe; witness the Spaniards, the Italians, and the +inhabitants of the southern provinces of France. People are seldom +guilty of excess in what is their daily fare. Nobody affects the +character of liberality and good fellowship, by being profuse of a +liquor which is as cheap as small beer. On the contrary, in the +countries which, either from excessive heat or cold, produce no grapes, +and where wine consequently is dear and a rarity, drunkenness is a +common vice, as among the northern nations, and all those who live +between the tropics, the negroes, for example, on the coast of Guinea. +When a French regiment comes from some of the northern provinces of +France, where wine is somewhat dear, to be quartered in the southern, +where it is very cheap, the soldiers, I have frequently heard it +observed, are at first debauched by the cheapness and novelty of good +wine; but after a few months residence, the greater part of them become +as sober as the rest of the inhabitants. Were the duties upon foreign +wines, and the excises upon malt, beer, and ale, to be taken away all at +once, it might, in the same manner, occasion in Great Britain a pretty +general and temporary drunkenness among the middling and inferior ranks +of people, which would probably be soon followed by a permanent and +almost universal sobriety. At present, drunkenness is by no means the +vice of people of fashion, or of those who can easily afford the most +expensive liquors. A gentleman drunk with ale has scarce ever been seen +among us. The restraints upon the wine trade in Great Britain, besides, +do not so much seem calculated to hinder the people from going, if I may +say so, to the alehouse, as from going where they can buy the best and +cheapest liquor. They favour the wine trade of Portugal, and discourage +that of France. The Portuguese, it is said, indeed, are better customers +for our manufactures than the French, and should therefore be encouraged +in preference to them. As they give us their custom, it is pretended we +should give them ours. The sneaking arts of underling tradesman are thus +erected into political maxims for the conduct of a great empire; for it +is the most underling tradesmen only who make it a rule to employ +chiefly their own customers. A great trader purchases his goods always +where they are cheapest and best, without regard to any little interest +of this kind. + +By such maxims as these, however, nations have been taught that their +interest consisted in beggaring all their neighbours. Each nation has +been made to look with an invidious eye upon the prosperity of all the +nations with which it trades, and to consider their gain as its own +loss. Commerce, which ought naturally to be, among nations as among +individuals, a bond of union and friendship, has become the most fertile +source of discord and animosity. The capricious ambition of kings and +ministers has not, during the present and the preceding century, been +more fatal to the repose of Europe, than the impertinent jealousy of +merchants and manufacturers. The violence and injustice of the rulers of +mankind is an ancient evil, for which, I am afraid, the nature of human +affairs can scarce admit of a remedy: but the mean rapacity, the +monopolizing spirit, of merchants and manufacturers, who neither are, +nor ought to be, the rulers of mankind, though it cannot, perhaps, be +corrected, may very easily be prevented from disturbing the tranquillity +of anybody but themselves. + +That it was the spirit of monopoly which originally both invented and +propagated this doctrine, cannot be doubted: and they who first taught +it, were by no means such fools as they who believed it. In every +country it always is, and must be, the interest of the great body of the +people, to buy whatever they want of those who sell it cheapest. The +proposition is so very manifest, that it seems ridiculous to take any +pains to prove it; nor could it ever have been called in question, had +not the interested sophistry of merchants and manufacturers confounded +the common sense of mankind. Their interest is, in this respect, +directly opposite to that of the great body of the people. As it is the +interest of the freemen of a corporation to hinder the rest of the +inhabitants from employing any workmen but themselves; so it is the +interest of the merchants and manufacturers of every country to secure +to themselves the monopoly of the home market. Hence, in Great Britain, +and in most other European countries, the extraordinary duties upon +almost all goods imported by alien merchants. Hence the high duties and +prohibitions upon all those foreign manufactures which can come into +competition with our own. Hence, too, the extraordinary restraints upon +the importation of almost all sorts of goods from those countries with +which the balance of trade is supposed to be disadvantageous; that is, +from those against whom national animosity happens to be most violently +inflamed. + +The wealth of neighbouring nations, however, though dangerous in war and +politics, is certainly advantageous in trade. In a state of hostility, +it may enable our enemies to maintain fleets and armies superior to our +own; but in a state of peace and commerce, it must likewise enable them +to exchange with us to a greater value, and to afford a better market, +either for the immediate produce of our own industry, or for whatever is +purchased with that produce. As a rich man is likely to be a better +customer to the industrious people in his neighbourhood, than a poor, so +is likewise a rich nation. A rich man, indeed, who is himself a +manufacturer, is a very dangerous neighbour to all those who deal in the +same way. All the rest of the neighbourhood, however, by far the +greatest number, profit by the good market which his expense affords +them. They even profit by his underselling the poorer workmen who deal +in the same way with him. The manufacturers of a rich nation, in the +same manner, may no doubt be very dangerous rivals to those of their +neighbours. This very competition, however, is advantageous to the great +body of the people, who profit greatly, besides, by the good market +which the great expense of such a nation affords them in every other +way. Private people, who want to make a fortune, never think of retiring +to the remote and poor provinces of the country, but resort either to +the capital, or to some of the great commercial towns. They know, that +where little wealth circulates, there is little to be got; but that +where a great deal is in motion, some share of it may fall to them. The +same maxim which would in this manner direct the common sense of one, or +ten, or twenty individuals, should regulate the judgment of one, or ten, +or twenty millions, and should make a whole nation regard the riches of +its neighbours, as a probable cause and occasion for itself to acquire +riches. A nation that would enrich itself by foreign trade, is certainly +most likely to do so, when its neighbours are all rich, industrious and +commercial nations. A great nation, surrounded on all sides by wandering +savages and poor barbarians, might, no doubt, acquire riches by the +cultivation of its own lands, and by its own interior commerce, but not +by foreign trade. It seems to have been in this manner that the ancient +Egyptians and the modern Chinese acquired their great wealth. The +ancient Egyptians, it is said, neglected foreign commerce, and the +modern Chinese, it is known, hold it in the utmost contempt, and scarce +deign to afford it the decent protection of the laws. The modern maxims +of foreign commerce, by aiming at the impoverishment of all our +neighbours, so far as they are capable of producing their intended +effect, tend to render that very commerce insignificant and +contemptible. + +It is in consequence of these maxims, that the commerce between France +and England has, in both countries, been subjected to so many +discouragements and restraints. If those two countries, however, were to +consider their real interest, without either mercantile jealousy or +national animosity, the commerce of France might be more advantageous to +Great Britain than that of any other country, and, for the same reason, +that of Great Britain to France. France is the nearest neighbour to +Great Britain. In the trade between the southern coast of England and +the northern and north-western coast of France, the returns might be +expected, in the same manner as in the inland trade, four, five, or six +times in the year. The capital, therefore, employed in this trade could, +in each of the two countries, keep in motion four, five, or six times +the quantity of industry, and afford employment and subsistence to four, +five, or six times the number of people, which an equal capital could do +in the greater part of the other branches of foreign trade. Between the +parts of France and Great Britain most remote from one another, the +returns might be expected, at least, once in the year; and even this +trade would so far be at least equally advantageous, as the greater part +of the other branches of our foreign European trade. It would be, at +least, three times more advantageous than the boasted trade with our +North American colonies, in which the returns were seldom made in less +than three years, frequently not in less than four or five years. +France, besides, is supposed to contain 24,000,000 of inhabitants. Our +North American colonies were never supposed to contain more than +3,000,000; and France is a much richer country than North America; +though, on account of the more unequal distribution of riches, there is +much more poverty and beggary in the one country than in the other. +France, therefore, could afford a market at least eight times more +extensive, and, on account of the superior frequency of the returns, +four-and-twenty times more advantageous than that which our North +American colonies ever afforded. The trade of Great Britain would be +just as advantageous to France, and, in proportion to the wealth, +population, and proximity of the respective countries, would have the +same superiority over that which France carries on with her own +colonies. Such is the very great difference between that trade which the +wisdom of both nations has thought proper to discourage, and that which +it has favoured the most. + +But the very same circumstances which would have rendered an open and +free commerce between the two countries so advantageous to both, have +occasioned the principal obstructions to that commerce. Being +neighbours, they are necessarily enemies, and the wealth and power of +each becomes, upon that account, more formidable to the other; and what +would increase the advantage of national friendship, serves only to +inflame the violence of national animosity. They are both rich and +industrious nations; and the merchants and manufacturers of each dread +the competition of the skill and activity of those of the other. +Mercantile jealousy is excited, and both inflames, and is itself +inflamed, by the violence of national animosity, and the traders of both +countries have announced, with all the passionate confidence of +interested falsehood, the certain ruin of each, in consequence of that +unfavourable balance of trade, which, they pretend, would be the +infallible effect of an unrestrained commerce with the other. + +There is no commercial country in Europe, of which the approaching ruin +has not frequently been foretold by the pretended doctors of this +system, from an unfavourable balance of trade. After all the anxiety, +however, which they have excited about this, after all the vain attempts +of almost all trading nations to turn that balance in their own favour, +and against their neighbours, it does not appear that any one nation in +Europe has been, in any respect, impoverished by this cause. Every town +and country, on the contrary, in proportion as they have opened their +ports to all nations, instead of being ruined by this free trade, as the +principles of the commercial system would lead us to expect, have been +enriched by it. Though there are in Europe, indeed, a few towns which, +in some respects, deserve the name of free ports, there is no country +which does so. Holland, perhaps, approaches the nearest to this +character of any, though still very remote from it; and Holland, it is +acknowledged, not only derives its whole wealth, but a great part of its +necessary subsistence, from foreign trade. + +There is another balance, indeed, which has already been explained, very +different from the balance of trade, and which, according as it happens +to be either favourable or unfavourable, necessarily occasions the +prosperity or decay of every nation. This is the balance of the annual +produce and consumption. If the exchangeable value of the annual +produce, it has already been observed, exceeds that of the annual +consumption, the capital of the society must annually increase in +proportion to this excess. The society in this case lives within its +revenue; and what is annually saved out of its revenue, is naturally +added to its capital, and employed so as to increase still further the +annual produce. If the exchangeable value of the annual produce, on the +contrary, fall short of the annual consumption, the capital of the +society must annually decay in proportion to this deficiency. The +expense of the society, in this case, exceeds its revenue, and +necessarily encroaches upon its capital. Its capital, therefore, must +necessarily decay, and, together with it, the exchangeable value of the +annual produce of its industry. + +This balance of produce and consumption is entirely different from what +is called the balance of trade. It might take place in a nation which +had no foreign trade, but which was entirely separated from all the +world. It may take place in the whole globe of the earth, of which the +wealth, population, and improvement, may be either gradually increasing +or gradually decaying. + +The balance of produce and consumption may be constantly in favour of a +nation, though what is called the balance of trade be generally against +it. A nation may import to a greater value than it exports for half a +century, perhaps, together; the gold and silver which comes into it +during all this time, may be all immediately sent out of it; its +circulating coin may gradually decay, different sorts of paper money +being substituted in its place, and even the debts, too, which it +contracts in the principal nations with whom it deals, may be gradually +increasing; and yet its real wealth, the exchangeable value of the +annual produce of its lands and labour, may, during the same period, +have been increasing in a much greater proportion. The state of our +North American colonies, and of the trade which they carried on with +Great Britain, before the commencement of the present disturbances,[38] +may serve as a proof that this is by no means an impossible supposition. + + + + +CHAP. IV. + +OF DRAWBACKS. + + +Merchants and manufacturers are not contented with the monopoly of the +home market, but desire likewise the most extensive foreign sale for +their goods. Their country has no jurisdiction in foreign nations, and +therefore can seldom procure them any monopoly there. They are generally +obliged, therefore, to content themselves with petitioning for certain +encouragements to exportation. + +Of these encouragements, what are called drawbacks seem to be the most +reasonable. To allow the merchant to draw back upon exportation, either +the whole, or a part of whatever excise or inland duty is imposed upon +domestic industry, can never occasion the exportation of a greater +quantity of goods than what would have been exported had no duty been +imposed. Such encouragements do not tend to turn towards any particular +employment a greater share of the capital of the country, than what +would go to that employment of its own accord, but only to hinder the +duty from driving away any part of that share to other employments. They +tend not to overturn that balance which naturally establishes itself +among all the various employments of the society, but to hinder it from +being overturned by the duty. They tend not to destroy, but to preserve, +what it is in most cases advantageous to preserve, the natural division +and distribution of labour in the society. + +The same thing may be said of the drawbacks upon the re-exportation of +foreign goods imported, which, in Great Britain, generally amount to by +much the largest part of the duty upon importation. By the second of the +rules, annexed to the act of parliament, which imposed what is now +called the old subsidy, every merchant, whether English or alien, was +allowed to draw back half that duty upon exportation; the English +merchant, provided the exportation took place within twelve months; the +alien, provided it took place within nine months. Wines, currants, and +wrought silks, were the only goods which did not fall within this rule, +having other and more advantageous allowances. The duties imposed by +this act of parliament were, at that time, the only duties upon the +importation of foreign goods. The term within which this, and all other +drawbacks could be claimed, was afterwards (by 7 Geo. I. chap. 21. sect. +10.) extended to three years. + +The duties which have been imposed since the old subsidy, are, the +greater part of them, wholly drawn back upon exportation. This general +rule, however, is liable to a great number of exceptions; and the +doctrine of drawbacks has become a much less simple matter than it was +at their first institution. + +Upon the exportation of some foreign goods, of which it was expected +that the importation would greatly exceed what was necessary for the +home consumption, the whole duties are drawn back, without retaining +even half the old subsidy. Before the revolt of our North American +colonies, we had the monopoly of the tobacco of Maryland and Virginia. +We imported about ninety-six thousand hogsheads, and the home +consumption was not supposed to extend fourteen thousand. To facilitate +the great exportation which was necessary, in order to rid us of the +rest, the whole duties were drawn back, provided the exportation took +place within three years. + +We still have, though not altogether, yet very nearly, the monopoly of +the sugars of our West Indian islands. If sugars are exported within a +year, therefore, all the duties, upon importation are drawn back; and if +exported within three years, all the duties, except half the old +subsidy, which still continues to be retained upon the exportation of +the greater part of goods. Though the importation of sugar exceeds a +good deal what is necessary for the home consumption, the excess is +inconsiderable, in comparison of what it used to be in tobacco. + +Some goods, the particular objects of the jealousy of our own +manufacturers, are prohibited to be imported for home consumption. They +may, however, upon paying certain duties, be imported and warehoused for +exportation. But upon such exportation no part of these duties is drawn +back. Our manufacturers are unwilling, it seems, that even this +restricted importation should be encouraged, and are afraid lest some +part of these goods should be stolen out of the warehouse, and thus came +into competition with their own. It is under these regulations only that +we can import wrought silks, French cambrics and lawns, calicoes, +painted, printed, stained, or dyed, &c. + +We are unwilling even to be the carriers of French goods, and choose +rather to forego a profit to ourselves than to suffer those whom we +consider as our enemies to make any profit by our means. Not only half +the old subsidy, but the second twenty-five per cent. is retained upon +the exportation of all French goods. + +By the fourth of the rules annexed to the old subsidy, the drawback +allowed upon the exportation of all wines amounted to a great deal more +than half the duties which were at that time paid upon their +importation; and it seems at that time to have been the object of the +legislature to give somewhat more than ordinary encouragement to the +carrying trade in wine. Several of the other duties, too, which were +imposed either at the same time or subsequent to the old subsidy, what +is called the additional duty, the new subsidy, the one-third and +two-thirds subsidies, the impost 1692, the tonnage on wine, were allowed +to be wholly drawn back upon exportation. All those duties, however, +except the additional duty and impost 1692, being paid down in ready +money upon importation, the interest of so large a sum occasioned an +expense, which made it unreasonable to expect any profitable carrying +trade in this article. Only a part, therefore of the duty called the +impost on wine, and no part of the twenty-five pounds the ton upon +French wines, or of the duties imposed in 1745, in 1763, and in 1778, +were allowed to be drawn back upon exportation. The two imposts of five +per cent. imposed in 1779 and 1781, upon all the former duties of +customs, being allowed to be wholly drawn back upon the exportation of +all other goods, were likewise allowed to be drawn back upon that of +wine. The last duty that has been particularly imposed upon wine, that +of 1780, is allowed to be wholly drawn back; an indulgence which, when +so many heavy duties are retained, most probably could never occasion +the exportation of a single ton of wine. These rules took place with +regard to all places of lawful exportation, except the British colonies +in America. + +The 15th Charles II, chap. 7, called an act for the encouragement of +trade, had given Great Britain the monopoly of supplying the colonies +with all the commodities of the growth or manufacture of Europe, and +consequently with wines. In a country of so extensive a coast as our +North American and West Indian colonies, where our authority was always +so very slender, and where the inhabitants were allowed to carry out in +their own ships their non-enumerated commodities, at first to all parts +of Europe, and afterwards to all parts of Europe south of Cape +Finisterre, it is not very probable that this monopoly could ever be +much respected; and they probably at all times found means of bringing +back some cargo from the countries to which they were allowed to carry +out one. They seem, however, to have found some difficulty in importing +European wines from the places of their growth; and they could not well +import them from Great Britain, where they were loaded with many heavy +duties, of which a considerable part was not drawn back upon +exportation. Madeira wine, not being an European commodity, could be +imported directly into America and the West Indies, countries which, in +all their non-enumerated commodities, enjoyed a free trade to the island +of Madeira. These circumstances had probably introduced that general +taste for Madeira wine, which our officers found established in all our +colonies at the commencement of the war which began in 1755, and which +they brought back with them to the mother country, where that wine had +not been much in fashion before. Upon the conclusion of that war, in +1763 (by the 4th Geo. III, chap. 15, sect. 12), all the duties except +L.3, 10s. were allowed to be drawn back upon the exportation to the +colonies of all wines, except French wines, to the commerce and +consumption of which national prejudice would allow no sort of +encouragement. The period between the granting of this indulgence and +the revolt of our North American colonies, was probably too short to +admit of any considerable change in the customs of those countries. + +The same act which, in the drawbacks upon all wines, except French +wines, thus favoured the colonies so much more than other countries, in +those upon the greater part of other commodities, favoured them much +less. Upon the exportation of the greater part of commodities to other +countries, half the old subsidy was drawn back. But this law enacted, +that no part of that duty should be drawn back upon the exportation to +the colonies of any commodities of the growth or manufacture either of +Europe or the East Indies, except wines, white calicoes, and muslins. + +Drawbacks were, perhaps, originally granted for the encouragement of the +carrying trade, which, as the freight of the ship is frequently paid by +foreigners in money, was supposed to be peculiarly fitted for bringing +gold and silver into the country. But though the carrying trade +certainly deserves no peculiar encouragement, though the motive of the +institution was, perhaps, abundantly foolish, the institution itself +seems reasonable enough. Such drawbacks cannot force into this trade a +greater share of the capital of the country than what would have gone to +it of its own accord, had there been no duties upon importation; they +only prevent its being excluded altogether by those duties. The carrying +trade, though it deserves no preference, ought not to be precluded, but +to be left free, like all other trades. It is a necessary resource to +those capitals which cannot find employment, either in the agriculture +or in the manufactures of the country, either in its home trade, or in +its foreign trade of consumption. + +The revenue of the customs, instead of suffering, profits from such +drawbacks, by that part of the duty which is retained. If the whole +duties had been retained, the foreign goods upon which they are paid +could seldom have been exported, nor consequently imported, for want of +a market. The duties, therefore, of which a part is retained, would +never have been paid. + +These reasons seem sufficiently to justify drawbacks, and would justify +them, though the whole duties, whether upon the produce of domestic +industry or upon foreign goods, were always drawn back upon exportation. +The revenue of excise would, in this case indeed, suffer a little, and +that of the customs a good deal more; but the natural balance of +industry, the natural division and distribution of labour, which is +always more or less disturbed by such duties, would be more nearly +re-established by such a regulation. + +These reasons, however, will justify drawbacks only upon exporting goods +to those countries which are altogether foreign and independent, not to +those in which our merchants and manufacturers enjoy a monopoly. A +drawback, for example, upon the exportation of European goods to our +American colonies, will not always occasion a greater exportation than +what would have taken place without it. By means of the monopoly which +our merchants and manufacturers enjoy there, the same quantity might +frequently, perhaps, be sent thither, though the whole duties were +retained. The drawback, therefore, may frequently be pure loss to the +revenue of excise and customs, without altering the state of the trade, +or rendering it in any respect more extensive. How far such drawbacks +can be justified as a proper encouragement to the industry of our +colonies, or how far it is advantageous to the mother country that they +should be exempted from taxes which are paid by all the rest of their +fellow-subjects, will appear hereafter, when I come to treat of +colonies. + +Drawbacks, however, it must always be understood, are useful only in +those cases in which the goods, for the exportation of which they are +given, are really exported to some foreign country, and not +clandestinely re-imported into our own. That some drawbacks, +particularly those upon tobacco, have frequently been abused in this +manner, and have given occasion to many frauds, equally hurtful both to +the revenue and to the fair trader, is well known. + + + + +CHAP. V. + +OF BOUNTIES. + + +Bounties upon exportation are, in Great Britain, frequently petitioned +for, and sometimes granted, to the produce of particular branches of +domestic industry. By means of them, our merchants and manufacturers, it +is pretended, will be enabled to sell their goods as cheap or cheaper +than their rivals in the foreign market. A greater quantity, it is said, +will thus be exported, and the balance of trade consequently turned more +in favour of our own country. We cannot give our workmen a monopoly in +the foreign, as we have done in the home market. We cannot force +foreigners to buy their goods as we have done our own countrymen. The +next best expedient, it has been thought, therefore, is to pay them for +buying. It is in this manner that the mercantile system proposes to +enrich the whole country, and to put money into all our pockets by means +of the balance of trade. + +Bounties, it is allowed, ought to be given to those branches of trade +only which cannot be carried on without them. But every branch of trade +in which the merchant can sell his goods for a price which replaces to +him, with the ordinary profits of stock, the whole capital employed in +preparing and sending them to market, can be carried on without a +bounty. Every such branch is evidently upon a level with all the other +branches of trade which are carried on without bounties, and cannot, +therefore, require one more than they. Those trades only require +bounties in which the merchant is obliged to sell his goods for a price +which does not replace to him his capital, together with the ordinary +profit, or in which he is obliged to sell them for less than it really +costs him to send them to market. The bounty is given in order to make +up this loss, and to encourage him to continue, or, perhaps, to begin a +trade, of which the expense is supposed to be greater than the returns, +of which every operation eats up a part of the capital employed in it, +and which is of such a nature, that if all other trades resembled it, +there would soon be no capital left in the country. + +The trades, it is to be observed, which are carried on by means of +bounties, are the only ones which can be carried on between two nations +for any considerable time together, in such a manner as that one of them +shall always and regularly lose, or sell its goods for less than it +really costs to send them to market. But if the bounty did not repay to +the merchant what he would otherwise lose upon the price of his goods, +his own interest would soon oblige him to employ his stock in another +way, or to find out a trade in which the price of the goods would +replace to him, with the ordinary profit, the capital employment in +sending them to market. The effect of bounties, like that of all the +other expedients of the mercantile system, can only be to force the +trade of a country into a channel much less advantageous than that in +which it would naturally run of its own accord. + +The ingenious and well-informed author of the Tracts upon the Corn Trade +has shown very clearly, that since the bounty upon the exportation of +corn was first established, the price of the corn exported, valued +moderately enough, has exceeded that of the corn imported, valued very +high, by a much greater sum than the amount of the whole bounties which +have been paid during that period. This, he imagines, upon the true +principles of the mercantile system, is a clear proof that this forced +corn trade is beneficial to the nation, the value of the exportation +exceeding that of the importation by a much greater sum than the whole +extraordinary expense which the public has been at in order to get it +exported. He does not consider that this extraordinary expense, or the +bounty, is the smallest part of the expense which the exportation of +corn really costs the society. The capital which the farmer employed in +raising it must likewise be taken into the account. Unless the price of +the corn, when sold in the foreign markets replaces, not only the +bounty, but this capital, together with the ordinary profits of stock, +the society is a loser by the difference, or the national stock is so +much diminished. But the very reason for which it has been thought +necessary to grant a bounty, is the supposed insufficiency of the price +to do this. + +The average price of corn, it has been said, has fallen considerably +since the establishment of the bounty. That the average price of corn +began to fall somewhat towards the end of the last century, and has +continued to do so during the course of the sixty-four first years of +the present, I have already endeavoured to show. But this event, +supposing it to be real, as I believe it to be, must have happened in +spite of the bounty, and cannot possibly have happened in consequence of +it. It has happened in France, as well as in England, though in France +there was not only no bounty, but, till 1764, the exportation of corn +was subjected to a general prohibition. This gradual fall in the average +price of grain, it is probable, therefore, is ultimately owing neither +to the one regulation nor to the other, but to that gradual and +insensible rise in the real value of silver, which, in the first book of +this discourse, I have endeavoured to show, has taken place in the +general market of Europe during the course of the present century. It +seems to be altogether impossible that the bounty could ever contribute +to lower the price of grain. + +In years of plenty, it has already been observed, the bounty, by +occasioning an extraordinary exportation, necessarily keeps up the price +of corn in the home market above what it would naturally fall to. To do +so was the avowed purpose of the institution. In years of scarcity, +though the bounty is frequently suspended, yet the great exportation +which it occasions in years of plenty, must frequently hinder, more or +less, the plenty of one year from relieving the scarcity of another. +Both in years of plenty and in years of scarcity, therefore, the bounty +necessarily tends to raise the money price of corn somewhat higher than +it otherwise would be in the home market. + +That, in the actual state of tillage, the bounty must necessarily have +this tendency, will not I apprehend, be disputed by any reasonable +person. But it has been thought by many people, that it tends to +encourage tillage, and that in two different ways; first, by opening a +more extensive foreign market to the corn of the farmer, it tends, they +imagine, to increase the demand for, and consequently the production of, +that commodity; and, secondly, by securing to him a better price than he +could otherwise expect in the actual state of tillage, it tends, they +suppose, to encourage tillage. This double encouragement must, they +imagine, in a long period of years, occasion such an increase in the +production of corn, as may lower its price in the home market, much more +than the bounty can raise it, in the actual state which tillage may, at +the end of that period, happen to be in. + +I answer, that whatever extension of the foreign market can be +occasioned by the bounty must, in every particular year, be altogether +at the expense of the home market; as every bushel of corn, which is +exported by means of the bounty, and which would not have been exported +without the bounty, would have remained in the home market to increase +the consumption, and to lower the price of that commodity. The corn +bounty, it is to be observed, as well as every other bounty upon +exportation, imposes two different taxes upon the people; first, the tax +which they are obliged to contribute, in order to pay the bounty; and, +secondly, the tax which arises from the advanced price of the commodity +in the home market, and which, as the whole body of the people are +purchasers of corn, must, in this particular commodity, be paid by the +whole body of the people. In this particular commodity, therefore, this +second tax is by much the heaviest of the two. Let us suppose that, +taking one year with another, the bounty of 5s. upon the exportation of +the quarter of wheat raises the price of that commodity in the home +market only 6d. the bushel, or 4s. the quarter higher than it otherwise +would have been in the actual state of the crop. Even upon this very +moderate supposition, the great body of the people, over and above +contributing the tax which pays the bounty of 5s. upon every quarter of +wheat exported, must pay another of 4s. upon every quarter which they +themselves consume. But according to the very well informed author of +the Tracts upon the Corn Trade, the average proportion of the corn +exported to that consumed at home, is not more than that of one to +thirty-one. For every 5s. therefore, which they contribute to the +payment of the first tax, they must contribute L.6, 4s. to the payment +of the second. So very heavy a tax upon the first necessary of life must +either reduce the subsistence of the labouring poor, or it must occasion +some augmentation in their pecuniary wages, proportionable to that in +the pecuniary price of their subsistence. So far as it operates in the +one way, it must reduce the ability of the labouring poor to educate and +bring up their children, and must, so far, tend to restrain the +population of the country. So far as it operates in the other, it must +reduce the ability of the employers of the poor, to employ so great a +number as they otherwise might do, and must so far tend to restrain the +industry of the country. The extraordinary exportation of corn, +therefore, occasioned by the bounty, not only in every particular year +diminishes the home, just as much as it extends the foreign market and +consumption, but, by restraining the population and industry of the +country, its final tendency is to stint and restrain the gradual +extension of the home market; and thereby, in the long-run, rather to +diminish than to augment the whole market and consumption of corn. + +This enhancement of the money price of corn, however, it has been +thought, by rendering that commodity more profitable to the farmer, must +necessarily encourage its production. + +I answer, that this might be the case, if the effect of the bounty was +to raise the real price of corn, or to enable the farmer, with an equal +quantity of it, to maintain a greater number of labourers in the same +manner, whether liberal, moderate, or scanty, than other labourers are +commonly maintained in his neighbourhood. But neither the bounty, it is +evident, nor any other human institution, can have any such effect. It +is not the real, but the nominal price of corn, which can in any +considerable degree be affected by the bounty. And though the tax, which +that institution imposes upon the whole body of the people, may be very +burdensome to those who pay it, it is of very little advantage to those +who receive it. + +The real effect of the bounty is not so much to raise the real value of +corn, as to degrade the real value of silver; or to make an equal +quantity of it exchange for a smaller quantity, not only of corn, but of +all other home made commodities; for the money price of corn regulates +that of all other home made commodities. + +It regulates the money price of labour, which must always be such as to +enable the labourer to purchase a quantity of corn sufficient to +maintain him and his family, either in the liberal, moderate, or scanty +manner, in which the advancing, stationary, or declining circumstances +of the society, oblige his employers to maintain him. + +It regulates the money price of all the other parts of the rude produce +of land, which, in every period of improvement, must bear a certain +proportion to that of corn, though this proportion is different in +different periods. It regulates, for example, the money price of grass +and hay, of butcher's meat, of horses, and the maintenance of horses, +of land carriage consequently, or of the greater part of the inland +commerce of the country. + +By regulating the money price of all the other parts of the rude produce +of land, it regulates that of the materials of almost all manufactures; +by regulating the money price of labour, it regulates that of +manufacturing art and industry; and by regulating both, it regulates +that of the complete manufacture. The money price of labour, and of +every thing that is the produce, either of land or labour, must +necessarily either rise or fall in proportion to the money price of +corn. + +Though in consequence of the bounty, therefore, the farmer should be +enabled to sell his corn for 4s. the bushel, instead of 3s 6d. and to +pay his landlord a money rent proportionable to this rise in the money +price of his produce; yet if, in consequence of this rise in the price +of corn, 4s. will purchase no more home made goods of any other kind +than 3s. 6d. would have done before, neither the circumstances of the +farmer, nor those of the landlord, will be much mended by this change. +The farmer will not be able to cultivate much better; the landlord will +not be able to live much better. In the purchase of foreign commodities, +this enhancement in the price of corn may give them some little +advantage. In that of home made commodities, it can give them none at +all. And almost the whole expense of the farmer, and the far greater +part even of that of the landlord, is in home made commodities. + +That degradation in the value of silver, which is the effect of the +fertility of the mines, and which operates equally, or very nearly +equally, through the greater part of the commercial world, is a matter +of very little consequence to any particular country. The consequent +rise of all money prices, though it does not make those who receive them +really richer, does not make them really poorer. A service of plate +becomes really cheaper, and every thing else remains precisely of the +same real value as before. + +But that degradation in the value of silver, which, being the effect +either of the peculiar situation or of the political institutions of a +particular country, takes place only in that country, is a matter of +very great consequence, which, far from tending to make any body really +richer, tends to make every body really poorer. The rise in the money +price of all commodities, which is in this case peculiar to that +country, tends to discourage more or less every sort of industry which +is carried on within it, and to enable foreign nations, by furnishing +almost all sorts of goods for a smaller quantity of silver than its own +workmen can afford to do, to undersell them, not only in the foreign, +but even in the home market. + +It is the peculiar situation of Spain and Portugal, as proprietors of +the mines, to be the distributers of gold and silver to all the other +countries of Europe. Those metals ought naturally, therefore, to be +somewhat cheaper in Spain and Portugal than in any other part of Europe. +The difference, however, should be no more than the amount of the +freight and insurance; and, on account of the great value and small bulk +of those metals, their freight is no great matter, and their insurance +is the same as that of any other goods of equal value. Spain and +Portugal, therefore, could suffer very little from their peculiar +situation, if they did not aggravate its disadvantages by their +political institutions. + +Spain by taxing, and Portugal by prohibiting, the exportation of gold +and silver, load that exportation with the expense of smuggling, and +raise the value of those metals in other countries so much more above +what it is in their own, by the whole amount of this expense. When you +dam up a stream of water, as soon as the dam is full, as much water must +run over the dam-head as if there was no dam at all. The prohibition of +exportation cannot detain a greater quantity of gold and silver in Spain +and Portugal, than what they can afford to employ, than what the annual +produce of their land and labour will allow them to employ, in coin, +plate, gilding, and other ornaments of gold and silver. When they have +got this quantity, the dam is full, and the whole stream which flows in +afterwards must run over. The annual exportation of gold and silver from +Spain and Portugal, accordingly, is, by all accounts, notwithstanding +these restraints, very near equal to the whole annual importation. As +the water, however, must always be deeper behind the dam-head than +before it, so the quantity of gold and silver which these restraints +detain in Spain and Portugal, must, in proportion to the annual produce +of their land and labour, be greater than what is to be found in other +countries. The higher and stronger the dam-head, the greater must be the +difference in the depth of water behind and before it. The higher the +tax, the higher the penalties with which the prohibition is guarded, the +more vigilant and severe the police which looks after the execution of +the law, the greater must be the difference in the proportion of gold +and silver to the annual produce of the land and labour of Spain and +Portugal, and to that of other countries. It is said, accordingly, to be +very considerable, and that you frequently find there a profusion of +plate in houses, where there is nothing else which would in other +countries be thought suitable or correspondent to this sort of +magnificence. The cheapness of gold and silver, or, what is the same +thing, the dearness of all commodities, which is the necessary effect of +this redundancy of the precious metals, discourages both the agriculture +and manufactures of Spain and Portugal, and enables foreign nations to +supply them with many sorts of rude, and with almost all sorts of +manufactured produce, for a smaller quantity of gold and silver than +what they themselves can either raise or make them for at home. The tax +and prohibition operate in two different ways. They not only lower very +much the value of the precious metals in Spain and Portugal, but by +detaining there a certain quantity of those metals which would otherwise +flow over other countries, they keep up their value in those other +countries somewhat above what it otherwise would be, and thereby give +those countries a double advantage in their commerce with Spain and +Portugal. Open the flood-gates, and there will presently be less water +above, and more below the dam-head, and it will soon come to a level in +both places. Remove the tax and the prohibition, and as the quantity of +gold and silver will diminish considerably in Spain and Portugal, so it +will increase somewhat in other countries; and the value of those +metals, their proportion to the annual produce of land and labour, will +soon come to a level, or very near to a level, in all. The loss which +Spain and Portugal could sustain by this exportation of their gold and +silver, would be altogether nominal and imaginary. The nominal value of +their goods, and of the annual produce of their land and labour, would +fall, and would be expressed or represented by a smaller quantity of +silver than before; but their real value would be the same as before, +and would be sufficient to maintain, command, and employ the same +quantity of labour. As the nominal value of their goods would fall, the +real value of what remained of their gold and silver would rise, and a +smaller quantity of those metals would answer all the same purposes of +commerce and circulation which had employed a greater quantity before. +The gold and silver which would go abroad would not go abroad for +nothing, but would bring back an equal value of goods of some kind or +other. Those goods, too, would not be all matters of mere luxury and +expense, to be consumed by idle people, who produce nothing in return +for their consumption. As the real wealth and revenue of idle people +would not be augmented by this extraordinary exportation of gold and +silver, so neither would their consumption be much augmented by it. +Those goods would probably, the greater part of them, and certainly some +part of them, consist in materials, tools, and provisions, for the +employment and maintenance of industrious people, who would reproduce, +with a profit, the full value of their consumption. A part of the dead +stock of the society would thus be turned into active stock, and would +put into motion a greater quantity of industry than had been employed +before. The annual produce of their land and labour would immediately be +augmented a little, and in a few years would probably be augmented a +great deal; their industry being thus relieved from one of the most +oppressive burdens which it at present labours under. + +The bounty upon the exportation of corn necessarily operates exactly in +the same way as this absurd policy of Spain and Portugal. Whatever be +the actual state of tillage, it renders our corn somewhat dearer in the +home market than it otherwise would be in that state, and somewhat +cheaper in the foreign; and as the average money price of corn +regulates, more or less, that of all other commodities, it lowers the +value of silver considerably in the one, and tends to raise it a little +in the other. It enables foreigners, the Dutch in particular, not only +to eat our corn cheaper than they otherwise could do, but sometimes to +eat it cheaper than even our own people can do upon the same occasions; +as we are assured by an excellent authority, that of Sir Matthew Decker. +It hinders our own workmen from furnishing their goods for so small a +quantity of silver as they otherwise might do, and enables the Dutch to +furnish theirs for a smaller. It tends to render our manufactures +somewhat dearer in every market, and theirs somewhat cheaper, than they +otherwise would be, and consequently to give their industry a double +advantage over our own. + +The bounty, as it raises in the home market, not so much the real, as +the nominal price of our corn; as it augments, not the quantity of +labour which a certain quantity of corn can maintain and employ, but +only the quantity of silver which it will exchange for; it discourages +our manufactures, without rendering any considerable service, either to +our farmers or country gentlemen. It puts, indeed, a little more money +into the pockets of both, and it will perhaps be somewhat difficult to +persuade the greater part of them that this is not rendering them a very +considerable service. But if this money sinks in its value, in the +quantity of labour, provisions, and home-made commodities of all +different kinds which it is capable of purchasing, as much as it rises +in its quantity, the service will be little more than nominal and +imaginary. + +There is, perhaps, but one set of men in the whole commonwealth to whom +the bounty either was or could be essentially serviceable. These were +the corn merchants, the exporters and importers of corn. In years of +plenty, the bounty necessarily occasioned a greater exportation than +would otherwise have taken place; and by hindering the plenty of the one +year from relieving the scarcity of another, it occasioned in years of +scarcity a greater importation than would otherwise have been necessary. +It increased the business of the corn merchant in both; and in the years +of scarcity, it not only enabled him to import a greater quantity, but +to sell it for a better price, and consequently with a greater profit, +than he could otherwise have made, if the plenty of one year had not +been more or less hindered from relieving the scarcity of another. It is +in this set of men, accordingly, that I have observed the greatest zeal +for the continuance or renewal of the bounty. + +Our country gentlemen, when they imposed the high duties upon the +exportation of corn, which in times of moderate plenty amount to a +prohibition, and when they established the bounty, seem to have imitated +the conduct of our manufacturers. By the one institution, they secured +to themselves the monopoly of the home market, and by the other they +endeavoured to prevent that market from ever being overstocked with +their commodity. By both they endeavoured to raise its real value, in +the same manner as our manufacturers had, by the like institutions, +raised the real value of many different sorts of manufactured goods. +They did not, perhaps, attend to the great and essential difference +which nature has established between corn and almost every other sort of +goods. When, either by the monopoly of the home market, or by a bounty +upon exportation, you enable our woollen or linen manufacturers to sell +their goods for somewhat a better price than they otherwise could get +for them, you raise, not only the nominal, but the real price of those +goods; you render them equivalent to a greater quantity of labour and +subsistence; you increase not only the nominal, but the real profit, the +real wealth and revenue of these manufacturers; and you enable them, +either to live better themselves, or to employ a greater quantity of +labour in those particular manufactures. You really encourage those +manufactures, and direct towards them a greater quantity of the industry +of the country than what would properly go to them of its own accord. +But when, by the like institutions, you raise the nominal or money price +of corn, you do not raise its real value; you do not increase the real +wealth, the real revenue, either of our farmers or country gentlemen; +you do not encourage the growth of corn, because you do not enable them +to maintain and employ more labourers in raising it. The nature of +things has stamped upon corn a real value, which cannot be altered by +merely altering its money price. No bounty upon exportation, no monopoly +of the home market, can raise that value. The freest competition cannot +lower it. Through the world in general, that value is equal to the +quantity of labour which it can maintain, and in every particular place +it is equal to the quantity of labour which it can maintain in the way, +whether liberal, moderate, or scanty, in which labour is commonly +maintained in that place. Woollen or linen cloth are not the regulating +commodities by which the real value of all other commodities must be +finally measured and determined; corn is. The real value of every other +commodity is finally measured and determined by the proportion which its +average money price bears to the average money price of corn. The real +value of corn does not vary with those variations in its average money +price, which sometimes occur from one century to another; it is the real +value of silver which varies with them. + +Bounties upon the exportation of any home-made commodity are liable, +first, to that general objection which may be made to all the different +expedients of the mercantile system; the objection of forcing some part +of the industry of the country into a channel less advantageous than +that in which it would run of its own accord; and, secondly, to the +particular objection of forcing it not only into a channel that is less +advantageous, but into one that is actually disadvantageous; the trade +which cannot be carried on but by means of a bounty being necessarily a +losing trade. The bounty upon the exportation of corn is liable to this +further objection, that it can in no respect promote the raising of that +particular commodity of which it was meant to encourage the production. +When our country gentlemen, therefore, demanded the establishment of the +bounty, though they acted in imitation of our merchants and +manufacturers, they did not act with that complete comprehension of +their own interest, which commonly directs the conduct of those two +other orders of people. They loaded the public revenue with a very +considerable expense: they imposed a very heavy tax upon the whole body +of the people; but they did not, in any sensible degree, increase the +real value of their own commodity; and by lowering somewhat the real +value of silver, they discouraged, in some degree, the general industry +of the country, and, instead of advancing, retarded more or less the +improvement of their own lands, which necessarily depend upon the +general industry of the country. + +To encourage the production of any commodity, a bounty upon production, +one should imagine, would have a more direct operation than one upon +exportation. It would, besides, impose only one tax upon the people, +that which they must contribute in order to pay the bounty. Instead of +raising, it would tend to lower the price of the commodity in the home +market; and thereby, instead of imposing a second tax upon the people, +it might, at least in part, repay them for what they had contributed to +the first. Bounties upon production, however, have been very rarely +granted. The prejudices established by the commercial system have taught +us to believe, that national wealth arises more immediately from +exportation than from production. It has been more favoured, +accordingly, as the more immediate means of bringing money into the +country. Bounties upon production, it has been said too, have been found +by experience more liable to frauds than those upon exportation. How far +this is true, I know not. That bounties upon exportation have been +abused, to many fraudulent purposes, is very well known. But it is not +the interest of merchants and manufacturers, the great inventors of all +these expedients, that the home market should be overstocked with their +goods; an event which a bounty upon production might sometimes occasion. +A bounty upon exportation, by enabling them to send abroad their surplus +part, and to keep up the price of what remains in the home market, +effectually prevents this. Of all the expedients of the mercantile +system, accordingly, it is the one of which they are the fondest. I have +known the different undertakers of some particular works agree privately +among themselves to give a bounty out of their own pockets upon the +exportation of a certain proportion of goods which they dealt in. This +expedient succeeded so well, that it more than doubled the price of +their goods in the home market, notwithstanding a very considerable +increase in the produce. The operation of the bounty upon corn must have +been wonderfully different, if it has lowered the money price of that +commodity. + +Something like a bounty upon production, however, has been granted upon +some particular occasions. The tonnage bounties given to the white +herring and whale fisheries may, perhaps, be considered as somewhat of +this nature. They tend directly, it may be supposed, to render the goods +cheaper in the home market than they otherwise would be. In other +respects, their effects, it must be acknowledged, are the same as those +of bounties upon exportation. By means of them, a part of the capital of +the country is employed in bringing goods to market, of which the price +does not repay the cost, together with the ordinary profits of stock. + +But though the tonnage bounties to those fisheries do not contribute to +the opulence of the nation, it may, perhaps, be thought that they +contribute to its defence, by augmenting the number of its sailors and +shipping. This, it may be alleged, may sometimes be done by means of +such bounties, at a much smaller expense than by keeping up a great +standing navy, if I may use such an expression, in the same way as a +standing army. + +Notwithstanding these favourable allegations, however, the following +considerations dispose me to believe, that in granting at least one of +these bounties, the legislature has been very grossly imposed upon: + +_First._ The herring-buss bounty seems too large. + +From the commencement of the winter fishing 1771, to the end of the +winter fishing 1781, the tonnage bounty upon the herring-buss fishery +has been at thirty shillings the ton. During these eleven years, the +whole number of barrels caught by the herring-buss fishery of Scotland +amounted to 378,347. The herrings caught and cured at sea are called +sea-sticks. In order to render them what are called merchantable +herrings, it is necessary to repack them with an additional quantity of +salt; and in this case, it is reckoned, that three barrels of sea-sticks +are usually repacked into two barrels of merchantable herrings. The +number of barrels of merchantable herrings, therefore, caught during +these eleven years, will amount only, according to this account, to +252,231-1/4. During these eleven years, the tonnage bounties paid +amounted to L.155,463 : 11s. or 8s. 2-1/4d. upon every barrel of +sea-sticks, and to 12s. 3-3/4d. upon every barrel of merchantable +herrings. + +The salt with which these herrings are cured is sometimes Scotch, and +sometimes foreign salt; both which are delivered, free of all excise +duty, to the fish-curers. The excise duty upon Scotch salt is at present +1s. 6d., that upon foreign salt 10s. the bushel. A barrel of herrings is +supposed to require about one bushel and one-fourth of a bushel foreign +salt. Two bushels are the supposed average of Scotch salt. If the +herrings are entered for exportation, no part of this duty is paid up; +if entered for home consumption, whether the herrings were cured with +foreign or with Scotch salt, only one shilling the barrel is paid up. It +was the old Scotch duty upon a bushel of salt, the quantity which, at a +low estimation, had been supposed necessary for curing a barrel of +herrings. In Scotland, foreign salt is very little used for any other +purpose but the curing of fish. But from the 5th April 1771 to the 5th +April 1782, the quantity of foreign salt imported amounted to 936,974 +bushels, at eighty-four pounds the bushel; the quantity of Scotch salt +delivered from the works to the fish-curers, to no more than 168,226, at +fifty-six pounds the bushel only. It would appear, therefore, that it is +principally foreign salt that is used in the fisheries. Upon every +barrel of herrings exported, there is, besides, a bounty of 2s. 8d. and +more than two-thirds of the buss-caught herrings are exported. Put all +these things together, and you will find that, during these eleven +years, every barrel of buss-caught herrings, cured with Scotch salt, +when exported, has cost government 17s. 11-3/4d.; and, when entered for +home consumption, 14s. 3-3/4d.; and that every barrel cured with foreign +salt, when exported, has cost government L.1 : 7 : 5-3/4d.; and, when +entered for home consumption, L.1 : 3 : 9-3/4d. The price of a barrel of +good merchantable herrings runs from seventeen and eighteen to four and +five-and-twenty shillings; about a guinea at an average.[39] + +_Secondly_, The bounty to the white-herring fishery is a tonnage bounty, +and is proportioned to the burden of the ship, not to her diligence or +success in the fishery; and it has, I am afraid, been too common for +the vessels to fit out for the sole purpose of catching, not the fish, +but the bounty. In the year 1759, when the bounty was at fifty shillings +the ton, the whole buss fishery of Scotland brought in only four barrels +of sea-sticks. In that year, each barrel of sea-sticks cost government, +in bounties alone, L.113 : 15s.; each barrel of merchantable herrings +L.159 : 7 : 6. + +_Thirdly_, The mode of fishing, for which this tonnage bounty in the +white herring fishery has been given (by busses or decked vessels from +twenty to eighty tons burden), seems not so well adapted to the +situation of Scotland, as to that of Holland, from the practice of which +country it appears to have been borrowed. Holland lies at a great +distance from the seas to which herrings are known principally to +resort, and can, therefore, carry on that fishery only in decked +vessels, which can carry water and provisions sufficient for a voyage to +a distant sea; but the Hebrides, or Western Islands, the islands of +Shetland, and the northern and north-western coasts of Scotland, the +countries in whose neighborhood the herring fishery is principally +carried on, are everywhere intersected by arms of the sea, which run up +a considerable way into the land, and which, in the language of the +country, are called sea-lochs. It is to these sea-lochs that the +herrings principally resort during the seasons in which they visit those +seas; for the visits of this, and, I am assured, of many other sorts of +fish, are not quite regular and constant. A boat-fishery, therefore, +seems to be the mode of fishing best adapted to the peculiar situation +of Scotland, the fishers carrying the herrings on shore as fast as they +are taken, to be either cured or consumed fresh. But the great +encouragement which a bounty of 30s. the ton gives to the buss-fishery, +is necessarily a discouragement to the boat-fishery, which, having no +such bounty, cannot bring its cured fish to market upon the same terms +as the buss-fishery. The boat-fishery, accordingly, which, before the +establishment of the buss-bounty, was very considerable, and is said to +have employed a number of seamen, not inferior to what the buss-fishery +employs at present, is now gone almost entirely to decay. Of the former +extent, however, of this now ruined and abandoned fishery, I must +acknowledge that I cannot pretend to speak with much precision. As no +bounty was paid upon the outfit of the boat-fishery, no account was +taken of it by the officers of the customs or salt duties. + +_Fourthly_, In many parts of Scotland, during certain seasons of the +year, herrings make no inconsiderable part of the food of the common +people. A bounty which tended to lower their price in the home market, +might contribute a good deal to the relief of a great number of our +fellow-subjects, whose circumstances are by no means affluent. But the +herring-buss bounty contributes to no such good purpose. It has ruined +the boat-fishery, which is by far the best adapted for the supply of the +home market; and the additional bounty of 2s. 8d. the barrel upon +exportation, carries the greater part, more than two-thirds, of the +produce of the buss-fishery abroad. Between thirty and forty years ago, +before the establishment of the buss-bounty, 16s. the barrel, I have +been assured, was the common price of white herrings. Between ten and +fifteen years ago, before the boat-fishery was entirely ruined, the +price was said to have run from seventeen to twenty shillings the +barrel. For these last five years, it has, at an average, been at +twenty-five shillings the barrel. This high price, however, may have +been owing to the real scarcity of the herrings upon the coast of +Scotland. I must observe, too, that the cask or barrel, which is usually +sold with the herrings, and of which the price is included in all the +foregoing prices, has, since the commencement of the American war, risen +to about double its former price, or from about 3s. to about 6s. I must +likewise observe, that the accounts I have received of the prices of +former times, have been by no means quite uniform and consistent, and an +old man of great accuracy and experience has assured me, that, more than +fifty years ago, a guinea was the usual price of a barrel of good +merchantable herrings; and this, I imagine, may still be looked upon as +the average price. All accounts, however, I think, agree that the price +has not been lowered in the home market in consequence of the +buss-bounty. + +When the undertakers of fisheries, after such liberal bounties have been +bestowed upon them, continue to sell their commodity at the same, or +even at a higher price than they were accustomed to do before, it might +be expected that their profits should be very great; and it is not +improbable that those of some individuals may have been so. In general, +however, I have every reason to believe they have been quite otherwise. +The usual effect of such bounties is, to encourage rash undertakers to +adventure in a business which they do not understand; and what they lose +by their own negligence and ignorance, more than compensates all that +they can gain by the utmost liberality of government. In 1750, by the +same act which first gave the bounty of 30s. the ton for the +encouragement of the white herring fishery (the 23d Geo. II. chap. 24), +a joint stock company was erected, with a capital of L.500,000, to which +the subscribers (over and above all other encouragements, the tonnage +bounty just now mentioned, the the exportation bounty of 2s. 8d. the +barrel, the delivery of both British and foreign salt duty free) were, +during the space of fourteen years, for every hundred pounds which they +subscribed and paid into the stock of the society, entitled to three +pounds a-year, to be paid by the receiver-general of the customs in +equal half-yearly payments. Besides this great company, the residence of +whose governor and directors was to be in London, it was declared lawful +to erect different fishing chambers in all the different out-ports of +the kingdom, provided a sum not less than L.10,000 was subscribed into +the capital of each, to be managed at its own risk, and for its own +profit and loss. The same annuity, and the same encouragements of all +kinds, were given to the trade of those inferior chambers as to that of +the great company. The subscription of the great company was soon filled +up, and several different fishing chambers were erected in the different +out-ports of the kingdom. In spite of all these encouragements, almost +all those different companies, both great and small, lost either the +whole or the greater part of their capitals; scarce a vestige now +remains of any of them, and the white-herring fishery is now entirely, +or almost entirely, carried on by private adventurers. + +If any particular manufacture was necessary, indeed, for the defence of +the society, it might not always be prudent to depend upon our +neighbours for the supply; and if such manufacture could not otherwise +be supported at home, it might not be unreasonable that all the other +branches of industry should be taxed in order to support it. The +bounties upon the exportation of British made sail-cloth, and British +made gunpowder, may, perhaps, both be vindicated upon this principle. + +But though it can very seldom be reasonable to tax the industry of the +great body of the people, in order to support that of some particular +class of manufacturers; yet, in the wantonness of great prosperity, when +the public enjoys a greater revenue than it knows well what to do with, +to give such bounties to favourite manufactures, may, perhaps, be as +natural as to incur any other idle expense. In public, as well as in +private expenses, great wealth, may, perhaps, frequently be admitted as +an apology for great folly. But there must surely be something more than +ordinary absurdity in continuing such profusion in times of general +difficulty and distress. + +What is called a bounty, is sometimes no more than a drawback, and, +consequently, is not liable to the same objections as what is properly a +bounty. The bounty, for example, upon refined sugar exported, may be +considered as a drawback of the duties upon the brown and Muscovado +sugars, from which it is made; the bounty upon wrought silk exported, a +drawback of the duties upon raw and thrown silk imported; the bounty +upon gunpowder exported, a drawback of the duties upon brimstone and +saltpetre imported. In the language of the customs, those allowances +only are called drawbacks which are given upon goods exported in the +same form in which they are imported. When that form has been so altered +by manufacture of any kind as to come under a new denomination, they are +called bounties. + +Premiums given by the public to artists and manufacturers, who excel in +their particular occupations, are not liable to the same objections as +bounties. By encouraging extraordinary dexterity and ingenuity, they +serve to keep up the emulation of the workmen actually employed in those +respective occupations, and are not considerable enough to turn towards +any one of them a greater share of the capital of the country than what +would go to it of its own accord. Their tendency is not to overturn the +natural balance of employments, but to render the work which is done in +each as perfect and complete as possible. The expense of premiums, +besides, is very trifling, that of bounties very great. The bounty upon +corn alone has sometimes cost the public, in one year, more than +L.300,000. + +Bounties are sometimes called premiums, as drawbacks are sometimes +called bounties. But we must, in all cases, attend to the nature of the +thing, without paying any regard to the word. + + +_Digression concerning the Corn Trade and Corn Laws._ + +I cannot conclude this chapter concerning bounties, without observing, +that the praises which have been bestowed upon the law which establishes +the bounty upon the exportation of corn, and upon that system of +regulations which is connected with it, are altogether unmerited. A +particular examination of the nature of the corn trade, and of the +principal British laws which relate to it, will sufficiently demonstrate +the truth of this assertion. The great importance of this subject must +justify the length of the digression. + +The trade of the corn merchant is composed of four different branches, +which, though they may sometimes be all carried on by the same person, +are, in their own nature, four separate and distinct trades. These are, +first, the trade of the inland dealer; secondly, that of the +merchant-importer for home consumption; thirdly, that of the +merchant-exporter of home produce for foreign consumption; and, +fourthly, that of the merchant-carrier, or of the importer of corn, in +order to export it again. + +I. The interest of the inland dealer, and that of the great body of the +people, how opposite soever they may at first appear, are, even in years +of the greatest scarcity, exactly the same. It is his interest to raise +the price of his corn as high as the real scarcity of the season +requires, and it can never be his interest to raise it higher. By +raising the price, he discourages the consumption, and puts every body +more or less, but particularly the inferior ranks of people, upon thrift +and good management. If, by raising it too high, he discourages the +consumption so much that the supply of the season is likely to go beyond +the consumption of the season, and to last for some time after the next +crop begins to come in, he runs the hazard, not only of losing a +considerable part of his corn by natural causes, but of being obliged to +sell what remains of it for much less than what he might have had for it +several months before. If, by not raising the price high enough, he +discourages the consumption so little, that the supply of the season is +likely to fall short of the consumption of the season, he not only loses +a part of the profit which he might otherwise have made, but he exposes +the people to suffer before the end of the season, instead of the +hardships of a dearth, the dreadful horrors of a famine. It is the +interest of the people that their daily, weekly, and monthly consumption +should be proportioned as exactly as possible to the supply of the +season. The interest of the inland corn dealer is the same. By supplying +them, as nearly as he can judge, in this proportion, he is likely to +sell all his corn for the highest price, and with the greatest profit; +and his knowledge of the state of the crop, and of his daily, weekly, +and monthly sales, enables him to judge, with more or less accuracy, how +far they really are supplied in this manner. Without intending the +interest of the people, he is necessarily led, by a regard to his own +interest, to treat them, even in years of scarcity, pretty much in the +same manner as the prudent master of a vessel is sometimes obliged to +treat his crew. When he foresees that provisions are likely to run +short, he puts them upon short allowance. Though from excess of caution +he should sometimes do this without any real necessity, yet all the +inconveniencies which his crew can thereby suffer are inconsiderable, in +comparison of the danger, misery, and ruin, to which they might +sometimes be exposed by a less provident conduct. Though, from excess of +avarice, in the same manner, the inland corn merchant should sometimes +raise the price of his corn somewhat higher than the scarcity of the +season requires, yet all the inconveniencies which the people can suffer +from this conduct, which effectually secures them from a famine in the +end of the season, are inconsiderable, in comparison of what they might +have been exposed to by a more liberal way of dealing in the beginning +of it. The corn merchant himself is likely to suffer the most by this +excess of avarice; not only from the indignation which it generally +excites against him, but, though he should escape the effects of this +indignation, from the quantity of corn which it necessarily leaves upon +his hands in the end of the season, and which, if the next season +happens to prove favourable, he must always sell for a much lower price +than he might otherwise have had. + +Were it possible, indeed, for one great company of merchants to possess +themselves of the whole crop of an extensive country, it might perhaps +be their interest to deal with it, as the Dutch are said to do with the +spiceries of the Moluccas, to destroy or throw away a considerable part +of it, in order to keep up the price of the rest. But it is scarce +possible, even by the violence of law, to establish such an extensive +monopoly with regard to corn; and wherever the law leaves the trade +free, it is of all commodities the least liable to be engrossed or +monopolized by the force of a few large capitals, which buy up the +greater part of it. Not only its value far exceeds what the capitals of +a few private men are capable of purchasing; but, supposing they were +capable of purchasing it, the manner in which it is produced renders +this purchase altogether impracticable. As, in every civilized country, +it is the commodity of which the annual consumption is the greatest; so +a greater quantity of industry is annually employed in producing corn +than in producing any other commodity. When it first comes from the +ground, too, it is necessarily divided among a greater number of owners +than any other commodity; and these owners can never be collected into +one place, like a number of independent manufacturers, but are +necessarily scattered through all the different corners of the country. +These first owners either immediately supply the consumers in their own +neighbourhood, or they supply other inland dealers, who supply those +consumers. The inland dealers in corn, therefore, including both the +farmer and the baker, are necessarily more numerous than the dealers in +any other commodity; and their dispersed situation renders it altogether +impossible for them to enter into any general combination. If, in a year +of scarcity, therefore, any of them should find that he had a good deal +more corn upon hand than, at the current price, he could hope to dispose +of before the end of the season, he would never think of keeping up this +price to his own loss, and to the sole benefit of his rivals and +competitors, but would immediately lower it, in order to get rid of his +corn before the new crop began to come in. The same motives, the same +interests, which would thus regulate the conduct of any one dealer, +would regulate that of every other, and oblige them all in general to +sell their corn at the price which, according to the best of their +judgment, was most suitable to the scarcity or plenty of the season. + +Whoever examines, with attention, the history of the dearths and famines +which have afflicted any part of Europe during either the course of the +present or that of the two preceding centuries, of several of which we +have pretty exact accounts, will find, I believe, that a dearth never +has arisen from any combination among the inland dealers in corn, nor +from any other cause but a real scarcity, occasioned sometimes, perhaps, +and in some particular places, by the waste of war, but in by far the +greatest number of cases by the fault of the seasons; and that a famine +has never arisen from any other cause but the violence of government +attempting, by improper means, to remedy the inconveniencies of a +dearth. + +In an extensive corn country, between all the different parts of which +there is a free commerce and communication, the scarcity occasioned by +the most unfavourable seasons can never be so great as to produce a +famine; and the scantiest crop, if managed with frugality and economy, +will maintain, through the year, the same number of people that are +commonly fed in a more affluent manner by one of moderate plenty. The +seasons most unfavourable to the crop are those of excessive drought or +excessive rain. But as corn grows equally upon high and low lands, upon +grounds that are disposed to be too wet, and upon those that are +disposed to be too dry, either the drought or the rain, which is hurtful +to one part of the country, is favourable to another; and though, both +in the wet and in the dry season, the crop is a good deal less than in +one more properly tempered; yet, in both, what is lost in one part of +the country is in some measure compensated by what is gained in the +other. In rice countries, where the crop not only requires a very moist +soil, but where, in a certain period of its growing, it must be laid +under water, the effects of a drought are much more dismal. Even in such +countries, however, the drought is, perhaps, scarce ever so universal as +necessarily to occasion a famine, if the government would allow a free +trade. The drought in Bengal, a few years ago, might probably have +occasioned a very great dearth. Some improper regulations, some +injudicious restraints, imposed by the servants of the East India +Company upon the rice trade, contributed, perhaps, to turn that dearth +into a famine. + +When the government, in order to remedy the inconveniencies of a dearth, +orders all the dealers to sell their corn at what it supposes a +reasonable price, it either hinders them from bringing it to market, +which may sometimes produce a famine even in the beginning of the +season; or, if they bring it thither, it enables the people, and thereby +encourages them to consume it so fast as must necessarily produce a +famine before the end of the season. The unlimited, unrestrained freedom +of the corn trade, as it is the only effectual preventive of the +miseries of a famine, so it is the best palliative of the +inconveniencies of a dearth; for the inconveniencies of a real scarcity +cannot be remedied; they can only be palliated. No trade deserves more +the full protection of the law, and no trade requires it so much; +because no trade is so much exposed to popular odium. + +In years of scarcity, the inferior ranks of people impute their distress +to the avarice of the corn merchant, who becomes the object of their +hatred and indignation. Instead of making profit upon such occasions, +therefore, he is often in danger of being utterly ruined, and of having +his magazines plundered and destroyed by their violence. It is in years +of scarcity, however, when prices are high, that the corn merchant +expects to make his principal profit. He is generally in contract with +some farmers to furnish him, for a certain number of years, with a +certain quantity of corn, at a certain price. This contract price is +settled according to what is supposed to be the moderate and reasonable, +that is, the ordinary or average price, which, before the late years of +scarcity, was commonly about 28s. for the quarter of wheat, and for that +of other grain in proportion. In years of scarcity, therefore, the corn +merchant buys a great part of his corn for the ordinary price, and sells +it for a much higher. That this extraordinary profit, however, is no +more them sufficient to put his trade upon a fair level with other +trades, and to compensate the many losses which be sustains upon other +occasions, both from the perishable nature of the commodity itself, and +from the frequent and unforeseen fluctuations of its price, seems +evident enough, from this single circumstance, that great fortunes are +as seldom made in this as in any other trade. The popular odium, +however, which attends it in years of scarcity, the only years in which +it can be very profitable, renders people of character and fortune +averse to enter into it. It is abandoned to an inferior set of dealers; +and millers, bakers, meal-men, and meal-factors, together with a number +of wretched hucksters, arr almost the only middle people that, in the +home market, come between the grower and the consumer. + +The ancient policy of Europe, instead of discountenancing this popular +odium against a trade so beneficial to the public, seems, on the +contrary, to have authorised and encouraged it. + +By the 5th and 6th of Edward VI. cap. 14, it was enacted, that whoever +should buy any corn or grain, with intent to sell it again, should be +reputed an unlawful engrosser, and should, for the first fault, suffer +two months imprisonment, and forfeit the value of the corn; for the +second, suffer six months imprisonment, and forfeit double the value; +and, for the third, be set in the pillory, suffer imprisonment during +the king's pleasure, and forfeit all his goods and chattels. The ancient +policy of most other parts of Europe was no better than that of England. + +Our ancestors seem to have imagined, that the people would buy their +corn cheaper of the farmer than of the corn merchant, who, they were +afraid, would require, over and above, the price which he paid to the +farmer, an exorbitant profit to himself. They endeavoured, therefore, +to annihilate his trade altogether. They even endeavoured to hinder, as +much as possible, any middle man of any kind from coming in between the +grower and the consumer; and this was the meaning of the many restraints +which they imposed upon the trade of those whom they called kidders, or +carriers of corn; a trade which nobody was allowed to exercise without a +licence, ascertaining his qualifications as a man of probity and fair +dealing. The authority of three justices of the peace was, by the +statute of Edward VI. necessary in order to grant this licence. But even +this restraint was afterwards thought insufficient, and, by a statute of +Elizabeth, the privilege of granting it was confined to the +quarter-sessions. + +The ancient policy of Europe endeavoured, in this manner, to regulate +agriculture, the great trade of the country, by maxims quite different +from those which it established with regard to manufactures, the great +trade of the towns. By leaving a farmer no other customers but either +the consumers or their immediate factors, the kidders and carriers of +corn, it endeavoured to force him to exercise the trade, not only of a +farmer, but of a corn merchant, or corn retailer. On the contrary, it, +in many cases, prohibited the manufacturer from exercising the trade of +a shopkeeper, or from selling his own goods by retail. It meant, by the +one law, to promote the general interest of the country, or to render +corn cheap, without, perhaps, its being well understood how this was to +be done. By the other, it meant to promote that of a particular order of +men, the shopkeepers, who would be so much undersold by the +manufacturer, it was supposed, that their trade would be ruined, if he +was allowed to retail at all. + +The manufacturer, however, though he had been allowed to keep a shop, +and to sell his own goods by retail, could not have undersold the common +shopkeeper. Whatever part of his capital he might have placed in his +shop, he must have withdrawn it from his manufacture. In order to carry +on his business on a level with that of other people, as he must have +had the profit of a manufacturer on the one part, so he must have had +that of a shopkeeper upon the other. Let us suppose, for example, that +in the particular town where he lived, ten per cent. was the ordinary +profit both of manufacturing and shopkeeping stock; he must in this case +have charged upon every piece of his own goods, which he sold in his +shop, a profit of twenty per cent. When he carried them from his +workhouse to his shop, he must have valued them at the price for which +he could have sold them to a dealer or shopkeeper, who would have bought +them by wholesale. If he valued them lower, he lost a part of the profit +of his manufacturing capital. When, again, he sold them from his shop, +unless he got the same price at which a shopkeeper would have sold them, +he lost a part of the profit of his shopkeeping capital. Though he might +appear, therefore, to make a double profit upon the same piece of goods, +yet, as these goods made successively a part of two distinct capitals, +he made but a single profit upon the whole capital employed about them; +and if he made less than his profit, he was a loser, and did not employ +his whole capital with the same advantage as the greater of part of his +neighbours. + +What the manufacturer was prohibited to do, the farmer was in some +measure enjoined to do; to divide his capital between two different +employments; to keep one part of it in his granaries and stack-yard, for +supplying the occasional demands of the market, and to employ the other +in the cultivation of his land. But as he could not afford to employ the +latter for less than the ordinary profits of farming stock, so he could +as little afford to employ the former for less than the ordinary profits +of mercantile stock. Whether the stock which really carried on the +business of a corn merchant belonged to the person who was called a +farmer, or to the person who was called a corn merchant, an equal profit +was in both cases requisite, in order to indemnify its owner for +employing it in this manner, in order to put his business on a level +with other trades, and in order to hinder him from having an interest to +change it as soon as possible for some other. The farmer, therefore, who +was thus forced to exercise the trade of a corn merchant, could not +afford to sell his corn cheaper than any other corn merchant would have +been obliged to do in the case a free competition. + +The dealer who can employ his whole stock in one single branch of +business, has an advantage of the same kind with the workman who can +employ his whole labour in one single operation. As the latter acquires +a dexterity which enables him, with the same two hands, to perform a +much greater quantity of work, so the former acquires so easy and ready +a method of transacting his business, of buying and disposing of his +goods, that, with the same capital he can transact a much greater +quantity of business. As the one can commonly afford his work a good +deal cheaper, so the other can commonly afford his goods somewhat +cheaper, than if his stock and attention were both employed about a +greater variety of objects. The greater part of manufacturers could not +afford to retail their own goods so cheap as a vigilant and active +shopkeeper, whose sole business it was to buy them by wholesale and to +retail them again. The greater part of farmers could still less afford +to retail their own corn, to supply the inhabitants of a town, at +perhaps four or five miles distance from the greater part of them, so +cheap as a vigilant and active corn merchant, whose sole business it +was to purchase corn by wholesale, to collect it into a great magazine, +and to retail it again. + +The law which prohibited the manufacturer from exercising the trade of a +shopkeeper, endeavoured to force this division in the employment of +stock to go on faster than it might otherwise have done. The law which +obliged the farmer to exercise the trade of a corn merchant, endeavoured +to hinder it from going on so fast. Both laws were evident violations of +natural liberty, and therefore unjust; and they were both, too, as +impolitic as they were unjust. It is the interest of every society, that +things of this kind should never either be forced or obstructed. The man +who employs either his labour or his stock in a greater variety of ways +than his situation renders necessary, can never hurt his neighbour by +underselling him. He may hurt himself, and he generally does so. +Jack-of-all-trades will never be rich, says the proverb. But the law +ought always to trust people with the care of their own interest, as in +their local situations they must generally be able to judge better of it +than the legislature can do. The law, however, which obliged the farmer +to exercise the trade of a corn merchant was by far the most pernicious +of the two. + +It obstructed not only that division in the employment of stock which is +so advantageous to every society, but it obstructed likewise the +improvement and cultivation of the land. By obliging the farmer to carry +on two trades instead of one, it forced him to divide his capital into +two parts, of which one only could be employed in cultivation. But if he +had been at liberty to sell his whole crop to a corn merchant as fast as +he could thresh it out, his whole capital might have returned +immediately to the land, and have been employed in buying more cattle, +and hiring more servants, in order to improve and cultivate it better. +But by being obliged to sell his corn by retail, he was obliged to keep +a great part of his capital in his granaries and stack-yard through the +year, and could not therefore cultivate so well as with the same capital +he might otherwise have done. This law, therefore, necessarily +obstructed the improvement of the land, and, instead of tending to +render corn cheaper, must have tended to render it scarcer, and +therefore dearer, than it would otherwise have been. + +After the business of the farmer, that of the corn merchant is in +reality the trade which, if properly protected and encouraged, would +contribute the most to the raising of corn. It would support the trade +of the farmer, in the same manner as the trade of the wholesale dealer +supports that of the manufacturer. + +The wholesale dealer, by affording a ready market to the manufacturer, +by taking his goods off his hand as fast as he can make them, and by +sometimes even advancing their price to him before he has made them, +enables him to keep his whole capital, and sometimes even more than his +whole capital, constantly employed in manufacturing, and consequently to +manufacture a much greater quantity of goods than if he was obliged to +dispose of them himself to the immediate consumers, or even to the +retailers. As the capital of the wholesale merchant, too, is generally +sufficient to replace that of many manufacturers, this intercourse +between him and them interests the owner of a large capital to support +the owners of a great number of small ones, and to assist them in those +losses and misfortunes which might otherwise prove ruinous to them. + +An intercourse of the same kind universally established between the +farmers and the corn merchants, would be attended with effects equally +beneficial to the farmers. They would be enabled to keep their whole +capitals, and even more than their whole capitals constantly employed in +cultivation. In case of any of those accidents to which no trade is more +liable than theirs, they would find in their ordinary customer, the +wealthy corn merchant, a person who had both an interest to support +them, and the ability to do it; and they would not, as at present, be +entirely dependent upon the forbearance of their landlord, or the mercy +of his steward. Were it possible, as perhaps it is not, to establish +this intercourse universally, and all at once; were it possible to turn +all at once the whole farming stock of the kingdom to its proper +business, the cultivation of land, withdrawing it from every other +employment into which any part of it may be at present diverted; and +were it possible, in order to support and assist, upon occasion, the +operations of this great stock, to provide all at once another stock +almost equally great; it is not, perhaps, very easy to imagine how +great, how extensive, and how sudden, would be the improvement which +this change of circumstances would alone produce upon the whole face of +the country. + +The statute of Edward VI. therefore, by prohibiting as much as possible +any middle man from coming in between the grower and the consumer, +endeavoured to annihilate a trade, of which the free exercise is not +only the best palliative of the inconveniencies of a dearth, but the +best preventive of that calamity; after the trade of the farmer, no +trade contributing so much to the growing of corn as that of the corn +merchant. + +The rigour of this law was afterwards softened by several subsequent +statutes, which successively permitted the engrossing of corn when the +prices of wheat should not exceed 20s. and 24s. 32s. and 40s. the +quarter. At last, by the 15th of Charles II. c. 7, the engrossing or +buying of corn, in order to sell it again, as long as the price of wheat +did not exceed 48s. the quarter, and that of other grain in proportion, +was declared lawful to all persons not being forestallers, that is, not +selling again in the same market within three months. All the freedom +which the trade of the inland corn dealer has ever yet enjoyed was +bestowed upon it by this statute. The statute of the twelfth of the +present king, which repeals almost all the other ancient laws against +engrossers and forestallers, does not repeal the restrictions of this +particular statute, which therefore still continue in force. + +This statute, however, authorises in some measure two very absurd +popular prejudices. + +_First_, It supposes, that when the price of wheat has risen so high as +48s. the quarter, and that of other grain in proportion, corn is likely +to be so engrossed as to hurt the people. But, from what has been +already said, it seems evident enough, that corn can at no price be so +engrossed by the inland dealers as to hurt the people; and 48s. the +quarter, besides, though it may be considered as a very high price, yet, +in years of scarcity, it is a price which frequently takes place +immediately after harvest, when scarce any part of the new crop can be +sold off, and when it is impossible even for ignorance to suppose that +any part of it can be so engrossed as to hurt the people. + +_Secondly_, It supposes that there is a certain price at which corn is +likely to be forestalled, that is, bought up in order to be sold again +soon after in the same market, so as to hurt the people. But if a +merchant ever buys up corn, either going to a particular market, or in a +particular market, in order to sell it again soon after in the same +market, it must be because he judges that the market cannot be so +liberally supplied through the whole season as upon that particular +occasion, and that the price, therefore, must rise. If he judges wrong +in this, and if the price does not rise, he not only loses the whole +profit of the stock which he employs in this manner, but a part of the +stock itself, by the expense and loss which necessarily attend the +storing and keeping of corn. He hurts himself, therefore, much more +essentially than he can hurt even the particular people whom he may +hinder from supplying themselves upon that particular market day, +because they may afterwards supply themselves just as cheap upon any +other market day. If he judges right, instead of hurting the great body +of the people, he renders them a most important service. By making them +feel the inconveniencies of a dearth somewhat earlier than they +otherwise might do, he prevents their feeling them afterwards so +severely as they certainly would do, if the cheapness of price +encouraged them to consume faster than suited the real scarcity of the +season. When the scarcity is real, the best thing that can be done for +people is, to divide the inconvenience of it as equally as possible, +through all the different months and weeks and days of the year. The +interest of the corn merchant makes him study to do this as exactly as +he can; and as no other person can have either the same interest, or the +same knowledge, or the same abilities, to do it so exactly as he, this +most important operation of commerce ought to be trusted entirely to +him; or, in other words, the corn trade, so far at least as concerns the +supply of the home market, ought to be left perfectly free. + +The popular fear of engrossing and forestalling may be compared to the +popular terrors and suspicions of witchcraft. The unfortunate wretches +accused of this latter crime were not more innocent of the misfortunes +imputed to them, than those who have been accused of the former. The law +which put an end to all prosecutions against witchcraft, which put it +out of any man's power to gratify his own malice by accusing his +neighbour of that imaginary crime, seems effectually to have put an end +to those fears and suspicions, by taking away the great cause which +encouraged and supported them. The law which would restore entire +freedom to the inland trade of corn, would probably prove as effectual +to put an end to the popular fears of engrossing and forestalling. + +The 15th of Charles II. c. 7, however, with all its imperfections, has, +perhaps, contributed more, both to the plentiful supply of the home +market, and to the increase of tillage, than any other law in the +statute book. It is from this law that the inland corn trade has derived +all the liberty and protection which it has ever yet enjoyed; and both +the supply of the home market and the interest of tillage are much more +effectually promoted by the inland, than either by the importation or +exportation trade. + +The proportion of the average quantity of all sorts of grain imported +into Great Britain to that of all sorts of grain consumed, it has been +computed by the author of the Tracts upon the Corn Trade, does not +exceed that of one to five hundred and seventy. For supplying the home +market, therefore, the importance of the inland trade must be to that of +the importation trade as five hundred and seventy to one. + +The average quantity of all sorts of grain exported from Great Britain +does not, according to the same author, exceed the one-and-thirtieth +part of the annual produce. For the encouragement of tillage, therefore, +by providing a market for the home produce, the importance of the inland +trade must be to that of the exportation trade as thirty to one. + +I have no great faith in political arithmetic, and I mean not to warrant +the exactness of either of these computations. I mention them only in +order to show of how much less consequence, in the opinion of the most +judicious and experienced persons, the foreign trade of corn is than the +home trade. The great cheapness of corn in the years immediately +preceding the establishment of the bounty may, perhaps with reason, be +ascribed in some measure to the operation of this statute of Charles II. +which had been enacted about five-and-twenty years before, and which +had, therefore, full time to produce its effect. + +A very few words will sufficiently explain all that I have to say +concerning the other three branches of the corn trade. + +II. The trade of the merchant-importer of foreign corn for home +consumption, evidently contributes to the immediate supply of the home +market, and must so far be immediately beneficial to the great body of +the people. It tends, indeed, to lower somewhat the average money price +of corn, but not to diminish its real value, or the quantity of labour +which it is capable of maintaining. If importation was at all times +free, our farmers and country gentlemen would probably, one year with +another, get less money for their corn than they do at present, when +importation is at most times in effect prohibited; but the money which +they got would be of more value, would buy more goods of all other +kinds, and would employ more labour. Their real wealth, their real +revenue, therefore, would be the same as at present, though it might be +expressed by a smaller quantity of silver, and they would neither be +disabled nor discouraged from cultivating corn as much as they do at +present. On the contrary, as the rise in the real value of silver, in +consequence of lowering the money price of corn, lowers somewhat the +money price of all other commodities, it gives the industry of the +country where it takes place some advantage in all foreign markets, and +thereby tends to encourage and increase that industry. But the extent of +the home market for corn must be in proportion to the general industry +of the country where it grows, or to the number of those who produce +something else, and, therefore, have something else, or, what comes to +the same thing, the price of something else, to give in exchange for +corn. But in every country, the home market, as it is the nearest and +most convenient, so is it likewise the greatest and most important +market for corn. That rise in the real value of silver, therefore, which +is the effect of lowering the average money price of corn, tends to +enlarge the greatest and most important market for corn, and thereby to +encourage, instead of discouraging its growth. + +By the 22nd of Charles II. c. 13, the importation of wheat, whenever the +price in the home market did not exceed 53s. 4d. the quarter, was +subjected to a duty of 16s. the quarter; and to a duty of 8s. whenever +the price did not exceed L.4. The former of these two prices has, for +more than a century past, taken place only in times of very great +scarcity; and the latter has, so far as I know, not taken place at all. +Yet, till wheat had risen above this latter price, it was, by this +statute, subjected to a very high duty; and, till it had risen above the +former, to a duty which amounted to a prohibition. The importation of +other sorts of grain was restrained at rates and by duties, in +proportion to the value of the grain, almost equally high.[40] +Subsequent laws still further increased those duties. + +The distress which, in years of scarcity, the strict execution of those +laws might have brought upon the people, would probably have been very +great; but, upon such occasions, its execution was generally suspended +by temporary statutes, which permitted, for a limited time, the +importation of foreign corn. The necessity of these temporary statutes +sufficiently demonstrates the impropriety of this general one. + +These restraints upon importation, though prior to the establishment of +the bounty, were dictated by the same spirit, by the same principles, +which afterwards enacted that regulation. How hurtful soever in +themselves, these, or some other restraints upon importation, became +necessary in consequence of that regulation. If, when wheat was either +below 48s. the quarter, or not much above it, foreign corn could have +been imported, either duty free, or upon paying only a small duty, it +might have been exported again, with the benefit of the bounty, to the +great loss of the public revenue, and to the entire perversion of the +institution, of which the object was to extend the market for the home +growth, not that for the growth of foreign countries. + +III. The trade of the merchant-exporter of corn for foreign consumption, +certainly does not contribute directly to the plentiful supply of the +home market. It does so, however, indirectly. From whatever source this +supply may be usually drawn, whether from home growth, or from foreign +importation, unless more corn is either usually grown, or usually +imported into the country, than what is usually consumed in it, the +supply of the home market can never be very plentiful. But unless the +surplus can, in all ordinary cases, be exported, the growers will be +careful never to grow more, and the importers never to import more, than +what the bare consumption of the home market requires. That market will +very seldom be overstocked; but it will generally be understocked; the +people, whose business it is to supply it, being generally afraid lest +their goods should be left upon their hands. The prohibition of +exportation limits the improvement and cultivation of the country to +what the supply of its own inhabitants require. The freedom of +exportation enables it to extend cultivation for the supply of foreign +nations. + +By the 12th of Charles II. c. 4, the exportation of corn was permitted +whenever the price of wheat did not exceed 40s. the quarter, and that of +other grain in proportion. By the 15th of the same prince, this liberty +was extended till the price of wheat exceeded 48s. the quarter, and by +the 22d, to all higher prices. A poundage, indeed, was to be paid to the +king upon such exportation; but all grain was rated so low in the book +of rates, that this poundage amounted only, upon wheat to 1s. upon oats +to 4d. and upon all other grain to 6d. the quarter. By the 1st of +William and Mary, the act which established this bounty, this small duty +was virtually taken off whenever the price of wheat did not exceed 48s. +the quarter; and by the 11th and 12th of William III. c. 20, it was +expressly taken off at all higher prices. + +The trade of the merchant-exporter was, in this manner, not only +encouraged by a bounty, but rendered much more free than that of the +inland dealer. By the last of these statutes, corn could be engrossed at +any price for exportation; but it could not be engrossed for inland +sale, except when the price did not exceed 48s. the quarter. The +interest of the inland dealer, however, it has already been shown, can +never be opposite to that of the great body of the people. That of the +merchant-exporter may, and in fact sometimes is. If, while his own +country labours under a dearth, a neighbouring country should be +afflicted with a famine, it might be his interest to carry corn to the +latter country, in such quantities as might very much aggravate the +calamities of the dearth. The plentiful supply of the home market was +not the direct object of those statutes; but, under the pretence of +encouraging agriculture, to raise the money price of corn as high as +possible, and thereby to occasion, as much as possible, a constant +dearth in the home market. By the discouragement of importation, the +supply of that market, even in times of great scarcity, was confined to +the home growth; and by the encouragement of exportation, when the price +was so high as 48s. the quarter, that market was not, even in times of +considerable scarcity, allowed to enjoy the whole of that growth. The +temporary laws, prohibiting, for a limited time, the exportation of +corn, and taking off, for a limited time, the duties upon its +importation, expedients to which Great Britain has been obliged so +frequently to have recourse, sufficiently demonstrate the impropriety of +her general system. Had that system been good, she would not so +frequently have been reduced to the necessity of departing from it. + +Were all nations to follow the liberal system of free exportation and +free importation, the different states into which a great continent was +divided, would so far resemble the different provinces of a great +empire. As among the different provinces of a great empire, the freedom +of the inland trade appears, both from reason and experience, not only +the best palliative of a dearth, but the most effectual preventive of a +famine; so would the freedom of the exportation and importation trade be +among the different states into which a great continent was divided. The +larger the continent, the easier the communication through all the +different parts of it, both by land and by water, the less would any one +particular part of it ever he exposed to either of these calamities, the +scarcity of any one country being more likely to be relieved by the +plenty of some other. But very few countries have entirely adopted this +liberal system. The freedom of the corn trade is almost everywhere more +or less restrained, and in many countries is confined by such absurd +regulations, as frequently aggravate the unavoidable misfortune of a +dearth into the dreadful calamity of a famine. The demand of such +countries for corn may frequently become so great and so urgent, that a +small state in their neighbourhood, which happened at the same time to +be labouring under some degree of dearth, could not venture to supply +them without exposing itself to the like dreadful calamity. The very bad +policy of one country may thus render it, in some measure, dangerous and +imprudent to establish what would otherwise be the best policy in +another. The unlimited freedom of exportation, however, would be much +less dangerous in great states, in which the growth being much greater, +the supply could seldom be much affected by any quantity of corn that +was likely to be exported. In a Swiss canton, or in some of the little +states in Italy, it may, perhaps, sometimes be necessary to restrain the +exportation of corn. In such great countries as France or England, it +scarce ever can. To hinder, besides, the farmer from sending his goods +at all times to the best market, is evidently to sacrifice the ordinary +laws of justice to an idea of public utility, to a sort of reasons of +state; an act of legislative authority which ought to be exercised only, +which can be pardoned only, in cases of the most urgent necessity. The +price at which exportation of corn is prohibited, if it is ever to be +prohibited, ought always to be a very high price. + +The laws concerning corn may everywhere be compared to the laws +concerning religion. The people feel themselves so much interested in +what relates either to their subsistence in this life, or to their +happiness in a life to come, that government must yield to their +prejudices, and, in order to preserve the public tranquillity, establish +that system which they approve of. It is upon this account, perhaps, +that we so seldom find a reasonable system established with regard to +either of those two capital objects. + +IV. The trade of the merchant-carrier, or of the importer of foreign +corn, in order to export it again, contributes to the plentiful supply +of the home market. It is not, indeed, the direct purpose of his trade +to sell his corn there; but he will generally be willing to do so, and +even for a good deal less money than he might expect in a foreign +market; because he saves in this manner the expense of loading and +unloading, of freight and insurance. The inhabitants of the country +which, by means of the carrying trade, becomes the magazine and +storehouse for the supply of other countries, can very seldom be in want +themselves. Though the carrying trade must thus contribute to reduce the +average money price of corn in the home market, it would not thereby +lower its real value; it would only raise somewhat the real value of +silver. + +The carrying trade was in effect prohibited in Great Britain, upon all +ordinary occasions, by the high duties upon the importation of foreign +corn, of the greater part of which there was no drawback; and upon +extraordinary occasions, when a scarcity made it necessary to suspend +those duties by temporary statutes, exportation was always prohibited. +By this system of laws, therefore, the carrying trade was in effect +prohibited. + +That system of laws, therefore, which is connected with the +establishment of the bounty, seems to deserve no part of the praise +which has been bestowed upon it. The improvement and prosperity of Great +Britain, which has been so often ascribed to those laws, may very easily +be accounted for by other causes. That security which the laws in Great +Britain give to every man, that he shall enjoy the fruits of his own +labour, is alone sufficient to make any country flourish, +notwithstanding these and twenty other absurd regulations of commerce; +and this security was perfected by the Revolution, much about the same +time that the bounty was established. The natural effort of every +individual to better his own condition, when suffered to exert itself +with freedom and security, is so powerful a principle, that it is alone, +and without any assistance, not only capable of carrying on the society +to wealth and prosperity, but of surmounting a hundred impertinent +obstructions, with which the folly of human laws too often encumbers its +operations: though the effect of those obstructions is always, more or +less, either to encroach upon its freedom, or to diminish its security. +In Great Britain industry is perfectly secure; and though it is far from +being perfectly free, it is as free or freer than in any other part of +Europe. + +Though the period of the greatest prosperity and improvement of Great +Britain has been posterior to that system of laws which is connected +with the bounty, we must not upon that account, impute it to those laws. +It has been posterior likewise to the national debt; but the national +debt has most assuredly not been the cause of it. + +Though the system of laws which is connected with the bounty, has +exactly the same tendency with the practice of Spain and Portugal, to +lower somewhat the value of the precious metals in the country where it +takes place; yet Great Britain is certainly one of the richest countries +in Europe, while Spain and Portugal are perhaps amongst the most +beggarly. This difference of situation, however, may easily be accounted +for from two different causes. First, the tax in Spain, the prohibition +in Portugal of exporting gold and silver, and the vigilant police which +watches over the execution of those laws, must, in two very poor +countries, which between them import annually upwards of six millions +sterling, operate not only more directly, but much more forcibly, in +reducing the value of those metals there, than the corn laws can do in +Great Britain. And, secondly, this bad policy is not in these countries +counterbalanced by the general liberty and security of the people. +Industry is there neither free nor secure; and the civil and +ecclesiastical governments of both Spain and Portugal are such as would +alone be sufficient to perpetuate their present state of poverty, even +though their regulations of commerce were as wise as the greatest part +of them are absurd and foolish. + +The 13th of the present king, c. 43, seems to have established a new +system with regard to the corn laws, in many respects better than the +ancient one, but in one or two respects perhaps not quite so good. + +By this statute, the high duties upon importation for home consumption +are taken off, so soon as the price of middling wheat rises to 48s. the +quarter; that of middling rye, pease, or beans, to 32s.; that of barley +to 24s.; and that of oats to 16s.; and instead of them, a small duty is +imposed of only 6d. upon the quarter of wheat, and upon that of other +grain in proportion. With regard to all those different sorts of grain, +but particularly with regard to wheat, the home market is thus opened +to foreign supplies, at prices considerably lower than before. + +By the same statute, the old bounty of 5s. upon the exportation of +wheat, ceases so soon as the price rises to 44s. the quarter, instead of +48s. the price at which it ceased before; that of 2s. 6d. upon the +exportation of barley, ceases so soon as the price rises to 22s. instead +of 24s. the price at which it ceased before; that of 2s. 6d. upon the +exportation of oatmeal, ceases so soon as the price rises to 14s. +instead of 15s. the price at which it ceased before. The bounty upon rye +is reduced from 3s. 6d. to 3s. and it ceases so soon as the price rises +to 28s. instead of 32s. the price at which it ceased before. If bounties +are as improper as I have endeavoured to prove them to be, the sooner +they cease, and the lower they are, so much the better. + +The same statute permits, at the lowest prices, the importation of corn +in order to be exported again, duty free, provided it is in the mean +time lodged in a warehouse under the joint locks of the king and the +importer. This liberty, indeed, extends to no more than twenty-five of +the different parts of Great Britain. They are, however, the principal +ones; and there may not, perhaps, be warehouses proper for this purpose +in the greater part of the others. + +So far this law seems evidently an improvement upon the ancient system. + +But by the same law, a bounty of 2s. the quarter is given for the +exportation of oats, whenever the price does not exceed fourteen +shillings. No bounty had ever been given before for the exportation of +this grain, no more than for that of pease or beans. + +By the same law, too, the exportation of wheat is prohibited so soon as +the price rises to forty-four shillings the quarter; that of rye so soon +as it rises to twenty-eight shillings; that of barley so soon as it +rises to twenty-two shillings; and that of oats so soon as they rise to +fourteen shillings. Those several prices seem all of them a good deal +too low; and there seems to be an impropriety, besides, in prohibiting +exportation altogether at those precise prices at which that bounty, +which was given in order to force it, is withdrawn. The bounty ought +certainly either to have been withdrawn at a much lower price, or +exportation ought to have been allowed at a much higher. + +So far, therefore, this law seems to be inferior to the ancient system. +With all its imperfections, however, we may perhaps say of it what was +said of the laws of Solon, that though not the best in itself, it is the +best which the interest, prejudices, and temper of the times, would +admit of. It may perhaps in due time prepare the way for a better. + + + + +CHAP. VI. + +OF TREATIES OF COMMERCE. + + +When a nation binds itself by treaty, either to permit the entry of +certain goods from one foreign country which it prohibits from all +others, or to exempt the goods of one country from duties to which it +subjects those of all others, the country, or at least the merchants and +manufacturers of the country, whose commerce is so favoured, must +necessarily derive great advantage from the treaty. Those merchants and +manufacturers enjoy a sort of monopoly in the country which is so +indulgent to them. That country becomes a market, both more extensive +and more advantageous for their goods: more extensive, because the goods +of other nations being either excluded or subjected to heavier duties, +it takes off a greater quantity of theirs; more advantageous, because +the merchants of the favoured country, enjoying a sort of monopoly +there, will often sell their goods for a better price than if exposed to +the free competition of all other nations. + +Such treaties, however, though they may be advantageous to the merchants +and manufacturers of the favoured, are necessarily disadvantageous to +those of the favouring country. A monopoly is thus granted against them +to a foreign nation; and they must frequently buy the foreign goods they +have occasion for, dearer than if the free competition of other nations +was admitted. That part of its own produce with which such a nation +purchases foreign goods, must consequently be sold cheaper; because, +when two things are exchanged for one another, the cheapness of the one +is a necessary consequence, or rather is the same thing, with the +dearness of the other. The exchangeable value of its annual produce, +therefore, is likely to be diminished by every such treaty. This +diminution, however, can scarce amount to any positive loss, but only to +a lessening of the gain which it might otherwise make. Though it sells +its goods cheaper than it otherwise might do, it will not probably sell +them for less than they cost; nor, as in the case of bounties, for a +price which will not replace the capital employed in bringing them to +market, together with the ordinary profits of stock. The trade could not +go on long if it did. Even the favouring country, therefore, may still +gain by the trade, though less than if there was a free competition. + +Some treaties of commerce, however, have been supposed advantageous, +upon principles very different from these; and a commercial country has +sometimes granted a monopoly of this kind, against itself, to certain +goods of a foreign nation, because it expected, that in the whole +commerce between them, it would annually sell more than it would buy, +and that a balance in gold and silver would be annually returned to it. +It is upon this principle that the treaty of commerce between England +and Portugal, concluded in 1703 by Mr Methuen, has been so much +commended. The following is a literal translation of that treaty, which +consists of three articles only. + + +ART. I. + +His sacred royal majesty of Portugal promises, both in his own name and +that of his successors, to admit for ever hereafter, into Portugal, the +woollen cloths, and the rest of the woollen manufactures of the British, +as was accustomed, till they were prohibited by the law; nevertheless +upon this condition: + + +ART. II. + +That is to say, that her sacred royal majesty of Great Britain shall, in +her own name, and that of her successors, be obliged, for ever +hereafter, to admit the wines of the growth of Portugal into Britain; so +that at no time, whether there shall be peace or war between the +kingdoms of Britain and France, any thing more shall be demanded for +these wines by the name of custom or duty, or by whatsoever other title, +directly or indirectly, whether they shall be imported into Great +Britain in pipes or hogsheads, or other casks, than what shall be +demanded for the like quantity or measure of French wine, deducting or +abating a third part of the custom or duty. But if, at any time, this +deduction or abatement of customs, which is to be made as aforesaid, +shall in any manner be attempted and prejudiced, it shall be just and +lawful for his sacred royal majesty of Portugal, again to prohibit the +woollen cloths, and the rest of the British woollen manufactures. + + +ART. III. + +The most excellent lords the plenipotentiaries promise and take upon +themselves, that their above named masters shall ratify this treaty; and +within the space of two months the ratification shall be exchanged. + + +By this treaty, the crown of Portugal becomes bound to admit the English +woollens upon the same footing as before the prohibition; that is, not +to raise the duties which had been paid before that time. But it does +not become bound to admit them upon any better terms than those of any +other nation, of France or Holland, for example. The crown of Great +Britain, on the contrary, becomes bound to admit the wines of Portugal, +upon paying only two-thirds of the duty which is paid for those of +France, the wines most likely to come into competition with them. So far +this treaty, therefore, is evidently advantageous to Portugal, and +disadvantageous to Great Britain. + +It has been celebrated, however, as a masterpiece of the commercial +policy of England. Portugal receives annually from the Brazils a greater +quantity of gold than can be employed in its domestic commerce, whether +in the shape of coin or of plate. The surplus is too valuable to be +allowed to lie idle and locked up in coffers; and as it can find no +advantageous market at home, it must, notwithstanding any prohibition, +be sent abroad, and exchanged for something for which there is a more +advantageous market at home. A large share of it comes annually to +England, in return either for English goods, or for those of other +European nations that receive their returns through England. Mr Barretti +was informed, that the weekly packet-boat from Lisbon brings, one week +with another, more than L.50,000 in gold to England. The sum had +probably been exaggerated. It would amount to more than L.2,600,000 +a-year, which is more than the Brazils are supposed to afford. + +Our merchants were, some years ago, out of humour with the crown of +Portugal. Some privileges which had been granted them, not by treaty, +but by the free grace of that crown, at the solicitation, indeed, it is +probable, and in return for much greater favours, defence and protection +from the crown of Great Britain, had been either infringed or revoked. +The people, therefore, usually most interested in celebrating the +Portugal trade, were then rather disposed to represent it as less +advantageous than it had commonly been imagined. The far greater part, +almost the whole, they pretended, of this annual importation of gold, +was not on account of Great Britain, but of other European nations; the +fruits and wines of Portugal annually imported into Great Britain nearly +compensating the value of the British goods sent thither. + +Let us suppose, however, that the whole was on account of Great Britain, +and that it amounted to a still greater sum than Mr Barretti seems to +imagine; this trade would not, upon that account, be more advantageous +than any other, in which, for the same value sent out, we received an +equal value of consumable goods in return. + +It is but a very small part of this importation which, it can be +supposed, is employed as an annual addition, either to the plate or to +the coin of the kingdom. The rest must all be sent abroad, and exchanged +for consumable goods of some kind or other. But if those consumable +goods were purchased directly with the produce of English industry, it +would be more for the advantage of England, than first to purchase with +that produce the gold of Portugal, and afterwards to purchase with that +gold those consumable goods. A direct foreign trade of consumption is +always more advantageous than a round-about one; and to bring the same +value of foreign goods to the home market, requires a much smaller +capital in the one way than in the other. If a smaller share of its +industry, therefore, had been employed in producing goods fit for the +Portugal market, and a greater in producing those fit for the other +markets, where those consumable goods for which there is a demand in +Great Britain are to be had, it would have been more for the advantage +of England. To procure both the gold which it wants for its own use, and +the consumable goods, would, in this way, employ a much smaller capital +than at present. There would be a spare capital, therefore, to be +employed for other purposes, in exciting an additional quantity of +industry, and in raising a greater annual produce. + +Though Britain were entirely excluded from the Portugal trade, it could +find very little difficulty in procuring all the annual supplies of gold +which it wants, either for the purposes of plate, or of coin, or of +foreign trade. Gold, like every other commodity, is always somewhere or +another to be got for its value by those who have that value to give for +it. The annual surplus of gold in Portugal, besides, would still be sent +abroad, and though not carried away by Great Britain, would be carried +away by some other nation, which would be glad to sell it again for its +price, in the same manner as Great Britain does at present. In buying +gold of Portugal, indeed, we buy it at the first hand; whereas, in +buying it of any other nation, except Spain, we should buy it at the +second, and might pay somewhat dearer. This difference, however, would +surely be too insignificant to deserve the public attention. + +Almost all our gold, it is said, comes from Portugal. With other +nations, the balance of trade is either against us, or not much in our +favour. But we should remember, that the more gold we import from one +country, the less we must necessarily import from all others. The +effectual demand for gold, like that for every other commodity, is in +every country limited to a certain quantity. If nine-tenths of this +quantity are imported from one country, there remains a tenth only to be +imported from all others. The more gold, besides, that is annually +imported from some particular countries, over and above what is +requisite for plate and for coin, the more must necessarily be exported +to some others: and the more that most insignificant object of modern +policy, the balance of trade, appears to be in our favour with some +particular countries, the more it must necessarily appear to be against +us with many others. + +It was upon this silly notion, however, that England could not subsist +without the Portugal trade, that, towards the end of the late war, +France and Spain, without pretending either offence or provocation, +required the king of Portugal to exclude all British ships from his +ports, and, for the security of this exclusion, to receive into them +French or Spanish garrisons. Had the king of Portugal submitted to those +ignominious terms which his brother-in-law the king of Spain proposed to +him, Britain would have been freed from a much greater inconveniency +than the loss of the Portugal trade, the burden of supporting a very +weak ally, so unprovided of every thing for his own defence, that the +whole power of England, had it been directed to that single purpose, +could scarce, perhaps, have defended him for another campaign. The loss +of the Portugal trade would, no doubt, have occasioned a considerable +embarrassment to the merchants at that time engaged in it, who might +not, perhaps, have found out, for a year or two, any other equally +advantageous method of employing their capitals; and in this would +probably have consisted all the inconveniency which England could have +suffered from this notable piece of commercial policy. + +The great annual importation of gold and silver is neither for the +purpose of plate nor of coin, but of foreign trade. A round-about +foreign trade of consumption can be carried on more advantageously by +means of these metals than of almost any other goods. As they are the +universal instruments of commerce, they are more readily received in +return for all commodities than any other goods; and, on account of +their small bulk and great value, it costs less to transport them +backward and forward from one place to another than almost any other +sort of merchandize, and they lose less of their value by being so +transported. Of all the commodities, therefore, which are bought in one +foreign country, for no other purpose but to be sold or exchanged again +for some other goods in another, there are none so convenient as gold +and silver. In facilitating all the different round-about foreign trades +of consumption which are carried on in Great Britain, consists the +principal advantage of the Portugal trade; and though it is not a +capital advantage, it is, no doubt, a considerable one. + +That any annual addition which, it can reasonably be supposed, is made +either to the plate or to the coin of the kingdom, could require but a +very small annual importation of gold and silver, seems evident enough; +and though we had no direct trade with Portugal, this small quantity +could always, somewhere or another, be very easily got. + +Though the goldsmiths trade be very considerable in Great Britain, the +far greater part of the new plate which they annually sell, is made from +other old plate melted down; so that the addition annually made to the +whole plate of the kingdom cannot be very great, and could require but a +very small annual importation. + +It is the same case with the coin. Nobody imagines, I believe, that even +the greater part of the annual coinage, amounting, for ten years +together, before the late reformation of the gold coin, to upwards of +L.800,000 a-year in gold, was an annual addition to the money before +current in the kingdom. In a country where the expense of the coinage is +defrayed by the government, the value of the coin, even when it contains +its full standard weight of gold and silver, can never be much greater +than that of an equal quantity of those metals uncoined, because it +requires only the trouble of going to the mint, and the delay, perhaps, +of a few weeks, to procure for any quantity of uncoined gold and silver +an equal quantity of those metals in coin; but in every country the +greater part of the current coin is almost always more or less worn, or +otherwise degenerated from its standard. In Great Britain it was, before +the late reformation, a good deal so, the gold being more than two per +cent., and the silver more than eight per cent. below its standard +weight. But if forty-four guineas and a-half, containing their full +standard weight, a pound weight of gold, could purchase very little more +than a pound weight of uncoined gold; forty-four guineas and a-half, +wanting a part of their weight, could not purchase a pound weight, and +something was to be added, in order to make up the deficiency. The +current price of gold bullion at market, therefore, instead of being the +same with the mint price, or L.46 : 14 : 6, was then about L.47 : 14s., +and sometimes about L.48. When the greater part of the coin, however, +was in this degenerate condition, forty-four guineas and a-half, fresh +from the mint, would purchase no more goods in the market than any other +ordinary guineas; because, when they came into the coffers of the +merchant, being confounded with other money, they could not afterwards +be distinguished without more trouble than the difference was worth. +Like other guineas, they were worth no more than L.46 : 14 : 6. If +thrown into the melting pot, however, they produced, without any +sensible loss, a pound weight of standard gold, which could be sold at +any time for between L.47 : 14s. and L.48, either in gold or silver, as +fit for all the purposes of coin as that which had been melted down. +There was an evident profit, therefore, in melting down new-coined +money; and it was done so instantaneously, that no precaution of +government could prevent it. The operations of the mint were, upon this +account, somewhat like the web of Penelopé; the work that was done in +the day was undone in the night. The mint was employed, not so much in +making daily additions to the coin, as in replacing the very best part +of it, which was daily melted down. + +Were the private people who carry their gold and silver to the mint to +pay themselves for the coinage, it would add to the value of those +metals, in the same manner as the fashion does to that of plate. Coined +gold and silver would be more valuable than uncoined. The seignorage, if +it was not exorbitant, would add to the bullion the whole value of the +duty; because, the government having everywhere the exclusive privilege +of coining, no coin can come to market cheaper than they think proper to +afford it. If the duty was exorbitant, indeed, that is, if it was very +much above the real value of the labour and expense requisite for +coinage, false coiners, both at home and abroad, might be encouraged, by +the great difference between the value of bullion and that of coin, to +pour in so great a quantity of counterfeit money as might reduce the +value of the government money. In France, however, though the seignorage +is eight per cent., no sensible inconveniency of this kind is found to +arise from it. The dangers to which a false coiner is everywhere +exposed, if he lives in the country of which he counterfeits the coin, +and to which his agents or correspondents are exposed, if he lives in a +foreign country, are by far too great to be incurred for the sake of a +profit of six or seven per cent. + +The seignorage in France raises the value of the coin higher than in +proportion to the quantity of pure gold which it contains. Thus, by the +edict of January 1726, the[41] mint price of fine gold of twenty-four +carats was fixed at seven hundred and forty livres nine sous and one +denier one-eleventh the mark of eight Paris ounces. The gold coin of +France, making an allowance for the remedy of the mint, contains +twenty-one carats and three-fourths of fine gold, and two carats +one-fourth of alloy. The mark of standard gold, therefore, is worth no +more than about six hundred and seventy-one livres ten deniers. But in +France this mark of standard gold is coined into thirty louis d'ors of +twenty-four livres each, or into seven hundred and twenty livres. The +coinage, therefore, increases the value of a mark of standard gold +bullion, by the difference between six hundred and seventy-one livres +ten deniers and seven hundred and twenty livres, or by forty-eight +livres nineteen sous and two deniers. + +A seignorage will, in many cases, take away altogether, and will in all +cases diminish, the profit of melting down the new coin. This profit +always arises from the difference between the quantity of bullion which +the common currency ought to contain and that which it actually does +contain. If this difference is less than the seignorage, there will be +loss instead of profit. If it is equal to the seignorage, there will be +neither profit nor loss. If it is greater than the seignorage, there +will, indeed, be some profit, but less than if there was no seignorage. +If, before the late reformation of the gold coin, for example, there had +been a seignorage of five per cent. upon the coinage, there would have +been a loss of three per cent. upon the melting down of the gold coin. +If the seignorage had been two per cent, there would have been neither +profit nor loss. If the seignorage had been one per cent., there would +have been a profit but of one per cent. only, instead of two per cent. +Wherever money is received by tale, therefore, and not by weight, a +seignorage is the most effectual preventive of the melting down of the +coin, and, for the same reason, of its exportation. It is the best and +heaviest pieces that are commonly either melted down or exported, +because it is upon such that the largest profits are made. + +The law for the encouragement of the coinage, by rendering it duty-free, +was first enacted during the reign of Charles II. for a limited time, +and afterwards continued, by different prolongations, till 1769, when it +was rendered perpetual. The bank of England, in order to replenish their +coffers with money, are frequently obliged to carry bullion to the mint; +and it was more for their interest, they probably imagined, that the +coinage should be at the expense of the government than at their own. It +was probably out of complaisance to this great company, that the +government agreed to render this law perpetual. Should the custom of +weighing gold, however, come to be disused, as it is very likely to be +on account of its inconveniency; should the gold coin of England come to +be received by tale, as it was before the late recoinage, this great +company may, perhaps, find that they have, upon this, as upon some other +occasions, mistaken their own interest not a little. + +Before the late recoinage, when the gold currency of England was two per +cent. below its standard weight, as there was no seignorage, it was two +per cent. below the value of that quantity of standard gold bullion +which it ought to have contained. When this great company, therefore, +bought gold bullion in order to have it coined, they were obliged to pay +for it two per cent. more than it was worth after the coinage. But if +there had been a seignorage of two per cent upon the coinage, the common +gold currency, though two per cent. below its standard weight, would, +notwithstanding, have been equal in value to the quantity of standard +gold which it ought to have contained; the value of the fashion +compensating in this case the diminuation of the weight. They would, +indeed, have had the seignorage to pay, which being two per cent., their +loss upon the whole transaction would have been two per cent., exactly +the same, but no greater than it actually was. + +If the seignorage had been five per cent., and the gold currency only +two per cent. below its standard weight, the bank would, in this case, +have gained three per cent. upon the price of the bullion; but as they +would have had a seignorage of five per cent. to pay upon the coinage, +their loss upon the whole transaction would, in the same manner, have +been exactly two per cent. + +If the seignorage had been only one per cent., and the gold currency two +per cent. below its standard weight, the bank would, in this case, have +lost only one per cent. upon the price of the bullion; but as they would +likewise have had a seignorage of one per cent. to pay, their loss upon +the whole transaction would have been exactly two per cent., in the same +manner as in all other cases. + +If there was a reasonable seignorage, while at the same time the coin +contained its full standard weight, as it has done very nearly since the +late recoinage, whatever the bank might lose by the seignorage, they +would gain upon the price of the bullion; and whatever they might gain +upon the price of the bullion, they would lose by the seignorage. They +would neither lose nor gain, therefore, upon the whole transaction, and +they would, in this, as in all the foregoing cases, be exactly in the +same situation as if there was no seignorage. + +When the tax upon a commodity is so moderate as not to encourage +smuggling, the merchant who deals in it, though he advances, does not +properly pay the tax, as he gets it back in the price of the commodity. +The tax is finally paid by the last purchaser or consumer. But money is +a commodity, with regard to which every man is a merchant. Nobody buys +it but in order to sell it again; and with regard to it there is, in +ordinary cases, no last purchaser or consumer. When the tax upon +coinage, therefore, is so moderate as not to encourage false coining, +though every body advances the tax, nobody finally pays it; because +every body gets it back in the advanced value of the coin. + +A moderate seignorage, therefore, would not, in any case, augment the +expense of the bank, or of any other private persons who carry their +bullion to the mint in order to be coined; and the want of a moderate +seignorage does not in any case diminish it. Whether there is or is not +a seignorage, if the currency contains its full standard weight, the +coinage costs nothing to any body; and if it is short of that weight, +the coinage must always cost the difference between the quantity of +bullion which ought to be contained in it, and that which actually is +contained in it. + +The government, therefore, when it defrays the expense of coinage, not +only incurs some small expense, but loses some small revenue which it +might get by a proper duty; and neither the bank, nor any other private +persons, are in the smallest degree benefited by this useless piece of +public generosity. + +The directors of the bank, however, would probably be unwilling to agree +to the imposition of a seignorage upon the authority of a speculation +which promises them no gain, but only pretends to insure them from any +loss. In the present state of the gold coin, and as long as it continues +to be received by weight, they certainly would gain nothing by such a +change. But if the custom of weighing the gold coin should ever go into +disuse, as it is very likely to do, and if the gold coin should ever +fall into the same state of degradation in which it was before the late +recoinage, the gain, or more properly the savings, of the bank, in +consequence of the imposition of a seignorage, would probably be very +considerable. The bank of England is the only company which sends any +considerable quantity of bullion to the mint, and the burden of the +annual coinage falls entirely, or almost entirely, upon it. If this +annual coinage had nothing to do but to repair the unavoidable losses +and necessary wear and tear of the coin, it could seldom exceed fifty +thousand, or at most a hundred thousand pounds. But when the coin is +degraded below its standard weight, the annual coinage must, besides +this, fill up the large vacuities which exportation and the melting pot +are continually making in the current coin. It was upon this account, +that during the ten or twelve years immediately preceding the late +reformation of the gold coin, the annual coinage amounted, at an +average, to more than L.850,000. But if there had been a seignorage of +four or five per cent. upon the gold coin, it would probably, even in +the state in which things then were, have put an effectual stop to the +business both of exportation and of the melting pot. The bank, instead +of losing every year about two and a half per cent. upon the bullion +which was to be coined into more than eight hundred and fifty thousand +pounds, or incurring an annual loss of more than twenty-one thousand two +hundred and fifty pounds, would not probably have incurred the tenth +part of that loss. + +The revenue allotted by parliament for defraying the expense of the +coinage is but fourteen thousand pounds a-year; and the real expense +which it costs the government, or the fees of the officers of the mint, +do not, upon ordinary occasions, I am assured, exceed the half of that +sum. The saving of so very small a sum, or even the gaining of another, +which could not well be much larger, are objects too inconsiderable, it +may be thought, to deserve the serious attention of government. But the +saving of eighteen or twenty thousand pounds a-year, in case of an event +which is not improbable, which has frequently happened before, and which +in very likely to happen again, is surely an object which well deserves +the serious attention, even of so great a company as the bank of +England. + +Some of the foregoing reasonings and observations might, perhaps, have +been more properly placed in those chapters of the first book which +treat of the origin and use of money, and of the difference between the +real and the nominal price of commodities. But as the law for the +encouragement of coinage derives its origin from these vulgar prejudices +which have been introduced by the mercantile system, I judged it more +proper to reserve them for this chapter. Nothing could be more agreeable +to the spirit of that system than a sort of bounty upon the production +of money, the very thing which, it supposes, constitutes the wealth of +every nation. It is one of its many admirable expedients for enriching +the country. + + + + +CHAP. VII. + +OF COLONIES. + + +PART I. + +_Of the Motives for Establishing New Colonies._ + +The interest which occasioned the first settlement of the different +European colonies in America and the West Indies, was not altogether so +plain and distinct as that which directed the establishment of those of +ancient Greece and Rome. + +All the different states of ancient Greece possessed, each of them, but +a very small territory; and when the people in any one of them +multiplied beyond what that territory could easily maintain, a part of +them were sent in quest of a new habitation, in some remote and distant +part of the world; the war-like neighbours who surrounded them on all +sides, rendering it difficult for any of them to enlarge very much its +territory at home. The colonies of the Dorians resorted chiefly to Italy +and Sicily, which, in the times preceding the foundation of Rome, were +inhabited by barbarous and uncivilized nations; those of the Ionians and +Æolians, the two other great tribes of the Greeks, to Asia Minor and +the islands of the Ægean sea, of which the inhabitants seem at that time +to have been pretty much in the same state as those of Sicily and Italy. +The mother city, though she considered the colony as a child, at all +times entitled to great favour and assistance, and owing in return much +gratitude and respect, yet considered it as an emancipated child, over +whom she pretended to claim no direct authority or jurisdiction. The +colony settled its own form of government, enacted its own laws, elected +its own magistrates, and made peace or war with its neighbours, as an +independent state, which had no occasion to wait for the approbation or +consent of the mother city. Nothing can be more plain and distinct than +the interest which directed every such establishment. + +Rome, like most of the other ancient republics, was originally founded +upon an agrarian law, which divided the public territory, in a certain +proportion, among the different citizens who composed the state. The +course of human affairs, by marriage, by succession, and by alienation, +necessarily deranged this original division, and frequently threw the +lands which had been allotted for the maintenance of many different +families, into the possession of a single person. To remedy this +disorder, for such it was supposed to be, a law was made, restricting +the quantity of land which any citizen could possess to five hundred +_jugera_, about 350 English acres. This law, however, though we read of +its having been executed upon one or two occasions, was either neglected +or evaded, and the inequality of fortunes went on continually +increasing. The greater part of the citizens had no land; and without it +the manners and customs of those times rendered it difficult for a +freeman to maintain his independency. In the present times, though a +poor man has no land of his own, if he has a little stock, he may either +farm the lands of another, or he may carry on some little retail trade; +and if he has no stock, he may find employment either as a country +labourer, or as an artificer. But among the ancient Romans, the lands of +the rich were all cultivated by slaves, who wrought under an overseer, +who was likewise a slave; so that a poor freeman had little chance of +being employed either as a farmer or as a labourer. All trades and +manufactures, too, even the retail trade, were carried on by the slaves +of the rich for the benefit of their masters, whose wealth, authority, +and protection, made it difficult for a poor freeman to maintain the +competition against them. The citizens, therefore, who had no land, had +scarce any other means of subsistence but the bounties of the candidates +at the annual elections. The tribunes, when they had a mind to animate +the people against the rich and the great, put them in mind of the +ancient divisions of lands, and represented that law which restricted +this sort of private property as the fundamental law of the republic. +The people became clamorous to get land, and the rich and the great, we +may believe, were perfectly determined not to give them any part of +theirs. To satisfy them in some measure, therefore, they frequently +proposed to send out a new colony. But conquering Rome was, even upon +such occasions, under no necessity of turning out her citizens to seek +their fortune, if one may so, through the wide world, without knowing +where they were to settle. She assigned them lands generally in the +conquered provinces of Italy, where, being within the dominions of the +republic, they could never form any independent state, but were at best +but a sort of corporation, which, though it had the power of enacting +bye-laws for its own government, was at all times subject to the +correction, jurisdiction, and legislative authority of the mother city. +The sending out a colony of this kind not only gave some satisfaction to +the people, but often established a sort of garrison, too, in a newly +conquered province, of which the obedience might otherwise have been +doubtful. A Roman colony, therefore, whether we consider the nature of +the establishment itself, or the motives for making it, was altogether +different from a Greek one. The words, accordingly, which in the +original languages denote those different establishments, have very +different meanings. The Latin word (_colonia_) signifies simply a +plantation. The Greek word ([Greek: apoikia]), on the contrary, +signifies a separation of dwelling, a departure from home, a going out +of the house. But though the Roman colonies were, in many respects, +different from the Greek ones, the interest which prompted to establish +them was equally plain and distinct. Both institutions derived their +origin, either from irresistible necessity, or from clear and evident +utility. + +The establishment of the European colonies in America and the West +Indies arose from no necessity; and though the utility which has +resulted from them has been very great, it is not altogether so clear +and evident. It was not understood at their first establishment, and was +not the motive, either of that establishment, or of the discoveries +which gave occasion to it; and the nature, extent, and limits of that +utility, are not, perhaps, well understood at this day. + +The Venetians, during the fourteenth and fifteenth centuries, carried on +a very advantageous commerce in spiceries and other East India goods, +which they distributed among the other nations of Europe. They purchased +them chiefly in Egypt, at that time under the dominion of the Mamelukes, +the enemies of the Turks, of whom the Venetians were the enemies: and +this union of interest, assisted by the money of Venice, formed such a +connexion as gave the Venetians almost a monopoly of the trade. + +The great profits of the Venetians tempted the avidity of the +Portuguese. They had been endeavouring, during the course of the +fifteenth century, to find out by sea a way to the countries from which +the Moors brought them ivory and gold dust across the desert. They +discovered the Madeiras, the Canaries, the Azores, the Cape de Verd +islands, the coast of Guinea, that of Loango, Congo, Angola, and +Benguela, and, finally, the Cape of Good Hope. They had long wished to +share in the profitable traffic of the Venetians, and this last +discovery opened to them a probable prospect of doing so. In 1497, Vasco +de Gamo sailed from the port of Lisbon with a fleet of four ships, and, +after a navigation of eleven months, arrived upon the coast of Indostan; +and thus completed a course of discoveries which had been pursued with +great steadiness, and with very little interruption, for near a century +together. + +Some years before this, while the expectations of Europe were in +suspense about the projects of the Portuguese, of which the success +appeared yet to be doubtful, a Genoese pilot formed the yet more daring +project of sailing to the East Indies by the west. The situation of +those countries was at that time very imperfectly known in Europe. The +few European travellers who had been there, had magnified the distance, +perhaps through simplicity and ignorance; what was really very great, +appearing almost infinite to those who could not measure it; or, +perhaps, in order to increase somewhat more the marvellous of their own +adventures in visiting regions so immensely remote from Europe. The +longer the way was by the east, Columbus very justly concluded, the +shorter it would be by the west. He proposed, therefore, to take that +way, as both the shortest and the surest, and he had the good fortune to +convince Isabella of Castile of the probability of his project. He +sailed from the port of Palos in August 1492, near five years before the +expedition of Vasco de Gamo set out from Portugal; and, after a voyage +of between two and three months, discovered first some of the small +Bahama or Lucyan islands, and afterwards the great island of St. +Domingo. + +But the countries which Columbus discovered, either in this or in any of +his subsequent voyages, had no resemblance to those which he had gone in +quest of. Instead of the wealth, cultivation, and populousness of China +and Indostan, he found, in St. Domingo, and in all the other parts of +the new world which he ever visited, nothing but a country quite covered +with wood, uncultivated, and inhabited only by some tribes of naked and +miserable savages. He was not very willing, however, to believe that +they were not the same with some of the countries described by Marco +Polo, the first European who had visited, or at least had left behind +him any description of China or the East Indies; and a very slight +resemblance, such as that which he found between the name of Cibao, a +mountain in St. Domingo, and that of Cipange, mentioned by Marco Polo, +was frequently sufficient to make him return to this favourite +prepossession, though contrary to the clearest evidence. In his letters +to Ferdinand and Isabella, he called the countries which he had +discovered the Indies. He entertained no doubt but that they were the +extremity of those which had been described by Marco Polo, and that they +were not very distant from the Ganges, or from the countries which had +been conquered by Alexander. Even when at last convinced that they were +different, he still flattered himself that those rich countries were at +no great distance; and in a subsequent voyage, accordingly, went in +quest of them along the coast of Terra Firma, and towards the Isthmus of +Darien. + +In consequence of this mistake of Columbus, the name of the Indies has +stuck to those unfortunate countries ever since; and when it was at last +clearly discovered that the new were altogether different from the old +Indies, the former were called the West, in contradistinction to the +latter, which were called the East Indies. + +It was of importance to Columbus, however, that the countries which he +had discovered, whatever they were, should be represented to the court +of Spain as of very great consequence; and, in what constitutes the real +riches of every country, the animal and vegetable productions of the +soil, there was at that time nothing which could well justify such a +representation of them. + +The cori, something between a rat and a rabbit, and supposed by Mr +Buffon to be the same with the aperea of Brazil, was the largest +viviparous quadruped in St. Domingo. This species seems never to have +been very numerous; and the dogs and cats of the Spaniards are said to +have long ago almost entirely extirpated it, as well as some other +tribes of a still smaller size. These, however, together with a pretty +large lizard, called the ivana or iguana, constituted the principal part +of the animal food which the land afforded. + +The vegetable food of the inhabitants, though, from their want of +industry, not very abundant, was not altogether so scanty. It consisted +in Indian corn, yams, potatoes, bananas, &c., plants which were then +altogether unknown in Europe, and which have never since been very much +esteemed in it, or supposed to yield a sustenance equal to what is drawn +from the common sorts of grain and pulse, which have been cultivated in +this part of the world time out of mind. + +The cotton plant, indeed, afforded the material of a very important +manufacture, and was at that time, to Europeans, undoubtedly the most +valuable of all the vegetable productions of those islands. But though, +in the end of the fifteenth century, the muslins and other cotton goods +of the East Indies were much esteemed in every part of Europe, the +cotton manufacture itself was not cultivated in any part of it. Even +this production, therefore, could not at that time appear in the eyes of +Europeans to be of very great consequence. + +Finding nothing, either in the animals or vegetables of the newly +discovered countries which could justify a very advantageous +representation of them, Columbus turned his view towards their minerals; +and in the richness of their productions of this third kingdom, he +flattered himself he had found a full compensation for the +insignificancy of those of the other two. The little bits of gold with +which the inhabitants ornamented their dress, and which, he was +informed, they frequently found in the rivulets and torrents which fell +from the mountains, were sufficient to satisfy him that those mountains +abounded with the richest gold mines. St. Domingo, therefore, was +represented as a country abounding with gold, and upon that account +(according to the prejudices not only of the present times, but of those +times), an inexhaustible source of real wealth to the crown and kingdom +of Spain. When Columbus, upon his return from his first voyage, was +introduced with a sort of triumphal honours to the sovereigns of Castile +and Arragon, the principal productions of the countries which he had +discovered were carried in solemn procession before him. The only +valuable part of them consisted in some little fillets, bracelets, and +other ornaments of gold, and in some bales of cotton. The rest were mere +objects of vulgar wonder and curiosity; some reeds of an extraordinary +size, some birds of a very beautiful plumage, and some stuffed skins of +the huge alligator and manati; all of which were preceded by six or +seven of the wretched natives, whose singular colour and appearance +added greatly to the novelty of the show. + +In consequence of the representations of Columbus, the council of +Castile determined to take possession of the countries of which the +inhabitants were plainly incapable of defending themselves. The pious +purpose of converting them to Christianity sanctified the injustice of +the project. But the hope of finding treasures of gold there was the +sole motive which prompted to undertake it; and to give this motive the +greater weight, it was proposed by Columbus, that the half of all the +gold and silver that should be found there, should belong to the crown. +This proposal was approved of by the council. + +As long as the whole, or the greater part of the gold which the first +adventurers imported into Europe was got by so very easy a method as the +plundering of the defenceless natives, it was not perhaps very difficult +to pay even this heavy tax; but when the natives were once fairly stript +of all that they had, which, in St. Domingo, and in all the other +countries discovered by Columbus, was done completely in six or eight +years, and when, in order to find more, it had become necessary to dig +for it in the mines, there was no longer any possibility of paying this +tax. The rigorous exaction of it, accordingly, first occasioned, it is +said, the total abandoning of the mines of St. Domingo, which have never +been wrought since. It was soon reduced, therefore, to a third; then to +a fifth; afterwards to a tenth; and at last to a twentieth part of the +gross produce of the gold mines. The tax upon silver continued for a +long time to be a fifth of the gross produce. It was reduced to a tenth +only in the course of the present century. But the first adventurers do +not appear to have been much interested about silver. Nothing less +precious than gold seemed worthy of their attention. + +All the other enterprizes of the Spaniards in the New World, subsequent +to those of Columbus, seem to have been prompted by the same motive. It +was the sacred thirst of gold that carried Ovieda, Nicuessa, and Vasco +Nugnes de Balboa, to the Isthmus of Darien; that carried Cortes to +Mexico, Almagro and Pizarro to Chili and Peru. When those adventurers +arrived upon any unknown coast, their first inquiry was always if there +was any gold to be found there; and according to the information which +they received concerning this particular, they determined either to quit +the country or to settle in it. + +Of all those expensive and uncertain projects, however, which bring +bankruptcy up on the greater part of the people who engage in them, +there is none, perhaps, more perfectly ruinous than the search after new +silver and gold mines. It is, perhaps, the most disadvantageous lottery +in the world, or the one in which the gain of those who draw the prizes +bears the least proportion to the loss of those who draw the blanks; for +though the prizes are few, and the blanks many, the common price of a +ticket is the whole fortune of a very rich man. Projects of mining, +instead of replacing the capital employed in them, together with the +ordinary profits of stock, commonly absorb both capital and profit. They +are the projects, therefore, to which, of all others, a prudent +lawgiver, who desired to increase the capital of his nation, would least +choose to give any extraordinary encouragement, or to turn towards them +a greater share of that capital than what would go to them of its own +accord. Such, in reality, is the absurd confidence which almost all men +have in their own good fortune, that wherever there is the least +probability of success, too great a share of it is apt to go to them of +its own accord. + +But though the judgment of sober reason and experience concerning such +projects has always been extremely unfavourable, that of human avidity +has commonly been quite otherwise. The same passion which has suggested +to so many people the absurd idea of the philosopher's stone, has +suggested to others the equally absurd one of immense rich mines of gold +and silver. They did not consider that the value of those metals has, in +all ages and nations, arisen chiefly from their scarcity, and that their +scarcity has arisen from the very small quantities of them which nature +has anywhere deposited in one place, from the hard and intractable +substances with which she has almost everywhere surrounded those small +quantities, and consequently from the labour and expense which are +everywhere necessary in order to penetrate, and get at them. They +flattered themselves that veins of those metals might in many places be +found, as large and as abundant as those which are commonly found of +lead, or copper, or tin, or iron. The dream of Sir Walter Raleigh, +concerning the golden city and country of El Dorado, may satisfy us, +that even wise men are not always exempt from such strange delusions. +More than a hundred years after the death of that great man, the Jesuit +Gumila was still convinced of the reality of that wonderful country, and +expressed, with great warmth, and, I dare say, with great sincerity, how +happy he should be to carry the light of the gospel to a people who +could so well reward the pious labours of their missionary. + +In the countries first discovered by the Spaniards, no gold or silver +mines are at present known which are supposed to be worth the working. +The quantities of those metals which the first adventurers are said to +have found there, had probably been very much magnified, as well as the +fertility of the mines which were wrought immediately after the first +discovery. What those adventurers were reported to have found, however, +was sufficient to inflame the avidity of all their countrymen. Every +Spaniard who sailed to America expected to find an El Dorado. Fortune, +too, did upon this what she has done upon very few other occasions. She +realized in some measure the extravagant hopes of her votaries; and in +the discovery and conquest of Mexico and Peru (of which the one happened +about thirty, and the other about forty, years after the first +expedition of Columbus), she presented them with something not very +unlike that profusion of the precious metals which they sought for. + +A project of commerce to the East Indies, therefore, gave occasion to +the first discovery of the West. A project of conquest gave occasion to +all the establishments of the Spaniards in those newly discovered +countries. The motive which excited them to this conquest was a project +of gold and silver mines; and a course of accidents which no human +wisdom could foresee, rendered this project much more successful than +the undertakers had any reasonable grounds for expecting. + +The first adventurers of all the other nations of Europe who attempted +to make settlements in America, were animated by the like chimerical +views; but they were not equally successful. It was more than a hundred +years after the first settlement of the Brazils, before any silver, +gold, or diamond mines, were discovered there. In the English, French, +Dutch, and Danish colonies, none have ever yet been discovered, at least +none that are at present supposed to be worth the working. The first +English settlers in North America, however, offered a fifth of all the +gold and silver which should be found there to the king, as a motive for +granting them their patents. In the patents of Sir Walter Raleigh, to +the London and Plymouth companies, to the council of Plymouth, &c. this +fifth was accordingly reserved to the crown. To the expectation of +finding gold and silver mines, those first settlers, too, joined that of +discovering a north-west passage to the East Indies. They have hitherto +been disappointed in both. + + +PART II. + +_Causes of the Prosperity of New Colonies._ + +The colony of a civilized nation which takes possession either of a +waste country, or of one so thinly inhabited that the natives easily +give place to the new settlers, advances more rapidly to wealth and +greatness than any other human society. + +The colonies carry out with them a knowledge of agriculture and of other +useful arts, superior to what can grow up of its own accord, in the +course of many centuries, among savage and barbarous nations. They carry +out with them, too, the habit of subordination, some notion of the +regular government which takes place in their own country, of the system +of laws which support it, and of a regular administration of justice; +and they naturally establish something of the same kind in the new +settlement. But among savage and barbarous nations, the natural progress +of law and government is still slower than the natural progress of arts, +after law and government have been so far established as is necessary +for their protection. Every colonist gets more land than he can possibly +cultivate. He has no rent, and scarce any taxes, to pay. No landlord +shares with him in its produce, and, the share of the sovereign is +commonly but a trifle. He has every motive to render as great as +possible a produce which is thus to be almost entirely his own. But his +land is commonly so extensive, that, with all his own industry, and +with all the industry of other people whom he can get to employ, he can +seldom make it produce the tenth part of what it is capable of +producing. He is eager, therefore, to collect labourers from all +quarters, and to reward them with the most liberal wages. But those +liberal wages, joined to the plenty and cheapness of land, soon make +those labourers leave him, in order to become landlords themselves, and +to reward with equal liberality other labourers, who soon leave them for +the same reason that they left their first master. The liberal reward of +labour encourages marriage. The children, during the tender years of +infancy, are well fed and properly taken care of; and when they are +grown up, the value of their labour greatly overpays their maintenance. +When arrived at maturity, the high price of labour, and the low price of +land, enable them to establish themselves in the same manner as their +fathers did before them. + +In other countries, rent and profit eat up wages, and the two superior +orders of people oppress the inferior one; but in new colonies, the +interest of the two superior orders obliges them to treat the inferior +one with more generosity and humanity, at least where that inferior one +is not in a state of slavery. Waste lands, of the greatest natural +fertility, are to be had for a trifle. The increase of revenue which the +proprietor, who is always the undertaker, expects from their +improvement, constitutes his profit, which, in these circumstances, is +commonly very great; but this great profit cannot be made, without +employing the labour of other people in clearing and cultivating the +land; and the disproportion between the great extent of the land and the +small number of the people, which commonly takes place in new colonies, +makes it difficult for him to get this labour. He does not, therefore, +dispute about wages, but is willing to employ labour at any price. The +high wages of labour encourage population. The cheapness and plenty of +good land encourage improvement, and enable the proprietor to pay those +high wages. In those wages consists almost the whole price of the land; +and though they are high, considered as the wages of labour, they are +low, considered as the price of what is so very valuable. What +encourages the progress of population and improvement, encourages that +of real wealth and greatness. + +The progress of many of the ancient Greek colonies towards wealth and +greatness seems accordingly to have been very rapid. In the course of a +century or two, several of them appear to have rivalled, and even to +have surpassed, their mother cities. Syracuse and Agrigentum in Sicily, +Tarentum and Locri in Italy, Ephesus and Miletus in Lesser Asia, appear, +by all accounts, to have been at least equal to any of the cities of +ancient Greece. Though posterior in their establishment, yet all the +arts of refinement, philosophy, poetry, and eloquence, seem to have been +cultivated as early, and to have been improved as highly in them as in +any part of the mother country. The schools of the two oldest Greek +philosophers, those of Thales and Pythagoras, were established, it is +remarkable, not in ancient Greece, but the one in an Asiatic, the other +in an Italian colony. All those colonies had established themselves in +countries inhabited by savage and barbarous nations, who easily gave +place to the new settlers. They had plenty of good land; and as they +were altogether independent of the mother city, they were at liberty to +manage their own affairs in the way that they judged was most suitable +to their own interest. + +The history of the Roman colonies is by no means so brilliant. Some of +them, indeed, such as Florence, have, in the course of many ages, and +after the fall of the mother city, grown up to be considerable states. +But the progress of no one of them seems ever to have been very rapid. +They were all established in conquered provinces, which in most cases +had been fully inhabited before. The quantity of land assigned to each +colonist was seldom very considerable, and, as the colony was not +independent, they were not always at liberty to manage their own affairs +in the way that they judged was most suitable to their own interest. + +In the plenty of good land, the European colonies established in America +and the West Indies resemble, and even greatly surpass, those of ancient +Greece. In their dependency upon the mother state, they resemble those +of ancient Rome; but their great distance from Europe has in all of them +alleviated more or less the effects of this dependency. Their situation +has placed them less in the view, and less in the power of their mother +country. In pursuing their interest their own way, their conduct has +upon many occasions been overlooked, either because not known or not +understood in Europe; and upon some occasions it has been fairly +suffered and submitted to, because their distance rendered it difficult +to restrain it. Even the violent and arbitrary government of Spain has, +upon many occasion, been obliged to recall or soften the orders which +had been given for the government of her colonies, for fear of a general +insurrection. The progress of all the European colonies in wealth, +population, and improvement, has accordingly been very great. + +The crown of Spain, by its share of the gold and silver, derived some +revenue from its colonies from the moment of their first establishment. +It was a revenue, too, of a nature to excite in human avidity the most +extravagant expectation of still greater riches. The Spanish colonies, +therefore, from the moment of their first establishment, attracted very +much the attention of their mother country; while those of the other +European nations were for a long time in a great measure neglected. The +former did not, perhaps, thrive the better in consequence of this +attention, nor the latter the worse in consequence of this neglect. In +proportion to the extent of the country which they in some measure +possess, the Spanish colonies are considered as less populous and +thriving than those of almost any other European nation. The progress +even of the Spanish colonies, however, in population and improvement, +has certainly been very rapid and very great. The city of Lima, founded +since the conquest, is represented by Ulloa as containing fifty thousand +inhabitants near thirty years ago. Quito, which had been but a miserable +hamlet of Indians, is represented by the same author as in his time +equally populous. Gemel i Carreri, a pretended traveller, it is said, +indeed, but who seems everywhere to have written upon extreme good +information, represents the city of Mexico as containing a hundred +thousand inhabitants; a number which, in spite of all the exaggerations +of the Spanish writers, is probably more than five times greater than +what it contained in the time of Montezuma. These numbers exceed greatly +these of Boston, New York, and Philadelphia, the three greatest cities +of the English colonies. Before the conquest of the Spaniards, there +were no cattle fit for draught, either in Mexico or Peru. The lama was +their only beast of burden, and its strength seems to have been a good +deal inferior to that of a common ass. The plough was unknown among +them. They were ignorant of the use of iron. They had no coined money, +nor any established instrument of commerce of any kind. Their commerce +was carried on by barter. A sort of wooden spade was their principal +instrument of agriculture. Sharp stones served them for knives and +hatchets to cut with; fish bones, and the hard sinews of certain +animals, served them with needles to sew with; and these seem to have +been their principal instruments of trade. In this state of things, it +seems impossible that either of those empires could have been so much +improved or so well cultivated as at present, when they are plentifully +furnished with all sorts of European cattle, and when the use of iron, +of the plough, and of many of the arts of Europe, have been introduced +among them. But the populousness of every country must be in proportion +to the degree of its improvement and cultivation. In spite of the cruel +destruction of the natives which followed the conquest, these two great +empires are probably more populous now than they ever were before; and +the people are surely very different; for we must acknowledge, I +apprehend, that the Spanish creoles are in many respects superior to the +ancient Indians. + +After the settlements of the Spaniards, that of the Portuguese in Brazil +is the oldest of any European nation in America. But as for a long time +after the first discovery neither gold nor silver mines were found in +it, and as it afforded upon that account little or no revenue to the +crown, it was for a long time in a great measure neglected; and during +this state of neglect, it grew up to be a great and powerful colony. +While Portugal was under the dominion of Spain, Brazil was attacked by +the Dutch, who got possession of seven of the fourteen provinces into +which it is divided. They expected soon to conquer the other seven, when +Portugal recovered its independency by the elevation of the family of +Braganza to the throne. The Dutch, then, as enemies to the Spaniards, +became friends to the Portuguese, who were likewise the enemies of the +Spaniards. They agreed, therefore, to leave that part of Brazil which +they had not conquered to the king of Portugal, who agreed to leave that +part which they had conquered to them, as a matter not worth disputing +about, with such good allies. But the Dutch government soon began to +oppress the Portuguese colonists, who, instead of amusing themselves +with complaints, took arms against their new masters, and by their own +valour and resolution, with the connivance, indeed, but without any +avowed assistance from the mother country, drove them out of Brazil. The +Dutch, therefore, finding it impossible to keep any part of the country +to themselves, were contented that it should be entirely restored to the +crown of Portugal. In this colony there are said to be more than six +hundred thousand people, either Portuguese or descended from Portuguese, +creoles, mulattoes, and a mixed race between Portuguese and Brazilians. +No one colony in America is supposed to contain so great a number of +people of European extraction. + +Towards the end of the fifteenth, and during the greater part of the +sixteenth century, Spain and Portugal were the two great naval powers +upon the ocean; for though the commerce of Venice extended to every part +of Europe, its fleet had scarce ever sailed beyond the Mediterranean. +The Spaniards, in virtue of the first discovery, claimed all America as +their own; and though they could not hinder so great a naval power as +that of Portugal from settling in Brazil, such was at that time the +terror of their name, that the greater part of the other nations of +Europe were afraid to establish themselves in any other part of that +great continent. The French, who attempted to settle in Florida, were +all murdered by the Spaniards. But the declension of the naval power of +this latter nation, in consequence of the defeat or miscarriage of what +they called their invincible armada, which happened towards the end of +the sixteenth century, put it out of their power to obstruct any longer +the settlements of the other European nations. In the course of the +seventeenth century, therefore, the English, French, Dutch, Danes, and +Swedes, all the great nations who had any ports upon the ocean, +attempted to make some settlements in the new world. + +The Swedes established themselves in New Jersey; and the number of +Swedish families still to be found there sufficiently demonstrates, that +this colony was very likely to prosper, had it been protected by the +mother country. But being neglected by Sweden, it was soon swallowed up +by the Dutch colony of New York, which again, in 1674, fell under the +dominion of the English. + +The small islands of St. Thomas and Santa Cruz, are the only countries +in the new world that have been possessed by the Danes. These little +settlements, too, were under the government of an exclusive company, +which had the sole right, both of purchasing the surplus produce of the +colonies, and of supplying them with such goods of other countries as +they wanted, and which, therefore, both in its purchases and sales, had +not only the power of oppressing them, but the greatest temptation to do +so. The government of an exclusive company of merchants is, perhaps, the +worst of all governments for any country whatever. It was not, however, +able to stop altogether the progress of these colonies, though it +rendered it more slow and languid. The late king of Denmark dissolved +this company, and since that time the prosperity of these colonies has +been very great. + +The Dutch settlements in the West, as well as those in the East Indies, +were originally put under the government of an exclusive company. The +progress of some of them, therefore, though it has been considerable in +comparison with that of almost any country that has been long peopled +and established, has been languid and slow in comparison with that of +the greater part of new colonies. The colony of Surinam, though very +considerable, is still inferior to the greater part of the sugar +colonies of the other European nations. The colony of Nova Belgia, now +divided into the two provinces of New York and New Jersey, would +probably have soon become considerable too, even though it had remained +under the government of the Dutch. The plenty and cheapness of good land +are such powerful causes of prosperity, that the very worst government +is scarce capable of checking altogether the efficacy of their +operation. The great distance, too, from the mother country, would +enable the colonists to evade more or less, by smuggling, the monopoly +which the company enjoyed against them. At present, the company allows +all Dutch ships to trade to Surinam, upon paying two and a-half per +cent. upon the value of their cargo for a license; and only reserves to +itself exclusively, the direct trade from Africa to America, which +consists almost entirely in the slave trade. This relaxation in the +exclusive privileges of the company, is probably the principal cause of +that degree of prosperity which that colony at present enjoys. Curaçoa +and Eustatia, the two principal islands belonging to the Dutch, are free +ports, open to the ships of all nations; and this freedom, in the midst +of better colonies, whose ports are open to those of one nation only, +has been the great cause of the prosperity of those two barren islands. + +The French colony of Canada was, during the greater part of the last +century, and some part of the present, under the government of an +exclusive company. Under so unfavourable administration, its progress +was necessarily very slow, in comparison with that of other new +colonies; but it became much more rapid when this company was dissolved, +after the fall of what is called the Mississippi scheme. When the +English got possession of this country, they found in it near double the +number of inhabitants which father Charlevoix had assigned to it between +twenty and thirty years before. That jesuit had travelled over the whole +country, and had no inclination to represent it as less inconsiderable +than it really was. + +The French colony of St. Domingo was established by pirates and +freebooters, who, for a long time, neither required the protection, nor +acknowledged the authority of France; and when that race of banditti +became so far citizens as to acknowledge this authority, it was for a +long time necessary to exercise it with very great gentleness. During +this period, the population and improvement of this colony increased +very fast. Even the oppression of the exclusive company, to which it was +for some time subjected with all the other colonies of France, though it +no doubt retarded, had not been able to stop its progress altogether. +The course of its prosperity returned as soon as it was relieved from +that oppression. It is now the most important of the sugar colonies of +the West Indies, and its produce is said to be greater than that of all +the English sugar colonies put together. The other sugar colonies of +France are in general all very thriving. + +But there are no colonies of which the progress has been more rapid than +that of the English in North America. + +Plenty of good land, and liberty to manage their own affairs their own +way, seem to be the two great causes of the prosperity of all new +colonies. + +In the plenty of good land, the English colonies of North America, +though no doubt very abundantly provided, are, however, inferior to +those of the Spaniards and Portuguese, and not superior to some of those +possessed by the French before the last war. But the political +institutions of the English colonies have been more favourable to the +improvement and cultivation of this land, than those of the other three +nations. + +_First_, The engrossing of uncultivated land, though it has by no means +been prevented altogether, has been more restrained in the English +colonies than in any other. The colony law, which imposes upon every +proprietor the obligation of improving and cultivating, within a limited +time, a certain proportion of his lands, and which, in case of failure, +declares those neglected lands grantable to any other person; though it +has not perhaps been very strictly executed, has, however, had some +effect. + +_Secondly_, In Pennsylvania there is no right of primogeniture, and +lands, like moveables, are divided equally among all the children of the +family. In three of the provinces of New England, the oldest has only a +double share, as in the Mosaical law. Though in those provinces, +therefore, too great a quantity of land should sometimes be engrossed by +a particular individual, it is likely, in the course of a generation or +two, to be sufficiently divided again. In the other English colonies, +indeed, the right of primogeniture takes place, as in the law of +England: But in all the English colonies, the tenure of the lands, which +are all held by free soccage, facilitates alienation; and the grantee of +an extensive tract of land generally finds it for his interest to +alienate, as fast as he can, the greater part of it, reserving only a +small quit-rent. In the Spanish and Portuguese colonies, what is called +the right of majorazzo takes place in the succession of all those great +estates to which any title of honour is annexed. Such estates go all to +one person, and are in effect entailed and unalienable. The French +colonies, indeed, are subject to the custom of Paris, which, in the +inheritance of land, is much more favourable to the younger children +than the law of England. But, in the French colonies, if any part of an +estate, held by the noble tenure of chivalry and homage, is alienated, +it is, for a limited time, subject to the right of redemption, either by +the heir of the superior, or by the heir of the family; and all the +largest estates of the country are held by such noble tenures, which +necessarily embarrass alienation. But, in a new colony, a great +uncultivated estate is likely to be much more speedily divided by +alienation than by succession. The plenty and cheapness of good land, it +has already been observed, are the principal causes of the rapid +prosperity of new colonies. The engrossing of land, in effect, destroys +this plenty and cheapness. The engrossing of uncultivated land, besides, +is the greatest obstruction to its improvement; but the labour that is +employed in the improvement and cultivation of land affords the greatest +and most valuable produce to the society. The produce of labour, in this +case, pays not only its own wages and the profit of the stock which +employs it, but the rent of the land too upon which it is employed. The +labour of the English colonies, therefore, being more employed in the +improvement and cultivation of land, is likely to afford a greater and +more valuable produce than that of any of the other three nations, +which, by the engrossing of land, is more or less diverted towards other +employments. + +_Thirdly_, The labour of the English colonists is not only likely to +afford a greater and more valuable produce, but, in consequence of the +moderation of their taxes, a greater proportion of this produce belongs +to themselves, which they may store up and employ in putting into motion +a still greater quantity of labour. The English colonists have never yet +contributed any thing towards the defence of the mother country, or +towards the support of its civil government. They themselves, on the +contrary, have hitherto been defended almost entirely at the expense of +the mother country; but the expense of fleets and armies is out of all +proportion greater than the necessary expense of civil government. The +expense of their own civil government has always been very moderate. It +has generally been confined to what was necessary for paying competent +salaries to the governor, to the judges, and to some other officers of +police, and for maintaining a few of the must useful public works. The +expense of the civil establishment of Massachusetts Bay, before the +commencement of the present disturbances, used to be but about L.18,000 +a-year; that of New Hampshire and Rhode Island, L.3500 each; that of +Connecticut, L.4000; that of New York and Pennsylvania, L.4500 each; +that of New Jersey, L.1200; that of Virginia and South Carolina, L.8000 +each. The civil establishments of Nova Scotia and Georgia are partly +supported by an annual grant of parliament; but Nova Scotia pays, +besides, about L.7000 a-year towards the public expenses of the colony, +and Georgia about L.2500 a-year. All the different civil establishments +in North America, in short, exclusive of those of Maryland and North +Carolina, of which no exact account has been got, did not, before the +commencement of the present disturbances, cost the inhabitants above +L.64,700 a-year; an ever memorable example, at how small an expense +three millions of people may not only be governed but well governed. The +must important part of the expense of government, indeed, that of +defence and protection, has constantly fallen upon the mother country. +The ceremonial, too, of the civil government in the colonies, upon the +reception of a new governor, upon the opening of a new assembly, &c. +though sufficiently decent, is not accompanied with any expensive pomp +or parade. Their ecclesiastical government is conducted upon a plan +equally frugal. Tithes are unknown among them; and their clergy, who are +far from being numerous, are maintained either by moderate stipends, or +by the voluntary contributions of the people. The power of Spain and +Portugal, on the contrary, derives some support from the taxes levied +upon their colonies. France, indeed, has never drawn any considerable +revenue from its colonies, the taxes which it levies upon them being +generally spent among them. But the colony government of all these three +nations is conducted upon a much more extensive plan, and is accompanied +with a much more expensive ceremonial. The sums spent upon the reception +of a new viceroy of Peru, for example, have frequently been enormous. +Such ceremonials are not only real taxes paid by the rich colonists upon +those particular occasions, but they serve to introduce among them the +habit of vanity and expense upon all other occasions. They are not only +very grievous occasional taxes, but they contribute to establish +perpetual taxes, of the same kind, still more grievous; the ruinous +taxes of private luxury and extravagance. In the colonies of all those +three nations, too, the ecclesiastical government is extremely +oppressive. Tithes take place in all of them, and are levied with the +utmost rigour in those of Spain and Portugal. All of them, besides, are +oppressed with numerous race of mendicant friars, whose beggary being +not only licensed but consecrated by religion, is a most grievous tax +upon the poor people, who are most carefully taught that it is a duty to +give, and a very great sin to refuse them their charity. Over and above +all this, the clergy are, in all of them, the greatest engrossers of +land. + +_Fourthly_, In the disposal of their surplus produce, or of what is over +and above their own consumption, the English colonies have been more +favoured, and have been allowed a more extensive market, than those of +any other European nation. Every European nation has endeavoured, more +or less, to monopolize to itself the commerce of its colonies, and, upon +that account, has prohibited the ships of foreign nations from trading +to them, and has prohibited them from importing European goods from any +foreign nation. But the manner in which this monopoly has been exercised +in different nations, has been very different. + +Some nations have given up the whole commerce of their colonies to an +exclusive company, of whom the colonists were obliged to buy all such +European goods as they wanted, and to whom they were obliged to sell the +whole of their surplus produce. It was the interest of the company, +therefore, not only to sell the former as dear, and to buy the latter as +cheap as possible, but to buy no more of the latter, even at this low +price, than what they could dispose of for a very high price in Europe. +It was their interest not only to degrade in all cases the value of the +surplus produce of the colony, but in many cases to discourage and keep +down the natural increase of its quantity. Of all the expedients that +can well be contrived to stunt the natural growth of a new colony, that +of an exclusive company is undoubtedly the most effectual. This, +however, has been the policy of Holland, though their company, in the +course of the present century, has given up in many respects the +exertion of their exclusive privilege. This, too, was the policy of +Denmark, till the reign of the late king. It has occasionally been the +policy of France; and of late, since 1755, after it had been abandoned +by all other nations on account of its absurdity, it has become the +policy of Portugal, with regard at least to two of the principal +provinces of Brazil, Pernambucco, and Marannon. + +Other nations, without establishing an exclusive company, have confined +the whole commerce of their colonies to a particular port of the mother +country, from whence no ship was allowed to sail, but either in a fleet +and at a particular season, or, if single, in consequence of a +particular license, which in most cases was very well paid for. This +policy opened, indeed, the trade of the colonies to all the natives of +the mother country, provided they traded from the proper port, at the +proper season, and in the proper vessels. But as all the different +merchants, who joined their stocks in order to fit out those licensed +vessels, would find it for their interest to act in concert, the trade +which was carried on in this manner would necessarily be conducted very +nearly upon the same principles as that of an exclusive company. The +profit of those merchants would be almost equally exorbitant and +oppressive. The colonies would be ill supplied, and would be obliged +both to buy very dear, and to sell very cheap. This, however, till +within these few years, had always been the policy of Spain; and the +price of all European goods, accordingly, is said to have been enormous +in the Spanish West Indies. At Quito, we are told by Ulloa, a pound of +iron sold for about 4s. 6d., and a pound of steel for about 6s. 9d. +sterling. But it is chiefly in order to purchase European goods that the +colonies part with their own produce. The more, therefore, they pay for +the one, the less they really get for the other, and the dearness of the +one is the same thing with the cheapness of the other. The policy of +Portugal is, in this respect, the same as the ancient policy of Spain, +with regard to all its colonies, except Pernambucco and Marannon; and +with regard to these it has lately adopted a still worse. + +Other nations leave the trade of their colonies free to all their +subjects, who may carry it on from all the different ports of the mother +country, and who have occasion for no other license than the common +despatches of the custom-house. In this case the number and dispersed +situation of the different traders renders it impossible for them to +enter into any general combination, and their competition is sufficient +to hinder them from making very exorbitant profits. Under so liberal a +policy, the colonies are enabled both to sell their own produce, and to +buy the goods of Europe at a reasonable price; but since the dissolution +of the Plymouth company, when our colonies were but in their infancy, +this has always been the policy of England. It has generally, too, been +that of France, and has been uniformly so since the dissolution of what +in England is commonly called their Mississippi company. The profits of +the trade, therefore, which France and England carry on with their +colonies, though no doubt somewhat higher than if the competition were +free to all other nations, are, however, by no means exorbitant; and the +price of European goods, accordingly, is not extravagantly high in the +greater part of the colonies of either of those nations. + +In the exportation of their own surplus produce, too, it is only with +regard to certain commodities that the colonies of Great Britain are +confined to the market of the mother country. These commodities having +been enumerated in the act of navigation, and in some other subsequent +acts, have upon that account been called _enumerated commodities_. The +rest are called _non-enumerated_, and may be exported directly to other +countries, provided it is in British or plantation ships, of which the +owners and three fourths of the mariners are British subjects. + +Among the non-enumerated commodities are some of the most important +productions of America and the West Indies, grain of all sorts, lumber, +salt provisions, fish, sugar, and rum. + +Grain is naturally the first and principal object of the culture of all +new colonies. By allowing them a very extensive market for it, the law +encourages them to extend this culture much beyond the consumption of a +thinly inhabited country, and thus to provide beforehand an ample +subsistence for a continually increasing population. + +In a country quite covered with wood, where timber consequently is of +little or no value, the expense of clearing the ground is the principal +obstacle to improvement. By allowing the colonies a very extensive +market for their lumber, the law endeavours to facilitate improvement by +raising the price of a commodity which would otherwise be of little +value, and thereby enabling them to make some profit of what would +otherwise be mere expense. + +In a country neither half peopled nor half cultivated, cattle naturally +multiply beyond the consumption of the inhabitants, and are often, upon +that account, of little or no value. But it is necessary, it has already +been shown, that the price of cattle should bear a certain proportion to +that of corn, before the greater part of the lands of any country can be +improved. By allowing to American cattle, in all shapes, dead and alive, +a very extensive market, the law endeavours to raise the value of a +commodity, of which the high price is so very essential to improvement. +The good effects of this liberty, however, must be somewhat diminished +by the 4th of Geo. III. c. 15, which puts hides and skins among the +enumerated commodities and thereby tends to reduce the value of American +cattle. + +To increase the shipping and naval power of Great Britain by the +extension of the fisheries of our colonies, is an object which the +legislature seems to have had almost constantly in view. Those +fisheries, upon this account, have had all the encouragement which +freedom can give them, and they have flourished accordingly. The New +England fishery, in particular, was, before the late disturbances, one +of the most important, perhaps, in the world. The whale fishery which, +notwithstanding an extravagant bounty, is in Great Britain carried on to +so little purpose, that in the opinion of many people (which I do not, +however, pretend to warrant), the whole produce does not much exceed the +value of the bounties which are annually paid for it, is in New England +carried on, without any bounty, to a very great extent. Fish is one of +the principal articles with which the North Americans trade to Spain, +Portugal, and the Mediterranean. + +Sugar was originally an enumerated commodity, which could only be +exported to Great Britain; but in 1731, upon a representation of the +sugar-planters, its exportation was permitted to all parts of the world. +The restrictions, however, with which this liberty was granted, joined +to the high price of sugar in Great Britain, have rendered it in a great +measure ineffectual. Great Britain and her colonies still continue to be +almost the sole market for all sugar produced in the British +plantations. Their consumption increases so fast, that, though in +consequence of the increasing improvement of Jamaica, as well as of the +ceded islands, the importation of sugar has increased very greatly +within these twenty years, the exportation to foreign countries is said +to be not much greater than before. + +Rum is a very important article in the trade which the Americans carry +on to the coast of Africa, from which they bring back negro slaves in +return. + +If the whole surplus produce of America, in grain of all sorts, in salt +provisions, and in fish, had been put into the enumeration, and thereby +forced into the market of Great Britain, it would have interfered too +much with the produce of the industry of our own people. It was probably +not so much from any regard to the interest of America, as from a +jealousy of this interference, that those important commodities have not +only been kept out of the enumeration, but that the importation into +Great Britain of all grain, except rice, and of all salt provisions, +has, in the ordinary state of the law, been prohibited. + +The non-enumerated commodities could originally be exported to all parts +of the world. Lumber and rice having been once put into the enumeration, +when they were afterwards taken out of it, were confined, as to the +European market, to the countries that lie south of Cape Finisterre. By +the 6th of George III. c. 52, all non-enumerated commodities were +subjected to the like restriction. The parts of Europe which lie south +of Cape Finisterre are not manufacturing countries, and we are less +jealous of the colony ships carrying home from them any manufactures +which could interfere with our own. + +The enumerated commodities are of two sorts; first, such as are either +the peculiar produce of America, or as cannot be produced, or at least +are not produced in the mother country. Of this kind are molasses, +coffee, cocoa-nuts, tobacco, pimento, ginger, whale-fins, raw silk, +cotton, wool, beaver, and other peltry of America, indigo, fustick, and +other dyeing woods; secondly, such as are not the peculiar produce of +America, but which are, and may be produced in the mother country, +though not in such quantities as to supply the greater part of her +demand, which is principally supplied from foreign countries. Of this +kind are all naval stores, masts, yards, and bowsprits, tar, pitch, and +turpentine, pig and bar iron, copper ore, hides and skins, pot and pearl +ashes. The largest importation of commodities of the first kind could +not discourage the growth, or interfere with the sale, of any part of +the produce of the mother country. By confining them to the home market, +our merchants, it was expected, would not only be enabled to buy them +cheaper in the plantations, and consequently to sell them with a better +profit at home, but to establish between the plantations and foreign +countries an advantageous carrying trade, of which Great Britain was +necessarily to be the centre or emporium, as the European country into +which those commodities were first to be imported. The importation of +commodities of the second kind might be so managed too, it was supposed, +as to interfere, not with the sale of those of the same kind which were +produced at home, but with that of those which were imported from +foreign countries; because, by means of proper duties, they might be +rendered always somewhat dearer than the former, and yet a good deal +cheaper than the latter. By confining such commodities to the home +market, therefore, it was proposed to discourage the produce, not of +Great Britain, but of some foreign countries with which the balance of +trade was believed to be unfavourable to Great Britain. + +The prohibition of exporting from the colonies to any other country but +Great Britain, masts, yards, and bowsprits, tar, pitch, and turpentine, +naturally tended to lower the price of timber in the colonies, and +consequently to increase the expense of clearing their lands, the +principal obstacle to their improvement. But about the beginning of the +present century, in 1703, the pitch and tar company of Sweden +endeavoured to raise the price of their commodities to Great Britain, by +prohibiting their exportation, except in their own ships, at their own +price, and in such quantities as they thought proper. In order to +counteract this notable piece of mercantile policy, and to render +herself as much as possible independent, not only of Sweden, but of all +the other northern powers, Great Britain gave a bounty upon the +importation of naval stores from America; and the effect of this bounty +was to raise the price of timber in America much more than the +confinement to the home market could lower it; and as both regulations +were enacted at the same time, their joint effect was rather to +encourage than to discourage the clearing of land in America. + +Though pig and bar iron, too, have been put among the enumerated +commodities, yet as, when imported from America, they are exempted from +considerable duties to which they are subject when imported from any +other country, the one part of the regulation contributes more to +encourage the erection of furnaces in America than the other to +discourage it. There is no manufacture which occasions so great a +consumption of wood as a furnace, or which can contribute so much to the +clearing of a country overgrown with it. + +The tendency of some of these regulations to raise the value of timber +in America, and thereby to facilitate the clearing of the land, was +neither, perhaps, intended nor understood by the legislature. Though +their beneficial effects, however, have been in this respect accidental, +they have not upon that account been less real. + +The most perfect freedom of trade is permitted between the British +colonies of America and the West Indies, both in the enumerated and in +the non-enumerated commodities. Those colonies are now become so +populous and thriving, that each of them finds in some of the others a +great and extensive market for every part of its produce. All of them +taken together, they make a great internal market for the produce of one +another. + +The liberality of England, however, towards the trade of her colonies, +has been confined chiefly to what concerns the market for their produce, +either in its rude state, or in what may be called the very first stage +of manufacture. The more advanced or more refined manufactures, even of +the colony produce, the merchants and manufacturers of Great Britain +chuse to reserve to themselves, and have prevailed upon the legislature +to prevent their establishment in the colonies, sometimes by high +duties, and sometimes by absolute prohibitions. + +While, for example, Muscovado sugars from the British plantations pay, +upon importation, only 6s. 4d. the hundred weight, white sugars pay +L.1 : 1 : 1; and refined, either double or single, in loaves, +L.4 : 2 : 5-8/20ths. When those high duties were imposed, Great Britain +was the sole, and she still continues to be, the principal market, to +which the sugars of the British colonies could be exported. They +amounted, therefore, to a prohibition, at first of claying or refining +sugar for any foreign market, and at present of claying or refining it +for the market which takes off, perhaps, more than nine-tenths of the +whole produce. The manufacture of claying or refining sugar, +accordingly, though it has flourished in all the sugar colonies of +France, has been little cultivated in any of those of England, except +for the market of the colonies themselves. While Grenada was in the +hands of the French, there was a refinery of sugar, by claying, at least +upon almost every plantation. Since it fell into those of the English, +almost all works of this kind have been given up; and there are at +present (October 1773), I am assured, not above two or three remaining +in the island. At present, however, by an indulgence of the +custom-house, clayed or refined sugar, if reduced from loaves into +powder, is commonly imported as Muscovado. + +While Great Britain encourages in America the manufacturing of pig and +bar iron, by exempting them from duties to which the like commodities +are subject when imported from any other country, she imposes an +absolute prohibition upon the erection of steel furnaces and slit-mills +in any of her American plantations. She will not suffer her colonies to +work in those more refined manufactures, even for their own consumption; +but insists upon their purchasing of her merchants and manufacturers all +goods of this kind which they have occasion for. + +She prohibits the exportation from one province to another by water, and +even the carriage by land upon horseback, or in a cart, of hats, of +wools, and woollen goods, of the produce of America; a regulation which +effectually prevents the establishment of any manufacture of such +commodities for distant sale, and confines the industry of her colonists +in this way to such coarse and household manufactures as a private +family commonly makes for its own use, or for that of some of its +neighbours in the same province. + +To prohibit a great people, however, from making all that they can of +every part of their own produce, or from employing their stock and +industry in the way that they judge most advantageous to themselves, is +a manifest violation of the most sacred rights of mankind. Unjust, +however, as such prohibitions may be, they have not hitherto been very +hurtful to the colonies. Land is still so cheap, and, consequently, +labour so dear among them, that they can import from the mother country +almost all the more refined or more advanced manufactures cheaper than +they could make them for themselves. Though they had not, therefore, +been prohibited from establishing such manufactures, yet, in their +present state of improvement, a regard to their own interest would +probably have prevented them from doing so. In their present state of +improvement, those prohibitions, perhaps, without cramping their +industry, or restraining it from any employment to which it would have +gone of its own accord, are only impertinent badges of slavery imposed +upon them, without any sufficient reason, by the groundless jealousy of +the merchants and manufacturers of the mother country. In a more +advanced state, they might be really oppressive and insupportable. + +Great Britain, too, as she confines to her own market some of the most +important productions of the colonies, so, in compensation, she gives to +some of them an advantage in that market, sometimes by imposing higher +duties upon the like productions when imported from other countries, and +sometimes by giving bounties upon their importation from the colonies. +In the first way, she gives an advantage in the home market to the +sugar, tobacco, and iron of her own colonies; and, in the second, to +their raw silk, to their hemp and flax, to their indigo, to their naval +stores, and to their building timber. This second way of encouraging the +colony produce, by bounties upon importation, is, so far as I have been +able to learn, peculiar to Great Britain: the first is not. Portugal +does not content herself with imposing higher duties upon the +importation of tobacco from any other country, but prohibits it under +the severest penalties. + +With regard to the importation of goods from Europe, England has +likewise dealt more liberally with her colonies than any other nation. + +Great Britain allows a part, almost always the half, generally a larger +portion, and sometimes the whole, of the duty which is paid upon the +importation of foreign goods, to be drawn back upon their exportation to +any foreign country. No independent foreign country, it was easy to +foresee, would receive them, if they came to it loaded with the heavy +duties to which almost all foreign goods are subjected on their +importation into Great Britain. Unless, therefore, some part of those +duties was drawn back upon exportation, there was an end of the carrying +trade; a trade so much favoured by the mercantile system. + +Our colonies, however, are by no means independent foreign countries; +and Great Britain having assumed to herself the exclusive right of +supplying them with all goods from Europe, might have forced them (in +the same manner as other countries have done their colonies) to receive +such goods loaded with all the same duties which they paid in the mother +country. But, on the contrary, till 1763, the same drawbacks were paid +upon the exportation of the greater part of foreign goods to our +colonies, as to any independent foreign country. In 1763, indeed, by the +4th of Geo. III. c. 15, this indulgence was a good deal abated, and it +was enacted, "That no part of the duty called the old subsidy should be +drawn back for any goods of the growth, production, or manufacture of +Europe or the East Indies, which should be exported from this kingdom to +any British colony or plantation in America; wines, white calicoes, and +muslins, excepted." Before this law, many different sorts of foreign +goods might have been bought cheaper in the plantations than in the +mother country, and some may still. + +Of the greater part of the regulations concerning the colony trade, the +merchants who carry it on, it must be observed, have been the principal +advisers. We must not wonder, therefore, if, in a great part of them, +their interest has been more considered than either that of the colonies +or that of the mother country. In their exclusive privilege of supplying +the colonies with all the goods which they wanted from Europe, and of +purchasing all such parts of their surplus produce as could not +interfere with any of the trades which they themselves carried on at +home, the interest of the colonies was sacrificed to the interest of +those merchants. In allowing the same drawbacks upon the re-exportation +of the greater part of European and East India goods to the colonies, as +upon their re-exportation to any independent country, the interest of +the mother country was sacrificed to it, even according to the +mercantile ideas of that interest. It was for the interest of the +merchants to pay as little as possible for the foreign goods which they +sent to the colonies, and, consequently, to get back as much as possible +of the duties which they advanced upon their importation into Great +Britain. They might thereby be enabled to sell in the colonies, either +the some quantity of goods with a greater profit, or a greater quantity +with the same profit, and, consequently, to gain something either in the +one way or the other. It was likewise for the interest of the colonies +to get all such goods as cheap, and in as great abundance as possible. +But this might not always be for the interest of the mother country. She +might frequently suffer, both in her revenue, by giving back a great +part of the duties which had been paid upon the importation of such +goods; and in her manufactures, by being undersold in the colony market +in consequence of the easy terms upon which foreign manufactures could +be carried thither by means of those drawbacks. The progress of the +linen manufacture of Great Britain, it is commonly said, has been a good +deal retarded by the drawbacks upon the re-exportation of German linen +to the American colonies. + +But though the policy of Great Britain, with regard to the trade of her +colonies, has been dictated by the same mercantile spirit as that of +other nations, it has, however, upon the whole, been less illiberal and +oppressive than that of any of them. + +In every thing except their foreign trade, the liberty of the English +colonists to manage their own affairs their own way, is complete. It is +in every respect equal to that of their fellow-citizens at home, and is +secured in the same manner, by an assembly of the representatives of the +people, who claim the sole right of imposing taxes for the support of +the colony government. The authority of this assembly overawes the +executive power; and neither the meanest nor the most obnoxious +colonist, as long as he obeys the law, has any thing to fear from the +resentment, either of the governor, or of any other civil or military +officer in the province. The colony assemblies, though, like the house +of commons in England, they are not always a very equal representation +of the people, yet they approach more nearly to that character; and as +the executive power either has not the means to corrupt them, or, on +account of the support which it receives from the mother country, is not +under the necessity of doing so, they are, perhaps, in general more +influenced by the inclinations of their constituents. The councils, +which, in the colony legislatures, correspond to the house of lords in +Great Britain, are not composed of a hereditary nobility. In some of the +colonies, as in three of the governments of New England, those councils +are not appointed by the king, but chosen by the representatives of the +people. In none of the English colonies is there any hereditary +nobility. In all of them, indeed, as in all other free countries, the +descendant of an old colony family is more respected than an upstart of +equal merit and fortune; but he is only more respected, and he has no +privileges by which he can be troublesome to his neighbours. Before the +commencement of the present disturbances, the colony assemblies had not +only the legislative, but a part of the executive power. In Connecticut +and Rhode Island, they elected the governor. In the other colonies, they +appointed the revenue officers, who collected the taxes imposed by those +respective assemblies, to whom those officers were immediately +responsible. There is more equality, therefore, among the English +colonists than among the inhabitants of the mother country. Their +manners are more republican; and their governments, those of three of +the provinces of New England in particular, have hitherto been more +republican too. + +The absolute governments of Spain, Portugal, and France, on the +contrary, take place in their colonies; and the discretionary powers +which such governments commonly delegate to all their inferior officers +are, on account of the great distance, naturally exercised there with +more than ordinary violence. Under all absolute governments, there is +more liberty in the capital than in any other part of the country. The +sovereign himself can never have either interest or inclination to +pervert the order of justice, or to oppress the great body of the +people. In the capital, his presence overawes, more or less, all his +inferior officers, who, in the remoter provinces, from whence the +complaints of the people are less likely to reach him, can exercise +their tyranny with much more safety. But the European colonies in +America are more remote than the most distant provinces of the greatest +empires which had ever been known before. The government of the English +colonies is, perhaps, the only one which, since the world began, could +give perfect security to the inhabitants of so very distant a province. +The administration of the French colonies, however, has always been +conducted with much more gentleness and moderation than that of the +Spanish and Portuguese. This superiority of conduct is suitable both to +the character of the French nation, and to what forms the character of +every nation, the nature of their government, which, though arbitrary +and violent in comparison with that of Great Britain, is legal and free +in comparison with those of Spain and Portugal. + +It is in the progress of the North American colonies, however, that the +superiority of the English policy chiefly appears. The progress of the +sugar colonies of France has been at least equal, perhaps superior, to +that of the greater part of those of England; and yet the sugar colonies +of England enjoy a free government, nearly of the same kind with that +which takes place in her colonies of North America. But the sugar +colonies of France are not discouraged, like those of England, from +refining their own sugar; and what is still of greater importance, the +genius of their government naturally introduces a better management of +their negro slaves. + +In all European colonies, the culture of the sugar-cane is carried on by +negro slaves. The constitution of those who have been born in the +temperate climate of Europe could not, it is supposed, support the +labour of digging the ground under the burning sun of the West Indies; +and the culture of the sugar-cane, as it is managed at present, is all +hand labour; though, in the opinion of many, the drill plough might be +introduced into it with great advantage. But, as the profit and success +of the cultivation which is carried on by means of cattle, depend very +much upon the good management of those cattle; so the profit and success +of that which is carried on by slaves must depend equally upon the good +management of those slaves; and in the good management of their slaves +the French planters, I think it is generally allowed, are superior to +the English. The law, so far as it gives some weak protection to the +slave against the violence of his master, is likely to be better +executed in a colony where the government is in a great measure +arbitrary, than in one where it is altogether free. In every country +where the unfortunate law of slavery is established, the magistrate, +when he protects the slave, intermeddles in some measure in the +management of the private property of the master; and, in a free +country, where the master is, perhaps, either a member of the colony +assembly, or an elector of such a member, he dares not do this but with +the greatest caution and circumspection. The respect which he is obliged +to pay to the master, renders it more difficult for him to protect the +slave. But in a country where the government is in a great measure +arbitrary, where it is usual for the magistrate to intermeddle even in +the management of the private property of individuals, and to send them, +perhaps, a lettre de cachet, if they do not manage it according to his +liking, it is much easier for him to give some protection to the slave; +and common humanity naturally disposes him to do so. The protection of +the magistrate renders the slave less contemptible in the eyes of his +master, who is thereby induced to consider him with more regard, and to +treat him with more gentleness. Gentle usage renders the slave not only +more faithful, but more intelligent, and, therefore, upon a double +account, more useful. He approaches more to the condition of a free +servant, and may possess some degree of integrity and attachment to his +master's interest; virtues which frequently belong to free servants, but +which never can belong to a slave, who is treated as slaves commonly are +in countries where the master is perfectly free and secure. + +That the condition of a slave is better under an arbitrary than under a +free government, is, I believe, supported by the history of all ages and +nations. In the Roman history, the first time we read of the magistrate +interposing to protect the slave from the violence of his master, is +under the emperors. When Vidius Pollio, in the presence of Augustus, +ordered one of his slaves, who had committed a slight fault, to be cut +into pieces and thrown into his fish-pond, in order to feed his fishes, +the emperor commanded him, with indignation, to emancipate immediately, +not only that slave, but all the others that belonged to him. Under the +republic no magistrate could have had authority enough to protect the +slave, much less to punish the master. + +The stock, it is to be observed, which has improved the sugar colonies +of France, particularly the great colony of St Domingo, has been raised +almost entirely from the gradual improvement and cultivation of those +colonies. It has been almost altogether the produce of the soil and of +the industry of the colonists, or, what comes to the same thing, the +price of that produce, gradually accumulated by good management, and +employed in raising a still greater produce. But the stock which has +improved and cultivated the sugar colonies of England, has, a great part +of it, been sent out from England, and has by no means been altogether +the produce of the soil and industry of the colonists. The prosperity of +the English sugar colonies has been in a great measure owing to the +great riches of England, of which a part has overflowed, if one may say +so, upon these colonies. But the prosperity of the sugar colonies of +France has been entirely owing to the good conduct of the colonists, +which must therefore have had some superiority over that of the English; +and this superiority has been remarked in nothing so much as in the good +management of their slaves. + +Such have been the general outlines of the policy of the different +European nations with regard to their colonies. + +The policy of Europe, therefore, has very little to boast of, either in +the original establishment, or, so far as concerns their internal +government, in the subsequent prosperity of the colonies of America. + +Folly and injustice seem to have been the principles which presided over +and directed the first project of establishing those colonies; the folly +of hunting after gold and silver mines, and the injustice of coveting +the possession of a country whose harmless natives, far from having ever +injured the people of Europe, had received the first adventurers with +every mark of kindness and hospitality. + +The adventurers, indeed, who formed some of the latter establishments, +joined to the chimerical project of finding gold and silver mines, other +motives more reasonable and more laudable; but even these motives do +very little honour to the policy of Europe. + +The English puritans, restrained at home, fled for freedom to America, +and established there the four governments of New England. The English +catholics, treated with much greater injustice, established that of +Maryland; the quakers, that of Pennsylvania. The Portuguese Jews, +persecuted by the inquisition, stript of their fortunes, and banished to +Brazil, introduced, by their example, some sort of order and industry +among the transported felons and strumpets by whom that colony was +originally peopled, and taught them the culture of the sugar-cane. Upon +all these different occasions, it was not the wisdom and policy, but the +disorder and injustice of the European governments, which peopled and +cultivated America. + +In effectuating some of the most important of these establishments, the +different governments of Europe had as little merit as in projecting +them. The conquest of Mexico was the project, not of the council of +Spain, but of a governor of Cuba; and it was effectuated by the spirit +of the bold adventurer to whom it was entrusted, in spite of every thing +which that governor, who soon repented of having trusted such a person, +could do to thwart it. The conquerors of Chili and Peru, and of almost +all the other Spanish settlements upon the continent of America, carried +out with them no other public encouragement, but a general permission to +make settlements and conquests in the name of the king of Spain. Those +adventures were all at the private risk and expense of the adventurers. +The government of Spain contributed scarce any thing to any of them. +That of England contributed as little towards effectuating the +establishment of some of its most important colonies in North America. + +When those establishments were effectuated, and had become so +considerable as to attract the attention of the mother country, the +first regulations which she made with regard to them, had always in view +to secure to herself the monopoly of their commerce; to confine their +market, and to enlarge her own at their expense, and, consequently, +rather to damp and discourage, than to quicken and forward the course of +their prosperity. In the different ways in which this monopoly has been +exercised, consists one of the most essential differences in the policy +of the different European nations with regard to their colonies. The +best of them all, that of England, is only somewhat less illiberal and +oppressive than that of any of the rest. + +In what way, therefore, has the policy of Europe contributed either to +the first establishment, or to the present grandeur of the colonies of +America? In one way, and in one way only, it has contributed a good +deal. _Magna virûm mater!_ It bred and formed the men who were capable +of achieving such great actions, and of laying the foundation of so +great an empire; and there is no other quarter of the world, of which +the policy is capable of forming, or has ever actually, and in fact, +formed such men. The colonies owe to the policy of Europe the education +and great views of their active and enterprising founders; and some of +the greatest and most important of them, so far as concerns their +internal government, owe to it scarce any thing else. + + +PART III. + +_Of the Advantages which Europe has derived from the Discovery of +America, and from that of a Passage to the East Indies by the Cape of +Good Hope._ + +Such are the advantages which the colonies of America have derived from +the policy of Europe. + +What are these which Europe has derived from the discovery and +colonization of America? + +Those advantages may be divided, first, into the general advantages +which Europe, considered as one great country, has derived from those +great events; and, secondly, into the particular advantages which each +colonizing country has derived from the colonies which particularly +belong to it, in consequence of the authority or dominion which it +exercises over them. + +The general advantages which Europe, considered as one great country, +has derived from the discovery and colonization of America, consist, +first, in the increase of its enjoyments; and, secondly, in the +augmentation of its industry. + +The surplus produce of America imported into Europe, furnishes the +inhabitants of this great continent with a variety of commodities which +they could not otherwise have possessed; some for conveniency and use, +some for pleasure, and some for ornament; and thereby contributes to +increase their enjoyments. + +The discovery and colonization of America, it will readily be allowed, +have contributed to augment the industry, first, of all the countries +which trade to it directly, such as Spain, Portugal, France, and +England; and, secondly, of all those which, without trading to it +directly, send, through the medium of other countries, goods to it of +their own produce, such as Austrian Flanders, and some provinces of +Germany, which, through the medium of the countries before mentioned, +send to it a considerable quantity of linen and other goods. All such +countries have evidently gained a more extensive market for their +surplus produce, and must consequently have been encouraged to increase +its quantity. + +But that those great events should likewise have contributed to +encourage the industry of countries such as Hungary and Poland, which +may never, perhaps, have sent a single commodity of their own produce to +America, is not, perhaps, altogether so evident. That those events have +done so, however, cannot be doubted. Some part of the produce of America +is consumed in Hungary and Poland, and there in some demand there for +the sugar, chocolate, and tobacco, of that new quarter of the world. But +those commodities must be purchased with something which is either the +produce of the industry of Hungary and Poland, or with something which +had been purchased with some part of that produce. Those commodities of +America are new values, new equivalents, introduced into Hungary and +Poland, to be exchanged there for the surplus produce of these +countries. By being carried thither, they create a new and more +extensive market for that surplus produce. They raise its value, and +thereby contribute to encourage its increase. Though no part of it may +ever be carried to America, it may be carried to other countries, which +purchase it with a part of their share of the surplus produce of +America, and it may find a market by means of the circulation of that +trade which was originally put into motion by the surplus produce of +America. + +Those great events may even have contributed to increase the enjoyments, +and to augment the industry, of countries which not only never sent any +commodities to America, but never received any from it. Even such +countries may have received a greater abundance of other commodities +from countries, of which the surplus produce had been augmented by means +of the American trade. This greater abundance, as it must necessarily +have increased their enjoyments, so it must likewise have augmented +their industry. A greater number of new equivalents, of some kind or +other, must have been presented to them to be exchanged for the surplus +produce of that industry. A more extensive market must have been created +for that surplus produce, so as to raise its value, and thereby +encourage its increase. The mass of commodities annually thrown into the +great circle of European commerce, and by its various revolutions +annually distributed among all the different nations comprehended within +it, must have been augmented by the whole surplus produce of America. A +greater share of this greater mass, therefore, is likely to have fallen +to each of those nations, to have increased their enjoyments, and +augmented their industry. + +The exclusive trade of the mother countries tends to diminish, or at +least to keep down below what they would otherwise rise to, both the +enjoyments and industry of all those nations in general, and of the +American colonies in particular. It is a dead weight upon the action of +one of the great springs which puts into motion a great part of the +business of mankind. By rendering the colony produce dearer in all other +countries, it lessens its consumption, and thereby cramps the industry +of the colonies, and both the enjoyments and the industry or all other +countries, which both enjoy less when they pay more for what they enjoy, +and produce less when they get less for what they produce. By rendering +the produce of all other countries dearer in the colonies, it cramps in +the same manner the industry of all other colonies, and both the +enjoyments and the industry of the colonies. It is a clog which, for the +supposed benefit of some particular countries, embarrasses the pleasures +and encumbers the industry of all other countries, but of the colonies +more than of any other. It not only excludes as much as possible all +other countries from one particular market, but it confines as much as +possible the colonies to one particular market; and the difference is +very great between being excluded from one particular market when all +others are open, and being confined to one particular market when all +others are shut up. The surplus produce of the colonies, however, is the +original source of all that increase of enjoyments and industry which +Europe derives from the discovery and colonization of America, and the +exclusive trade of the mother countries tends to render this source much +less abundant than it otherwise would be. + +The particular advantages which each colonizing country derives from the +colonies which particularly belong to it, are of two different kinds; +first, those common advantages which every empire derives from the +provinces subject to its dominion; and, secondly, those peculiar +advantages which are supposed to result from provinces of so very +peculiar a nature as the European colonies of America. + +The common advantages which every empire derives from the provinces +subject to its dominion consist, first, in the military force which they +furnish for its defence; and, secondly, in the revenue which they +furnish for the support of its civil government. The Roman colonies +furnished occasionally both the one and the other. The Greek colonies +sometimes furnished a military force, but seldom any revenue. They +seldom acknowledged themselves subject to the dominion of the mother +city. They were generally her allies in war, but very seldom her +subjects in peace. + +The European colonies of America have never yet furnished any military +force for the defence of the mother country. The military force has +never yet been sufficient for their own defence; and in the different +wars in which the mother countries have been engaged, the defence of +their colonies has generally occasioned a very considerable distraction +of the military force of those countries. In this respect, therefore, +all the European colonies have, without exception, been a cause rather +of weakness than of strength to their respective mother countries. + +The colonies of Spain and Portugal only have contributed any revenue +towards the defence of the mother country, or the support of her civil +government. The taxes which have been levied upon those of other +European nations, upon those of England in particular, have seldom been +equal to the expense laid out upon them in time of peace, and never +sufficient to defray that which they occasioned in time of war. Such +colonies, therefore, have been a source of expense, and not of revenue, +to their respective mother countries. + +The advantages of such colonies to their respective mother countries, +consist altogether in those peculiar advantages which are supposed to +result from provinces of so very peculiar a nature as the European +colonies of America; and the exclusive trade, it is acknowledged, is the +sole source of all those peculiar advantages. + +In consequence of this exclusive trade, all that part of the surplus +produce of the English colonies, for example, which consists in what are +called enumerated commodities, can be sent to no other country but +England. Other countries must afterwards buy it of her. It must be +cheaper, therefore, in England than it can be in any other country, and +must contribute more to increase the enjoyments of England than those of +any other country. It must likewise contribute more to encourage her +industry. For all those parts of her own surplus produce which England +exchanges for those enumerated commodities, she must get a better price +than any other countries can get for the like parts of theirs, when they +exchange them for the same commodities. The manufactures of England, for +example, will purchase a greater quantity of the sugar and tobacco of +her own colonies than the like manufactures of other countries can +purchase of that sugar and tobacco. So far, therefore, as the +manufactures of England and those of other countries are both to be +exchanged for the sugar and tobacco of the English colonies, this +superiority of price gives an encouragement to the former beyond what +the latter can, in these circumstances, enjoy. The exclusive trade of +the colonies, therefore, as it diminishes, or at least keeps down below +what they would otherwise rise to, both the enjoyments and the industry +of the countries which do not possess it, so it gives an evident +advantage to the countries which do possess it over those other +countries. + +This advantage, however, will, perhaps, be found to be rather what may +be called a relative than an absolute advantage, and to give a +superiority to the country which enjoys it, rather by depressing the +industry and produce of other countries, than by raising those of that +particular country above what they would naturally rise to in the case +of a free trade. + +The tobacco of Maryland and Virginia, for example, by means of the +monopoly which England enjoys of it, certainly comes cheaper to England +than it can do to France, to whom England commonly sells a considerable +part of it. But had France and all other European countries been at all +times allowed a free trade to Maryland and Virginia, the tobacco of +those colonies might by this time have come cheaper than it actually +does, not only to all those other countries, but likewise to England. +The produce of tobacco, in consequence of a market so much more +extensive than any which it has hitherto enjoyed, might, and probably +would, by this time have been so much increased as to reduce the profits +of a tobacco plantation to their natural level with those of a corn +plantation, which it is supposed they are still somewhat above. The +price of tobacco might, and probably would, by this time have fallen +somewhat lower than it is at present. An equal quantity of the +commodities, either of England or of those other countries, might have +purchased in Maryland and Virginia a greater quantity of tobacco than it +can do at present, and consequently have been sold there for so much a +better price. So far as that weed, therefore, can, by its cheapness and +abundance, increase the enjoyments, or augment the industry, either of +England or of any other country, it would probably, in the case of a +free trade, have produced both these effects in somewhat a greater +degree than it can do at present. England, indeed, would not, in this +case, have had any advantage over other countries. She might have bought +the tobacco of her colonies somewhat cheaper, and consequently have sold +some of her own commodities somewhat dearer, than she actually does; but +she could neither have bought the one cheaper, nor sold the other +dearer, than any other country might have done. She might, perhaps, have +gained an absolute, but she would certainly have lost a relative +advantage. + +In order, however, to obtain this relative advantage in the colony +trade, in order to execute the invidious and malignant project of +excluding, as much as possible, other nations from any share in it, +England, there are very probable reasons for believing, has not only +sacrificed a part of the absolute advantage which she, as well as every +other nation, might have derived from that trade, but has subjected +herself both to an absolute and to a relative disadvantage in almost +every other branch of trade. + +When, by the act of navigation, England assumed to herself the monopoly +of the colony trade, the foreign capitals which had before been employed +in it, were necessarily withdrawn from it. The English capital, which +had before carried on but a part of it, was now to carry on the whole. +The capital which had before supplied the colonies with but a part of +the goods which they wanted from Europe, was now all that was employed +to supply them with the whole. But it could not supply them with the +whole; and the goods with which it did supply them were necessarily sold +very dear. The capital which had before bought but a part of the surplus +produce of the colonies, was now all that was employed to buy the whole. +But it could not buy the whole at anything near the old price; and +therefore, whatever it did buy, it necessarily bought very cheap. But in +an employment of capital, in which the merchant sold very dear, and +bought very cheap, the profit must have been very great, and much above +the ordinary level of profit in other branches of trade. This +superiority of profit in the colony trade could not fail to draw from +other branches of trade a part of the capital which had before been +employed in them. But this revulsion of capital, as it must have +gradually increased the competition of capitals in the colony trade, so +it must have gradually diminished that competition in all those other +branches of trade; as it must have gradually lowered the profits of the +one, so it must have gradually raised those of the other, till the +profits of all came to a new level, different from, and somewhat higher, +than that at which they had been before. + +This double effect of drawing capital from all other trades, and of +raising the rate of profit somewhat higher than it otherwise would have +been in all trades, was not only produced by this monopoly upon its +first establishment, but has continued to be produced by it ever since. + +_First_, This monopoly has been continually drawing capital from all +other trades, to be employed in that of the colonies. + +Though the wealth of Great Britain has increased very much since the +establishment of the act of navigation, it certainly has not increased +in the same proportion as that of the colonies. But the foreign trade of +every country naturally increases in proportion to its wealth, its +surplus produce in proportion to its whole produce; and Great Britain +having engrossed to herself almost the whole of what may be called the +foreign trade of the colonies, and her capital not having increased in +the same proportion as the extent of that trade, she could not carry it +on without continually withdrawing from other branches of trade some +part of the capital which had before been employed in them, as well as +withholding from them a great deal more which would otherwise have gone +to them. Since the establishment of the act of navigation, accordingly, +the colony trade has been continually increasing, while many other +branches of foreign trade, particularly of that to other parts of +Europe, have been continually decaying. Our manufactures for foreign +sale, instead of being suited, as before the act of navigation, to the +neighbouring market of Europe, or to the more distant one of the +countries which lie round the Mediterranean sea, have, the greater part +of them, been accommodated to the still more distant one of the +colonies; to the market in which they have the monopoly, rather than to +that in which they have many competitors. The causes of decay in other +branches of foreign trade, which, by Sir Matthew Decker and other +writers, have been sought for in the excess and improper made of +taxation, in the high price of labour, in the increase of luxury, &c. +may all be found in the overgrowth of the colony trade. The mercantile +capital of Great Britain, though very great, yet not being infinite, and +though greatly increased since the act of navigation, yet not being +increased in the same proportion as the colony trade, that trade could +not possibly be carried on without withdrawing some part of that capital +from other branches of trade, nor consequently without some decay of +those other branches. + +England, it must be observed, was a great trading country, her +mercantile capital was very great, and likely to become still greater +and greater every day, not only before the act of navigation had +established the monopoly of the corn trade, but before that trade was +very considerable. In the Dutch war, during the government of Cromwell, +her navy was superior to that of Holland; and in that which broke out in +the beginning of the reign of Charles II., it was at least equal, +perhaps superior to the united navies of France and Holland. Its +superiority, perhaps, would scarce appear greater in the present times, +at least if the Dutch navy were to bear the same proportion to the Dutch +commerce now which it did then. But this great naval power could not, in +either of those wars, be owing to the act of navigation. During the +first of them, the plan of that act had been but just formed; and +though, before the breaking out of the second, it had been fully enacted +by legal authority, yet no part of it could have had time to produce any +considerable effect, and least of all that part which established the +exclusive trade to the colonies. Both the colonies and their trade were +inconsiderable then, in comparison of what they are now. The island of +Jamaica was an unwholesome desert, little inhabited, and less +cultivated. New York and New Jersey were in the possession of the Dutch, +the half of St. Christopher's in that of the French. The island of +Antigua, the two Carolinas, Pennsylvania, Georgia, and Nova Scotia, were +not planted. Virginia, Maryland, and New England were planted; and +though they were very thriving colonies, yet there was not perhaps at +that time, either in Europe or America, a single person who foresaw, or +even suspected, the rapid progress which they have since made in wealth, +population, and improvement. The island of Barbadoes, in short, was the +only British colony of any consequence, of which the condition at that +time bore any resemblance to what it is at present. The trade of the +colonies, of which England, even for some time after the act of +navigation, enjoyed but a part (for the act of navigation was not very +strictly executed till several years after it was enacted), could not at +that time be the cause of the great trade of England, nor of the great +naval power which was supported by that trade. The trade which at that +time supported that great naval power was the trade of Europe, and of +the countries which lie round the Mediterranean sea. But the share which +Great Britain at present enjoys of that trade could not support any such +great naval power. Had the growing trade of the colonies been left free +to all nations, whatever share of it might have fallen to Great Britain, +and a very considerable share would probably have fallen to her, must +have been all an addition to this great trade of which she was before in +possession. In consequence of the monopoly, the increase of the colony +trade has not so much occasioned an addition to the trade which Great +Britain had before, as a total change in its direction. + +_Secondly_, This monopoly has necessarily contributed to keep up the +rate of profit, in all the different branches of British trade, higher +than it naturally would have been, had all nations been allowed a free +trade to the British colonies. + +The monopoly of the colony trade, as it necessarily drew towards that +trade a greater proportion of the capital of Great Britain than what +would have gone to it of its own accord, so, by the expulsion of all +foreign capitals, it necessarily reduced the whole quantity of capital +employed in that trade below what it naturally would have been in the +case of a free trade. But, by lessening the competition of capitals in +that branch of trade, it necessarily raised the rate of profit in that +branch. By lessening, too, the competition of British capitals in all +other branches of trade, it necessarily raised the rate of British +profit in all those other branches. Whatever may have been, at any +particular period since the establishment of the act of navigation, the +state or extent of the mercantile capital of Great Britain, the monopoly +of the colony trade must, during the continuance of that state, have +raised the ordinary rate of British profit higher than it otherwise +would have been, both in that and in all the other branches of British +trade. If, since the establishment of the act of navigation, the +ordinary rate of British profit has fallen considerably, as it certainly +has, it must have fallen still lower, had not the monopoly established +by that act contributed to keep it up. + +But whatever raises, in any country, the ordinary rate of profit higher +than it otherwise would be, necessarily subjects that country both to +an absolute, and to a relative disadvantage in every branch of trade of +which she has not the monopoly. + +It subjects her to an absolute disadvantage; because, in such branches +of trade, her merchants cannot get this greater profit without selling +dearer than they otherwise would do, both the goods of foreign countries +which they import into their own, and the goods of their own country +which they export to foreign countries. Their own country must both buy +dearer and sell dearer; must both buy less, and sell less; must both +enjoy less and produce less, than she otherwise would do. + +It subjects her to a relative disadvantage; because, in such branches of +trade, it sets other countries, which are not subject to the same +absolute disadvantage, either more above her or less below her, than +they otherwise would be. It enables them both to enjoy more and to +produce more, in proportion to what she enjoys and produces. It renders +their superiority greater, or their inferiority less, than it otherwise +would be. By raising the price of her produce above what it otherwise +would be, it enables the merchants of other countries to undersell her +in foreign markets, and thereby to justle her out of almost all those +branches of trade, of which she has not the monopoly. + +Our merchants frequently complain of the high wages of British labour, +as the cause of their manufactures being undersold in foreign markets; +but they are silent about the high profits of stock. They complain of +the extravagant gain of other people; but they say nothing of their own. +The high profits of British stock, however, may contribute towards +raising the price of British manufactures, in many cases, as much, and +in some perhaps more, than the high wages of British labour. + +It is in this manner that the capital of Great Britain, one may justly +say, has partly been drawn and partly been driven from the greater part +of the different branches of trade of which she has not the monopoly; +from the trade of Europe, in particular, and from that of the countries +which lie round the Mediterranean sea. + +It has partly been drawn from those branches of trade, by the attraction +of superior profit in the colony trade, in consequence of the continual +increase of that trade, and of the continual insufficiency of the +capital which had carried it on one year to carry it on the next. + +It has partly been driven from them, by the advantage which the high +rate of profit established in Great Britain gives to other countries, in +all the different branches of trade of which Great Britain has not the +monopoly. + +As the monopoly of the colony trade has drawn from those other branches +a part of the British capital, which would otherwise have been employed +in them, so it has forced into them many foreign capitals which would +never have gone to them, had they not been expelled from the colony +trade. In those other branches of trade, it has diminished the +competition of British capitals, and thereby raised the rate of British +profit higher than it otherwise would have been. On the contrary, it has +increased the competition of foreign capitals, and thereby sunk the rate +of foreign profit lower than it otherwise would have been. Both in the +one way and in the other, it must evidently have subjected Great Britain +to a relative disadvantage in all those other branches of trade. + +The colony trade, however, it may perhaps be said, is more advantageous +to Great Britain than any other; and the monopoly, by forcing into that +trade a greater proportion of the capital of Great Britain than what +would otherwise have gone to it, has turned that capital into an +employment, more advantageous to the country than any other which it +could have found. + +The most advantageous employment of any capital to the country to which +it belongs, is that which maintains there the greatest quantity of +productive labour, and increases the most the annual produce of the land +and labour of that country. But the quantity of productive labour which +any capital employed in the foreign trade of consumption can maintain, +is exactly in proportion, it has been shown in the second book, to the +frequency of its returns. A capital of a thousand pounds, for example, +employed in a foreign trade of consumption, of which the returns are +made regularly once in the year, can keep in constant employment, in the +country to which it belongs, a quantity of productive labour, equal to +what a thousand pounds can maintain there for a year. If the returns are +made twice or thrice in the year, it can keep in constant employment a +quantity of productive labour, equal to what two or three thousand +pounds can maintain there for a year. A foreign trade of consumption +carried on with a neighbouring, is, upon that account, in general, more +advantageous than one carried on with a distant country; and, for the +same reason, a direct foreign trade of consumption, as it has likewise +been shown in the second book, is in general more advantageous than a +round-about one. + +But the monopoly of the colony trade, so far as it has operated upon the +employment of the capital of Great Britain, has, in all cases, forced +some part of it from a foreign trade of consumption carried on with a +neighbouring, to one carried on with a more distant country, and in many +cases from a direct foreign trade of consumption to a round-about one. + +_First_, The monopoly of the colony trade has, in all cases, forced some +part of the capital of Great Britain from a foreign trade of +consumption carried on with a neighbouring, to one carried on with a +more distant country. + +It has, in all cases, forced some part of that capital from the trade +with Europe, and with the countries which lie round the Mediterranean +sea, to that with the more distant regions of America and the West +Indies; from which the returns are necessarily less frequent, not only +on account of the greater distance, but on account of the peculiar +circumstances of those countries. New colonies, it has already been +observed, are always understocked. Their capital in always much less +than what they could employ with great profit and advantage in the +improvement and cultivation of their land. They have a constant demand, +therefore, for more capital than they have of their own; and, in order +to supply the deficiency of their own, they endeavour to borrow as much +as they can of the mother country, to whom they are, therefore, always +in debt. The most common way in which the colonies contract this debt, +is not by borrowing upon bond of the rich people of the mother country, +though they sometimes do this too, but by running as much in arrear to +their correspondents, who supply them with goods from Europe, as those +correspondents will allow them. Their annual returns frequently do not +amount to more than a third, and sometimes not to so great a proportion +of what they owe. The whole capital, therefore, which their +correspondents advance to them, is seldom returned to Britain in less +than three, and sometimes not in less than four or five years. But a +British capital of a thousand pounds, for example, which is returned to +Great Britain only once in five years, can keep in constant employment +only one-fifth part of the British industry which it could maintain, if +the whole was returned once in the year; and, instead of the quantity of +industry which a thousand pounds could maintain for a year, can keep in +constant employment the quantity only which two hundred pounds can +maintain for a year. The planter, no doubt, by the high price which he +pays for the goods from Europe, by the interest upon the bills which he +grants at distant dates, and by the commission upon the renewal of those +which he grants at near dates, makes up, and probably more than makes +up, all the loss which his correspondent can sustain by this delay. But, +though he make up the loss of his correspondent, he cannot make up that +of Great Britain. In a trade of which the returns are very distant, the +profit of the merchant may be as great or greater than in one in which +they are very frequent and near; but the advantage of the country in +which he resides, the quantity of productive labour constantly +maintained there, the annual produce of the land and labour, must always +be much less. That the returns of the trade to America, and still more +those of that to the West Indies, are, in general, not only more +distant, but more irregular and more uncertain, too, than those of the +trade to any part of Europe, or even of the countries which lie round +the Mediterranean sea, will readily be allowed, I imagine, by every body +who has any experience of these different branches of trade. + +_Secondly_, The monopoly of the colony trade, has, in many cases, forced +some part of the capital of Great Britain from a direct foreign trade of +consumption, into a round-about one. + +Among the enumerated commodities which can be sent to no other market +but Great Britain, there are several of which the quantity exceeds very +much the consumption of Great Britain, and of which, a part, therefore, +must be exported to other countries. But this cannot be done without +forcing some part of the capital of Great Britain into a round-about +foreign trade of consumption. Maryland, and Virginia, for example, send +annually to Great Britain upwards of ninety-six thousand hogsheads of +tobacco, and the consumption of Great Britain is said not to exceed +fourteen thousand. Upwards of eighty-two thousand hogsheads, therefore, +must be exported to other countries, to France, to Holland, and, to the +countries which lie round the Baltic and Mediterranean seas. But that +part of the capital of Great Britain which brings those eighty-two +thousand hogsheads to Great Britain, which re-exports them from thence +to those other countries, and which brings back from those countries to +Great Britain either goods or money in return, is employed in a +round-about foreign trade of consumption; and is necessarily forced into +this employment, in order to dispose of this great surplus. If we would +compute in how many years the whole of this capital is likely to come +back to Great Britain, we must add to the distance of the American +returns that of the returns from those other countries. If, in the +direct foreign trade of consumption which we carry on with America, the +whole capital employed frequently does not come back in less than three +or four years, the whole capital employed in this round-about one is not +likely to come back in less than four or five. If the one can keep in +constant employment but a third or a fourth part of the domestic +industry which could be maintained by a capital returned once in the +year, the other can keep in constant employment but a fourth or a fifth +part of that industry. At some of the out-ports a credit is commonly +given to those foreign correspondents to whom they export their tobacco. +At the port of London, indeed, it is commonly sold for ready money: the +rule is Weigh and pay. At the port of London, therefore, the final +returns of the whole round-about trade are more distant than the +returns from America, by the time only which the goods may lie unsold in +the warehouse; where, however, they may sometimes lie long enough. But, +had not the colonies been confined to the market of Great Britain for +the sale of their tobacco, very little more of it would probably have +come to us than what was necessary for the home consumption. The goods +which Great Britain purchases at present for her own consumption with +the great surplus of tobacco which she exports to other countries, she +would, in this case, probably have purchased with the immediate produce +of her own industry, or with some part of her own manufactures. That +produce, those manufactures, instead of being almost entirely suited to +one great market, as at present, would probably have been fitted to a +great number of smaller markets. Instead of one great round-about +foreign trade of consumption, Great Britain would probably have carried +on a great number of small direct foreign trades of the same kind. On +account of the frequency of the returns, a part, and probably but a +small part, perhaps not above a third or a fourth of the capital which +at present carries on this great round-about trade, might have been +sufficient to carry on all those small direct ones; might have kept in +constant employment an equal quantity of British industry; and have +equally supported the annual produce of the land and labour of Great +Britain. All the purposes of this trade being, in this manner, answered +by a much smaller capital, there would have been a large spare capital +to apply to other purposes; to improve the lands, to increase the +manufactures, and to extend the commerce of Great Britain; to come into +competition at least with the other British capitals employed in all +those different ways, to reduce the rate of profit in them all, and +thereby to give to Great Britain, in all of them, a superiority over +other countries, still greater than what she at present enjoys. + +The monopoly of the colony trade, too, has forced some part of the +capital of Great Britain from all foreign trade of consumption to a +carrying trade; and, consequently from supporting more or less the +industry of Great Britain, to be employed altogether in supporting +partly that of the colonies, and partly that of some other countries. + +The goods, for example, which are annually purchased with the great +surplus of eighty-two thousand hogsheads of tobacco annually re-exported +from Great Britain, are not all consumed in Great Britain. Part of them, +linen from Germany and Holland, for example, is returned to the colonies +for their particular consumption. But that part of the capital of Great +Britain which buys the tobacco with which this linen is afterwards +bought, is necessarily withdrawn from supporting the industry of Great +Britain, to be employed altogether in supporting, partly that of the +colonies, and partly that of the particular countries who pay for this +tobacco with the produce of their own industry. + +The monopoly of the colony trade, besides, by forcing towards it a much +greater proportion of the capital of Great Britain than what would +naturally have gone to it, seems to have broken altogether that natural +balance which would otherwise have taken place among all the different +branches of British industry. The industry of Great Britain, instead of +being accommodated to a great number of small markets, has been +principally suited to one great market. Her commerce, instead of running +in a great number of small channels, has been taught to run principally +in one great channel. But the whole system of her industry and commerce +has thereby been rendered less secure; the whole state of her body +politic less healthful than it otherwise would have been. In her present +condition, Great Britain resembles one of those unwholesome bodies in +which some of the vital parts are overgrown, and which, upon that +account, are liable to many dangerous disorders, scarce incident to +those in which all the parts are more properly proportioned. A small +stop in that great blood-vessel, which has been artificially swelled +beyond its natural dimensions, and through which an unnatural proportion +of the industry and commerce of the country has been forced to +circulate, is very likely to bring on the most dangerous disorders upon +the whole body politic. The expectation of a rupture with the colonies, +accordingly, has struck the people of Great Britain with more terror +than they ever felt for a Spanish armada, or a French invasion. It was +this terror, whether well or ill grounded, which rendered the repeal of +the stamp act, among the merchants at least, a popular measure. In the +total exclusion from the colony market, was it to last only for a few +years, the greater part of our merchants used to fancy that they foresaw +an entire stop to their trade; the greater part of our master +manufacturers, the entire ruin of their business; and the greater part +of our workmen, an end of their employment. A rupture with any of our +neighbours upon the continent, though likely, too, to occasion some stop +or interruption in the employments of some of all these different orders +of people, is foreseen, however, without any such general emotion. The +blood, of which the circulation is stopt in some of the smaller vessels, +easily disgorges itself into the greater, without occasioning any +dangerous disorder; but, when it is stopt in any of the greater vessels, +convulsions, apoplexy, or death, are the immediate and unavoidable +consequences. If but one of those overgrown manufactures, which, by +means either of bounties or of the monopoly of the home and colony +markets, have been artificially raised up to any unnatural height, finds +some small stop or interruption in its employment, it frequently +occasions a mutiny and disorder alarming to government, and embarrassing +even to the deliberations of the legislature. How great, therefore, +would be the disorder and confusion, it was thought, which must +necessarily be occasioned by a sudden and entire stop in the employment +of so great a proportion of our principal manufacturers? + +Some moderate and gradual relaxation of the laws which give to Great +Britain the exclusive trade to the colonies, till it is rendered in a +great measure free, seems to be the only expedient which can, in all +future times, deliver her from this danger; which can enable her, or +even force her, to withdraw some part of her capital from this overgrown +employment, and to turn it, though with less profit, towards other +employments; and which, by gradually diminishing one branch of her +industry, and gradually increasing all the rest, can, by degrees, +restore all the different branches of it to that natural, healthful, and +proper proportion, which perfect liberty necessarily establishes, and +which perfect liberty can alone preserve. To open the colony trade all +at once to all nations, might not only occasion some transitory +inconveniency, but a great permanent loss, to the greater part of those +whose industry or capital is at present engaged in it. The sudden loss +of the employment, even of the ships which import the eighty-two +thousand hogsheads of tobacco, which are over and above the consumption +of Great Britain, might alone be felt very sensibly. Such are the +unfortunate effects of all the regulations of the mercantile system. +They not only introduce very dangerous disorders into the state of the +body politic, but disorders which it is often difficult to remedy, +without occasioning, for a time at least, still greater disorders. In +what manner, therefore, the colony trade ought gradually to be opened; +what are the restraints which ought first, and what are those which +ought last, to be taken away; or in what manner the natural system of +perfect liberty and justice ought gradually to be restored, we must +leave to the wisdom of future statesmen and legislators to determine. + +Five different events, unforeseen and unthought of, have very +fortunately concurred to hinder Great Britain from feeling, so sensibly +as it was generally expected she would, the total exclusion which has +now taken place for more than a year (from the first of December 1774) +from a very important branch of the colony trade, that of the twelve +associated provinces of North America. First, those colonies, in +preparing themselves for their non-importation agreement, drained Great +Britain completely of all the commodities which were fit for their +market; secondly, the extraordinary demand of the Spanish flota has, +this year, drained Germany and the north of many commodities, linen in +particular, which used to come into competition, even in the British +market, with the manufactures of Great Britain; thirdly, the peace +between Russia and Turkey has occasioned an extraordinary demand from +the Turkey market, which, during the distress of the country, and while +a Russian fleet was cruising in the Archipelago, had been very poorly +supplied; fourthly, the demand of the north of Europe for the +manufactures of Great Britain has been increasing from year to year, for +some time past; and, fifthly, the late partition, and consequential +pacification of Poland, by opening the market of that great country, +have, this year, added an extraordinary demand from thence to the +increasing demand of the north. These events are all, except the fourth, +in their nature transitory and accidental; and the exclusion from so +important a branch of the colony trade, if unfortunately it should +continue much longer, may still occasion some degree of distress. This +distress, however, as it will come on gradually, will be felt much less +severely than if it had come on all at once; and, in the mean time, the +industry and capital of the country may find a new employment and +direction, so as to prevent this distress from ever rising to any +considerable height. + +The monopoly of the colony trade, therefore, so far as it has turned +towards that trade a greater proportion of the capital of Great Britain +than what would otherwise have gone to it, has in all cases turned it, +from a foreign trade of consumption with a neighbouring, into one with a +more distant country; in many cases from a direct foreign trade of +consumption into a round-about one; and, in some cases, from all foreign +trade of consumption into a carrying trade. It has, in all cases, +therefore, turned it from a direction in which it would have maintained +a greater quantity of productive labour, into one in which it can +maintain a much smaller quantity. By suiting, besides, to one particular +market only, so great a part of the industry and commerce of Great +Britain, it has rendered the whole state of that industry and commerce +more precarious and less secure, than if their produce had been +accommodated to a greater variety of markets. + +We must carefully distinguish between the effects of the colony trade +and those of the monopoly of that trade. The former are always and +necessarily beneficial; the latter always and necessarily hurtful. But +the former are so beneficial, that the colony trade, though subject to a +monopoly, and, notwithstanding the hurtful effects of that monopoly, is +still, upon the whole, beneficial, and greatly beneficial, though a good +deal less so than it otherwise would be. + +The effect of the colony trade, in its natural and free state, is to +open a great though distant market, for such parts of the produce of +British industry as may exceed the demand of the markets nearer home, of +those of Europe, and of the countries which lie round the Mediterranean +sea. In its natural and free state, the colony trade, without drawing +from those markets any part of the produce which had ever been sent to +them, encourages Great Britain to increase the surplus continually, by +continually presenting new equivalents to be exchanged for it. In its +natural and free state, the colony trade tends to increase the quantity +of productive labour in Great Britain, but without altering in any +respect the direction of that which had been employed there before. In +the natural and free state of the colony trade, the competition of all +other nations would hinder the rate of profit from rising above the +common level, either in the new market, or in the new employment. The +new market, without drawing any thing from the old one, would create, if +one may say so, a new produce for its own supply; and that new produce +would constitute a new capital for carrying on the new employment, +which, in the same manner, would draw nothing from the old one. + +The monopoly of the colony trade, on the contrary, by excluding the +competition of other nations, and thereby raising the rate of profit, +both in the new market and in the new employment, draws produce from the +old market, and capital from the old employment. To augment our share of +the colony trade beyond what it otherwise would be, is the avowed +purpose of the monopoly. If our share of that trade were to be no +greater with, than it would have been without the monopoly, there could +have been no reason for establishing the monopoly. But whatever forces +into a branch of trade, of which the returns are slower and more distant +than those of the greater part of other trades, a greater proportion of +the capital of any country, than what of its own accord would go to that +branch, necessarily renders the whole quantity of productive labour +annually maintained there, the whole annual produce of the land and +labour of that country, less than they otherwise would be. It keeps down +the revenue of the inhabitants of that country below what it would +naturally rise to, and thereby diminishes their power of accumulation. +It not only hinders, at all times, their capital from maintaining so +great a quantity of productive labour as it would otherwise maintain, +but it hinders it from increasing so fast as it would otherwise +increase, and, consequently, from maintaining a still greater quantity +of productive labour. + +The natural good effects of the colony trade, however, more than +counterbalance to Great Britain the bad effects of the monopoly; so +that, monopoly and altogether, that trade, even as it is carried on at +present, is not only advantageous, but greatly advantageous. The new +market and the new employment which are opened by the colony trade, are +of much greater extent than that portion of the old market and of the +old employment which is lost by the monopoly. The new produce and the +new capital which has been created, if one may say so, by the colony +trade, maintain in Great Britain a greater quantity of productive labour +than what can have been thrown out of employment by the revulsion of +capital from other trades of which the returns are more frequent. If the +colony trade, however, even as it is carried on at present, is +advantageous to Great Britain, it is not by means of the monopoly, but +in spite of the monopoly. + +It is rather for the manufactured than for the rude produce of Europe, +that the colony trade opens a new market. Agriculture is the proper +business of all new colonies; a business which the cheapness of land +renders more advantageous than any other. They abound, therefore, in the +rude produce of land; and instead of importing it from other countries, +they have generally a large surplus to export. In new colonies, +agriculture either draws hands from all other employments, or keeps them +from going to any other employment. There are few hands to spare for the +necessary, and none for the ornamental manufactures. The greater part of +the manufactures of both kinds they find it cheaper to purchase of other +countries than to make for themselves. It is chiefly by encouraging the +manufactures of Europe, that the colony trade indirectly encourages its +agriculture. The manufacturers of Europe, to whom that trade gives +employment, constitute a new market for the produce of the land, and the +most advantageous of all markets; the home market for the corn and +cattle, for the bread and butcher's meat of Europe, is thus greatly +extended by means of the trade to America. + +But that the monopoly of the trade of populous and thriving colonies is +not alone sufficient to establish, or even to maintain, manufactures in +any country, the examples of Spain and Portugal sufficiently +demonstrate. Spain and Portugal were manufacturing countries before they +had any considerable colonies. Since they had the richest and most +fertile in the world, they have both ceased to be so. + +In Spain and Portugal, the bad effects of the monopoly, aggravated by +other causes, have, perhaps, nearly overbalanced the natural good +effects of the colony trade. These causes seem to be other monopolies of +different kinds: the degradation of the value of gold and silver below +what it is in most other countries; the exclusion from foreign markets +by improper taxes upon exportation, and the narrowing of the home +market, by still more improper taxes upon the transportation of goods +from one part of the country to another; but above all, that irregular +and partial administration of justice which often protects the rich and +powerful debtor from the pursuit of his injured creditor, and which +makes the industrious part of the nation afraid to prepare goods for the +consumption of those haughty and great men, to whom they dare not refuse +to sell upon credit, and from whom they are altogether uncertain of +repayment. + +In England, on the contrary, the natural good effects of the colony +trade, assisted by other causes, have in a great measure conquered the +bad effects of the monopoly. These causes seem to be, the general +liberty of trade, which, notwithstanding some restraints, is at least +equal, perhaps superior, to what it is in any other country; the liberty +of exporting, duty free, almost all sorts of goods which are the produce +of domestic industry, to almost any foreign country; and what, perhaps, +is of still greater importance, the unbounded liberty of transporting +them from one part of our own country to any other, without being +obliged to give any account to any public office, without being liable +to question or examination of any kind; but, above all, that equal and +impartial administration of justice, which renders the rights of the +meanest British subject respectable to the greatest, and which, by +securing to every man the fruits of his own industry, gives the greatest +and most effectual encouragement to every sort of industry. + +If the manufactures of Great Britain, however, have been advanced, as +they certainly have, by the colony trade, it has not been by means of +the monopoly of that trade, but in spite of the monopoly. The effect of +the monopoly has been, not to augment the quantity, but to alter the +quality and shape of a part of the manufactures of Great Britain, and to +accommodate to a market, from which the returns are slow and distant, +what would otherwise have been accommodated to one from which the +returns are frequent and near. Its effect has consequently been, to turn +a part of the capital of Great Britain from an employment in which it +would have maintained a greater quantity of manufacturing industry, to +one in which it maintains a much smaller, and thereby to diminish, +instead of increasing, the whole quantity of manufacturing industry +maintained in Great Britain. + +The monopoly of the colony trade, therefore, like all the other mean and +malignant expedients of the mercantile system, depresses the industry of +all other countries, but chiefly that of the colonies, without in the +least increasing, but on the contrary diminishing, that of the country +in whose favour it is established. + +The monopoly hinders the capital of that country, whatever may, at any +particular time, be the extent of that capital, from maintaining so +great a quantity of productive labour as it would otherwise maintain, +and from affording so great a revenue to the industrious inhabitants as +it would otherwise afford. But as capital can be increased only by +savings from revenue, the monopoly, by hindering it from affording so +great a revenue as it would otherwise afford, necessarily hinders it +from increasing so fast as it would otherwise increase, and consequently +from maintaining a still greater quantity of productive labour, and +affording a still greater revenue to the industrious inhabitants of that +country. One great original source of revenue, therefore, the wages of +labour, the monopoly must necessarily have rendered, at all times, less +abundant than it otherwise would have been. + +By raising the rate of mercantile profit, the monopoly discourages the +improvement of land. The profit of improvement depends upon the +difference between what the land actually produces, and what, by the +application of a certain capital, it can be made to produce. If this +difference affords a greater profit than what can be drawn from an equal +capital in any mercantile employment, the improvement of land will draw +capital from all mercantile employments. If the profit in less, +mercantile employments will draw capital from the improvement of land. +Whatever, therefore, raises the rate of mercantile profit, either +lessens the superiority, or increases the inferiority of the profit of +improvement: and, in the one case, hinders capital from going to +improvement, and in the other draws capital from it; but by discouraging +improvement, the monopoly necessarily retards the natural increase of +another great original source of revenue, the rent of land. By raising +the rate of profit, too, the monopoly necessarily keeps up the market +rate of interest higher than it otherwise would be. But the price of +land, in proportion to the rent which it affords, the number of years +purchase which is commonly paid for it, necessarily falls as the rate of +interest rises, and rises as the rate of interest falls. The monopoly, +therefore, hurts the interest of the landlord two different ways, by +retarding the natural increase, first, of his rent, and, secondly, of +the price which he would get for his land, in proportion to the rent +which it affords. + +The monopoly, indeed, raises the rate of mercantile profit, and thereby +augments somewhat the gain of our merchants. But as it obstructs the +natural increase of capital, it tends rather to diminish than to +increase the sum total of the revenue which the inhabitants of the +country derive from the profits of stock; a small profit upon a great +capital generally affording a greater revenue than a great profit upon a +small one. The monopoly raises the rate of profit, but it hinders the +sum of profit from rising so high as it otherwise would do. + +All the original sources of revenue, the wages of labour, the rent of +land, and the profits of stock, the monopoly renders much less abundant +than they otherwise would be. To promote the little interest of one +little order of men in one country, it hurts the interest of all other +orders of men in that country, and of all the men in all other +countries. + +It is solely by raising the ordinary rate of profit, that the monopoly +either has proved, or could prove, advantageous to any one particular +order of men. But besides all the bad effects to the country in general, +which have already been mentioned as necessarily resulting from a higher +rate of profit, there is one more fatal, perhaps, than all these put +together, but which, if we may judge from experience, is inseparably +connected with it. The high rate of profit seems everywhere to destroy +that parsimony which, in other circumstances, is natural to the +character of the merchant. When profits are high, that sober virtue +seems to be superfluous, and expensive luxury to suit better the +affluence of his situation. But the owners of the great mercantile +capitals are necessarily the leaders and conductors of the whole +industry of every nation; and their example has a much greater influence +upon the manners of the whole industrious part of it than that of any +other order of men. If his employer is attentive and parsimonious, the +workman is very likely to be so too; but if the master in dissolute and +disorderly, the servant, who shapes his work according to the pattern +which his master prescribes to him, will shape his life, too, according +to the example which he sets him. Accumulation is thus prevented in the +hands of all those who are naturally the most disposed to accumulate; +and the funds destined for the maintenance of productive labour, receive +no augmentation from the revenue of those who ought naturally to augment +them the most. The capital of the country, instead of increasing, +gradually dwindles away, and the quantity of productive labour +maintained in it grows every day less and less. Have the exorbitant +profits of the merchants of Cadiz and Lisbon augmented the capital of +Spain and Portugal? Have they alleviated the poverty, have they promoted +the industry, of those two beggarly countries? Such has been the tone of +mercantile expense in those two trading cities, that those exorbitant +profits, far from augmenting the general capital of the country, seem +scarce to have been sufficient to keep up the capitals upon which they +were made. Foreign capitals are every day intruding themselves, if I may +say so, more and more into the trade of Cadiz and Lisbon. It is to expel +those foreign capitals from a trade which their own grows every day more +and more insufficient for carrying on, that the Spaniards and Portuguese +endeavour every day to straiten more and more the galling bands of their +absurd monopoly. Compare the mercantile manners of Cadiz and Lisbon with +those of Amsterdam, and you will be sensible how differently the conduct +and character of merchants are affected by the high and by the low +profits of stock. The merchants of London, indeed, have not yet +generally become such magnificent lords as those of Cadiz and Lisbon; +but neither are they in general such attentive and parsimonious burghers +as those of Amsterdam. They are supposed, however, many of them, to be a +good deal richer than the greater part of the former, and not quite so +rich as many of the latter: but the rate of their profit is commonly +much lower than that of the former, and a good deal higher than that of +the latter. Light come, light go, says the proverb; and the ordinary +tone of expense seems everywhere to be regulated, not so much according +to the real ability of spending, as to the supposed facility of getting +money to spend. + +It is thus that the single advantage which the monopoly procures to a +single order of men, is in many different ways hurtful to the general +interest of the country. + +To found a great empire for the sole purpose of raising up a people of +customers, may at first sight, appear a project fit only for a nation of +shopkeepers. It is, however, a project altogether unfit for a nation of +shopkeepers, but extremely fit for a nation whose government is +influenced by shopkeepers. Such statesmen, and such statesmen only, are +capable of fancying that they will find some advantage in employing the +blood and treasure of their fellow-citizens, to found and maintain such +an empire. Say to a shopkeeper, Buy me a good estate, and I shall always +buy my clothes at your shop, even though I should pay somewhat dearer +than what I can have them for at other shops; and you will not find him +very forward to embrace your proposal. But should any other person buy +you such an estate, the shopkeeper will be much obliged to your +benefactor if he would enjoin you to buy all your clothes at his shop. +England purchased for some of her subjects, who found themselves uneasy +at home, a great estate in a distant country. The price, indeed, was +very small, and instead of thirty years purchase, the ordinary price of +land in the present times, it amounted to little more than the expense +of the different equipments which made the first discovery, reconoitered +the coast, and took a fictitious possession of the country. The land was +good, and of great extent; and the cultivators having plenty of good +ground to work upon, and being for some time at liberty to sell their +produce where they pleased, became, in the course of little more than +thirty or forty years (between 1620 and 1660), so numerous and thriving +a people, that the shopkeepers and other traders of England wished to +secure to themselves the monopoly of their custom. Without pretending, +therefore, that they had paid any part, either of the original purchase +money, or of the subsequent expense of improvement, they petitioned the +parliament, that the cultivators of America might for the future be +confined to their shop; first, for buying all the goods which they +wanted from Europe; and, secondly, for selling all such parts of their +own produce as these traders might find it convenient to buy. For they +did not find it convenient to buy every part of it. Some parts of it +imported into England, might have interfered with some of the trades +which they themselves carried on at home. Those particular parts of it, +therefore, they were willing that the colonists should sell where they +could; the farther off the better; and upon that account proposed that +their market should be confined to the countries south of Cape +Finisterre. A clause in the famous act of navigation established this +truly shopkeeper proposal into a law. + +The maintenance of this monopoly has hitherto been the principal, or +more properly, perhaps, the sole end and purpose of the dominion which +Great Britain assumes over her colonies. In the exclusive trade, it is +supposed, consists the great advantage of provinces, which have never +yet afforded either revenue or military force for the support of the +civil government, or the defence of the mother country. The monopoly is +the principal badge of their dependency, and it is the sole fruit which +has hitherto been gathered from that dependency. Whatever expense Great +Britain has hitherto laid out in maintaining this dependency, has really +been laid out in order to support this monopoly. The expense of the +ordinary peace establishment of the colonies amounted, before the +commencement of the present disturbances to the pay of twenty regiments +of foot; to the expense of the artillery, stores, and extraordinary +provisions, with which it was necessary to supply them; and to the +expense of a very considerable naval force, which was constantly kept +up, in order to guard from the smuggling vessels of other nations, the +immense coast of North America, and that of our West Indian islands. The +whole expense of this peace establishment was a charge upon the revenue +of Great Britain, and was, at the same time, the smallest part of what +the dominion of the colonies has cost the mother country. If we would +know the amount of the whole, we must add to the annual expense of this +peace establishment, the interest of the sums which, in consequence of +their considering her colonies as provinces subject to her dominion, +Great Britain has, upon different occasions, laid out upon their +defence. We must add to it, in particular, the whole expense of the late +war, and a great part of that of the war which preceded it. The late war +was altogether a colony quarrel; and the whole expense of it, in +whatever part of the world it might have been laid out, whether in +Germany or the East Indies, ought justly to be stated to the account of +the colonies. It amounted to more than ninety millions sterling, +including not only the new debt which was contracted, but the two +shillings in the pound additional land tax, and the sums which were +every year borrowed from the sinking fund. The Spanish war which began +in 1739 was principally a colony quarrel. Its principal object was to +prevent the search of the colony ships, which carried on a contraband +trade with the Spanish Main. This whole expense is, in reality, a bounty +which has been given in order to support a monopoly. The pretended +purpose of it was to encourage the manufactures, and to increase the +commerce of Great Britain. But its real effect has been to raise the +rate of mercantile profit, and to enable our merchants to turn into a +branch of trade, of which the returns are more slow and distant than +those of the greater part of other trades, a greater proportion of their +capital than they otherwise would have done; two events which, if a +bounty could have prevented, it might perhaps have been very well worth +while to give such a bounty. + +Under the present system of management, therefore, Great Britain derives +nothing but loss from the dominion which she assumes over her colonies. + +To propose that Great Britain should voluntarily give up all authority +over her colonies, and leave them to elect their own magistrates, to +enact their own laws, and to make peace and war, as they might think +proper, would be to propose such a measure as never was, and never will +be, adopted by any nation in the world. No nation ever voluntarily gave +up the dominion of any province, how troublesome soever it might be to +govern it, and how small soever the revenue which it afforded might be +in proportion to the expense which it occasioned. Such sacrifices, +though they might frequently be agreeable to the interest, are always +mortifying to the pride of every nation; and, what is perhaps of still +greater consequence, they are always contrary to the private interest of +the governing part of it, who would thereby be deprived of the disposal +of many places of trust and profit, of many opportunities of acquiring +wealth and distinction, which the possession of the most turbulent, and, +to the great body of the people, the most unprofitable province, seldom +fails to afford. The most visionary enthusiasts would scarce be capable +of proposing such a measure, with any serious hopes at least of its +ever being adopted. If it was adopted, however, Great Britain would not +only be immediately freed from the whole annual expense of the peace +establishment of the colonies, but might settle with them such a treaty +of commerce as would effectually secure to her a free trade, more +advantageous to the great body of the people, though less so to the +merchants, than the monopoly which she at present enjoys. By thus +parting good friends, the natural affection of the colonies to the +mother country, which, perhaps our late dissensions have well nigh +extinguished, would quickly revive. It might dispose them not only to +respect, for whole centuries together, that treaty of commerce which +they had concluded with us at parting, but to favour us in war as in +trade, and instead of turbulent and factious subjects, to become our +most faithful, affectionate, and generous allies; and the same sort of +parental affection on the one side, and filial respect on the other, +might revive between Great Britain and her colonies, which used to +subsist between those of ancient Greece and the mother city from which +they descended. + +In order to render any province advantageous to the empire to which it +belongs, it ought to afford, in time of peace, a revenue to the public, +sufficient not only for defraying the whole expense of its own peace +establishment, but for contributing its proportion to the support of the +general government of the empire. Every province necessarily +contributes, more or less, to increase the expense of that general +government. If any particular province, therefore, does not contribute +its share towards defraying this expense, an unequal burden must be +thrown upon some other part of the empire. The extraordinary revenue, +too, which every province affords to the public in time of war, ought, +from parity of reason, to bear the same proportion to the extraordinary +revenue of the whole empire, which its ordinary revenue does in time of +peace. That neither the ordinary nor extraordinary revenue which Great +Britain derives from her colonies, bears this proportion to the whole +revenue of the British empire, will readily be allowed. The monopoly, it +has been supposed, indeed, by increasing the private revenue of the +people of Great Britain, and thereby enabling them to pay greater taxes, +compensates the deficiency of the public revenue of the colonies. But +this monopoly, I have endeavoured to show, though a very grievous tax +upon the colonies, and though it may increase the revenue of a +particular order of men in Great Britain, diminishes, instead of +increasing, that of the great body of the people, and consequently +diminishes, instead of increasing, the ability of the great body of the +people to pay taxes. The men, too, whose revenue the monopoly increases, +constitute a particular order, which it is both absolutely impossible to +tax beyond the proportion of other orders, and extremely impolitic even +to attempt to tax beyond that proportion, as I shall endeavour to show +in the following book. No particular resource, therefore, can be drawn +from this particular order. + +The colonies may be taxed either by their own assemblies, or by the +parliament of Great Britain. + +That the colony assemblies can never be so managed as to levy upon their +constituents a public revenue, sufficient, not only to maintain at all +times their own civil and military establishment, but to pay their +proper proportion of the expense of the general government of the +British empire, seems not very probable. It was a long time before even +the parliament of England, though placed immediately under the eye of +the sovereign, could be brought under such a system of management, or +could be rendered sufficiently liberal in their grants for supporting +the civil and military establishments even of their own country. It was +only by distributing among the particular members of parliament a great +part either of the offices, or of the disposal of the offices arising +from this civil and military establishment, that such a system of +management could be established, even with regard to the parliament of +England. But the distance of the colony assemblies from the eye of the +sovereign, their number, their dispersed situation, and their various +constitutions, would render it very difficult to manage them in the same +manner, even though the sovereign had the same means of doing it; and +those means are wanting. It would be absolutely impossible to distribute +among all the leading members of all the colony assemblies such a share, +either of the offices, or of the disposal of the offices, arising from +the general government of the British empire, as to dispose them to give +up their popularity at home, and to tax their constituents for the +support of that general government, of which almost the whole emoluments +were to be divided among people who were strangers to them. The +unavoidable ignorance of administration, besides, concerning the +relative importance of the different members of those different +assemblies, the offences which must frequently be given, the blunders +which must constantly be committed, in attempting to manage them in this +manner, seems to render such a system of management altogether +impracticable with regard to them. + +The colony assemblies, besides, cannot be supposed the proper judges of +what is necessary for the defence and support of the whole empire. The +care of that defence and support is not entrusted to them. It is not +their business, and they have no regular means of information concerning +it. The assembly of a province, like the vestry of a parish, may judge +very properly concerning the affairs of its own particular district, but +can have no proper means of judging concerning those of the whole +empire. It cannot even judge properly concerning the proportion which +its own province bears to the whole empire, or concerning the relative +degree of its wealth and importance, compared with the other provinces; +because those other provinces are not under the inspection and +superintendency of the assembly of a particular province. What is +necessary for the defence and support of the whole empire, and in what +proportion each part ought to contribute, can be judged of only by that +assembly which inspects and superintends the affairs of the whole +empire. + +It has been proposed, accordingly, that the colonies should be taxed by +requisition, the parliament of Great Britain determining the sum which +each colony ought to pay, and the provincial assembly assessing and +levying it in the way that suited best the circumstances of the +province. What concerned the whole empire would in this way be +determined by the assembly which inspects and superintends the affairs +of the whole empire; and the provincial affairs of each colony might +still be regulated by its own assembly. Though the colonies should, in +this case, have no representatives in the British parliament, yet, if we +may judge by experience, there is no probability that the parliamentary +requisition would be unreasonable. The parliament of England has not, +upon any occasion, shewn the smallest disposition to overburden those +parts of the empire which are not represented in parliament. The islands +of Guernsey and Jersey, without any means of resisting the authority of +parliament, are more lightly taxed than any part of Great Britain. +Parliament, in attempting to exercise its supposed right, whether well +or ill grounded, of taxing the colonies, has never hitherto demanded of +them any thing which even approached to a just proportion to what was +paid by their fellow-subjects at home. If the contribution of the +colonies, besides, was to rise or fall in proportion to the rise or fall +of the land-tax, parliament could not tax them without taxing, at the +same time, its own constituents, and the colonies might, in this case, +be considered as virtually represented in parliament. + +Examples are not wanting of empires in which all the different provinces +are not taxed, if I may be allowed the expression, in one mass; but in +which the sovereign regulates the sum which each province ought to pay, +and in some provinces assesses and levies it as he thinks proper; while +in others he leaves it to be assessed and levied as the respective +states of each province shall determine. In some provinces of France, +the king not only imposes what taxes he thinks proper, but assesses and +levies them in the way he thinks proper. From others he demands a +certain sum, but leaves it to the states of each province to assess and +levy that sum as they think proper. According to the scheme of taxing by +requisition, the parliament of Great Britain would stand nearly in the +same situation towards the colony assemblies, as the king of France does +towards the states of those provinces which still enjoy the privilege of +having states of their own, the provinces of France which are supposed +to be the best governed. + +But though, according to this scheme, the colonies could have no just +reason to fear that their share of the public burdens should ever exceed +the proper proportion to that of their fellow-citizens at home, Great +Britain might have just reason to fear that it never would amount to +that proper proportion. The parliament of Great Britain has not, for +some time past, had the same established authority in the colonies, +which the French king has in those provinces of France which still enjoy +the privilege of having states of their own. The colony assemblies, if +they were not very favourably disposed (and unless more skilfully +managed than they ever have been hitherto, they are not very likely to +be so), might still find many pretences for evading or rejecting the +most reasonable requisitions of parliament. A French war breaks out, we +shall suppose; ten millions must immediately be raised, in order to +defend the seat of the empire. This sum must be borrowed upon the credit +of some parliamentary fund mortgaged for paying the interest. Part of +this fund parliament proposes to raise by a tax to be levied in Great +Britain, and part of it by a requisition to all the different colony +assemblies of America and the West Indies. Would people readily advance +their money upon the credit of a fund which partly depended upon the +good humour of all these assemblies, far distant from the seat of the +war, and sometimes, perhaps, thinking themselves not much concerned in +the event of it? Upon such a fund, no more money would probably be +advanced than what the tax to be levied in Great Britain might be +supposed to answer for. The whole burden of the debt contracted on +account of the war would in this manner fall, as it always has done +hitherto, upon Great Britain; upon a part of the empire, and not upon +the whole empire. Great Britain is, perhaps, since the world began, the +only state which, as it has extended its empire, has only increased its +expense, without once augmenting its resources. Other states have +generally disburdened themselves, upon their subject and subordinate +provinces, of the most considerable part of the expense of defending the +empire. Great Britain has hitherto suffered her subject and subordinate +provinces to disburden themselves upon her of almost this whole expense. +In order to put Great Britain upon a footing of equality with her own +colonies, which the law has hitherto supposed to be subject and +subordinate, it seems necessary, upon the scheme of taxing them by +parliamentary requisition, that parliament should have some means of +rendering its requisitions immediately effectual, in case the colony +assemblies should attempt to evade or reject them; and what those means +are, it is not very easy to conceive, and it has not yet been explained. + +Should the parliament of Great Britain, at the same time, be ever fully +established in the right of taxing the colonies, even independent of the +consent of their own assemblies, the importance of those assemblies +would, from that moment, be at an end, and with it, that of all the +leading men of British America. Men desire to have some share in the +management of public affairs, chiefly on account of the importance which +it gives them. Upon the power which the greater part of the leading men, +the natural aristocracy of every country, have of preserving or +defending their respective importance, depends the stability and +duration of every system of free government. In the attacks which those +leading men are continually making upon the importance of one another, +and in the defence of their own, consists the whole play of domestic +faction and ambition. The leading men of America, like those of all +other countries, desire to preserve their own importance. They feel, or +imagine, that if their assemblies, which they are fond of calling +parliaments, and of considering as equal in authority to the parliament +of Great Britain, should be so far degraded as to become the humble +ministers and executive officers of that parliament, the greater part of +their own importance would be at an end. They have rejected, therefore, +the proposal of being taxed by parliamentary requisition, and, like +other ambitious and high-spirited men, have rather chosen to draw the +sword in defence of their own importance. + +Towards the declension of the Roman republic, the allies of Rome, who +had borne the principal burden of defending the state and extending the +empire, demanded to be admitted to all the privileges of Roman citizens. +Upon being refused, the social war broke out. During the course of that +war, Rome granted those privileges to the greater part of them, one by +one, and in proportion as they detached themselves from the general +confederacy. The parliament of Great Britain insists upon taxing the +colonies; and they refuse to be taxed by a parliament in which they are +not represented. If to each colony which should detach itself from the +general confederacy, Great Britain should allow such a number of +representatives as suited the proportion of what it contributed to the +public revenue of the empire, in consequence of its being subjected to +the same taxes, and in compensation admitted to the same freedom of +trade with its fellow-subjects at home; the number of its +representatives to be augmented as the proportion of its contribution +might afterwards augment; a new method of acquiring importance, a new +and more dazzling object of ambition, would be presented to the leading +men of each colony. Instead of piddling for the little prizes which are +to be found in what may be called the paltry raffle of colony faction, +they might then hope, from the presumption which men naturally have in +their own ability and good fortune, to draw some of the great prizes +which sometimes come from the wheel of the great state lottery of +British politics. Unless this or some other method is fallen upon, and +there seems to be none more obvious than this, of preserving the +importance and of gratifying the ambition of the leading men of America, +it is not very probable that they will ever voluntarily submit to us; +and we ought to consider, that the blood which must be shed in forcing +them to do so, is, every drop of it, the blood either of those who are, +or of those whom we wish to have for our fellow-citizens. They are very +weak who flatter themselves that, in the state to which things have +come, our colonies will be easily conquered by force alone. The persons +who now govern the resolutions of what they call their continental +congress, feel in themselves at this moment a degree of importance +which, perhaps, the greatest subjects in Europe scarce feel. From +shopkeepers, tradesmen, and attorneys, they are become statesmen and +legislators, and are employed in contriving a new form of government for +an extensive empire, which, they flatter themselves, will become, and +which, indeed, seems very likely to become, one of the greatest and most +formidable that ever was in the world. Five hundred different people, +perhaps, who, in different ways, act immediately under the continental +congress, and five hundred thousand, perhaps, who act under those five +hundred, all feel, in the same manner, a proportionable rise in their +own importance. Almost every individual of the governing party in +America fills, at present, in his own fancy, a station superior, not +only to what he had ever filled before, but to what he had ever expected +to fill; and unless some new object of ambition is presented either to +him or to his leaders, if he has the ordinary spirit of a man, he will +die in defence of that station. + +It is a remark of the President Heynaut, that we now read with pleasure +the account of many little transactions of the Ligue, which, when they +happened, were not, perhaps, considered as very important pieces of +news. But every man then, says he, fancied himself of some importance; +and the innumerable memoirs which have come down to us from those times, +were the greater part of them written by people who took pleasure in +recording and magnifying events, in which they flattered themselves +they had been considerable actors. How obstinately the city of Paris, +upon that occasion, defended itself, what a dreadful famine it +supported, rather than submit to the best, and afterwards the most +beloved of all the French kings, is well known. The greater part of the +citizens, or those who governed the greater part of them, fought in +defence of their own importance, which, they foresaw, was to be at an +end whenever the ancient government should be re-established. Our +colonies, unless they can be induced to consent to a union, are very +likely to defend themselves, against the best of all mother countries, +as obstinately as the city of Paris did against one of the best of +kings. + +The idea of representation was unknown in ancient times. When the people +of one state were admitted to the right of citizenship in another, they +had no other means of exercising that right, but by coming in a body to +vote and deliberate with the people of that other state. The admission +of the greater part of the inhabitants of Italy to the privileges of +Roman citizens, completely ruined the Roman republic. It was no longer +possible to distinguish between who was, and who was not, a Roman +citizen. No tribe could know its own members. A rabble of any kind could +be introduced into the assemblies of the people, could drive out the +real citizens, and decide upon the affairs of the republic, as if they +themselves had been such. But though America were to send fifty or sixty +new representatives to parliament, the door-keeper of the house of +commons could not find any great difficulty in distinguishing between +who was and who was not a member. Though the Roman constitution, +therefore, was necessarily ruined by the union of Rome with the allied +states of Italy, there is not the least probability that the British +constitution would be hurt by the union of Great Britain with her +colonies. That constitution, on the contrary, would be completed by it, +and seems to be imperfect without it. The assembly which deliberates and +decides concerning the affairs of every part of the empire, in order to +be properly informed, ought certainly to have representatives from every +part of it. That this union, however, could be easily effectuated, or +that difficulties, and great difficulties, might not occur in the +execution, I do not pretend. I have yet heard of none, however, which +appear insurmountable. The principal, perhaps, arise, not from the +nature of things, but from the prejudices and opinions of the people, +both on this and on the other side of the Atlantic. + +We on this side of the water are afraid lest the multitude of American +representatives should overturn the balance of the constitution, and +increase too much either the influence of the crown on the one hand, or +the force of the democracy on the other. But if the number of American +representatives were to be in proportion to the produce of American +taxation, the number of people to be managed would increase exactly in +proportion to the means of managing them, and the means of managing to +the number of people to be managed. The monarchical and democratical +parts of the constitution would, after the union, stand exactly in the +same degree of relative force with regard to one another as they had +done before. + +The people on the other side of the water are afraid lest their distance +from the seat of government might expose them to many oppressions; but +their representatives in parliament, of which the number ought from the +first to be considerable, would easily be able to protect them from all +oppression. The distance could not much weaken the dependency of the +representative upon the constituent, and the former would still feel +that he owed his seat in parliament, and all the consequence which he +derived from it, to the good-will of the latter. It would be the +interest of the former, therefore, to cultivate that good-will, by +complaining, with all the authority of a member of the legislature, of +every outrage which any civil or military officer might be guilty of in +those remote parts of the empire. The distance of America from the seat +of government, besides, the natives of that country might flatter +themselves, with some appearance of reason too, would not be of very +long continuance. Such has hitherto been the rapid progress of that +country in wealth, population, and improvement, that in the course of +little more than a century, perhaps, the produce of the American might +exceed that of the British taxation. The seat of the empire would then +naturally remove itself to that part of the empire which contributed +most to the general defence and support of the whole. + +The discovery of America, and that of a passage to the East Indies by +the Cape of Good Hope, are the two greatest and most important events +recorded in the history of mankind. Their consequences have already been +great; but, in the short period of between two and three centuries which +has elapsed since these discoveries were made, it is impossible that the +whole extent of their consequences can have been seen. What benefits or +what misfortunes to mankind may hereafter result from those great +events, no human wisdom can foresee. By uniting in some measure the most +distant parts of the world, by enabling them to relieve one another's +wants, to increase one another's enjoyments, and to encourage one +another's industry, their general tendency would seem to be beneficial. +To the natives, however, both of the East and West Indies, all the +commercial benefits which can have resulted from those events have been +sunk and lost in the dreadful misfortunes which they have occasioned. +These misfortunes, however, seem to have arisen rather from accident +than from any thing in the nature of those events themselves. At the +particular time when these discoveries were made, the superiority of +force happened to be so great on the side of the Europeans, that they +were enabled to commit with impunity every sort of injustice in those +remote countries. Hereafter, perhaps, the natives of those countries may +grow stronger, or those of Europe may grow weaker; and the inhabitants +of all the different quarters of the world may arrive at that equality +of courage and force which, by inspiring mutual fear, can alone overawe +the injustice of independent nations into some sort of respect for the +rights of one another. But nothing seems more likely to establish this +equality of force, than that mutual communication of knowledge, and of +all sorts of improvements, which an extensive commerce from all +countries to all countries naturally, or rather necessarily, carries +along with it. + +In the mean time, one of the principal effects of those discoveries has +been, to raise the mercantile system to a degree of splendour and glory +which it could never otherwise have attained to. It is the object of +that system to enrich a great nation, rather by trade and manufactures +than by the improvement and cultivation of land, rather by the industry +of the towns than by that of the country. But in consequence of those +discoveries, the commercial towns of Europe, instead of being the +manufacturers and carriers for but a very small part of the world (that +part of Europe which is washed by the Atlantic ocean, and the countries +which lie round the Baltic and Mediterranean seas), have now become the +manufacturers for the numerous and thriving cultivators of America, and +the carriers, and in some respects the manufacturers too, for almost all +the different nations of Asia, Africa, and America. Two new worlds have +been opened to their industry, each of them much greater and more +extensive than the old one, and the market of one of them growing still +greater and greater every day. + +The countries which possess the colonies of America, and which trade +directly to the East Indies, enjoy indeed the whole show and splendour +of this great commerce. Other countries, however, notwithstanding all +the invidious restraints by which it is meant to exclude them, +frequently enjoy a greater share of the real benefit of it. The colonies +of Spain and Portugal, for example, give more real encouragement to the +industry of other countries than to that of Spain and Portugal. In the +single article of linen alone, the consumption of those colonies +amounts, it is said (but I do not pretend to warrant the quantity), to +more than three millions sterling a-year. But this great consumption is +almost entirely supplied by France, Flanders, Holland, and Germany. +Spain and Portugal furnish but a small part of it. The capital which +supplies the colonies with this great quantity of linen, is annually +distributed among, and furnishes a revenue to, the inhabitants of those +other countries. The profits of it only are spent in Spain and Portugal, +where they help to support the sumptuous profusion of the merchants of +Cadiz and Lisbon. + +Even the regulations by which each nation endeavours to secure to itself +the exclusive trade of its own colonies, are frequently more hurtful to +the countries in favour of which they are established, than to those +against which they are established. The unjust oppression of the +industry of other countries falls back, if I may say so, upon the heads +of the oppressors, and crushes their industry more than it does that of +those other countries. By those regulations, for example, the merchant +of Hamburg must send the linen which he destines for the American market +to London, and he must bring back from thence the tobacco which he +destines for the German market; because he can neither send the one +directly to America, nor bring the other directly from thence. By this +restraint he is probably obliged to sell the one somewhat cheaper, and +to buy the other somewhat dearer, than he otherwise might have done; and +his profits are probably somewhat abridged by means of it. In this +trade, however, between Hamburg and London, he certainly receives the +returns of his capital much more quickly than he could possibly have +done in the direct trade to America, even though we should suppose, what +is by no means the case, that the payments of America were as punctual +as those of London. In the trade, therefore, to which those regulations +confine the merchant of Hamburg, his capital can keep in constant +employment a much greater quantity of German industry than he possibly +could have done in the trade from which he is excluded. Though the one +employment, therefore, may to him perhaps be less profitable than the +other, it cannot be less advantageous to his country. It is quite +otherwise with the employment into which the monopoly naturally +attracts, if I may say so, the capital of the London merchant. That +employment may, perhaps, be more profitable to him than the greater part +of other employments; but on account of the slowness of the returns, it +cannot be more advantageous to his country. + +After all the unjust attempts, therefore, of every country in Europe to +engross to itself the whole advantage of the trade of its own colonies, +no country has yet been able to engross to itself any thing but the +expense of supporting in time of peace, and of defending in time of war, +the oppressive authority which it assumes over them. The +inconveniencies resulting from the possession of its colonies, every +country has engrossed to itself completely. The advantages resulting +from their trade, it has been obliged to share with many other +countries. + +At first sight, no doubt, the monopoly of the great commerce of America +naturally seems to be an acquisition of the highest value. To the +undiscerning eye of giddy ambition it naturally presents itself, amidst +the confused scramble of politics and war, as a very dazzling object to +fight for. The dazzling splendour of the object, however, the immense +greatness of the commerce, is the very quality which renders the +monopoly of it hurtful, or which makes one employment, in its own nature +necessarily less advantageous to the country than the greater part of +other employments, absorb a much greater proportion of the capital of +the country than what would otherwise have gone to it. + +The mercantile stock of every country, it has been shown in the second +book, naturally seeks, if one may say so, the employment most +advantageous to that country. If it is employed in the carrying trade, +the country to which it belongs becomes the emporium of the goods of all +the countries whose trade that stock carries on. But the owner of that +stock necessarily wishes to dispose of as great a part of those goods as +he can at home. He thereby saves himself the trouble, risk, and expense +of exportation; and he will upon that account be glad to sell them at +home, not only for a much smaller price, but with somewhat a smaller +profit, than he might expect to make by sending them abroad. He +naturally, therefore, endeavours as much as he can to turn his carrying +trade into a foreign trade of consumption. If his stock, again, is +employed in a foreign trade of consumption, he will, for the same +reason, be glad to dispose of, at home, as great a part as he can of the +home goods which he collects in order to export to some foreign market, +and he will thus endeavour, as much as he can, to turn his foreign trade +of consumption into a home trade. The mercantile stock of every country +naturally courts in this manner the near, and shuns the distant +employment; naturally courts the employment in which the returns are +frequent, and shuns that in which they are distant and slow; naturally +courts the employment in which it can maintain the greatest quantity of +productive labour in the country to which it belongs, or in which its +owner resides, and shuns that in which it can maintain there the +smallest quantity. It naturally courts the employment which in ordinary +cases is most advantageous, and shuns that which in ordinary cases is +least advantageous to that country. + +But if, in any one of these distant employments, which in ordinary cases +are less advantageous to the country, the profit should happen to rise +somewhat higher than what is sufficient to balance the natural +preference which is given to nearer employments, this superiority of +profit will draw stock from those nearer employments, till the profits +of all return to their proper level. This superiority of profit, +however, is a proof that, in the actual circumstances of the society, +those distant employments are somewhat understocked in proportion to +other employments, and that the stock of the society is not distributed +in the properest manner among all the different employments carried on +in it. It is a proof that something is either bought cheaper or sold +dearer than it ought to be, and that some particular class of citizens +is more or less oppressed, either by paying more, or by getting less +than what is suitable to that equality which ought to take place, and +which naturally does take place, among all the different classes of +them. Though the same capital never will maintain the same quantity of +productive labour in a distant as in a near employment, yet a distant +employment may be as necessary for the welfare of the society as a near +one; the goods which the distant employment deals in being necessary, +perhaps, for carrying on many of the nearer employments. But if the +profits of those who deal in such goods are above their proper level, +those goods will be sold dearer than they ought to be, or somewhat above +their natural price, and all those engaged in the nearer employments +will be more or less oppressed by this high price. Their interest, +therefore, in this case, requires, that some stock should be withdrawn +from those nearer employments, and turned towards that distant one, in +order to reduce its profits to their proper level, and the price of the +goods which it deals in to their natural price. In this extraordinary +case, the public interest requires that some stock should be withdrawn +from those employments which, in ordinary cases, are more advantageous, +and turned towards one which, in ordinary cases, is less advantageous to +the public; and, in this extraordinary case, the natural interests and +inclinations of men coincide as exactly with the public interests as in +all other ordinary cases, and lead them to withdraw stock from the near, +and to turn it towards the distant employments. + +It is thus that the private interests and passions of individuals +naturally dispose them to turn their stock towards the employments which +in ordinary cases, are most advantageous to the society. But if from +this natural preference they should turn too much of it towards those +employments, the fall of profit in them, and the rise of it in all +others, immediately dispose them to alter this faulty distribution. +Without any intervention of law, therefore, the private interests and +passions of men naturally lead them to divide and distribute the stock +of every society among all the different employments carried on in it, +as nearly as possible in the proportion which is most agreeable to the +interest of the whole society. + +All the different regulations of the mercantile system necessarily +derange more or less this natural and most advantageous distribution of +stock. But those which concern the trade to America and the East Indies +derange it, perhaps, more than any other; because the trade to those two +great continents absorbs a greater quantity of stock than any two other +branches of trade. The regulations, however, by which this derangement +is effected in those two different branches of trade, are not altogether +the same. Monopoly is the great engine of both; but it is a different +sort of monopoly. Monopoly of one kind or another, indeed, seems to be +the sole engine of the mercantile system. + +In the trade to America, every nation endeavours to engross as much as +possible the whole market of its own colonies, by fairly excluding all +other nations from any direct trade to them. During the greater part of +the sixteenth century, the Portuguese endeavoured to manage the trade to +the East Indies in the same manner, by claiming the sole right of +sailing in the Indian seas, on account of the merit of having first +found out the road to them. The Dutch still continue to exclude all +other European nations from any direct trade to their spice islands. +Monopolies of this kind are evidently established against all other +European nations, who are thereby not only excluded from a trade to +which it might be convenient for them to turn some part of their stock, +but are obliged to buy the goods which that trade deals in, somewhat +dearer than if they could import them themselves directly from the +countries which produced them. + +But since the fall of the power of Portugal, no European nation has +claimed the exclusive right of sailing in the Indian seas, of which the +principal ports are now open to the ships of all European nations. +Except in Portugal, however, and within these few years in France, the +trade to the East Indies has, in every European country, been subjected +to an exclusive company. Monopolies of this kind are properly +established against the very nation which erects them. The greater part +of that nation are thereby not only excluded from a trade to which it +might be convenient for them to turn some part of their stock, but are +obliged to buy the goods which that trade deals in somewhat dearer than +if it was open and free to all their countrymen. Since the establishment +of the English East India company, for example, the other inhabitants of +England, over and above being excluded from the trade, must have paid, +in the price of the East India goods which they have consumed, not only +for all the extraordinary profits which the company may have made upon +those goods in consequence of their monopoly, but for all the +extraordinary waste which the fraud and abuse inseparable from the +management of the affairs of so great a company must necessarily have +occasioned. The absurdity of this second kind of monopoly, therefore, is +much more manifest than that of the first. + +Both these kinds of monopolies derange more or less the natural +distribution of the stock of the society; but they do not always derange +it in the same way. + +Monopolies of the first kind always attract to the particular trade in +which they are established a greater proportion of the stock of the +society than what would go to that trade of its own accord. + +Monopolies of the second kind may sometimes attract stock towards the +particular trade in which they are established, and sometimes repel it +from that trade, according to different circumstances. In poor +countries, they naturally attract towards the trade more stock than +would otherwise go to it. In rich countries, they naturally repel from +it a good deal of stock which would otherwise go to it. + +Such poor countries as Sweden and Denmark, for example, would probably +have never sent a single ship to the East Indies, had not the trade been +subjected to an exclusive company. The establishment of such a company +necessarily encourages adventurers. Their monopoly secures them against +all competitors in the home market, and they have the same chance for +foreign markets with the traders of other nations. Their monopoly shows +them the certainty of a great profit upon a considerable quantity of +goods, and the chance of a considerable profit upon a great quantity. +Without such extraordinary encouragement, the poor traders of such poor +countries would probably never have thought of hazarding their small +capitals in so very distant and uncertain an adventure as the trade to +the East Indies must naturally have appeared to them. + +Such a rich country as Holland, on the contrary, would probably, in the +case of a free trade, send many more ships to the East Indies than it +actually does. The limited stock of the Dutch East India company +probably repels from that trade many great mercantile capitals which +would otherwise go to it. The mercantile capital of Holland is so great, +that it is, as it were, continually overflowing, sometimes into the +public funds of foreign countries, sometimes into loans to private +traders and adventurers of foreign countries, sometimes into the most +round-about foreign trades consumption, and sometimes into the carrying +trade. All near employments being completely filled up, all the capital +which can be placed in them with any tolerable profit being already +placed in them, the capital of Holland necessarily flows towards the +most distant employments. The trade to the East Indies, if it were +altogether free, would probably absorb the greater part of this +redundant capital. The East Indies offer a market both for the +manufactures of Europe, and for the gold and silver, as well as for the +several other productions of America, greater and more extensive than +both Europe and America put together. + +Every derangement of the natural distribution of stock is necessarily +hurtful to the society in which it takes place; whether it be by +repelling from a particular trade the stock which would otherwise go to +it, or by attracting towards a particular trade that which would not +otherwise come to it. If, without any exclusive company, the trade of +Holland to the East Indies would be greater than it actually is, that +country must suffer a considerable loss, by part of its capital being +excluded from the employment most convenient for that port. And, in the +same manner, if, without an exclusive company, the trade of Sweden and +Denmark to the East Indies would be less than it actually is, or, what +perhaps is more probable, would not exist at all, those two countries +must likewise suffer a considerable loss, by part of their capital being +drawn into an employment which must be more or less unsuitable to their +present circumstances. Better for them, perhaps, in the present +circumstances, to buy East India goods of other nations, even though +they should pay somewhat dearer, than to turn so great a part of their +small capital to so very distant a trade, in which the returns are so +very slow, in which that capital can maintain so small a quantity of +productive labour at home, where productive labour is so much wanted, +where so little is done, and where so much is to do. + +Though without an exclusive company, therefore, a particular country +should not be able to carry on any direct trade to the East Indies, it +will not from thence follow, that such a company ought to be established +there, but only that such a country ought not, in these circumstances, +to trade directly to the East Indies. That such companies are not in +general necessary for carrying on the East India trade, is sufficiently +demonstrated by the experience of the Portuguese, who enjoyed almost the +whole of it for more than a century together, without any exclusive +company. + +No private merchant, it has been said, could well have capital +sufficient to maintain factors and agents in the different ports of the +East Indies, in order to provide goods for the ships which he might +occasionally send thither; and yet, unless he was able to do this, the +difficulty of finding a cargo might frequently make his ships lose the +season for returning; and the expense of so long a delay would not only +eat up the whole profit of the adventure, but frequently occasion a very +considerable loss. This argument, however, if it proved any thing at +all, would prove that no one great branch of trade could be carried on +without an exclusive company, which is contrary to the experience of all +nations. There is no great branch of trade, in which the capital of any +one private merchant is sufficient for carrying on all the subordinate +branches which must be carried on, in order to carry on the principal +one. But when a nation is ripe for any great branch of trade, some +merchants naturally turn their capitals towards some principal, and some +towards the subordinate branches of it; and though all the different +branches of it are in this manner carried on, yet it very seldom happens +that they are all carried on by the capital of one private merchant. If +a nation, therefore, is ripe for the East India trade, a certain portion +of its capital will naturally divide itself among all the different +branches of that trade. Some of its merchants will find it for their +interest to reside in the East Indies, and to employ their capitals +there in providing goods for the ships which are to be sent out by other +merchants who reside in Europe. The settlements which different European +nations have obtained in the East Indies, if they were taken from the +exclusive companies to which they at present belong, and put under the +immediate protection of the sovereign, would render this residence both +safe and easy, at least to the merchants of the particular nations to +whom those settlements belong. If, at any particular time, that part of +the capital of any country which of its own accord tended and inclined, +if I may say so, towards the East India trade, was not sufficient for +carrying on all those different branches of it, it would be a proof +that, at that particular time, that country was not ripe for that trade, +and that it would do better to buy for some time, even at a higher +price, from other European nations, the East India goods it had occasion +for, than to import them itself directly from the East Indies. What it +might lose by the high price of those goods, could seldom be equal to +the loss which it would sustain by the distraction of a large portion of +its capital from other employments more necessary, or more useful, or +more suitable to its circumstances and situation, than a direct trade to +the East Indies. + +Though the Europeans possess many considerable settlements both upon the +coast of Africa and in the East Indies, they have not yet established, +in either of those countries, such numerous and thriving colonies as +those in the islands and continent of America. Africa, however, as well +as several of the countries comprehended under the general name of the +East Indies, is inhabited by barbarous nations. But those nations were +by no means so weak and defenceless as the miserable and helpless +Americans; and in proportion to the natural fertility of the countries +which they inhabited, they were, besides, much more populous. The most +barbarous nations, either of Africa or of the East Indies, were +shepherds; even the Hottentots were so. But the natives of every part of +America, except Mexico and Peru, were only hunters; and the difference +is very great between the number of shepherds and that of hunters, whom +the same extent of equally fertile territory can maintain. In Africa and +the East Indies, therefore, it was more difficult to displace the +natives, and to extend the European plantations over the greater part of +the lands of the original inhabitants. The genius of exclusive +companies, besides, is unfavourable, it has already been observed, to +the growth of new colonies, and has probably been the principal cause of +the little progress which they have made in the East Indies. The +Portuguese carried on the trade both to Africa and the East Indies, +without any exclusive companies; and their settlements at Congo, Angola, +and Benguela, on the coast of Africa, and at Goa in the East Indies, +though much depressed by superstition and every sort of bad government, +yet bear some resemblance to the colonies of America, and are partly +inhabited by Portuguese who have been established there for several +generations. The Dutch settlements at the Cape of Good Hope and at +Batavia, are at present the most considerable colonies which the +Europeans have established, either in Africa or in the East Indies; and +both those settlements are peculiarly fortunate in their situation. The +Cape of Good Hope was inhabited by a race of people almost as barbarous, +and quite as incapable of defending themselves, as the natives of +America. It is, besides, the half-way house, if one may say so, between +Europe and the East Indies, at which almost every European ship makes +some stay, both in going and returning. The supplying of those ships +with every sort of fresh provisions, with fruit, and sometimes with +wine, affords alone a very extensive market for the surplus produce of +the colonies. What the Cape of Good Hope is between Europe and every +part of the East Indies, Batavia is between the principal countries of +the East Indies. It lies upon the most frequented road from Indostan to +China and Japan, and is nearly about mid-way upon that road. Almost all +the ships too, that sail between Europe and China, touch at Batavia; and +it is, over and above all this, the centre and principal mart of what is +called the country trade of the East Indies; not only of that part of it +which is carried on by Europeans, but of that which is carried on by the +native Indians; and vessels navigated by the inhabitants of China and +Japan, of Tonquin, Malacca, Cochin-China, and the island of Celebes, are +frequently to be seen in its port. Such advantageous situations have +enabled those two colonies to surmount all the obstacles which the +oppressive genius of an exclusive company may have occasionally opposed +to their growth. They have enabled Batavia to surmount the additional +disadvantage of perhaps the most unwholesome climate in the world. + +The English and Dutch companies, though they have established no +considerable colonies, except the two above mentioned, have both made +considerable conquests in the East Indies. But in the manner in which +they both govern their new subjects, the natural genius of an exclusive +company has shewn itself most distinctly. In the spice islands, the +Dutch are said to burn all the spiceries which a fertile season +produces, beyond what they expect to dispose of in Europe with such a +profit as they think sufficient. In the islands where they have no +settlements, they give a premium to those who collect the young blossoms +and green leaves of the clove and nutmeg trees, which naturally grow +there, but which this savage policy has now, it is said, almost +completely extirpated. Even in the islands where they have settlements, +they have very much reduced, it is said, the number of those trees. If +the produce even of their own islands was much greater than what suited +their market, the natives, they suspect, might find means to convey some +part of it to other nations; and the best way, they imagine, to secure +their own monopoly, is to take care that no more shall grow than what +they themselves carry to market. By different arts of oppression, they +have reduced the population of several of the Moluccas nearly to the +number which is sufficient to supply with fresh provisions, and other +necessaries of life, their own insignificant garrisons, and such of +their ships as occasionally come there for a cargo of spices. Under the +government even of the Portuguese, however, those islands are said to +have been tolerably well inhabited. The English company have not yet had +time to establish in Bengal so perfectly destructive a system. The plan +of their government, however, has had exactly the same tendency. It has +not been uncommon, I am well assured, for the chief, that is, the first +clerk of a factory, to order a peasant to plough up a rich field of +poppies, and sow it with rice, or some other grain. The pretence was, to +prevent a scarcity of provisions; but the real reason, to give the chief +an opportunity of selling at a better price a large quantity of opium +which he happened then to have upon hand. Upon other occasions, the +order has been reversed; and a rich field of rice or other grain has +been ploughed up, in order to make room for a plantation of poppies, +when the chief foresaw that extraordinary profit was likely to be made +by opium. The servants of the company have, upon several occasions, +attempted to establish in their own favour the monopoly of some of the +most important branches, not only of the foreign, but of the inland +trade of the country. Had they been allowed to go on, it is impossible +that they should not, at some time or another, have attempted to +restrain the production of the particular articles of which they had +thus usurped the monopoly, not only to the quantity which they +themselves could purchase, but to that which they could expect to sell +with such a profit as they might think sufficient. In the course of a +century or two, the policy of the English company would, in this manner, +have probably proved as completely destructive as that of the Dutch. + +Nothing, however, can be more directly contrary to the real interest of +those companies, considered as the sovereigns of the countries which +they have conquered, than this destructive plan. In almost all +countries, the revenue of the sovereign is drawn from that of the +people. The greater the revenue of the people, therefore, the greater +the annual produce of their land and labour, the more they can afford to +the sovereign. It is his interest, therefore, to increase as much as +possible that annual produce. But if this is the interest of every +sovereign, it is peculiarly so of one whose revenue, like that of the +sovereign of Bengal, arises chiefly from a land-rent. That rent must +necessarily be in proportion to the quantity and value of the produce; +and both the one and the other must depend upon the extent of the +market. The quantity will always be suited, with more or less exactness, +to the consumption of those who can afford to pay for it; and the price +which they will pay will always be in proportion to the eagerness of +their competition. It is the interest of such a sovereign, therefore, to +open the most extensive market for the produce of his country, to allow +the most perfect freedom of commerce, in order to increase as much as +possible the number and competition of buyers; and upon this account to +abolish, not only all monopolies, but all restraints upon the +transportation of the home produce from one part of the country to +another, upon its exportation to foreign countries, or upon the +importation of goods of any kind for which it can be exchanged. He is in +this manner most likely to increase both the quantity and value of that +produce, and consequently of his own share of it, or of his own revenue. + +But a company of merchants, are, it seems, incapable of considering +themselves as sovereigns, even after they have become such. Trade, or +buying in order to sell again, they still consider as their principal +business, and by a strange absurdity, regard the character of the +sovereign as but an appendix to that of the merchant; as something which +ought to be made subservient to it, or by means of which they may be +enabled to buy cheaper in India, and thereby to sell with a better +profit in Europe. They endeavour, for this purpose, to keep out as much +as possible all competitors from the market of the countries which are +subject to their government, and consequently to reduce, at least, some +part of the surplus produce of those countries to what is barely +sufficient for supplying their own demand, or to what they can expect to +sell in Europe, with such a profit as they may think reasonable. Their +mercantile habits draw them in this manner, almost necessarily, though +perhaps insensibly, to prefer, upon all ordinary occasions, the little +and transitory profit of the monopolist to the great and permanent +revenue of the sovereign; and would gradually lead them to treat the +countries subject to their government nearly as the Dutch treat the +Moluccas. It is the interest of the East India company, considered as +sovereigns, that the European goods which are carried to their Indian +dominions should be sold there as cheap as possible; and that the Indian +goods which are brought from thence should bring there as good a price, +or should be sold there as dear as possible. But the reverse of this is +their interest as merchants. As sovereigns, their interest is exactly +the same with that of the country which they govern. As merchants, their +interest is directly opposite to that interest. + +But if the genius of such a government, even as to what concerns its +direction in Europe, is in this manner essentially, and perhaps +incurably faulty, that of its administration in India is still more so. +That administration is necessarily composed of a council of merchants, a +profession no doubt extremely respectable, but which in no country in +the world carries along with it that sort of authority which naturally +overawes the people, and without force commands their willing obedience. +Such a council can command obedience only by the military force with +which they are accompanied; and their government is, therefore, +necessarily military and despotical. Their proper business, however, is +that of merchants. It is to sell, upon their master's account, the +European goods consigned to them, and to buy, in return, Indian goods +for the European market. It is to sell the one as dear, and to buy the +other as cheap as possible, and consequently to exclude, as much as +possible, all rivals from the particular market where they keep their +shop. The genius of the administration, therefore, so far as concerns +the trade of the company, is the same as that of the direction. It tends +to make government subservient to the interest of monopoly, and +consequently to stunt the natural growth of some parts, at least, of the +surplus produce of the country, to what is barely sufficient for +answering the demand of the company. + +All the members of the administration, besides, trade more or less upon +their own account; and it is in vain to prohibit them from doing so. +Nothing can be more completely foolish than to expect that the clerks of +a great counting-house, at ten thousand miles distance, and consequently +almost quite out of sight, should, upon a simple order from their +master, give up at once doing any sort of business upon their own +account; abandon for ever all hopes of making a fortune, of which they +have the means in their hands; and content themselves with the moderate +salaries which those masters allow them, and which, moderate as they +are, can seldom be augmented, being commonly as large as the real +profits of the company trade can afford. In such circumstances, to +prohibit the servants of the company from trading upon their own +account, can have scarce any other effect than to enable its superior +servants, under pretence of executing their master's order, to oppress +such of the inferior ones as have had the misfortune to fall under their +displeasure. The servants naturally endeavour to establish the same +monopoly in favour of their own private trade as of the public trade of +the company. If they are suffered to act as they could wish, they will +establish this monopoly openly and directly, by fairly prohibiting all +other people from trading in the articles in which they choose to deal; +and this, perhaps, is the best and least oppressive way of establishing +it. But if, by an order from Europe, they are prohibited from doing +this, they will, notwithstanding, endeavour to establish a monopoly of +the same kind secretly and indirectly, in a way that is much more +destructive to the country. They will employ the whole authority of +government, and pervert the administration of justice, in order to +harass and ruin those who interfere with them in any branch of commerce, +which by means of agents, either concealed, or at least not publicly +avowed, they may choose to carry on. But the private trade of the +servants will naturally extend to a much greater variety of articles +than the public trade of the company. The public trade of the company +extends no further than the trade with Europe, and comprehends a part +only of the foreign trade of the country. But the private trade of the +servants may extend to all the different branches both of its inland and +foreign trade. The monopoly of the company can tend only to stunt the +natural growth of that part of the surplus produce which, in the case of +a free trade, would be exported to Europe. That of the servants tends to +stunt the natural growth of every part of the produce in which they +choose to deal; of what is destined for home consumption, as well as of +what is destined for exportation; and consequently to degrade the +cultivation of the whole country, and to reduce the number of its +inhabitants. It tends to reduce the quantity of every sort of produce, +even that of the necessaries of life, whenever the servants of the +country choose to deal in them, to what those servants can both afford +to buy and expect to sell with such a profit as pleases them. + +From the nature of their situation, too, the servants must be more +disposed to support with rigourous severity their own interest, against +that of the country which they govern, than their masters can be to +support theirs. The country belongs to their masters, who cannot avoid +having some regard for the interest of what belongs to them; but it does +not belong to the servants. The real interest of their masters, if they +were capable of understanding it, is the same with that of the +country;[42] and it is from ignorance chiefly, and the meanness of +mercantile prejudice, that they ever oppress it. But the real interest +of the servants is by no means the same with that of the country, and +the most perfect information would not necessarily put an end to their +oppressions. The regulations, accordingly, which have been sent out from +Europe, though they have been frequently weak, have upon most occasions +been well meaning. More intelligence, and perhaps less good meaning, has +sometimes appeared in those established by the servants in India. It is +a very singular government in which every member of the administration +wishes to get out of the country, and consequently to have done with the +government, as soon as he can, and to whose interest, the day after he +has left it, and carried his whole fortune with him, it is perfectly +indifferent though the whole country was swallowed up by an earthquake. + +I mean not, however, by any thing which I have here said, to throw any +odious imputation upon the general character of the servants of the East +India company, and much less upon that of any particular persons. It is +the system of government, the situation in which they are placed, that I +mean to censure, not the character of those who have acted in it. They +acted as their situation naturally directed, and they who have clamoured +the loudest against them would probably not have acted better +themselves. In war and negotiation, the councils of Madras and Calcutta, +have upon several occasions, conducted themselves with a resolution and +decisive wisdom, which would have done honour to the senate of Rome in +the best days of that republic. The members of those councils, however, +had been bred to professions very different from war and politics. But +their situation alone, without education, experience, or even example, +seems to have formed in them all at once the great qualities which it +required, and to have inspired them both with abilities and virtues +which they themselves could not well know that they possessed. If upon +some occasions, therefore, it has animated them to actions of +magnanimity which could not well have been expected from them, we should +not wonder if, upon others, it has prompted them to exploits of somewhat +a different nature. + +Such exclusive companies, therefore, are nuisances in every respect; +always more or less inconvenient to the countries in which they are +established, and destructive to those which have the misfortune to fall +under their government. + + + + +CHAP. VIII. + +CONCLUSION OF THE MERCANTILE SYSTEM. + + +Though the encouragement of exportation, and the discouragement of +importation, are the two great engines by which the mercantile system +proposes to enrich every country, yet, with regard to some particular +commodities, it seems to follow an opposite plan: to discourage +exportation, and to encourage importation. Its ultimate object, however, +it pretends, is always the same, to enrich the country by an +advantageous balance of trade. It discourages the exportation of the +materials of manufacture, and of the instruments of trade, in order to +give our own workmen an advantage, and to enable them to undersell those +of other nations in all foreign markets; and by restraining, in this +manner, the exportation of a few commodities, of no great price, it +proposes to occasion a much greater and more valuable exportation of +others. It encourages the importation of the materials of manufacture, +in order that our own people may be enabled to work them up more +cheaply, and thereby prevent a greater and more valuable importation of +the manufactured commodities. I do not observe, at least in our statute +book, any encouragement given to the importation of the instruments of +trade. When manufactures have advanced to a certain pitch of greatness, +the fabrication of the instruments of trade becomes itself the object of +a great number of very important manufactures. To give any particular +encouragement to the importation of such instruments, would interfere +too much with the interest of those manufactures. Such importation, +therefore, instead of being encouraged, has frequently been prohibited. +Thus the importation of wool cards, except from Ireland, or when brought +in as wreck or prize goods, was prohibited by the 3d of Edward IV.; +which prohibition was renewed by the 39th of Elizabeth, and has been +continued and rendered perpetual by subsequent laws. + +The importation of the materials of manufacture has sometimes been +encouraged by an exemption from the duties to which other goods are +subject, and sometimes by bounties. + +The importation of sheep's wool from several different countries, of +cotton wool from all countries, of undressed flax, of the greater part +of dyeing drugs, of the greater part of undressed hides from Ireland, or +the British colonies, of seal skins from the British Greenland fishery, +of pig and bar iron from the British colonies, as well as of several +other materials of manufacture, has been encouraged by an exemption from +all duties, if properly entered at the custom-house. The private +interest of our merchants and manufacturers may, perhaps, have extorted +from the legislature these exemptions, as well as the greater part of +our other commercial regulations. They are, however, perfectly just and +reasonable; and if, consistently with the necessities of the state, they +could be extended to all the other materials of manufacture, the public +would certainly be a gainer. + +The avidity of our great manufacturers, however, has in some cases +extended these exemptions a good deal beyond what can justly be +considered as the rude materials of their work. By the 24th Geo. II. +chap. 46, a small duty of only 1d. the pound was imposed upon the +importation of foreign brown linen yarn, instead of much higher duties, +to which it had been subjected before, viz. of 6d. the pound upon +sail yarn, of 1s. the pound upon all French and Dutch yarn, and of +L.2 : 13 : 4 upon the hundred weight of all spruce or Muscovia yarn. But +our manufacturers were not long satisfied with this reduction: by the +29th of the same king, chap. 15, the same law which gave a bounty upon +the exportation of British and Irish linen, of which the price did not +exceed 18d. the yard, even this small duty upon the importation of brown +linen yarn was taken away. In the different operations, however, which +are necessary for the preparation of linen yarn, a good deal more +industry is employed, than in the subsequent operation of preparing +linen cloth from linen yarn. To say nothing of the industry of the +flax-growers and flax-dressers, three or four spinners at least are +necessary in order to keep one weaver in constant employment; and more +than four-fifths of the whole quantity of labour necessary for the +preparation of linen cloth, is employed in that of linen yarn; but our +spinners are poor people; women commonly scattered about in all +different parts of the country, without support or protection. It is not +by the sale of their work, but by that of the complete work of the +weavers, that our great master manufactures make their profits. As it is +their interest to sell the complete manufacture as dear, so it is to buy +the materials as cheap as possible. By extorting from the legislature +bounties upon the exportation of their own linen, high duties upon the +importation of all foreign linen, and a total prohibition of the home +consumption of some sorts of French linen, they endeavour to sell their +own goods as dear as possible. By encouraging the importation of foreign +linen yarn, and thereby bringing it into competition with that which is +made by our own people, they endeavour to buy the work of the poor +spinners as cheap as possible. They are as intent to keep down the wages +of their own weavers, as the earnings of the poor spinners; and it is by +no means for the benefit of the workmen that they endeavour either to +raise the price of the complete work, or to lower that of the rude +materials. It is the industry which is carried on for the benefit of the +rich and the powerful, that is principally encouraged by our mercantile +system. That which is carried on for the benefit of the poor and the +indigent is too often either neglected or oppressed. + +Both the bounty upon the exportation of linen, and the exemption from +the duty upon the importation of foreign yarn, which were granted only +for fifteen years, but continued by two different prolongations, expire +with the end of the session of parliament which shall immediately follow +the 24th of June 1786. + +The encouragement given to the importation of the materials of +manufacture by bounties, has been principally confined to such as were +imported from our American plantations. + +The first bounties of this kind were those granted about the beginning +of the present century, upon the importation of naval stores from +America. Under this denomination were comprehended timber fit for masts, +yards, and bowsprits; hemp, tar, pitch, and turpentine. The bounty, +however, of L.1 the ton upon masting-timber, and that of L.6 the ton +upon hemp, were extended to such as should be imported into England from +Scotland. Both these bounties continued, without any variation, at the +same rate, till they were severally allowed to expire; that upon hemp on +the 1st of January 1741, and that upon masting-timber at the end of the +session of parliament immediately following the 24th June 1781. + +The bounties upon the importation of tar, pitch, and turpentine, +underwent, during their continuance, several alterations. Originally, +that upon tar was L.4 the ton; that upon pitch the same; and that upon +turpentine L.3 the ton. The bounty of L.4 the ton upon tar was +afterwards confined to such as had been prepared in a particular manner; +this upon other good, clean, and merchantable tar was reduced to L.2, +4s. the ton. The bounty upon pitch was likewise reduced to L.1, and that +upon turpentine to L.1 : 10s. the ton. + +The second bounty upon the importation of any of the materials of +manufacture, according to the order of time, was that granted by the +21st Geo. II. chap. 30, upon the importation of indigo from the British +plantations. When the plantation indigo was worth three-fourths of the +price of the best French indigo, it was, by this act, entitled to a +bounty of 6d. the pound. This bounty, which, like most others was +granted only for a limited time, was continued by several prolongations, +but was reduced to 4d. the pound. It was allowed to expire with the end +of the session of parliament which followed the 25th March 1781. + +The third bounty of this kind was that granted (much about the time that +we were beginning sometimes to court, and sometimes to quarrel with our +American colonies), by the 4th Geo. III. chap. 26, upon the importation +of hemp, or undressed flax, from the British plantations. This bounty +was granted for twenty-one years, from the 24th June 1764 to the 24th +June 1785. For the first seven years, it was to be at the rate of L.8 +the ton; for the second at L.6; and for the third at L.4. It was not +extended to Scotland, of which the climate (although hemp is sometimes +times raised there in small quantities, and of an inferior quality) is +not very fit for that produce. Such a bounty upon the importation of +Scotch flax in England would have been too great a discouragement to the +native produce of the southern part of the united kingdom. + +The fourth bounty of this kind was that granted by the 5th Geo. III. +chap. 45, upon the importation of wood from America. It was granted for +nine years from the 1st January 1766 to the 1st January 1775. During the +first three years, it was to be for every hundred-and-twenty good deals, +at the rate of L.1, and for every load containing fifty cubic feet of +other square timber, at the rate of 12s. For the second three years, it +was for deals, to be at the rate of 15s., and for other squared timber +at the rate of 8s.; and for the third three years, it was for deals, to +be at the rate of 10s.; and for every other squared timber at the rate +of 5s. + +The fifth bounty of this kind was that granted by the 9th Geo. III. +chap. 38, upon the importation of raw silk from the British plantations. +It was granted for twenty-one years, from the 1st January 1770, to the +1st January 1791. For the first seven years, it was to be at the rate of +L.25 for every hundred pounds value; for the second, at L.20; and for +the third, at L.15. The management of the silk-worm, and the preparation +of silk, requires so much hand-labour, and labour is so very dear in +America, that even this great bounty, I have been informed, was not +likely to produce any considerable effect. + +The sixth bounty of this kind was that granted by 11th Geo. III. chap. +50, for the importation of pipe, hogshead, and barrel-staves and heading +from the British plantations. It was granted for nine years, from 1st +January 1772 to the 1st January 1781. For the first three years, it was, +for a certain quantity of each, to be at the rate of L.6; for the second +three years at L.4; and for the third three years at L.2. + +The seventh and last bounty of this kind was that granted by the 19th +Geo. III. chap. 37, upon the importation of hemp from Ireland. It was +granted in the same manner as that for the importation of hemp and +undressed flax from America, for twenty-one years, from the 24th June +1779 to the 24th June 1800. The term is divided likewise into three +periods, of seven years each; and in each of those periods, the rate of +the Irish bounty is the same with that of the American. It does not, +however, like the American bounty, extend to the importation of +undressed flax. It would have been too great a discouragement to the +cultivation of that plant in Great Britain. When this last bounty was +granted, the British and Irish legislatures were not in much better +humour with one another, than the British and American had been before. +But this boon to Ireland, it is to be hoped, has been granted under more +fortunate auspices than all those to America. + +The same commodities, upon which we thus gave bounties, when imported +from America, were subjected to considerable duties when imported from +any other country. The interest of our American colonies was regarded as +the same with that of the mother country. Their wealth was considered as +our wealth. Whatever money was sent out to them, it was said, came all +back to us by the balance of trade, and we could never become a farthing +the poorer by any expense which we could lay out upon them. They were +our own in every respect, and it was an expense laid out upon the +improvement of our own property, and for the profitable employment of +our own people. It is unnecessary, I apprehend, at present to any any +thing further, in order to expose the folly of a system which fatal +experience has now sufficiently exposed. Had our American colonies +really been a part of Great Britain, those bounties might have been +considered as bounties upon production, and would still have been liable +to all the objections to which such bounties are liable, but to no +other. + +The exportation of the materials of manufacture is sometimes discouraged +by absolute prohibitions, and sometimes by high duties. + +Our woollen manufacturers have been more successful than any other class +of workmen, in persuading the legislature that the prosperity of the +nation depended upon the success and extension of their particular +business. They have not only obtained a monopoly against the consumers, +by an absolute prohibition of importing woollen cloths from any foreign +country; but they have likewise obtained another monopoly against the +sheep farmers and growers of wool, by a similar prohibition of the +exportation of live sheep and wool. The severity of many of the laws +which have been enacted for the security of the revenue is very justly +complained of, as imposing heavy penalties upon actions which, +antecedent to the statutes that declared them to be crimes, had always +been understood to be innocent. But the cruellest of our revenue laws, I +will venture to affirm, are mild and gentle, in comparison to some of +those which the clamour of our merchants and manufacturers has extorted +from the legislature, for the support of their own absurd and oppressive +monopolies. Like the laws of Draco, these laws may be said to be all +written in blood. + +By the 8th of Elizabeth, chap. 3, the exporter of sheep, lambs, or rams, +was for the first offence, to forfeit all his goods for ever, to suffer +a year's imprisonment, and then to have his left hand cut off on a +market town, upon a market day, to be there nailed up; and for the +second offence, to be adjudged a felon, and to suffer death accordingly. +To prevent the breed of our sheep from being propagated in foreign +countries, seems to have been the object of this law. By the 13th and +14th of Charles II. chap. 18, the exportation of wool was made felony, +and the exporter subjected to the same penalties and forfeitures as a +felon. + +For the honour of the national humanity, it is to be hoped that neither +of these statutes was ever executed. The first of them, however, so far +as I know, has never been directly repealed, and serjeant Hawkins seems +to consider it as still in force. It may, however, perhaps be considered +as virtually repealed by the 12th of Charles II. chap. 32, sect. 3, +which, without expressly taking away the penalties imposed by former +statutes, imposes a new penalty, viz. that of 20s. for every sheep +exported, or attempted to be exported, together with the forfeiture of +the sheep, and of the owner's share of the sheep. The second of them was +expressly repealed by the 7th and 8th of William III. chap. 28, sect. 4, +by which it is declared that 'Whereas the statute of the 13th and 14th +of king Charles II. made against the exportation of wool, among other +things in the said act mentioned, doth enact the same to be deemed +felony, by the severity of which penalty the prosecution of offenders +hath not been so effectually put in execution; be it therefore enacted, +by the authority aforesaid, that so much of the said act, which relates +to the making the said offence felony, be repealed and made void.' + +The penalties, however, which are either imposed by this milder statute, +or which, though imposed by former statutes, are not repealed by this +one, are still sufficiently severe. Besides the forfeiture of the goods, +the exporter incurs the penalty of 3s. for every pound weight of wool, +either exported or attempted to be exported, that is, about four or five +times the value. Any merchant, or other person convicted of this +offence, is disabled from requiring any debt or account belonging to him +from any factor or other person. Let his fortune be what it will, +whether he is or is not able to pay those heavy penalties, the law means +to ruin him completely. But, as the morals of the great body of people +are not yet so corrupt as those of the contrivers of this statute, I +have not heard that any advantage has ever been taken of this clause. If +the person convicted of this offence is not able to pay the penalties +within three months after judgment, he is to be transported for seven +years; and if he returns before the expiration of that time, he is +liable to the pains of felony, without benefit of clergy. The owner of +the ship, knowing this offence, forfeits all his interest in the ship +and furniture. The master and mariners knowing this offence, forfeit all +their goods and chattels, and suffer three months imprisonment. By a +subsequent statute, the master suffers six months imprisonment. + +In order to prevent exportation, the whole inland commerce of wool is +laid under very burdensome and oppressive restrictions. It cannot be +packed in any box, barrel, cask, case, chest, or any other package, but +only in packs of leather or pack-cloth, on which must be marked on the +outside the words WOOL or YARN, in large letters, not less than three +inches long, on pain of forfeiting the same and the package, and 3s. for +every pound weight, to be paid by the owner or packer. It cannot be +loaden on any horse or cart, or carried by land within five miles of the +coast, but between sun-rising, and sun-setting, on pain of forfeiting +the same, the horses and carriages. The hundred next adjoining to the +sea coast, out of, or through which the wool is carried or exported, +forfeits L.20, if the wool is under the value of L.10; and if of greater +value, then treble that value, together with treble costs, to be sued +for within the year. The execution to be against any two of the +inhabitants, whom the sessions must reimburse, by an assessment on the +other inhabitants, as in the cases of robbery. And if any person +compounds with the hundred for less than this penalty, he is to be +imprisoned for five years, and any other person may prosecute. These +regulations take place through the whole kingdom. + +But in the particular counties of Kent and Sussex, the restrictions are +still more troublesome. Every owner of wool within ten miles of the sea +coast must give an account in writing, three days after shearing, to the +next officer of the customs, of the number of his fleeces, and of the +places where they are lodged. And before he removes any part of them, he +must give the like notice of the number and weight of the fleeces, and +of the name and abode of the person to whom they are sold, and of the +place to which it is intended they should be carried. No person within +fifteen miles of the sea, in the said counties, can buy any wool, before +he enters into bond to the king, that no part of the wool which he shall +so buy shall be sold by him to any other person within fifteen miles of +the sea. If any wool is found carrying towards the sea side in the said +counties, unless it has been entered and security given as aforesaid, it +is forfeited, and the offender also forfeits 3s. for every pound weight. +If any person lay any wool, not entered as aforesaid, within fifteen +miles of the sea, it must be seized and forfeited; and if, after such +seizure, any person shall claim the same, he must give security to the +exchequer, that if he is cast upon trial he shall pay treble costs, +besides all other penalties. + +When such restrictions are imposed upon the inland trade, the coasting +trade, we may believe, cannot be left very free. Every owner of wool, +who carrieth, or causeth to be carried, any wool to any part or place on +the sea coast, in order to be from thence transported by sea to any +other place or port on the coast, must first cause an entry thereof to +be made at the port from whence it is intended to be conveyed, +containing the weight, marks, and number, of the packages, before he +brings the same within five miles of that part, on pain of forfeiting +the same, and also the horses, carts, and other carriages; and also of +suffering and forfeiting, as by the other laws in force against the +exportation of wool. This law, however (1st of William III. chap. 32), +is so very indulgent as to declare, that 'this shall not hinder any +person from carrying his wool home from the place of shearing, though it +be within five miles of the sea, provided that in ten days after +shearing, and before he remove the wool, he do under his hand certify to +the next officer of the customs the true number of fleeces, and where it +is housed; and do not remove the same, without certifying to such +officer, under his hand, his intention so to do, three days before.' +Bond must be given that the wool to be carried coast-ways is to be +landed at the particular port for which it is entered outwards; and if +any part of it is landed without the presence of an officer, not only +the forfeiture of the wool is incurred, as in other goods, but the usual +additional penalty of 3s. for every pound weight is likewise incurred. + +Our woollen manufacturers, in order to justify their demand of such +extraordinary restrictions and regulations, confidently asserted, that +English wool was of a peculiar quality, superior to that of any other +country; that the wool of other countries could not, without some +mixture of it, be wrought up into any tolerable manufacture; that fine +cloth could not be made without it; that England, therefore, if the +exportation of it could be totally prevented, could monopolize to +herself almost the whole woollen trade of the world; and thus, having no +rivals, could sell at what price she pleased, and in a short time +acquire the most incredible degree of wealth by the most advantageous +balance of trade. This doctrine, like most other doctrines which are +confidently asserted by any considerable number of people, was, and +still continues to be, most implicitly believed by a much greater +number: by almost all those who are either unacquainted with the woollen +trade, or who have not made particular inquiries. It is, however, so +perfectly false, that English wool is in any respect necessary for the +making of fine cloth, that it is altogether unfit for it. Fine cloth is +made altogether of Spanish wool. English wool, cannot be even so mixed +with Spanish wool, as to enter into the composition without spoiling and +degrading, in some degree, the fabric of the cloth. + +It has been shown in the foregoing part of this work, that the effect of +these regulations has been to depress the price of English wool, not +only below what it naturally would be in the present times, but very +much below what it actually was in the time of Edward III. The price of +Scotch wool, when, in consequence of the Union, it became subject to the +same regulations, is said to have fallen about one half. It is observed +by the very accurate and intelligent author of the Memoirs of Wool, the +Reverend Mr. John Smith, that the price of the best English wool in +England, is generally below what wool of a very inferior quality +commonly sells for in the market of Amsterdam. To depress the price of +this commodity below what may be called its natural and proper price, +was the avowed purpose of those regulations; and there seems to be no +doubt of their having produced the effect that was expected from them. + +This reduction of price, it may perhaps be thought, by discouraging the +growing of wool, must have reduced very much the annual produce of that +commodity, though not below what it formerly was, yet below what, in the +present state of things, it would probably have been, had it, in +consequence of an open and free market, been allowed to rise to the +natural and proper price. I am, however, disposed to believe, that the +quantity of the annual produce cannot have been much, though it may, +perhaps, have been a little affected by these regulations. The growing +of wool is not the chief purpose for which the sheep farmer employs his +industry and stock. He expects his profit, not so much from the price of +the fleece, as from that of the carcase; and the average or ordinary +price of the latter must even, in many cases, make up to him whatever +deficiency there may be in the average or ordinary price of the former. +It has been observed, in the foregoing part of this work, that 'whatever +regulations tend to sink the price, either of wool or of raw hides, +below what it naturally would be, must, in an improved and cultivated +country, have some tendency to raise the price of butcher's meat. The +price, both of the great and small cattle which are fed on improved and +cultivated land, must be sufficient to pay the rent which the landlord, +and the profit which the farmer, has reason to expect from improved and +cultivated land. If it is not, they will soon cease to feed them. +Whatever part of this price, therefore, is not paid by the wool and the +hide, must be paid by the carcase. The less there is paid for the one, +the more must be paid for the other. In what manner this price is to be +divided upon the different parts of the beast, is indifferent to the +landlords and farmers, provided it is all paid to them. In an improved +and cultivated country, therefore, their interest as landlords and +farmers cannot be much affected by such regulations, though their +interest as consumers may, by the rise in the price of provisions.' +According to this reasoning, therefore, this degradation in the price of +wool is not likely, in an improved and cultivated country, to occasion +any diminution in the annual produce of that commodity; except so far +as, by raising the price of mutton, it may somewhat diminish the demand +for, and consequently the production of, that particular species of +butcher's meat. Its effect, however, even in this way, it is probable, +is not very considerable. + +But though its effect upon the quantity of the annual produce may not +have been very considerable, its effect upon the quality, it may perhaps +be thought, must necessarily have been very great. The degradation in +the quality of English wool, if not below what it was in former times, +yet below what it naturally would have been in the present state of +improvement and cultivation, must have been, it may perhaps be supposed, +very nearly in proportion to the degradation of price. As the quality +depends upon the breed, upon the pasture, and upon the management and +cleanliness of the sheep, during the whole progress of the growth of the +fleece, the attention to these circumstances, it may naturally enough be +imagined, can never be greater than in proportion to the recompence +which the price of the fleece is likely to make for the labour and +expense which that attention requires. It happens, however, that the +goodness of the fleece depends, in great measure, upon the health, +growth, and bulk of the animal: the same attention which is necessary +for the improvement of the carcase is, in some respect, sufficient for +that of the fleece. Notwithstanding the degradation of price, English +wool is said to have been improved considerably during the course even +of the present century. The improvement, might, perhaps, have been +greater if the price had been better; but the lowness of price, though +it may have obstructed, yet certainly it has not altogether prevented +that improvement. + +The violence of these regulations, therefore, seems to have affected +neither the quantity nor the quality of the annual produce of wool, so +much as it might have been expected to do (though I think it probable +that it may have affected the latter a good deal more than the former); +and the interest of the growers of wool, though it must have been hurt +in some degree, seems upon the whole, to have been much less hurt than +could well have been imagined. + +These considerations, however, will not justify the absolute prohibition +of the exportation of wool; but they will fully justify the imposition +of a considerable tax upon that exportation. + +To hurt, in any degree, the interest of any one order of citizens, for +no other purpose but to promote that of some other, is evidently +contrary to that justice and equality of treatment which the sovereign +owes to all the different orders of his subjects. But the prohibition +certainly hurts, in some degree, the interest of the growers of wool, +for no other purpose but to promote that of the manufacturers. + +Every different order of citizens is bound to contribute to the support +of the sovereign or commonwealth. A tax of five, or even of ten +shillings, upon the exportation of every tod of wool, would produce a +very considerable revenue to the sovereign. It would hurt the interest +of the growers somewhat less than the prohibition, because it would not +probably lower the price of wool quite so much. It would afford a +sufficient advantage to the manufacturer, because, though he might not +buy his wool altogether so cheap as under the prohibition, he would +still buy it at least five or ten shillings cheaper than any foreign +manufacturer could buy it, besides saving the freight and insurance +which the other would be obliged to pay. It is scarce possible to devise +a tax which could produce any considerable revenue to the sovereign, and +at the same time occasion so little inconveniency to any body. + +The prohibition, notwithstanding all the penalties which guard it, does +not prevent the exportation of wool. It is exported, it is well known, +in great quantities. The great difference between the price in the home +and that in the foreign market, presents such a temptation to smuggling, +that all the rigour of the law cannot prevent it. This illegal +exportation is advantageous to nobody but the smuggler. A legal +exportation, subject to a tax, by affording a revenue to the sovereign, +and thereby saving the imposition of some other, perhaps more burdensome +and inconvenient taxes, might prove advantageous to all the different +subjects of the state. + +The exportation of fuller's earth, or fuller's clay, supposed to be +necessary for preparing and cleansing the woollen manufactures, has been +subjected to nearly the same penalties as the exportation of wool. Even +tobacco-pipe clay, though acknowledged to be different from fuller's +clay, yet, on account of their resemblance, and because fuller's clay +might sometimes be exported as tobacco-pipe clay, has been laid under +the same prohibitions and penalties. + +By the 13th and 14th of Charles II. chap. 7, the exportation, not only +of raw hides, but of tanned leather, except in the shape of boots, +shoes, or slippers, was prohibited; and the law gave a monopoly to our +boot-makers and shoe-makers, not only against our graziers, but against +our tanners. By subsequent statutes, our tanners have got themselves +exempted from this monopoly, upon paying a small tax of only one +shilling on the hundred weight of tanned leather, weighing one hundred +and twelve pounds. They have obtained likewise the drawback of +two-thirds of the excise duties imposed upon their commodity, even when +exported without further manufacture. All manufactures of leather may be +exported duty free; and the exporter is besides entitled to the drawback +of the whole duties of excise. Our graziers still continue subject to +the old monopoly. Graziers, separated from one another, and dispersed +through all the different corners of the country, cannot, without great +difficulty, combine together for the purpose either of imposing +monopolies upon their fellow-citizens, or of exempting themselves from +such as may have been imposed upon them by other people. Manufacturers +of all kinds, collected together in numerous bodies in all great cities, +easily can. Even the horns of cattle are prohibited to be exported; and +the two insignificant trades of the horner and comb-maker enjoy, in this +respect, a monopoly against the graziers. + +Restraints, either by prohibitions, or by taxes, upon the exportation of +goods which are partially, but not completely manufactured, are not +peculiar to the manufacture of leather. As long as any thing remains to +be done, in order to fit any commodity for immediate use and +consumption, our manufacturers think that they themselves ought to the +doing of it. Woollen yarn and worsted are prohibited to be exported, +under the same penalties as wool. Even white cloths are subject to a +duty upon exportation; and our dyers have so far obtained a monopoly +against our clothiers. Our clothiers would probably have been able to +defend themselves against it; but it happens that the greater part of +our principal clothiers are themselves likewise dyers. Watch-cases, +clock-cases, and dial-plates for clocks and watches, have been +prohibited to be exported. Our clock-makers and watch-makers are, it +seems, unwilling that the price of this sort of workmanship should be +raised upon them by the competition of foreigners. + +By some old statutes of Edward III. Henry VIII. and Edward VI. the +exportation of all metals was prohibited. Lead and tin were alone +excepted, probably on account of the great abundance of those metals; in +the exportation of which a considerable part of the trade of the kingdom +in those days consisted. For the encouragement of the mining trade, the +5th of William and Mary, chap. 17, exempted from this prohibition iron, +copper, and mundic metal made from British ore. The exportation of all +sorts of copper bars, foreign as well as British, was afterwards +permitted by the 9th and 10th of William III. chap 26. The exportation +of unmanufactured brass, of what is called gun-metal, bell-metal, and +shroff-metal, still continues to be prohibited. Brass manufactures of +all sorts may be exported duty free. + +The exportation of the materials of manufacture, where it is not +altogether prohibited, is, in many cases, subjected to considerable +duties. + +By the 8th Geo. I. chap. 15, the exportation of all goods, the produce +or manufacture of Great Britain, upon which any duties had been imposed +by former statutes, was rendered duty free. The following goods, +however, were excepted: alum, lead, lead-ore, tin, tanned leather, +copperas, coals, wool, cards, white woolen cloths, lapis calaminaris, +skins of all sorts, glue, coney hair or wool, hares wool, hair of all +sorts, horses, and litharge of lead. If you expect horses, all these are +either materials of manufacture, or incomplete manufactures (which may +be considered as materials for still further manufacture), or +instruments of trade. This statute leaves them subject to all the old +duties which had ever been imposed upon them, the old subsidy, and one +per cent. outwards. + +By the same statute, a great number of foreign drugs for dyers use are +exempted from all duties upon importation. Each of them, however, is +afterwards subjected to a certain duty, not indeed a very heavy one, +upon exportation. Our dyers, it seems, while they thought it for their +interest to encourage the importation of those drugs, by an exemption +from all duties, thought it likewise for their own interest to throw +some small discouragement upon their exportation. The avidity, however, +which suggested this notable piece of mercantile ingenuity, most +probably disappointed itself of its object. It necessarily taught the +importers to be more careful than they might otherwise have been, that +their importation should not exceed what was necessary for the supply of +the home market. The home market was at all times likely to be more +scantily supplied; the commodities were at all times likely to be +somewhat dearer there than they would have been, had the exportation +been rendered as free as the importation. + +By the above-mentioned statute, gum senega, or gum arabic, being among +the enumerated dyeing drugs, might be imported duty free. They were +subjected, indeed, to a small poundage duty, amounting only to +threepence in the hundred weight, upon their re-exportation. France +enjoyed, at that time, an exclusive trade to the country most productive +of those drugs, that which lies in the neighbourhood of the Senegal; and +the British market could not easily be supplied by the immediate +importation of them from the place of growth. By the 25th Geo. II. +therefore, gum senega was allowed to be imported (contrary to the +general dispositions of the act of navigation) from any part of Europe. +As the law, however, did not mean to encourage this species of trade, so +contrary to the general principles of the mercantile policy of England, +it imposed a duty of ten shillings the hundred weight upon such +importation, and no part of this duty was to be afterwards drawn back +upon its exportation. The successful war which began in 1755 gave Great +Britain the same exclusive trade to those countries which France had +enjoyed before. Our manufactures, as soon as the peace was made, +endeavoured to avail themselves of this advantage, and to establish a +monopoly in their own favour both against the growers and against the +importers of this commodity. By the 5th Geo. III. therefore, chap. 37, +the exportation of gum senega, from his majesty's dominions in Africa, +was confined to Great Britain, and was subjected to all the same +restrictions, regulations, forfeitures, and penalties, as that of the +enumerated commodities of the British colonies in America and the West +Indies. Its importation, indeed, was subjected to a small duty of +sixpence the hundred weight, but its re-exportation was subjected to the +enormous duty of one pound ten shillings the hundred weight. It was the +intention of our manufacturers, that the whole produce of those +countries should be imported into Great Britain; and in order that they +themselves might be enabled to buy it at their own price, that no part +of it should be exported again, but at such an expense as would +sufficiently discourage that exportation. Their avidity, however, upon +this, as well as upon many other occasions, disappointed itself of its +object. This enormous duty presented such a temptation to smuggling, +that great quantities of this commodity were clandestinely exported, +probably to all the manufacturing countries of Europe, but particularly +to Holland, not only from Great Britain, but from Africa. Upon this +account, by the 14th Geo. III. chap. 10, this duty upon exportation was +reduced to five shillings the hundred weight. + +In the book of rates, according to which the old subsidy was levied, +beaver skins were estimated at six shillings and eight pence a-piece; +and the different subsidies and imposts which, before the year 1722, had +been laid upon their importation, amounted to one-fifth part of the +rate, or to sixteen pence upon each skin; all of which, except half the +old subsidy, amounting only to twopence, was drawn back upon +exportation. This duty, upon the importation of so important a material +of manufacture, had been thought too high; and, in the year 1722, the +rate was reduced to two shillings and sixpence, which reduced the duty +upon importation to sixpence, and of this only one-half was to be drawn +back upon exportation. The same successful war put the country most +productive of beaver under the dominion of Great Britain; and beaver +skins being among the enumerated commodities, the exportation from +America was consequently confined to the market of Great Britain. Our +manufacturers soon bethought themselves of the advantage which they +might make of this circumstance; and in the year 1764, the duty upon the +importation of beaver skin was reduced to one penny, but the duty upon +exportation was raised to sevenpence each skin, without any drawback of +the duty upon importation. By the same law, a duty of eighteen pence the +pound was imposed upon the exportation of beaver wool or woumbs, without +making any alteration in the duty upon the importation of that +commodity, which, when imported by British, and in British shipping, +amounted at that time to between fourpence and fivepence the piece. + +Coals may be considered both as a material of manufacture, and as an +instrument of trade. Heavy duties, accordingly, have been imposed upon +their exportation, amounting at present (1783) to more than five +shillings the ton, or more than fifteen shillings the chaldron, +Newcastle measure; which is, in most cases, more than the original value +of the commodity at the coal-pit, or even at the shipping port for +exportation. + +The exportation, however, of the instruments of trade, properly so +called, is commonly restrained, not by high duties, but by absolute +prohibitions. Thus, by the 7th and 8th of William III. chap. 20, sect. +8, the exportation of frames or engines for knitting gloves or +stockings, is prohibited, under the penalty, not only of the forfeiture +of such frames or engines, so exported, or attempted to be exported, but +of forty pounds, one half to the king, the other to the person who shall +inform or sue for the same. In the same manner, by the 14th Geo. III. +chap. 71, the exportation to foreign parts, of any utensils made use of +in the cotton, linen, woollen, and silk manufacturers, is prohibited +under the penalty, not only of the forfeiture of such utensils, but of +two hundred pounds, to be paid by the person who shall offend in this +manner; and likewise of two hundred pounds, to be paid by the master of +the ship, who shall knowingly suffer such utensils to be loaded on board +his ship. + +When such heavy penalties were imposed upon the exportation of the dead +instruments of trade, it could not well be expected that the living +instrument, the artificer, should be allowed to go free. Accordingly, by +the 5th Geo. I. chap. 27, the person who shall be convicted of enticing +any artificer, of or in any of the manufactures of Great Britain, to go +into any foreign parts, in order to practise or teach his trade, is +liable, for the first offence, to be fined in any sum not exceeding one +hundred pounds, and to three months imprisonment, and until the fine +shall be paid; and for the second offence, to be fined in any sum, at +the discretion of the court, and to imprisonment for twelve months, and +until the fine shall be paid. By the 23d Geo. II. chap. 13, this penalty +is increased, for the first offence, to five hundred pounds for every +artificer so enticed, and to twelve months imprisonment, and until the +fine shall be paid; and for the second offence, to one thousand pounds, +and to two years imprisonment, and until the fine shall be paid. + +By the former of these two statutes, upon proof that any person has been +enticing any artificer, or that any artificer has promised or contracted +to go into foreign parts, for the purposes aforesaid, such artificer may +be obliged to give security, at the discretion of the court, that he +shall not go beyond the seas, and may be committed to prison until he +give such security. + +If any artificer has gone beyond the seas, and is exercising or teaching +his trade in any foreign country, upon warning being given to him by any +of his majesty's ministers or consuls abroad, or by one of his majesty's +secretaries of state, for the time being, if he does not, within six +months after such warning, return into this realm, and from henceforth +abide and inhabit continually within the same, he is from thenceforth +declared incapable of taking any legacy devised to him within this +kingdom, or of being executor or administrator to any person, or of +taking any lands within this kingdom, by descent, devise, or purchase. +He likewise forfeits to the king all his lands, goods, and chattels; is +declared an alien in every respect; and is put out of the king's +protection. + +It is unnecessary, I imagine, to observe how contrary such regulations +are to the boasted liberty of the subject, of which we affect to be so +very jealous; but which, in this case, is so plainly sacrificed to the +futile interests of our merchants and manufacturers. + +The laudable motive of all these regulations, is to extend our own +manufactures, not by their own improvement, but by the depression of +those of all our neighbours, and by putting an end, as much as possible, +to the troublesome competition of such odious and disagreeable rivals. +Our master manufacturers think it reasonable that they themselves should +have the monopoly of the ingenuity of all their countrymen. Though by +restraining, in some trades, the number of apprentices which can be +employed at one time, and by imposing the necessity of a long +apprenticeship in all trades, they endeavour, all of them, to confine +the knowledge of their respective employments to as small a number as +possible; they are unwilling, however, that any part of this small +number should go abroad to instruct foreigners. + +Consumption is the sole end and purpose of all production; and the +interest of the producer ought to be attended to, only so far as it may +be necessary for promoting that of the consumer. + +The maxim is so perfectly self-evident, that it would be absurd to +attempt to prove it. But in the mercantile system, the interest of the +consumer is almost constantly sacrificed to that of the producer; and it +seems to consider production, and not consumption, as the ultimate end +and object of all industry and commerce. + +In the restraints upon the importation of all foreign commodities which +can come into competition with those of our own growth or manufacture, +the interest of the home consumer is evidently sacrificed to that of the +producer. It is altogether for the benefit of the latter, that the +former is obliged to pay that enhancement of price which this monopoly +almost always occasions. + +It is altogether for the benefit of the producer, that bounties are +granted upon the exportation of some of his productions. The home +consumer is obliged to pay, first, the tax which is necessary for paying +the bounty; and, secondly, the still greater tax which necessarily +arises from the enhancement of the price of the commodity in the home +market. + +By the famous treaty of commerce with Portugal, the consumer is +prevented by high duties from purchasing of a neighbouring country, a +commodity which our own climate does not produce; but is obliged to +purchase it of a distant country, though it is acknowledged, that the +commodity of the distant country is of a worse quality than that of the +near one. The home consumer is obliged to submit to this inconvenience, +in order that the producer may import into the distant country some of +his productions, upon more advantageous terms than he otherwise would +have been allowed to do. The consumer, too, is obliged to pay whatever +enhancement in the price of those very productions this forced +exportation may occasion in the home market. + +But in the system of laws which has been established for the management +of our American and West Indies colonies, the interest of the home +consumer has been sacrificed to that of the producer, which a more +extravagant profusion than in all our other commercial regulations. A +great empire has been established for the sole purpose of raising up a +nation of customers, who should be obliged to buy, from the shops of our +different producers, all the goods with which these could supply them. +For the sake of that little enhancement of price which this monopoly +might afford our producers, the home consumers have been burdened with +the whole expense of maintaining and defending that empire. For this +purpose, and for this purpose only, in the last two wars, more than two +hundred millions have been spent, and a new debt of more than a hundred +and seventy millions has been contracted, over and above all that had +been expended for the same purpose in former wars. The interest of this +debt alone is not only greater than the whole extraordinary profit +which, it never could be pretended, was made by the monopoly of the +colony trade, but than the whole value of that trade, or than the whole +value of the goods which, at an average, have been annually exported to +the colonies. + +It cannot be very difficult to determine who have been the contrivers of +this whole mercantile system; not the consumers, we may believe, whose +interest has been entirely neglected; but the producers, whose interest +has been so carefully attended to; and among this latter class, our +merchants and manufacturers have been by far the principal architects. +In the mercantile regulations, which have been taken notice of in this +chapter, the interest of our manufacturers has been most peculiarly +attended to; and the interest, not so much of the consumers, as that of +some other sets of producers, has been sacrificed to it. + + + + +CHAP. IX. + +OF THE AGRICULTURAL SYSTEMS, OR OF THOSE SYSTEMS OF POLITICAL ECONOMY +WHICH REPRESENT THE PRODUCE OF LAND, AS EITHER THE SOLE OR THE PRINCIPAL +SOURCE OF THE REVENUE AND WEALTH OF EVERY COUNTRY. + + +The agricultural systems of political economy will not require so long +an explanation as that which I have thought it necessary to bestow upon +the mercantile or commercial system. + +That system which represents the produce of land as the sole source of +the revenue and wealth of every country, has, so far as I know, never +been adopted by any nation, and it at present exists only in the +speculations of a few men of great learning and ingenuity in France. It +would not, surely, be worth while to examine at great length the errors +of a system which never has done, and probably never will do, any harm +in any part of the world. I shall endeavour to explain, however, as +distinctly as I can, the great outlines of this very ingenious system. + +Mr. Colbert, the famous minister of Lewis XIV. was a man of probity, of +great industry, and knowledge of detail; of great experience and +acuteness in the examination of public accounts; and of abilities, in +short, every way fitted for introducing method and good order into the +collection and expenditure of the public revenue. That minister had +unfortunately embraced all the prejudices of the mercantile system, in +its nature and essence a system of restraint and regulation, and such as +could scarce fail to be agreeable to a laborious and plodding man of +business, who had been accustomed to regulate the different departments +of public offices, and to establish the necessary checks and controuls +for confining each to its proper sphere. The industry and commerce of a +great country, he endeavoured to regulate upon the same model as the +departments of a public office; and instead of allowing every man to +pursue his own interest his own way, upon the liberal plan of equality, +liberty, and justice, he bestowed upon certain branches of industry +extraordinary privileges, while he laid others under as extraordinary +restraints. He was not only disposed, like other European ministers, to +encourage more the industry of the towns than that of the country; but, +in order to support the industry of the towns, he was willing even to +depress and keep down that of the country. In order to render provisions +cheap to the inhabitants of the towns, and thereby to encourage +manufactures and foreign commerce, he prohibited altogether the +exportation of corn, and thus excluded the inhabitants of the country +from every foreign market, for by far the most important part of the +produce of their industry. This prohibition, joined to the restraints +imposed by the ancient provincial laws of France upon the transportation +of corn from one province to another, and to the arbitrary and degrading +taxes which are levied upon the cultivators in almost all the provinces, +discouraged and kept down the agriculture of that country very much +below the state to which it would naturally have risen in so very +fertile a soil, and so very happy a climate. This state of +discouragement and depression was felt more or less in every different +part of the country, and many different inquiries were set on foot +concerning the causes of it. One of those causes appeared to be the +preference given, by the institutions of Mr. Colbert, to the industry of +the towns above that of the country. + +If the rod be bent too much one way, says the proverb, in order to make +it straight, you must bend it as much the other. The French +philosophers, who have proposed the system which represents agriculture +as the sole source of the revenue and wealth of every country, seem to +have adopted this proverbial maxim; and, as in the plan of Mr. Colbert, +the industry of the towns was certainly overvalued in comparison with +that of the country, so in their system it seems to be as certainly +under-valued. + +The different orders of people, who have ever been supposed to +contribute in any respect towards the annual produce of the land and +labour of the country, they divide into three classes. The first is the +class of the proprietors of land. The second is the class of the +cultivators, of farmers and country labourers, whom they honour with the +peculiar appellation of the productive class. The third is the class of +artificers, manufacturers, and merchants, whom they endeavour to degrade +by the humiliating appellation of the barren or unproductive class. + +The class of proprietors contributes to the annual produce, by the +expense which they may occasionally lay out upon the improvement of the +land, upon the buildings, drains, inclosures, and other ameliorations, +which they may either make or maintain upon it, and by means of which +the cultivators are enabled, with the same capital, to raise a greater +produce, and consequently to pay a greater rent. This advanced rent may +be considered as the interest or profit due to the proprietor, upon the +expense or capital which he thus employs in the improvement of his land. +Such expenses are in this system called ground expenses (_depenses +foncieres_). + +The cultivators or farmers contribute to the annual produce, by what are +in this system called the original and annual expenses (_depenses +primitives, et depenses annuelles_), which they lay out upon the +cultivation of the land. The original expenses consist in the +instruments of husbandry, in the stock of cattle, in the seed, and in +the maintenance of the farmer's family, servants, and cattle, during at +least a great part of the first year of his occupancy, or till he can +receive some return from the land. The annual expenses consist in the +seed, in the wear and tear of instruments of husbandry, and in the +annual maintenance of the farmer's servants and cattle, and of his +family too, so far as any part of them can be considered as servants +employed in cultivation. That part of the produce of the land which +remains to him after paying the rent, ought to be sufficient, first, to +replace to him, within a reasonable time, at least during the term of +his occupancy, the whole of his original expenses, together with the +ordinary profits of stock; and, secondly, to replace to him annually the +whole of his annual expenses, together likewise with the ordinary +profits of stock. Those two sorts of expenses are two capitals which the +farmer employs in cultivation; and unless they are regularly restored to +him, together with a reasonable profit, he cannot carry on his +employment upon a level with other employments; but, from a regard to +his own interest, must desert it as soon as possible, and see some +other. That part of the produce of the land which is thus necessary for +enabling the farmer to continue his business, ought to be considered as +a fund sacred to cultivation, which, if the landlord violates, he +necessarily reduces the produce of his own land, and, in a few years, +not only disables the farmer from paying this racked rent, but from +paying the reasonable rent which he might otherwise have got for his +land. The rent which properly belongs to the landlord, is no more than +the neat produce which remains after paying, in the completest manner, +all the necessary expenses which must be previously laid out, in order +to raise the gross or the whole produce. It is because the labour of the +cultivators, over and above paying completely all those necessary +expenses, affords a neat produce of this kind, that this class of people +are in this system peculiarly distinguished by the honourable +appellation of the productive class. Their original and annual expenses +are for the same reason called, in this system, productive expenses, +because, over and above replacing their own value, they occasion the +annual reproduction of this neat produce. + +The ground expenses, as they are called, or what the landlord lays out +upon the improvement of his land, are, in this system, too, honoured +with the appellation of productive expenses. Till the whole of those +expenses, together with the ordinary profits of stock, have been +completely repaid to him by the advanced rent which he gets from his +land, that advanced rent ought to be regarded as sacred and inviolable, +both by the church and by the king; ought to be subject neither to tithe +nor to taxation. If it is otherwise, by discouraging the improvement of +land, the church discourages the future increase of her own tithes, and +the king the future increase of his own taxes. As in a well ordered +state of things, therefore, those ground expenses, over and above +reproducing in the completest manner their own value, occasion likewise, +after a certain time, a reproduction of neat produce, they are in this +system considered as productive expenses. + +The ground expenses of the landlord, however, together with the original +and the annual expenses of the farmer, are the only three sorts of +expenses which in this system are considered as productive. All other +expenses, and all other orders of people, even those who, in the common +apprehensions of men, are regarded as the most productive, are, in this +account of things, represented as altogether barren and unproductive. + +Artificers and manufacturers, in particular, whose industry, in the +common apprehensions of men, increases so much the value of the rude +produce of land, are in this system represented as a class of people +altogether barren and unproductive. Their labour, it is said, replaces +only the stock which employs them, together with its ordinary profits. +That stock consists in the materials, tools, and wages, advanced to them +by their employer; and is the fund destined for their employment and +maintenance. Its profits are the fund destined for the maintenance of +their employer. Their employer, as he advances to them the stock of +materials, tools, and wages, necessary for their employment, so he +advances to himself what is necessary for his own maintenance; and this +maintenance he generally proportions to the profit which he expects to +make by the price of their work. Unless its price repays to him the +maintenance which he advances to himself, as well as the materials, +tools, and wages, which he advances to his workmen, it evidently does +not repay to him the whole expense which he lays out upon it. The +profits of manufacturing stock, therefore, are not, like the rent of +land, a neat produce which remains after completely repaying the whole +expense which must be laid out in order to obtain them. The stock of the +farmer yields him a profit, as well as that of the master manufacturer; +and it yields a rent likewise to another person, which that of the +master manufacturer does not. The expense, therefore, laid out in +employing and maintaining artificers and manufacturers, does no more +than continue, if one may say so, the existence of its own value, and +does not produce any new value. It is, therefore, altogether a barren +and unproductive expense. The expense, on the contrary, laid out in +employing farmers and country labourers, over and above continuing the +existence of its own value, produces a new value the rent of the +landlord. It is, therefore, a productive expense. + +Mercantile stock is equally barren and unproductive with manufacturing +stock. It only continues the existence of its own value, without +producing any new value. Its profits are only the repayment of the +maintenance which its employer advances to himself during the time that +he employs it, or till he receives the returns of it. They are only the +repayment of a part of the expense which must be laid out in employing +it. + +The labour of artificers and manufacturers never adds any thing to the +value of the whole annual amount of the rude produce of the land. It +adds, indeed, greatly to the value of some particular parts of it. But +the consumption which, in the mean time, it occasions of other parts, is +precisely equal to the value which it adds to those parts; so that the +value of the whole amount is not, at any one moment of time, in the +least augmented by it. The person who works the lace of a pair of fine +ruffles for example, will sometimes raise the value of, perhaps, a +pennyworth of flax to L.30 sterling. But though, at first sight, he +appears thereby to multiply the value of a part of the rude produce +about seven thousand and two hundred times, he in reality adds nothing +to the value of the whole annual amount of the rude produce. The working +of that lace costs him, perhaps, two years labour. The L.30 which he +gets for it when it is finished, is no more than the repayment of the +subsistence which he advances to himself during the two years that he is +employed about it. The value which, by every day's, month's, or year's +labour, he adds to the flax, does no more than replace the value of his +own consumption during that day, month, or year. At no moment of time, +therefore, does he add any thing to the value of the whole annual amount +of the rude produce of the land: the portion of that produce which he is +continually consuming, being always equal to the value which he is +continually producing. The extreme poverty of the greater part of the +persons employed in this expensive, though trifling manufacture, may +satisfy us that the price of their work does not, in ordinary cases, +exceed the value of their subsistence. It is otherwise with the work of +farmers and country labourers. The rent of the landlord is a value +which, in ordinary cases, it is continually producing over and above +replacing, in the most complete manner, the whole consumption, the whole +expense laid out upon the employment and maintenance both of the workmen +and of their employer. + +Artificers, manufacturers, and merchants, can augment the revenue and +wealth of their society by parsimony only; or, as it is expressed in +this system, by privation, that is, by depriving themselves of a part of +the funds destined for their own subsistence. They annually reproduce +nothing but those funds. Unless, therefore, they annually save some part +of them, unless they annually deprive themselves of the enjoyment of +some part of them, the revenue and wealth of their society can never be, +in the smallest degree, augmented by means of their industry. Farmers +and country labourers, on the contrary, may enjoy completely the whole +funds destined for their own subsistence, and yet augment, at the same +time, the revenue and wealth of their society. Over and above what is +destined for their own subsistence, their industry annually affords a +neat produce, of which the augmentation necessarily augments the revenue +and wealth of their society. Nations, therefore, which like France or +England, consist in a great measure, of proprietors and cultivators, can +be enriched by industry and enjoyment. Nations, on the contrary which, +like Holland and Hamburgh, are composed chiefly of merchants, +artificers, and manufacturers, can grow rich only through parsimony and +privation. As the interest of nations so differently circumstanced is +very different, so is likewise the common character of the people. In +those of the former kind, liberality, frankness, and good fellowship, +naturally make a part of their common character; in the latter, +narrowness, meanness, and a selfish disposition, averse to all social +pleasure and enjoyment. + +The unproductive class, that of merchants, artificers, and +manufacturers, is maintained and employed altogether at the expense of +the two other classes, of that of proprietors, and of that of +cultivators. They furnish it both with the materials of its work, and +with the fund of its subsistence, with the corn and cattle which it +consumes while it is employed about that work. The proprietors and +cultivators finally pay both the wages of all the workmen of the +unproductive class, and the profits of all their employers. Those +workmen and their employers are properly the servants of the proprietors +and cultivators. They are only servants who work without doors, as +menial servants work within. Both the one and the other, however, are +equally maintained at the expense of the same masters. The labour of +both is equally unproductive. It adds nothing to the value of the sum +total of the rude produce of the land. Instead of increasing the value +of that sum total, it is a charge and expense which must be paid out of +it. + +The unproductive class, however, is not only useful, but greatly useful, +to the other two classes. By means of the industry of merchants, +artificers, and manufacturers, the proprietors and cultivators can +purchase both the foreign goods and the manufactured produce of their +own country, which they have occasion for, with the produce of a much +smaller quantity of their own labour, than what they would be obliged to +employ, if they were to attempt, in an awkward and unskilful manner, +either to import the one, or to make the other, for their own use. By +means of the unproductive class, the cultivators are delivered from many +cares, which would otherwise distract their attention from the +cultivation of land. The superiority of produce, which in consequence of +this undivided attention, they are enabled to raise, is fully sufficient +to pay the whole expense which the maintenance and employment of the +unproductive class costs either the proprietors or themselves. The +industry of merchants, artificers, and manufacturers, though in its own +nature altogether unproductive, yet contributes in this manner +indirectly to increase the produce of the land. It increases the +productive powers of productive labour, by leaving it at liberty to +confine itself to its proper employment, the cultivation of land; and +the plough goes frequently the easier and the better, by means of the +labour of the man whose business is most remote from the plough. + +It can never be the interest of the proprietors and cultivators, to +restrain or to discourage, in any respect, the industry of merchants, +artificers, and manufacturers. The greater the liberty which this +unproductive class enjoys, the greater will be the competition in all +the different trades which compose it, and the cheaper will the other +two classes be supplied, both with foreign goods and with the +manufactured produce of their own country. + +It can never be the interest of the unproductive class to oppress the +other two classes. It is the surplus produce of the land, or what +remains after deducting the maintenance, first of the cultivators, and +afterwards of the proprietors, that maintains and employs the +unproductive class. The greater this surplus, the greater must likewise +be the maintenance and employment of that class. The establishment of +perfect justice, of perfect liberty, and of perfect equality, is the +very simple secret which most effectually secures the highest degree of +prosperity to all the three classes. + +The merchants, artificers, and manufacturers of those mercantile states, +which, like Holland and Hamburgh, consist chiefly of this unproductive +class, are in the same manner maintained and employed altogether at the +expense of the proprietors and cultivators of land. The only difference +is, that those proprietors and cultivators are, the greater part of +them, placed at a most inconvenient distance from the merchants, +artificers, and manufacturers, whom they supply with the materials of +their work and the fund of their subsistence; are the inhabitants of +other countries, and the subjects of other governments. + +Such mercantile states, however, are not only useful, but greatly +useful, to the inhabitants of these other countries. They fill up, in +some measure, a very important void; and supply the place of the +merchants, artificers, and manufacturers, whom the inhabitants of those +countries ought to find at home, but whom, from some defect in their +policy, they do not find at home. + +It can never be the interest of those landed nations, if I may call them +so, to discourage or distress the industry of such mercantile states, by +imposing high duties upon their trade, or upon the commodities which +they furnish. Such duties, by rendering those commodities dearer, could +serve only to sink the real value of the surplus produce of their own +land, with which, or, what comes to the same thing, with the price of +which those commodities are purchased. Such duties could only serve to +discourage the increase of that surplus produce, and consequently the +improvement and cultivation of their own land. The most effectual +expedient, on the contrary, for raising the value of that surplus +produce, for encouraging its increase, and consequently the improvement +and cultivation of their own land, would be to allow the most perfect +freedom to the trade of all such mercantile nations. + +This perfect freedom of trade would even be the most effectual expedient +for supplying them, in due time, with all the artificers, manufacturers, +and merchants, whom they wanted at home; and for filling up, in the +properest and most advantageous manner, that very important void which +they felt there. + +The continual increase of the surplus produce of their land would, in +due time, create a greater capital than what would be employed with the +ordinary rate of profit in the improvement and cultivation of land; and +the surplus part of it would naturally turn itself to the employment of +artificers and manufacturers, at home. But these artificers and +manufacturers, finding at home both the materials of their work and the +fund of their subsistence, might immediately, even with much less art +and skill be able to work as cheap as the little artificers and +manufacturers of such mercantile states, who had both to bring from a +greater distance. Even though, from want of art and skill, they might +not for some time be able to work as cheap, yet, finding a market at +home, they might be able to sell their work there as cheap as that of +the artificers and manufacturers of such mercantile states, which could +not be brought to that market but from so great a distance; and as their +art and skill improved, they would soon be able to sell it cheaper. The +artificers and manufacturers of such mercantile states, therefore, would +immediately be rivalled in the market of those landed nations, and soon +after undersold and justled out of it altogether. The cheapness of the +manufactures of those landed nations, in consequence of the gradual +improvements of art and skill, would, in due time, extend their sale +beyond the home market, and carry them to many foreign markets, from +which they would, in the same manner, gradually justle out many of the +manufacturers of such mercantile nations. + +This continual increase, both of the rude and manufactured produce of +those landed nations, would, in due time, create a greater capital than +could, with the ordinary rate of profit, be employed either in +agriculture or in manufactures. The surplus of this capital would +naturally turn itself to foreign trade, and be employed in exporting, to +foreign countries, such parts of the rude and manufactured produce of +its own country, as exceeded the demand of the home market. In the +exportation of the produce of their own country, the merchants of a +landed nation would have an advantage of the same kind over those of +mercantile nations, which its artificers and manufacturers had over the +artificers and manufacturers of such nations; the advantage of finding +at home that cargo, and those stores and provisions, which the others +were obliged to seek for at a distance. With inferior art and skill in +navigation, therefore, they would be able to sell that cargo as cheap in +foreign markets as the merchants of such mercantile nations; and with +equal art and skill they would be able to sell it cheaper. They would +soon, therefore, rival those mercantile nations in this branch of +foreign trade, and, in due time, would justle them out of it altogether. + +According to this liberal and generous system, therefore, the most +advantageous method in which a landed nation can raise up artificers, +manufacturers, and merchants of its own, is to grant the most perfect +freedom of trade to the artificers, manufacturers, and merchants of all +other nations. It thereby raises the value of the surplus produce of its +own land, of which the continual increase gradually establishes a fund, +which, in due time, necessarily raises up all the artificers, +manufacturers, and merchants, whom it has occasion for. + +When a landed nation on the contrary, oppresses, either by high duties +or by prohibitions, the trade of foreign nations, it necessarily hurts +its own interest in two different ways. First, by raising the price of +all foreign goods, and of all sorts of manufactures, it necessarily +sinks the real value of the surplus produce of its own land, with which, +or, what comes to the same thing, with the price of which, it purchases +those foreign goods and manufactures. Secondly, by giving a sort of +monopoly of the home market to its own merchants, artificers, and +manufacturers, it raises the rate of mercantile and manufacturing +profit, in proportion to that of agricultural profit; and, consequently, +either draws from agriculture a part of the capital which had before +been employed in it, or hinders from going to it a part of what would +otherwise have gone to it. This policy, therefore, discourages +agriculture in two different ways; first, by sinking the real value of +its produce, and thereby lowering the rate of its profits; and, +secondly, by raising the rate of profit in all other employments. +Agriculture is rendered less advantageous, and trade and manufactures +more advantageous, than they otherwise would be; and every man is +tempted by his own interest to turn, as much as he can, both his capital +and his industry from the former to the latter employments. + +Though, by this oppressive policy, a landed nation should be able to +raise up artificers, manufacturers, and merchants of its own, somewhat +sooner than it could do by the freedom of trade; a matter, however, +which is not a little doubtful; yet it would raise them up, if one may +say so, prematurely, and before it was perfectly ripe for them. By +raising up too hastily one species of industry, it would depress another +more valuable species of industry. By raising up too hastily a species +of industry which only replaces the stock which employs it, together +with the ordinary profit, it would depress a species of industry which, +over and above replacing that stock, with its profit, affords likewise a +neat produce, a free rent to the landlord. It would depress productive +labour, by encouraging too hastily that labour which is altogether +barren and unproductive. + +In what manner, according to this system, the sum total of the annual +produce of the land is distributed among the three classes above +mentioned, and in what manner the labour of the unproductive class does +no more than replace the value of its own consumption, without +increasing in any respect the value of that sum total, is represented by +Mr Quesnai, the very ingenious and profound author of this system, in +some arithmetical formularies. The first of these formularies, which, by +way of eminence, he peculiarly distinguishes by the name of the +Economical Table, represents the manner in which he supposes this +distribution takes place, in a state of the most perfect liberty, and, +therefore, of the highest prosperity; in a state where the annual +produce is such as to afford the greatest possible neat produce, and +where each class enjoys its proper share of the whole annual produce. +Some subsequent formularies represent the manner in which he supposes +this distribution is made in different states of restraint and +regulation; in which, either the class of proprietors, or the barren and +unproductive class, is more favoured than the class of cultivators; and +in which either the one or the other encroaches, more or less, upon the +share which ought properly to belong to this productive class. Every +such encroachment, every violation of that natural distribution, which +the most perfect liberty would establish, must, according to this +system, necessarily degrade, more or less, from one year to another, the +value and sum total of the annual produce, and must necessarily occasion +a gradual declension in the real wealth and revenue of the society; a +declension, of which the progress must be quicker or slower, according +to the degree of this encroachment, according as that natural +distribution, which the most perfect liberty would establish, is more or +less violated. Those subsequent formularies represent the different +degrees of declension which, according to this system, correspond to the +different degrees in which this natural distribution of things is +violated. + +Some speculative physicians seem to have imagined that the health of the +human body could be preserved only by a certain precise regimen of diet +and exercise, of which every, the smallest violation, necessarily +occasioned some degree of disease or disorder proportionate to the +degree of the violation. Experience, however, would seem to shew, that +the human body frequently preserves, to all appearance at least, the +most perfect state of health under a vast variety of different regimens; +even under some which are generally believed to be very far from being +perfectly wholesome. But the healthful state of the human body, it would +seem, contains in itself some unknown principle of preservation, capable +either of preventing or of correcting, in many respects, the bad effects +even of a very faulty regimen. Mr Quesnai, who was himself a physician, +and a very speculative physician, seems to have entertained a notion of +the same kind concerning the political body, and to have imagined that +it would thrive and prosper only under a certain precise regimen, the +exact regimen of perfect liberty and perfect justice. He seems not to +have considered, that in the political body, the natural effort which +every man is continually making to better his own condition, is a +principle of preservation capable of preventing and correcting, in many +respects, the bad effects of a political economy, in some degree both +partial and oppressive. Such a political economy, though it no doubt +retards more or less, is not always capable of stopping altogether, the +natural progress of a nation towards wealth and prosperity, and still +less of making it go backwards. If a nation could not prosper without +the enjoyment of perfect liberty and perfect justice, there is not in +the world a nation which could ever have prospered. In the political +body, however, the wisdom of nature has fortunately made ample provision +for remedying many of the bad effects of the folly and injustice of man; +in the same manner as it has done in the natural body, for remedying +those of his sloth and intemperance. + +The capital error of this system, however, seems to lie in its +representing the class of artificers, manufacturers, and merchants, as +altogether barren and unproductive. The following observations may serve +to shew the impropriety of this representation:-- + +First, this class, it is acknowledged, reproduces annually the value of +its own annual consumption, and continues, at least, the existence of +the stock or capital which maintains and employs it. But, upon this +account alone, the denomination of barren or unproductive should seem to +be very improperly applied to it. We should not call a marriage barren +or unproductive, though it produced only a son and a daughter, to +replace the father and mother, and though it did not increase the number +of the human species, but only continued it as it was before. Farmers +and country labourers, indeed, over and above the stock which maintains +and employs them, reproduce annually a neat produce, a free rent to the +landlord. As a marriage which affords three children is certainly more +productive than one which affords only two, so the labour of farmers and +country labourers is certainly more productive than that of merchants, +artificers, and manufacturers. The superior produce of the one class, +however, does not, render the other barren or unproductive. + +Secondly, it seems, on this account, altogether improper to consider +artificers, manufacturers, and merchants, in the same light as menial +servants. The labour of menial servants does not continue the existence +of the fund which maintains and employs them. Their maintenance and +employment is altogether at the expense of their masters, and the work +which they perform is not of a nature to repay that expense. That work +consists in services which perish generally in the very instant of their +performance, and does not fix or realize itself in any vendible +commodity, which can replace the value of their wages and maintenance. +The labour, on the contrary, of artificers, manufacturers, and +merchants, naturally does fix and realize itself in some such vendible +commodity. It is upon this account that, in the chapter in which I treat +of productive and unproductive labour, I have classed artificers, +manufacturers, and merchants among the productive labourers, and menial +servants among the barren or unproductive. + +Thirdly, it seems, upon every supposition, improper to say, that the +labour of artificers, manufacturers, and merchants, does not increase +the real revenue of the society. Though we should suppose, for example, +as it seems to be supposed in this system, that the value of the daily, +monthly, and yearly consumption of this class was exactly equal to that +of its daily, monthly, and yearly production; yet it would not from +thence follow, that its labour added nothing to the real revenue, to the +real value of the annual produce of the land and labour of the society. +An artificer, for example, who, in the first six months after harvest, +executes ten pounds worth of work, though he should, in the same time, +consume ten pounds worth of corn and other necessaries, yet really adds +the value of ten pounds to the annual produce of the land and labour of +the society. While he has been consuming a half-yearly revenue of ten +pounds worth of corn and other necessaries, he has produced an equal +value of work, capable of purchasing, either to himself, or to some +other person, an equal half-yearly revenue. The value, therefore, of +what has been consumed and produced during these six months, is equal, +not to ten, but to twenty pounds. It is possible, indeed, that no more +than ten pounds worth of this value may ever have existed at any one +moment of time. But if the ten pounds worth of corn and other +necessaries which were consumed by the artificer, had been consumed by a +soldier, or by a menial servant, the value of that part of the annual +produce which existed at the end of the six months, would have been ten +pounds less than it actually is in consequence of the labour of the +artificer. Though the value of what the artificer produces, therefore, +should not, at any one moment of time, be supposed greater than the +value he consumes, yet, at every moment of time, the actually existing +value of goods in the market is, in consequence of what he produces, +greater than it otherwise would be. + +When the patrons of this system assert, that the consumption of +artificers, manufacturers, and merchants, is equal to the value of what +they produce, they probably mean no more than that their revenue, or the +fund destined for their consumption, is equal to it. But if they had +expressed themselves more accurately, and only asserted, that the +revenue of this class was equal to the value of what they produced, it +might readily have occurred to the reader, that what would naturally be +saved out of this revenue, must necessarily increase more or less the +real wealth of the society. In order, therefore, to make out something +like an argument, it was necessary that they should express themselves +as they have done; and this argument, even supposing things actually +were as it seems to presume them to be, turns out to be a very +inconclusive one. + +Fourthly, farmers and country labourers can no more augment, without +parsimony, the real revenue, the annual produce of the land and labour +of their society, than artificers, manufacturers, and merchants. The +annual produce of the land and labour of any society can be augmented +only in two ways; either, first, by some improvement in the productive +powers of the useful labour actually maintained within it; or, secondly, +by some increase in the quantity of that labour. + +The improvement in the productive powers of useful labour depends, +first, upon the improvement in the ability of the workman; and, +secondly, upon that of the machinery with which he works. But the labour +of artificers and manufacturers, as it is capable of being more +subdivided, and the labour of each workman reduced to a greater +simplicity of operation, than that of farmers and country labourers; so +it is likewise capable of both these sorts of improvement in a much +higher degree.[43] In this respect, therefore, the class of cultivators +can have no sort of advantage over that of artificers and manufacturers. + +The increase in the quantity of useful labour actually employed within +any society must depend altogether upon the increase of the capital +which employs it; and the increase of that capital, again, must be +exactly equal to the amount of the savings from the revenue, either of +the particular persons who manage and direct the employment of that +capital, or of some other persons, who lend it to them. If merchants, +artificers, and manufacturers are, as this system seems to suppose, +naturally more inclined to parsimony and saving than proprietors and +cultivators, they are, so far, more likely to augment the quantity of +useful labour employed within their society, and consequently to +increase its real revenue, the annual produce of its land and labour. + +Fifthly and lastly, though the revenue of the inhabitants of every +country was supposed to consist altogether, as this system seems to +suppose, in the quantity of subsistence which their industry could +procure to them; yet, even upon this supposition, the revenue of a +trading and manufacturing country must, other things being equal, always +be much greater than that of one without trade or manufactures. By means +of trade and manufactures, a greater quantity of subsistence can be +annually imported into a particular country, than what its own lands, in +the actual state of their cultivation, could afford. The inhabitants of +a town, though they frequently possess no lands of their own, yet draw +to themselves, by their industry, such a quantity of the rude produce of +the lands of other people, as supplies them, not only with the materials +of their work, but with the fund of their subsistence. What a town +always is with regard to the country in its neighbourhood, one +independent state or country may frequently be with regard to other +independent states or countries. It is thus that Holland draws a great +part of its subsistence from other countries; live cattle from Holstein +and Jutland, and corn from almost all the different countries of Europe. +A small quantity of manufactured produce, purchases a great quantity of +rude produce. A trading and manufacturing country, therefore, naturally +purchases, with a small part of its manufactured produce, a great part +of the rude produce of other countries; while, on the contrary, a +country without trade and manufactures is generally obliged to purchase, +at the expense of a great part of its rude produce, a very small part of +the manufactured produce of other countries. The one exports what can +subsist and accommodate but a very few, and imports the subsistence and +accommodation of a great number. The other exports the accommodation and +subsistence of a great number, and imports that of a very few only. The +inhabitants of the one must always enjoy a much greater quantity of +subsistence than what their own lands, in the actual state of their +cultivation, could afford. The inhabitants of the other most always +enjoy a much smaller quantity. + +This system, however, with all its imperfections, is perhaps the nearest +approximation to the truth that has yet been published upon the subject +of political economy; and is upon that account, well worth the +consideration of every man who wishes to examine with attention the +principles of that very important science. Though in representing the +labour which is employed upon land as the only productive labour, the +notions which it inculcates are, perhaps, too narrow and confined; yet +in representing the wealth of nations as consisting, not in the +unconsumable riches of money, but in the consumable goods annually +reproduced by the labour of the society, and in representing perfect +liberty as the only effectual expedient for rendering this annual +reproduction the greatest possible, its doctrine seems to be in every +respect as just as it is generous and liberal. Its followers are very +numerous; and as men are fond of paradoxes, and of appearing to +understand what surpasses the comprehensions of ordinary people, the +paradox which it maintains, concerning the unproductive nature of +manufacturing labour, has not, perhaps, contributed a little to increase +the number of its admirers. They have for some years past made a pretty +considerable sect, distinguished in the French republic of letters by +the name of the Economists. Their works have certainly been of some +service to their country; not only by bringing into general discussion, +many subjects which had never been well examined before, but by +influencing, in some measure, the public administration in favour of +agriculture. It has been in consequence of their representations, +accordingly, that the agriculture of France has been delivered from +several of the oppressions which it before laboured under. The term, +during which such a lease can be granted, as will be valid against every +future purchaser or proprietor of the land, has been prolonged from nine +to twenty-seven years. The ancient provincial restraints upon the +transportation of corn from one province of the kingdom to another, have +been entirely taken away; and the liberty of exporting it to all foreign +countries, has been established as the common law of the kingdom in all +ordinary cases. This sect, in their works, which are very numerous, and +which treat not only of what is properly called Political Economy, or of +the nature and causes of the wealth of nations, but of every other +branch of the system of civil government, all follow implicitly, and +without any sensible variation, the doctrine of Mr. Quesnai. There is, +upon this account, little variety in the greater part of their works. +The most distinct and best connected account of this doctrine is to be +found in a little book written by Mr. Mercier de la Riviere, some time +intendant of Martinico, entitled, The natural and essential Order of +Political Societies. The admiration of this whole sect for their master, +who was himself a man of the greatest modesty and simplicity, is not +inferior to that of any of the ancient philosophers for the founders of +their respective systems. 'There have been since the world began,' says +a very diligent and respectable author, the Marquis de Mirabeau, 'three +great inventions which have principally given stability to political +societies, independent of many other inventions which have enriched and +adorned them. The first is the invention of writing, which alone gives +human nature the power of transmitting, without alteration, its laws, +its contracts, its annals, and its discoveries. The second is the +invention of money, which binds together all the relations between +civilized societies. The third is the economical table, the result of +the other two, which completes them both by perfecting their object; the +great discovery of our age, but of which our posterity will reap the +benefit.' + +As the political economy of the nations of modern Europe has been more +favourable to manufactures and foreign trade, the industry of the towns, +than to agriculture, the industry of the country; so that of other +nations has followed a different plan, and has been more favourable to +agriculture than to manufactures and foreign trade. + +The policy of China favours agriculture more than all other employments. +In China, the condition of a labourer is said to be as much superior to +that of an artificer, as in most parts of Europe that of an artificer is +to that of a labourer. In China, the great ambition of every man is to +get possession of a little bit of land, either in property or in lease; +and leases are there said to be granted upon very moderate terms, and to +be sufficiently secured to the lessees. The Chinese have little respect +for foreign trade. Your beggarly commerce! was the language in which the +mandarins of Pekin used to talk to Mr. De Lange, the Russian envoy, +concerning it[44]. Except with Japan, the Chinese carry on, themselves, +and in their own bottoms, little or no foreign trade; and it is only +into one or two ports of their kingdom that they even admit the ships of +foreign nations. Foreign trade, therefore, is, in China, every way +confined within a much narrower circle than that to which it would +naturally extend itself, if more freedom was allowed to it, either in +their own ships, or in those of foreign nations. + +Manufactures, as in a small bulk they frequently contain a great value, +and can upon that account be transported at less expense from one +country to another than most parts of rude produce, are, in almost all +countries, the principal support of foreign trade. In countries, +besides, less extensive, and less favourably circumstanced for inferior +commerce than China, they generally require the support of foreign +trade. Without an extensive foreign market, they could not well +flourish, either in countries so moderately extensive as to afford but a +narrow home market, or in countries where the communication between one +province and another was so difficult, as to render it impossible for +the goods of any particular place to enjoy the whole of that home market +which the country could afford. The perfection of manufacturing +industry, it must be remembered, depends altogether upon the division of +labour; and the degree to which the division of labour can be introduced +into any manufacture, is necessarily regulated, it has already been +shewn, by the extent of the market. But the great extent of the empire +of China, the vast multitude of its inhabitants, the variety of climate, +and consequently of productions in its different provinces, and the easy +communication by means of water-carriage between the greater part of +them, render the home market of that country of so great extent, as to +be alone sufficient to support very great manufactures, and to admit of +very considerable subdivisions of labour. The home market of China is, +perhaps, in extent, not much inferior to the market of all the different +countries of Europe put together. A more extensive foreign trade, +however, which to this great home market added the foreign market of all +the rest of the world, especially if any considerable part of this trade +was carried on in Chinese ships, could scarce fail to increase very much +the manufactures of China, and to improve very much the productive +powers of its manufacturing industry. By a more extensive navigation, +the Chinese would naturally learn the art of using and constructing, +themselves, all the different machines made use of in other countries, +as well as the other improvements of art and industry which are +practised in all the different parts of the world. Upon their present +plan, they have little opportunity of improving themselves by the +example of any other nation, except that of the Japanese. + +The policy of ancient Egypt, too, and that of the Gentoo government of +Indostan, seem to have favoured agriculture more than all other +employments. + +Both in ancient Egypt and Indostan, the whole body of the people was +divided into different casts or tribes each of which was confined, from +father to son, to a particular employment, or class of employments. The +son of a priest was necessarily a priest; the son of a soldier, a +soldier; the son of a labourer, a labourer; the son of a weaver, a +weaver; the son of a tailor, a tailor, &c. In both countries, the cast +of the priests holds the highest rank, and that of the soldiers the +next; and in both countries the cast of the farmers and labourers was +superior to the casts of merchants and manufacturers. + +The government of both countries was particularly attentive to the +interest of agriculture. The works constructed by the ancient sovereigns +of Egypt, for the proper distribution of the waters of the Nile, were +famous in antiquity, and the ruined remains of some of them are still +the admiration of travellers. Those of the same kind which were +constructed by the ancient sovereigns of Indostan, for the proper +distribution of the waters of the Ganges, as well as of many other +rivers, though they have been less celebrated, seem to have been equally +great. Both countries accordingly, though subject occasionally to +dearths, have been famous for their great fertility. Though both were +extremely populous, yet, in years of moderate plenty, they were both +able to export great quantities of grain to their neighbours. + +The ancient Egyptians had a superstitious aversion to the sea; and as +the Gentoo religion does not permit its followers to light a fire, nor +consequently to dress any victuals, upon the water, it, in effect, +prohibits them from all distant sea voyages. Both the Egyptians and +Indians must have depended almost altogether upon the navigation of +other nations for the exportation of their surplus produce; and this +dependency, as it must have confined the market, so it must have +discouraged the increase of this surplus produce. It must have +discouraged, too, the increase of the manufactured produce, more than +that of the rude produce. Manufactures require a much more extensive +market than the most important parts of the rude produce of the land. A +single shoemaker will make more than 300 pairs of shoes in the year; +and his own family will not, perhaps, wear out six pairs. Unless, +therefore, he has the custom of, at least, 50 such families as his own, +he cannot dispose of the whole produce of his own labour. The most +numerous class of artificers will seldom, in a large country, make more +than one in 50, or one in a 100, of the whole number of families +contained in it. But in such large countries, as France and England, the +number of people employed in agriculture has, by some authors, been +computed at a half, by others at a third, and by no author that I know +of, at less than a fifth of the whole inhabitants of the country. But as +the produce of the agriculture of both France and England is, the far +greater part of it, consumed at home, each person employed in it must, +according to these computations, require little more than the custom of +one, two, or, at most, of four such families as his own, in order in +dispose of the whole produce of his own labour. Agriculture, therefore, +can support itself under the discouragement of a confined market much +better than manufactures. In both ancient Egypt and Indostan, indeed, +the confinement of the foreign market was in some measure compensated by +the conveniency of many inland navigations, which opened, in the most +advantageous manner, the whole extent of the home market to every part +of the produce of every different district of those countries. The great +extent of Indostan, too, rendered the home market of that country very +great, and sufficient to support a great variety of manufactures. But +the small extent of ancient Egypt, which was never equal to England, +must at all times, have rendered the home market of that country too +narrow for supporting any great variety of manufactures. Bengal +accordingly, the province of Indostan which commonly exports the +greatest quantity of rice, has always been more remarkable for the +exportation of a great variety of manufactures, than for that of its +grain. Ancient Egypt, on the contrary, though it exported some +manufactures, fine linen in particular, as well as some other goods, was +always most distinguished for its great exportation of grain. It was +long the granary of the Roman empire. + +The sovereigns of China, of ancient Egypt, and of the different kingdoms +into which Indostan has, at different times, been divided, have always +derived the whole, or by far the most considerable part, of their +revenue, from some sort of land tax or land rent. This land tax, or land +rent, like the tithe in Europe, consisted in a certain proportion, a +fifth it is said, of the produce of the land, which was either delivered +in kind, or paid in money, according to a certain valuation, and which, +therefore, varied from year to year, according to all the variations of +the produce. It was natural, therefore, that the sovereigns of those +countries should be particularly attentive to the interests of +agriculture, upon the prosperity or declension of which immediately +depended the yearly increase or diminution of their own revenue. + +The policy of the ancient republics of Greece, and that of Rome, though +it honoured agriculture more than manufactures or foreign trade, yet +seems rather to have discouraged the latter employments, than to have +given any direct or intentional encouragement to the former. In several +of the ancient states of Greece, foreign trade was prohibited +altogether; and in several others the employments of artificers and +manufacturers were considered as hurtful to the strength and agility of +the human body, as rendering it incapable of those habits which their +military and gymnastic exercises endeavoured to form in it, and as +thereby disqualifying it, more or less, for undergoing the fatigues and +encountering the dangers of war. Such occupations were considered as fit +only for slaves, and the free citizens of the states were prohibited +from exercising them. Even in those states where no such prohibition +took place, as in Rome and Athens, the great body of the people were in +effect excluded from all the trades which are now commonly exercised by +the lower sort of the inhabitants of towns. Such trades were, at Athens +and Rome, all occupied by the slaves of the rich, who exercised them for +the benefit of their masters, whose wealth, power, and protection, made +it almost impossible for a poor freeman to find a market for his work, +when it came into competition with that of the slaves of the rich. +Slaves, however, are very seldom inventive; and all the most important +improvements, either in machinery, or in the arrangement and +distribution of work, which facilitate and abridge labour have been the +discoveries of freemen. Should a slave propose any improvement of this +kind, his master would be very apt to consider the proposal as the +suggestion of laziness, and of a desire to save his own labour at the +master's expense. The poor slave, instead of reward would probably meet +with much abuse, perhaps with some punishment. In the manufactures +carried on by slaves, therefore, more labour must generally have been +employed to exercise the same quantity of work, than in those carried on +by freemen. The work of the former must, upon that account, generally +have been dearer than that of the latter. The Hungarian mines, it is +remarked by Mr. Montesquieu, though not richer, have always been wrought +with less expense, and therefore with more profit, than the Turkish +mines in their neighbourhood. The Turkish mines are wrought by slaves; +and the arms of those slaves are the only machines which the Turks have +ever thought of employing. The Hungarian mines are wrought by freemen, +who employ a great deal of machinery, by which they facilitate and +abridge their own labour. From the very little that is known about the +price of manufactures in the times of the Greeks and Romans, it would +appear that those of the finer sort were excessively dear. Silk sold for +its weight in gold. It was not, indeed, in those times an European +manufacture; and as it was all brought from the East Indies, the +distance of the carriage may in some measure account for the greatness +of the price. The price, however, which a lady, it is said, would +sometimes pay for a piece of very fine linen, seems to have been equally +extravagant; and as linen was always either an European, or at farthest, +an Egyptian manufacture, this high price can be accounted for only by +the great expense of the labour which must have been employed about it, +and the expense of this labour again could arise from nothing but the +awkwardness of the machinery which is made use of. The price of fine +woollens, too, though not quite so extravagant, seems, however, to have +been much above that of the present times. Some cloths, we are told by +Pliny[45], dyed in a particular manner, cost a hundred denarii, or +L.3 6s. 8d. the pound weight. Others, dyed in another manner, cost a +thousand denarii the pound weight, or L.33 6s. 8d. The Roman pound, it +must be remembered, contained only twelve of our avoirdupois ounces. +This high price, indeed, seems to have been principally owing to the +dye. But had not the cloths themselves been much dearer than any which +are made in the present times, so very expensive a dye would not +probably have been bestowed upon them. The disproportion would have been +too great between the value of the accessory and that of the principal. +The price mentioned by the same author[46], of some triclinaria, a sort +of woollen pillows or cushions made use of to lean upon as they reclined +upon their couches at table, passes all credibility; some of them being +said to have cost more than L.30,000, others more than L.300,000. This +high price, too, is not said to have arisen from the dye. In the dress +of the people of fashion of both sexes, there seems to have been much +less variety, it is observed by Dr. Arbuthnot, in ancient than in modern +times; and the very little variety which we find in that of the ancient +statues, confirms his observation. He infers from this, that their dress +must, upon the whole, have been cheaper than ours; but the conclusion +does not seem to follow. When the expense of fashionable dress is very +great, the variety must be very small. But when, by the improvements in +the productive powers of manufacturing art and industry, the expense of +any one dress comes to be very moderate, the variety will naturally be +very great. The rich, not being able to distinguish themselves by the +expense of any one dress, will naturally endeavour to do so by the +multitude and variety of their dresses. + +The greatest and most important branch of the commerce of every nation, +it has already been observed, is that which is carried on between the +inhabitants of the town and those of the country. The inhabitants of the +town draw from the country the rude produce, which constitutes both the +materials of their work and the fund of their subsistence; and they pay +for this rude produce, by sending back to the country a certain portion +of it manufactured and prepared for immediate use. The trade which is +carried on between these two different sets of people, consists +ultimately in a certain quantity of rude produce exchanged for a certain +quantity of manufactured produce. The dearer the latter, therefore, the +cheaper the former; and whatever tends in any country to raise the price +of manufactured produce, tends to lower that of the rude produce of the +land, and thereby to discourage agriculture. The smaller the quantity of +manufactured produce, which any given quantity of rude produce, or, what +comes to the same thing, which the price of any given quantity of rude +produce, is capable of purchasing, the smaller the exchangeable value of +that given quantity of rude produce; the smaller the encouragement which +either the landlord has to increase its quantity by improving, or the +farmer by cultivating the land. Whatever, besides, tends to diminish in +any country the number of artificers and manufacturers, tends to +diminish the home market, the most important of all markets, for the +rude produce of the land, and thereby still further to discourage +agriculture. + +Those systems, therefore, which preferring agriculture to all other +employments, in order to promote it, impose restraints upon manufactures +and foreign trade, act contrary to the very end which they propose, and +indirectly discourage that very species of industry which they mean to +promote. They are so far, perhaps, more inconsistent than even the +mercantile system. That system, by encouraging manufactures and foreign +trade more than agriculture, turns a certain portion of the capital of +the society, from supporting a more advantageous, to support a less +advantageous species of industry. But still it really, and in the end, +encourages that species of industry which it means to promote. Those +agricultural systems, on the contrary, really, and in the end, +discourage their own favourite species of industry. + +It is thus that every system which endeavours, either, by extraordinary +encouragements to draw towards a particular species of industry a +greater share of the capital of the society than what would naturally go +to it, or, by extraordinary restraints, to force from a particular +species of industry some share of the capital which would otherwise be +employed in it, is, in reality subversive of the great purpose which it +means to promote. It retards, instead of accelerating, the progress of +the society towards real wealth and greatness; and diminishes, instead +of increasing, the real value of the annual produce of its land and +labour. + +All systems, either of preference or of restraint, therefore, being thus +completely taken away, the obvious and simple system of natural liberty +establishes itself of its own accord. Every man, as long as he does not +violate the laws of justice, is left perfectly free to pursue his own +interest his own way, and to bring both his industry and capital into +competition with those of any other man, or order of men. The sovereign +is completely discharged from a duty, in the attempting to perform which +he must always be exposed to innumerable delusions, and for the proper +performance of which, no human wisdom or knowledge could ever be +sufficient; the duty of superintending the industry of private people, +and of directing it towards the employments most suitable to the +interest of the society. According to the system of natural liberty, the +sovereign has only three duties to attend to; three duties of great +importance, indeed, but plain and intelligible to common understandings: +first, the duty of protecting the society from violence and invasion of +other independent societies; secondly, the duty of protecting, as far as +possible, every member of the society from the injustice or oppression +of every other member of it, or the duty of establishing an exact +administration of justice; and, thirdly, the duty of erecting and +maintaining certain public works, and certain public institutions, which +it can never be for the interest of any individual, or small number of +individuals to erect and maintain; because the profit could never repay +the expense to any individual, or small number of individuals, though it +may frequently do much more than repay it to a great society. + +The proper performance of those several duties of the sovereign +necessarily supposes a certain expense; and this expense again +necessarily requires a certain revenue to support it. In the following +book, therefore, I shall endeavour to explain, first, what are the +necessary expenses of the sovereign or commonwealth; and which of those +expenses ought to be defrayed by the general contribution of the whole +society; and which of them, by that of some particular part only, or of +some particular members of the society; secondly, what are the different +methods in which the whole society may be made to contribute towards +defraying the expenses incumbent on the whole society; and what are the +principal advantages and inconveniences of each of those methods; and +thirdly, what are the reasons and causes which have induced almost all +modern governments to mortgage some part of this revenue, or to contract +debts; and what have been the effects of those debts upon the real +wealth, the annual produce of the land and labour of the society. The +following book, therefore, will naturally be divided into three +chapters. + + + + +INDEX. + + +The two following accounts are subjoined, in order to illustrate and +confirm what is said in the fifth chapter of the fourth book, concerning +the Tonnage Bounty to the White-herring Fishery. The reader, I believe, +may depend upon the accuracy of both accounts. + + +_An Account of Busses fitted out in Scotland for eleven Years, with +the Number of empty Barrels carried out, and the Number of Barrels +of Herrings caught; also the Bounty, at a Medium, on each Barrel of +Sea-sticks, and on each Barrel when fully packed._ + + +-------------------------------------------------------------------+ + |Years.|Number of|Empty Barrels| Barrels of | Bounty paid on | + | | Busses. |carried out. |Herrings caught.| the Busses. | + +------+---------+-------------+----------------+-------------------+ + | | | | | L. s. d.| + | 1771 | 29 | 5,948 | 2,832 | 2,885 0 0 | + | 1772 | 168 | 41,316 | 22,237 | 11,055 7 6 | + | 1773 | 190 | 42,333 | 42,055 | 12,510 8 6 | + | 1774 | 240 | 59,303 | 56,365 | 26,952 2 6 | + | 1775 | 275 | 69,144 | 52,879 | 19,315 15 0 | + | 1776 | 294 | 76,329 | 51,863 | 21,290 7 6 | + | 1777 | 240 | 62,679 | 45,313 | 17,592 2 6 | + | 1778 | 220 | 56,390 | 40,958 | 16,316 2 6 | + | 1779 | 206 | 55,194 | 29,367 | 15,287 0 0 | + | 1780 | 181 | 48,315 | 19,885 | 13,445 12 6 | + | 1781 | 135 | 33,992 | 16,593 | 9,613 15 6 | + +------+---------+-------------+----------------+-------------------+ + | Total, 2,186 | 550,943 | 378,347 |L.165,463 14 0 | + +----------------+-------------+----------------+-------------------+ + + Sea-sticks, 378,347 + 1-3d deducted, 126,115-2/3 + ----------- + Barrels fully packed, 252,231-1/3 + + Bounty, at a medium, for each barrel of sea-sticks, L.0 8 2-1/4 + + But a barrel of sea-sticks being only reckoned two + thirds of a barrel fully packed, one third is to + be deducted, which brings the bounty to L.0 12 3-3/4 + + And if the herrings are exported, there is besides, + a premium of L.0 2 8 + -------------- + So that the bounty paid by government in money, for + each barrel, is L.0 14 11-3/4 + + But if to this, the duty of the salt usually taken + credit for as expended in curing each barrel, which, + at a medium, is, of foreign, one bushel and one-fourth + of a bushel, at 10s. a-bushel, be added. viz. 0 12 6 + -------------- + the bounty on each barrel would amount to L.1 7 5-3/4 + -------------- + +If the herrings are cured with British salt, it will stand thus, viz. + + Bounty, as before L.0 14 11-3/4 + + But if to this bounty, the duty on two bushels of + Scotch salt, at 1s. 6d. per bushel, supposed to be + the quantity, at a medium, used in curing each barrel, + is added, viz. 0 3 0 + -------------- + the bounty on each barrel will amount to L.0 17 11-3/4 + -------------- + + And when buss herrings are entered for home consumption + in Scotland, and pay the shilling a-barrel of duty, the + bounty stands thus, to wit, as before L.0 12 3 + + From which the 1s. a-barrel is to be deducted 0 1 0 + -------------- + L.0 11 3-3/4 + + But to that there is to be added again, the duty of the + foreign salt used in curing a barrel of herrings, viz. 0 12 6 + -------------- + So that the premium allowed for each barrel of herrings + entered for home consumption is L.1 3 9-3/4 + -------------- + +If the herrings are cured with British salt, it will stand as follows, +viz. + + Bounty on each barrel brought in by the busses, as above L.0 12 3-3/4 + + From which deduct the 1s. a-barrel, paid at the time they + are entered for home consumption 0 1 0 + -------------- + L.0 11 3-3/4 + + But if to the bounty, the duty on two bushels of Scotch + salt, at 1s. 6d. per bushel, supposed to be the quantity, + at a medium, used in curing each barrel, is added, viz. 0 3 0 + -------------- + the premium for each barrel entered for home consumption + will be L.0 14 3-3/4 + +Though the loss of duties upon herrings exported cannot, perhaps, +properly be considered as bounty, that upon herrings entered for home +consumption certainly may. + + +_An Account of the Quantity of Foreign Salt imported into Scotland, +and of Scotch Salt delivered Duty-free from the Works there, for the +Fishery, from the 5th of April 1771 to the 5th of April 1782, with +the Medium of both for one Year._ + + +-----------------------------------+-------------+----------------+ + | | | Scotch Salt | + | | Foreign Salt| delivered from | + | PERIOD. | imported. | the Works. | + | +-------------+----------------+ + | | Bushels | Bushels | + +-----------------------------------+-------------+----------------+ + |From the 5th of April 1771 to the }| | | + | 5th April 1782. }| 936,974 | 168,226 | + | +-------------+----------------+ + |Medium for one year | 85,179-5/11 | 15,293-3/11 | + +-----------------------------------+-------------+----------------+ + +It is to be observed, that the bushel of foreign salt weighs 48lb. that +of British salt, 56lb. only. + + + + +BOOK V. + + +OF THE REVENUE OF THE SOVEREIGN OR COMMONWEALTH. + + + + +CHAP. I. + +OF THE EXPENSES OF THE SOVEREIGN OR COMMONWEALTH. + + +PART I. + +_Of the Expense of Defence._ + +The first duty of the sovereign, that of protecting the society from the +violence and invasion of other independent societies, can be performed +only by means of a military force. But the expense both of preparing +this military force in time of peace, and of employing it in time of +war, is very different in the different states of society, in the +different periods of improvement. + +Among nations of hunters, the lowest and rudest state of society, such +as we find it among the native tribes of North America, every man is a +warrior, as well as a hunter. When he goes to war, either to defend his +society, or to revenge the injuries which have been done to it by other +societies, he maintains himself by his own labour, in the same manner as +when he lives at home. His society (for in this state of things there is +properly neither sovereign nor commonwealth) is at no sort of expense, +either to prepare him for the field, or to maintain him while he is in +it. + +Among nations of shepherds, a more advanced state of society, such as we +find it among the Tartar and Arabs, every man is, in the same manner a +warrior. Such nations have commonly no fixed habitation, but live either +in tents, or in a sort of covered wagons, which are easily transported +from place to place. The whole tribe, or nation, changes its situation +according to the different seasons of the year, as well as according to +other accidents. When its herds and flocks have consumed the forage of +one part of the country, it removes to another, and from that to a +third. In the dry season, it comes down to the banks of the rivers; in +the wet season, it retires to the upper country. When such a nation goes +to war, the warriors will not trust their herds and flocks to the feeble +defence of their old men, their women and children; and their old men, +their women and children, will not be left behind without defence, and +without subsistence. The whole nation, besides, being accustomed to a +wandering life, even in time of peace, easily takes the field in time of +war. Whether it marches as an army, or moves about as a company of +herdsmen, the way of life is nearly the same, though the object proposed +by it be very different. They all go to war together, therefore, and +every one does as well as he can. Among the Tartars, even the women have +been frequently known to engage in battle. If they conquer, whatever +belongs to the hostile tribe is the recompence of the victory; but if +they are vanquished, all is lost; and not only their herds and flocks, +but their women and children, become the booty of the conqueror. Even +the greater part of those who survive the action are obliged to submit +to him for the sake of immediate subsistence. The rest are commonly +dissipated and dispersed in the desert. + +The ordinary life, the ordinary exercise of a Tartar or Arab, prepare +him sufficiently for war. Running, wrestling, cudgel-playing, throwing +the javelin, drawing the bow, &c. are the common pastimes of those who +live in the open air, and are all of them the images of war. When a +Tartar or Arab actually goes to war, he is maintained by his own herds +and flocks, which he carries with him, in the same manner as in peace. +His chief or sovereign (for those nations have all chiefs or +sovereigns) is at no sort of expense in preparing him for the field; and +when he is in it, the chance of plunder is the only pay which he either +expects or requires. + +An army of hunters can seldom exceed two or three hundred men. The +precarious subsistence which the chace affords, could seldom allow a +greater number to keep together for any considerable time. An army of +shepherds, on the contrary, may sometimes amount to two or three hundred +thousand. As long as nothing stops their progress, as long as they can +go on from one district, of which they have consumed the forage, to +another, which is yet entire; there seems to be scarce any limit to the +number who can march on together. A nation of hunters can never be +formidable to the civilized nations in their neighbourhood; a nation of +shepherds may. Nothing can be more contemptible than an Indian war in +North America; nothing, on the contrary, can be more dreadful than a +Tartar invasion has frequently been in Asia. The judgement of +Thucydides, that both Europe and Asia could not resist the Scythians +united, has been verified by the experience of all ages. The inhabitants +of the extensive, but defenceles plains of Scythia or Tartary, have been +frequently united under the dominion of the chief of some conquering +horde or clan; and the havock and devastation of Asia have always +signalized their union. The inhabitants of the inhospitable deserts of +Arabia, the other great nation of shepherds, have never been united but +once, under Mahomet and his immediate successors. Their union, which was +more the effect of religious enthusiasm than of conquest, was signalized +in the same manner. If the hunting nations of America should ever become +shepherds, their neighbourhood would be much more dangerous to the +European colonies than it is at present. + +In a yet more advanced state of society, among those nations of +husbandmen who have little foreign commerce, and no other manufactures +but those coarse and household ones, which almost every private family +prepares for its own use, every man, in the same manner, either is a +warrior, or easily becomes such. Those who live by agriculture generally +pass the whole day in the open air, exposed to all the inclemencies of +the seasons. The hardiness of their ordinary life prepares them for the +fatigues of war, to some of which their necessary occupations bear a +great analogy. The necessary occupation of a ditcher prepares him to +work in the trenches, and to fortify a camp, as well as to inclose a +field. The ordinary pastimes of such husbandmen are the same as those of +shepherds, and are in the same manner the images of war. But as +husbandmen have less leisure than shepherds, they are not so frequently +employed in those pastimes. They are soldiers, but soldiers not quite so +much masters of their exercise. Such as they are, however, it seldom +costs the sovereign or commonwealth any expense to prepare them for the +field. + +Agriculture, even in its rudest and lowest state, supposes a settlement, +some sort of fixed habitation, which cannot be abandoned without great +loss. When a nation of mere husbandmen, therefore, goes to war, the +whole people cannot take the field together. The old men, the women and +children, at least, must remain at home, to take care of the habitation. +All the men of the military age, however, may take the field, and in +small nations of this kind, have frequently done so. In every nation, +the men of the military age are supposed to amount to about a fourth or +a fifth part of the whole body of the people. If the campaign, too, +should begin after seed-time, and end before harvest, both the +husbandman and his principal labourers can be spared from the farm +without much loss. He trusts that the work which must be done in the +mean time, can be well enough executed by the old men, the women, and +the children. He is not unwilling, therefore, to serve without pay +during a short campaign; and it frequently costs the sovereign or +commonwealth as little to maintain him in the field as to prepare him +for it. The citizens of all the different states of ancient Greece seem +to have served in this manner till after the second Persian war; and the +people of Peloponnesus till after the Peloponnesian war. The +Peloponnesians, Thucydides observes, generally left the field in the +summer, and returned home to reap the harvest. The Roman people, under +their kings, and during the first ages of the republic, served in the +same manner. It was not till the siege of Veii, that they who staid at +home began to contribute something towards maintaining those who went to +war. In the European monarchies, which were founded upon the ruins of +the Roman empire, both before, and for some time after, the +establishment of what is properly called the feudal law, the great +lords, with all their immediate dependents, used to serve the crown at +their own expense. In the field, in the same manner as at home, they +maintained themselves by their own revenue, and not by any stipend or +pay which they received from the king upon that particular occasion. + +In a more advanced state of society, two different causes contribute to +render it altogether impossible that they who take the field should +maintain themselves at their own expense. Those two causes are, the +progress of manufactures, and the improvement in the art of war. + +Though a husbandman should be employed in an expedition, provided it +begins after seed-time, and ends before harvest, the interruption of his +business will not always occasion any considerable diminution of his +revenue. Without the intervention of his labour, Nature does herself the +greater part of the work which remains to be done. But the moment that +an artificer, a smith, a carpenter, or a weaver, for example, quits his +workhouse, the sole source of his revenue is completely dried up. Nature +does nothing for him; he does all for himself. When he takes the field, +therefore, in defence of the public, as he has no revenue to maintain +himself, he must necessarily be maintained by the public. But in a +country, of which a great part of the inhabitants are artificers and +manufacturers, a great part the people who go to war must be drawn from +those classes, and must, therefore, be maintained by the public as long +as they are employed in its service. + +When the art of war, too, has gradually grown up to be a very intricate +and complicated science; when the event of war ceases to be determined, +as in the first ages of society, by a single irregular skirmish or +battle; but when the contest is generally spun out through several +different campaigns, each of which lasts during the greater part of the +year; it becomes universally necessary that the public should maintain +those who serve the public in war, at least while they are employed in +that service. Whatever, in time of peace, might be the ordinary +occupation of those who go to war, so very tedious and expensive a +service would otherwise be by far too heavy a burden upon them. After +the second Persian war, accordingly, the armies of Athens seem to have +been generally composed of mercenary troops, consisting, indeed, partly +of citizens, but partly, too, of foreigners; and all of them equally +hired and paid at the expense of the state. From the time of the siege +of Veii, the armies of Rome received pay for their service during the +time which they remained in the field. Under the feudal governments, the +military service, both of the great lords, and of their immediate +dependents, was, after a certain period, universally exchanged for a +payment in money, which was employed to maintain those who served in +their stead. + +The number of those who can go to war, in proportion to the whole number +of the people, is necessarily much smaller in a civilized than in a rude +state of society. In a civilized society, as the soldiers are maintained +altogether by the labour of those who are not soldiers, the number of +the former can never exceed what the latter can maintain, over and above +maintaining, in a manner suitable to their respective stations, both +themselves and the other officers of government and law, whom they are +obliged to maintain. In the little agrarian states of ancient Greece, a +fourth or a fifth part of the whole body of the people considered +themselves as soldiers, and would sometimes, it is said, take the field. +Among the civilized nations of modern Europe, it is commonly computed, +that not more than the one hundredth part of the inhabitants of any +country can be employed as soldiers, without ruin to the country which +pays the expense of their service. + +The expense of preparing the army for the field seems not to have become +considerable in any nation, till long after that of maintaining it in +the field had devolved entirely upon the sovereign or commonwealth. In +all the different republics of ancient Greece, to learn his military +exercises, was a necessary part of education imposed by the state upon +every free citizen. In every city there seems to have been a public +field, in which, under the protection of the public magistrate, the +young people were taught their different exercises by different masters. +In this very simple institution consisted the whole expense which any +Grecian state seems ever to have been at, in preparing its citizens for +war. In ancient Rome, the exercises of the Campus Martius answered the +same purpose with those of the Gymnasium in ancient Greece. Under the +feudal governments, the many public ordinances, that the citizens of +every district should practise archery, as well as several other +military exercises, were intended for promoting the same purpose, but do +not seem to have promoted it so well. Either from want of interest in +the officers entrusted with the execution of those ordinances, or from +some other cause, they appear to have been universally neglected; and in +the progress of all those governments, military exercises seem to have +gone gradually into disuse among the great body of the people. + +In the republic of ancient Greece and Rome, during the whole period of +their existence, and under the feudal governments, for a considerable +time after their first establishment, the trade of a soldier was not a +separate, distinct trade, which constituted the sole or principal +occupation of a particular class of citizens; every subject of the +state, whatever might be the ordinary trade or occupation by which he +gained his livelihood, considered himself, upon all ordinary occasions, +as fit likewise to exercise the trade of a soldier, and, upon many +extraordinary occasions, as bound to exercise it. + +The art of war, however, as it is certainly the noblest of all arts, so, +in the progress of improvement, it necessarily becomes one of most +complicated among them. The state of the mechanical, as well as some +other arts, with which it is necessarily connected, determines the +degree of perfection to which it is capable of being carried at any +particular time. But in order to carry it to this degree of perfection, +it is necessary that it should become the sole or principal occupation +of a particular class of citizens; and the division of labour is as +necessary for the improvement of this, as of every other art. Into other +arts, the division of labour is naturally introduced by the prudence of +individuals, who find that they promote their private interest better by +confining themselves to a particular trade, than by exercising a great +number. But it is the wisdom of the state only, which can render the +trade of a soldier a particular trade, separate and distinct from all +others. A private citizen, who, in time of profound peace, and without +any particular encouragement from the public, should spend the greater +part of his time in military exercises, might, no doubt, both improve +himself very much in them, and amuse himself very well; but he certainly +would not promote his own interest. It is the wisdom of the state only, +which can render it for his interest to give up the greater part of his +time to this peculiar occupation; and states have not always had this +wisdom, even when their circumstances had become such, that the +preservation of their existence required that they should have it. + +A shepherd has a great deal of leisure; a husbandman, in the rude state +of husbandry, has some; an artificer or manufacturer has none at all. +The first may, without any loss, employ a great deal of his time in +martial exercises; the second may employ some part of it; but the last +cannot employ a single hour in them without some loss, and his attention +to his own interest naturally leads him to neglect them altogether. +Those improvements in husbandry, too, which the progress of arts and +manufacturers necessarily introduces, leave the husbandman as little +leisure as the artificer. Military exercises come to be as much +neglected by the inhabitants of the country as by those of the town, and +the great body of the people becomes altogether unwarlike. That wealth, +at the same time, which always follows the improvements of agriculture +and manufactures, and which, in reality, is no more than the accumulated +produce of those improvements, provokes the invasion of all their +neighbours. An industrious, and, upon that account, a wealthy nation, is +of all nations the most likely to be attacked; and unless the states +takes some new measure for the public defence, the natural habits of the +people render them altogether incapable of defending themselves. + +In these circumstances, there seem to be but two methods by which the +state can make any tolerable provision for the public defence. + +If may either, first, by means of a very rigorous police, and in spite +of the whole bent of the interest, genius, and inclinations of the +people, enforce the practice of military exercises, and oblige either +all the citizens of the military age, or a certain number of them, to +join in some measure the trade of a soldier to whatever other trade or +profession they may happen to carry on. + +Or, secondly, by maintaining and employing a certain number of citizens +in the constant practice of military exercises, it may render the trade +of a soldier a particular trade, separate and distinct from all others. + +If the state has recourse to the first of those two expedients, its +military force is said to consist in a militia; if to the second, it is +said to consist in a standing army. The practice of military exercises +is the sole or principal occupation of the soldiers of a standing army, +and the maintenance or pay which the state affords them is the principal +and ordinary fund of their subsistence. The practice of military +exercises is only the occasional occupation of the soldiers of a +militia, and they derive the principal and ordinary fund of their +subsistence from some other occupation. In a militia, the character of +the labourer, artificer, or tradesman, predominates over that of the +soldier; in a standing army, that of the soldier predominates over every +other character; and in this distinction seems to consist the essential +difference between those two different species of military force. + +Militias have been of several different kinds. In some countries, the +citizens destined for defending the state seem to have been exercised +only, without being, if I may say so, regimented; that is, without being +divided into separate and distinct bodies of troops, each of which +performed its exercises under its own proper and permanent officers. In +the republics of ancient Greece and Rome, each citizen, as long as he +remained at home, seems to have practiced his exercises, either +separately and independently, or with such of his equals as he liked +best; and not to have been attached to any particular body of troops, +till he was actually called upon to take the field. In other countries, +the militia has not only been exercised, but regimented. In England, in +Switzerland, and, I believe, in every other country of modern Europe, +where any imperfect military force of this kind has been established, +every militiaman is, even in time of peace, attached to a particular +body of troops, which performs its exercises under its own proper and +permanent officers. + +Before the invention of fire-arms, that army was superior in which the +soldiers had, each individually, the greatest skill and dexterity in the +use of their arms. Strength and agility of body were of the highest +consequence, and commonly determined the fate of battles. But this skill +and dexterity in the use of their arms could be acquired only, in the +same manner as fencing is at present, by practising, not in great +bodies, but each man separately, in a particular school, under a +particular master, or with his own particular equals and companions. +Since the invention of fire-arms, strength and agility of body, or even +extraordinary dexterity and skill in the use of arms, though they are +far from being of no consequence, are, however, of less consequence. The +nature of the weapon, though it by no means puts the awkward upon a +level with the skilful, puts him more nearly so than he ever was before. +All the dexterity and skill, it is supposed, which are necessary for +using it, can be well enough acquired by practising in great bodies. + +Regularity, order, and prompt obedience to command, are qualities which, +in modern armies, are of more importance towards determining the fate of +battles, than the dexterity and skill of the soldiers in the use of +their arms. But the noise of fire-arms, the smoke, and the invisible +death to which every man feels himself every moment exposed, as soon as +he comes within cannon-shot, and frequently a long time before the +battle can be well said to be engaged, must render it very difficult to +maintain any considerable degree of this regularity, order, and prompt +obedience, even in the beginning of a modern battle. In an ancient +battle, there was no noise but what arose from the human voice; there +was no smoke, there was no invisible cause of wounds or death. Every +man, till some mortal weapon actually did approach him, saw clearly that +no such weapon was near him. In these circumstances, and among troops +who had some confidence in their own skill and dexterity in the use of +their arms, it must have been a good deal less difficult to preserve +some degree of regularity and order, not only in the beginning, but +through the whole progress of an ancient battle, and till one of the two +armies was fairly defeated. But the habits of regularity, order, and +prompt obedience to command, can be acquired only by troops which are +exercised in great bodies. + +A militia, however, in whatever manner it may be either disciplined or +exercised, must always be much inferior to a well disciplined and well +exercised standing army. + +The soldiers who are exercised only once a-week, or once a-month, can +never be so expert in the use of their arms, as those who are exercised +every day, or every other day; and though this circumstance may not be +of so much consequence in modern, as it was in ancient times, yet the +acknowledged superiority of the Prussian troops, owing, it is said, very +much to their superior expertness in their exercise, may satisfy us that +it is, even at this day, of very considerable consequence. + +The soldiers, who are bound to obey their officer only once a-week, or +once a-month, and who are at all other times at liberty to manage their +own affairs their own way, without being, in any respect, accountable to +him, can never be under the same awe in his presence, can never have the +same disposition to ready obedience, with those whose whole life and +conduct are every day directed by him, and who every day even rise and +go to bed, or at least retire to their quarters, according to his +orders. In what is called discipline, or in the habit of ready +obedience, a militia must always be still more inferior to a standing +army, than it may sometimes be in what is called the manual exercise, or +in the management and use of its arms. But, in modern war, the habit of +ready and instant obedience is of much greater consequence than a +considerable superiority in the management of arms. + +Those militias which, like the Tartar or Arab militia, go to war under +the same chieftains whom they are accustomed to obey in peace, are by +far the best. In respect for their officers, in the habit of ready +obedience, they approach nearest to standing armies. The Highland +militia, when it served under its own chieftains, had some advantage of +the same kind. As the Highlanders, however, were not wandering, but +stationary shepherds, as they had all a fixed habitation, and were not, +in peaceable times, accustomed to follow their chieftain from place to +place; so, in time of war, they were less willing to follow him to any +considerable distance, or to continue for any long time in the field. +When they had acquired any booty, they were eager to return home, and +his authority was seldom sufficient to detain them. In point of +obedience, they were always much inferior to what is reported of the +Tartars and Arabs. As the Highlanders, too, from their stationary life, +spend less of their time in the open air, they were always less +accustomed to military exercises, and were less expert in the use of +their arms than the Tartars and Arabs are said to be. + +A militia of any kind, it must be observed, however, which has served +for several successive campaigns in the field, becomes in every respect +a standing army. The soldiers are every day exercised in the use of +their arms, and, being constantly under the command of their officers, +are habituated to the same prompt obedience which takes place in +standing armies. What they were before they took the field, is of little +importance. They necessarily become in every respect a standing army, +after they have passed a few campaigns in it. Should the war in America +drag out through another campaign, the American militia may become, in +every respect, a match for that standing army, of which the valour +appeared, in the last war at least, not inferior to that of the hardiest +veterans of France and Spain. + +This distinction being well understood, the history of all ages, it will +be found, bears testimony to the irresistible superiority which a well +regulated standing army has over a militia. + +One of the first standing armies, of which we have any distinct account +in any well authenticated history, is that of Philip of Macedon. His +frequent wars with the Thracians, Illyrians, Thessalians, and some of +the Greek cities in the neighbourhood of Macedon, gradually formed his +troops, which in the beginning were probably militia, to the exact +discipline of a standing army. When he was at peace, which he was very +seldom, and never for any long time together, he was careful not to +disband that army. It vanquished and subdued, after a long and violent +struggle, indeed, the gallant and well exercised militias of the +principal republics of ancient Greece; and afterwards, with very little +struggle, the effeminate and ill exercised militia of the great Persian +empire. The fall of the Greek republics, and of the Persian empire was +the effect of the irresistible superiority which a standing army has +over every other sort of militia. It is the first great revolution in +the affairs of mankind of which history has preserved any distinct and +circumstantial account. + +The fall of Carthage, and the consequent elevation of Rome, is the +second. All the varieties in the fortune of those two famous republics +may very well be accounted for from the same cause. + +From the end of the first to the beginning of the second Carthaginian +war, the armies of Carthage were continually in the field, and employed +under three great generals, who succeeded one another in the command; +Amilcar, his son-in-law Asdrubal, and his son Annibal: first in +chastising their own rebellious slaves, afterwards in subduing the +revolted nations of Africa; and lastly, in conquering the great kingdom +of Spain. The army which Annibal led from Spain into Italy must +necessarily, in those different wars, have been gradually formed to the +exact discipline of standing army. The Romans, in the meantime, though +they had not been altogether at peace, yet they had not, during this +period, been engaged in any war of very great consequence; and their +military discipline, it is generally said, was a good deal relaxed. The +Roman armies which Annibal encountered at Trebi, Thrasymenus, and Cannæ, +were militia opposed to a standing army. This circumstance, it is +probable, contributed more than any other to determine the fate of those +battles. + +The standing army which Annibal left behind him in Spain had the like +superiority over the militia which the Romans sent to oppose it; and, in +a few years, under the command of his brother, the younger Asdrubal, +expelled them almost entirely from that country. + +Annibal was ill supplied from home. The Roman militia, being continually +in the field, became, in the progress of the war, a well disciplined and +well exercised standing army; and the superiority of Annibal grew every +day less and less. Asdrubal judged it necessary to lead the whole, or +almost the whole, of the standing army which he commanded in Spain, to +the assistance of his brother in Italy. In this march, he is said to +have been misled by his guides; and in a country which he did not know, +was surprised and attacked, by another standing army, in every respect +equal or superior to his own, and was entirely defeated. + +When Asdrubal had left Spain, the great Scipio found nothing to oppose +him but a militia inferior to his own. He conquered and subdued that +militia, and, in the course of the war, his own militia necessarily +became a well disciplined and well exercised standing army. That +standing army was afterwards carried to Africa, where it found nothing +but a militia to oppose it. In order to defend Carthage, it became +necessary to recal the standing army of Annibal. The disheartened and +frequently defeated African militia joined it, and, at the battle of +Zama, composed the greater part of the troops of Annibal. The event of +that day determined the fate of the two rival republics. + +From the end of the second Carthaginian war till the fall of the Roman +republic, the armies of Rome were in every respect standing armies. The +standing army of Macedon made some resistance to their arms. In the +height of their grandeur, it cost them two great wars, and three great +battles, to subdue that little kingdom, of which the conquest would +probably have been still more difficult, had it not been for the +cowardice of its last king. The militias of all the civilized nations of +the ancient word, of Greece, of Syria, and of Egypt, made but a feeble +resistance to the standing armies of Rome. The militias of some +barbarous nations defended themselves much better. The Scythian or +Tartar militia, which Mithridates drew from the countries north of the +Euxine and Caspian seas, were the most formidable enemies whom the +Romans had to encounter after the second Carthaginian war. The Parthian +and German militias, too, were always respectable, and upon several +occasions, gained very considerable advantages over the Roman armies. In +general, however, and when the Roman armies were well commanded, they +appear to have been very much superior; and if the Romans did not pursue +the final conquest either of Parthia or Germany, it was probably because +they judged that it was not worth while to add those two barbarous +countries to an empire which was already too large. The ancient +Parthians appear to have been a nation of Scythian or Tartar extraction, +and to have always retained a good deal of the manners of their +ancestors. The ancient Germans were, like the Scythians or Tartars, a +nation of wandering shepherds, who went to war under the same chiefs +whom they were accustomed to follow in peace. Their militia was exactly +of the same kind with that of the Scythians or Tartars, from whom, too, +they were probably descended. + +Many different causes contributed to relax the discipline of the Roman +armies. Its extreme severity was, perhaps, one of those causes. In the +days of their grandeur, when no enemy appeared capable of opposing them, +their heavy armour was laid aside as unnecessarily burdensome, their +laborious exercises were neglected, as unnecessarily toilsome. Under the +Roman emperors, besides, the standing armies of Rome, those particularly +which guarded the German and Pannonian frontiers, became dangerous to +their masters, against whom they used frequently to set up their own +generals. In order to render them less formidable, according to some +authors, Dioclesian, according to others, Constantine, first withdrew +them from the frontier, where they had always before been encamped in +great bodies, generally of two or three legions each, and dispersed them +in small bodies through the different provincial towns, from whence they +were scarce ever removed, but when it became necessary to repel an +invasion. Small bodies of soldiers, quartered in trading and +manufacturing towns, and seldom removed from those quarters, became +themselves tradesmen, artificers, and manufacturers. The civil came to +predominate over the military character; and the standing armies of Rome +gradually degenerated into a corrupt, neglected, and undisciplined +militia, incapable of resisting the attack of the German and Scythian +militias, which soon afterwards invaded the western empire. It was only +by hiring the militia of some of those nations to oppose to that of +others, that the emperors were for some time able to defend themselves. +The fall of the western empire is the third great revolution in the +affairs of mankind, of which ancient history has preserved any distinct +or circumstantial account. It was brought about by the irresistible +superiority which the militia of a barbarous has over that of a +civilized nation; which the militia of a nation of shepherds has over +that of a nation of husbandmen, artificers, and manufacturers. The +victories which have been gained by militias have generally been, not +over standing armies, but over other militias, in exercise and +discipline inferior to themselves. Such were the victories which the +Greek militia gained over that of the Persian empire; and such, too, +were those which, in later times, the Swiss militia gained over that of +the Austrians and Burgundians. + +The military force of the German and Scythian nations, who established +themselves upon the ruins of the western empire, continued for some time +to be of the same kind in their new settlements, as it had been in their +original country. It was a militia of shepherds and husbandmen, which, +in time of war, took the field under the command of the same chieftains +whom it was accustomed to obey in peace. It was, therefore, tolerably +well exercised, and tolerably well disciplined. As arts and industry +advanced, however, the authority of the chieftains gradually decayed, +and the great body of the people had less time to spare for military +exercises. Both the discipline and the exercise of the feudal militia, +therefore, went gradually to ruin, and standing armies were gradually +introduced to supply the place of it. When the expedient of a standing +army, besides, had once been adopted by one civilized nation, it became +necessary that all its neighbors should follow the example. They soon +found that their safety depended upon their doing so, and that their own +militia was altogether incapable of resisting the attack of such an +army. + +The soldiers of a standing army, though they may never have seen an +enemy, yet have frequently appeared to possess all the courage of +veteran troops, and, the very moment that they took the field, to have +been fit to face the hardiest and most experienced veterans. In 1756, +when the Russian army marched into Poland, the valour of the Russian +soldiers did not appear inferior to that of the Prussians, at that time +supposed to be the hardiest and most experienced veterans in Europe. The +Russian empire, however, had enjoyed a profound peace for near twenty +years before, and could at that time have very few soldiers who had ever +seen an enemy. When the Spanish war broke out in 1739, England had +enjoyed a profound peace for about eight-and-twenty years. The valour of +her soldiers, however, far from being corrupted by that long peace, was +never more distinguished than in the attempt upon Carthagena, the first +unfortunate exploit of that unfortunate war. In a long peace, the +generals, perhaps, may sometimes forget their skill; but where a well +regulated standing army has been kept up, the soldiers seem never to +forget their valour. + +When a civilized nation depends for its defence upon a militia, it is at +all times exposed to be conquered by any barbarous nation which happens +to be in its neighbourhood. The frequent conquests of all the civilized +countries in Asia by the Tartars, sufficiently demonstrates the natural +superiority which the militia of a barbarous has over that of a +civilized nation. A well regulated standing army is superior to every +militia. Such an army, as it can best be maintained by an opulent and +civilized nation, so it can alone defend such a nation against the +invasion of a poor and barbarous neighbour. It is only by means of a +standing army, therefore, that the civilization of any country can be +perpetuated, or even preserved, for any considerable time. + +As it is only by means of a well regulated standing army, that a +civilized country can be defended, so it is only by means of it that a +barbarous country can be suddenly and tolerably civilised. A standing +army establishes, with an irresistible force, the law of the sovereign +through the remotest provinces of the empire, and maintains some degree +of regular government in countries which could not otherwise admit of +any. Whoever examines with attention, the improvements which Peter the +Great introduced into the Russian empire, will find that they almost all +resolve themselves into the establishment of a well regulated standing +army. It is the instrument which executes and maintains all his other +regulations. That degree of order and internal peace, which that empire +has ever since enjoyed, is altogether owing to the influence of that +army. + +Men of republican principles have been jealous of a standing army, as +dangerous to liberty. It certainly is so, wherever the interest of the +general, and that of the principal officers, are not necessarily +connected with the support of the constitution of the state. The +standing army of Cæsar destroyed the Roman republic. The standing army +of Cromwell turned the long parliament out of doors. But where the +sovereign is himself the general, and the principal nobility and gentry +of the country the chief officers of the army; where the military force +is placed under the command of those who have the greatest interest in +the support of the civil authority, because they have themselves the +greatest share of that authority, a standing army can never be dangerous +to liberty. On the contrary, it may, in some cases, be favourable to +liberty. The security which it gives to the sovereign renders +unnecessary that troublesome jealousy, which, in some modern republics, +seems to watch over the minutest actions, and to be at all times ready +to disturb the peace of every citizen. Where the security of the +magistrate, though supported by the principal people of the country, is +endangered by every popular discontent; where a small tumult is capable +of bringing about in a few hours a great revolution, the whole authority +of government must be employed to suppress and punish every murmur and +complaint against it. To a sovereign, on the contrary, who feels himself +supported, not only by the natural aristocracy of the country, but by a +well regulated standing army, the rudest, the most groundless, and the +must licentious remonstrances, can give little disturbance. He can +safely pardon or neglect them, and his consciousness of his own +superiority naturally disposes him to do so. That degree of liberty +which approaches to licentiousness, can be tolerated only in countries +where the sovereign is secured by a well regulated standing army. It is +in such countries only, that the public safety does not require that the +sovereign should be trusted with any discretionary power, for +suppressing even the impertinent wantonness of this licentious liberty. + +The first duty of the sovereign, therefore, that of defending the +society from the violence and injustice of other independent societies, +grows gradually more and more expensive, as the society advances in +civilization. The military force of the society, which originally cost +the sovereign no expense, either in time of peace, or in time of war, +must, in the progress of improvement, first be maintained by him in time +of war, and afterwards even in time of peace. + +The great change introduced into the art of war by the invention of +fire-arms, has enhanced still further both the expense of exercising and +disciplining any particular number of soldiers in time of peace, and +that of employing them in time of war. Both their arms and their +ammunition are become more expensive. A musket is a more expensive +machine than a javelin or a bow and arrows; a cannon or a mortar, than a +balista or a catapulta. The powder which is spent in a modern review is +lost irrecoverably, and occasions a very considerable expense. The +javelins and arrows which were thrown or shot in an ancient one, could +easily be picked up again, and were, besides, of very little value. The +cannon and the mortar are not only much dearer, but much heavier +machines than the balista or catapulta; and require a greater expense, +not only to prepare them for the field, but to carry them to it. As the +superiority of the modern artillery, too, over that of the ancients, is +very grant; it has become much more difficult, and consequently much +more expensive, to fortify a town, so as to resist, even for a few +weeks, the attack of that superior artillery. In modern times, many +different causes contribute to render the defence of the society more +expensive. The unavoidable effects of the natural progress of +improvement have, in this respect, been a good deal enhanced by a great +revolution in the the art of war, to which a mere accident, the +invention of gunpowder, seems to have given occasion. + +In modern war, the great expense of fire-arms gives an evident advantage +to the nation which can best afford that expense; and consequently, to +an opulent and civilized, over a poor and barbarous nation. In ancient +times, the opulent and civilized found it difficult to defend themselves +against the poor and barbarous nations. In modern times, the poor and +barbarous find it difficult to defend themselves against the opulent +and civilized. The invention of fire-arms, an invention which at first +sight appears to be so pernicious, is certainly favourable, both to the +permanency and to the extension of civilisation. + + +PART II. + +_Of the Expense of Justice._ + +The second duty of the sovereign, that of protecting, as far as +possible, every member of the society from the injustice or oppression +of every other member of it, or the duty of establishing an exact +administration of justice, requires two very different degrees of +expense in the different periods of society. + +Among nations of hunters, as there is scarce any property, or at least +none that exceeds the value of two or three days labour; so there is +seldom any established magistrate, or any regular administration of +justice. Men who have no property, can injure one another only in their +persons or reputations. But when one man kills, wounds, beats, or +defames another, though he to whom the injury is done suffers, he who +does it receives no benefit. It is otherwise with the injuries to +property. The benefit of the person who does the injury is often equal +to the loss of him who suffers it. Envy, malice, or resentment, are the +only passions which can prompt one man to injure another in his person +or reputation. But the greater part of men are not very frequently under +the influence of those passions; and the very worst men are so only +occasionally. As their gratification, too, how agreeable soever it may +be to certain characters, is not attended with any real or permanent +advantage, it is, in the greater part of men, commonly restrained by +prudential considerations. Men may live together in society with some +tolerable degree of security, though there is no civil magistrate to +protect them from the injustice of those passions. But avarice and +ambition in the rich, in the poor the hatred of labour and the love of +present ease and enjoyment, are the passions which prompt to invade +property; passions much more steady in their operation, and much more +universal in their influence. Wherever there is a great property, there +is great inequality. For one very rich man, there must be at least five +hundred poor, and the affluence of the few supposes the indigence of the +many. The affluence of the rich excites the indignation of the poor, who +are often both driven by want, and prompted by envy to invade his +possessions. It is only under the shelter of the civil magistrate, that +the owner of that valuable property, which is acquired by the labour of +many years, or perhaps of many successive generations, can sleep a +single night in security. He is at all times surrounded by unknown +enemies, whom, though he never provoked, he can never appease, and from +whose injustice he can be protected only by the powerful arm of the +civil magistrate, continually held up to chastise it. The requisition of +valuable and extensive property, therefore, necessarily requires the +establishment of civil government. Where there is no property, or at +least none that exceeds the value of two or three days labour, civil +government is not so necessary. + +Civil government supposes a certain subordination. But as the necessity +of civil government gradually grows up with the acquisition of valuable +property, so the principal causes, which naturally introduce +subordination, gradually grow up with the growth of that valuable +property. + +The causes or circumstances which naturally introduce subordination, or +which naturally and antecedent to any civil institution, give some men +some superiority over the greater part of their brethren, seem to be +four in number. + +The first of those causes or circumstances, is the superiority of +personal qualifications, of strength, beauty, and agility of body; of +wisdom and virtue of prudence, justice, fortitude, and moderation of +mind. The qualifications of the body, unless supported by those of the +mind, can give little authority in any period of society. He is a very +strong man, who, by mere strength of body, can force two weak ones to +obey him. The qualifications of the mind can alone give very great +authority. They are however, invisible qualities; always disputable, and +generally disputed. No society, whether barbarous or civilized, has ever +found it convenient to settle the rules of precedency of rank and +subordination, according to those invisible qualities; but according to +something that is more plain and palpable. + +The second of those causes or circumstances is the superiority of age. +An old man, provided his age is not so far advanced as to give suspicion +of dotage, is everywhere more respected than a young man of equal rank, +fortune, and abilities. Among nations of hunters, such as the native +tribes of North America, age is the sole foundation of rank and +precedency. Among them, father is the appellation of a superior; +brother, of an equal; and son, of an inferior. In the most opulent and +civilized nations, age regulates rank among those who are in every other +respect equal; and among whom, therefore, there is nothing else to +regulate it. Among brothers and among sisters, the eldest always takes +place; and in the succession of the paternal estate, every thing which +cannot be divided, but must go entire to one person, such as a title of +honour, is in most cases given to the eldest. Age is a plain and +palpable quality, which admits of no dispute. + +The third of those causes or circumstances, is the superiority of +fortune. The authority of riches, however, though great in every age of +society, is, perhaps, greatest in the rudest ages of society, which +admits of any considerable inequality of fortune. A Tartar chief, the +increase of whose flocks and herds is sufficient to maintain a thousand +men, cannot well employ that increase in any other way than in +maintaining a thousand men. The rude state of his society does not +afford him any manufactured produce; any trinkets or baubles of any +kind, for which he can exchange that part of his rude produce which is +over and above his own consumption. The thousand men whom he thus +maintains, depending entirely upon him for their subsistence, must both +obey his orders in war, and submit to his jurisdiction in peace. He is +necessarily both their general and their judge, and his chieftainship is +the necessary effect of the superiority of his fortune. In an opulent +and civilized society, a man may possess a much greater fortune, and yet +not be able to command a dozen of people. Though the produce of his +estate may be sufficient to maintain, and may, perhaps, actually +maintain, more than a thousand people, yet, as those people pay for +every thing which they get from him, as he gives scarce any thing to any +body but in exchange for an equivalent, there is scarce any body who +considers himself as entirely dependent upon him, and his authority +extends only over a few menial servants. The authority of fortune, +however, is very great, even in an opulent and civilized society. That +it is much greater than that either of age or of personal qualities, has +been the constant complaint of every period of society which admitted of +any considerable inequality of fortune. The first period of society, +that of hunters, admits of no such inequality. Universal poverty +establishes their universal equality; and the superiority, either of age +or of personal qualities, are the feeble, but the sole foundations of +authority and subordination. There is, therefore, little or no authority +or subordination in this period of society. The second period of +society, that of shepherds, admits of very great inequalities of +fortune, and there is no period in which the superiority of fortune +gives so great authority to those who possess it. There is no period, +accordingly, in which authority and subordination are more perfectly +established. The authority of an Arabian scherif is very great; that of +a Tartar khan altogether despotical. + +The fourth of those causes or circumstances, is the superiority of +birth. Superiority of birth supposes an ancient superiority of fortune +in the family of the person who claims it. All families are equally +ancient; and the ancestors of the prince, though they may be better +known, cannot well be more numerous than those of the beggar. Antiquity +of family means everywhere the antiquity either of wealth, or of that +greatness which is commonly either founded upon wealth, or accompanied +with it. Upstart greatness is everywhere less respected than ancient +greatness. The hatred of usurpers, the love of the family of an ancient +monarch, are in a great measure founded open the contempt which men +naturally have for the former, and upon their veneration for the latter. +As a military officer submits, without reluctance, to the authority of a +superior by whom he has always been commanded, but cannot bear that his +inferior should be set over his head; so men easily submit to a family +to whom they and their ancestors have always submitted; but are fired +with indignation when another family, in whom they had never +acknowledged any such superiority, assumes a dominion over them. + +The distinction of birth, being subsequent to the inequality of fortune, +can have no place in nations of hunters, among whom all men, being equal +in fortune, must likewise be very nearly equal in birth. The son of a +wise and brave man may, indeed, even among them, be somewhat more +respected than a man of equal merit, who has the misfortune to be the +son of a fool or a coward. The difference, however, will not be very +great; and there never was, I believe, a great family in the world, +whose illustration was entirely derived from the inheritance of wisdom +and virtue. + +The distinction of birth not only may, but always does, take place among +nations of shepherds. Such nations are always strangers to every sort of +luxury, and great wealth can scarce ever be dissipated among them by +improvident profusion. There are no nations, accordingly, who abound +more in families revered and honoured on account of their descent from a +long race of great and illustrious ancestors; because there are no +nations among whom wealth is likely to continue longer in the same +families. + +Birth and fortune are evidently the two circumstances which principally +set one man above another. They are the two great sources of personal +distinction, and are, therefore, the principal causes which naturally +establish authority and subordination among men. Among nations of +shepherds, both those causes operate with their full force. The great +shepherd or herdsman, respected on account of his great wealth, and of +the great number of those who depend upon him for subsistence, and +revered on account of the nobleness of his birth, and of the immemorial +antiquity of his illustrious family, has a natural authority over all +the inferior shepherds or herdsmen of his horde or clan. He can command +the united force of a greater number of people than any of them. His +military power is greater than that of any of them. In time of war, +they are all of them naturally disposed to muster themselves under his +banner, rather than under that of any other person; and his birth and +fortune thus naturally procure to him some sort of executive power. By +commanding, too, the united force of a greater number of people than any +of them, he is best able to compel any one of them, who may have injured +another, to compensate the wrong. He is the person, therefore, to whom +all those who are too weak to defend themselves naturally look up for +protection. It is to him that they naturally complain of the injuries +which they imagine have been done to them; and his interposition, in +such cases, is more easily submitted to, even by the person complained +of, than that of any other person would be. His birth and fortune thus +naturally procure him some sort of judicial authority. + +It is in the age of shepherds, in the second period of society, that the +inequality of fortune first begins to take place, and introduces among +men a degree of authority and subordination, which could not possibly +exist before. It thereby introduces some degree of that civil government +which is indispensably necessary for its own preservation; and it seems +to do this naturally, and even independent of the consideration of that +necessity. The consideration of that necessity comes, no doubt, +afterwards, to contribute very much to maintain and secure that +authority and subordination. The rich, in particular, are necessarily +interested to support that order of things, which can alone secure them +in the possession of their own advantages. Men of inferior wealth +combine to defend those of superior wealth in the possession of their +property, in order that men of superior wealth may combine to defend +them in the possession of theirs. All the inferior shepherds and +herdsmen feel, that the security of their own herds and flocks depends +upon the security of those of the great shepherd or herdsman; that the +maintenance of their lesser authority depends upon that of his greater +authority; and that upon their subordination to him depends his power of +keeping their inferiors in subordination to them. They constitute a sort +of little nobility, who feel themselves interested to defend the +property, and to support the authority, of their own little sovereign, +in order that he may be able to defend their property, and to support +their authority. Civil government, so far as it is instituted for the +security of property, is, in reality, instituted for the defence of the +rich against the poor, or of those who have some property against those +who have none at all. + +The judicial authority of such a sovereign, however, far from being a +cause of expense, was, for a long time, a source of revenue to him. The +persons who applied to him for justice were always willing to pay for +it, and a present never failed to accompany a petition. After the +authority of the sovereign, too, was thoroughly established, the person +found guilty, over and above the satisfaction which he was obliged to +make to the party, was likewise forced to pay an amercement to the +sovereign. He had given trouble, he had disturbed, he had broke the +peace of his lord the king, and for those offences an amercement was +thought due. In the Tartar governments of Asia, in the governments of +Europe which were founded by the German and Scythian nations who +overturned the Roman empire, the administration of justice was a +considerable source of revenue, both to the sovereign, and to all the +lesser chiefs or lords who exercised under him any particular +jurisdiction, either over some particular tribe or clan, or over some +particular territory or district. Originally, both the sovereign and the +inferior chiefs used in exercise this jurisdiction in their own persons. +Afterwards, they universally found it convenient to delegate it to some +substitute, bailiff, or judge. This substitute, however, was still +obliged to account to his principal or constituent for the profits of +the jurisdiction. Whoever reads the instructions[47] which were given to +the judges of the circuit in the time of Henry II. will see clearly that +those judges were a sort of itinerant factors, sent round the country +for the purpose of levying certain branches of the king's revenue. In +those days, the administration of justice not only afforded a certain +revenue to the sovereign, but, to procure this revenue, seems to have +been one of the principal advantages which he proposed to obtain by the +administration of justice. + +This scheme of making the administration of justice subservient to the +purposes of revenue, could scarce fail to be productive of several very +gross abuses. The person who applied for justice with a large present in +his hand, was likely to get something more than justice; while he who +applied for it with a small one was likely to get something less. +Justice, too, might frequently be delayed, in order that this present +might be repeated. The amercement, besides, of the person complained of, +might frequently suggest a very strong reason for finding him in the +wrong, even when he had not really been so. That such abuses were far +from being uncommon, the ancient history of every country in Europe +bears witness. + +When the sovereign or chief exercises his judicial authority in his own +person, how much soever he might abuse it, it must have been scarce +possible to get any redress; because there could seldom be any body +powerful enough to call him to account. When he exercised it by a +bailiff, indeed, redress might sometimes be had. If it was for his own +benefit only, that the bailiff had been guilty of an act of injustice, +the sovereign himself might not always be unwilling to punish him, or to +oblige him to repair the wrong. But if it was for the benefit of his +sovereign; if it was in order to make court to the person who appointed +him, and who might prefer him, that he had committed any act of +oppression; redress would, upon most occasions be as impossible as if +the sovereign had committed it himself. In all barbarous governments, +accordingly, in all those ancient governments of Europe in particular, +which were founded upon the ruins of the Roman empire, the +administration of justice appears for a long time to have been extremely +corrupt; far from being quite equal and impartial, even under the best +monarchs, and altogether profligate under the worst. + +Among nations of shepherds, where the sovereign or chief is only the +greatest shepherd or herdsman of the horde or clan, he is maintained in +the same manner as any of his vassals or subjects, by the increase of +his own herds or flocks. Among those nations of husbandmen, who are but +just come out of the shepherd state, and who are not much advanced +beyond that state, such as the Greek tribes appear to have been about +the time of the Trojan war, and our German and Scythian ancestors, when +they first settled upon the ruins of the western empire; the sovereign +or chief is, in the same manner, only the greatest landlord of the +country, and is maintained in the same manner as any other landlord, by +a revenue derived from his own private estate, or from what, in modern +Europe, was called the demesne of the crown. His subjects, upon ordinary +occasions, contribute nothing to his support, except when, in order to +protect them from the oppression of some of their fellow-subjects, they +stand in need of his authority. The presents which they make him upon +such occasions constitute the whole ordinary revenue, the whole of the +emoluments which, except, perhaps, upon some very extraordinary +emergencies, he derives from his dominion over them. When Agamemnon, in +Homer, offers to Achilles, for his friendship, the sovereignty of seven +Greek cities, the sole advantage which he mentions as likely to be +derived from it was, that the people would honour him with presents. As +long as such presents, as long as the emoluments of justice, or what may +be called the fees of court, constituted, in this manner, the whole +ordinary revenue which the sovereign derived from his sovereignty, it +could not well be expected, it could not even decently be proposed, that +he should give them up altogether. It might, and it frequently was +proposed, that he should regulate and ascertain then. But after they had +been so regulated and ascertained, how to hinder a person who was +all-powerful from extending them beyond those regulations, was still +very difficult, not to say impossible. During the continuance of this +state of things, therefore, the corruption of justice, naturally +resulting from the arbitrary and uncertain nature of those presents, +scarce admitted of any effectual remedy. + +But when, from different causes, chiefly from the continually increasing +expense of defending the nation against the invasion of other nations, +the private estate of the sovereign had become altogether insufficient +for defraying the expense of the sovereignty; and when it had become +necessary that the people should, for their own security, contribute +towards this expense by taxes of different kinds; it seems to have been +very commonly stipulated, that no present for the administration of +justice should, under any pretence, be accepted either by the sovereign, +or by his bailiffs and substitutes, the judges. Those presents, it seems +to have been supposed, could more easily be abolished altogether, than +effectually regulated and ascertained. Fixed salaries were appointed to +the judges, which were supposed to compensate to them the loss of +whatever might have been their share of the ancient emoluments of +justice; as the taxes more than compensated to the sovereign the loss of +his. Justice was then said to be administered gratis. + +Justice, however, never was in reality administered gratis in any +country. Lawyers and attorneys, at least, must always be paid by the +parties; and if they were not, they would perform their duty still worse +than they actually perform it. The fees annually paid to lawyers and +attorneys, amount, in every court, to a much greater sum than the +salaries of the judges. The circumstance of those salaries being paid by +the crown, can nowhere much diminish the necessary expense of a +law-suit. But it was not so much to diminish the expense, as to prevent +the corruption of justice, that the judges were prohibited from +receiving any present or fee from the parties. + +The office of judge is in itself so very honourable, that men are +willing to accept of it, though accompanied with very small emoluments. +The inferior office of justice of peace, though attended with a good +deal of trouble, and in most cases with no emoluments at all, is an +object of ambition to the greater part of our country gentlemen. The +salaries of all the different judges, high and low, together with the +whole expense of the administration and execution of justice, even where +it is not managed with very good economy, makes, in any civilized +country, but a very inconsiderable part of the whole expense of +government. + +The whole expense of justice, too, might easily be defrayed by the fees +of court; and, without exposing the administration of justice to any +real hazard of corruption, the public revenue might thus be entirely +discharged from a certain, though perhaps but a small incumbrance. It is +difficult to regulate the fees of court effectually, where a person so +powerful as the sovereign is to share in them, and to derive any +considerable part of his revenue from them. It is very easy, where the +judge is the principal person who can reap any benefit from them. The +law can very easily oblige the judge to respect the regulation, though +it might not always be able to make the sovereign respect it. Where the +fees of court are precisely regulated and ascertained; where they are +paid all at once, at a certain period of every process, into the hands +of a cashier or receiver, to be by him distributed in certain known +proportions among the different judges after the process is decided, and +not till it is decided; there seems to be no more danger of corruption +than where such fees are prohibited altogether. Those fees, without +occasioning any considerable increase in the expense of a law-suit, +might be rendered fully sufficient for defraying the whole expense of +justice. But not being paid to the judges till the process was +determined, they might be some incitement to the diligence of the court +in examining and deciding it. In courts which consisted of a +considerable number of judges, by proportioning the share of each judge +to the number of hours and days which he had employed in examining the +process, either in the court, or in a committee, by order of the court, +those fees might give some encouragement to the diligence of each +particular judge. Public services are never better performed, than when +their reward comes only in consequence of their being performed, and is +proportioned to the diligence employed in performing them. In the +different parliaments of France, the fees of court (called epices and +vacations) constitute the far greater part of the emoluments of the +judges. After all deductions are made, the neat salary paid by the crown +to a counsellor or judge in the parliament of Thoulouse, in rank and +dignity the second parliament of the kingdom, amounts only to 150 +livres, about L.6. 11s. sterling a-year. About seven years ago, that sum +was in the same place the ordinary yearly wages of a common footman. The +distribution of these epices, too, is according to the diligence of the +judges. A diligent judge gains a comfortable, though moderate revenue, +by his office; an idle one gets little more than his salary. Those +parliaments are, perhaps, in many respects, not very convenient courts +of justice, but they have never been accused; they seem never even to +have been suspected of corruption. + +The fees of court seem originally to have been the principal support of +the different courts of justice in England. Each court endeavoured to +draw to itself as much business as it could, and was, upon that account, +willing to take cognizance of many suits which were not originally +intended to fall under its jurisdiction. The court of king's bench, +instituted for the trial of criminal causes only, took cognizance of +civil suits; the plaintiff pretending that the defendant, in not doing +him justice, had been guilty of some trespass or misdemeanour. The court +of exchequer, instituted for the levying of the king's revenue, and for +enforcing the payment of such debts only as were due to the king, took +cognizance of all other contract debts; the plaintiff alleging that he +could not pay the king, because the defendant would not pay him. In +consequence of such fictions, it came, in many cases, to depend +altogether upon the parties, before what court they would choose to have +their cause tried, and each court endeavoured, by superior dispatch and +impartiality, to draw to itself as many causes as it could. The present +admirable constitution of the courts of justice in England was, perhaps, +originally, in a great measure, formed by this emulation, which +anciently took place between their respective judges; each judge +endeavouring to give, in his own court, the speediest and most effectual +remedy which the law would admit, for every sort of injustice. +Originally, the courts of law gave damages only for breach of contract. +The court of chancery, as a court of conscience, first took upon it to +enforce the specific performance of agreements. When the breach of +contract consisted in the non-payment of money, the damage sustained +could be compensated in no other way than by ordering payment, which was +equivalent to a specific performance of the agreement. In such cases, +therefore, the remedy of the courts of law was sufficient. It was not so +in others. When the tenant sued his lord for having unjustly outed him +of his lease, the damages which he recovered were by no means equivalent +to the possession of the land. Such causes, therefore, for some time, +went all to the court of chancery, to the no small loss of the courts of +law. It was to draw back such causes to themselves, that the courts of +law are said to have invented the artificial and fictitious writ of +ejectment, the most effectual remedy for an unjust outer or +dispossession of land. + +A stamp-duty upon the law proceedings by each particular court, to be +levied by that court, and applied towards the maintenance of the judges, +and other officers belonging to it, might in the same manner, afford a +revenue sufficient for defraying the expense of the administration of +justice, without bringing any burden upon the general revenue of the +society. The judges, indeed, might in this case, be under the temptation +of multiplying unnecessarily the proceedings upon every cause, in order +to increase, as much as possible, the produce of such a stamp-duty. It +has been the custom in modern Europe to regulate, upon most occasions, +the payment of the attorneys and clerks of court according to the number +of pages which they had occasion to write; the court, however, requiring +that each page should contain so many lines, and each line so many +words. In order to increase their payment, the attorneys and clerks have +contrived to multiply words beyond all necessity, to the corruption of +the law language of, I believe, every court of justice in Europe. A like +temptation might, perhaps, occasion a like corruption in the form of law +proceedings. + +But whether the administration of justice be so contrived as to defray +its own expense, or whether the judges be maintained by fixed salaries +paid to them from some other fund, it does not seem necessary that the +person or persons entrusted with the executive power should be charged +with the management of that fund, or with the payment of those salaries. +That fund might arise from the rent of landed estates, the management of +each estate being entrusted to the particular court which was to be +maintained by it. That fund might arise even from the interest of a sum +of money, the lending out of which might, in the same manner, be +entrusted to the court which was to be maintained by it. A part, though +indeed but a small part of the salary of the judges of the court of +session in Scotland, arises from the interest of a sum of money. The +necessary instability of such a fund seems, however, to render it an +improper one for the maintenance of an institution which ought to last +for ever. + +The separation of the judicial from the executive power, seems +originally to have arisen from the increasing business of the society, +in consequence of its increasing improvement. The administration of +justice became so laborious and so complicated a duty, as to require the +undivided attention of the person to whom it was entrusted. The person +entrusted with the executive power, not having leisure to attend to the +decision of private causes himself, a deputy was appointed to decide +them in his stead. In the progress of the Roman greatness, the consul +was too much occupied with the political affairs of the state, to attend +to the administration of justice. A prætor, therefore, was appointed to +administer it in his stead. In the progress of the European monarchies, +which were founded upon the ruins of the Roman empire, the sovereigns +and the great lords came universally to consider the administration of +justice as an office both too laborious and too ignoble for them to +execute in their own persons. They universally, therefore, discharged +themselves of it, by appointing a deputy, bailiff, or judge. + +When the judicial is united to the executive power, it is scarce +possible that justice should not frequently be sacrificed to what is +vulgarly called politics. The persons entrusted with the great interests +of the state may even without any corrupt views, sometimes imagine it +necessary to sacrifice to those interests the rights of a private man. +But upon the impartial administration of justice depends the liberty of +every individual, the sense which he has of his own security. In order +to make every individual feel himself perfectly secure in the possession +of every right which belongs to him, it is not only necessary that the +judicial should be separated from the executive power, but that it +should be rendered as much as possible independent of that power. The +judge should not be liable to be removed from his office according to +the caprice of that power. The regular payment of his salary should not +depend upon the good will, or even upon the good economy of that power. + + +PART III. + +_Of the Expense of public Works and public Institutions._ + +The third and last duty of the sovereign or commonwealth, is that of +erecting and maintaining those public institutions and those public +works, which though they may be in the highest degree advantageous to a +great society, are, however, of such a nature, that the profit could +never repay the expense to any individual, or small number of +individuals; and which it, therefore, cannot be expected that any +individual, or small number of individuals, should erect or maintain. +The performance of this duty requires, too, very different degrees of +expense in the different periods of society. + +After the public institutions and public works necessary for the defence +of the society, and for the administration of justice, both of which +have already been mentioned, the other works and institutions of this +kind are chiefly for facilitating the commerce of the society, and those +for promoting the instruction of the people. The institutions for +instruction are of two kinds: those for the education of the youth, and +those for the instruction of people of all ages. The consideration of +the manner in which the expense of those different sorts of public works +and institutions may be most properly defrayed will divide this third +part of the present chapter into three different articles. + + +ART. I.--_Of the public Works and Institutions for facilitating the +Commerce of the Society._ + +_And, first, of those which are necessary for facilitating Commerce in +general._ + +That the erections and maintenance of the public works which facilitate +the commerce of any country, such as good roads, bridges, navigable +canals, harbours, &c. must require very different degrees of expense in +the different periods of society, is evident without any proof. The +expense of making and maintaining the public roads of any country must +evidently increase with the annual produce of the land and labour of +that country, or with the quantity and weight of the goods which it +becomes necessary to fetch and carry upon those roads. The strength of a +bridge must be suited to the number and weight of the carriages which +are likely to pass over it. The depth and the supply of water for a +navigable canal must be proportional to the number and tonnage of the +lighters which are likely to carry goods upon it; the extent of a +harbour, to the number of the shipping which are likely to take shelter +in it. + +It does not seem necessary that the expense of those public works should +be defrayed from that public revenue, as it is commonly called, of which +the collection and application are in most countries, assigned to the +executive power. The greater part of such public works may easily be so +managed, as to afford a particular revenue, sufficient for defraying +their own expense, without bringing any burden upon the general revenue +of the society. + +A highway, a bridge, a navigable canal, for example, may, in most cases, +be both made and maintained by a small toll upon the carriages which +make use of them; a harbour, by a moderate port-duty upon the tonnage of +the shipping which load or unload in it. The coinage, another +institution for facilitating commerce, in many countries, not only +defrays its own expense, but affords a small revenue or a seignorage to +the sovereign. The post-office, another institution for the same +purpose, over and above defraying its own expense, affords, in almost +all countries, a very considerable revenue to the sovereign. + +When the carriages which pass over a highway or a bridge, and the +lighters which sail upon a navigable canal, pay toll in proportion to +their weight or their tonnage, they pay for the maintenance of these +public works exactly in proportion to the wear and tear which they +occasion of them. It seems scarce possible to invent a more equitable +way of maintaining such works. This tax or toll, too, though it is +advanced by the carrier, is finally paid by the consumer, to whom it +must always be charged in the price of the goods. As the expense of +carriage, however, is very much reduced by means of such public works, +the goods, notwithstanding the toll, come cheaper to the consumer than +they could otherwise have done, their price not being so much raised by +the toll, as it is lowered by the cheapness of the carriage. The person +who finally pays this tax, therefore, gains by the application more than +he loses by the payment of it. His payment is exactly in proportion to +his gain. It is, in reality, no more than a part of that gain which he +is obliged to give up, in order to get the rest. It seems impossible to +imagine a more equitable method of raising a tax. + +When the toll upon carriages of luxury, upon coaches, post-chaises, &c. +is made somewhat higher in proportion to their weight, than upon +carriages of necessary use, such as carts, waggons, &c. the indolence +and vanity of the rich is made to contribute, in a very easy manner, to +the relief of the poor, by rendering cheaper the transportation of heavy +goods to all the different parts of the country. + +When high-roads, bridges, canals, &c. are in this manner made and +supported by the commerce which is carried on by means of them, they can +be made only where that commerce requires them, and, consequently, where +it is proper to make them, Their expense, too, their grandeur and +magnificence, must be suited to what that commerce can afford to pay. +They must be made, consequently, as it is proper to make them. A +magnificent high-road cannot be made through a desert country, where +there is little or no commerce, or merely because it happens to lead to +the country villa of the intendant of the province, or to that of some +great lord, to whom the intendant finds it convenient to make his court. +A great bridge cannot be thrown over a river at a place where nobody +passes, or merely to embellish the view from the windows of a +neighbouring palace; things which sometimes happen in countries, where +works of this kind are carried on by any other revenue than that which +they themselves are capable of affording. + +In several different parts of Europe, the toll or lock-duty upon a canal +is the property of private persons, whose private interest obliges them +to keep up the canal. If it is not kept in tolerable order, the +navigation necessarily ceases altogether, and, along with it, the whole +profit which they can make by the tolls. If those tolls were put under +the the management of commissioners, who had themselves no interest in +them, they might be less attentive to the maintenance of the works which +produced them. The canal of Languedoc cost the king of France and the +province upwards of thirteen millions of livres, which (at twenty-eight +livres the mark of silver, the value of French money in the end of the +last century) amounted to upwards of nine hundred thousand pounds +sterling. When that great work was finished, the most likely method, it +was found, of keeping it in constant repair, was to make a present of +the tolls to Riquet, the engineer who planned and conducted the work. +Those tolls constitute, at present, a very large estate to the different +branches of the family of that gentleman, who have, therefore, a great +interest to keep the work in constant repair. But had those tolls been +put under the management of commissioners, who had no such interest, +they might perhaps, have been dissipated in ornamental and unnecessary +expenses, while the most essential parts of the works were allowed to go +to ruin. + +The tolls for the maintenance of a high-road cannot, with any safety, be +made the property of private persons. A high-road, though entirely +neglected, does not become altogether impassable, though a canal does. +The proprietors of the tolls upon a high-road, therefore, might neglect +altogether the repair of the road, and yet continue to levy very nearly +the same tolls. It is proper, therefore, that the tolls for the +maintenance of such a work should be put under the management of +commissioners or trustees. + +In Great Britain, the abuses which the very trustees have committed in +the management of those tolls, have, in many cases, been very justly +complained of. At many turnpikes, it has been said, the money levied is +more than double of what is necessary for executing, in the completest +manner, the work, which is often executed in a very slovenly manner, and +sometimes not executed at all. The system of repairing the high-roads by +tolls of this kind, it must be observed, is not of very long standing. +We should not wonder, therefore, if it has not yet been brought that +degree of perfection of which it seems capable. If mean and improper +persons are frequently appointed trustees; and if proper courts of +inspection and account have not yet been established for controlling +their conduct, and for reducing the tolls to what is barely sufficient +for executing the work to be done by them; the recency of the +institution both accounts and apologizes for those defects, of which, by +the wisdom of parliament, the greater part may, in due time, be +gradually remedied. + +The money levied at the different turnpikes in Great Britain, is +supposed to exceed so much what is necessary for repairing the roads, +that the savings which, with proper economy, might be made from it, have +been considered, even by some ministers, as a very great resource, which +might, at some time or another, be applied to the exigencies of the +state. Government, it has been said, by taking the management of the +turnpikes into its own hands, and by employing the soldiers, who would +work for a very small addition to their pay, could keep the roads in +good order, at a much less expense than it can be done by trustees, who +have no other workmen to employ, but such as derive their whole +subsistence from their wages. A great revenue, half a million, +perhaps[48], it has been pretended, might in this manner be gained, +without laying any new burden upon the people; and the turnpike roads +might be made to contribute to the general expense of the state, in the +same manner as the post-office does at present. + +That a considerable revenue might be gained in this manner, I have no +doubt, though probably not near so much as the projectors of this plan +have supposed. The plan itself, however, seems liable to several very +important objections. + +First, If the tolls which are levied at the turnpikes should ever be +considered as one of the resources for supplying the exigencies of the +state, they would certainly be augmented as those exigencies were +supposed to require. According to the policy of Great Britain, +therefore, they would probably be augmented very fast. The facility with +which a great revenue could be drawn from them, would probably encourage +administration to recur very frequently to this resource. Though it may, +perhaps, be more than doubtful, whether half a million could by any +economy be saved out of the present tolls, it can scarcely be doubted, +but that a million might be saved out of them, if they were doubled; and +perhaps two millions, if they were tripled[49]. This great revenue, too, +might be levied without the appointment of a single new officer to +collect and receive it. But the turnpike tolls, being continually +augmented in this manner, instead of facilitating the inland commerce of +the country, as at present, would soon become a very great incumbrance +upon it. The expense of transporting all heavy goods from one part of +the country to another, would soon be so much increased, the market for +all such goods, consequently, would soon be so much narrowed, that their +production would be in a great measure discouraged, and the most +important branches of the domestic industry of the country annihilated +altogether. + +Secondly, A tax upon carriages, in proportion to their weight, though a +very equal tax when applied to the sole purpose of repairing the roads, +is a very unequal one when applied to any other purpose, or to supply +the common exigencies of the state. When it is applied to the sole +purpose above mentioned, each carriage is supposed to pay exactly for +the wear and tear which that carriage occasions of the roads. But when +it is applied to any other purpose, each carriage is supposed to pay for +more than that wear and tear, and contributes to the supply of some +other exigency of the state. But as the turnpike toll raises the price +of goods in proportion to their weight and not to their value, it is +chiefly paid by the consumers of coarse and bulky, not by those of +precious and light commodities. Whatever exigency of the state, +therefore, this tax might be intended to supply, that exigency would be +chiefly supplied at the expense of the poor, not of the rich; at the +expense of those who are least able to supply it, not of those who are +most able. + +Thirdly, If government should at any time neglect the reparation of the +high-roads, it would be still more difficult, than it is at present, to +compel the proper application of any part of the turnpike tolls. A large +revenue might thus be levied upon the people, without any part of it +being applied to the only purpose to which a revenue levied in this +manner ought ever to be applied. If the meanness and poverty of the +trustees of turnpike roads render it sometimes difficult, at present, to +oblige them to repair their wrong; their wealth and greatness would +render it ten times more so in the case which is here supposed. + +In France, the funds destined for the reparation of the high-roads are +under the immediate direction of the executive power. Those funds +consist, partly in a certain number of days labour, which the country +people are in most parts of Europe obliged to give to the reparation of +the highways; and partly in such a portion of the general revenue of the +state as the king chooses to spare from his other expenses. + +By the ancient law of France, as well as by that of most other parts of +Europe, the labour of the country people was under the direction of a +local or provincial magistracy, which had no immediate dependency upon +the king's council. But, by the present practice, both the labour of the +country people, and whatever other fund the king may choose to assign +for the reparation of the high-roads in any particular province or +generality, are entirely under the management of the intendant; an +officer who is appointed and removed by the king's council who receives +his orders from it, and is in constant correspondence with it. In the +progress of despotism, the authority of the executive power gradually +absorbs that of every other power in the state, and assumes to itself +the management of every branch of revenue which is destined for any +public purpose. In France, however, the great post-roads, the roads +which make the communication between the principal towns of the kingdom, +are in general kept in good order; and, in some provinces, are even a +good deal superior to the greater part of the turnpike roads of England. +But what we call the cross roads, that is, the far greater part of the +roads in the country, are entirely neglected, and are in many places +absolutely impassable for any heavy carriage. In some places it is even +dangerous to travel on horseback, and mules are the only conveyance +which can safely be trusted. The proud minister of an ostentatious +court, may frequently take pleasure in executing a work of splendour and +magnificence, such as a great highway, which is frequently seen by the +principal nobility, whose applauses not only flatter his vanity, but +even contribute to support his interest at court. But to execute a great +number of little works, in which nothing that can be done can make any +great appearance, or excite the smallest degree of admiration in any +traveller, and which, in short, have nothing to recommend them but their +extreme utility, is a business which appears, in every respect, too mean +and paltry to merit the attention of so great a magistrate. Under such +an administration, therefore, such works are almost always entirely +neglected. + +In China, and in several other governments of Asia, the executive power +charges itself both with the reparation of the high-roads, and with the +maintenance of the navigable canals. In the instructions which are given +to the governor of each province, those objects, it is said, are +constantly recommended to him, and the judgment which the court forms of +his conduct is very much regulated by the attention which he appears to +have paid to this part of his instructions. This branch of public +police, accordingly, is said to be very much attended to in all those +countries, but particularly in China, where the high-roads, and still +more the navigable canals, it is pretended, exceed very much every thing +of the same kind which is known in Europe. The accounts of those works, +however, which have been transmitted to Europe, have generally been +drawn up by weak and wondering travellers; frequently by stupid and +lying missionaries. If they had been examined by more intelligent eyes, +and if the accounts of them had been reported by more faithful +witnesses, they would not, perhaps, appear to be so wonderful. The +account which Bernier gives of some works of this kind in Indostan, +falls very short of what had been reported of them by other travellers, +more disposed to the marvellous than he was. It may too, perhaps, be in +those countries, as it is in France, where the great roads, the great +communications, which are likely to be the subjects of conversation at +the court and in the capital, are attended to, and all the rest +neglected. In China, besides, in Indostan, and in several other +governments of Asia, the revenue of the sovereign arises almost +altogether from a land tax or land rent, which rises or falls with the +rise and fall of the annual produce of the land. The great interest of +the sovereign, therefore, his revenue, is in such countries necessarily +and immediately connected with the cultivation of the land, with the +greatness of its produce, and with the value of its produce. But in +order to render that produce both as great and as valuable as possible, +it is necessary to procure to it as extensive a market as possible, and +consequently to establish the freest, the easiest, and the least +expensive communication between all the different parts of the country; +which can be done only by means of the best roads and the best navigable +canals. But the revenue of the sovereign does not, in any part of +Europe, arise chiefly from a land tax or land rent. In all the great +kingdoms of Europe, perhaps, the greater part of it may ultimately +depend upon the produce of the land: but that dependency is neither so +immediate nor so evident. In Europe, therefore, the sovereign does not +feel himself so directly called upon to promote the increase, both in +quantity and value of the produce of the land, or, by maintaining good +roads and canals, to provide the most extensive market for that produce. +Though it should be true, therefore, what I apprehend is not a little +doubtful, that in some parts of Asia this department of the public +police is very properly managed by the executive power, there is not the +least probability that, during the present state of things, it could be +tolerably managed by that power in any part of Europe. + +Even those public works, which are of such a nature that they cannot +afford any revenue for maintaining themselves, but of which the +conveniency is nearly confined to some particular place or district, are +always better maintained by a local or provincial revenue, under the +management of a local and provincial administration, than by the general +revenue of the state, of which the executive power must always have the +management. Were the streets of London to be lighted and paved at the +expense of the treasury, is there any probability that they would be so +well lighted and paved as they are at present, or even at so small an +expense? The expense, besides, instead of being raised by a local tax +upon the inhabitants of each particular street, parish, or district in +London, would, in this case, be defrayed out of the general revenue of +the state, and would consequently be raised by a tax upon all the +inhabitants of the kingdom, of whom the greater part derive no sort of +benefit from the lighting and paving of the streets of London. + +The abuses which sometimes creep into the local and provincial +administration of a local and provincial revenue, how enormous soever +they may appear, are in reality, however, almost always very trifling in +comparison of those which commonly take place in the administration and +expenditure of the revenue of a great empire. They are, besides, much +more easily corrected. Under the local or provincial administration of +the justices of the peace in Great Britain, the six days labour which +the country people are obliged to give to the reparation of the +highways, is not always, perhaps, very judiciously applied, but it is +scarce ever exacted with any circumstance of cruelty or oppression. In +France, under the administration of the intendants, the application is +not always more judicious, and the exaction is frequently the most cruel +and oppressive. Such corvees, as they are called, make one of the +principal instruments of tyranny by which these officers chastise any +parish or communeaute, which has had the misfortune to fall under their +displeasure. + + +_Of the public Works and Institutions which are necessary for +facilitating particular Branches of Commerce._ + +The object of the public works and institutions above mentioned, is to +facilitate commerce in general. But in order to facilitate some +particular branches of it, particular institutions are necessary, which +again require a particular and extraordinary expense. + +Some particular branches of commerce which are carried on with barbarous +and uncivilized nations, require extraordinary protection. An ordinary +store or counting-house could give little security to the goods of the +merchants who trade to the western coast of Africa. To defend them from +the barbarous natives, it is necessary that the place where they are +deposited should be in same measure fortified. The disorders in the +government of Indostan have been supposed to render a like precaution +necessary, even among that mild and gentle people; and it was under +pretence of securing their persons and property from violence, that both +the English and French East India companies were allowed to erect the +first forts which they possessed in that country. Among other nations, +whose vigorous government will suffer no strangers to possess any +fortified place within their territory, it may be necessary to maintain +some ambassador, minister, or consul, who may both decide, according to +their own customs, the differences arising among his own countrymen; +and, in their disputes with the natives, may by means of his public +character, interfere with more authority and afford them a more powerful +protection than they could expect from any private man. The interests of +commerce have frequently made it necessary to maintain ministers in +foreign countries, where the purposes either of war or alliance would +not have required any. The commerce of the Turkey company first +occasioned the establishment of an ordinary ambassador at +Constantinople. The first English embassies to Russia arose altogether +from commercial interests. The constant interference with those +interests, necessarily occasioned between the subjects of the different +states of Europe, has probably introduced the custom of keeping, in all +neighbouring countries, ambassadors or ministers constantly resident, +even in the time of peace. This custom, unknown to ancient times, seems +not to be older than the end of the fifteenth, or beginning of the +sixteenth century; that is, than the time when commerce first began to +extend itself to the greater part of the nations of Europe, and when +they first began to attend to its interests. + +It seems not unreasonable, that the extraordinary expense which the +protection of any particular branch of commerce may occasion, should be +defrayed by a moderate tax upon that particular branch; by a moderate +fine, for example, to be paid by the traders when they first enter into +it; or, what is more equal, by a particular duty of so much per cent. +upon the goods which they either import into, or export out of, the +particular countries with which it is carried on. The protection of +trade, in general, from pirates and freebooters, is said to have given +occasion to the first institution of the duties of customs. But, if it +was thought reasonable to lay a general tax upon trade, in order to +defray the expense of protecting trade in general, it should seem +equally reasonable to lay a particular tax upon a particular branch of +trade, in order to defray the extraordinary expense of protecting that +branch. + +The protection of trade, in general, has always been considered as +essential to the defence of the commonwealth, and, upon that account, a +necessary part of the duty of the executive power. The collection and +application of the general duties of customs, therefore, have always +been left to that power. But the protection of any particular branch of +trade is a part of the general protection of trade; a part, therefore, +of the duty of that power; and if nations always acted consistently, the +particular duties levied for the purposes of such particular protection, +should always have been left equally to its disposal. But in this +respect, as well as in many others, nations have not always acted +consistently; and in the greater part of the commercial states of +Europe, particular companies of merchants have had the address to +persuade the legislature to entrust to them the performance of this part +of the duty of the sovereign, together with all the powers which are +necessarily connected with it. + +These companies, though they may, perhaps, have been useful for the +first introduction of some branches of commerce, by making, at their own +expense, an experiment which the state might not think it prudent to +make, have in the long-run proved, universally, either burdensome or +useless, and have either mismanaged or confined the trade. + +When those companies do not trade upon a joint stock, but are obliged to +admit any person, properly qualified, upon paying a certain fine, and +agreeing to submit to the regulations of the company, each member +trading upon his own stock, and at his own risk, they are called +regulated companies. When they trade upon a joint stock, each member +sharing in the common profit or loss, in proportion to his share in this +stock, they are called joint-stock companies. Such companies, whether +regulated or joint-stock, sometimes have, and sometimes have not, +exclusive privileges. + +Regulated companies resemble, in every respect, the corporation of +trades, so common in the cities and towns of all the different countries +of Europe; and are a sort of enlarged monopolies of the same kind. As no +inhabitant of a town can exercise an incorporated trade, without first +obtaining his freedom in the incorporation, so, in most cases, no +subject of the state can lawfully carry on any branch of foreign trade, +for which a regulated company is established, without first becoming a +member of that company. The monopoly is more or less strict, according +as the terms of admission are more or less difficult, and according as +the directors of the company have more or less authority, or have it +more or less in their power to manage in such a manner as to confine the +greater part of the trade to themselves and their particular friends. In +the most ancient regulated companies, the privileges of apprenticeship +were the same as in other corporations, and entitled the person who had +served his time to a member of the company, to become himself a member, +either without paying any fine, or upon paying a much smaller one than +what was exacted of other people. The usual corporation spirit, wherever +the law does not restrain it, prevails in all regulated companies. When +they have been allowed to act according to their natural genius, they +have always, in order to confine the competition to as small a number of +persons as possible, endeavoured to subject the trade to many burdensome +regulations. When the law has restrained them from doing this, they have +become altogether useless and insignificant. + +The regulated companies for foreign commerce which at present subsist in +Great Britain, are the ancient merchant-adventurers company, now +commonly called the Hamburgh company, the Russia company, the Eastland +company, the Turkey company, and the African company. + +The terms of admission into the Hamburgh company are now said to be +quite easy; and the directors either have it not in their power to +subject the trade to any troublesome restraint or regulations, or, at +least, have not of late exercised that power. It has not always been so. +About the middle of the last century, the fine for admission was fifty, +and at one time one hundred pounds, and the conduct of the company was +said to be extremely oppressive. In 1643, in 1645, and in 1661, the +clothiers and free traders of the west of England complained of them to +parliament, as of monopolists, who confined the trade, and oppressed the +manufactures of the country. Though those complaints produced no act of +parliament, they had probably intimidated the company so far, as to +oblige them to reform their conduct. Since that time, at least, there +have been no complaints against them. By the 10th and 11th of William +III. c. 6, the fine for admission into the Russia company was reduced to +five pounds; and by the 25th of Charles II. c. 7, that for admission +into the Eastland company to forty shillings; while, at the same time, +Sweden, Denmark, and Norway, all the countries on the north side of the +Baltic, were exempted from their exclusive charter. The conduct of those +companies had probably given occasion to those two acts of parliament. +Before that time, Sir Josiah Child had represented both these and the +Hamburgh company as extremely oppressive, and imputed to their bad +management the low state of the trade, which we at that time carried on +to the countries comprehended within their respective charters. But +though such companies may not, in the present times, be very oppressive, +they are certainly altogether useless. To be merely useless, indeed, is +perhaps, the highest eulogy which can ever justly be bestowed upon a +regulated company; and all the three companies above mentioned seem, in +their present state, to deserve this eulogy. + +The fine for admission into the Turkey company was formerly twenty-five +pounds for all persons under twenty-six years of age, and fifty pounds +for all persons above that age. Nobody but mere merchants could be +admitted; a restriction which excluded all shop-keepers and retailers. +By a bye-law, no British manufactures could be exported to Turkey but in +the general ships of the company; and as those ships sailed always from +the port of London, this restriction confined the trade to that +expensive port, and the traders in those who lived in London and in its +neighbourhood. By another bye-law, no person living within twenty miles +of London, and not free of the city could be admitted a member; another +restriction which, joined to the foregoing, necessarily excluded all but +the freemen of London. As the time for the loading and sailing of those +general ships depended altogether upon the directors, they could easily +fill them with their own goods, and those of their particular friends, +to the exclusion of others, who, they might pretend, had made their +proposals too late. In this state of things, therefore, this company +was, in every respect, a strict and oppressive monopoly. Those abuses +gave occasion to the act of the 26th of George II. c. 18, reducing the +fine for admission to twenty pounds for all persons, without any +distinction of ages, or any restriction, either to mere merchants, or to +the freemen of London; and granting to all such persons the liberty of +exporting, from all the ports of Great Britain, to any port in Turkey, +all British goods, of which the exportation was not prohibited, upon +paying both the general duties of customs, and the particular duties +assessed for defraying the necessary expenses of the company; and +submitting, at the same time, to the lawful authority of the British +ambassador and consuls resident in Turkey, and to the bye-laws of the +company duly enacted. To prevent any oppression by those bye-laws, it +was by the same act ordained, that if any seven members of the company +conceived themselves aggrieved by any bye-law which should be enacted +after the passing of this act, they might appeal to the board of trade +and plantations (to the authority of which a committee of the privy +council has now succeeded), provided such appeal was brought within +twelve months after the bye-law was enacted; and that, if any seven +members conceived themselves aggrieved by any bye-law which had been +enacted before the passing of this act, they might bring a like appeal, +provided it was within twelve months after the day on which this act was +to take place. The experience of one year, however, may not always be +sufficient to discover to all the members of a great company the +pernicious tendency of a particular bye-law; and if several of them +should afterwards discover it, neither the board of trade, nor the +committee of council, can afford them any redress. The object, besides, +of the greater part of the bye-laws of all regulated companies, as well +as of all other corporations, is not so much to oppress those who are +already members, as to discourage others from becoming so; which may be +done, not only by a high fine, but by many other contrivances. The +constant view of such companies is always to raise the rate of their own +profit as high as they can; to keep the market, both for the goods which +they export, and for those which they import, as much understocked as +they can; which can be done only by restraining the competition, or by +discouraging new adventurers from entering into the trade. A fine, even +of twenty pounds, besides, though it may not, perhaps, be sufficient to +discourage any man from entering into the Turkey trade, with an +intention to continue in it, may be enough to discourage a speculative +merchant from hazarding a single adventure in it. In all trades, the +regular established traders, even though not incorporated, naturally +combine to raise profits, which are noway so likely to be kept, at all +times, down to their proper level, as by the occasional competition of +speculative adventurers. The Turkey trade, though in some measure laid +open by this act of parliament, is still considered by many people as +very far from being altogether free. The Turkey company contribute to +maintain an ambassador and two or three consuls, who, like other public +ministers, ought to be maintained altogether by the state, and the trade +laid open to all his majesty's subjects. The different taxes levied by +the company, for this and other corporation purposes, might afford a +revenue much more than sufficient to enable a state to maintain such +ministers. + +Regulated companies, it was observed by Sir Josiah Child, though they +had frequently supported public ministers, had never maintained any +forts or garrisons in the countries to which they traded; whereas +joint-stock companies frequently had. And, in reality, the former seem +to be much more unfit for this sort of service than the latter. First, +the directors of a regulated company have no particular interest in the +prosperity of the general trade of the company, for the sake of which +such forts and garrisons are maintained. The decay of that general trade +may even frequently contribute to the advantage of their own private +trade; as, by diminishing the number of their competitors, it may enable +them both to buy cheaper, and to sell dearer. The directors of a +joint-stock company, on the contrary, having only their share in the +profits which are made upon the common stock committed to their +management, have no private trade of their own, of which the interest +can be separated from that of the general trade of the company. Their +private interest is connected with the prosperity of the general trade +of the company, and with the maintenance of the forts and garrisons +which are necessary for its defence. They are more likely, therefore, to +have that continual and careful attention which that maintenance +necessarily requires. Secondly, The directors of a joint-stock company +have always the management of a large capital, the joint stock of the +company, a part of which they may frequently employ, with propriety, in +building, repairing, and maintaining such necessary forts and garrisons. +But the directors of a regulated company, having the management of no +common capital, have no other fund to employ in this way, but the casual +revenue arising from the admission fines, and from the corporation +duties imposed upon the trade of the company. Though they had the same +interest, therefore, to attend to the maintenance of such forts and +garrisons, they can seldom have the same ability to render that +attention effectual. The maintenance of a public minister, requiring +scarce any attention, and but a moderate and limited expense, is a +business much more suitable both to the temper and abilities of a +regulated company. + +Long after the time of Sir Josiah Child, however, in 1750, a regulated +company was established, the present company of merchants trading to +Africa; which was expressly charged at first with the maintenance of all +the British forts and garrisons that lie between Cape Blanc and the Cape +of Good Hope, and afterwards with that of those only which lie between +Cape Rouge and the Cape of Good Hope. The act which establishes this +company (the 23d of George II. c. 31), seems to have had two distinct +objects in view; first, to restrain effectually the oppressive and +monopolizing spirit which is natural to the directors of a regulated +company; and, secondly, to force them, as much as possible, to give an +attention, which is not natural to them, towards the maintenance of +forts and garrisons. + +For the first of these purposes, the fine for admission is limited to +forty shillings. The company is prohibited from trading in their +corporate capacity, or upon a joint stock; from borrowing money upon +common seal, or from laying any restraints upon the trade, which may be +carried on freely from all places, and by all persons being British +subjects, and paying the fine. The government is in a committee of nine +persons, who meet at London, but who are chosen annually by the freemen +of the company at London, Bristol, and Liverpool; three from each place. +No committee-man can be continued in office for more than three years +together. Any committee-man might be removed by the board of trade and +plantations, now by a committee of council, after being heard in his own +defence. The committee are forbid to export negroes from Africa, or to +import any African goods into Great Britain. But as they are charged +with the maintenance of forts and garrisons, they may, for that purpose +export from Great Britain to Africa goods and stores of different kinds. +Out of the moneys which they shall receive from the company, they are +allowed a sum, not exceeding eight hundred pounds, for the salaries of +their clerks and agents at London, Bristol, and Liverpool, the +house-rent of their offices at London, and all other expenses of +management, commission, and agency, in England. What remains of this +sum, after defraying these different expenses, they may divide among +themselves, as compensation for their trouble, in what manner they think +proper. By this constitution, it might have been expected, that the +spirit of monopoly would have been effectually restrained, and the first +of these purposes sufficiently answered. It would seem, however, that it +had not. Though by the 4th of George III. c. 20, the fort of Senegal, +with all its dependencies, had been invested in the company of merchants +trading to Africa, yet, in the year following (by the 5th of George III. +c. 44), not only Senegal and its dependencies, but the whole coast, from +the port of Sallee, in South Barbary, to Cape Rouge, was exempted from +the jurisdiction of that company, was vested in the crown, and the trade +to it declared free to all his majesty's subjects. The company had been +suspected of restraining the trade and of establishing some sort of +improper monopoly. It is not, however, very easy to conceive how, under +the regulations of the 23d George II. they could do so. In the printed +debates of the house of commons, not always the most authentic records +of truth, I observe, however, that they have been accused of this. The +members of the committee of nine being all merchants, and the governors +and factors in their different forts and settlements being all dependent +upon them, it is not unlikely that the latter might have given peculiar +attention to the consignments and commissions of the former, which would +establish a real monopoly. + +For the second of these purposes, the maintenance of the forts and +garrisons, an annual sum has been allotted to them by parliament, +generally about L.13,000. For the proper application of this sum, the +committee is obliged to account annually to the cursitor baron of +exchequer; which account is afterwards to be laid before parliament. But +parliament, which gives so little attention to the application of +millions, is not likely to give much to that of L.13,000 a-year; and the +cursitor baron of exchequer, from his profession and education, is not +likely to be profoundly skilled in the proper expense of forts and +garrisons. The captains of his majesty's navy, indeed, or any other +commissioned officers, appointed by the board of admiralty, may inquire +into the condition of the forts and garrisons, and report their +observations to that board. But that board seems to have no direct +jurisdiction over the committee, nor any authority to correct those +whose conduct it may thus inquire into; and the captains of his +majesty's navy, besides, are not supposed to be always deeply learned in +the science of fortification. Removal from an office, which can be +enjoyed only for the term of three years, and of which the lawful +emoluments, even during that term, are so very small, seems to be the +utmost punishment to which any committee-man is liable, for any fault, +except direct malversation, or embezzlement, either of the public money, +or of that of the company; and the fear of the punishment can never be a +motive of sufficient weight to force a continual and careful attention +to a business to which he has no other interest to attend. The committee +are accused of having sent out bricks and stones from England for the +reparation of Cape Coast Castle, on the coast of Guinea; a business for +which parliament had several times granted an extraordinary sum of +money. These bricks and stones, too, which had thus been sent upon so +long a voyage, were said to have been of so bad a quality, that it was +necessary to rebuild, from the foundation, the walls which had been +repaired with them. The forts and garrisons which lie north of Cape +Rouge, are not only maintained at the expense of the state, but are +under the immediate government of the executive power; and why those +which lie south of that cape, and which, too, are, in part at least, +maintained at the expense of the state, should be under a different +government, it seems not very easy even to imagine a good reason. The +protection of the Mediterranean trade was the original purpose or +pretence of the garrisons of Gibraltar and Minorca; and the maintenance +and government of those garrisons have always been, very properly, +committed, not to the Turkey company, but to the executive power. In the +extent of its dominion consists, in a great measure, the pride and +dignity of that power; and it is not very likely to fail in attention to +what is necessary for the defence of that dominion. The garrisons at +Gibraltar and Minorca, accordingly, have never been neglected. Though +Minorca has been twice taken, and is now probably lost for ever, that +disaster has never been imputed to any neglect in the executive power. I +would not, however, be understood to insinuate, that either of those +expensive garrisons was ever, even in the smallest degree, necessary for +the purpose for which they were originally dismembered from the Spanish +monarchy. That dismemberment, perhaps, never served any other real +purpose than to alienate from England her natural ally the king of +Spain, and to unite the two principal branches of the house of Bourbon +in a much stricter and more permanent alliance than the ties of blood +could ever have united them. + +Joint-stock companies, established either by royal charter, or by act of +parliament, are different in several respects, not only from regulated +companies, but from private copartneries. + +First, In a private copartnery, no partner without the consent of the +company, can transfer his share to another person, or introduce a new +member into the company. Each member, however, may, upon proper warning, +withdraw from the copartnery, and demand payment from them of his share +of the common stock. In a joint-stock company, on the contrary, no +member can demand payment of his share from the company; but each +member can, without their consent, transfer his share to another person, +and thereby introduce a new member. The value of a share in a joint +stock is always the price which it will bring in the market; and this +may be either greater or less in any proportion, than the sum which its +owner stands credited for in the stock of the company. + +Secondly, In a private copartnery, each partner is bound for the debts +contracted by the company, to the whole extent of his fortune. In a +joint-stock company, on the contrary, each partner is bound only to the +extent of his share. + +The trade of a joint-stock company is always managed by a court of +directors. This court, indeed, is frequently subject, in many respects, +to the control of a general court of proprietors. But the greater part +of these proprietors seldom pretend to understand any thing of the +business of the company; and when the spirit of faction happens not to +prevail among them, give themselves no trouble about it, but receive +contentedly such half-yearly or yearly dividend as the directors think +proper to make to them. This total exemption from trouble and from risk, +beyond a limited sum, encourages many people to become adventurers in +joint-stock companies, who would, upon no account, hazard their fortunes +in any private copartnery. Such companies, therefore, commonly draw to +themselves much greater stocks, than any private copartnery can boast +of. The trading stock of the South Sea company at one time amounted to +upwards of thirty-three millions eight hundred thousand pounds. The +divided capital of the Bank of England amounts, at present, to ten +millions seven hundred and eighty thousand pounds. The directors of such +companies, however, being the managers rather of other people's money +than of their own, it cannot well be expected that they should watch +over it with the same anxious vigilance with which the partners in a +private copartnery frequently watch over their own. Like the stewards of +a rich man, they are apt to consider attention to small matters as not +for their master's honour, and very easily give themselves a +dispensation from having it. Negligence and profusion, therefore, must +always prevail, more or less, in the management of the affairs of such a +company. It is upon this account, that joint-stock companies for foreign +trade have seldom been able to maintain the competition against private +adventurers. They have, accordingly, very seldom succeeded without an +exclusive privilege; and frequently have not succeeded with one. Without +an exclusive privilege, they have commonly mismanaged the trade. With an +exclusive privilege, they have both mismanaged and confined it. + +The Royal African company, the predecessors of the present African +company, had an exclusive privilege by charter; but as that charter had +not been confirmed by act of parliament, the trade, in consequence of +the declaration of rights, was, soon after the Revolution, laid open to +all his majesty's subjects. The Hudson's Bay company are, as to their +legal rights, in the same situation as the Royal African company. Their +exclusive charter has not been confirmed by act of parliament. The South +Sea company, as long as they continued to be a trading company, had an +exclusive privilege confirmed by act of parliament; as have likewise the +present united company of merchants trading to the East Indies. + +The Royal African company soon found that they could not maintain the +competition against private adventurers, whom, notwithstanding the +declaration of rights, they continued for some time to call interlopers, +and to persecute as such. In 1698, however, the private adventurers were +subjected to a duty of ten per cent. upon almost all the different +branches of their trade, to be employed by the company in the +maintenance of their forts and garrisons. But, notwithstanding this +heavy tax, the company were still unable to maintain the competition. +Their stock and credit gradually declined. In 1712, their debts had +become so great, that a particular act of parliament was thought +necessary, both for their security and for that of their creditors. It +was enacted, that the resolution of two-thirds of these creditors in +number and value should bind the rest, both with regard to the time +which should be allowed to the company for the payment of their debts, +and with regard to any other agreement which it might be thought proper +to make with them concerning those debts. In 1730, their affairs were in +so great disorder, that they were altogether incapable of maintaining +their forts and garrisons, the sole purpose and pretext of their +institution. From that year till their final dissolution, the parliament +judged it necessary to allow the annual sum of ten thousand pounds for +that purpose. In 1732, after having been for many years losers by the +trade of carrying negroes to the West Indies, they at last resolved to +give it up altogether; to sell to the private traders to America the +negroes which they purchased upon the coast; and to employ their +servants in a trade to the inland parts of Africa for gold dust, +elephants teeth, dyeing drugs, &c. But their success in this more +confined trade was not greater than in their former extensive one. Their +affairs continued to go gradually to decline, till at last, being in +every respect a bankrupt company, they were dissolved by act of +parliament, and their forts and garrisons vested in the present +regulated company of merchants trading to Africa. Before the erection of +the Royal African company, there had been three other joint-stock +companies successively established, one after another, for the African +trade. They were all equally unsuccessful. They all, however, had +exclusive charters, which, though not confirmed by act of parliament, +were in those days supposed to convey a real exclusive privilege. + +The Hudson's Bay company, before their misfortunes in the late war, had +been much more fortunate than the Royal African company. Their necessary +expense is much smaller. The whole number of people whom they maintain +in their different settlements and habitations, which they have honoured +with the name of forts, is said not to exceed a hundred and twenty +persons. This number, however, is sufficient to prepare beforehand the +cargo of furs and other goods necessary for loading their ships, which, +on account of the ice, can seldom remain above six or eight weeks in +those seas. This advantage of having a cargo ready prepared, could not, +for several years, be acquired by private adventurers; and without it +there seems to be no possibility of trading to Hudson's Bay. The +moderate capital of the company, which, it is said, does not exceed one +hundred and ten thousand pounds, may, besides, be sufficient to enable +them to engross the whole, or almost the whole trade and surplus +produce, of the miserable though extensive country comprehended within +their charter. No private adventurers, accordingly, have ever attempted +to trade to that country in competition with them. This company, +therefore, have always enjoyed an exclusive trade, in fact, though they +may have no right to it in law. Over and above all this, the moderate +capital of this company is said to be divided among a very small number +of proprietors. But a joint-stock company, consisting of a small number +of proprietors, with a moderate capital, approaches very nearly to the +nature of a private copartnery, and may be capable of nearly the same +degree of vigilance and attention. It is not to be wondered at, +therefore, if, in consequence of these different advantages, the +Hudson's Bay company had, before the late war, been able to carry on +their trade with a considerable degree of success. It does not seem +probable, however, that their profits ever approached to what the late +Mr Dobbs imagined them. A much more sober and judicious writer, Mr +Anderson, author of the Historical and Chronological Deduction of +Commerce, very justly observes, that upon examining the accounts which +Mr Dobbs himself has given for several years together, of their exports +and imports, and upon making proper allowances for their extraordinary +risk and expense, it does not appear that their profits deserve to be +envied, or that they can much, if at all, exceed the ordinary profits of +trade. + +The South Sea company never had any forts or garrisons to maintain, and +therefore were entirely exempted from one great expense, to which other +joint-stock companies for foreign trade are subject; but they had an +immense capital divided among an immense number of proprietors. It was +naturally to be expected, therefore, that folly, negligence, and +profusion, should prevail in the whole management of their affairs. The +knavery and extravagance of their stock-jobbing projects are +sufficiently known, and the explication of them would be foreign to the +present subject. Their mercantile projects were not much better +conducted. The first trade which they engaged in, was that of supplying +the Spanish West Indies with negroes, of which (in consequence of what +was called the Assiento Contract granted them by the treaty of Utrecht) +they had the exclusive privilege. But as it was not expected that much +profit could be made by this trade, both the Portuguese and French +companies, who had enjoyed it upon the same terms before them, having +been ruined by it, they were allowed, as compensation, to send annually +a ship of a certain burden, to trade directly to the Spanish West +Indies. Of the ten voyages which this annual ship was allowed to make, +they are said to have gained considerably by one, that of the Royal +Caroline, in 1731; and to have been losers, more or less, by almost all +the rest. Their ill success was imputed, by their factors and agents, to +the extortion and oppression of the Spanish government; but was, +perhaps, principally owing to the profusion and depredations of those +very factors and agents; some of whom are said to have acquired great +fortunes, even in one year. In 1734, the company petitioned the king, +that they might be allowed to dispose of the trade and tonnage of their +annual ship, on account of the little profit which they made by it, and +to accept of such equivalent as they could obtain from the king of +Spain. + +In 1724, this company had undertaken the whale fishery. Of this, indeed, +they had no monopoly; but as long as they carried it on, no other +British subjects appear to have engaged in it. Of the eight voyages +which their ships made to Greenland, they were gainers by one, and +losers by all the rest. After their eighth and last voyage, when they +had sold their ships, stores, and utensils, they found that their whole +loss upon this branch, capital and interest included, amounted to +upwards of two hundred and thirty-seven thousand pounds. + +In 1722, this company petitioned the parliament to be allowed to divide +their immense capital of more than thirty-three millions eight hundred +thousand pounds, the whole of which been lent to government, into two +equal parts; the one half, or upwards of sixteen millions nine hundred +thousand pounds, to be put upon the same footing with other government +annuities, and not to be subject to the debts contracted, or losses +incurred, by the directors of the company, in the prosecution of their +mercantile projects; the other half to remain as before, a trading +stock, and to be subject to those debts and losses. The petition was too +reasonable not to be granted. In 1733, they again petitioned the +parliament, that three-fourths of their trading stock might be turned +into annuity stock, and only one-fourth remain as trading stock, or +exposed to the hazards arising from the bad management of their +directors. Both their annuity and trading stocks had, by this time, been +reduced more than two millions each, by several different payments from +government; so that this fourth amounted only to L.3,662,784 : 8 : 6. +In 1748, all the demands of the company upon the king of Spain, in +consequence of the assiento contract, were, by the treaty of +Aix-la-Chapelle, given up for what was supposed an equivalent. An end +was put to their trade with the Spanish West Indies; the remainder of +their trading stock was turned into an annuity stock; and the company +ceased, in every respect, to be a trading company. + +It ought to be observed, that in the trade which the South Sea company +carried on by means of their annual ship, the only trade by which it +ever was expected that they could make any considerable profit, they +were not without competitors, either in the foreign or in the home +market. At Carthagena, Porto Bello, and La Vera Cruz, they had to +encounter the competition of the Spanish merchants, who brought from +Cadiz to those markets European goods, of the same kind with the outward +cargo of their ship; and in England they had to encounter that of the +English merchants, who imported from Cadiz goods of the Spanish West +Indies, of the same kind with the inward cargo. The goods, both of the +Spanish and English merchants, indeed, were, perhaps, subject to higher +duties. But the loss occasioned by the negligence, profusion, and +malversation of the servants of the company, had probably been a tax +much heavier than all those duties. That a joint-stock company should be +able to carry on successfully any branch of foreign trade, when private +adventurers can come into any sort of open and fair competition with +them, seems contrary to all experience. + +The old English East India company was established in 1600, by a charter +from Queen Elizabeth. In the first twelve voyages which they fitted out +for India, they appear to have traded as a regulated company, with +separate stocks, though only in the general ships of the company. In +1612, they united into a joint stock. Their charter was exclusive, and, +though not confirmed by act of parliament, was in those days supposed to +convey a real exclusive privilege. For many years, therefore, they were +not much disturbed by interlopers. Their capital, which never exceeded +seven hundred and fourty-four thousand pounds, and of which fifty pounds +was a share, was not so exorbitant, nor their dealings so extensive, as +to afford either a pretext for gross negligence and profusion, or a +cover to gross malversation. Notwithstanding some extraordinary losses, +occasioned partly by the malice of the Dutch East India company, and +partly by other accidents, they carried on for many years a successful +trade. But in process of time, when the principles of liberty were +better understood, it became every day more and more doubtful, how far a +royal charter, not confirmed by act of parliament, could convey an +exclusive privilege. Upon this question the decisions of the courts of +justice were not uniform, but varied with the authority of government, +and the humours of the times. Interlopers multiplied upon them; and +towards the end of the reign of Charles II., through the whole of that +of James II., and during a part of that of William III., reduced them to +great distress. In 1698, a proposal was made to parliament, of advancing +two millions to government, at eight per cent. provided the subscribers +were erected into a new East India company, with exclusive privileges. +The old East India company offered seven hundred thousand pounds, nearly +the amount of their capital, at four per cent. upon the same conditions. +But such was at that time the state of public credit, that it was more +convenient for government to borrow two millions at eight per cent. than +seven hundred thousand pounds at four. The proposal of the new +subscribers was accepted, and a new East India company established in +consequence. The old East India company, however, had a right to +continue their trade till 1701. They had, at the same time, in the name +of their treasurer, subscribed very artfully three hundred and fifteen +thousand pounds into the stock of the new. By a negligence in the +expression of the act of parliament, which vested the East India trade +in the subscribers to this loan of two millions, it did not appear +evident that they were all obliged to unite into a joint stock. A few +private traders, whose subscriptions amounted only to seven thousand two +hundred pounds, insisted upon the privilege of trading separately upon +their own stocks, and at their own risks. The old East India company had +a right to a separate trade upon their own stock till 1701; and they had +likewise, both before and after that period, a right, like that of other +private traders, to a separate trade upon the three hundred and fifteen +thousand pounds, which they had subscribed into the stock of the new +company. The competition of the two companies with the private traders, +and with one another, is said to have well nigh ruined both. Upon a +subsequent occasion, in 1730, when a proposal was made to parliament for +putting the trade under the management of a regulated company, and +thereby laying it in some measure open, the East India company, in +opposition to this proposal, represented, in very strong terms, what had +been, at this time, the miserable effects, as they thought them, of this +competition. In India, they said, it raised the price of goods so high, +that they were not worth the buying; and in England, by overstocking the +market, it sunk their price so low, that no profit could be made by +them. That by a more plentiful supply, to the great advantage and +conveniency of the public, it must have reduced very much the price of +India goods in the English market, cannot well be doubted; but that it +should have raised very much their price in the Indian market, seems not +very probable, as all the extraordinary demand which that competition +could occasion must have been but as a drop of water in the immense +ocean of Indian commerce. The increase of demand, besides, though in the +beginning it may sometimes raise the price of goods, never fails to +lower it in the long-run. It encourages production, and thereby +increases the competition of the producers, who, in order to undersell +one another, have recourse to new divisions of labour and new +improvements of art, which might never otherwise have been thought of. +The miserable effects of which the company complained, were the +cheapness of consumption, and the encouragement given to production; +precisely the two effects which it is the great business of political +economy to promote. The competition, however, of which they gave this +doleful account, had not been allowed to be of long continuance. In +1702, the two companies were, in some measure, united by an indenture +tripartite, to which the queen was the third party; and in 1708, they +were by act of parliament, perfectly consolidated into one company, by +their present name of the United Company of Merchants trading to the +East Indies. Into this act it was thought worth while to insert a +clause, allowing the separate traders to continue their trade till +Michaelmas 1711; but at the same time empowering the directors, upon +three years notice, to redeem their little capital of seven thousand two +hundred pounds, and thereby to convert the whole stock of the company +into a joint stock. By the same act, the capital of the company, in +consequence of a new loan to government, was augmented from two millions +to three millions two hundred thousand pounds. In 1743, the company +advanced another million to government. But this million being raised, +not by a call upon the proprietors, but by selling annuities and +contracting bond-debts, it did not augment the stock upon which the +proprietors could claim a dividend. It augmented, however, their trading +stock, it being equally liable with the other three millions two hundred +thousand pounds, to the losses sustained, and debts contracted by the +company in prosecution of their mercantile projects. From 1708, or at +least from 1711, this company, being delivered from all competitors, and +fully established in the monopoly of the English commerce to the East +Indies, carried on a successful trade, and from their profits, made +annually a moderate dividend to their proprietors. During the French +war, which began in 1741, the ambition of Mr. Dupleix, the French +governor of Pondicherry, involved them in the wars of the Carnatic, and +in the politics of the Indian princes. After many signal successes, and +equally signal losses, they at last lost Madras, at that time their +principal settlement in India. It was restored to them by the treaty of +Aix-la-Chapelle; and, about this time the spirit of war and conquest +seems to have taken possession of their servants in India, and never +since to have left them. During the French war, which began in 1755, +their arms partook of the general good fortune of those of Great +Britain. They defended Madras, took Pondicherry, recovered Calcutta, and +acquired the revenues of a rich and extensive territory, amounting, it +was then said, to upwards of three millions a-year. They remained for +several years in quiet possession of this revenue; but in 1767, +administration laid claim to their territorial acquisitions, and the +revenue arising from them, as of right belonging to the crown; and the +company, in compensation for this claim, agreed to pay to government +four hundred thousand pounds a-year. They had, before this, gradually +augmented their dividend from about six to ten per cent.; that is, upon +their capital of three millions two hundred thousand pounds, they had +increased it by a hundred and twenty-eight thousand pounds, or had +raised it from one hundred and ninety-two thousand to three hundred and +twenty thousand pounds a-year. They were attempting about this time to +raise it still further, to twelve and a-half per cent., which would have +made their annual payments to their proprietors equal to what they had +agreed to pay annually to government, or to four hundred thousand pounds +a-year. But during the two years in which their agreement with +government was to take place, they were restrained from any further +increase of dividend by two successive acts of parliament, of which the +object was to enable them to make a speedier progress in the payment of +their debts, which were at this time estimated at upwards of six or +seven millions sterling. In 1769, they renewed their agreement with +government for five years more, and stipulated, that during the course +of that period, they should be allowed gradually to increase their +dividend to twelve and a-half per cent; never increasing it, however, +more than one per cent. in one year. This increase of dividend, +therefore, when it had risen to its utmost height, could augment their +annual payments, to their proprietors and government together, but by +six hundred and eight thousand pounds, beyond what they had been before +their late territorial acquisitions. What the gross revenue of those +territorial acquisitions was supposed to amount to, has already been +mentioned; and by an account brought by the Cruttenden East Indiaman in +1769, the neat revenue, clear of all deductions and military charges, +was stated at two millions forty-eight thousand seven hundred and +forty-seven pounds. They were said, at the same time, to possess another +revenue, arising partly from lands, but chiefly from the customs +established at their different settlements, amounting to four hundred +and thirty-nine thousand pounds. The profits of their trade, too, +according to the evidence of their chairman before the house of commons, +amounted, at this time, to at least four hundred thousand pounds a-year; +according to that of their accountant, to at least five hundred +thousand; according to the lowest account, at least equal to the highest +dividend that was to be paid to their proprietors. So great a revenue +might certainly have afforded augmentation of six hundred and eight +thousand pounds in their annual payments; and, at the same time, have +left a large sinking fund, sufficient for the speedy reduction of their +debt. In 1773, however, their debts, instead of being reduced, were +augmented by an arrear to the treasury in the payment of the four +hundred thousand pounds; by another to the custom-house for duties +unpaid; by a large debt to the bank, for money borrowed; and by a +fourth, for bills drawn upon them from India, and wantonly accepted, to +the amount of upwards of twelve hundred thousand pounds. The distress +which these accumulated claims brought upon them, obliged them not only +to reduce all at once their dividend to six per cent. but to throw +themselves upon the mercy of government, and to supplicate, first, a +release from the further payment of the stipulated four hundred thousand +pounds a-year; and, secondly, a loan of fourteen hundred thousand, to +save them from immediate bankruptcy. The great increase of their fortune +had, it seems, only served to furnish their servants with a pretext for +greater profusion, and a cover for greater malversation, than in +proportion even to that increase of fortune. The conduct of their +servants in India, and the general state of their affairs both in India +and in Europe, became the subject of a parliamentary inquiry: in +consequence of which, several very important alterations were made in +the constitution of their government, both at home and abroad. In India, +their principal settlements of Madras, Bombay, and Calcutta, which had +before been altogether independent of one another, were subjected to a +governor-general, assisted by a council of four assessors, parliament +assuming to itself the first nomination of this governor and council, +who were to reside at Calcutta; that city having now become, what Madras +was before, the most important of the English settlements in India. The +court of the Mayor of Calcutta, originally instituted for the trial of +mercantile causes, which arose in the city and neighbourhood, had +gradually extended its jurisdiction with the extension of the empire. It +was now reduced and confined to the original purpose of its institution. +Instead of it, a new supreme court of judicature was established, +consisting of a chief justice and three judges, to be appointed by the +crown. In Europe, the qualification necessary to entitle a proprietor to +vote at their general courts was raised, from five hundred pounds, the +original price of a share in the stock of the company, to a thousand +pounds. In order to vote upon this qualification, too, it was declared +necessary, that he should have possessed it, if acquired by his own +purchase, and not by inheritance, for at least one year, instead of six +months, the term requisite before. The court of twenty-four directors +had before been chosen annually; but it was now enacted, that each +director should, for the future, be chosen for four years; six of them, +however, to go out of office by rotation every year, and not be capable +of being re-chosen at the election of the six new directors for the +ensuing year. In consequence of these alterations, the courts, both of +the proprietors and directors, it was expected, would be likely to act +with more dignity and steadiness than they had usually done before. But +it seems impossible, by any alterations, to render those courts, in any +respect, fit to govern, or even to share in the government of a great +empire; because the greater part of their members must always have too +little interest in the prosperity of that empire, to give any serious +attention to what may promote it. Frequently a man of great, sometimes +even a man of small fortune, is willing to purchase a thousand pounds +share in India stock, merely for the influence which he expects to +acquire by a vote in the court of proprietors. It gives him a share, +though not in the plunder, yet in the appointment of the plunderers of +India; the court of directors, though they make that appointment, being +necessarily more or less under the influence of the proprietors, who not +only elect those directors, but sometimes over-rule the appointments of +their servants in India. Provided he can enjoy this influence for a few +years, and thereby provide for a certain number of his friends, he +frequently cares little about the dividend, or even about the value of +the stock upon which his vote in founded. About the prosperity of the +great empire, in the government of which that vote gives him a share, he +seldom cares at all. No other sovereigns ever were, or, from the nature +of things, ever could be, so perfectly indifferent about the happiness +or misery of their subjects, the improvement or waste of their +dominions, the glory or disgrace of their administration, as, from +irresistible moral causes, the greater part of the proprietors of such a +mercantile company are, and necessarily must be. This indifference, too, +was more likely to be increased than diminished by some of the new +regulations which were made in consequence of the parliamentary inquiry. +By a resolution of the house of commons, for example, it was declared, +that when the L.1,400,000 lent to the company by government, should be +paid, and their bond-debts be reduced to L.1,500,000, they might then, +and not till then, divide eight per cent. upon their capital; and that +whatever remained of their revenues and neat profits at home should be +divided into four parts; three of them to be paid into the exchequer for +the use of the public, and the fourth to be reserved as a fund, either +for the further reduction of their bond-debts, or for the discharge of +other contingent exigencies which the company might labour under. But if +the company were bad stewards and bad sovereigns, when the whole of +their neat revenue and profits belonged to themselves, and were at their +own disposal, they were surely not likely to be better when +three-fourths of them were to belong to other people, and the other +fourth, though to be laid out for the benefit of the company, yet to be +so under the inspection and with the approbation of other people. + +It might be more agreeable to the company, that their own servants and +dependants should have either the pleasure of wasting, or the profit of +embezzling, whatever surplus might remain, after paying the proposed +dividend of eight per cent. than that it should come into the hands of a +set of people with whom those resolutions could scarce fail to set them +in some measure at variance. The interest of those servants and +dependants might so far predominate in the court of proprietors, as +sometimes to dispose it to support the authors of depredations which had +been committed in direct violation of its own authority. With the +majority of proprietors, the support even of the authority of their own +court might sometimes be a matter of less consequence than the support +of those who had set that authority at defiance. + +The regulations of 1773, accordingly, did not put an end to the disorder +of the company's government in India. Notwithstanding that, during a +momentary fit of good conduct, they had at one time collected into the +treasury of Calcutta more than L.3,000,000 sterling; notwithstanding +that they had afterwards extended either their dominion or their +depredations over a vast accession of some of the richest and most +fertile countries in India, all was wasted and destroyed. They found +themselves altogether unprepared to stop or resist the incursion of +Hyder Ali; and in consequence of those disorders, the company is now +(1784) in greater distress than ever; and, in order to prevent immediate +bankruptcy, is once more reduced to supplicate the assistance of +government. Different plans have been proposed by the different parties +in parliament for the better management of its affairs; and all those +plans seem to agree in supposing, what was indeed always abundantly +evident, that it is altogether unfit to govern its territorial +possessions. Even the company itself seems to be convinced of its own +incapacity so far, and seems, upon that account willing to give them up +to government. + +With the right of possessing forts and garrisons in distant and +barbarous countries, is necessarily connected the right of making peace +and war in those countries. The joint-stock companies, which have had +the one right, have constantly exercised the other, and have frequently +had it expressly conferred upon them. How unjustly, how capriciously, +how cruelly, they have commonly exercised it, is too well known from +recent experience. + +When a company of merchants undertake, at their own risk and expense, to +establish a new trade with some remote and barbarous nation, it may not +be unreasonable to incorporate them into a joint-stock company, and to +grant them, in case of their success, a monopoly of the trade for a +certain number of years. It is the easiest and most natural way in which +the state can recompense them for hazarding a dangerous and expensive +experiment, of which the public is afterwards to reap the benefit. A +temporary monopoly of this kind may be vindicated, upon the same +principles upon which a like monopoly of a new machine is granted to its +inventor, and that of a new book to its author. But upon the expiration +of the term, the monopoly ought certainly to determine; the forts and +garrisons, if it was found necessary to establish any, to be taken into +the hands of government, their value to be paid to the company, and the +trade to be laid open to all the subjects of the state. By a perpetual +monopoly, all the other subjects of the state are taxed very absurdly in +two different ways: first, by the high price of goods, which, in the +case of a free trade, they could buy much cheaper; and, secondly, by +their total exclusion from a branch of business which it might be both +convenient and profitable for many of them to carry on. It is for the +most worthless of all purposes, too, that they are taxed in this manner. +It is merely to enable the company to support the negligence, profusion, +and malversation of their own servants, whose disorderly conduct seldom +allows the dividend of the company to exceed the ordinary rate of profit +in trades which are altogether free, and very frequently makes it fall +even a good deal short of that rate. Without a monopoly, however, a +joint-stock company, it would appear from experience, cannot long carry +on any branch of foreign trade. To buy in one market, in order to sell +with profit in another, when there are many competitors in both; to +watch over, not only the occasional variations in the demand, but the +much greater and more frequent variations in the competition, or in the +supply which that demand is likely to get from other people; and to suit +with dexterity and judgment both the quantity and quality of each +assortment of goods to all these circumstances, is a species of warfare, +of which the operations are continually changing, and which can scarce +ever be conducted successfully, without such an unremitting exertion of +vigilance and attention as cannot long be expected from the directors of +a joint-stock company. The East India company, upon the redemption of +their funds, and the expiration of their exclusive privilege, have a +right, by act of parliament, to continue a corporation with a joint +stock, and to trade in their corporate capacity to the East Indies, in +common with the rest of their fellow subjects. But in this situation, +the superior vigilance and attention of a private adventurer would, in +all probability, soon make them weary of the trade. + +An eminent French author, of great knowledge in matters of political +economy, the Abbé Morellet, gives a list of fifty-five joint-stock +companies for foreign trade, which have been established in different +parts of Europe since the year 1600, and which, according to him, have +all failed from mismanagement, notwithstanding they had exclusive +privileges. He has been misinformed with regard to the history of two or +three of them, which were not joint-stock companies and have not failed. +But, in compensation, there have been several joint-stock companies +which have failed, and which he has omitted. + +The only trades which it seems possible for a joint-stock company to +carry on successfully, without an exclusive privilege, are those, of +which all the operations are capable of bring reduced to what is called +a routine, or to such a uniformity of method as admits of little or no +variation. Of this kind is, first, the banking trade; secondly, the +trade of insurance from fire and from sea risk, and capture in time of +war; thirdly, the trade of making and maintaining a navigable cut or +canal; and, fourthly, the similar trade of bringing water for the supply +of a great city. + +Though the principles of the banking trade may appear somewhat abstruse, +the practice is capable of being reduced to strict rules. To depart upon +any occasion from those rules, in consequence of some flattering +speculation of extraordinary gain, is almost always extremely dangerous +and frequently fatal to the banking company which attempts it. But the +constitution of joint-stock companies renders them in general, more +tenacious of established rules than any private copartnery. Such +companies, therefore, seem extremely well fitted for this trade. The +principal banking companies in Europe, accordingly, are joint-stock +companies, many of which manage their trade very successfully without +any exclusive privilege. The bank of England has no other exclusive +privilege, except that no other banking company in England shall consist +of more than six persons. The two banks of Edinburgh are joint-stock +companies, without any exclusive privilege. + +The value of the risk, either from fire, or from loss by sea, or by +capture, though it cannot, perhaps, be calculated very exactly, admits, +however, of such a gross estimation, as renders it, in some degree, +reducible to strict rule and method. The trade of insurance, therefore, +may be carried on successfully by a joint-stock company, without any +exclusive privilege. Neither the London Assurance, nor the Royal +Exchange Assurance companies, have any such privilege. + +When a navigable cut or canal has been once made, the management of it +becomes quite simple and easy, and it is reducible to strict rule and +method. Even the making of it is so, as it may be contracted for with +undertakers, at so much a mile, and so much a lock. The same thing may +be said of a canal, an aqueduct, or a great pipe for bringing water to +supply a great city. Such undertakings, therefore, may be, and +accordingly frequently are, very successfully managed by joint-stock +companies, without any exclusive privilege. + +To establish a joint-stock company, however, for any undertaking, merely +because such a company might be capable of managing it successfully; or, +to exempt a particular set of dealers from some of the general laws +which take place with regard to all their neighbours, merely because +they might be capable of thriving, if they had such an exemption, would +certainly not be reasonable. To render such an establishment perfectly +reasonable, with the circumstance of being reducible to strict rule and +method, two other circumstances ought to concur. First, it ought to +appear with the clearest evidence, that the undertaking is of greater +and more general utility than the greater part of common trades; and, +secondly, that it requires a greater capital than can easily be +collected into a private copartnery. If a moderate capital were +sufficient, the great utility of the undertaking would not be a +sufficient reason for establishing a joint-stock company; because, in +this case, the demand for what it was to produce, would readily and +easily be supplied by private adventurers. In the four trades above +mentioned, both those circumstances concur. + +The great and general utility of the banking trade, when prudently +managed, has been fully explained in the second book of this Inquiry. +But a public bank, which is to support public credit, and, upon +particular emergencies, to advance to government the whole produce of a +tax, to the amount, perhaps, of several millions, a year or two before +it comes in, requires a greater capital than can easily be collected +into any private copartnery. + +The trade of insurance gives great security to the fortunes of private +people, and, by dividing among a great many that loss which would ruin +an individual, makes it fall light and easy upon the whole society. In +order to give this security, however, it is necessary that the insurers +should have a very large capital. Before the establishment of the two +joint-stock companies for insurance in London, a list, it is said, was +laid before the attorney-general, of one hundred and fifty private +insurers, who had failed in the course of a few years. + +That navigable cuts and canals, and the works which are sometimes +necessary for supplying a great city with water, are of great and +general utility, while, at the same time, they frequently require a +greater expense than suits the fortunes of private people, is +sufficiently obvious. + +Except the four trades above mentioned, I have not been able to +recollect any other, in which all the three circumstances requisite for +rendering reasonable the establishment of a joint-stock company concur. +The English copper company of London, the lead-smelting company, the +glass-grinding company, have not even the pretext of any great or +singular utility in the object which they pursue; nor does the pursuit +of that object seem to require any expense unsuitable to the fortunes of +many private men. Whether the trade which those companies carry on, is +reducible to such strict rule and method as to render it fit for the +management of a joint-stock company, or whether they have any reason to +boast of their extraordinary profits, I do not pretend to know. The +mine-adventurers company has been long ago bankrupt. A share in the +stock of the British Linen company of Edinburgh sells, at present, very +much below par, though less so than it did some years ago. The +joint-stock companies, which are established for the public-spirited +purpose of promoting some particular manufacture, over and above +managing their own affairs ill, to the diminution of the general stock +of the society, can, in other respects, scarce ever fail to do more harm +than good. Notwithstanding the most upright intentions, the unavoidable +partiality of their directors to particular branches of the manufacture, +of which the undertakers mislead and impose upon them, is a real +discouragement to the rest, and necessarily breaks, more or less, that +natural proportion which would otherwise establish itself between +judicious industry and profit, and which, to the general industry of the +country, is of all encouragements the greatest and the most effectual. + + +ART. II.--_Of the Expense of the Institution for the Education of +Youth._ + +The institutions for the education of the youth may, in the same manner, +furnish a revenue sufficient for defraying their own expense. The fee or +honorary, which the scholar pays to the master, naturally constitutes a +revenue of this kind. + +Even where the reward of the master does not arise altogether from this +natural revenue, it still is not necessary that it should be derived +from that general revenue of the society, of which the collection and +application are, in most countries, assigned to the executive power. +Through the greater part of Europe, accordingly, the endowment of +schools and colleges makes either no charge upon that general revenue, +or but a very small one. It everywhere arises chiefly from some local or +provincial revenue, from the rent of some landed estate, or from the +interest of some sum of money, allotted and put under the management of +trustees for this particular purpose, sometimes by the sovereign +himself, and sometimes by some private donor. + +Have those public endowments contributed in general, to promote the end +of their institution? Have they contributed to encourage the diligence, +and to improve the abilities, of the teachers? Have they directed the +course of education towards objects more useful, both to the individual +and to the public, than those to which it would naturally have gone of +its own accord? It should not seem very difficult to give at least a +probable answer to each of those questions. + +In every profession, the exertion of the greater part of those who +exercise it, is always in proportion to the necessity they are under of +making that exertion. This necessity is greatest with those to whom the +emoluments of their profession are the only source from which they +expect their fortune, or even their ordinary revenue and subsistence. In +order to acquire this fortune, or even to get this subsistence, they +must, in the course of a year, execute a certain quantity of work of a +known value; and, where the competition is free, the rivalship of +competitors, who are all endeavouring to justle one another out of +employment, obliges every man to endeavour to execute his work with a +certain degree of exactness. The greatness of the objects which are to +be acquired by success in some particular professions may, no doubt, +sometimes animate the exertion of a few men of extraordinary spirit and +ambition. Great objects, however, are evidently not necessary, in order +to occasion the greatest exertions. Rivalship and emulation render +excellency, even in mean professions, an object of ambition, and +frequently occasion the very greatest exertions. Great objects, on the +contrary, alone and unsupported by the necessity of application, have +seldom been sufficient to occasion any considerable exertion. In +England, success in the profession of the law leads to some very great +objects of ambition; and yet how few men, born to easy fortunes, have +ever in this country been eminent in that profession? + +The endowments of schools and colleges have necessarily diminished, more +or less, the necessity of application in the teachers. Their +subsistence, so far as it arises from their salaries, is evidently +derived from a fund, altogether independent of their success and +reputation in their particular professions. + +In some universities, the salary makes but a part, and frequently but a +small part, of the emoluments of the teacher, of which the greater part +arises from the honoraries or fees of his pupils. The necessity of +application, though always more or less diminished, is not, in this +case, entirely taken away. Reputation in his profession is still of some +importance to him, and he still has some dependency upon the affection, +gratitude, and favourable report of those who have attended upon his +instructions; and these favourable sentiments he is likely to gain in no +way so well as by deserving them, that is, by the abilities and +diligence with which he discharges every part of his duty. + +In other universities, the teacher is prohibited from receiving any +honorary or fee from his pupils, and his salary constitutes the whole of +the revenue which he derives from his office. His interest is, in this +case, set as directly in opposition to his duty as it is possible to set +it. It is the interest of every man to live as much at his ease as he +can; and if his emoluments are to be precisely the same, whether he does +or does not perform some very laborious duty, it is certainly his +interest, at least as interest is vulgarly understood, either to neglect +it altogether, or, if he is subject to some authority which will not +suffer him to do this, to perform it in as careless and slovenly a +manner as that authority will permit. If he is naturally active and a +lover of labour, it is his interest to employ that activity in any way +from which he can derive some advantage, rather than in the performance +of his duty, from which he can derive none. + +If the authority to which he is subject resides in the body corporate, +the college, or university, of which he himself is a member, and in +which the greater part of the other members are, like himself, persons +who either are, or ought to be teachers, they are likely to make a +common cause, to be all very indulgent to one another, and every man to +consent that his neighbour may neglect his duty, provided he himself is +allowed to neglect his own. In the university of Oxford, the greater +part of the public professors have, for these many years, given up +altogether even the pretence of teaching. + +If the authority to which he is subject resides, not so much in the body +corporate, of which he is a member, as in some other extraneous persons, +in the bishop of the diocese, for example, in the governor of the +province, or, perhaps, in some minister of state, it is not, indeed, in +this case, very likely that he will be suffered to neglect his duty +altogether. All that such superiors, however, can force him to do, is to +attend upon his pupils a certain number of hours, that is, to give a +certain number of lectures in the week, or in the year. What those +lectures shall be, must still depend upon the diligence of the teacher; +and that diligence is likely to be proportioned to the motives which he +has for exerting it. An extraneous jurisdiction of this kind, besides, +is liable to be exercised both ignorantly and capriciously. In its +nature, it is arbitrary and discretionary; and the persons who exercise +it, neither attending upon the lectures of the teacher themselves, nor +perhaps understanding the sciences which it is his business to teach, +are seldom capable of exercising it with judgment. From the insolence of +office, too, they are frequently indifferent how they exercise it, and +are very apt to censure or deprive him of his office wantonly and +without any just cause. The person subject to such jurisdiction is +necessarily degraded by it, and, instead of being one of the most +respectable, is rendered one of the meanest and most contemptible +persons in the society. It is by powerful protection only, that he can +effectually guard himself against the bad usage to which he is at all +times exposed; and this protection he is most likely to gain, not by +ability or diligence in his profession, but by obsequiousness to the +will of his superiors, and by being ready, at all times, to sacrifice to +that will the rights, the interest, and the honour of the body +corporate, of which he is a member. Whoever has attended for any +considerable time to the administration of a French university, must +have had occasion to remark the effects which naturally result from an +arbitrary and extraneous jurisdiction of this kind. + +Whatever forces a certain number of students to any college or +university, independent of the merit or reputation of the teachers, +tends more or less to diminish the necessity of that merit or +reputation. + +The privileges of graduates in arts, in law, physic, and divinity, when +they can be obtained only by residing a certain number of years in +certain universities, necessarily force a certain number of students to +such universities, independent of the merit or reputation of the +teachers. The privileges of graduates are a sort of statutes of +apprenticeship, which have contributed to the improvement of education, +just as the other statutes of apprenticeship have to that of arts and +manufactures. + +The charitable foundations of scholarships, exhibitions, bursaries, &c. +necessarily attach a certain number of students to certain colleges, +independent altogether of the merit of those particular colleges. Were +the students upon such charitable foundations left free to choose what +college they liked best, such liberty might perhaps contribute to excite +some emulation among different colleges. A regulation, on the contrary, +which prohibited even the independent members of every particular +college from leaving it, and going to any other, without leave first +asked and obtained of that which they meant to abandon, would tend very +much to extinguish that emulation. + +If in each college, the tutor or teacher, who was to instruct each +student in all arts and sciences, should not be voluntarily chosen by +the student, but appointed by the head of the college; and if, in case +of neglect, inability, or bad usage, the student should not be allowed +to change him for another, without leave first asked and obtained; such +a regulation would not only tend very much to extinguish all emulation +among the different tutors of the same college, but to diminish very +much, in all of them, the necessity of diligence and of attention to +their respective pupils. Such teachers, though very well paid by their +students, might be as much disposed to neglect them, as those who are +not paid by them at all or who have no other recompense but their +salary. + +If the teacher happens to be a man of sense, it must be an unpleasant +thing to him to be conscious, while he is lecturing to his students, +that he is either speaking or reading nonsense, or what is very little +better than nonsense. It must, too, be unpleasant to him to observe, +that the greater part of his students desert his lectures; or perhaps, +attend upon them with plain enough marks of neglect, contempt, and +derision. If he is obliged, therefore, to give a certain number of +lectures, these motives alone, without any other interest, might dispose +him to take some pains to give tolerably good ones. Several different +expedients, however, may be fallen upon, which will effectually blunt +the edge of all those incitements to diligence. The teacher, instead of +explaining to his pupils himself the science in which he proposes to +instruct them, may read some book upon it; and if this book is written +in a foreign and dead language, by interpreting it to them into their +own, or, what would give him still less trouble, by making them +interpret it to him, and by now and then making an occasional remark +upon it, he may flatter himself that he is giving a lecture. The +slightest degree of knowledge and application will enable him to do +this, without exposing himself to contempt or derision, by saying any +thing that is really foolish, absurd, or ridiculous. The discipline of +the college, at the same time, may enable him to force all his pupils to +the most regular attendance upon his sham lecture, and to maintain the +most decent and respectful behaviour during the whole time of the +performance. + +The discipline of colleges and universities is in general contrived, not +for the benefit of the students, but for the interest, or, more properly +speaking, for the ease of the masters. Its object is, in all cases, to +maintain the authority of the master, and, whether he neglects or +performs his duty, to oblige the students in all cases to behave to him +as if he performed it with the greatest diligence and ability. It seems +to presume perfect wisdom and virtue in the one order, and the greatest +weakness and folly in the other. Where the masters, however, really +perform their duty, there are no examples, I believe, that the greater +part of the students ever neglect theirs. No discipline is ever +requisite to force attendance upon lectures which are really worth the +attending, as is well known wherever any such lectures are given. Force +and restraint may, no doubt, be in some degree requisite, in order to +oblige children, or very young boys, to attend to those parts of +education, which it is thought necessary for them to acquire during that +early period of life; but after twelve or thirteen years of age, +provided the master does his duty, force or restraint can scarce ever be +necessary to carry on any part of education. Such is the generosity of +the greater part of young men, that so far from being disposed to +neglect or despise the instructions of their master, provided he shews +some serious intention of being of use to them, they are generally +inclined to pardon a great deal of incorrectness in the performance of +his duty, and sometimes even to conceal from the public a good deal of +gross negligence. + +Those parts of education, it is to be observed, for the teaching of +which there are no public institutions, are generally the best taught. +When a young man goes to a fencing or a dancing school, he does not, +indeed, always learn to fence or to dance very well; but he seldom fails +of learning to fence or to dance. The good effects of the riding school +are not commonly so evident. The expense of a riding school is so great, +that in most places it is a public institution. The three most +essential parts of literary education, to read, write, and account, it +still continues to be more common to acquire in private than in public +schools; and it very seldom happens, that anybody fails of acquiring +them to the degree in which it is necessary to acquire them. + +In England, the public schools are much less corrupted than the +universities. In the schools, the youth are taught, or at least may be +taught, Greek and Latin; that is, every thing which the masters pretend +to teach, or which it is expected they should teach. In the +universities, the youth neither are taught, nor always can find any +proper means of being taught the sciences, which it is the business of +those incorporated bodies to teach. The reward of the schoolmaster, in +most cases, depends principally, in some cases almost entirely, upon the +fees or honoraries of his scholars. Schools have no exclusive +privileges. In order to obtain the honours of graduation, it is not +necessary that a person should bring a certificate of his having studied +a certain number of years at a public school. If, upon examination, he +appears to understand what is taught there, no questions are asked about +the place where he learnt it. + +The parts of education which are commonly taught in universities, it may +perhaps be said, are not very well taught. But had it not been for those +institutions, they would not have been commonly taught at all; and both +the individual and the public would have suffered a good deal from the +want of those important parts of education. + +The present universities of Europe were originally, the greater part of +them, ecclesiastical corporations, instituted for the education of +churchmen. They were founded by the authority of the pope; and were so +entirely under his immediate protection, that their members, whether +masters or students, had all of them what was then called the benefit of +clergy, that is, were exempted from the civil jurisdiction of the +countries in which their respective universities were situated, and were +amenable only to the ecclesiastical tribunals. What was taught in the +greater part of those universities was suitable to the end of their +institution, either theology, or something that was merely preparatory +to theology. + +When Christianity was first established by law, a corrupted Latin had +become the common language of all the western parts of Europe. The +service of the church, accordingly, and the translation of the Bible +which were read in churches, were both in that corrupted Latin; that is, +in the common language of the country. After the irruption of the +barbarous nations who overturned the Roman empire, Latin gradually +ceased to be the language of any part of Europe. But the reverence of +the people naturally preserves the established forms and ceremonies of +religion long after the circumstances which first introduced and +rendered them reasonable, are no more. Though Latin, therefore, was no +longer understood anywhere by the great body of the people, the whole +service of the church still continued to be performed in that language. +Two different languages were thus established in Europe, in the same +manner as in ancient Egypt: a language of the priests, and a language of +the people; a sacred and a profane, a learned and an unlearned language. +But it was necessary that the priests should understand something of +that sacred and learned language in which they were to officiate; and +the study of the Latin language therefore made, from the beginning, an +essential part of university education. + +It was not so with that either of the Greek or of the Hebrew language. +The infallible decrees of the church had pronounced the Latin +translation of the Bible, commonly called the Latin Vulgate, to have +been equally dictated by divine inspiration, and therefore of equal +authority with the Greek and Hebrew originals. The knowledge of those +two languages, therefore, not being indispensably requisite to a +churchman, the study of them did not for a long time make a necessary +part of the common course of university education. There are some +Spanish universities, I am assured, in which the study of the Greek +language has never yet made any part of that course. The first reformers +found the Greek text of the New Testament, and even the Hebrew text of +the Old, more favourable to their opinions than the vulgate translation, +which, as might naturally be supposed, had been gradually accommodated +to support the doctrines of the Catholic Church. They set themselves, +therefore, to expose the many errors of that translation, which the +Roman catholic clergy were thus put under the necessity of defending or +explaining. But this could not well be done without some knowledge of +the original languages, of which the study was therefore gradually +introduced into the greater part of universities; both of those which +embraced, and of those which rejected, the doctrines of the reformation. +The Greek language was connected with every part of that classical +learning, which, though at first principally cultivated by catholics and +Italians, happened to come into fashion much about the same time that +the doctrines of the reformation were set on foot. In the greater part +of universities, therefore, that language was taught previous to the +study of philosophy, and as soon as the student had made some progress +in the Latin. The Hebrew language having no connection with classical +learning, and, except the Holy Scriptures, being the language of not a +single book in any esteem the study of it did not commonly commence +till after that of philosophy, and when the student had entered upon the +study of theology. + +Originally, the first rudiments, both of the Greek and Latin languages, +were taught in universities; and in some universities they still +continue to be so. In others, it is expected that the student should +have previously acquired, at least, the rudiments of one or both of +those languages, of which the study continues to make everywhere a very +considerable part of university education. + +The ancient Greek philosophy was divided into three great branches; +physics, or natural philosophy; ethics, or moral philosophy; and logic. +This general division seems perfectly agreeable to the nature of things. + +The great phenomenon of nature, the revolutions of the heavenly bodies, +eclipses, comets; thunder and lightning, and other extraordinary +meteors; the generation, the life, growth, and dissolution of plants and +animals; are objects which, as they necessarily excite the wonder, so +they naturally call forth the curiosity of mankind to inquire into their +causes. Superstition first attempted to satisfy this curiosity, by +referring all those wonderful appearances to the immediate agency of the +gods. Philosophy afterwards endeavoured to account for them from more +familiar causes, or from such as mankind were better acquainted with, +than the agency of the gods. As those great phenomena are the first +objects of human curiosity, so the science which pretends to explain +them must naturally have been the first branch of philosophy that was +cultivated. The first philosophers, accordingly, of whom history has +preserved any account, appears to have been natural philosophers. + +In every age and country of the world, men must have attended to the +characters, designs, and actions of one another; and many reputable +rules and maxims for the conduct of human life must have been laid down +and approved of by common consent. As soon as writing came into fashion, +wise men, or those who fancied themselves such, would naturally +endeavour to increase the number of those established and respected +maxims, and to express their own sense of what was either proper or +improper conduct, sometimes in the more artificial form of apologues, +like what are called the fables of Æsop; and sometimes in the more +simple one of apophthegms or wise sayings, like the proverbs of Solomon, +the verses of Theognis and Phocyllides, and some part of the works of +Hesiod. They might continue in this manner, for a long time, merely to +multiply the number of those maxims of prudence and morality, without +even attempting to arrange them in any very distinct or methodical +order, much less to connect them together by one or more general +principles, from which they were all deducible, like effects from their +natural causes. The beauty of a systematical arrangement of different +observations, connected by a few common principles, was first seen in +the rude essays of those ancient times towards a system of natural +philosophy. Something of the same kind was afterwards attempted in +morals. The maxims of common life were arranged in some methodical +order, and connected together by a few common principles, in the same +manner as they had attempted to arrange and connect the phenomena of +nature. The science which pretends to investigate and explain those +connecting principles, is what is properly called Moral Philosophy. + +Different authors gave different systems, both of natural and moral +philosophy. But the arguments by which they supported those different +systems, far from being always demonstrations, were frequently at best +but very slender probabilities, and sometimes mere sophisms, which had +no other foundation but the inaccuracy and ambiguity of common language. +Speculative systems, have, in all ages of the world, been adopted for +reasons too frivolous to have determined the judgment of any man of +common sense, in a matter of the smallest pecuniary interest. Gross +sophistry has scarce ever had any influence upon the opinions of +mankind, except in matters of philosophy and speculation; and in these +it has frequently had the greatest. The patrons of each system of +natural and moral philosophy, naturally endeavoured to expose the +weakness of the arguments adduced to support the systems which were +opposite to their own. In examining those arguments, they were +necessarily led to consider the difference between a probable and a +demonstrative argument, between a fallacious and a conclusive one; and +logic, or the science of the general principles of good and bad +reasoning, necessarily arose out of the observations which a scrutiny of +this kind gave occasion to; though, in its origin, posterior both to +physics and to ethics, it was commonly taught, not indeed in all, but in +the greater part of the ancient schools of philosophy, previously to +either of those sciences. The student, it seems to have been thought, +ought to understand well the difference between good and bad reasoning, +before he was led to reason upon subjects of so great importance. + +This ancient division of philosophy into three parts was, in the greater +part of the universities of Europe, changed for another into five. + +In the ancient philosophy, whatever was taught concerning the nature +either of the human mind or of the Deity, made a part of the system of +physics. Those beings, in whatever their essence might be supposed to +consist, were parts of the great system of the universe, and parts, too, +productive of the most important effects. Whatever human reason could +either conclude or conjecture concerning them, made, as it were, two +chapters, though no doubt two very important ones, of the science which +pretended to give an account of the origin and revolutions of the great +system of the universe. But in the universities of Europe, where +philosophy was taught only as subservient to theology, it was natural to +dwell longer upon these two chapters than upon any other of the science. +They were gradually more and more extended, and were divided into many +inferior chapters; till at last the doctrine of spirits, of which so +little can be known, came to take up as much room in the system of +philosophy as the doctrine of bodies, of which so much can be known. The +doctrines concerning those two subjects were considered as making two +distinct sciences. What are called metaphysics, or pneumatics, were set +in opposition to physics, and were cultivated not only as the more +sublime, but, for the purposes of a particular profession, as the more +useful science of the two. The proper subject of experiment and +observation, a subject in which a careful attention is capable of making +so many useful discoveries, was almost entirely neglected. The subject +in which, after a very few simple and almost obvious truths, the most +careful attention can discover nothing but obscurity and uncertainty, +and can consequently produce nothing but subtleties and sophisms, was +greatly cultivated. + +When these two sciences had thus been set in opposition to one another, +the comparison between them naturally gave birth to a third, to what was +called ontology, or the science which treated of the qualities and +attributes which were common to both the subjects of the other two +sciences. But if subtleties and sophisms composed the greater part of +the metaphysics or pneumatics of the schools, they composed the whole of +this cobweb science of ontology, which was likewise sometimes called +metaphysics. + +Wherein consisted the happiness and perfection of a man, considered not +only as an individual, but as the member of a family, of a state, and of +the great society of mankind, was the object which the ancient moral +philosophy proposed to investigate. In that philosophy, the duties of +human life were treated of as subservient to the happiness and +perfection of human life. But when moral, as well as natural philosophy, +came to be taught only as subservient to theology, the duties of human +life were treated of as chiefly subservient to the happiness of a life +to come. In the ancient philosophy, the perfection of virtue was +represented as necessarily productive, to the person who possessed it, +of the most perfect happiness in this life. In the modern philosophy, it +was frequently represented as generally, or rather as almost always, +inconsistent with any degree of happiness in this life; and heaven was +to be earned only by penance and mortification, by the austerities and +abasement of a monk, not by the liberal, generous, and spirited conduct +of a man. Casuistry, and an ascetic morality, made up, in most cases, +the greater part of the moral philosophy of the schools. By far the most +important of all the different branches of philosophy became in this +manner by far the most corrupted. + +Such, therefore, was the common course of philosophical education in the +greater part of the universities in Europe. Logic was taught first; +ontology came in the second place; pneumatology, comprehending the +doctrine concerning the nature of the human soul and of the Deity, in +the third; in the fourth followed a debased system of moral philosophy, +which was considered as immediately connected with the doctrines of +pneumatology, with the immortality of the human soul, and with the +rewards and punishments which, from the justice of the Deity, were to be +expected in a life to come: a short and superficial system of physics +usually concluded the course. + +The alterations which the universities of Europe thus introduced into +the ancient course of philosophy were all meant for the education of +ecclesiastics, and to render it a more proper introduction to the study +of theology. But the additional quantity of subtlety and sophistry, the +casuistry and ascetic morality which those alterations introduced into +it, certainly did not render it more for the education of gentlemen or +men of the world, or more likely either to improve the understanding or +to mend the heart. + +This course of philosophy is what still continues to be taught in the +greater part of the universities of Europe, with more or less diligence, +according as the constitution of each particular university happens to +render diligence more or less necessary to the teachers. In some of the +richest and best endowed universities, the tutors content themselves +with teaching a few unconnected shreds and parcels of this corrupted +course; and even these they commonly teach very negligently and +superficially. + +The improvements which, in modern times, have been made in several +different branches of philosophy, have not, the greater part of them, +been made in universities, though some, no doubt, have. The greater part +of universities have not even been very forward to adopt those +improvements after they were made; and several of those learned +societies have chosen to remain, for a long time, the sanctuaries in +which exploded systems and obsolete prejudices found shelter and +protection, after they had been hunted out of every other corner of the +world. In general, the richest and best endowed universities have been +slowest in adopting those improvements, and the most averse to permit +any considerable change in the established plan of education. Those +improvements were more easily introduced into some of the poorer +universities, in which the teachers, depending upon their reputation for +the greater part of their subsistence, were obliged to pay more +attention to the current opinions of the world. + +But though the public schools and universities of Europe were originally +intended only for the education of a particular profession, that of +churchmen; and though they were not always very diligent in instructing +their pupils, even in the sciences which were supposed necessary for +that profession; yet they gradually drew to themselves the education of +almost all other people, particularly of almost all gentlemen and men of +fortune. No better method, it seems, could be fallen upon, of spending, +with any advantage, the long interval between infancy and that period of +life at which men begin to apply in good earnest to the real business of +the world, the business which is to employ them during the remainder of +their days. The greater part of what is taught in schools and +universities, however, does not seem to be the most proper preparation +for that business. + +In England, it becomes every day more and more the custom to send young +people to travel in foreign countries immediately upon their leaving +school, and without sending them to any university. Our young people, it +is said, generally return home much improved by their travels. A young +man, who goes abroad at seventeen or eighteen, and returns home at +one-and-twenty, returns three or four years older than he was when he +went abroad; and at that age it is very difficult not to improve a good +deal in three or four years. In the course of his travels, he generally +acquires some knowledge of one or two foreign languages; a knowledge, +however, which is seldom sufficient to enable him either to speak or +write them with propriety. In other respects, he commonly returns home +more conceited, more unprincipled, more dissipated, and more incapable +of any serious application, either to study or to business, than he +could well have become in so short a time had he lived at home. By +travelling so very young, by spending in the must frivolous dissipation +the most precious years of his life, at a distance from the inspection +and controul of his parents and relations, every useful habit, which the +earlier parts of his education might have had some tendency to form in +him, instead of being riveted and confirmed, is almost necessarily +either weakened or effaced. Nothing but the discredit into which the +universities are allowing themselves to fall, could ever have brought +into repute so very absurd a practice as that of travelling at this +early period of life. By sending his son abroad, a father delivers +himself, at least for some time, from so disagreeable an object as that +of a son unemployed, neglected, and going to ruin before his eyes. + +Such have been the effects of some of the modern institutions for +education. + +Different plans and different institutions for education seem to have +taken place in other ages and nations. + +In the republics of ancient Greece, every free citizen was instructed, +under the direction of the public magistrate, in gymnastic exercises and +in music. By gymnastic exercises, it was intended to harden his body, to +sharpen his courage, and to prepare him for the fatigues and dangers of +war; and as the Greek militia was, by all accounts, one of the best that +ever was in the world, this part of their public education must have +answered completely the purpose for which it was intended. By the other +part, music, it was proposed, at least by the philosophers and +historians, who have given us an account of those institutions, to +humanize the mind, to soften the temper, and to dispose it for +performing all the social and moral duties of public and private life. + +In ancient Rome, the exercises of the Campus Martius answered the same +purpose as those of the Gymnasium in ancient Greece, and they seem to +have answered it equally well. But among the Romans there was nothing +which corresponded to the musical education of the Greeks. The morals of +the Romans, however, both in private and public life, seem to have been, +not only equal, but, upon the whole, a good deal superior to those of +the Greeks. That they were superior in private life, we have the express +testimony of Polybius, and of Dionysius of Halicarnassus, two authors +well acquainted with both nations; and the whole tenor of the Greek and +Roman history bears witness to the superiority of the public morals of +the Romans. The good temper and moderation of contending factions seem +to be the most essential circumstances in the public morals of a free +people. But the factions of the Greeks were almost always violent and +sanguinary; whereas, till the time of the Gracchi, no blood had ever +been shed in any Roman faction; and from the time of the Gracchi, the +Roman republic may be considered as in reality dissolved. +Notwithstanding, therefore, the very respectable authority of Plato, +Aristotle, and Polybius, and notwithstanding the very ingenious reasons +by which Mr. Montesquieu endeavours to support that authority, it seems +probable that the musical education of the Greeks had no great effect in +mending their morals, since, without any such education, those of the +Romans were, upon the whole, superior. The respect of those ancient +sages for the institutions of their ancestors had probably disposed +them to find much political wisdom in what was, perhaps, merely an +ancient custom, continued, without interruption, from the earliest +period of those societies, to the times in which they had arrived at a +considerable degree of refinement. Music and dancing are the great +amusements of almost all barbarous nations, and the great +accomplishments which are supposed to fit any man for entertaining his +society. It is so at this day among the negroes on the coast of Africa. +It was so among the ancient Celtes, among the ancient Scandinavians, +and, as we may learn from Homer, among the ancient Greeks, in the times +preceding the Trojan war. When the Greek tribes had formed themselves +into little republics, it was natural that the study of those +accomplishments should for a long time make a part of the public and +common education of the people. + +The masters who instructed the young people, either in music or in +military exercises, do not seem to have been paid, or even appointed by +the state, either in Rome or even at Athens, the Greek republic of whose +laws and customs we are the best informed. The state required that every +free citizen should fit himself for defending it in war, and should upon +that account, learn his military exercises. But it left him to learn +them of such masters as he could find; and it seems to have advanced +nothing for this purpose, but a public field or place of exercise, in +which he should practise and perform them. + +In the early ages, both of the Greek and Roman republics, the other +parts of education seem to have consisted in learning to read, write, +and account, according to the arithmetic of the times. These +accomplishments the richer citizens seem frequently to have acquired at +home, by the assistance of some domestic pedagogue, who was, generally, +either a slave or a freedman; and the poorer citizens in the schools of +such masters as made a trade of teaching for hire. Such parts of +education, however, were abandoned altogether to the care of the parents +or guardians of each individual. It does not appear that the state ever +assumed any inspection or direction of them. By a law of Solon, indeed, +the children were acquitted from maintaining those parents who had +neglected to instruct them in some profitable trade or business. + +In the progress of refinement, when philosophy and rhetoric came into +fashion, the better sort of people used to send their children to the +schools of philosophers and rhetoricians, in order to be instructed in +these fashionable sciences. But those schools were not supported by the +public. They were, for a long time, barely tolerated by it. The demand +for philosophy and rhetoric was, for a long time, so small, that the +first professed teachers of either could not find constant employment in +any one city, but were obliged to travel about from place to place. In +this manner lived Zeno of Elea, Protagoras, Gorgias, Hippias, and many +others. As the demand increased, the schools, both of philosophy and +rhetoric, became stationary, first in Athens, and afterwards in several +other cities. The state, however, seems never to have encouraged them +further, than by assigning to some of them a particular place to teach +in, which was sometimes done, too, by private donors. The state seems to +have assigned the Academy to Plato, the Lyceum to Aristotle, and the +Portico to Zeno of Citta, the founder of the Stoics. But Epicurus +bequeathed his gardens to his own school. Till about the time of Marcus +Antoninus, however, no teacher appears to have had any salary from the +public, or to have had any other emoluments, but what arose from the +honoraries or fees of his scholars. The bounty which that philosophical +emperor, as we learn from Lucian, bestowed upon one of the teachers of +philosophy, probably lasted no longer than his own life. There was +nothing equivalent to the privileges of graduation; and to have attended +any of those schools was not necessary, in order to be permitted to +practise any particular trade or profession. If the opinion of their own +utility could not draw scholars to them, the law neither forced anybody +to go to them, nor rewarded anybody for having gone to them. The +teachers had no jurisdiction over their pupils, nor any other authority +besides that natural authority which superior virtue and abilities never +fail to procure from young people towards those who are entrusted with +any part of their education. + +At Rome, the study of the civil law made a part of the education, not of +the greater part of the citizens, but of some particular families. The +young people, however, who wished to acquire knowledge in the law, had +no public school to go to, and had no other method of studying it, than +by frequenting the company of such of their relations and friends as +were supposed to understand it. It is, perhaps, worth while to remark, +that though the laws of the twelve tables were many of them copied from +those of some ancient Greek republics, yet law never seems to have grown +up to be a science in any republic of ancient Greece. In Rome it became +a science very early, and gave a considerable degree of illustration to +those citizens who had the reputation of understanding it. In the +republics of ancient Greece, particularly in Athens, the ordinary courts +of justice consisted of numerous, and therefore disorderly, bodies of +people, who frequently decided almost at random, or as clamour, faction, +and party-spirit, happened to determine. The ignominy of an unjust +decision, when it was to be divided among five hundred, a thousand, or +fifteen hundred people (for some of their courts were so very +numerous), could not fall very heavy upon any individual. At Rome, on +the contrary, the principal courts of justice consisted either of a +single judge, or of a small number of judges, whose characters, +especially as they deliberated always in public, could not fail to be +very much affected by any rash or unjust decision. In doubtful cases +such courts, from their anxiety to avoid blame, would naturally +endeavour to shelter themselves under the example or precedent of the +judges who had sat before them, either in the same or in some other +court. This attention to practice and precedent, necessarily formed the +Roman law into that regular and orderly system in which it has been +delivered down to us; and the like attention has had the like effects +upon the laws of every other country where such attention has taken +place. The superiority of character in the Romans over that of the +Greeks, so much remarked by Polybius and Dionysius of Halicarnassus, was +probably more owing to the better constitution of their courts of +justice, than to any of the circumstances to which those authors ascribe +it. The Romans are said to have been particularly distinguished for +their superior respect to an oath. But the people who were accustomed to +make oath only before some diligent and well informed court of justice, +would naturally be much more attentive to what they swore, than they who +were accustomed to do the same thing before mobbish and disorderly +assemblies. + +The abilities, both civil and military, of the Greeks and Romans, will +readily be allowed to have been at least equal to those of any modern +nation. Our prejudice is perhaps rather to overrate them. But except in +what related to military exercises, the state seems to have been at no +pains to form those great abilities; for I cannot be induced to believe +that the musical education of the Greeks could be of much consequence in +forming them. Masters, however, had been found, it seems, for +instructing the better sort of people among those nations, in every art +and science in which the circumstances of their society rendered it +necessary or convenient for them to be instructed. The demand for such +instruction produced, what it always produces, the talent for giving it; +and the emulation which an unrestrained competition never fails to +excite, appears to have brought that talent to a very high degree of +perfection. In the attention which the ancient philosophers excited, in +the empire which they acquired over the opinions and principles of their +auditors, in the faculty which they possessed of giving a certain tone +and character to the conduct and conversation of those auditors, they +appear to have been much superior to any modern teachers. In modern +times, the diligence of public teachers is more or less corrupted by the +circumstances which render them more or less independent of their +success and reputation in their particular professions. Their salaries, +too, put the private teacher, who would pretend to come into competition +with them, in the same state with a merchant who attempts to trade +without a bounty, in competition with those who trade with a +considerable one. If he sells his goods at nearly the same price, he +cannot have the same profit; and poverty and beggary at least, if not +bankruptcy and ruin, will infallibly be his lot. If he attempts to sell +them much dearer, he is likely to have so few customers, that his +circumstances will not be much mended. The privileges of graduation, +besides, are in many countries necessary, or at least extremely +convenient, to most men of learned professions, that is, to the far +greater part of those who have occasion for a learned education. But +those privileges can be obtained only by attending the lectures of the +public teachers. The most careful attendance upon the ablest +instructions of any private teacher cannot always give any title to +demand them. It is from these different causes that the private teacher +of any of the sciences, which are commonly taught in universities, is, +in modern times, generally considered as in the very lowest order of men +of letters. A man of real abilities can scarce find out a more +humiliating or a more unprofitable employment to turn them to. The +endowments of schools and colleges have in this manner not only +corrupted the diligence of public teachers, but have rendered it almost +impossible to have any good private ones. + +Were there no public institutions for education, no system, no science, +would be taught, for which there was not some demand, or which the +circumstances of the times did not render it either necessary or +convenient, or at least fashionable to learn. A private teacher could +never find his account in teaching either an exploded and antiquated +system of a science acknowledged to be useful, or a science universally +believed to be a mere useless and pedantic heap of sophistry and +nonsense. Such systems, such sciences, can subsist nowhere but in those +incorporated societies for education, whose prosperity and revenue are +in a great measure independent of their industry. Were there no public +institutions for education, a gentleman, after going through, with +application and abilities, the most complete course of education which +the circumstances of the times were supposed to afford, could not come +into the world completely ignorant of every thing which is the common +subject of conversation among gentlemen and men of the world. + +There are no public institutions for the education of women, and there +is accordingly nothing useless, absurd, or fantastical, in the common +course of their education. They are taught what their parents or +guardians judge it necessary or useful for them to learn, and they are +taught nothing else. Every part of their education tends evidently to +some useful purpose; either to improve the natural attractions of their +person, or to form their mind to reserve, to modesty, to chastity, and +to economy; to render them both likely to become the mistresses of a +family, and to behave properly when they have become such. In every part +of her life, a woman feels some conveniency or advantage from every part +of her education. It seldom happens that a man, in any part of his life, +derives any conveniency or advantage from some of the most laborious and +troublesome parts of his education. + +Ought the public, therefore, to give no attention, it may be asked, to +the education of the people? Or, if it ought to give any, what are the +different parts of education which it ought to attend to in the +different orders of the people? and in what manner ought it to attend to +them? + +In some cases, the state of society necessarily places the greater part +of individuals in such situations as naturally form in them, without any +attention of government, almost all the abilities and virtues which that +state requires, or perhaps can admit of. In other cases, the state of +the society does not place the greater part of individuals in such +situations; and some attention of government is necessary, in order to +prevent the almost entire corruption and degeneracy of the great body of +the people. + +In the progress of the division of labour, the employment of the far +greater part of those who live by labour, that is, of the great body of +the people, comes to be confined to a few very simple operations; +frequently to one or two. But the understandings of the greater part of +men are necessarily formed by their ordinary employments. The man whose +whole life is spent in performing a few simple operations, of which the +effects, too, are perhaps always the same, or very nearly the same, has +no occasion to exert his understanding, or to exercise his invention, in +finding out expedients for removing difficulties which never occur. He +naturally loses, therefore, the habit of such exertion, and generally +becomes as stupid and ignorant as it is possible for a human creature to +become. The torpor of his mind renders him not only incapable of +relishing or bearing a part in any rational conversation, but of +conceiving any generous, noble, or tender sentiment, and consequently of +forming any just judgment concerning many even of the ordinary duties of +private life. Of the great and extensive interests of his country he is +altogether incapable of judging; and unless very particular pains have +been taken to render him otherwise, he is equally incapable of defending +his country in war. The uniformity of his stationary life naturally +corrupts the courage of his mind, and makes him regard, with abhorrence, +the irregular, uncertain, and adventurous life of a soldier. It corrupts +even the activity of his body, and renders him incapable of exerting his +strength with vigour and perseverance in any other employment, than that +to which he has been bred. His dexterity at his own particular trade +seems, in this manner, to be acquired at the expense of his +intellectual, social, and martial virtues. But in every improved and +civilized society, this is the state into which the labouring poor, that +is, the great body of the people, must necessarily fall, unless +government takes some pains to prevent it. + +It is otherwise in the barbarous societies, as they are commonly called, +of hunters, of shepherds, and even of husbandmen in that rude state of +husbandry which precedes the improvement of manufactures, and the +extension of foreign commerce. In such societies, the varied occupations +of every man oblige every man to exert his capacity, and to invent +expedients for removing difficulties which are continually occurring. +Invention is kept alive, and the mind is not suffered to fall into that +drowsy stupidity, which, in a civilized society, seems to benumb the +understanding of almost all the inferior ranks of people. In those +barbarous societies, as they are called, every man, it has already been +observed, is a warrior. Every man, too, is in some measure a statesman, +and can form a tolerable judgment concerning the interest of the +society, and the conduct of those who govern it. How far their chiefs +are good judges in peace, or good leaders in war, is obvious to the +observation of almost every single man among them. In such a society, +indeed, no man can well acquire that improved and refined understanding +which a few men sometimes possess in a more civilized state. Though in a +rude society there is a good deal of variety in the occupations of every +individual, there is not a great deal in those of the whole society. +Every man does, or is capable of doing, almost every thing which any +other man does, or is capable of doing. Every man has a considerable +degree of knowledge, ingenuity, and invention; but scarce any man has a +great degree. The degree, however, which is commonly possessed, is +generally sufficient for conducting the whole simple business of the +society. In a civilized state, on the contrary, though there is little +variety in the occupations of the greater part of individuals, there is +an almost infinite variety in those of the whole society. These varied +occupations present an almost infinite variety of objects to the +contemplation of those few, who, being attached to no particular +occupation themselves, have leisure and inclination to examine the +occupations of other people. The contemplation of so great a variety of +objects necessarily exercises their minds in endless comparisons end +combinations, and renders their understandings, in an extraordinary +degree, both acute and comprehensive. Unless those few, however, happen +to be placed in some very particular situations, their great abilities, +though honourable to themselves, may contribute very little to the good +government or happiness of their society. Notwithstanding the great +abilities of those few, all the nobler parts of the human character may +be, in a great measure, obliterated end extinguished in the great body +of the people. + +The education of the common people requires, perhaps, in a civilized and +commercial society, the attention of the public, more than that of +people of some rank and fortune. People of some rank and fortune are +generally eighteen or nineteen years of age, before they enter upon that +particular business, profession, or trade, by which they propose to +distinguish themselves in the world. They have, before that, full time +to acquire, or at least to fit themselves for afterwards acquiring, +every accomplishment which can recommend them to the public esteem, or +render them worthy of it. Their parents or guardians are generally +sufficiently anxious that they should be so accomplished, and are, in +most cases, willing enough to lay out the expense which is necessary for +that purpose. If they are not always properly educated, it is seldom +from the want of expense laid out upon their education, but from the +improper application of that expense. It is seldom from the want of +masters, but from the negligence and incapacity of the masters who are +to be had, and from the difficulty, or rather from the impossibility, +which there is, in the present state of things, of finding any better. +The employments, too, in which people of some rank or fortune spend the +greater part of their lives, are not, like those of the common people, +simple and uniform. They are almost all of them extremely complicated, +and such as exercise the head more than the hands. The understandings of +those who are engaged in such employments, can seldom grow torpid for +want of exercise. The employments of people of some rank and fortune, +besides, are seldom such as harass them from morning to night. They +generally have a good deal of leisure, during which they may perfect +themselves in every branch, either of useful or ornamental knowledge, of +which they may have laid the foundation, or for which they may have +acquired some taste in the earlier part of life. + +It is otherwise with the common people. They have little time to spare +for education. Their parents can scarce afford to maintain them, even in +infancy. As soon as they are able to work, they must apply to some +trade, by which they can earn their subsistence. That trade, too, is +generally so simple and uniform, as to give little exercise to the +understanding; while, at the same time, their labour is both so constant +and so severe, that it leaves them little leisure and less inclination +to apply to, or even to think of any thing else. + +But though the common people cannot, in any civilized society, be so +well instructed as people of some rank and fortune; the most essential +parts of education, however, to read, write, and account, can be +acquired at so early a period of life, that the greater part, even of +those who are to be bred to the lowest occupations, have time to acquire +them before they can be employed in those occupations. For a very small +expense, the public can facilitate, can encourage, and can even impose +upon almost the whole body of the people, the necessity of acquiring +those most essential parts of education. + +The public can facilitate this acquisition, by establishing in every +parish or district a little school, where children may be taught for a +reward so moderate, that even a common labourer may afford it; the +master being partly, but not wholly, paid by the public; because, if he +was wholly, or even principally, paid by it, he would soon learn to +neglect his business. In Scotland, the establishment of such parish +schools has taught almost the whole common people to read, and a very +great proportion of them to write and account. In England, the +establishment of charity schools has had an effect of the same kind, +though not so universally, because the establishment is not so +universal. If, in those little schools, the books by which the children +are taught to read, were a little more instructive than they commonly +are; and if, instead of a little smattering in Latin, which the children +of the common people are sometimes taught there, and which can scarce +ever be of any use to them, they were instructed in the elementary parts +of geometry and mechanics; the literary education of this rank of people +would, perhaps, be as complete as can be. There is scarce a common +trade, which does not afford some opportunities of applying to it the +principles of geometry and mechanics, and which would not, therefore, +gradually exercise and improve the common people in those principles, +the necessary introduction to the most sublime, as well as to the most +useful sciences. + +The public can encourage the acquisition of those most essential +parts of education, by giving small premiums, and little badges of +distinction, to the children of the common people who excel in them. + +The public can impose upon almost the whole body of the people the +necessity of acquiring the most essential parts of education, by +obliging every man to undergo an examination or probation in them, +before he can obtain the freedom in any corporation, or be allowed to +set up any trade, either in a village or town corporate. + +It was in this manner, by facilitating the acquisition of their military +and gymnastic exercises, by encouraging it, and even by imposing upon +the whole body of the people the necessity of learning those exercises, +that the Greek and Roman republics maintained the martial spirit of +their respective citizens. They facilitated the acquisition of those +exercises, by appointing a certain place for learning and practising +them, and by granting to certain masters the privilege of teaching in +that place. Those masters do not appear to have had either salaries or +exclusive privileges of any kind. Their reward consisted altogether in +what they got from their scholars; and a citizen, who had learnt his +exercises in the public gymnasia, had no sort of legal advantage over +one who had learnt them privately, provided the latter had learned them +equally well. Those republics encouraged the acquisition of those +exercises, by bestowing little premiums and badges of distinction upon +those who excelled in them. To have gained a prize in the Olympic, +Isthmian, or Nemæan games, gave illustration, not only to the person who +gained it, but to his whole family and kindred. The obligation which +every citizen was under, to serve a certain number of years, if called +upon, in the armies of the republic, sufficient imposed the necessity of +learning those exercises, without which he could not be fit for that +service. + +That in the progress of improvement, the practice of military exercises, +unless government takes proper pains to support it, goes gradually to +decay, and, together with it, the martial spirit of the great body of +the people, the example of modern Europe sufficiently demonstrates. But +the security of every society must always depend, more or less, upon the +martial spirit of the great body of the people. In the present times, +indeed, that martial spirit alone, and unsupported by a well-disciplined +standing army, would not, perhaps, be sufficient for the defence and +security of any society. But where every citizen had the spirit of a +soldier, a smaller standing army would surely be requisite. That spirit, +besides, would necessarily diminish very much the dangers to liberty, +whether real or imaginary, which are commonly apprehended from a +standing army. As it would very much facilitate the operations of that +army against a foreign invader; so it would obstruct them as much, if +unfortunately they should ever be directed against the constitution of +the state. + +The ancient institutions of Greece and Rome seem to have been much more +effectual for maintaining the martial spirit of the great body of the +people, than the establishment of what are called the militias of modern +times. They were much more simple. When they were once established, they +executed themselves, and it required little or no attention from +government to maintain them in the most perfect vigour. Whereas to +maintain, even in tolerable execution, the complex regulations of any +modern militia, requires the continual and painful attention of +government, without which they are constantly falling into total neglect +and disuse. The influence, besides, of the ancient institutions, was +much more universal. By means of them, the whole body of the people was +completely instructed in the use of arms; whereas it is but a very small +part of them who can ever be so instructed by the regulations of any +modern militia, except, perhaps, that of Switzerland. But a coward, a +man incapable either of defending or of revenging himself, evidently +wants one of the most essential parts of the character of a man. He is +as much mutilated and deformed in his mind as another is in his body, +who is either deprived of some of its most essential members, or has +lost the use of them. He is evidently the more wretched and miserable of +the two; because happiness and misery, which reside altogether in the +mind, must necessarily depend more upon the healthful or unhealthful, +the mutilated or entire state of the mind, than upon that of the body. +Even though the martial spirit of the people were of no use towards the +defence of the society, yet, to prevent that sort of mental mutilation, +deformity, and wretchedness, which cowardice necessarily involves in it, +from spreading themselves through the great body of the people, would +still deserve the most serious attention of government; in the same +manner as it would deserve its most serious attention to prevent a +leprosy, or any other loathsome and offensive disease, though neither +mortal nor dangerous, from spreading itself among them; though, perhaps, +no other public good might result from such attention, besides the +prevention of so great a public evil. + +The same thing may be said of the gross ignorance and stupidity which, +in a civilized society, seem so frequently to benumb the understandings +of all the inferior ranks of people. A man without the proper use of the +intellectual faculties of a man, is, if possible, more contemptible than +even a coward, and seems to be mutilated and deformed in a still more +essential part of the character of human nature. Though the state was to +derive no advantage from the instruction of the inferior ranks of +people, it would still deserve its attention that they should not be +altogether uninstructed. The state, however, derives no inconsiderable +advantage from their instruction. The more they are instructed, the less +liable they are to the delusions of enthusiasm and superstition, which, +among ignorant nations frequently occasion the most dreadful disorders. +An instructed and intelligent people, besides, are always more decent +and orderly than an ignorant and stupid one. They feel themselves, each +individually, more respectable, and more likely to obtain the respect of +their lawful superiors, and they are, therefore, more disposed to +respect those superiors. They are more disposed to examine, and more +capable of seeing through, the interested complaints of faction and +sedition; and they are, upon that account, less apt to be misled into +any wanton or unnecessary opposition to the measures of government. In +free countries, where the safety of government depends very much upon +the favourable judgment which the people may form of its conduct, it +must surely be of the highest importance, that they should not be +disposed to judge rashly or capriciously concerning it. + + +ART. III.--_Of the Expense of the Institutions for the Instruction of +People of all Ages._ + +The institutions for the instruction of people of all ages, are chiefly +those for religious instruction. This is a species of instruction, which +the object is not so much to render the people good citizens in this +world, as to prepare them for another and a better world in the life to +come. The teachers of the doctrine which contains this instruction, in +the same manner as other teachers, may either depend altogether for +their subsistence upon the voluntary contributions of their hearers; or +they may derive it from some other fund, to which the law of their +country may entitle them; such as a landed estate, a tythe or land tax, +an established salary or stipend. Their exertion, their zeal and +industry, are likely to be much greater in the former situation than in +the latter. In this respect, the teachers of a new religion have always +had a considerable advantage in attacking these ancient and established +systems, of which the clergy, reposing themselves upon their benefices, +had neglected to keep up the fervour of faith and devotion in the great +body of the people; and having given themselves up to indolence, were +become altogether incapable of making any vigorous exertion in defence +even of their own establishment. The clergy of an established and well +endowed religion frequently become men of learning and elegance, who +possess all the virtues of gentlemen, or which can recommend them to the +esteem of gentlemen; but they are apt gradually to lose the qualities, +both good and bad, which gave them authority and influence with the +inferior ranks of people, and which had perhaps been the original causes +of the success and establishment of their religion. Such a clergy, when +attacked by a set of popular and bold, though perhaps stupid and +ignorant enthusiasts, feel themselves as perfectly defenceless as the +indolent, effeminate, and full fed nations of the southern parts of +Asia, when they were invaded by the active, hardy, and hungry Tartars of +the north. Such a clergy, upon such an emergency, have commonly no other +resource than to call upon the civil magistrate to persecute, destroy, +or drive out their adversaries, as disturbers of the public peace. It +was thus that the Roman catholic clergy called upon the civil magistrate +to persecute the protestants, and the church of England to persecute the +dissenters; and that in general every religious sect, when it has once +enjoyed, for a century or two, the security of a legal establishment, +has found itself incapable of making any vigorous defence against any +new sect which chose to attack its doctrine or discipline. Upon such +occasions, the advantage, in point of learning and good writing, may +sometimes be on the side of the established church. But the arts of +popularity, all the arts of gaining proselytes, are constantly on the +side of its adversaries. In England, those arts have been long neglected +by the well endowed clergy of the established church, and are at present +chiefly cultivated by the dissenters and by the methodists. The +independent provisions, however, which in many places have been made for +dissenting teachers, by means of voluntary subscriptions, of trust +rights, and other evasions of the law, seem very much to have abated the +zeal and activity of those teachers. They have many of them become very +learned, ingenious, and respectable men; but they have in general ceased +to be very popular preachers. The methodists, without half the learning +of the dissenters, are much more in vogue. + +In the church of Rome the industry and zeal of the inferior clergy are +kept more alive by the powerful motive of self-interest, than perhaps in +any established protestant church. The parochial clergy derive many of +them, a very considerable part of their subsistence from the voluntary +oblations of the people; a source of revenue, which confession gives +them many opportunities of improving. The mendicant orders derive their +whole subsistence from such oblations. It is with them as with the +hussars and light infantry of some armies; no plunder, no pay. The +parochial clergy are like those teachers whose reward depends partly +upon their salary, and partly upon the fees or honoraries which they get +from their pupils; and these must always depend, more or less, upon +their industry and reputation. The mendicant orders are like those +teachers whose subsistence depends altogether upon their industry. They +are obliged, therefore, to use every art which can animate the devotion +of the common people. The establishment of the two great mendicant +orders of St. Dominic and St. Francis, it is observed by Machiavel, +revived, in the thirteenth and fourteenth centuries, the languishing +faith and devotion of the catholic church. In Roman catholic countries, +the spirit of devotion is supported altogether by the monks, and by the +poorer parochial clergy. The great dignitaries of the church, with all +the accomplishments of gentlemen and men of the world, and sometimes +with those of men of learning, are careful to maintain the necessary +discipline over their inferiors, but seldom give themselves any trouble +about the instruction of the people. + +"Most of the arts and professions in a state," says by far the most +illustrious philosopher and historian of the present age, "are of such a +nature, that, while they promote the interests of the society, they are +also useful or agreeable to some individuals; and, in that case, the +constant rule of the magistrate, except, perhaps, on the first +introduction of any art, is, to leave the profession to itself, and +trust its encouragement to the individuals who reap the benefit of it. +The artisans, finding their profits to rise by the favour of their +customers, increase, as much as possible, their skill and industry; and +as matters are not disturbed by any injudicious tampering, the commodity +is always sure to be at all times nearly proportioned to the demand." + +"But there are also some callings which, though useful and even +necessary in a state, bring no advantage or pleasure to any individual; +and the supreme power is obliged to alter its conduct with regard to the +retainers of those professions. It must give them public encouragement +in order to their subsistence; and it must provide against that +negligence to which they will naturally be subject, either by annexing +particular honours to profession, by establishing a long subordination +of ranks, and a strict dependence, or by some other expedient. The +persons employed in the finances, fleets, and magistracy, are instances +of this order of men. + +"It may naturally be thought, at first sight, that the ecclesiastics +belong to the first class, and that their encouragement, as well as that +of lawyers and physicians, may safely be entrusted to the liberality of +individuals, who are attached to their doctrines, and who find benefit +or consolation from their spiritual ministry and assistance. Their +industry and vigilance will, no doubt, be whetted by such an additional +motive; and their skill in the profession, as well as their address in +governing the minds of the people, must receive daily increase, from +their increasing practice, study, and attention. + +"But if we consider the matter more closely, we shall find that this +interested diligence of the clergy is what every wise legislator will +study to prevent; because, in every religion except the true, it is +highly pernicious, and it has even a natural tendency to pervert the +truth, by infusing into it a strong mixture of superstition, folly, and +delusion. Each ghostly practitioner, in order to render himself more +precious and sacred in the eyes of his retainers, will inspire them with +the most violent abhorrence of all other sects, and continually +endeavour, by some novelty, to excite the languid devotion of his +audience. No regard will be paid to truth, morals, or decency, in the +doctrines inculcated. Every tenet will be adopted that best suits the +disorderly affections of the human frame. Customers will be drawn in +each conventicle by new industry and address, in practising on the +passions and credulity of the populace. And, in the end, the civil +magistrate will find that he has dearly paid for his intended frugality, +in saving a fixed establishment for the priests; and that, in reality, +the most decent and advantageous composition, which he can make with the +spiritual guides, is to bribe their indolence, by assigning stated +salaries to their profession, and rendering it superfluous for them to +be farther active, than merely to prevent their flock from straying in +quest of new pastors. And in this manner ecclesiastical establishments, +though commonly they arose at first from religious views, prove in the +end advantageous to the political interests of society." + +But whatever may have been the good or bad effects of the independent +provision of the clergy, it has, perhaps, been very seldom bestowed upon +them from any view to those effects. Times of violent religious +controversy have generally been times of equally violent political +faction. Upon such occasions, each political party has either found it, +or imagined it, for his interest, to league itself with some one or +other of the contending religious sects. But this could be done only by +adopting, or, at least, by favouring the tenets of that particular sect. +The sect which had the good fortune to be leagued with the conquering +party necessarily shared in the victory of its ally, by whose favour and +protection it was soon enabled, in some degree, to silence and subdue +all its adversaries. Those adversaries had generally leagued themselves +with the enemies of the conquering party, and were, therefore the +enemies of that party. The clergy of this particular sect having thus +become complete masters of the field, and their influence and authority +with the great body of the people being in its highest vigour, they were +powerful enough to overawe the chiefs and leaders of their own party, +and to oblige the civil magistrate to respect their opinions and +inclinations. Their first demand was generally that he should silence +and subdue all their adversaries; and their second, that he should +bestow an independent provision on themselves. As they had generally +contributed a good deal to the victory, it seemed not unreasonable that +they should have some share in the spoil. They were weary, besides, of +humouring the people, and of depending upon their caprice for a +subsistence. In making this demand, therefore, they consulted their own +ease and comfort, without troubling themselves about the effect which it +might have, in future times, upon the influence and authority of their +order. The civil magistrate, who could comply with their demand only by +giving them something which he would have chosen much rather to take, or +to keep to himself, was seldom very forward to grant it. Necessity, +however, always forced him to submit at last, though frequently not till +after many delays, evasions, and affected excuses. + +But if politics had never called in the aid of religion, had the +conquering party never adopted the tenets of one sect more than those of +another, when it had gained the victory, it would probably have dealt +equally and impartially with all the different sects, and have allowed +every man to choose his own priest, and his own religion, as he thought +proper. There would, and, in this case, no doubt, have been, a great +multitude of religious sects. Almost every different congregation might +probably have had a little sect by itself, or have entertained some +peculiar tenets of its own. Each teacher, would, no doubt, have felt +himself under the necessity of making the utmost exertion, and of using +every art, both to preserve and to increase the number of his disciples. +But as every other teacher would have felt himself under the same +necessity, the success of no one teacher, or sect of teachers, could +have been very great. The interested and active zeal of religious +teachers can be dangerous and troublesome only where there is either but +one sect tolerated in the society, or where the whole of a large society +is divided into two or three great sects; the teachers of each acting by +concert, and under a regular discipline and subordination. But that zeal +must be altogether innocent, where the society is divided into two or +three hundred, or, perhaps, into as many thousand small sects, of which +no one could be considerable enough to disturb the public tranquillity. +The teachers of each sect, seeing themselves surrounded on all sides +with more adversaries than friends, would be obliged to learn that +candour and moderation which are so seldom to be found among the +teachers of those great sects, whose tenets, being supported by the +civil magistrate, are held in veneration by almost all the inhabitants +of extensive kingdoms and empires, and who, therefore, see nothing round +them but followers, disciples, and humble admirers. The teachers of each +little sect, finding themselves almost alone, would be obliged to +respect those of almost every other sect; and the concessions which they +would mutually find in both convenient and agreeable to make one to +another, might in time, probably reduce the doctrine of the greater part +of them to that pure and rational religion, free from every mixture of +absurdity, imposture, or fanaticism, such as wise men have, in all ages +of the world, wished to see established; but such as positive law has, +perhaps, never yet established, and probably never will establish in any +country; because, with regard to religion, positive law always has been, +and probably always will be, more or less influenced by popular +superstition and enthusiasm. This plan of ecclesiastical government, or, +more properly, of no ecclesiastical government, was what the sect called +Independents (a sect, no doubt, of very wild enthusiasts), proposed to +establish in England towards the end of the civil war. If it had been +established, though of a very unphilosophical origin, it would probably, +by this time, have been productive of the most philosophical good temper +and moderation with regard to every sort of religious principle. It has +been established in Pennsylvania, where, though the quakers happen to be +the most numerous, the law, in reality, favours no one sect more than +another; and it is there said to have been productive of this +philosophical good temper and moderation. + +But though this equality of treatment should not be productive of this +good temper and moderation in all, or even in the greater part of the +religious sects of a particular country; yet, provided those sects were +sufficiently numerous, and each of them consequently too small to +disturb the public tranquillity, the excessive zeal of each for its +particular tenets could not well be productive of any very hurtful +effects, but, on the contrary, of several good ones; and if the +government was perfectly decided, both to let them all alone, and to +oblige them all to let alone one another, there is little danger that +they would not of their own accord, subdivide themselves fast enough, so +as soon to become sufficiently numerous. + +In every civilized society, in every society where the distinction of +ranks has once been completely established, there have been always two +different schemes or systems of morality current at the same time; of +which the one may be called the strict or austere; the other the +liberal, or, if you will, the loose system. The former is generally +admired and revered by the common people; the latter is commonly more +esteemed and adopted by what are called the people of fashion. The +degree of disapprobation with which we ought to mark the vices of +levity, the vices which are apt to arise from great prosperity, and from +the excess of gaiety and good humour, seems to constitute the principal +distinction between those two opposite schemes or systems. In the +liberal or loose system, luxury, wanton, and even disorderly mirth, the +pursuit of pleasure to some degree of intemperance, the breach of +chastity, at least in one of the two sexes, &c. provided they are not +accompanied with gross indecency, and do not lead to falsehood and +injustice, are generally treated with a good deal of indulgence, and are +easily either excused or pardoned altogether. In the austere system, on +the contrary, those excesses are regarded with the utmost abhorrence and +detestation. The vices of levity are always ruinous to the common +people, and a single week's thoughtlessness and dissipation is often +sufficient to undo a poor workman for ever, and to drive him, through +despair, upon committing the most enormous crimes. The wiser and better +sort of the common people, therefore, have always the utmost abhorrence +and detestation of such excesses, which their experience tells them are +so immediately fatal to people of their condition. The disorder and +extravagance of several years, on the contrary, will not always ruin a +man of fashion; and people of that rank are very apt to consider the +power of indulging in some degree of excess, as one of the advantages of +their fortune; and the liberty of doing so without censure or reproach, +as one of the privileges which belong to their station. In people of +their own station, therefore, they regard such excesses with but a small +degree of disapprobation, and censure them either very slightly or not +at all. + +Almost all religious sects have begun among the common people, from whom +they have generally drawn their earliest, as well as their most numerous +proselytes. The austere system of morality has, accordingly, been +adopted by those sects almost constantly, or with very few exceptions; +for there have been some. It was the system by which they could best +recommend themselves to that order of people, to whom they first +proposed their plan of reformation upon what had been before +established. Many of them, perhaps the greater part of them, have even +endeavoured to gain credit by refining upon this austere system, and by +carrying it to some degree of folly and extravagance; and this excessive +rigour has frequently recommended them, more than any thing else, to the +respect and veneration of the common people. + +A man of rank and fortune is, by his station, the distinguished member +of a great society, who attend to every part of his conduct, and who +thereby oblige him to attend to every part of it himself. His authority +and consideration depend very much upon the respect which this society +bears to him. He dares not do any thing which would disgrace or +discredit him in it; and he is obliged to a very strict observation of +that species of morals, whether liberal or austere, which the general +consent of this society prescribes to persons of his rank and fortune. A +man of low condition, on the contrary, is far from being a distinguished +member of any great society. While he remains in a country village, his +conduct may be attended to, and he may be obliged to attend to it +himself. In this situation, and in this situation only, he may have what +is called a character to lose. But as soon as he comes into a great +city, he is sunk in obscurity and darkness. His conduct is observed and +attended to by nobody; and he is, therefore, very likely to neglect it +himself, and to abandon himself to every sort of low profligacy and +vice. He never emerges so effectually from this obscurity, his conduct +never excites so much the attention of any respectable society, as by +his becoming the member of a small religious sect. He from that moment +acquires a degree of consideration which he never had before. All his +brother sectaries are, for the credit of the sect, interested to observe +his conduct; and, if he gives occasion to any scandal, if he deviates +very much from those austere morals which they almost always require of +one another, to punish him by what is always a very severe punishment, +even where no evil effects attend it, expulsion or excommunication from +the sect. In little religious sects, accordingly, the morals of the +common people have been almost always remarkably regular and orderly; +generally much more so than in the established church. The morals of +those little sects, indeed, have frequently been rather disagreeably +rigorous and unsocial. + +There are two very easy and effectual remedies, however, by whose joint +operation the state might, without violence, correct whatever was +unsocial or disagreeably rigorous in the morals of all the little sects +into which the country was divided. + +The first of those remedies is the study of science and philosophy, +which the state might render almost universal among all people of +middling or more than middling rank and fortune; not by giving salaries +to teachers in order to make them negligent and idle, but by instituting +some sort of probation, even in the higher and more difficult sciences, +to be undergone by every person before he was permitted to exercise any +liberal profession, or before he could be received as a candidate for +any honourable office, of trust or profit. If the state imposed upon +this order of men the necessity of learning, it would have no occasion +to give itself any trouble about providing them with proper teachers. +They would soon find better teachers for themselves, than any whom the +state could provide for them. Science is the great antidote to the +poison of enthusiasm and superstition; and where all the superior ranks +of people were secured from it, the inferior ranks could not be much +exposed to it. + +The second of those remedies is the frequency and gaiety of public +diversions. The state, by encouraging, that is, by giving entire liberty +to all those who, from their own interest, would attempt, without +scandal or indecency, to amuse and divert the people by painting, +poetry, music, dancing; by all sorts of dramatic representations and +exhibitions; would easily dissipate, in the greater part of them, that +melancholy and gloomy humour which is almost always the nurse of popular +superstition and enthusiasm. Public diversions have always been the +objects of dread and hatred to all the fanatical promoters of those +popular frenzies. The gaiety and good humour which those diversions +inspire, were altogether inconsistent with that temper of mind which was +fittest for their purpose, or which they could best work upon. Dramatic +representations, besides, frequently exposing their artifices to public +ridicule, and sometimes even to public execration, were, upon that +account, more than all other diversions, the objects of their peculiar +abhorrence. + +In a country where the law favoured the teachers of no one religion more +than those of another, it would not be necessary that any of them should +have any particular or immediate dependency upon the sovereign or +executive power; or that he should have any thing to do either in +appointing or in dismissing them from their offices. In such a +situation, he would have no occasion to give himself any concern about +them, further than to keep the peace among them, in the same manner as +among the rest of his subjects, that is, to hinder them from +persecuting, abusing, or oppressing one another. But it is quite +otherwise in countries where there is an established or governing +religion. The sovereign can in this case never be secure, unless he has +the means of influencing in a considerable degree the greater part of +the teachers of that religion. + +The clergy of every established church constitute a great incorporation. +They can act in concert, and pursue their interest upon one plan, and +with one spirit as much as if they were under the direction of one man; +and they are frequently, too, under such direction. Their interest as an +incorporated body is never the same with that of the sovereign, and is +sometimes directly opposite to it. Their great interest is to maintain +their authority with the people, and this authority depends upon the +supposed certainty and importance of the whole doctrine which they +inculcate, and upon the supposed necessity of adopting every part of it +with the most implicit faith, in order to avoid eternal misery. Should +the sovereign have the imprudence to appear either to deride, or doubt +himself of the most trifling part of their doctrine, or from humanity, +attempt to protect those who did either the one or the other, the +punctilious honour of a clergy, who have no sort of dependency upon him, +is immediately provoked to proscribe him as a profane person, and to +employ all the terrors of religion, in order to oblige the people to +transfer their allegiance to some more orthodox and obedient prince. +Should he oppose any of their pretensions or usurpations, the danger is +equally great. The princes who have dared in this manner to rebel +against the church, over and above this crime of rebellion, have +generally been charged, too, with the additional crime of heresy, +notwithstanding their solemn protestations of their faith, and humble +submission to every tenet which she thought proper to prescribe to them. +But the authority of religion is superior to every other authority. The +fears which it suggests conquer all other fears. When the authorized +teachers of religion propagate through the great body of the people, +doctrines subversive of the authority of the sovereign, it is by +violence only, or by the force of a standing army, that he can maintain +his authority. Even a standing army cannot in this case give him any +lasting security; because if the soldiers are not foreigners, which can +seldom be the case, but drawn from the great body of the people, which +must almost always be the case, they are likely to be soon corrupted by +those very doctrines. The revolutions which the turbulence of the Greek +clergy was continually occasioning at Constantinople, as long as the +eastern empire subsisted; the convulsions which, during the course of +several centuries, the turbulence of the Roman clergy was continually +occasioning in every part of Europe, sufficiently demonstrate how +precarious and insecure must always be the situation of the sovereign, +who has no proper means of influencing the clergy of the established and +governing religion of his country. + +Articles of faith, as well as all other spiritual matters, it is evident +enough, are not within the proper department of a temporal sovereign, +who, though he may be very well qualified for protecting, is seldom +supposed to be so for instructing the people. With regard to such +matters, therefore, his authority can seldom be sufficient to +counterbalance the united authority of the clergy of the established +church. The public tranquillity, however, and his own security, may +frequently depend upon the doctrines which they may think proper to +propagate concerning such matters. As he can seldom directly oppose +their decision, therefore, with proper weight and authority, it is +necessary that he should be able to influence it; and he can influence +it only by the fears and expectations which he may excite in the greater +part of the individuals of the order. Those fears and expectations may +consist in the fear of deprivation or other punishment, and in the +expectation of further preferment. + +In all Christian churches, the benefices of the clergy are a sort of +freeholds, which they enjoy, not during pleasure, but during life or +good behaviour. If they held them by a more precarious tenure, and were +liable to be turned out upon every slight disobligation either of the +sovereign or of his ministers, it would perhaps be impossible for them +to maintain their authority with the people, who would then consider +them as mercenary dependents upon the court, in the sincerity of whose +instructions they could no longer have any confidence. But should the +sovereign attempt irregularly, and by violence, to deprive any number of +clergymen of their freeholds, on account, perhaps, of their having +propagated, with more than ordinary zeal, some factious or seditious +doctrine, he would only render, by such persecution, both them and their +doctrine ten times more popular, and therefore ten times more +troublesome and dangerous, than they had been before. Fear is in almost +all cases a wretched instrument of government, and ought in particular +never to be employed against any order of men who have the smallest +pretensions to independency. To attempt to terrify them, serves only to +irritate their bad humour, and to confirm them in an opposition, which +more gentle usage, perhaps, might easily induce them either to soften, +or to lay aside altogether. The violence which the French government +usually employed in order to oblige all their parliaments, or sovereign +courts of justice, to enregister any unpopular edict, very seldom +succeeded. The means commonly employed, however, the imprisonment of all +the refractory members, one would think, were forcible enough. The +princes of the house of Stuart sometimes employed the like means in +order to influence some of the members of the parliament of England, and +they generally found them equally intractable. The parliament of England +is now managed in another manner; and a very small experiment, which the +duke of Choiseul made, about twelve years ago, upon the parliament of +Paris, demonstrated sufficiently that all the parliaments of France +might have been managed still more easily in the same manner. That +experiment was not pursued. For though management and persuasion are +always the easiest and safest instruments of government as force and +violence are the worst and the most dangerous; yet such, it seems, is +the natural insolence of man, that he almost always disdains to use the +good instrument, except when he cannot or dare not use the bad one. The +French government could and durst use force, and therefore disdained to +use management and persuasion. But there is no order of men, it appears +I believe, from the experience of all ages, upon whom it is so dangerous +or rather so perfectly ruinous, to employ force and violence, as upon +the respected clergy of an established church. The rights, the +privileges, the personal liberty of every individual ecclesiastic, who +is upon good terms with his own order, are, even in the most despotic +governments, more respected than those of any other person of nearly +equal rank and fortune. It is so in every gradation of despotism, from +that of the gentle and mild government of Paris, to that of the violent +and furious government of Constantinople. But though this order of men +can scarce ever be forced, they may be managed as easily as any other; +and the security of the sovereign, as well as the public tranquillity, +seems to depend very much upon the means which he has of managing them; +and those means seem to consist altogether in the preferment which he +has to bestow upon them. + +In the ancient constitution of the Christian church, the bishop of each +diocese was elected by the joint votes of the clergy and of the people +of the episcopal city. The people did not long retain their right of +election; and while they did retain it, they almost always acted under +the influence of the clergy, who, in such spiritual matters, appeared to +be their natural guides. The clergy, however, soon grew weary of the +trouble of managing them, and found it easier to elect their own bishops +themselves. The abbot, in the same manner, was elected by the monks of +the monastery, at least in the greater part of abbacies. All the +inferior ecclesiastical benefices comprehended within the diocese were +collated by the bishop, who bestowed them upon such ecclesiastics as he +thought proper. All church preferments were in this manner in the +disposal of the church. The sovereign, though he might have some +indirect influence in those elections, and though it was sometimes usual +to ask both his consent to elect, and his approbation of the election, +yet had no direct or sufficient means of managing the clergy. The +ambition of every clergyman naturally led him to pay court, not so much +to his sovereign as to his own order, from which only he could expect +preferment. + +Through the greater part of Europe, the pope gradually drew to himself, +first the collation of almost all bishoprics and abbacies, or of what +were called consistorial benefices, and afterwards, by various +machinations and pretences, of the greater part of inferior benefices +comprehended within each diocese, little more being left to the bishop +than what was barely necessary to give him a decent authority with his +own clergy. By this arrangement the condition of the sovereign was still +worse than it bad been before. The clergy of all the different countries +of Europe were thus formed into a sort of spiritual army, dispersed in +different quarters, indeed, but of which all the movements and +operations could now be directed by one head, and conducted upon one +uniform plan. The clergy of each particular country might be considered +as a particular detachment of that army, of which the operations could +easily be supported and seconded by all the other detachments quartered +in the different countries round about. Each detachment was not only +independent of the sovereign of the country in which it was quartered, +and by which it was maintained, but dependent upon a foreign sovereign, +who could at any time turn its arms against the sovereign of that +particular country, and support them by the arms of all the other +detachments. + +Those arms were the most formidable that can well be imagined. In the +ancient state of Europe, before the establishment of arts and +manufactures, the wealth of the clergy gave them the same sort of +influence over the common people which that of the great barons gave +them over their respective vassals, tenants, and retainers. In the great +landed estates, which the mistaken piety both of princes and private +persons had bestowed upon the church, jurisdictions were established, of +the same kind with those of the great barons, and for the same reason. +In those great landed estates, the clergy, or their bailiffs, could +easily keep the peace, without the support or assistance either of the +king or of any other person; and neither the king nor any other person +could keep the peace there without the support and assistance of the +clergy. The jurisdictions of the clergy, therefore, in their particular +baronies or manors, were equally independent, and equally exclusive of +the authority of the king's courts, as those of the great temporal +lords. The tenants of the clergy were, like those of the great barons, +almost all tenants at will, entirely dependent upon their immediate +lords, and, therefore, liable to be called out at pleasure, in order to +fight in any quarrel in which the clergy might think proper to engage +them. Over and above the rents of those estates, the clergy possessed in +the tithes a very large portion of the rents of all the other estates in +every kingdom of Europe. The revenues arising from both those species of +rents were, the greater part of them, paid in kind, in corn, wine, +cattle, poultry, &c. The quantity exceeded greatly what the clergy could +themselves consume; and there were neither arts nor manufactures, for +the produce of which they could exchange the surplus. The clergy could +derive advantage from this immense surplus in no other way than by +employing it, as the great barons employed the like surplus of their +revenues, in the most profuse hospitality, and in the most extensive +charity. Both the hospitality and the charity of the ancient clergy, +accordingly, are said to have been very great. They not only maintained +almost the whole poor of every kingdom, but many knights and gentlemen +had frequently no other means of subsistence than by travelling about +from monastery to monastery, under pretence of devotion, but in reality +to enjoy the hospitality of the clergy. The retainers of some particular +prelates were often as numerous as those of the greatest lay-lords; and +the retainers of all the clergy taken together were, perhaps, more +numerous than those of all the lay-lords. There was always much more +union among the clergy than among the lay-lords. The former were under a +regular discipline and subordination to the papal authority. The latter +were under no regular discipline or subordination, but almost always +equally jealous of one another, and of the king. Though the tenants and +retainers of the clergy, therefore, had both together been less numerous +than those of the great lay-lords, and their tenants were probably much +less numerous, yet their union would have rendered them more formidable. +The hospitality and charity of the clergy, too, not only gave them the +command of a great temporal force, but increased very much the weight of +their spiritual weapons. Those virtues procured them the highest respect +and veneration among all the inferior ranks of people, of whom many were +constantly, and almost all occasionally, fed by them. Every thing +belonging or related to so popular an order, its possessions, its +privileges, its doctrines, necessarily appeared sacred in the eyes of +the common people; and every violation of them, whether real or +pretended, the highest act of sacrilegious wickedness and profaneness. +In this state of things, if the sovereign frequently found it difficult +to resist the confederacy of a few of the great nobility, we cannot +wonder that he should find it still more so to resist the united force +of the clergy of his own dominions, supported by that of the clergy of +all the neighbouring dominions. In such circumstances, the wonder is, +not that he was sometimes obliged to yield, but that he ever was able to +resist. + +The privileges of the clergy in those ancient times (which to us, who +live in the present times, appear the most absurd), their total +exemption from the secular jurisdiction, for example, or what in England +was called the benefit of clergy, were the natural, or rather the +necessary, consequences of this state of things. How dangerous must it +have been for the sovereign to attempt to punish a clergyman for any +crime whatever, if his order were disposed to protect him, and to +represent either the proof as insufficient for convicting so holy a man, +or the punishment as too severe to be inflicted upon one whose person +had been rendered sacred by religion? The sovereign could, in such +circumstances, do no better than leave him to be tried by the +ecclesiastical courts, who, for the honour of their own order, were +interested to restrain, as much as possible, every member of it from +committing enormous crimes, or even from giving occasion to such gross +scandal as might disgust the minds of the people. + +In the state in which things were, through the greater part of Europe, +during the tenth, eleventh, twelfth, and thirteenth centuries, and for +some time both before and after that period, the constitution of the +church of Rome may be considered as the must formidable combination that +ever was formed against the authority and security of civil government, +as well as against the liberty, reason, and happiness of mankind, which +can flourish only where civil government is able to protect them. In +that constitution, the grossest delusions of superstition were supported +in such a manner by the private interests of so great a number of +people, as put them out of all danger from any assault of human reason; +because, though human reason might, perhaps, have been able to unveil, +even to the eyes of the common people, some of the delusions of +superstition, it could never have dissolved the ties of private +interest. Had this constitution been attacked by no other enemies but +the feeble efforts of human reason, it must have endured for ever. But +that immense and well-built fabric, which all the wisdom and virtue of +man could never have shaken, much less have overturned, was, by the +natural course of things, first weakened, and afterwards in part +destroyed; and is now likely, in the course of a few centuries more, +perhaps, to crumble into ruins altogether. + +The gradual improvements of arts, manufactures, and commerce, the same +causes which destroyed the power of the grant barons, destroyed, in the +same manner, through the greater part of Europe, the whole temporal +power of the clergy. In the produce of arts, manufactures, and commerce, +the clergy, like the great barons, found something for which they could +exchange their rude produce, and thereby discovered the means of +spending their whole revenues upon their own persons, without giving any +considerable share of them to other people. Their charity became +gradually less extensive, their hospitality less liberal, or less +profuse. Their retainers became consequently less numerous, and, by +degrees, dwindled away altogether. The clergy, too, like the great +barons, wished to get a better rent from their landed estates, in order +to spend it, in the same manner, upon the gratification of their own +private vanity and folly. But this increase of rent could be got only by +granting leases to their tenants, who thereby became, in a great +measure, independent of them. The ties of interest, which bound the +inferior ranks of people to the clergy, were in this manner gradually +broken and dissolved. They were even broken and dissolved sooner than +those which bound the same ranks of people to the great barons; because +the benefices of the church being, the greater part of them, much +smaller than the estates of the great barons, the possessor of each +benefice was much sooner able to spend the whole of its revenue upon his +own person. During the greater part of the fourteenth and fifteenth +centuries, the power of the great barons was, through the greater part +of Europe, in full vigour. But the temporal power of the clergy, the +absolute command which they had once had over the great body of the +people was very much decayed. The power of the church was, by that time, +very nearly reduced, through the greater part of Europe, to what arose +from their spiritual authority; and even that spiritual authority was +much weakened, when it ceased to be supported by the charity and +hospitality of the clergy. The inferior ranks of people no longer looked +upon that order as they had done before; as the comforters of their +distress, and the relievers of their indigence. On the contrary, they +were provoked and disgusted by the vanity, luxury, and expense of the +richer clergy, who appeared to spend upon their own pleasures what had +always before been regarded as the patrimony of the poor. + +In this situation of things, the sovereigns in the different states of +Europe endeavoured to recover the influence which they had once had in +the disposal of the great benefices of the church; by procuring to the +deans and chapters of each diocese the restoration of their ancient +right of electing the bishop; and to the monks of each abbacy that of +electing the abbot. The reestablishing this ancient order was the object +of several statutes enacted in England during the course of the +fourteenth century, particularly of what is called the statute of +provisors; and of the pragmatic sanction, established in France in the +fifteenth century. In order to render the election valid, it was +necessary that the sovereign should both consent to it before hand, and +afterwards approve of the person elected; and though the election was +still supposed to be free, he had, however all the indirect means which +his situation necessarily afforded him, of influencing the clergy in his +own dominions. Other regulations, of a similar tendency, were +established in other parts of Europe. But the power of the pope, in the +collation of the great benefices of the church, seems, before the +reformation, to have been nowhere so effectually and so universally +restrained as in France and England. The concordat afterwards, in the +sixteenth century, gave to the kings of France the absolute right of +presenting to all the great, or what are called the consistorial, +benefices of the Gallican church. + +Since the establishment of the pragmatic sanction and of the concordat, +the clergy of France have, in general shewn less respect to the decrees +of the papal court, than the clergy of any other catholic country. In +all the disputes which their sovereign has had with the pope, they have +almost constantly taken part with the former. This independency of the +clergy of France upon the court of Rome seems to be principally founded +upon the pragmatic sanction and the concordat. In the earlier periods of +the monarchy, the clergy of France appear to have been as much devoted +to the pope as those of any other country. When Robert, the second +prince of the Capetian race, was most unjustly excommunicated by the +court of Rome, his own servants, it is said, threw the victuals which +came from his table to the dogs, and refused to taste any thing +themselves which had been polluted by the contact of a person in his +situation. They were taught to do so, it may very safely be presumed, by +the clergy of his own dominions. + +The claim of collating to the great benefices of the church, a claim in +defence of which the court of Rome had frequently shaken, and sometimes +overturned, the thrones of some of the greatest sovereigns in +Christendom, was in this manner either restrained or modified, or given +up altogether, in many different parts of Europe, even before the time +of the reformation. As the clergy had now less influence over the +people, so the state had more influence over the clergy. The clergy, +therefore, had both less power, and less inclination, to disturb the +state. + +The authority of the church of Rome was in this state of declension, +when the disputes which gave birth to the reformation began in Germany, +and soon spread themselves through every part of Europe. The new +doctrines were everywhere received with a high degree of popular favour. +They were propagated with all that enthusiastic zeal which commonly +animates the spirit of party, when it attacks established authority. The +teachers of those doctrines, though perhaps, in other respects, not more +learned than many of the divines who defended the established church, +seem in general to have been better acquainted with ecclesiastical +history, and with the origin and progress of that system of opinions +upon which the authority of the church was established; and they had +thereby the advantage in almost every dispute. The austerity of their +manners gave them authority with the common people, who contrasted the +strict regularity of their conduct with the disorderly lives of the +greater part of their own clergy. They possessed, too, in a much higher +degree than their adversaries, all the arts of popularity and of gaining +proselytes; arts which the lofty and dignified sons of the church had +long neglected, as being to them in a great measure useless. The reason +of the new doctrines recommended them to some, their novelty to many; +the hatred and contempt of the established clergy to a still greater +number: but the zealous, passionate, and fanatical, though frequently +coarse and rustic eloquence, with which they were almost everywhere +inculcated, recommended them to by far the greatest number. + +The success of the new doctrines was almost everywhere so great, that +the princes, who at that time happened to be on bad terms with the court +of Rome, were, by means of them, easily enabled, in their own dominions, +to overturn the church, which having lost the respect and veneration of +the inferior ranks of people, could make scarce any resistance. The +court of Rome had disobliged some of the smaller princes in the northern +parts of Germany, whom it had probably considered as too insignificant +to be worth the managing. They universally, therefore, established the +reformation in their own dominions. The tyranny of Christiern II., and +of Troll archbishop of Upsal, enabled Gustavus Vasa to expel them both +from Sweden. The pope favoured the tyrant and the archbishop, and +Gustavus Vasa found no difficulty in establishing the reformation in +Sweden. Christiern II. was afterwards deposed from the throne of +Denmark, where his conduct had rendered him as odious as in Sweden. The +pope, however, was still disposed to favour him; and Frederic of +Holstein, who had mounted the throne in his stead, revenged himself, by +following the example of Gustavus Vasa. The magistrates of Berne and +Zurich, who had no particular quarrel with the pope, established with +great ease the reformation in their respective cantons, where just +before some of the clergy had, by an imposture somewhat grosser than +ordinary, rendered the whole order both odious and contemptible. + +In this critical situation of its affairs the papal court was at +sufficient pains to cultivate the friendship of the powerful sovereigns +of France and Spain, of whom the latter was at that time emperor of +Germany. With their assistance, it was enabled, though not without great +difficulty, and much bloodshed, either to suppress altogether, or +obstruct very much, the progress of the reformation in their dominions. +It was well enough inclined, too, to be complaisant to the king of +England. But from the circumstances of the times, it could not be so +without giving offense to a still greater sovereign, Charles V., king of +Spain and emperor of Germany. Henry VIII., accordingly, though he did +not embrace himself the greater part of the doctrines of the reformation +was yet enabled, by their general prevalence, to suppress all the +monasteries, and to abolish the authority of the church of Rome in his +dominions. That he should go so far, though he went no further, gave +some satisfaction to the patrons of the reformation, who, having got +possession of the government in the reign of his son and successor, +completed, without any difficulty, the work which Henry VIII. had +begun. + +In some countries, as in Scotland, where the government was weak, +unpopular, and not very firmly established, the reformation was strong +enough to overturn, not only the church, but the state likewise, for +attempting to support the church. + +Among the followers of the reformation, dispersed in all the different +countries of Europe, there was no general tribunal, which, like that of +the court of Rome, or an oecumenical council, could settle all +disputes among them, and, with irresistible authority, prescribe to all +of them the precise limits of orthodoxy. When the followers of the +reformation in one country, therefore, happened to differ from their +brethren in another, as they had no common judge to appeal to, the +dispute could never be decided; and many such disputes arose among them. +Those concerning the government of the church, and the right of +conferring ecclesiastical benefices, were perhaps the most interesting +to the peace and welfare of civil society. They gave birth, accordingly, +to the two principal parties or sects among the followers of the +reformation, the Lutheran and Calvinistic sects, the only sects among +them, of which the doctrine and discipline have ever yet been +established by law in any part of Europe. + +The followers of Luther, together with what is called the church of +England, preserved more or less of the episcopal government, established +subordination among the clergy, gave the sovereign the disposal of all +the bishoprics, and other consistorial benefices within his dominions, +and thereby rendered him the real head of the church; and without +depriving the bishop of the right of collating to the smaller benefices +within his diocese, they, even to those benefices, not only admitted, +but favoured the right of presentation, both in the sovereign and in all +other lay patrons. This system of church government was, from the +beginning, favourable to peace and good order, and to submission to the +civil sovereign. It has never, accordingly, been the occasion of any +tumult or civil commotion in any country in which it has once been +established. The church of England, in particular, has always valued +herself, with great reason, upon the unexceptionable loyalty of her +principles. Under such a government, the clergy naturally endeavour to +recommend themselves to the sovereign, to the court, and to the nobility +and gentry of the country, by whose influence they chiefly expect to +obtain preferment. They pay court to those patrons, sometimes, no doubt, +by the vilest flattery and assentation; but frequently, too, by +cultivating all those arts which best deserve, and which are therefore +most likely to gain them, the esteem of people of rank and fortune; by +their knowledge in all the different branches of useful and ornamental +learning, by the decent liberality of their manners, by the social good +humour of their conversation, and by their avowed contempt of those +absurd and hypocritical austerities which fanatics inculcate and pretend +to practise, in order to draw upon themselves the veneration, and upon +the greater part of men of rank and fortune, who avow that they do not +practise them, the abhorrence of the common people. Such a clergy, +however, while they pay their court in this manner to the higher ranks +of life, are very apt to neglect altogether the means of maintaining +their influence and authority with the lower. They are listened to, +esteemed, and respected by their superiors; but before their inferiors +they are frequently incapable of defending, effectually, and to the +conviction of such hearers, their own sober and moderate doctrines, +against the most ignorant enthusiast who chooses to attack them. + +The followers of Zuinglius, or more properly those of Calvin, on the +contrary, bestowed upon the people of each parish, whenever the church +became vacant, the right of electing their own pastor; and established, +at the same time, the most perfect equality among the clergy. The former +part of this institution, as long as it remained in vigour, seems to +have been productive of nothing but disorder and confusion, and to have +tended equally to corrupt the morals both of the clergy and of the +people. The latter part seems never to have had any effects but what +were perfectly agreeable. + +As long as the people of each parish preserved the right of electing +their own pastors, they acted almost always under the influence of the +clergy, and generally of the most factious and fanatical of the order. +The clergy, in order to preserve their influence in those popular +elections, became, or affected to become, many of them, fanatics +themselves, encouraged fanaticism among the people, and gave the +preference almost always to the most fanatical candidate. So small a +matter as the appointment of a parish priest, occasioned almost always a +violent contest, not only in one parish, but in all the neighbouring +parishes who seldom failed to take part in the quarrel. When the parish +happened to be situated in a great city, it divided all the inhabitants +into two parties; and when that city happened, either to constitute +itself a little republic, or to be the head and capital of a little +republic, as in the case with many of the considerable cities in +Switzerland and Holland, every paltry dispute of this kind, over and +above exasperating the animosity of all their other factions, threatened +to leave behind it, both a new schism in the church, and a new faction +in the state. In those small republics, therefore, the magistrate very +soon found it necessary, for the sake of preserving the public peace, to +assume to himself the right of presenting to all vacant benefices. In +Scotland, the most extensive country in which this presbyterian form of +church government has ever been established, the rights of patronage +were in effect abolished by the act which established presbytery in the +beginning of the reign of William III. That act, at least, put in the +power of certain classes of people in each parish to purchase, for a +very small price, the right of electing their own pastor. The +constitution which this act established, was allowed to subsist for +about two-and-twenty years, but was abolished by the 10th of queen Anne, +ch. 12, on account of the confusions and disorders which this more +popular mode of election had almost everywhere occasioned. In so +extensive a country as Scotland, however, a tumult in a remote parish +was not so likely to give disturbance to government as in a smaller +state. The 10th of queen Anne restored the rights of patronage. But +though, in Scotland, the law gives the benefice, without any exception +to the person presented by the patron; yet the church requires sometimes +(for she has not in this respect been very uniform in her decisions) a +certain concurrence of the people, before she will confer upon the +presentee what is called the cure of souls, or the ecclesiastical +jurisdiction in the parish. She sometimes, at least, from an affected +concern for the peace of the parish, delays the settlement till this +concurrence can be procured. The private tampering of some of the +neighbouring clergy, sometimes to procure, but more frequently to +prevent this concurrence, and the popular arts which they cultivate, in +order to enable them upon such occasions to tamper more effectually, are +perhaps the causes which principally keep up whatever remains of the old +fanatical spirit, either in the clergy or in the people of Scotland. + +The equality which the presbyterian form of church government +establishes among the clergy, consists, first, in the equality of +authority or ecclesiastical jurisdiction; and, secondly, in the equality +of benefice. In all presbyterian churches, the equality of authority is +perfect; that of benefice is not so. The difference, however, between +one benefice and another, is seldom so considerable, as commonly to +tempt the possessor even of the small one to pay court to his patron, by +the vile arts of flattery and assentation, in order to get a better. In +all the presbyterian churches, where the rights of patronage are +thoroughly established, it is by nobler and better arts, that the +established clergy in general endeavour to gain the favour of their +superiors; by their learning, by the irreproachable regularity of their +life, and by the faithful and diligent discharge of their duty. Their +patrons even frequently complain of the independency of their spirit, +which they are apt to construe into ingratitude for past favours, but +which, at worst, perhaps, is seldom any more than that indifference +which naturally arises from the consciousness that no further favours of +the kind are ever to be expected. There is scarce, perhaps, to be found +anywhere in Europe, a more learned, decent, independent, and respectable +set of men, than the greater part of the presbyterian clergy of Holland, +Geneva, Switzerland, and Scotland. + +Where the church benefices are all nearly equal, none of them can be +very great; and this mediocrity of benefice, though it may be, no doubt, +carried too far, has, however, some very agreeable effects. Nothing but +exemplary morals can give dignity to a man of small fortune. The vices +of levity and vanity necessarily render him ridiculous, and are, +besides, almost as ruinous to him as they are to the common people. In +his own conduct, therefore, he is obliged to follow that system of +morals which the common people respect the most. He gains their esteem +and affection, by that plan of life which his own interest and situation +would lead him to follow. The common people look upon him with that +kindness with which we naturally regard one who approaches somewhat to +our own condition, but who, we think, ought to be in a higher. Their +kindness naturally provokes his kindness. He becomes careful to instruct +them, and attentive to assist and relieve them. He does not even despise +the prejudices of people who are disposed to be so favourable to him, +and never treats them with those contemptuous and arrogant airs, which +we so often meet with in the proud dignitaries of opulent and well +endowed churches. The presbyterian clergy, accordingly, have more +influence over the minds of the common people, than perhaps the clergy +of any other established church. It is, accordingly, in presbyterian +countries only, that we ever find the common people converted, without +persecution completely, and almost to a man, to the established church. + +In countries where church benefices are, the greater part of them, very +moderate, a chair in a university is generally a better establishment +than a church benefice. The universities have, in this case, the picking +and chusing of their members from all the churchmen of the country, who, +in every country, constitute by far the most numerous class of men of +letters. Where church benefices, on the contrary, are many of them very +considerable, the church naturally draws from the universities the +greater part of their eminent men of letters; who generally find some +patron, who does himself honour by procuring them church preferment. In +the former situation, we are likely to find the universities filled +with the most eminent men of letters that are to be found in the +country. In the latter, we are likely to find few eminent men among +them, and those few among the youngest members of the society, who are +likely, too, to be drained away from it, before they can have acquired +experience and knowledge enough to be of much use to it. It is observed +by Mr. de Voltaire, that father Porée, a jesuit of no great eminence in +the republic of letters, was the only professor they had ever had in +France, whose works were worth the reading. In a country which has +produced so many eminent men of letters, it must appear somewhat +singular, that scarce one of them should have been a professor in a +university. The famous Cassendi was, in the beginning of his life, a +professor in the university of Aix. Upon the first dawning of his +genius, it was represented to him, that by going into the church he +could easily find a much more quiet and comfortable subsistence, as well +as a better situation for pursuing his studies; and he immediately +followed the advice. The observation of Mr. de Voltaire may be applied, +I believe, not only to France, but to all other Roman Catholic +countries. We very rarely find in any of them an eminent man of letters, +who is a professor in a university, except, perhaps, in the professions +of law and physic; professions from which the church is not so likely to +draw them. After the church of Rome, that of England is by far the +richest and best endowed church in Christendom. In England, accordingly, +the church is continually draining the universities of all their best +and ablest members; and an old college tutor who is known and +distinguished in Europe as an eminent man of letters, is as rarely to be +found there as in any Roman catholic country. In Geneva, on the +contrary, in the protestant cantons of Switzerland, in the protestant +countries of Germany, in Holland, in Scotland, in Sweden, and Denmark, +the most eminent men of letters whom those countries have produced, +have, not all indeed, but the far greater part of them, been professors +in universities. In those countries, the universities are continually +draining the church of all its most eminent men of letters. + +It may, perhaps, be worth while to remark, that, if we except the poets, +a few orators, and a few historians, the far greater part of the other +eminent men of letters, both of Greece and Rome, appear to have been +either public or private teachers; generally either of philosophy or of +rhetoric. This remark will be found to hold true, from the days of +Lysias and Isocrates, of Plato and Aristotle, down to those of Plutarch +and Epictetus, Suetonius, and Quintilian. To impose upon any man the +necessity of teaching, year after year, in any particular branch of +science seems in reality to be the most effectual method for rendering +him completely master of it himself. By being obliged to go every year +over the same ground, if he is good for any thing, he necessarily +becomes, in a few years, well acquainted with every part of it: and if, +upon any particular point, he should form too hasty an opinion one year, +when he comes, in the course of his lectures to reconsider the same +subject the year thereafter, he is very likely to correct it. As to be a +teacher of science is certainly the natural employment of a mere man of +letters; so is it likewise, perhaps, the education which is most likely +to render him a man of solid learning and knowledge. The mediocrity of +church benefices naturally tends to draw the greater part of men of +letters in the country where it takes place, to the employment in which +they can be the most useful to the public, and at the same time to give +them the best education, perhaps, they are capable of receiving. It +tends to render their learning both as solid as possible, and as useful +as possible. + +The revenue of every established church, such parts of it excepted as +may arise from particular lands or manors, is a branch, it ought to be +observed, of the general revenue of the state, which is thus diverted to +a purpose very different from the defence of the state. The tithe, for +example, is a real land-tax, which puts it out of the power of the +proprietors of land to contribute so largely towards the defence of the +state as they otherwise might be able to do. The rent of land, however, +is, according to some, the sole fund; and, according to others, the +principal fund, from which, in all great monarchies, the exigencies of +the state must be ultimately supplied. The more of this fund that is +given to the church, the less, it is evident, can be spared to the +state. It may be laid down as a certain maxim, that all other things +being supposed equal, the richer the church, the poorer must necessarily +be, either the sovereign on the one hand, or the people on the other; +and, in all cases, the less able must the state be to defend itself. In +several protestant countries, particularly in all the protestant cantons +of Switzerland, the revenue which anciently belonged to the Roman +catholic church, the tithes and church lands, has been found a fund +sufficient, not only to afford competent salaries to the established +clergy, but to defray, with little or no addition, all the other +expenses of the state. The magistrates of the powerful canton of Berne, +in particular, have accumulated, out of the savings from this fund, a +very large sum, supposed to amount to several millions; part of which is +deposited in a public treasure, and part is placed at interest in what +are called the public funds of the different indebted nations of Europe; +chiefly in those of France and Great Britain. What may be the amount of +the whole expense which the church, either of Berne, or of any other +protestant canton, costs the state, I do not pretend to know. By a very +exact account it appears, that, in 1755, the whole revenue of the clergy +of the church of Scotland, including their glebe or church lands, and +the rent of their manses or dwelling-houses, estimated according to a +reasonable valuation, amounted only to L.68,514, 1s. 5-1/12d. This very +moderate revenue affords a decent subsistence to nine hundred and +forty-four ministers. The whole expense of the church, including what is +occasionally laid out for the building and reparation of churches, and +of the manses of ministers, cannot well be supposed to exceed eighty or +eighty-five thousand pounds a-year. The most opulent church in +Christendom does not maintain better the uniformity of faith, the +fervour of devotion, the spirit of order, regularity, and austere +morals, in the great body of the people, than this very poorly endowed +church of Scotland. All the good effects, both civil and religious, +which an established church can be supposed to produce, are produced by +it as completely as by any other. The greater part of the protestant +churches of Switzerland, which, in general, are not better endowed than +the church of Scotland, produce those effects in a still higher degree. +In the greater part of the protestant cantons, there is not a single +person to be found, who does not profess himself to be of the +established church. If he professes himself to be of any other, indeed, +the law obliges him to leave the canton. But so severe, or, rather, +indeed, so oppressive a law, could never have been executed in such free +countries, had not the diligence of the clergy beforehand converted to +the established church the whole body of the people, with the exception +of, perhaps, a few individuals only. In some parts of Switzerland, +accordingly, where, from the accidental union of a protestant and Roman +catholic country, the conversion has not been so complete, both +religions are not only tolerated, but established by law. + +The proper performance of every service seems to require, that its pay +or recompence should be, as exactly as possible, proportioned to the +nature of the service. If any service is very much underpaid, it is very +apt to suffer by the meanness and incapacity of the greater part of +those who are employed in it. If it is very much overpaid, it is apt to +suffer, perhaps still more, by their negligence and idleness. A man of a +large revenue, whatever may be his profession, thinks he ought to live +like other men of large revenues; and to spend a great part of his time +in festivity, in vanity, and in dissipation. But in a clergyman, this +train of life not only consumes the time which ought to be employed in +the duties of his function, but in the eyes of the common people, +destroys almost entirely that sanctity of character, which can alone +enable him to perform these duties with proper weight and authority. + + +PART IV. + +_Of the Expense of supporting the Dignity of the Sovereign._ + +Over and above the expenses necessary for enabling the sovereign to +perform his several duties, a certain expense is requisite for the +support of his dignity. This expense varies, both with the different +periods of improvement, and with the different forms of government. + +In an opulent and improved society, where all the different orders of +people are growing every day more expensive in their houses, in their +furniture, in their tables, in their dress, and in their equipage; it +cannot well be expected that the sovereign should alone hold out against +the fashion. He naturally, therefore, or rather necessarily, becomes +more expensive in all those different articles too. His dignity even +seems to require that he should become so. + +As, in point of dignity, a monarch is more raised above his subjects +than the chief magistrate of any republic is ever supposed to be above +his fellow-citizens; so a greater expense is necessary for supporting +that higher dignity. We naturally expect more splendour in the court of +a king, than in the mansion-house of a doge or burgo-master. + + +CONCLUSION. + +The expense of defending the society, and that of supporting the dignity +of the chief magistrate, are both laid out for the general benefit of +the whole society. It is reasonable, therefore, that they should be +defrayed by the general contribution of the whole society; all the +different members contributing, as nearly as possible, in proportion to +their respective abilities. + +The expense of the administration of justice, too, may no doubt be +considered as laid out for the benefit of the whole society. There is no +impropriety, therefore, in its being defrayed by the general +contribution of the whole society. The persons, however, who give +occasion to this expense, are those who, by their injustice in one way +or another, make it necessary to seek redress or protection from the +courts of justice. The persons, again, most immediately benefited by +this expense, are those whom the courts of justice either restore to +their rights, or maintain in their rights. The expense of the +administration of justice, therefore, may very properly be defrayed by +the particular contribution of one or other, or both, of those two +different sets of persons, according as different occasions may require, +that is, by the fees of court. It cannot be necessary to have recourse +to the general contribution of the whole society, except for the +conviction of those criminals who have not themselves any estate or fund +sufficient for paying those fees. + +Those local or provincial expenses, of which the benefit is local or +provincial (what is laid out, for example, upon the police of a +particular town or district), ought to be defrayed by a local or +provincial revenue, and ought to be no burden upon the general revenue +of the society. It is unjust that the whole society should contribute +towards an expense, of which the benefit is confined to a part of the +society. + +The expense of maintaining good roads and communications is, no doubt, +beneficial to the whole society, and may, therefore, without any +injustice, be defrayed by the general contributions of the whole +society. This expense, however, is most immediately and directly +beneficial to those who travel or carry goods from one place to another, +and to those who consume such goods. The turnpike tolls in England, and +the duties called peages in other countries, lay it altogether upon +those two different sets of people, and thereby discharge the general +revenue of the society from a very considerable burden. + +The expense of the institutions for education and religious instruction, +is likewise, no doubt, beneficial to the whole society, and may, +therefore, without injustice, be defrayed by the general contribution of +the whole society. This expense, however, might, perhaps, with equal +propriety, and even with some advantage, be defrayed altogether by those +who receive the immediate benefit of such education and instruction, or +by the voluntary contribution of those who think they have occasion for +either the one or the other. + +When the institutions, or public works, which are beneficial to the +whole society, either cannot be maintained altogether, or are not +maintained altogether, by the contribution of such particular members of +the society as are most immediately benefited by them; the deficiency +must, in most cases, be made up by the general contribution of the whole +society. The general revenue of the society, over and above defraying +the expense of defending the society, and of supporting the dignity of +the chief magistrate, must make up for the deficiency of many particular +branches of revenue. The sources of this general or public revenue, I +shall endeavour to explain in the following chapter. + + + + +CHAP. II. + +OF THE SOURCES OF THE GENERAL OR PUBLIC REVENUE OF THE SOCIETY. + + +The revenue which must defray, not only the expense of defending the +society and of supporting the dignity of the chief magistrate, but all +the other necessary expenses of government, for which the constitution +of the state has not provided any particular revenue may be drawn, +either, first, from some fund which peculiarly belongs to the sovereign +or commonwealth, and which is independent of the revenue of the people; +or, secondly, from the revenue of the people. + + +PART I. + +_Of the Funds, or Sources, of Revenue, which may peculiarly belong to +the Sovereign or Commonwealth._ + +The funds, or sources, of revenue, which may peculiarly belong to the +sovereign or commonwealth, must consist, either in stock, or in land. + +The sovereign, like any other owner of stock, may derive a revenue from +it, either by employing it himself, or by lending it. His revenue is, in +the one case, profit, in the other interest. + +The revenue of a Tartar or Arabian chief consists in profit. It arises +principally from the milk and increase of his own herds and flocks, of +which he himself superintends the management, and is the principal +shepherd or herdsman of his own horde or tribe. It is, however, in this +earliest and rudest state of civil government only, that profit has ever +made the principal part of the public revenue of a monarchical state. + +Small republics have sometimes derived a considerable revenue from the +profit of mercantile projects. The republic of Hamburgh is said to do so +from the profits of a public wine-cellar and apothecary's shop.[50] That +state cannot be very great, of which the sovereign has leisure to carry +on the trade of a wine-merchant or an apothecary. The profit of a public +bank has been a source of revenue to more considerable states. It has +been so, not only to Hamburgh, but to Venice and Amsterdam. A revenue of +this kind has even by some people been thought not below the attention +of so great an empire as that of Great Britain. Reckoning the ordinary +dividend of the bank of England at five and a-half per cent., and its +capital at ten millions seven hundred and eighty thousand pounds, the +net annual profit, after paying the expense of management, must amount, +it is said, to five hundred and ninety-two thousand nine hundred pounds. +Government, it is pretended, could borrow this capital at three per +cent. interest, and, by taking the management of the bank into its own +hands, might make a clear profit of two hundred and sixty-nine thousand +five hundred pounds a-year. The orderly, vigilant, and parsimonious +administration of such aristocracies as those of Venice and Amsterdam, +is extremely proper, it appears from experience, for the management of a +mercantile project of this kind. But whether such a government as that +of England, which, whatever may be its virtues, has never been famous +for good economy; which, in time of peace, has generally conducted +itself with the slothful and negligent profusion that is, perhaps, +natural to monarchies; and, in time of war, has constantly acted with +all the thoughtless extravagance that democracies are apt to fall into, +could be safely trusted with the management of such a project, must at +least be good deal more doubtful. + +The post-office is properly a mercantile project. The government +advances the expense of establishing the different offices, and of +buying or hiring the necessary horses or carriages, and is repaid, with +a large profit, by the duties upon what is carried. It is, perhaps, the +only mercantile project which has been successfully managed by, I +believe, every sort of government. The capital to be advanced is not +very considerable. There is no mystery in the business. The returns are +not only certain, but immediate. + +Princes, however, have frequently engaged in many other mercantile +projects, and have been willing, like private persons, to mend their +fortunes, by becoming adventurers in the common branches of trade. They +have scarce ever succeeded. The profusion with which the affairs of +princes are always managed, renders it almost impossible that they +should. The agents of a prince regard the wealth of their master as +inexhaustible; are careless at what price they buy, are careless at what +price they sell, are careless at what expense they transport his goods +from one place to another. Those agents frequently live with the +profusion of princes; and sometimes, too, in spite of that profusion, +and by a proper method of making up their accounts, acquire the fortunes +of princes. It was thus, as we are told by Machiavel, that the agents of +Lorenzo of Medicis, not a prince of mean abilities, carried on his +trade. The republic of Florence was several times obliged to pay the +debt into which their extravagance had involved him. He found it +convenient, accordingly to give up the business of merchant, the +business to which his family had originally owed their fortune, and, in +the latter part of his life, to employ both what remained of that +fortune, and the revenue of the state, of which he had the disposal, in +projects and expenses more suitable to his station. + +No two characters seem more inconsistent than those of trader and +sovereign. If the trading spirit of the English East India company +renders them very bad sovereigns, the spirit of sovereignty seems to +have rendered them equally bad traders. While they were traders only, +they managed their trade successfully, and were able to pay from their +profits a moderate dividend to the proprietors of their stock. Since +they became sovereigns, with a revenue which, it is said, was originally +more than three millions sterling, they have been obliged to beg the +ordinary assistance of government, in order to avoid immediate +bankruptcy. In their former situation, their servants in India +considered themselves as the clerks of merchants; in their present +situation, those servants consider themselves as the ministers of +sovereigns. + +A state may sometimes derive some part of its public revenue from the +interest of money, as well as from the profits of stock. If it has +amassed a treasure, it may lend a part of that treasure, either to +foreign states, or to its own subjects. + +The canton of Berne derives a considerable revenue by lending a part of +its treasure to foreign states, that is, by placing it in the public +funds of the different indebted nations of Europe, chiefly in those of +France and England. The security of this revenue must depend, first, +upon the security of the funds in which it is placed, or upon the good +faith of the government which has the management of them; and, secondly, +upon the certainty or probability of the continuance of peace with the +debtor nation. In the case of a war, the very first act of hostility on +the part of the debtor nation might be the forfeiture of the funds of +its creditor. This policy of lending money to foreign states is, so far +as I know peculiar to the canton of Berne. + +The city of Hamburgh[51] has established a sort of public pawn-shop, +which lends money to the subjects of the state, upon pledges, at six per +cent. interest. This pawn-shop, or lombard, as it is called, affords a +revenue, it is pretended, to the state, of a hundred and fifty thousand +crowns, which, at four and sixpence the crown, amounts to L.33,750 +sterling. + +The government of Pennsylvania, without amassing any treasure, invented +a method of lending, not money, indeed, but what is equivalent to money, +to its subjects. By advancing to private people, at interest, and upon +land security to double the value, paper bills of credit, to be redeemed +fifteen years after their date; and, in the mean time, made transferable +from hand to hand, like banknotes, and declared by act of assembly to be +a legal tender in all payments from one inhabitant of the province to +another, it raised a moderate revenue, which went a considerable way +towards defraying an annual expense of about L.4500, the whole ordinary +expense of that frugal and orderly government. The success of an +expedient of this kind must have depended upon three different +circumstances: first, upon the demand for some other instrument of +commerce, besides gold and silver money, or upon the demand for such a +quantity of consumable stock as could not be had without sending abroad +the greater part of their gold and silver money, in order to purchase +it; secondly, upon the good credit of the government which made use of +this expedient; and, thirdly, upon the moderation with which it was +used, the whole value of the paper bills of credit never exceeding that +of the gold and silver money which would have been necessary for +carrying on their circulation, had there been no paper bills of credit. +The same expedient was, upon different occasions, adopted by several +other American colonies; but, from want of this moderation, it produced, +in the greater part of them, much more disorder than conveniency. + +The unstable and perishable nature of stock and credit, however, renders +them unfit to be trusted to as the principal funds of that sure, steady, +and permanent revenue, which can alone give security and dignity to +government. The government of no great nation, that was advanced beyond +the shepherd state, seems ever to have derived the greater part of its +public revenue from such sources. + +Land is a fund of more stable and permanent nature; and the rent of +public lands, accordingly, has been the principal source of the public +revenue of many a great nation that was much advanced beyond the +shepherd state. From the produce or rent of the public lands, the +ancient republics of Greece and Italy derived for a long time the +greater part of that revenue which defrayed the necessary expenses of +the commonwealth. The rent of the crown lands constituted for a long +time the greater part of the revenue of the ancient sovereigns of +Europe. + +War, and the preparation for war, are the two circumstances which, in +modern times, occasion the greater part of the necessary expense of all +great states. But in the ancient republics of Greece and Italy, every +citizen was a soldier, and both served, and prepared himself for +service, at his own expense. Neither of those two circumstances, +therefore, could occasion any very considerable expense to the state. +The rent of a very moderate landed estate might be fully sufficient for +defraying all the other necessary expenses of government. + +In the ancient monarchies of Europe, the manners and customs of the +times sufficiently prepared the great body of the people for war; and +when they took the field, they were, by the condition of their feudal +tenures, to be maintained either at their own expense, or at that of +their immediate lords, without bringing any new charge upon the +sovereign. The other expenses of government were, the greater part of +them, very moderate. The administration of justice, it has been shewn, +instead of being a cause of expense was a source of revenue. The labour +of the country people, for three days before, and for three days after, +harvest, was thought a fund sufficient for making and maintaining all +the bridges, highways, and other public works, which the commerce of the +country was supposed to require. In those days the principal expense of +the sovereign seems to have consisted in the maintenance of his own +family and household. The officers of his household, accordingly, were +then the great officers of state. The lord treasurer received his rents. +The lord steward and lord chamberlain looked after the expense of his +family. The care of his stables was committed to the lord constable and +the lord marshal. His houses were all built in the form of castles, and +seem to have been the principal fortresses which he possessed. The +keepers of those houses or castles might be considered as a sort of +military governors. They seem to have been the only military officers +whom it was necessary to maintain in time of peace. In these +circumstances, the rent of a great landed estate might, upon ordinary +occasions, very well defray all the necessary expenses of government. + +In the present state of the greater part of the civilized monarchies of +Europe, the rent of all the lands in the country, managed as they +probably would be, if they all belonged to one proprietor, would scarce, +perhaps, amount to the ordinary revenue which they levy upon the people +even in peaceable times. The ordinary revenue of Great Britain, for +example, including not only what is necessary for defraying the current +expense of the year, but for paying the interest of the public debts, +and for sinking a part of the capital of those debts, amounts to upwards +of ten millions a-year. But the land tax, at four shillings in the +pound, falls short of two millions a-year. This land tax, as it is +called, however, is supposed to be one-fifth, not only of the rent of +all the land, but of that of all the houses, and of the interest of all +the capital stock of Great Britain, that part of it only excepted which +is either lent to the public, or employed as farming stock in the +cultivation of land. A very considerable part of the produce of this tax +arises from the rent of houses and the interest of capital stock. The +land tax of the city of London, for example, at four shillings in the +pound, amounts to L.123,399 : 6 : 7; that of the city of Westminster to +L.63,092 : 1 : 5; that of the palaces of Whitehall and St. James's to +L.30,754 : 6 : 3. A certain proportion of the land tax is, in the same +manner, assessed upon all the other cities and towns corporate in the +kingdom; and arises almost altogether, either from the rent of houses, +or from what is supposed to be the interest of trading and capital +stock. According to the estimation, therefore, by which Great Britain is +rated to the land tax, the whole mass of revenue arising from the rent +of all the lands, from that of all the houses, and from the interest of +all the capital stock, that part of it only excepted which is either +lent to the public, or employed in the cultivation of land, does not +exceed ten millions sterling a-year, the ordinary revenue which +government levies upon the people even in peaceable times. The +estimation by which Great Britain is rated to the land tax is, no doubt, +taking the whole kingdom at an average, very much below the real value; +though in several particular counties and districts it is said to be +nearly equal to that value. The rent of the lands alone, exclusive of +that of houses and of the interest of stock, has by many people been +estimated at twenty millions; an estimation made in a great measure at +random, and which, I apprehend, is as likely to be above as below the +truth. But if the lands of Great Britain, in the present state of their +cultivation, do not afford a rent of more than twenty millions a-year, +they could not well afford the half, most probably not the fourth part +of that rent, if they all belonged to a single proprietor, and were put +under the negligent, expensive, and oppressive management of his factors +and agents. The crown lands of Great Britain do not at present afford +the fourth part of the rent which could probably be drawn from them if +they were the property of private persons. If the crown lands were more +extensive, it is probable, they would be still worse managed. + +The revenue which the great body of the people derives from land is, in +proportion, not to the rent, but to the produce of the land. The whole +annual produce of the land of every country, if we except what is +reserved for seed, is either annually consumed by the great body of the +people, or exchanged for something else that is consumed by them. +Whatever keeps down the produce of the land below what it would +otherwise rise to, keeps down the revenue of the great body of the +people, still more than it does that of the proprietors of land. The +rent of land, that portion of the produce which belongs to the +proprietors, is scarce anywhere in Great Britain supposed to be more +than a third part of the whole produce. If the land which, in one state +of cultivation, affords a revenue of ten millions sterling a-year, would +in another afford a rent of twenty millions; the rent being, in both +cases, supposed a third part of the produce, the revenue of the +proprietors would be less than it otherwise might be, by ten millions +a-year only; but the revenue of the great body of the people would be +less than it otherwise might be, by thirty millions a-year, deducting +only what would be necessary for seed. The population of the country +would be less by the number of people which thirty millions a-year, +deducting always the seed, could maintain, according to the particular +mode of living, and expense which might take place in the different +ranks of men, among whom the remainder was distributed. + +Though there is not at present in Europe, any civilized state of any +kind which derives the greater part of its public revenue from the rent +of lands which are the property of the state; yet, in all the great +monarchies of Europe, there are still many large tracts of land which +belong to the crown. They are generally forest, and sometimes forests +where, after travelling several miles, you will scarce find a single +tree; a mere waste and loss of country, in respect both of produce and +population. In every great monarchy of Europe, the sale of the crown +lands would produce a very large sum of money, which, if applied to the +payment of the public debts, would deliver from mortgage a much greater +revenue than any which those lands have ever afforded to the crown. In +countries where lands, improved and cultivated very highly, and +yielding, at the time of sale, as great a rent as can easily be got from +them, commonly sell at thirty years purchase; the unimproved, +uncultivated, and low-rented crown lands, might well be expected to sell +at forty, fifty, or sixty years purchase. The crown might immediately +enjoy the revenue which this great price would redeem from mortgage. In +the course of a few years, it would probably enjoy another revenue. When +the crown lands had become private property, they would, in the course +of a few years, become well improved and well cultivated. The increase +of their produce would increase the population of the country, by +augmenting the revenue and consumption of the people. But the revenue +which the crown derives from the duties of custom and excise, would +necessarily increase with the revenue and consumption of the people. + +The revenue which, in any civilized monarchy, the crown derives from the +crown lands, though it appears to cost nothing to individuals, in +reality costs more to the society than perhaps any other equal revenue +which the crown enjoys. It would, in all cases, be for the interest of +the society, to replace this revenue to the crown by some other equal +revenue, and to divide the lands among the people, which could not well +be done better, perhaps, than by exposing them to public sale. + +Lands, for the purposes of pleasure and magnificence, parks, gardens, +public walks, &c. possessions which are everywhere considered as causes +of expense, not as sources of revenue, seem to be the only lands which, +in a great and civilized monarchy, ought to belong to the crown. + +Public stock and public lands, therefore, the two sources of revenue +which may peculiarly belong to the sovereign or commonwealth, being both +improper and insufficient funds for defraying the necessary expense of +any great and civilized state; it remains that this expense must, the +greater part of it, be defrayed by taxes of one kind or another; the +people contributing a part of their own private revenue, in order to +make up a public revenue to the sovereign or commonwealth. + + +PART II. + +_Of Taxes._ + +The private revenue of individuals, it has been shown in the first book +of this Inquiry, arises, ultimately from the three different sources; +rent, profit, and wages. Every tax must finally be paid from some one or +other of those three different sources of revenue, or from all of them +indifferently. I shall endeavour to give the best account I can, first, +of those taxes which, it is intended should fall upon rent; secondly, of +those which, it is intended should fall upon profit; thirdly, of those +which, it is intended should fall upon wages; and fourthly, of those +which, it is intended should fall indifferently upon all those three +different sources of private revenue. The particular consideration of +each of these four different sources of taxes will divide the second +part of the present chapter into four articles, three of which will +require several other subdivisions. Many of these taxes, it will appear +from the following review, are not finally paid from the fund, or source +of revenue, upon which it is intended they should fall. + +Before I enter upon the examination of particular taxes, it is necessary +to premise the four following maxims with regard to taxes in general. + +1. The subjects of every state ought to contribute towards the support +of the government, as nearly as possible, in proportion to their +respective abilities; that is, in proportion to the revenue which they +respectively enjoy under the protection of the state. The expense of +government to the individuals of a great nation, is like the expense of +management to the joint tenants of a great estate, who are all obliged +to contribute in proportion to their respective interests in the estate. +In the observation or neglect of this maxim, consists what is called the +equality or inequality of taxation. Every tax, it must be observed once +for all, which falls finally upon one only of the three sorts of revenue +above mentioned, is necessarily unequal, in so far as it does not affect +the other two. In the following examination of different taxes, I shall +seldom take much farther notice of this sort of inequality; but shall, +in most cases, confine my observations to that inequality which is +occasioned by a particular tax falling unequally upon that particular +sort of private revenue which is affected by it. + +2. The tax which each individual is bound to pay, ought to be certain +and not arbitrary. The time of payment, the manner of payment, the +quantity to be paid, ought all to be clear and plain to the contributor, +and to every other person. Where it is otherwise, every person subject +to the tax is put more or less in the power of the tax-getherer, who can +either aggravate the tax upon any obnoxious contributor, or extort, by +the terror of such aggravation, some present or perquisite to himself. +The uncertainty of taxation encourages the insolence, and favours the +corruption, of an order of men who are naturally unpopular, even where +they are neither insolent nor corrupt. The certainty of what each +individual ought to pay is, in taxation, a matter of so great +importance, that a very considerable degree of inequality, it appears, I +believe, from the experience of all nations, is not near so great an +evil as a very small degree of uncertainty. + +3. Every tax ought to be levied at the time, or in the manner, in which +it is most likely to be convenient for the contributor to pay it. A tax +upon the rent of land or of houses, payable at the same term at which +such rents are usually paid, is levied at the time when it is most +likely to be convenient for the contributor to pay; or when he is most +likely to have wherewithal to pay. Taxes upon such consumable goods as +are articles of luxury, are all finally paid by the consumer, and +generally in a manner that is very convenient for him. He pays them by +little and little, as he has occasion to buy the goods. As he is at +liberty too, either to buy or not to buy, as he pleases, it must be his +own fault if he ever suffers any considerable inconveniency from such +taxes. + +4. Every tax ought to be so contrived, as both to take out and to keep +out of the pockets of the people as little as possible, over and above +what it brings into the public treasury of the state. A tax may either +take out or keep out of the pockets of the people a great deal more than +it brings into the public treasury, in the four following ways. First, +the levying of it may require a great number of officers, whose salaries +may eat up the greater part of the produce of the tax, and whose +perquisites may impose another additional tax upon the people. Secondly, +it may obstruct the industry of the people, and discourage them from +applying to certain branches of business which might give maintenance +and employment to great multitudes. While it obliges the people to pay, +it may thus diminish, or perhaps destroy, some of the funds which might +enable them more easily to do so. Thirdly, by the forfeitures and other +penalties which those unfortunate individuals incur, who attempt +unsuccessfully to evade the tax, it may frequently ruin them, and +thereby put an end to the benefit which the community might have +received from the employment of their capitals. An injudicious tax +offers a great temptation to smuggling. But the penalties of smuggling +must arise in proportion to the temptation. The law, contrary to all the +ordinary principles of justice, first creates the temptation, and then +punishes those who yield to it; and it commonly enhances the punishment, +too, in proportion to the very circumstance which ought certainly to +alleviate it, the temptation to commit the crime.[52] Fourthly, by +subjecting the people to the frequent visits and the odious examination +of the tax-gatherers, it may expose them to much unnecessary trouble, +vexation, and oppression; and though vexation is not, strictly speaking, +expense, it is certainly equivalent to the expense at which every man +would be willing to redeem himself from it. It is in some one or other +of these four different ways, that taxes are frequently so much more +burdensome to the people than they are beneficial to the sovereign. + +The evident justice and utility of the foregoing maxims have recommended +them, more or less, to the attention of all nations. All nations have +endeavoured, to the best of their judgment, to render their taxes as +equal as they could contrive; as certain, as convenient to the +contributor, both the time and the mode of payment, and in proportion to +the revenue which they brought to the prince, as little burdensome to +the people. The following short review of some of the principal taxes +which have taken place in different ages and countries, will show, that +the endeavours of all nations have not in this respect been equally +successful. + + +ART. I.--_Taxes upon Rent--Taxes upon the Rent of Land._ + +A tax upon the rent of land may either be imposed according to a certain +canon, every district being valued at a certain rent, which valuation is +not afterwards to be altered; or it may be imposed in such a manner, as +to vary with every variation in the real rent of the land, and to rise +or fall with the improvement or declaration of its cultivation. + +A land tax which, like that of Great Britain, is assessed upon each +district according to a certain invariable canon, though it should be +equal at the time of its first establishment, necessarily becomes +unequal in process of time, according to the unequal degrees of +improvement or neglect in the cultivation of the different parts of the +country. In England, the valuation, according to which the different +counties and parishes were assessed to the land tax by the 4th of +William and Mary, was very unequal even at its first establishment. This +tax, therefore, so far offends against the first of the four maxims +above mentioned. It is perfectly agreeable to the other three. It is +perfectly certain. The time of payment for the tax, being the same as +that for the rent, is as convenient as it can be to the contributor. +Though the landlord is, in all cases, the real contributor, the tax is +commonly advanced by the tenant, to whom the landlord is obliged to +allow it in the payment of the rent. This tax is levied by a much +smaller number of officers than any other which affords nearly the same +revenue. As the tax upon each district does not rise with the rise of +the rent, the sovereign does not share in the profits of the landlord's +improvements. Those improvements sometimes contribute, indeed, to the +discharge of the other landlords of the district. But the aggravation of +the tax, which this may sometimes occasion upon a particular estate, is +always so very small, that it never can discourage those improvements, +nor keep down the produce of the land below what it would otherwise rise +to. As it has no tendency to diminish the quantity, it can have none to +raise the price of that produce. It does not obstruct the industry of +the people; it subjects the landlord to no other inconveniency besides +the unavoidable one of paying the tax. + +The advantage, however, which the landlord has derived from the +invariable constancy of the valuation, by which all the lands of Great +Britain are rated to the land-tax, has been principally owing to some +circumstances altogether extraneous to the nature of the tax. + +It has been owing in part, to the great prosperity of almost every part +of the country, the rents of almost all the estates of Great Britain +having, since the time when this valuation was first established, been +continually rising, and scarce any of them having fallen. The landlords, +therefore, have almost all gained the difference between the tax which +they would have paid, according to the present rent of their estates, +and that which they actually pay according to the ancient valuation. Had +the state of the country been different, had rents been gradually +falling in consequence of the declension of cultivation, the landlords +would almost all have lost this difference. In the state of things which +has happened to take place since the revolution, the constancy of the +valuation has been advantageous to the landlord and hurtful to the +sovereign. In a different state of things it might have been +advantageous to the sovereign and hurtful to the landlord. + +As the tax is made payable in money, so the valuation of the land is +expressed in money. Since the establishment of this valuation, the value +of silver has been pretty uniform, and there has been no alteration in +the standard of the coin, either as to weight or fineness. Had silver +risen considerably in its value, as it seems to have done in the course +of the two centuries which preceded the discovery of the mines of +America, the constancy of the valuation might have proved very +oppressive to the landlord. Had silver fallen considerably in its value, +as it certainly did for about a century at least after the discovery of +those mines, the same constancy of valuation would have reduced very +much this branch of the revenue of the sovereign. Had any considerable +alteration been made in the standard of the money, either by sinking the +same quantity of silver to a lower denomination, or by raising it to a +higher; had an ounce of silver, for example, instead of being coined +into five shillings and two pence, been coined either into pieces which +bore so low a denomination as two shillings and seven pence, or into +pieces which bore so high a one as ten shillings and four pence, it +would, in the one case, have hurt the revenue of the proprietor, in the +other that of the sovereign. + +In circumstances, therefore, somewhat different from those which have +actually taken place, this constancy of valuation might have been a very +great inconveniency, either to the contributors or to the commonwealth. +In the course of ages, such circumstances, however, must at some time or +other happen. But though empires, like all the other works of men, have +all hitherto proved mortal, yet every empire aims at immortality. Every +constitution, therefore, which it is meant should be as permanent as the +empire itself, ought to be convenient, not in certain circumstances +only, but in all circumstances; or ought to be suited, not to those +circumstances which are transitory, occasional, or accidental, but to +those which are necessary, and therefore always the same. + +A tax upon the rent of land, which varies with every variation of the +rent, or which rises and falls according to the improvement or neglect +of cultivation, is recommended by that sect of men of letters in France, +who call themselves the economists, as the most equitable of all taxes. +All taxes, they pretend, fall ultimately upon the rent of land, and +ought, therefore, to be imposed equally upon the fund which must finally +pay them. That all taxes ought to fall as equally as possible upon the +fund which must finally pay them, is certainly true. But without +entering into the disagreeable discussion of the metaphysical arguments +by which they support their very ingenious theory, it will sufficiently +appear, from the following review, what are the taxes which fall finally +upon the rent of the land, and what are those which fall finally upon +some other fund. + +In the Venetian territory, all the arable lands which are given in lease +to farmers are taxed at a tenth of the rent.[53] The leases are recorded +in a public register, which is kept by the officers of revenue in each +province or district. When the proprietor cultivates his own lands, they +are valued according to an equitable estimation, and he is allowed a +deduction of one-fifth of the tax; so that for such land he pays only +eight instead of ten per cent. of the supposed rent. + +A land-tax of this kind is certainly more equal than the land-tax of +England. It might not, perhaps, be altogether so certain, and the +assessment of the tax might frequently occasion a good deal more trouble +to the landlord. It might, too, be a good deal more expensive in the +levying. + +Such a system of administration, however, might, perhaps, be contrived, +as would in a great measure both prevent this uncertainty, and moderate +this expense. + +The landlord and tenant, for example, might jointly be obliged to record +their lease in a public register. Proper penalties might be enacted +against concealing or misrepresenting any of the conditions; and if part +of those penalties were to be paid to either of the two parties who +informed against and convicted the other of such concealment or +misrepresentation, it would effectually deter them from combining +together in order to defraud the public revenue. All the conditions of +the lease might be sufficiently known from such a record. + +Some landlords, instead of raising the rent, take a fine for the renewal +of the lease. This practice is, in most cases, the expedient of a +spendthrift, who, for a sum of ready money sells a future revenue of +much greater value. It is, in most cases, therefore, hurtful to the +landlord; it is frequently hurtful to the tenant; and it is always +hurtful to the community. It frequently takes from the tenant so great a +part of his capital, and thereby diminishes so much his ability to +cultivate the land, that he finds it more difficult to pay a small rent +than it would otherwise have been to pay a great one. Whatever +diminishes his ability to cultivate, necessarily keeps down, below what +it would otherwise have been, the most important part of the revenue of +the community. By rendering the tax upon such fines a good deal heavier +than upon the ordinary rent, this hurtful practice might be discouraged, +to the no small advantage of all the different parties concerned, of the +landlord, of the tenant, of the sovereign, and of the whole community. + +Some leases prescribe to the tenant a certain mode of cultivation, and a +certain succession of crops, during the whole continuance of the lease. +This condition, which is generally the effect of the landlord's conceit +of his own superior knowledge (a conceit in most cases very +ill-founded), ought always to be considered as an additional rent, as a +rent in service, instead of a rent in money. In order to discourage the +practice, which is generally a foolish one, this species of rent might +be valued rather high, and consequently taxed somewhat higher than +common money-rents. + +Some landlords, instead of a rent in money, require a rent in kind, in +corn, cattle, poultry, wine, oil, &c.; others, again, require a rent in +service. Such rents are always more hurtful to the tenant than +beneficial to the landlord. They either take more, or keep more out of +the pocket of the former, than they put into that of the latter. In +every country where they take place, the tenants are poor and beggarly, +pretty much according to the degree in which they take place. By +valuing, in the same manner, such rents rather high, and consequently +taxing them somewhat higher than common money-rents, a practice which is +hurtful to the whole community, might, perhaps, be sufficiently +discouraged. + +When the landlord chose to occupy himself a part of his own lands, the +rent might be valued according to an equitable arbitration of the +farmers and landlords in the neighbourhood, and a moderate abatement of +the tax might be granted to him, in the same manner as in the Venetian +territory, provided the rent of the lands which he occupied did not +exceed a certain sum. It is of importance that the landlord should be +encouraged to cultivate a part of his own land. His capital is generally +greater than that of the tenant, and, with less skill, he can frequently +raise a greater produce. The landlord can afford to try experiments, and +in generally disposed to do so. His unsuccessful experiments occasion +only a moderate loss to himself. His successful ones contribute to the +improvement and better cultivation of the whole country. It might be of +importance, however, that the abatement of the tax should encourage him +to cultivate to a certain extent only. If the landlords should, the +greater part of them, be tempted to farm the whole of their own lands, +the country (instead of sober and industrious tenants, who are bound by +their own interest to cultivate as well as their capital and skill will +allow them) would be filled with idle and profligate bailiffs, whose +abusive management would soon degrade the cultivation, and reduce the +annual produce of the land, to the diminution, not only of the revenue +of their masters, but of the most important part of that of the whole +society. + +Such a system of administration might, perhaps, free a tax of this kind +from any degree of uncertainty, which could occasion either oppression +or inconveniency to the contributor; and might, at the same time, serve +to introduce into the common management of land such a plan of policy as +might contribute a good deal to the general improvement and good +cultivation of the country. + +The expense of levying a land-tax, which varied with every variation of +the rent, would, no doubt, be somewhat greater than that of levying one +which was always rated according to a fixed valuation. Some additional +expense would necessarily be incurred, both by the different +register-offices which it would be proper to establish in the different +districts of the country, and by the different valuations which might +occasionally be made of the lands which the proprietor chose to occupy +himself. The expense of all this, however, might be very moderate, and +much below what is incurred in the levying of many other taxes, which +afford a very inconsiderable revenue in comparison of what might easily +be drawn from a tax of this kind. + +The discouragement which a variable land-tax of this kind might give to +the improvement of land, seems to be the most important objection which +can be made to it. The landlord would certainly be less disposed to +improve, when the sovereign, who contributed nothing to the expense, was +to share in the profit of the improvement. Even this objection might, +perhaps, be obviated, by allowing the landlord, before he began his +improvement, to ascertain, in conjunction with the officers of revenue, +the actual value of his lands, according to the equitable arbitration of +a certain number of landlords and farmers in the neighbourhood, equally +chosen by both parties: and by rating him, according to this valuation, +for such a number of years as might be fully sufficient for his complete +indemnification. To draw the attention of the sovereign towards the +improvement of the land, from a regard to the increase of his own +revenue, is one of the principal advantages proposed by this species of +land-tax. The term, therefore, allowed, for the indemnification of the +landlord, ought not to be a great deal longer than what was necessary +for that purpose, lest the remoteness of the interest should discourage +too much this attention. It had better, however, be somewhat too long, +than in any respect too short. No incitement to the attention of the +sovereign can ever counterbalance the smallest discouragement to that of +the landlord. The attention of the sovereign can be, at best, but a very +general and vague consideration of what is likely to contribute to the +better cultivation of the greater part of his dominions. The attention +of the landlord is a particular and minute consideration of what is +likely to be the most advantageous application of every inch of ground +upon his estate. The principal attention of the sovereign ought to be, +to encourage, by every means in his power, the attention both of the +landlord and of the farmer, by allowing both to pursue their own +interest in their own way, and according to their own judgment; by +giving to both the most perfect security that they shall enjoy the full +recompence of their own industry; and by procuring to both the most +extensive market for every part of their produce, in consequence of +establishing the easiest and safest communications, both by land and by +water, through every part of his own dominions, as well as the most +unbounded freedom of exportation to the dominions of all other princes. + +If, by such a system of administration, a tax of this kind could be so +managed as to give, not only no discouragement, but, on the contrary, +some encouragement to the improvement of land, it does not appear likely +to occasion any other inconveniency to the landlord, except always the +unavoidable one of being obliged to pay the tax. + +In all the variations of the state of the society, in the improvement +and in the declension of agriculture; in all the variations in the value +of silver, and in all those in the standard of the coin, a tax of this +kind would, of its own accord, and without any attention of government, +readily suit itself to the actual situation of things, and would be +equally just and equitable in all those different changes. It would, +therefore, be much more proper to be established as a perpetual and +unalterable regulation, or as what is called a fundamental law of the +commonwealth, than any tax which was always to be levied according to a +certain valuation. + +Some states, instead of the simple and obvious expedient of a register +of leases, have had recourse to the laborious and expensive one of an +actual survey and valuation of all the lands in the country. They have +suspected, probably, that the lessor and lessee, in order to defraud the +public revenue, might combine to conceal the real terms of the lease. +Doomsday-book seems to have been the result of a very accurate survey of +this kind. + +In the ancient dominions of the king of Prussia, the land-tax is +assessed according to an actual survey and valuation, which is reviewed +and altered from time to time.[54] According to that valuation, the lay +proprietors pay from twenty to twenty-five per cent. of their revenue; +ecclesiastics from forty to forty-five per cent. The survey and +valuation of Silesia was made by order of the present king, it is said, +with great accuracy. According to that valuation, the lands belonging to +the bishop of Breslaw are taxed at twenty-five per cent. of their rent. +The other revenues of the ecclesiastics of both religions at fifty per +cent. The commanderies of the Teutonic order, and of that of Malta, at +forty per cent. Lands held by a noble tenure, at thirty-eight and +one-third per cent. Lands held by a base tenure, at thirty-five and +one-third per cent. + +The survey and valuation of Bohemia is said to have been the work of +more than a hundred years. It was not perfected till after the peace of +1748, by the orders of the present empress queen.[55] The survey of the +duchy of Milan, which was begun in the time of Charles VI., was not +perfected till after 1760. It is esteemed one of the most accurate that +has ever been made. The survey of Savoy and Piedmont was executed under +the orders of the late king of Sardinia.[56] + +In the dominions of the king of Prussia, the revenue of the church is +taxed much higher than that of lay proprietors. The revenue of the +church is, the greater part of it, a burden upon the rent of land. It +seldom happens that any part of it is applied towards the improvement of +land; or is so employed as to contribute, in any respect, towards +increasing the revenue of the great body of the people. His Prussian +majesty had probably, upon that account, thought it reasonable that it +should contribute a good deal more towards relieving the exigencies of +the state. In some countries, the lands of the church are exempted from +all taxes. In others, they are taxed more lightly than other lands. In +the duchy of Milan, the lands which the church possessed before 1575, +are rated to the tax at a third only of their value. + +In Silesia, lands held by a noble tenure are taxed three per cent. +higher than those held by a base tenure. The honours and privileges of +different kinds annexed to the former, his Prussian majesty had probably +imagined, would sufficiently compensate to the proprietor a small +aggravation of the tax; while, at the same time, the humiliating +inferiority of the latter would be in some measure alleviated, by being +taxed somewhat more lightly. In other countries, the system of taxation, +instead of alleviating, aggravates this inequality. In the dominions of +the king of Sardinia, and in those provinces of France which are subject +to what is called the real or predial taille, the tax falls altogether +upon the lands held by a base tenure. Those held by a noble one are +exempted. + +A land tax assessed according to a general survey and valuation, how +equal soever it may be at first, must, in the course of a very moderate +period of time, become unequal. To prevent its becoming so would require +the continual and painful attention of government to all the variations +in the state and produce of every different farm in the country. The +governments of Prussia, of Bohemia, of Sardinia, and of the duchy of +Milan, actually exert an attention of this kind; an attention so +unsuitable to the nature of government, that it is not likely to be of +long continuance, and which, if it is continued, will probably, in the +long-run, occasion much more trouble and vexation then it can possibly +bring relief to the contributors. + +In 1666, the generality of Montauban was assessed to the real or predial +taille, according, it is said, to a very exact survey and valuation.[57] +By 1727, this assessment had become altogether unequal. In order to +remedy this inconveniency, government has found no better expedient, +than to impose upon the whole generality an additional tax of a hundred +and twenty thousand livres. This additional tax is rated upon all the +different districts subject to the taille according to the old +assessment. But it is levied only upon those which, in the actual state +of things, are by that assessment under-taxed; and it is applied to the +relief of those which, by the same assessment, are over-taxed. Two +districts, for example, one of which ought, in the actual state of +things, to be taxed at nine hundred, the other at eleven hundred livres, +are, by the old assessment, both taxed at a thousand livres. Both these +districts are, by the additional tax, rated at eleven hundred livres +each. But this additional tax is levied only upon the district +under-charged, and it is applied altogether to the relief of that +overcharged, which consequently pays only nine hundred livres. The +government neither gains nor loses by the additional tax, which is +applied altogether to remedy the inequalities arising from the old +assessment. The application is pretty much regulated according to the +discretion of the intendant of the generality, and must, therefore, be +in a great measure arbitrary. + + +_Taxes which are proportioned, not to the Rent, but to the Produce of +Land._ + +Taxes upon the produce of land are, in reality, taxes upon the rent; and +though they may be originally advanced by the farmer, are finally paid +by the landlord. When a certain portion of the produce is to be paid +away for a tax, the farmer computes as well as he can, what the value of +this portion is, one year with another, likely to amount to, and he +makes a proportionable abatement in the rent which he agrees to pay to +the landlord. There is no farmer who does not compute before hand what +the church tythe, which is a land tax of this kind, is, one year with +another, likely to amount to. + +The tythe, and every other land tax of this kind, under the appearance +of perfect equality, are very unequal taxes; a certain portion of the +produce being in different situations, equivalent to a very different +portion of the rent. In some very rich lands, the produce is so great, +that the one half of it is fully sufficient to replace to the farmer his +capital employed in cultivation, together with the ordinary profits of +farming stock in the neighbourhood. The other half, or, what comes to +the same thing, the value of the other half, he could afford to pay as +rent to the landlord, if there was no tythe. But if a tenth of the +produce is taken from him in the way of tythe, he must require an +abatement of the fifth part of his rent, otherwise he cannot get back +his capital with the ordinary profit. In this case, the rent of the +landlord, instead of amounting to a half, or five-tenths of the whole +produce, will amount only to four-tenths of it. In poorer lands, on the +contrary, the produce is sometimes so small, and the expense of +cultivation so great, that it requires four-fifths of the whole produce, +to replace to the farmer his capital with the ordinary profit. In this +case, though there was no tythe, the rent of the landlord could amount +to no more than one-fifth or two-tenths of the whole produce. But if the +farmer pays one-tenth of the produce in the way of tythe, he must +require an equal abatement of the rent of the landlord, which will thus +be reduced to one-tenth only of the whole produce. Upon the rent of rich +lands the tythe may sometimes be a tax of no more than one-fifth part, +or four shillings in the pound; whereas upon that of poorer lands, it +may sometimes be a tax of one half, or of ten shillings in the pound. + +The tythe, as it is frequently a very unequal tax upon the rent, so it +is always a great discouragement, both to the improvements of the +landlord, and to the cultivation of the farmer. The one cannot venture +to make the most important, which are generally the most expensive +improvements; nor the other to raise the most valuable, which are +generally, too, the most expensive crops; when the church, which lays +out no part of the expense, is to share so very largely in the profit. +The cultivation of madder was, for a long time, confined by the tythe to +the United Provinces, which, being presbyterian countries, and upon that +account exempted from this destructive tax, enjoyed a sort of monopoly +of that useful dyeing drug against the rest of Europe. The late attempts +to introduce the culture of this plant into England, have been made only +in consequence of the statute, which enacted that five shillings an acre +should be received in lieu of all manner of tythe upon madder. + +As through the greater part of Europe, the church, so in many different +countries of Asia, the state, is principally supported by a land tax, +proportioned not to the rent, but to the produce of the land. In China, +the principal revenue of the sovereign consists in a tenth part of the +produce of all the lands of the empire. This tenth part, however, is +estimated so very moderately, that, in many provinces, it is said not to +exceed a thirtieth part of the ordinary produce. The land tax or land +rent which used to be paid to the Mahometan government of Bengal, before +that country fell into the hands of the English East India company, is +said to have amounted to about a fifth part of the produce. The land tax +of ancient Egypt is said likewise to have amounted to a fifth part. + +In Asia, this sort of land tax is said to interest the sovereign in the +improvement and cultivation of land. The sovereigns of China, those of +Bengal while under the Mahometan government, and those of ancient Egypt, +are said, accordingly, to have been extremely attentive to the making +and maintaining of good roads and navigable canals, in order to +increase, as much as possible, both the quantity and value of every part +of the produce of the land, by procuring to every part of it the most +extensive market which their own dominions could afford. The tythe of +the church is divided into such small portions that no one of its +proprietors can have any interest of this kind. The parson of a parish +could never find his account in making a road or canal to a distant part +of the country, in order to extend the market for the produce of his own +particular parish. Such taxes, when destined for the maintenance of the +state, have some advantages, which may serve in some measure to balance +their inconveniency. When destined for the maintenance of the church, +they are attended with nothing but inconveniency. + +Taxes upon the produce of land may be levied, either in kind, or, +according to a certain valuation in money. + +The person of a parish, or a gentleman of small fortune who lives upon +his estate, may sometimes, perhaps find some advantage in receiving, the +one his tythe, and the other his rent, in kind. The quantity to be +collected, and the district within which it is to be collected, are so +small, that they both can oversee, with their own eyes, the collection +and disposal of every part of what is due to them. A gentleman of great +fortune, who lived in the capital, would be in danger of suffering much +by the neglect, and more by the fraud, of his factors and agents, if the +rents of an estate in a distant province were to be paid to him in this +manner. The loss of the sovereign, from the abuse and depredation of his +tax-gatherers, would necessarily be much greater. The servants of the +most careless private person are, perhaps, more under the eye of their +master than those of the most careful prince; and a public revenue, +which was paid in kind, would suffer so much from the mismanagement of +the collectors, that a very small part of what was levied upon the +people would ever arrive at the treasury of the prince. Some part of the +public revenue of China, however, is said to be paid in this manner. The +mandarins and other tax-gatherers will, no doubt, find their advantage +in continuing the practice of a payment, which is so much more liable to +abuse than any payment in money. + +A tax upon the produce of land, which is levied in money, may be levied, +either according to a valuation, which varies with all the variations of +the market price; or according to a fixed valuation, a bushel of wheat, +for example, being always valued at one and the same money price, +whatever may be the state of the market. The produce of a tax levied in +the former way will vary only according to the variations in the real +produce of the land, according to the improvement or neglect of +cultivation. The produce of a tax levied in the latter way will vary, +not only according to the variations in the produce of the land, but +according both to those in the value of the precious metals, and those +in the quantity of those metals, which is at different times contained +in coin of the same denomination. The produce of the former will always +bear the same proportion to the value of the real produce of the land. +The produce of the latter may, at different times, bear very different +proportions to that value. + +When, instead either of a certain portion of the produce of land, or of +the price of a certain portion, a certain sum of money is to be paid in +full compensation for all tax or tythe; the tax becomes, in this case, +exactly of the same nature with the land tax of England. It neither +rises nor falls with the rent of the land. It neither encourages nor +discourages improvement. The tythe in the greater part of those parishes +which pay what is called a modus, in lieu of all other tythe, is a tax +of this kind. During the Mahometan government of Bengal, instead of the +payment in kind of the fifth part of the produce, a modus, and, it is +said, a very moderate one, was established in the greater part of the +districts or zemindaries of the country. Some of the servants of the +East India company, under pretence of restoring the public revenue to +its proper value, have, in some provinces, exchanged this modus for a +payment in kind. Under their management, this change is likely both to +discourage cultivation, and to give new opportunities for abuse in the +collection of the public revenue, which has fallen very much below what +it was said to have been when it first fell under the management of the +company. The servants of the company may, perhaps, have profited by the +change, but at the expense, it is probable, both of their masters and of +the country. + + +_Taxes upon the Rent of Houses._ + +The rent of a house may be distinguished into two parts, of which the +one may very properly be called the building-rent; the other is commonly +called the ground-rent. + +The building-rent is the interest or profit of the capital expended in +building the house. In order to put the trade of a builder upon a level +with other trades, it is necessary that this rent should be sufficient, +first, to pay him the same interest which he would have got for his +capital, if he had lent it upon good security; and, secondly, to keep +the house in constant repair, or, what comes to the same thing, to +replace, within a certain term of years, the capital which had been +employed in building it. The building-rent, or the ordinary profit of +building, is, therefore, everywhere regulated by the ordinary interest +of money. Where the market rate of interest is four per cent. the rent +of a house, which, over and above paying the ground-rent, affords six or +six and a-half per cent. upon the whole expense of building, may, +perhaps, afford a sufficient profit to the builder. Where the market +rate of interest is five per cent. it may perhaps require seven or seven +and a-half per cent. If, in proportion to the interest of money, the +trade of the builders affords at any time much greater profit than this, +it will soon draw so much capital from other trades as will reduce the +profit to its proper level. If it affords at any time much less than +this, other trades will soon draw so much capital from it as will again +raise that profit. + +Whatever part of the whole rent of a house is over and above what is +sufficient for affording this reasonable profit, naturally goes to the +ground-rent; and, where the owner of the ground and the owner of the +building are two different persons, is, in most cases, completely paid +to the former. This surplus rent is the price which the inhabitant of +the house pays for some real or supposed advantage of the situation. In +country houses, at a distance from any great town, where there is plenty +of ground to chuse upon, the ground-rent is scarce any thing, or no more +than what the ground which the house stands upon would pay, if employed +in agriculture. In country villas, in the neighbourhood of some great +town, it is sometimes a good deal higher; and the peculiar conveniency +or beauty of situation is there frequently very well paid for. +Ground-rents are generally highest in the capital, and in those +particular parts of it where there happens to be the greatest demand for +houses, whatever be the reason of that demand, whether for trade and +business, for pleasure and society, or for mere vanity and fashion. + +A tax upon house-rent, payable by the tenant, and proportioned to the +whole rent of each house, could not, for any considerable time at least, +affect the building-rent. If the builder did not get his reasonable +profit, he would be obliged to quit the trade; which, by raising the +demand for building, would, in a short time, bring back his profit to +its proper level with that of other trades. Neither would such a tax +fall altogether upon the ground-rent; but it would divide itself in such +a manner, as to fall partly upon the inhabitant of the house, and partly +upon the owner of the ground. + +Let us suppose, for example, that a particular person judges that he can +afford for house-rent an expense of sixty pounds a-year; and let us +suppose, too, that a tax of four shillings in the pound, or of +one-fifth, payable by the inhabitant, is laid upon house-rent. A house +of sixty pounds rent will, in that case, cost him seventy-two pounds +a-year, which is twelve pounds more than he thinks he can afford. He +will, therefore, content himself with a worse house, or a house of fifty +pounds rent, which, with the additional ten pounds that he must pay for +the tax, will make up the sum of sixty pounds a-year, the expense which +he judges he can afford, and, in order to pay the tax, he will give up a +part of the additional conveniency which he might have had from a house +of ten pounds a-year more rent. He will give up, I say, a part of this +additional conveniency; for he will seldom be obliged to give up the +whole, but will, in consequence of the tax, get a better house for fifty +pounds a-year, than he could have got if there had been no tax. For as a +tax of this kind, by taking away this particular competitor, must +diminish the competition for houses of sixty pounds rent, so it must +likewise diminish it for those of fifty pounds rent, and in the same +manner for those of all other rents, except the lowest rent, for which +it would for some time increase the competition. But the rents of every +class of houses for which the competition was diminished, would +necessarily be more or less reduced. As no part of this reduction, +however, could for any considerable time at least, affect the +building-rent, the whole of it must, in the long-run, necessarily fall +upon the ground-rent. The final payment of this tax, therefore, would +fall partly upon the inhabitant of the house, who, in order to pay his +share, would be obliged to give up part of his conveniency; and partly +upon the owner of the ground, who, in order to pay his share, would be +obliged to give up a part of his revenue. In what proportion this final +payment would be divided between them, it is not, perhaps, very easy to +ascertain. The division would probably be very different in different +circumstances, and a tax of this kind might, according to those +different circumstances, affect very unequally, both the inhabitant of +the house and the owner of the ground. + +The inequality with which a tax of this kind might fall upon the owners +of different ground-rents, would arise altogether from the accidental +inequality of this division. But the inequality with which it might fall +upon the inhabitants of different houses, would arise, not only from +this, but from another cause. The proportion of the expense of +house-rent to the whole expense of living, is different in the different +degrees of fortune. It is, perhaps, highest in the highest degree, and +it diminishes gradually through the inferior degrees, so as in general +to be lowest in the lowest degree. The necessaries of life occasion the +great expense of the poor. They find it difficult to get food, and the +greater part of their little revenue is spent in getting it. The +luxuries and vanities of life occasion the principal expense of the +rich; and a magnificent house embellishes and sets off to the best +advantage all the other luxuries and vanities which they possess. A tax +upon house-rents, therefore, would in general fall heaviest upon the +rich; and in this sort of inequality there would not, perhaps, be any +thing very unreasonable. It is not very unreasonable that the rich +should contribute to the public expense, not only in proportion to their +revenue, but something more than in that proportion. + +The rent of houses, though it in some respects resembles the rent of +land, is in one respect essentially different from it. The rent of land +is paid for the use of a productive subject. The land which pays it +produces it. The rent of houses is paid for the use of an unproductive +subject. Neither the house, nor the ground which it stands upon, produce +any thing. The person who pays the rent, therefore, must draw it from +some other source of revenue, distinct from and independent of this +subject. A tax upon the rent of houses, so far as it falls upon the +inhabitants, must be drawn from the same source as the rent itself, and +must be paid from their revenue, whether derived from the wages of +labour, the profits of stock, or the rent of land. So far as it falls +upon the inhabitants, it is one of those taxes which fall, not upon one +only, but indifferently upon all the three different sources of revenue; +and is, in every respect, of the same nature as a tax upon any any other +sort of consumable commodities. In general, there is not perhaps, any +one article of expense or consumption by which the liberality or +narrowness of a man's whole expense can be better judged of than by his +house-rent. A proportional tax upon this particular article of expense +might, perhaps, produce a more considerable revenue than any which has +hitherto been drawn from it in any part of Europe. If the tax, indeed, +was very high, the greater part of people would endeavour to evade it as +much as they could, by contenting themselves with smaller houses, and by +turning the greater part of their expense into some other channel. + +The rent of houses might easily be ascertained with sufficient accuracy, +by a policy of the same kind with that which would be necessary for +ascertaining the ordinary rent of land. Houses not inhabited ought to +pay no tax. A tax upon them would fall altogether upon the proprietor, +who would thus be taxed for a subject which afforded him neither +conveniency nor revenue. Houses inhabited by the proprietor ought to be +rated, not according to the expense which they might have cost in +building, but according to the rent which an equitable arbitration might +judge them likely to bring if leased to a tenant. If rated according to +the expense which they might have cost in building, a tax of three or +four shillings in the pound, joined with other taxes, would ruin almost +all the rich and great families of this, and, I believe, of every other +civilized country. Whoever will examine with attention the different +town and country houses of some of the richest and greatest families in +this country, will find that, at the rate of only six and a-half, or +seven per cent. upon the original expense of building, their house-rent +is nearly equal to the whole neat rent of their estates. It is the +accumulated expense of several successive generations, laid out upon +objects of great beauty and magnificence, indeed, but, in proportion to +what they cost, of very small exchangeable value.[58] + +Ground-rents are a still more proper subject of taxation than the rent +of houses. A tax upon ground-rents would not raise the rent of houses; +it would fall altogether upon the owner of the ground-rent, who acts +always as a monopolist, and exacts the greatest rent which can be got +for the use of his ground. More or less can be got for it, according as +the competitors happen to be richer or poorer, or can afford to gratify +their fancy for a particular spot of ground at a greater or smaller +expense. In every country, the greatest number of rich competitors is in +the capital, and it is there accordingly that the highest ground-rents +are always to be found. As the wealth of those competitors would in no +respect be increased by a tax upon ground-rents, they would not probably +be disposed to pay more for the use of the ground. Whether the tax was +to be advanced by the inhabitant or by the owner of the ground, would be +of little importance. The more the inhabitant was obliged to pay for the +tax, the less he would incline to pay for the ground; so that the final +payment of the tax would fall altogether upon the owner of the +ground-rent. The ground-rents of uninhabited houses ought to pay no tax. + +Both ground-rents, and the ordinary rent of land, are a species of +revenue which the owner, in many cases, enjoys without any care or +attention of his own. Though a part of this revenue should be taken from +him in order to defray the expenses of the state, no discouragement will +thereby be given to any sort of industry. The annual produce of the land +and labour of the society, the real wealth and revenue of the great body +of the people, might be the same after such a tax as before. +Ground-rents, and the ordinary rent of land, are therefore, perhaps, the +species of revenue which can best bear to have a peculiar tax imposed +upon them. + +Ground-rents seem, in this respect, a more proper subject of peculiar +taxation, than even the ordinary rent of land. The ordinary rent of land +is, in many cases, owing partly, at least, to the attention and good +management of the landlord. A very heavy tax might discourage, too much, +this attention and good management. Ground-rents, so far as they exceed +the ordinary rent of land, are altogether owing to the good government +of the sovereign, which, by protecting the industry either of the whole +people or of the inhabitants of some particular place, enables them to +pay so much more than its real value for the ground which they build +their houses upon; or to make to its owner so much more than +compensation for the loss which he might sustain by this use of it. +Nothing can be more reasonable, than that a fund, which owes its +existence to the good government of the state, should be taxed +peculiarly, or should contribute something more than the greater part of +other funds, towards the support of that government. + +Though, in many different countries of Europe, taxes have been imposed +upon the rent of houses, I do not know of any in which ground-rents have +been considered as a separate subject of taxation. The contrivers of +taxes have, probably, found some difficulty in ascertaining what part of +the rent ought to be considered as ground-rent, and what part ought to +be considered as building-rent. It should not, however, seem very +difficult to distinguish those two parts of the rent from one another. + +In Great Britain the rent of houses is supposed to be taxed in the same +proportion as the rent of land, by what is called the annual land tax. +The valuation, according to which each different parish and district is +assessed to this tax, is always the same. It was originally extremely +unequal, and it still continues to be so. Through the greater part of +the kingdom this tax falls still more lightly upon the rent of houses +than upon that of land. In some few districts only, which were +originally rated high, and in which the rents of houses have fallen +considerably, the land tax of three or four shillings in the pound is +said to amount to an equal proportion of the real rent of houses. +Untenanted houses, though by law subject to the tax, are, in most +districts, exempted from it by the favour of assessors; and this +exemption sometimes occasions some little variation in the rate of +particular houses, though that of the district is always the same. +Improvements of rent, by new buildings, repairs, &c. go to the discharge +of the district, which occasions still further variations in the rate of +particular houses. + +In the province of Holland,[59] every house is taxed at two and a-half +per cent. of its value, without any regard, either to the rent which it +actually pays, or to the circumstance of its being tenanted or +untenanted. There seems to be a hardship in obliging the proprietor to +pay a tax for an untenanted house, from which he can derive no revenue, +especially so very heavy a tax. In Holland, where the market rate of +interest does not exceed three per cent., two and a-half per cent. upon +the whole value of the house must, in most cases, amount to more than a +third of the building-rent, perhaps of the whole rent. The valuation, +indeed, according to which the houses are rated, though very unequal, in +said to be always below the real value. When a house is rebuilt, +improved, or enlarged, there is a new valuation, and the tax is rated +accordingly. + +The contrivers of the several taxes which in England have, at different +times, been imposed upon houses, seem to have imagined that there was +some great difficulty in ascertaining, with tolerable exactness, what +was the real rent of every house. They have regulated their taxes, +therefore, according to some more obvious circumstance, such as they had +probably imagined would, in most cases, bear some proportion to the +rent. + +The first tax of this kind was hearth-money; or a tax of two shillings +upon every hearth. In order to ascertain how many hearths were in the +house, it was necessary that the tax-gatherer should enter every room in +it. This odious visit rendered the tax odious. Soon after the +Revolution, therefore, it was abolished as a badge of slavery. + +The next tax of this kind was a tax of two shillings upon every +dwelling-house inhabited. A house with ten windows to pay four shillings +more. A house with twenty windows and upwards to pay eight shillings. +This tax was afterwards so far altered, that houses with twenty windows, +and with less than thirty, were ordered to pay ten shillings, and those +with thirty windows and upwards to pay twenty shillings. The number of +windows can, in most cases, be counted from the outside, and, in all +cases, without entering every room in the house. The visit of the +tax-gatherer, therefore, was less offensive in this tax than in the +hearth-money. + +This tax was afterwards repealed, and in the room of it was established +the window-tax, which has undergone two several alterations and +augmentations. The window tax, as it stands at present (January 1775), +over and above the duty of three shillings upon every house in England, +and of one shilling upon every house in Scotland, lays a duty upon every +window, which in England augments gradually from twopence, the lowest +rate upon houses with not more than seven windows, to two shillings, the +highest rate upon houses with twenty-five windows and upwards. + +The principal objection to all such taxes is their inequality; an +inequality of the worst kind, as they must frequently fall much heavier +upon the poor than upon the rich. A house of ten pounds rent in a +country town, may sometimes have more windows than a house of five +hundred pounds rent in London; and though the inhabitant of the former +in likely to be a much poorer man than that of the latter, yet, so far +as his contribution is regulated by the window tax, he must contribute +more to the support of the state. Such taxes are, therefore, directly +contrary to the first of the four maxims above mentioned. They do not +seem to offend much against any of the other three. + +The natural tendency of the window tax, and of all other taxes upon +houses, is to lower rents. The more a man pays for the tax, the less, it +is evident, he can afford to pay for the rent. Since the imposition of +the window tax, however, the rents of houses have, upon the whole, risen +more or less, in almost every town and village of Great Britain, with +which I am acquainted. Such has been, almost everywhere, the increase of +the demand for houses, that it has raised the rents more than the window +tax could sink them; one of the many proofs of the great prosperity of +the country, and of the increasing revenue of its inhabitants. Had it +not been for the tax, rents would probably have risen still higher. + + +ART. II.--_Taxes upon Profit, or upon the Revenue arising from Stock._ + +The revenue or profit arising from stock naturally divides itself into +two parts; that which pays the interest, and which belongs to the owner +of the stock; and that surplus part which is over and above what is +necessary for paying the interest. + +This latter part of profit is evidently a subject not taxable directly. +It is the compensation, and, in most cases, it is no more than a very +moderate compensation for the risk and trouble of employing the stock. +The employer must have this compensation, otherwise he cannot, +consistently with his own interest, continue the employment. If he was +taxed directly, therefore, in proportion to the whole profit, he would +be obliged either to raise the rate of his profit, or to charge the tax +upon the interest of money; that is, to pay less interest. If he raised +the rate of his profit in proportion to the tax, the whole tax, though +it might be advanced by him, would be finally paid by one or other of +two different sets of people, according to the different ways in which +he might employ the stock of which he had the management. If he employed +it as a farming stock, in the cultivation of land, he could raise the +rate of his profit only by retaining a greater portion, or, what comes +to the same thing, the price of a greater portion, of the produce of the +land; and as this could be done only by a reduction of rent, the final +payment of the tax would fall upon the landlord. If he employed it as a +mercantile or manufacturing stock, he could raise the rate of his profit +only by raising the price of his goods; in which case, the final payment +of the tax would fall altogether upon the consumers of those goods. If +he did not raise the rate of his profit, he would be obliged to charge +the whole tax upon that part of it which was allotted for the interest +of money. He could afford less interest for whatever stock he borrowed, +and the whole weight of the tax would, in this case, fall ultimately +upon the interest of money. So far as he could not relieve himself from +the tax in the one way, he would be obliged to relieve himself in the +other. + +The interest of money seems, at first sight, a subject equally capable +of being taxed directly as the rent of land. Like the rent of land, it +is a neat produce, which remains, after completely compensating the +whole risk and trouble of employing the stock. As a tax upon the rent of +land cannot raise rents, because the neat produce which remains, after +replacing the stock of the farmer, together with his reasonable profit, +cannot be greater after the tax than before it, so, for the same +reason, a tax upon the interest of money could not raise the rate of +interest; the quantity of stock or money in the country, like the +quantity of land, being supposed to remain the same after the tax as +before it. The ordinary rate of profit, it has been shewn, in the first +book, is everywhere regulated by the quantity of stock to be employed, +in proportion to the quantity of the employment, or of the business +which must be done by it. But the quantity of the employment, or of the +business to be done by stock, could neither be increased nor diminished +by any tax upon the interest of money. If the quantity of the stock to +be employed, therefore, was neither increased nor diminished by it, the +ordinary rate of profit would necessarily remain the same. But the +portion of this profit, necessary for compensating the risk and trouble +of the employer, would likewise remain the same; that risk and trouble +being in no respect altered. The residue, therefore, that portion which +belongs to the owner of the stock, and which pays the interest of money, +would necessarily remain the same too. At first sight, therefore, the +interest of money seems to be a subject as fit to be taxed directly as +the rent of land. + +There are, however, two different circumstances, which render the +interest of money a much less proper subject of direct taxation than the +rent of land. + +First, the quantity and value of the land which any man possesses, can +never be a secret, and can always be ascertained with great exactness. +But the whole amount of the capital stock which he possesses is almost +always a secret, and can scarce ever be ascertained with tolerable +exactness. It is liable, besides, to almost continual variations. A year +seldom passes away, frequently not a month, sometimes scarce a single +day, in which it does not rise or fall more or less. An inquisition into +every man's private circumstances, and an inquisition which, in order to +accommodate the tax to them, watched over all the fluctuations of his +fortune, would be a source of such continual and endless vexation as no +person could support. + +Secondly, land is a subject which cannot be removed; whereas stock +easily may. The proprietor of land is necessarily a citizen of the +particular country in which his estate lies. The proprietor of stock is +properly a citizen of the world, and is not necessarily attached to any +particular country. He would be apt to abandon the country in which he +was exposed to a vexatious inquisition, in order to be assessed to a +burdensome tax; and would remove his stock to some other country, where +he could either carry on his business, or enjoy his fortune more at his +ease. By removing his stock, he would put an end to all the industry +which it had maintained in the country which he left. Stock cultivates +land; stock employs labour. A tax which tended to drive away stock from +any particular country, would so far tend to dry up every source of +revenue, both to the sovereign and to the society. Not only the profits +of stock, but the rent of land, and the wages of labour, would +necessarily be more or less diminished by its removal. + +The nations, accordingly, who have attempted to tax the revenue arising +from stock, instead of any severe inquisition of this kind, have been +obliged to content themselves with some very loose, and, therefore, more +or less arbitrary estimation. The extreme inequality and uncertainty of +a tax assessed in this manner, can be compensated only by its extreme +moderation; in consequence of which, every man finds himself rated so +very much below his real revenue, that he gives himself little +disturbance though his neighbour should be rated somewhat lower. + +By what is called the land tax in England, it was intended that the +stock should be taxed in the same proportion as land. When the tax upon +land was at four shillings in the pound, or at one-fifth of the supposed +rent, it was intended that stock should be taxed at one-fifth of the +supposed interest. When the present annual land tax was first imposed, +the legal rate of interest was six per cent. Every hundred pounds stock, +accordingly, was supposed to be taxed at twenty-four shillings, the +fifth part of six pounds. Since the legal rate of interest has been +reduced to five per cent. every hundred pounds stock is supposed to be +taxed at twenty shillings only. The sum to be raised, by what is called +the land tax, was divided between the country and the principal towns. +The greater part of it was laid upon the country; and of what was laid +upon the towns, the greater part was assessed upon the houses. What +remained to be assessed upon the stock or trade of the towns (for the +stock upon the land was not meant to be taxed) was very much below the +real value of that stock or trade. Whatever inequalities, therefore, +there might be in the original assessment, gave little disturbance. +Every parish and district still continues to be rated for its land, its +houses, and its stock, according to the original assessment; and the +almost universal prosperity of the country, which, in most places, has +raised very much the value of all these, has rendered those inequalities +of still less importance now. The rate, too, upon each district, +continuing always the same, the uncertainty of this tax, so far as it +might be assessed upon the stock of any individual, has been very much +diminished, as well as rendered of much less consequence. If the greater +part of the lands of England are not rated to the land tax at half their +actual value, the greater part of the stock of England is, perhaps, +scarce rated at the fiftieth part of its actual value. In some towns, +the whole land tax is assessed upon houses; as in Westminster, where +stock and trade are free. It is otherwise in London. + +In all countries, a severe inquisition into the circumstances of private +persons has been carefully avoided. + +At Hamburg,[60] every inhabitant is obliged to pay to the state one +fourth per cent. of all that he possesses; and as the wealth of the +people of Hamburg consists principally in stock, this tax may be +considered as a tax upon stock. Every man assesses himself, and, in the +presence of the magistrate, puts annually into the public coffer a +certain sum of money, which he declares upon oath, to be one fourth per +cent. of all that he possesses, but without declaring what it amounts +to, or being liable to any examination upon that subject. This tax is +generally supposed to be paid with great fidelity. In a small republic, +where the people have entire confidence in their magistrates, are +convinced of the necessity of the tax for the support of the state, and +believe that it will be faithfully applied to that purpose, such +conscientious and voluntary payment may sometimes be expected. It is not +peculiar to the people of Hamburg. + +The canton of Underwald, in Switzerland, is frequently ravaged by storms +and inundations, and it is thereby exposed to extraordinary expenses. +Upon such occasions the people assemble, and every one is said to +declare with the greatest frankness what he is worth, in order to be +taxed accordingly. At Zurich, the law orders, that in cases of +necessity, every one should be taxed in proportion to his revenue; the +amount of which he is obliged to declare upon oath. They have no +suspicion, it is said, that any of their fellow-citizens will deceive +them. At Basil, the principal revenue of the state arises from a small +custom upon goods exported. All the citizens make oath, that they will +pay every three months all the taxes imposed by law. All merchants, and +even all inn-keepers, are trusted with keeping themselves the account of +the goods which they sell, either within or without the territory. At +the end of every three months, they send this account to the treasurer, +with the amount of the tax computed at the bottom of it. It is not +suspected that the revenue suffers by this confidence.[61] + +To oblige every citizen to declare publicly upon oath, the amount of his +fortune, must not, it seems, in those Swiss cantons, be reckoned a +hardship. At Hamburg it would be reckoned the greatest. Merchants +engaged in the hazardous projects of trade, all tremble at the thoughts +of being obliged, at all times, to expose the real state of their +circumstances. The ruin of their credit, and the miscarriage of their +projects, they foresee, would too often be the consequence. A sober and +parsimonious people, who are strangers to all such projects, do not feel +that they have occasion for any such concealment. + +In Holland, soon after the exaltation of the late prince of Orange to +the stadtholdership, a tax of two per cent. or the fiftieth penny, as it +was called, was imposed upon the whole substance of every citizen. Every +citizen assessed himself, and paid his tax, in the same manner as at +Hamburg, and it was in general supposed to have been paid with great +fidelity. The people had at that time the greatest affection for their +new government, which they had just established by a general +insurrection. The tax was to be paid but once, in order to relieve the +state in a particular exigency. It was, indeed, too heavy to be +permanent. In a country where the market rate of interest seldom exceeds +three per cent., a tax of two per cent. amounts to thirteen shillings +and four pence in the pound, upon the highest neat revenue which is +commonly drawn from stock. It is a tax which very few people could pay, +without encroaching more or less upon their capitals. In a particular +exigency, the people may, from great public zeal, make a great effort, +and give up even a part of their capital, in order to relieve the state. +But it is impossible that they should continue to do so for any +considerable time; and if they did, the tax would soon ruin them so +completely, as to render them altogether incapable of supporting the +state. + +The tax upon stock, imposed by the land tax bill in England, though it +is proportioned to the capital, is not intended to diminish or take away +any part of that capital. It is meant only to be a tax upon the interest +of money, proportioned to that upon the rent of land; so that when the +latter is at four shillings in the pound, the former may be at four +shillings in the pound too. The tax at Hamburg, and the still more +moderate taxes of Underwald and Zurich, are meant, in the same manner, +to be taxes, not upon the capital, but upon the interest or neat revenue +of stock. That of Holland was meant to be a tax upon the capital. + + +_Taxes upon the Profit of particular Employments._ + +In some countries, extraordinary taxes are imposed upon the profits of +stock; sometimes when employed in particular branches of trade, and +sometimes when employed in agriculture. + +Of the former kind, are in England, the tax upon hawkers and pedlars, +that upon hackney-coaches and chairs, and that which the keepers of +ale-houses pay for a licence to retail ale and spiritous liquors. During +the late war, another tax of the same kind was proposed upon shops. The +war having been undertaken, it was said, in defence of the trade of the +country, the merchants, who were to profit by it, ought to contribute +towards the support of it. + +A tax, however, upon the profits of stock employed in any particular +branch of trade, can never fall finally upon the dealers (who must in +all ordinary cases have their reasonable profit, and, where the +competition is free, can seldom have more than that profit), but always +upon the consumers, who must be obliged to pay in the price of the goods +the tax which the dealer advances; and generally with some overcharge. + +A tax of this kind, when it is proportioned to the trade of the dealer, +is finally paid by the consumer, and occasions no oppression to the +dealer. When it is not so proportioned, but is the same upon all +dealers, though in this case, too, it is finally paid by the consumer, +yet it favours the great, and occasions some oppression to the small +dealer. The tax of five shillings a-week upon every hackney coach, and +that of ten shillings a-year upon every hackney chair, so far as it is +advanced by the different keepers of such coaches and chairs, is exactly +enough proportioned to the extent of their respective dealings. It +neither favours the great, nor oppresses the smaller dealer. The tax of +twenty shillings a-year for a licence to sell ale; of forty shillings +for a licence to sell spiritous liquors; and of forty shillings more for +a licence to sell wine, being the same upon all retailers, must +necessarily give some advantage to the great, and occasion some +oppression to the small dealers. The former must find it more easy to +get back the tax in the price of their goods than the latter. The +moderation of the tax, however, renders this inequality of less +importance; and it may to many people appear not improper to give some +discouragement to the multiplication of little ale-houses. The tax upon +shops, it was intended, should be the same upon all shops. It could not +well have been otherwise. It would have been impossible to proportion, +with tolerable exactness, the tax upon a shop to the extent of the trade +carried on in it, without such an inquisition as would have been +altogether insupportable in a free country. If the tax had been +considerable, it would have oppressed the small, and forced almost the +whole retail trade into the hands of the great dealers. The competition +of the former being taken away, the latter would have enjoyed a monopoly +of the trade; and, like all other monopolists, would soon have combined +to raise their profits much beyond what was necessary for the payment of +the tax. The final payment, instead of falling upon the shop-keeper, +would have fallen upon the consumer, with a considerable overcharge to +the profit of the shop-keeper. For these reasons, the project of a tax +upon shops was laid aside, and in the room of it was substituted the +subsidy, 1759. + +What in France is called the personal taille, is perhaps, the most +important tax upon the profits of stock employed in agriculture, that is +levied in any part of Europe. + +In the disorderly state of Europe, during the prevalence of the feudal +government, the sovereign was obliged to content himself with taxing +those who were too weak to refuse to pay taxes. The great lords, though +willing to assist him upon particular emergencies, refused to subject +themselves to any constant tax, and he was not strong enough to force +them. The occupiers of land all over Europe were, the greater part of +them, originally bond-men. Through the greater part of Europe, they were +gradually emancipated. Some of them acquired the property of landed +estates, which they held by some base or ignoble tenure, sometimes under +the king, and sometimes under some other great lord, like the ancient +copy-holders of England. Others, without acquiring the property, +obtained leases for terms of years, of the lands which they occupied +under their lord, and thus became less dependent upon him. The great +lords seem to have beheld the degree of prosperity and independency, +which this inferior order of men had thus come to enjoy, with a +malignant and contemptuous indignation, and willingly consented that the +sovereign should tax them. In some countries, this tax was confined to +the lands which were held in property by an ignoble tenure; and, in this +case, the taille was said to be real. The land tax established by the +late king of Sardinia, and the taille in the provinces of Languedoc, +Provence, Dauphine, and Brittany; in the generality of Montauban, and in +the elections of Agen and Condom, as well as in some other districts of +France; are taxes upon lands held in property by an ignoble tenure. In +other countries, the tax was laid upon the supposed profits of all those +who held, in farm or lease, lands belonging to other people, whatever +might be the tenure by which the proprietor held them; and in this case, +the taille was said to be personal. In the greater part of those +provinces of France, which are called the countries of elections, the +taille is of this kind. The real taille, as it is imposed only upon a +part of the lands of the country, is necessarily an unequal, but it is +not always an arbitrary tax, though it is so upon some occasions. The +personal taille, as it is intended to be proportioned to the profits of +a certain class of people, which can only be guessed at, is necessarily +both arbitrary and unequal. + +In France, the personal taille at present (1775) annually imposed upon +the twenty generalities, called the countries of elections, amounts to +40,107,239 livres, 16 sous.[62] The proportion in which this sum is +assessed upon those different provinces, varies from year to year, +according to the reports which are made to the king's council concerning +the goodness or badness of the crops, as well as other circumstances, +which may either increase or diminish their respective abilities to pay. +Each generality is divided into a certain number of elections; and the +proportion in which the sum imposed upon the whole generality is divided +among those different elections, varies likewise from year to year, +according to the reports made to the council concerning their respective +abilities. It seems impossible, that the council, with the best +intentions, can ever proportion, with tolerable exactness, either of +these two assessments to the real abilities of the province or district +upon which they are respectively laid. Ignorance and misinformation must +always, more or less, mislead the most upright council. The proportion +which each parish ought to support of what is assessed upon the whole +election, and that which each individual ought to support of what is +assessed upon his particular parish, are both in the same manner varied +from year to year, according as circumstances are supposed to require. +These circumstances are judged of, in the one case, by the officers of +the election, in the other, by those of the parish; and both the one and +the other are, more or less, under the direction and influence of the +intendant. Not only ignorance and misinformation, but friendship, party +animosity, and private resentment, are said frequently to mislead such +assessors. No man subject to such a tax, it is evident, can ever be +certain, before he is assessed, of what he is to pay. He cannot even be +certain after he is assessed. If any person has been taxed who ought to +have been exempted, or if any person has been taxed beyond his +proportion, though both must pay in the mean time, yet if they complain, +and make good their complaints, the whole parish is reimposed next year, +in order to reimburse them. If any of the contributors become bankrupt +or insolvent, the collector is obliged to advance his tax; and the whole +parish is reimposed next year, in order to reimburse the collector. If +the collector himself should become bankrupt, the parish which elects +him must answer for his conduct to the receiver-general of the election. +But, as it might be troublesome for the receiver to prosecute the whole +parish, he takes at his choice five or six of the richest contributors, +and obliges them to make good what had been lost by the insolvency of +the collector. The parish is afterwards reimposed, in order to reimburse +those five or six. Such reimpositions are always over and above the +taille of the particular year in which they are laid on. + +When a tax is imposed upon the profits of stock in a particular branch +of trade, the traders are all careful to bring no more goods to market +than what they can sell at a price sufficient to reimburse them from +advancing the tax. Some of them withdraw a part of their stocks from the +trade, and the market is more sparingly supplied than before. The price +of the goods rises, and the final payment of the tax falls upon the +consumer. But when a tax is imposed upon the profits of stock employed +in agriculture, it is not the interest of the farmers to withdraw any +part of their stock from that employment. Each farmer occupies a certain +quantity of land, for which he pays rent. For the proper cultivation of +this land, a certain quantity of stock is necessary; and by withdrawing +any part of this necessary quantity, the farmer is not likely to be more +able to pay either the rent or the tax. In order to pay the tax, it can +never be his interest to diminish the quantity of his produce, nor +consequently to supply the market more sparingly than before. The tax, +therefore, will never enable him to raise the price of his produce, so +as to reimburse himself, by throwing the final payment upon the +consumer. The farmer, however, must have his reasonable profit as well +as every other dealer, otherwise he must give up the trade. After the +imposition of a tax of this kind, he can get this reasonable profit only +by paying less rent to the landlord. The more he is obliged to pay in +the way of tax, the less he can afford to pay in the way of rent. A tax +of this kind, imposed during the currency of a lease, may, no doubt, +distress or ruin the farmer. Upon the renewal of the lease, it must +always fall upon the landlord. + +In the countries where the personal taille takes place, the farmer is +commonly assessed in proportion to the stock which he appears to employ +in cultivation. He is, upon this account, frequently afraid to have a +good team of horses or oxen, but endeavours to cultivate with the +meanest and most wretched instruments of husbandry that he can. Such is +his distrust in the justice of his assessors, that he counterfeits +poverty, and wishes to appear scarce able to pay any thing, for fear of +being obliged to pay too much. By this miserable policy, he does not, +perhaps, always consult his own interest in the most effectual manner; +and he probably loses more by the diminution of his produce, than he +saves by that of his tax. Though, in consequence of this wretched +cultivation, the market is, no doubt, somewhat worse supplied; yet, the +small rise of price which this may occasion, as it is not likely even to +indemnify the farmer for the diminution of his produce, it is still +less likely to enable him to pay more rent to the landlord. The public, +the farmer, the landlord, all suffer more or less by this degraded +cultivation. That the personal taille tends, in many different ways, to +discourage cultivation, and consequently to dry up the principal source +of the wealth of every great country, I have already had occasion to +observe in the third book of this Inquiry. + +What are called poll-taxes in the southern provinces of North America, +and the West India islands, annual taxes of so much a-head upon every +negro, are properly taxes upon the profits of a certain species of stock +employed in agriculture. As the planters, are the greater part of them, +both farmers and landlords, the final payment of the tax falls upon them +in their quality of landlords, without any retribution. + +Taxes of so much a head upon the bondmen employed in cultivation, seem +anciently to have been common all over Europe. There subsists at present +a tax of this kind in the empire of Russia. It is probably upon this +account that poll-taxes of all kinds have often been represented as +badges of slavery. Every tax, however, is to the person who pays it, a +badge, not of slavery, but of liberty. It denotes that he is subject to +government, indeed; but that, as he has some property, he cannot himself +be the property of a master. A poll-tax upon slaves is altogether +different from a poll-tax upon freemen. The latter is paid by the +persons upon whom it is imposed; the former, by a different set of +persons. The latter is either altogether arbitrary, or altogether +unequal, and, in most cases, is both the one and the other; the former, +though in some respects unequal, different slaves being of different +values, is in no respect arbitrary. Every master, who knows the number +of his own slaves, knows exactly what he has to pay. Those different +taxes, however, being called by the same name, have been considered as +of the same nature. + +The taxes which in Holland are imposed upon men and maid servants, are +taxes, not upon stock, but upon expense; and so far resemble the taxes +upon consumable commodities. The tax of a guinea a-head for every +man-servant, which has lately been imposed in Great Britain, is of the +same kind. It falls heaviest upon the middling rank. A man of two +hundred a-year may keep a single man-servant. A man of ten thousand +a-year will not keep fifty. It does not affect the poor. + +Taxes upon the profits of stock, in particular employments, can never +affect the interest of money. Nobody will lend his money for less +interest to those who exercise the taxed, than to those who exercise the +untaxed employments. Taxes upon the revenue arising from stock in all +employments, where the government attempts to levy them with any degree +of exactness, will, in many cases, fall upon the interest of money. The +vingtieme, or twentieth penny, in France, is a tax of the same kind with +what is called the land tax in England, and is assessed, in the same +manner, upon the revenue arising upon land, houses, and stock. So far as +it affects stock, it is assessed, though not with great rigour, yet with +much more exactness than that part of the land tax in England which is +imposed upon the same fund. It, in many cases, falls altogether upon the +interest of money. Money is frequently sunk in France, upon what are +called contracts for the constitution of a rent; that is, perpetual +annuities, redeemable at any time by the debtor, upon payment of the sum +originally advanced, but of which this redemption is not exigible by the +creditor except in particular cases. The vingtieme seems not to have +raised the rate of those annuities, though it is exactly levied upon +them all. + + +APPENDIX TO ARTICLES I. AND II.--_Taxes upon the Capital Value of Lands, +Houses, and Stock._ + +While property remains in the possession of the same person, whatever +permanent taxes may have been imposed upon it, they have never been +intended to diminish or take away any part of its capital value, but +only some part of the revenue arising from it. But when property changes +hands, when it is transmitted either from the dead to the living, or +from the living to the living, such taxes have frequently been imposed +upon it as necessarily take away some part of its capital value. + +The transference of all sorts of property from the dead to the living, +and that of immoveable property of land and houses from the living to +the living, are transactions which are in their nature either public and +notorious, or such as cannot be long concealed. Such transactions, +therefore, may be taxed directly. The transference of stock or moveable +property, from the living to the living, by the lending of money, is +frequently a secret transaction, and may always be made so. It cannot +easily, therefore, be taxed directly. It has been taxed indirectly in +two different ways; first, by requiring that the deed, containing the +obligation to repay, should be written upon paper or parchment which had +paid a certain stamp duty, otherwise not to be valid; secondly, by +requiring, under the like penalty of invalidity, that it should be +recorded either in a public or secret register, and by imposing certain +duties upon such registration. Stamp duties, and duties of registration, +have frequently been imposed likewise upon the deeds transferring +property of all kinds from the dead to the living, and upon those +transferring immoveable property from the living to the living; +transactions which might easily have been taxed directly. + +The vicesima hereditatum, or the twentieth penny of inheritances, +imposed by Augustus upon the ancient Romans, was a tax upon the +transference of property from the dead to the living. Dion Cassius,[63] +the author who writes concerning it the least indistinctly, says, that +it was imposed upon all successions, legacies and donations, in case of +death, except upon those to the nearest relations, and to the poor. + +Of the same kind is the Dutch tax upon successions.[64] Collateral +successions are taxed according to the degree of relation, from five to +thirty per cent. upon the whole value of the succession. Testamentary +donations, or legacies to collaterals, are subject to the like duties. +Those from husband to wife, or from wife to husband, to the fiftieth +penny. The luctuosa hereditas, the mournful succession of ascendants to +descendants, to the twentieth penny only. Direct successions, or those +of descendants to ascendants, pay no tax. The death of a father, to such +of his children as live in the same house with him, is seldom attended +with any increase, and frequently with a considerable diminution of +revenue; by the loss of his industry, of his office, or of some +life-rent estate, of which he may have been in possession. That tax +would be cruel and oppressive, which aggravated their loss, by taking +from them any part of his succession. It may, however, sometimes be +otherwise with those children, who, in the language of the Roman law, +are said to be emancipated; in that of the Scotch law, to be +foris-familiated; that is, who have received their portion, have got +families of their own, and are supported by funds separate and +independent of those of their father. Whatever part of his succession +might come to such children, would be a real addition to their fortune, +and might, therefore, perhaps, without more inconveniency than what +attends all duties of this kind, be liable to some tax. + +The casualties of the feudal law were taxes upon the transference of +land, both from the dead to the living, and from the living to the +living. In ancient times, they constituted, in every part of Europe, one +of the principal branches of the revenue of the crown. + +The heir of every immediate vassal of the crown paid a certain duty, +generally a year's rent, upon receiving the investiture of the estate. +If the heir was a minor, the whole rents of the estate, during the +continuance of the minority, devolved to the superior, without any other +charge besides the maintenance of the minor, and the payment of the +widow's dower, when there happened to be a dowage upon the land. When +the minor came to be of age, another tax, called relief, was still due +to the superior, which generally amounted likewise to a year's rent. A +long minority, which, in the present times, so frequently disburdens a +great estate of all its incumbrances, and restores the family to their +ancient splendour, could in those times have no such effect. The waste, +and not the disincumbrance of the estate, was the common effect of a +long minority. + +By a feudal law, the vassal could not alienate without the consent of +his superior, who generally extorted a fine or composition on granting +it. This fine, which was at first arbitrary, came, in many countries, to +be regulated at a certain portion of the price of the land. In some +countries, where the greater part of the other feudal customs have gone +into disuse, this tax upon the alienation of land still continues to +make a very considerable branch of the revenue of the sovereign. In the +canton of Berne it is so high as a sixth part of the price of all noble +fiefs, and a tenth part of that of all ignoble ones.[65] In the canton +of Lucern, the tax upon the sale of land is not universal, and takes +place only in certain districts. But if any person sells his land in +order to remove out of the territory, he pays ten per cent. upon the +whole price of the sale.[66] Taxes of the same kind, upon the sale +either of all lands, or of lands held by certain tenures, take place in +many other countries, and make a more or less considerable branch of the +revenue of the sovereign. + +Such transactions may be taxed indirectly, by means either of stamp +duties, or of duties upon registration; and those duties either may, or +may not, be proportioned to the value of the subject which is +transferred. + +In Great Britain, the stamp duties are higher or lower, not so much +according to the value of the property transferred (an eighteen-penny or +half-crown stamp being sufficient upon a bond for the largest sum of +money), as according to the nature of the deed. The highest do not +exceed six pounds upon every sheet of paper, or skin of parchment; and +these high duties fall chiefly upon grants from the crown, and upon +certain law proceedings, without any regard to the value of the subject. +There are, in Great Britain, no duties on the registration of deeds or +writings, except the fees of the officers who keep the register; and +these are seldom more than a reasonable recompense for their labour. The +crown derives no revenue from them. + +In Holland[67] there are both stamp duties and duties upon registration; +which in some cases are, and in some are not, proportioned to the value +of the property transferred. All testaments must be written upon stamped +paper, of which the price is proportioned to the property disposed of; +so that there are stamps which cost from three pence or three stivers +a-sheet, to three hundred florins, equal to about twenty-seven pounds +ten shillings of our money. If the stamp is of an inferior price to what +the testator ought to have made use of, his succession is confiscated. +This is over and above all their other taxes on succession. Except bills +of exchange, and some other mercantile bills, all other deeds, bonds, +and contracts, are subject to a stamp duty. This duty, however, does not +rise in proportion to the value of the subject. All sales of land and of +houses, and all mortgages upon either, must be registered, and, upon +registration, pay a duty to the state of two and a-half per cent. upon +the amount of the price or of the mortgage. This duty is extended to the +sale of all ships and vessels of more than two tons burden, whether +decked or undecked. These, it seems, are considered as a sort of houses +upon the water. The sale of moveables, when it is ordered by a court of +justice, is subject to the like duty of two and a-half per cent. + +In France, there are both stamp duties and duties upon registration. The +former are considered as a branch of the aids of excise, and, in the +provinces where those duties take place, are levied by the excise +officers. The latter are considered as a branch of the domain of the +crown, and are levied by a different set of officers. + +Those modes of taxation by stamp duties and by duties upon registration, +are of very modern invention. In the course of little more than a +century, however, stamp duties have, in Europe, become almost universal, +and duties upon registration extremely common. There is no art which one +government sooner learns of another, than that of draining money from +the pockets of the people. + +Taxes upon the transference of property from the dead to the living, +fall finally, as well as immediately, upon the persons to whom the +property is transferred. Taxes upon the sale of land fall altogether +upon the seller. The seller is almost always under the necessity of +selling, and must, therefore, take such a price as he can get. The buyer +is scarce ever under the necessity of buying, and will, therefore, only +give such a price as he likes. He considers what the land will cost him, +in tax and price together. The more he is obliged to pay in the way of +tax, the less he will be disposed to give in the way of price. Such +taxes, therefore, fall almost always upon a necessitous person, and +must, therefore, be frequently very cruel and oppressive. Taxes upon the +sale of new-built houses, where the building is sold without the ground, +fall generally upon the buyer, because the builder must generally have +his profit; otherwise he must give up the trade. If he advances the tax, +therefore, the buyer must generally repay it to him. Taxes upon the sale +of old houses, for the same reason as those upon the sale of land, fall +generally upon the seller; whom, in most cases, either conveniency or +necessity obliges to sell. The number of new-built houses that are +annually brought to market, is more or less regulated by the demand. +Unless the demand is such as to afford the builder his profit, after +paying all expenses, he will build no more houses. The number of old +houses which happen at any time to come to market, is regulated by +accidents, of which the greater part have no relation to the demand. Two +or three great bankruptcies in a mercantile town, will bring many houses +to sale, which must be sold for what can be got for them. Taxes upon the +sale of ground-rents fall altogether upon the seller, for the same +reason as those upon the sale of lands. Stamp duties, and duties upon +the registration of bonds and contracts for borrowed money, fall +altogether upon the borrower, and, in fact, are always paid by him. +Duties of the same kind upon law proceedings fall upon the suitors. They +reduce to both the capital value of the subject in dispute. The more it +costs to acquire any property, the less must be the neat value of it +when acquired. + +All taxes upon the transference of property of every kind, so far as +they diminish the capital value of that property, tend to diminish the +funds destined for the maintenance of productive labour. They are all +more or less unthrifty taxes that increase the revenue of the sovereign, +which seldom maintains any but unproductive labourers, at the expense of +the capital of the people, which maintains none but productive. + +Such taxes, even when they are proportioned to the value of the property +transferred, are still unequal; the frequency of transference not being +always equal in property of equal value. When they are not proportioned +to this value, which is the case with the greater part of the stamp +duties and duties of registration, they are still more so. They are in +no respect arbitrary, but are, or may be, in all cases, perfectly clear +and certain. Though they sometimes fall upon the person who is not very +able to pay, the time of payment is, in most cases, sufficiently +convenient for him. When the payment becomes due, he must, in most +cases, have the money to pay. They are levied at very little expense, +and in general subject the contributors to no other inconveniency, +besides always the unavoidable one of paying the tax. + +In France, the stamp duties are not much complained of. Those of +registration, which they call the Controle, are. They give occasion, it +is pretended, to much extortion in the officers of the farmers-general +who collect the tax, which is in a great measure arbitrary and +uncertain. In the greater part of the libels which have been written +against the present system of finances in France, the abuses of the +controle make a principal article. Uncertainty, however, does not seem +to be necessarily inherent in the nature of such taxes. If the popular +complaints are well founded, the abuse must arise, not so much from the +nature of the tax as from the want of precision and distinctness in the +words of the edicts or laws which impose it. + +The registration of mortgages, and in general of all rights upon +immoveable property, as it gives great security both to creditors and +purchasers, is extremely advantageous to the public. That of the greater +part of deeds of other kinds, is frequently inconvenient and even +dangerous to individuals, without any advantage to the public. All +registers which, it is acknowledged, ought to be kept secret, ought +certainly never to exist. The credit of individuals ought certainly +never to depend upon so very slender a security, as the probity and +religion of the inferior officers of revenue. But where the fees of +registration have been made a source of revenue to the sovereign, +register-offices have commonly been multiplied without end, both for the +deeds which ought to be registered, and for those which ought not. In +France there are several different sorts of secret registers. This +abuse, though not perhaps a necessary, it must be acknowledged, is a +very natural effect of such taxes. + +Such stamp duties as those in England upon cards and dice, upon +newspapers and periodical pamphlets, &c. are properly taxes upon +consumption; the final payment falls upon the persons who use or consume +such commodities. Such stamp duties as those upon licences to retail +ale, wine, and spiritous liquors, though intended, perhaps, to fall upon +the profits of the retailers, are likewise finally paid by the consumers +of those liquors. Such taxes, though called by the same name, and levied +by the same officers, and in the same manner with the stamp duties above +mentioned upon the transference of property, are, however, of a quite +different nature, and fall upon quite different funds. + + +ART. III.--_Taxes upon the Wages of Labour._ + +The wages of the inferior classes of workmen, I have endeavoured to show +in the first book are everywhere necessarily regulated by two different +circumstances; the demand for labour, and the ordinary or average price +of provisions. The demand for labour, according as it happens to be +either increasing, stationary or declining; or to require an increasing, +stationary, or declining population; regulates the subsistence of the +labourer, and determines in what degree it shall be either liberal, +moderate, or scanty. The ordinary average price of provisions determines +the quantity of money which must be paid to the workman, in order to +enable him, one year with another, to purchase this liberal, moderate, +or scanty subsistence. While the demand for the labour and the price of +provisions, therefore, remain the same, a direct tax upon the wages of +labour can have no other effect, than to raise them somewhat higher than +the tax. Let us suppose, for example, that, in particular place, the +demand for labour and the price of provisions were such as to render ten +shillings a-week the ordinary wages of labour; and that a tax of +one-fifth, or four shillings in the pound, was imposed upon wages. If +the demand for labour and the price of provisions remained the same, it +would still be necessary that the labourer should, in that place, earn +such a subsistence as could be bought only for ten shillings a-week; or +that, after paying the tax, he should have ten shillings a-week free +wages. But, in order to leave him such free wages, after paying such a +tax, the price of labour must, in that place, soon rise, not to twelve +shillings a-week only, but to twelve and sixpence; that is, in order to +enable him to pay a tax of one-fifth, his wages must necessarily soon +rise, not one-fifth part only, but one-fourth. Whatever was the +proportion of the tax, the wages of labour must, in all cases rise, not +only in that proportion, but in a higher proportion. If the tax for +example, was one-tenth, the wages of labour must necessarily soon rise, +not one-tenth part only, but one-eighth. + +A direct tax upon the wages of labour, therefore, though the labourer +might, perhaps, pay it out of his hand, could not properly be said to be +even advanced by him; at least if the demand for labour and the average +price of provisions remained the same after the tax as before it. In all +such cases, not only the tax, but something more than the tax, would in +reality be advanced by the person who immediately employed him. The +final payment would, in different cases, fall upon different persons. +The rise which such a tax might occasion in the wages of manufacturing +labour would be advanced by the master manufacturer, who would both be +entitled and obliged to charge it, with a profit, upon the price of his +goods. The final payment of this rise of wages, therefore, together with +the additional profit of the master manufacturer, would fall upon the +consumer. The rise which such a tax might occasion in the wages of +country labour would be advanced by the farmer, who, in order to +maintain the name number of labourers as before, would he obliged to +employ a greater capital. In order to get back this greater capital, +together with the ordinary profits of stock, it would be necessary that +he should retain a larger portion, or, what comes to the same thing, the +price of a larger portion, of the produce of the land, and, +consequently, that he should pay less rent to the landlord. The final +payment of this rise of wages, therefore, would, in this case, fall upon +the landlord, together with the additional profit of the farmer who had +advanced it. In all cases, a direct tax upon the wages of labour must, +in the long-run, occasion both a greater reduction in the rent of land, +and a greater rise in the price of manufactured goods than would have +followed from the proper assessment of a sum equal to the produce of the +tax, partly upon the rent of land, and partly upon consumable +commodities. + +If direct taxes upon the wages of labour have not always occasioned a +proportionable rise in those wages, it is because they have generally +occasioned a considerable fall in the demand of labour. The declension +of industry, the decrease of employment for the poor, the diminution of +the annual produce of the land and labour of the country, have generally +been the effects of such taxes. In consequence of them, however, the +price of labor must always be higher than it otherwise would have been +in the actual state of the demand; and this enhancement of price, +together with the profit of those who advance it, must always be finally +paid by the landlords and consumers. + +A tax upon the wages of country labour does not raise the price of the +rude produce of land in proportion to the tax; for the same reason that +a tax upon the farmer's profit does not raise that price in that +proportion. + +Absurd and destructive as such taxes are, however, they take place in +many countries. In France, that part of the taille which is charged upon +the industry of workmen and day-labourers in country villages, is +properly a tax of this kind. Their wages are computed according to the +common rate of the district in which they reside; and, that they may be +as little liable as possible to any overcharge, their yearly gains are +estimated at no more than two hundred working days in the year.[68] The +tax of each individual is varied from year to year, according to +different circumstances, of which the collector or the commissary, whom +the intendant appoints to assist him, are the judges. In Bohemia, in +consequence of the alteration in the system of finances which was begun +in 1748, a very heavy tax is imposed upon the industry of artificers. +They are divided into four classes. The highest class pay a hundred +florins a-year, which, at two-and-twenty pence half penny a-florin, +amounts to L.9 : 7 : 6. The second class are taxed at seventy; the third +at fifty; and the fourth, comprehending artificers in villages, and the +lowest class of those in towns, at twenty-five florins.[69] + +The recompence of ingenious artists, and of men of liberal professions, +I have endeavoured to show in the first book, necessarily keeps a +certain proportion to the emoluments of inferior trades. A tax upon this +recompence, therefore, could have no other effect than to raise it +somewhat higher than in proportion to the tax. If it did not rise in +this manner, the ingenious arts and the liberal professions, being no +longer upon a level with other trades, would be so much deserted, that +they would soon return to that level. + +The emoluments of offices are not, like those of trades and professions, +regulated by the free competition of the market, and do not, therefore, +always bear a just proportion to what the nature of the employment +requires. They are, perhaps, in most countries, higher than it requires; +the persons who have the administration of government being generally +disposed to regard both themselves and their immediate dependents, +rather more than enough. The emoluments offices, therefore, can, in most +cases, very well bear to be taxed. The persons, besides, who enjoy +public offices, especially the more lucrative, are, in all countries, +the objects of general envy; and a tax upon their emoluments, even +though it should be somewhat higher than upon any other sort of revenue, +is always a very popular tax. In England, for example, when, by the +land-tax, every other sort of revenue was supposed to be assessed at +four shillings in the pound, it was very popular to lay a real tax of +five shillings and sixpence in the pound upon the salaries of offices +which exceeded a hundred pounds a-year; the pensions of the younger +branches of the royal family, the pay of the officers of the army and +navy, and a few others less obnoxious to envy, excepted. There are in +England no other direct taxes upon the wages of labour. + + +ART. IV.--_Taxes which it is intended should fall indifferently upon +every different Species of Revenue._ + +The taxes which it is intended should fall indifferently upon every +different species of revenue, are capitation taxes, and taxes upon +consumable commodities. These must be paid indifferently, from whatever +revenue the contributors may possess; from the rent of their land, from +the profits of their stock, or from the wages of their labour. + + +_Capitation Taxes._ + +Capitation taxes, if it is attempted to proportion them to the fortune +or revenue of each contributor, become altogether arbitrary. The state +of a man's fortune varies from day to day; and, without an inquisition, +more intolerable than any tax, and renewed at least once every year, can +only be guessed at. His assessment, therefore, must, in most cases, +depend upon the good or bad humour of his assessors, and must, +therefore, be altogether arbitrary and uncertain. + +Capitation taxes, if they are proportioned, not to the supposed fortune, +but to the rank of each contributor, become altogether unequal; the +degrees of fortune being frequently unequal in the same degree of rank. + +Such taxes, therefore, if it is attempted to render them equal, become +altogether arbitrary and uncertain; and if it is attempted to render +them certain and not arbitrary, become altogether unequal. Let the tax +be light or heavy, uncertainty is always a great grievance. In a light +tax, a considerable degree of inequality may be supported; in a heavy +one, it is altogether intolerable. + +In the different poll-taxes which took place in England during the reign +of William III. the contributors were, the greater part of them, +assessed according to the degree of their rank; as dukes, marquises, +earls, viscounts, barons, esquires, gentlemen, the eldest and youngest +sons of peers, &c. All shop-keepers and tradesmen worth more than three +hundred pounds, that is, the better sort of them, were subject to the +same assessment, how great soever might be the difference in their +fortunes. Their rank was more considered than their fortune. Several of +those who, in the first poll-tax, were rated according to their supposed +fortune, were afterwards rated according to their rank. Serjeants, +attorneys, and proctors at law, who, in the first poll-tax, were +assessed at three shillings in the pound of their supposed income, were +afterwards assessed as gentlemen. In the assessment of a tax which was +not very heavy, a considerable degree of inequality had been found less +insupportable than any degree of uncertainty. + +In the capitation which has been levied in France, without any +interruption, since the beginning of the present century, the highest +orders of people are rated according to their rank, by an invariable +tariff; the lower orders of people, according to what is supposed to be +their fortune, by an assessment which varies from year to year. The +officers of the king's court, the judges, and other officers in the +superior courts of justice, the officers of the troops, &c. are assessed +in the first manner. The inferior ranks of people in the provinces are +assessed in the second. In France, the great easily submit to a +considerable degree of inequality in a tax which, so far as it affects +them, is not a very heavy one; but could not brook the arbitrary +assessment of an intendant. + +The inferior ranks of people must, in that country, suffer patiently the +usage which their superiors think proper to give them. + +In England, the different poll-taxes never produced the sum which had +been expected from them, or which it was supposed they might have +produced, had they been exactly levied. In France, the capitation always +produces the sum expected from it. The mild government of England, when +it assessed the different ranks of people to the poll-tax, contented +itself with what that assessment happened to produce, and required no +compensation for the loss which the state might sustain, either by those +who could not pay, or by those who would not pay (for there were many +such), and who, by the indulgent execution of the law, were not forced +to pay. The more severe government of France assesses upon each +generality a certain sum, which the intendant must find as he can. If +any province complains of being assessed too high, it may, in the +assessment of next year, obtain an abatement proportioned to the +overcharge of the year before; but it must pay in the mean time. The +intendant, in order to be sure of finding the sum assessed upon his +generality, was empowered to assess it in a larger sum, that the failure +or inability of some of the contributors might be compensated by the +overcharge of the rest; and till 1765, the fixation of this surplus +assessment was left altogether to his discretion. In that year, indeed, +the council assumed this power to itself. In the capitation of the +provinces, it is observed by the perfectly well informed author of the +Memoirs upon the Impositions in France, the proportion which falls upon +the nobility, and upon those whose privileges exempt them from the +taille, is the least considerable. The largest falls upon those subject +to the taille, who are assessed to the capitation at so much a-pound of +what they pay to that other tax. + +Capitation taxes, so far as they are levied upon the lower ranks of +people, are direct taxes upon the wages of labour, and are attended with +all the inconveniencies of such taxes. + +Capitation taxes are levied at little expense; and, where they are +rigorously exacted, afford a very sure revenue to the state. It is upon +this account that, in countries where the ease, comfort, and security of +the inferior ranks of people are little attended to, capitation taxes +are very common. It is in general, however, but a small part of the +public revenue, which, in a great empire, has ever been drawn from such +taxes; and the greatest sum which they have ever afforded, might always +have been found in some other way much more convenient to the people. + + +_Taxes upon Consumable Commodities._ + +The impossibility of taxing the people, in proportion to their revenue, +by any capitation, seems to have given occasion to the invention of +taxes upon consumable commodities. The state not knowing how to tax, +directly and proportionably, the revenue of its subjects, endeavours to +tax it indirectly by taxing their expense, which, it is supposed, will, +in most cases, be nearly in proportion to their revenue. Their expense +is taxed, by taxing the consumable commodities upon which it is laid +out. + +Consumable commodities are either necessaries or luxuries. + +By necessaries I understand, not only the commodities which are +indispensibly necessary for the support of life, but whatever the custom +of the country renders it indecent for creditable people, even of the +lowest order, to be without. A linen shirt, for example, is, strictly +speaking, not a necessary of life. The Greeks and Romans lived, I +suppose, very comfortably, though they had no linen. But in the present +times, through the greater part of Europe, a creditable day-labourer +would be ashamed to appear in public without a linen shirt, the want of +which would be supposed to denote that disgraceful degree of poverty, +which, it is presumed, nobody can well fall into without extreme bad +conduct. Custom, in the same manner, has rendered leather shoes a +necessary of life in England. The poorest creditable person, of either +sex, would be ashamed to appear in public without them. In Scotland, +custom has rendered them a necessary of life to the lowest order of men; +but not to the same order of women, who may, without any discredit, walk +about barefooted. In France, they are necessaries neither to men nor to +women; the lowest rank of both sexes appearing there publicly, without +any discredit, sometimes in wooden shoes, and sometimes barefooted. +Under necessaries, therefore, I comprehend, not only those things which +nature, but those things which the established rules of decency have +rendered necessary to the lowest rank of people. All other things I call +luxuries, without meaning, by this appellation, to throw the smallest +degree of reproach upon the temperate use of them. Beer and ale, for +example, in Great Britain, and wine, even in the wine countries, I call +luxuries. A man of any rank may, without any reproach, abstain totally +from tasting such liquors. Nature does not render them necessary for the +support of life; and custom nowhere renders it indecent to live without +them. + +As the wages of labour are everywhere regulated, partly by the demand +for it, and partly by the average price of the necessary articles of +subsistence; whatever raises this average price must necessarily raise +those wages; so that the labourer may still be able to purchase that +quantity of those necessary articles which the state of the demand for +labour, whether increasing, stationary, or declining, requires that he +should have.[70] A tax upon those articles necessarily raises their +price somewhat higher than the amount of the tax, because the dealer, +who advances the tax, must generally get it back, with a profit. Such a +tax must, therefore, occasion a rise in the wages of labour, +proportionable to this rise of price. + +It is thus that a tax upon the necessaries of life operates exactly in +the same manner as a direct tax upon the wages of labour. The labourer, +though he may pay it out of his hand, cannot, for any considerable time +at least, be properly said even to advance it. It must always, in the +long-run, be advanced to him by his immediate employer, in the advanced +state of wages. His employer, if he is a manufacturer, will charge upon +the price of his goods the rise of wages, together with a profit, so +that the final payment of the tax, together with this overcharge, will +fall upon the consumer. If his employer is a farmer, the final payment, +together with a like overcharge, will fall upon the rent of the +landlord. + +It is otherwise with taxes upon what I call luxuries, even upon those of +the poor. The rise in the price of the taxed commodities, will not +necessarily occasion any rise in the wages of labour. A tax upon +tobacco, for example, though a luxury of the poor, as well as of the +rich, will not raise wages. Though it is taxed in England at three +times, and in France at fifteen times its original price, those high +duties seem to have no effect upon the wages of labour. The same thing +may be said of the taxes upon tea and sugar, which, in England and +Holland, have become luxuries of the lowest ranks of people; and of +those upon chocolate, which, in Spain, is said to have become so. + +The different taxes which, in Great Britain, have, in the course of the +present century, been imposed upon spiritous liquors, are not supposed +to have had any effect upon the wages of labour. The rise in the price +of porter, occasioned by an additional tax of three shillings upon the +barrel of strong beer, has not raised the wages of common labour in +London. These were about eighteen pence or twenty pence a-day before the +tax, and they are not more now. + +The high price of such commodities does not necessarily diminish the +ability of the inferior ranks of people to bring up families. Upon the +sober and industrious poor, taxes upon such commodities act as sumptuary +laws, and dispose them either to moderate, or to refrain altogether from +the use of superfluities which they can no longer easily afford. Their +ability to bring up families, in consequence of this forced frugality, +instead of being diminished, is frequently, perhaps, increased by the +tax. It is the sober and industrious poor who generally bring up the +most numerous families, and who principally supply the demand for useful +labour. All the poor, indeed, are not sober and industrious; and the +dissolute and disorderly might continue to indulge themselves in the use +of such commodities, after this rise of price, in the same manner as +before, without regarding the distress which this indulgence might bring +upon their families. Such disorderly persons, however, seldom rear up +numerous families, their children generally perishing from neglect, +mismanagement, and the scantiness or unwholesomeness of their food. If, +by the strength of their constitution, they survive the hardships to +which the bad conduct of their parents exposes them, yet the example of +that bad conduct commonly corrupts their morals; so that, instead of +being useful to society by their industry, they become public nuisances +by their vices and disorders. Though the advanced price of the luxuries +of the poor, therefore, might increase somewhat the distress of such +disorderly families, and thereby diminish somewhat their ability to +bring up children, it would not probably diminish much the useful +population of the country. + +Any rise in the average price of necessaries, unless it be compensated +by a proportionable rise in the wages of labour, must necessarily +diminish, more or less, the ability of the poor to bring up numerous +families, and, consequently, to supply the demand for useful labour; +whatever may be the state of that demand, whether increasing, +stationary, or declining; or such as requires an increasing, stationary, +or declining population. + +Taxes upon luxuries have no tendency to raise the price of any other +commodities, except that of the commodities taxed. Taxes upon +necessaries, by raising the wages of labour, necessarily tend to raise +the price of all manufactures, and consequently to diminish the extent +of their sale and consumption. Taxes upon luxuries are finally paid by +the consumers of the commodities taxed, without any retribution. They +fall indifferently upon every species of revenue, the wages of labour, +the profits of stock, and the rent of land. Taxes upon necessaries, so +far as they affect the labouring poor, are finally paid, partly by +landlords, in the diminished rent of their lands, and partly by rich +consumers, whether landlords or others, in the advanced price of +manufactured goods; and always with a considerable overcharge. The +advanced price of such manufactures as are real necessaries of life, and +are destined for the consumption of the poor, of coarse woollens, for +example, must be compensated to the poor by a farther advancement of +their wages. The middling and superior ranks of people, if they +understood their own interest, ought always to oppose all taxes upon the +necessaries of life, as well as all taxes upon the wages of labour. The +final payment of both the one and the other falls altogether upon +themselves, and always with a considerable overcharge. They fall +heaviest upon the landlords, who always pay in a double capacity; in +that of landlords, by the reduction, of their rent; and in that of rich +consumers, by the increase of their expense. The observation of Sir +Matthew Decker, that certain taxes are, in the price of certain goods, +sometimes repeated and accumulated four or five times, is perfectly just +with regard to taxes upon the necessaries of life. In the price of +leather, for example, you must pay not only for the tax upon the leather +of your own shoes, but for a part of that upon those of the shoemaker +and the tanner. You must pay, too, for the tax upon the salt, upon the +soap, and upon the candles which those workmen consume while employed in +your service; and for the tax upon the leather, which the salt-maker, +the soap-maker, and the candle-maker consume, while employed in their +service. + +In Great Britain, the principal taxes upon the necessaries of life, are +those upon the four commodities just now mentioned, salt, leather, soap, +and candles. + +Salt is a very ancient and a very universal subject of taxation. It was +taxed among the Romans, and it is so at present in, I believe, every +part of Europe. The quantity annually consumed by any individual is so +small, and may be purchased so gradually, that nobody, it seems to have +been thought, could feel very sensibly even a pretty heavy tax upon it. +It is in England taxed at three shillings and fourpence a bushel; about +three times the original price of the commodity. In some other +countries, the tax is still higher. Leather is a real necessary of life. +The use of linen renders soap such. In countries where the winter nights +are long, candles are a necessary instrument of trade. Leather and soap +are in Great Britain taxed at three halfpence a-pound; candles at a +penny; taxes which, upon the original price of leather, may amount to +about eight or ten per cent.; upon that of soap, to about twenty or +five-and-twenty per cent.; and upon that of candles to about fourteen or +fifteen per cent.; taxes which, though lighter than that upon salt, are +still very heavy. As all those four commodities are real necessaries of +life, such heavy taxes upon them must increase some what the expense of +the sober and industrious poor, and must consequently raise more or less +the wages of their labour. + +In a country where the winters are so cold as in Great Britain, fuel is, +during that season, in the strictest sense of the word, a necessary of +life, not only for the purpose of dressing victuals, but for the +comfortable subsistence of many different sorts of workmen who work +within doors; and coals are the cheapest of all fuel. The price of fuel +has so important an influence upon that of labour, that all over Great +Britain, manufactures have confined themselves principally to the coal +countries; other parts of the country, on account of the high price of +this necessary article, not being able to work so cheap. In some +manufactures, besides, coal is a necessary instrument of trade; as in +those of glass, iron, and all other metals. If a bounty could in any +case be reasonable, it might perhaps be so upon the transportation of +coals from those parts of the country in which they abound, to those in +which they are wanted. But the legislature, instead of a bounty, has +imposed a tax of three shillings and threepence a-ton upon coals carried +coastways; which, upon most sorts of coal, is more than sixty per cent. +of the original price at the coal pit. Coals carried, either by land or +by inland navigation, pay no duty. Where they are naturally cheap, they +are consumed duty free; where they are naturally dear, they are loaded +with a heavy duty. + +Such taxes, though they raise the price of subsistence, and consequently +the wages of labour, yet they afford a considerable revenue to +government, which it might not be easy to find in any other way. There +may, therefore, be good reasons for continuing them. The bounty upon the +exportation of corn, so far as it tends, in the actual state of tillage, +to raise the price of that necessary article, produces all the like bad +effects; and instead of affording any revenue, frequently occasions a +very great expense to government. The high duties upon the importation +of foreign corn, which, in years of moderate plenty, amount to a +prohibition; and the absolute prohibition of the importation, either of +live cattle, or of salt provisions, which takes place in the ordinary +state of the law, and which, on account of the scarcity, is at present +suspended for a limited time with regard to Ireland and the British +plantations, have all had the bad effects of taxes upon the necessaries +of life, and produce no revenue to government. Nothing seems necessary +for the repeal of such regulations, but to convince the public of the +futility of that system in consequence of which they have been +established. + +Taxes upon the necessaries of life are much higher in many other +countries than in Great Britain. Duties upon flour and meal when ground +at the mill, and upon bread when baked at the oven, take place in many +countries. In Holland the money-price of the bread consumed in towns is +supposed to be doubled by means of such taxes. In lieu of a part of +them, the people who live in the country, pay every year so much a-head, +according to the sort of bread they are supposed to consume. Those who +consume wheaten bread pay three guilders fifteen stivers; about six +shillings and ninepence halfpenny. These, and some other taxes of the +same kind, by raising the price of labour, are said to have ruined the +greater part of the manufactures of Holland[71]. Similar taxes, though +not quite so heavy, take place in the Milanese, in the states of Genoa, +in the duchy of Modena, in the duchies of Parma, Placentia, and +Guastalla, and the Ecclesiastical state. A French author[72] of some +note, has proposed to reform the finances of his country, by +substituting in the room of the greater part of other taxes, this most +ruinous of all taxes. There is nothing so absurd, says Cicero, which has +not sometimes been asserted by some philosophers. + +Taxes upon butcher's meat are still more common than those upon bread. +It may indeed be doubted, whether butcher's meat is any where a +necessary of life. Grain and other vegetables, with the help of milk, +cheese, and butter, or oil, where butter is not to be had, it is known +from experience, can, without any butcher's meat, afford the most +plentiful, the most wholesome, the most nourishing, and the most +invigorating diet. Decency nowhere requires that any man should eat +butcher's meat, as it in most places requires that he should wear a +linen shirt or a pair of leather shoes. + +Consumable commodities, whether necessaries or luxuries, may be taxed in +two different ways. The consumer may either pay an annual sum on account +of his using or consuming goods of a certain kind; or the goods may be +taxed while they remain in the hands of the dealer, and before they are +delivered to the consumer. The consumable goods which last a +considerable time before they are consumed altogether, are most properly +taxed in the one way; those of which the consumption is either immediate +or more speedy, in the other. The coach-tax and plate-tax are examples +of the former method of imposing; the greater part of the other duties +of excise and customs, of the latter. + +A coach may, with good management, last ten or twelve years. It might be +taxed, once for all, before it comes out of the hands of the +coach-maker. But it is certainly more convenient for the buyer to pay +four pounds a-year for the privilege of keeping a coach, than to pay all +at once forty or forty-eight pounds additional price to the +coach-maker; or a sum equivalent to what the tax is likely to cost him +during the time he uses the same coach. A service of plate in the same +manner, may last more than a century. It is certainly easier for the +consumer to pay five shillings a-year for every hundred ounces of plate, +near one per cent. of the value, than to redeem this long annuity at +five-and-twenty of thirty years purchase, which would enhance the price +at least five-and-twenty or thirty per cent. The different taxes which +affect houses, are certainly more conveniently paid by moderate annual +payments, than by a heavy tax of equal value upon the first building or +sale of the house. + +It was the well-known proposal of Sir Matthew Decker, that all +commodities, even those of which the consumption is either immediate or +speedy, should be taxed in this manner; the dealer advancing nothing, +but the consumer paying a certain annual sum for the licence to consume +certain goods. The object of his scheme was to promote all the different +branches of foreign trade, particularly the carrying trade, by taking +away all duties upon importation and exportation, and thereby enabling +the merchant to employ his whole capital and credit in the purchase of +goods and the freight of ships, no part of either being diverted towards +the advancing of taxes. The project, however, of taxing, in this manner, +goods of immediate or speedy consumption, seems liable to the four +following very important objections. First, the tax would be more +unequal, or not so well proportioned to the expense and consumption of +the different contributors, as in the way in which it is commonly +imposed. The taxes upon ale, wine, and spiritous liquors, which are +advanced by the dealers, are finally paid by the different consumers, +exactly in proportion to their respective consumption. But if the tax +were to be paid by purchasing a licence to drink those liquors, the +sober would, in proportion to his consumption, be taxed much more +heavily than the drunken consumer. A family which exercised great +hospitality, would be taxed much more lightly than one who entertained +fewer guests. Secondly, this mode of taxation, by paying for an annual, +half-yearly, or quarterly licence to consume certain goods, would +diminish very much one of the principal conveniences of taxes upon goods +of speedy consumption; the piece-meal payment. In the price of +threepence halfpenny, which is at present paid for a pot of porter, the +different taxes upon malt, hops, and beer, together with the +extraordinary profit which the brewer charges for having advanced them, +may perhaps amount to about three halfpence. If a workman can +conveniently spare those three halfpence, he buys a pot of porter. If he +cannot, he contents himself with a pint; and, as a penny saved is a +penny got, he thus gains a farthing by his temperance. He pays the tax +piece-meal, as he can afford to pay it, and when he can afford to pay +it, and every act of payment is perfectly voluntary, and what he can +avoid if he chuses to do so. Thirdly, such taxes would operate less as +sumptuary laws. When the licence was once purchased, whether the +purchaser drunk much or drunk little, his tax would he the same. +Fourthly, if a workman were to pay all at once, by yearly, half-yearly, +or quarterly payments, a tax equal to what he at present pays, with +little or no inconveniency, upon all the different pots and pints of +porter which he drinks in any such period of time, the sum might +frequently distress him very much. This mode of taxation, therefore, it +seems evident, could never, without the most grievous oppression, +produce a revenue nearly equal to what is derived from the present mode +without any oppression. In several countries, however, commodities of an +immediate or very speedy consumption are taxed in this manner. In +Holland, people pay so much a-head for a licence to drink tea. I have +already mentioned a tax upon bread, which, so far as it is consumed in +farm houses and country villages, is there levied in the same manner. + +The duties of excise are imposed chiefly upon goods of home produce, +destined for home consumption. They are imposed only upon a few sorts of +goods of the most general use. There can never be any doubt, either +concerning the goods which are subject to those duties, or concerning +the particular duty which each species of goods is subject to. They fall +almost altogether upon what I call luxuries, excepting always the four +duties above mentioned, upon salt, soap, leather, candles, and perhaps +that upon green glass. + +The duties of customs are much more ancient than those of excise. They +seem to have been called customs, as denoting customary payments, which +had been in use for time immemorial. They appear to have been originally +considered as taxes upon the profits of merchants. During the barbarous +times of feudal anarchy, merchants, like all the other inhabitants of +burghs, were considered as little better than emancipated bondmen, whose +persons were despised, and whose gains were envied. The great nobility, +who had consented that the king should tallage the profits of their own +tenants, were not unwilling that he should tallage likewise those of an +order of men whom it was much less their interest to protect. In those +ignorant times, it was not understood, that the profits of merchants are +a subject not taxable directly; or that the final payment of all such +taxes must fall, with a considerable overcharge, upon the consumers. + +The gains of alien merchants were looked upon more unfavourably than +those of English merchants. It was natural, therefore, that those of the +former should be taxed more heavily than those of the latter. This +distinction between the duties upon aliens and those upon English +merchants, which was begun from ignorance, has been continued from the +spirit of monopoly, or in order to give our own merchants an advantage, +both in the home and in the foreign market. + +With this distinction, the ancient duties of customs were imposed +equally upon all sorts of goods, necessaries as well as luxuries, goods +exported as well as goods imported. Why should the dealers in one sort +of goods, it seems to have been thought, be more favoured than those in +another? or why should the merchant exporter be more favoured than the +merchant importer? + +The ancient customs were divided into three branches. The first, and, +perhaps, the most ancient of all those duties, was that upon wool and +leather. It seems to have been chiefly or altogether an exportation +duty. When the woollen manufacture came to be established in England, +lest the king should lose any part of his customs upon wool by the +exportation of woollen cloths, a like duty was imposed upon them. The +other two branches were, first, a duty upon wine, which being imposed at +so much a-ton, was called a tonnage; and, secondly, a duty upon all +other goods, which being imposed at so much a-pound of their supposed +value, was called a poundage. In the forty-seventh year of Edward III., +a duty of sixpence in the pound was imposed upon all goods exported and +imported, except wools, wool-felts, leather, and wines which were +subject to particular duties. In the fourteenth of Richard II., this +duty was raised to one shilling in the pound; but, three years +afterwards, it was again reduced to sixpence. It was raised to +eightpence in the second year of Henry IV.; and, in the fourth of the +same prince, to one shilling. From this time to the ninth year of +William III., this duty continued at one shilling in the pound. The +duties of tonnage and poundage were generally granted to the king by one +and the same act of parliament, and were called the subsidy of tonnage +and poundage. The subsidy of poundage having continued for so long a +time at one shilling in the pound, or at five per cent., a subsidy came, +in the language of the customs, to denote a general duty of this kind of +five per cent. This subsidy, which is now called the old subsidy, still +continues to be levied, according to the book of rates established by +the twelfth of Charles II. The method of ascertaining, by a book of +rates, the value of goods subject to this duty, is said to be older than +the time of James I. The new subsidy, imposed by the ninth and tenth of +William III., was an additional five per cent. upon the greater part of +goods. The one-third and the two-third subsidy made up between them +another five per cent. of which they were proportionable parts. The +subsidy of 1747 made a fourth five per cent. upon the greater part of +goods; and that of 1759, a fifth upon some particular sorts of goods. +Besides those five subsidies, a great variety of other duties have +occasionally been imposed upon particular sorts of goods in order +sometimes to relieve the exigencies of the state, and sometimes to +regulate the trade of the country, according to the principles of the +mercantile system. + +That system has come gradually more and more into fashion. The old +subsidy was imposed indifferently upon exportation, as well as +importation. The four subsequent subsidies, as well as the other duties +which have since been occasionally imposed upon particular sorts of +goods, have, with a few exceptions, been laid altogether upon +importation. The greater part of the ancient duties which had been +imposed upon the exportation of the goods of home produce and +manufacture, have either been lightened or taken away altogether. In +most cases, they have been taken away. Bounties have even been given +upon the exportation of some of them. Drawbacks, too, sometimes of the +whole, and, in most cases, or a part of the duties which are paid upon +the importation of foreign goods, have been granted upon their +exportation. Only half the duties imposed by the old subsidy upon +importation, are drawn back upon exportation; but the whole of those +imposed by the latter subsidies and other imports are, upon the greater +parts of the goods, drawn back in the same manner. This growing favour +of exportation, and discouragement of importation, have suffered only a +few exceptions, which chiefly concern the materials of some +manufactures. These our merchants and manufacturers are willing should +come as cheap as possible to themselves, and as dear as possible to +their rivals and competitors in other countries. Foreign materials are, +upon this account, sometimes allowed to be imported duty-free; Spanish +wool, for example, flax, and raw linen yarn. The exportation of the +materials of home produce, and of those which are the particular produce +of our colonies, has sometimes been prohibited, and sometimes subjected +to higher duties. The exportation of English wool has been prohibited. +That of beaver skins, of beaver wool, and of gum-senega, has been +subjected to higher duties; Great Britain, by the conquests of Canada +and Senegal, having got almost the monopoly of those commodities. + +That the mercantile system has not been very favourable to the revenue +of the great body of the people, to the annual produce of the land and +labour of the country, I have endeavoured to show in the fourth book of +this Inquiry. It seems not to have been more favourable to the revenue +of the sovereign; so far, at least, as that revenue depends upon the +duties of customs. + +In consequence of that system, the importation of several sorts of goods +has been prohibited altogether. This prohibition has, in some cases, +entirely prevented, and in others has very much diminished, the +importation of those commodities, by reducing the importers to the +necessity of smuggling. It has entirely prevented the importation of +foreign wollens; and it has very much diminished that of foreign silks +and velvets. In both cases, it has entirely annihilated the revenue of +customs which might have been levied upon such importation. + +The high duties which have been imposed upon the importation of many +different sorts of foreign goods in order to discourage their +consumption in Great Britain, have, in many cases, served only to +encourage smuggling, and, in all cases, have reduced the revenues of the +customs below what more moderate duties would have afforded. The saying +of Dr. Swift, that in the arithmetic of the customs, two and two, +instead of making four, make sometimes only one, holds perfectly true +with regard to such heavy duties, which never could have been imposed, +had not the mercantile system taught us, in many cases, to employ +taxation as an instrument, not of revenue, but of monopoly. + +The bounties which are sometimes given upon the exportation of home +produce and manufactures, and the drawbacks which are paid upon the +re-exportation of the greater part of foreign goods, have given occasion +to many frauds, and to a species of smuggling, more destructive of the +public revenue than any other. In order to obtain the bounty or +drawback, the goods, it is well known, are sometimes shipped, and sent +to sea, but soon afterwards clandestinely re-landed in some other part +of the country. The defalcation of the revenue of customs occasioned by +bounties and drawbacks, of which a great part are obtained fraudulently, +is very great. The gross produce of the customs, in the year which ended +on the 5th of January 1755, amounted to L.5,068,000. The bounties which +were paid out of this revenue, though in that year there was no bounty +upon corn, amounted to L.167,800. The drawbacks which were paid upon +debentures and certificates, to L.2,156,800. Bounties and drawbacks +together amounted to L.2,324,600. In consequence of these deductions, +the revenue of the customs amounted only to L.2,743,400; from which +deducting L.287,900 for the expense of management, in salaries and other +incidents, the neat revenue of the customs for that year comes out to be +L.2,455,500. The expense of management, amounts, in this manner, to +between five and six per cent. upon the gross revenue of the customs; +and to something more than ten per cent. upon what remains of that +revenue, after deducting what is paid away in bounties and drawbacks. + +Heavy duties being imposed upon almost all goods imported, our merchant +importers smuggle as much, and make entry of as little as they can. Our +merchant exporters, on the contrary, make entry of more than they +export; sometimes out of vanity, and to pass for great dealers in goods +which pay no duty and sometimes to gain a bounty or a drawback. Our +exports, in consequence of these different frauds, appear upon the +custom-house books greatly to overbalance our imports, to the +unspeakable comfort of those politicians, who measure the national +prosperity by what they call the balance of trade. + +All goods imported, unless particularly exempted, and such exemptions +are not very numerous, are liable to some duties of customs. If any +goods are imported, not mentioned in the book of rates, they are taxed +at 4s. 9-9/20d. for every twenty shillings value, according to the oath +of the importer, that is, nearly at five subsidies, or five poundage +duties. The book of rates is extremely comprehensive, and enumerates a +great variety of articles, many of them little used, and, therefore, not +well known. It is, upon this account, frequently uncertain under what +article a particular sort of goods ought to be classed, and, +consequently what duty they ought to pay. Mistakes with regard to this +sometimes ruin the custom-house officer, and frequently occasion much +trouble, expense, and vexation to the importer. In point of perspicuity, +precision, and distinctness, therefore, the duties of customs are much +more inferior to those of excise. + +In order that the greater part of the members of any society should +contribute to the public revenue, in proportion to their respective +expense, it does not seem necessary that every single article of that +expense should be taxed. The revenue which is levied by the duties of +excise is supposed to fall as equally upon the contributors as that +which is levied by the duties of customs; and the duties of excise are +imposed upon a few articles only of the most general use and +consumption. It has been the opinion of many people, that, by proper +management, the duties of customs might likewise, without any loss to +the public revenue, and with great advantage to foreign trade, be +confined to a few articles only. + +The foreign articles, of the most general use and consumption in Great +Britain, seem at present to consist chiefly in foreign wines and +brandies; in some of the productions of America and the West Indies, +sugar, rum, tobacco, cocoa-nuts, &c. and in some of those of the East +Indies, tea, coffee, china-ware, spiceries of all kinds, several sorts +of piece-goods, &c. These different articles afford, perhaps, at +present, the greater part of the revenue which is drawn from the duties +of customs. The taxes which at present subsist upon foreign +manufactures, if you except those upon the few contained in the +foregoing enumeration, have, the greater part of them, been imposed for +the purpose, not of revenue, but of monopoly, or to give our own +merchants an advantage in the home market. By removing all prohibitions, +and by subjecting all foreign manufactures to such moderate taxes, as it +was found from experience, afforded upon each article the greatest +revenue to the public, our own workmen might still have a considerable +advantage in the home market; and many articles, some of which at +present afford no revenue to government, and others a very +inconsiderable one, might afford a very great one. + +High taxes, sometimes by diminishing the consumption of the taxed +commodities, and sometimes by encouraging smuggling, frequently afford a +smaller revenue to government than what might be drawn from more +moderate taxes. + +When the diminution of revenue is the effect of the diminution of +consumption, there can be but one remedy, and that is the lowering of +the tax. + +When the diminution of revenue is the effect of the encouragement given +to smuggling, it may, perhaps, be remedied in two ways; either by +diminishing the temptation to smuggle, or by increasing the difficulty +of smuggling. The temptation to smuggle can be be diminished only by the +lowering of the tax; and the difficulty of smuggling can be increased +only by establishing that system of administration which is most proper +for preventing it. + +The excise laws, it appears, I believe, from experience, obstruct and +embarrass the operations of the smuggler much more effectually than +those of the customs. By introducing into the customs a system of +administration as similar to that of the excise as the nature of the +different duties will admit, the difficulty of smuggling might be very +much increased. This alteration, it has been supposed by many people, +might very easily be brought about. + +The importer of commodities liable to any duties of customs, it has been +said, might, at his option, he allowed either to carry them to his own +private warehouse; or to lodge them in a warehouse, provided either at +his own expense or at that of the public, but under the key of the +custom-house officer, and never to be opened but in his presence. If the +merchant carried them to his own private warehouse, the duties to be +immediately paid, and never afterwards to be drawn back; and that +warehouse to be at all times subject to the visit and examination of the +custom-house officer, in order to ascertain how far the quantity +contained in it corresponded with that for which the duty had been paid. +If he carried them to the public warehouse, no duty to be paid till they +were taken out for home consumption. If taken out for exportation, to be +duty-free; proper security being always given that they should be so +exported. The dealers in those particular commodities, either by +wholesale or retail, to be at all times subject to the visit and +examination of the custom-house officer; and to be obliged to justify, +by proper certificates, the payment of the duty upon the whole quantity +contained in their shops or warehouses. What are called the excise +duties upon rum imported, are at present levied in this manner; and the +same system of administration might, perhaps, be extended to all duties +upon goods imported; provided always that those duties were, like the +duties of excise, confined to a few sorts of goods of the most general +use and consumption. If they were extended to almost all sorts of goods, +as at present, public warehouses of sufficient extent could not easily +be provided; and goods of a very delicate nature, or of which the +preservation required much care and attention, could not safely be +trusted by the merchant in any warehouse but his own. + +If, by such a system of administration, smuggling to any considerable +extent could be prevented, even under pretty high duties; if every duty +was occasionally either heightened or lowered according as it was +likely, either the one way or the other, to afford the greatest revenue +to the state; taxation being always employed as an instrument of +revenue, and never of monopoly; it seems not improbable that a revenue, +at least equal to the present neat revenue of the customs, might be +drawn from duties upon the importation of only a few sorts of goods of +the most general use and consumption; and that the duties of customs +might thus be brought to the same degree of simplicity, certainty, and +precision, as those of excise. What the revenue at present loses by +drawbacks upon the re-exportation of foreign goods, which are afterwards +re-landed and consumed at home, would, under this system, be saved +altogether. If to this saving, which would alone be very considerable, +were added the abolition of all bounties upon the exportation of home +produce; in all cases in which those bounties were not in reality +drawbacks of some duties of excise which had before been advanced; it +cannot well be doubted, but that the neat revenue of customs might, +after an alteration of this kind, be fully equal to what it had ever +been before. + +If, by such a change of system, the public revenue suffered no loss, the +trade and manufactures of the country would certainly gain a very +considerable advantage. The trade in the commodities not taxed, by far +the greatest number would be perfectly free, and might be carried on to +and from all parts of the world with every possible advantage. Among +those commodities would be comprehended all the necessaries of life, and +all the materials of manufacture. So far as the free importation of the +necessaries of life reduced their average money price in the home +market, it would reduce the money price of labour, but without reducing +in any respect its real recompense. The value of money is in proportion +to the quantity of the necessaries of life which it will purchase. That +of the necessaries of life is altogether independent of the quantity of +money which can be had for them. The reduction in the money price of +labour would necessarily be attended with a proportionable one in that +of all home manufactures, which would thereby gain some advantage in all +foreign markets. The price of some manufactures would be reduced, in a +still greater proportion, by the free importation of the raw materials. +If raw silk could be imported from China and Indostan, duty-free, the +silk manufacturers in England could greatly undersell those of both +France and Italy. There would be no occasion to prohibit the importation +of foreign silks and velvets. The cheapness of their goods would secure +to our own workmen, not only the possession of a home, but a very great +command of the foreign market. Even the trade in the commodities taxed, +would be carried on with much more advantage than at present. If those +commodities were delivered out of the public warehouse for foreign +exportation, being in this case exempted from all taxes, the trade in +them would be perfectly free. The carrying trade, in all sorts of goods, +would, under this system, enjoy every possible advantage. If these +commodities were delivered out for home consumption, the importer not +being obliged to advance the tax till he had an opportunity of selling +his goods, either to some dealer, or to some consumer, he could always +afford to sell them cheaper than if he had been obliged to advance it at +the moment of importation. Under the same taxes, the foreign trade of +consumption, even in the taxed commodities, might in this manner be +carried on with much more advantage than it is at present. + +It was the object of the famous excise scheme of Sir Robert Walpole, to +establish, with regard to wine and tobacco, a system not very unlike +that which is here proposed. But though the bill which was then brought +into Parliament, comprehended those two commodities only, it was +generally supposed to be meant as an introduction to a more extensive +scheme of the same kind. Faction, combined with the interest of +smuggling merchants, raised so violent, though so unjust a clamour, +against that bill, that the minister thought proper to drop it; and, +from a dread of exciting a clamour of the same kind, none of his +successors have dared to resume the project. + +The duties upon foreign luxuries, imported for home consumption, though +they sometimes fall upon the poor, fall principally upon people of +middling or more than middling fortune. Such are, for example, the +duties upon foreign wines, upon coffee, chocolate, tea, sugar, &c. + +The duties upon the cheaper luxuries of home produce, destined for home +consumption, fall pretty equally upon people of all ranks, in proportion +to their respective expense. The poor pay the duties upon malt, hops, +beer, and ale, upon their own consumption; the rich, upon both their own +consumption and that of their servants. + +The whole consumption of the inferior ranks of people, or of those below +the middling rank, it must be observed, is, in every country, much +greater, not only in quantity, but in value, than that of the middling, +and of those above the middling rank. The whole expense of the inferior +is much greater than that of the superior ranks. In the first place, +almost the whole capital of every country is annually distributed among +the inferior ranks of people, as the wages of productive labour. +Secondly, a great part of the revenue, arising from both the rent of +land and the profits of stock, is annually distributed among the same +rank, in the wages and maintenance of menial servants, and other +unproductive labourers. Thirdly, some part of the profits of stock +belongs to the same rank, as a revenue arising from the employment of +their small capitals. The amount of the profits annually made by small +shopkeepers, tradesmen, and retailers of all kinds, is everywhere very +considerable, and makes a very considerable portion of the annual +produce. Fourthly and lastly, some part even of the rent of land belongs +to the same rank; a considerable part to those who are somewhat below +the middling rank, and a small part even to the lowest rank; common +labourers sometimes possessing in property an acre or two of land. +Though the expense of those inferior ranks of people, therefore, taking +them individually, is very small, yet the whole mass of it, taking them +collectively, amounts always to by much the largest portion of the whole +expense of the society; what remains of the annual produce of the land +and labour of the country, for the consumption of the superior ranks, +being always much less, not only in quantity, but in value. The taxes +upon expense, therefore, which fall chiefly upon that of the superior +ranks of people, upon the smaller portion of the annual produce, are +likely to be much less productive than either those which fall +indifferently upon the expense of all ranks, or even those which fall +chiefly upon that of the inferior ranks, than either those which fall +indifferently upon the whole annual produce, or those which fall chiefly +upon the larger portion of it. The excise upon the materials and +manufacture of home-made fermented and spiritous liquors, is, +accordingly, of all the different taxes upon expense, by far the most +productive; and this branch of the excise falls very much, perhaps +principally, upon the expense of the common people. In the year which +ended on the 5th of July 1775, the gross produce of this branch of the +excise amounted to L.3,341,837 : 9 : 9. + +It must always be remembered, however, that it is the luxuries, and not +the necessary expense of the inferior ranks of people, that ought ever +to be taxed. The final payment of any tax upon their necessary expense, +would fall altogether upon the superior ranks of people; upon the +smaller portion of the annual produce, and not upon the greater. Such a +tax must, in all cases, either raise the wages of labour, or lessen the +demand for it. It could not raise the wages of labour, without throwing +the final payment of the tax upon the superior ranks of people. It could +not lessen the demand for labour, without lessening the annual produce +of the land and labour of the country, the fund upon which all taxes +must be finally paid. Whatever might be the state to which a tax of this +kind reduced the demand for labour, it must always raise wages higher +than they otherwise would be in that state; and the final payment of +this enhancement of wages must, in all cases, fall upon the superior +ranks of people. + +Fermented liquors brewed, and spiritous liquors distilled, not for sale, +but for private use, are not in Great Britain liable to any duties of +excise. This exemption, of which the object is to save private families +from the odious visit and examination of the tax-gatherer, occasions the +burden of those duties to fall frequently much lighter upon the rich +than upon the poor. It is not, indeed, very common to distil for private +use, though it is done sometimes. But in the country, many middling, and +almost all rich and great families, brew their own beer. Their strong +beer, therefore, costs them eight shillings a-barrel less than it costs +the common brewer, who must have his profit upon the tax, as well as +upon all the other expense which he advances. Such families, therefore, +must drink their beer at least nine or ten shillings a-barrel cheaper +than any liquor of the same quality can be drank by the common people, +to whom it is everywhere more convenient to buy their beer, by little +and little, from the brewery or the alehouse. Malt, in the same manner, +that is made for the use of a private family, is not liable to the visit +or examination of the tax-gatherer; but, in this case the family must +compound at seven shillings and sixpence a-head for the tax. Seven +shillings and sixpence are equal to the excise upon ten bushels of malt; +a quantity fully equal to what all the different members of any sober +family, men, women, and children, are, at an average, likely to consume. +But in rich and great families, where country hospitality is much +practised, the malt liquors consumed by the members of the family make +but a small part of the consumption of the house. Either on account of +this composition, however, or for other reasons, it is not near so +common to malt as to brew for private use. It is difficult to imagine +any equitable reason, why those who either brew or distil for private +use should not be subject to a composition of the same kind. + +A greater revenue than what is at present drawn from all the heavy taxes +upon malt, beer, and ale, might be raised, it has frequently been said, +by a much lighter tax upon malt; the opportunities of defrauding the +revenue being much greater in a brewery than in a malt-house; and those +who brew for private use being exempted from all duties or composition +for duties, which is not the case with those who malt for private use. + +In the porter brewery of London, a quarter of malt is commonly brewed +into more than two barrels and a-half, sometimes into three barrels of +porter. The different taxes upon malt amount to six shillings a-quarter; +those upon strong ale and beer to eight shillings a-barrel. In the +porter brewery, therefore, the different taxes upon malt, beer, and ale, +amount to between twenty-six and thirty shillings upon the produce of a +quarter of malt. In the country brewery for common country sale, a +quarter of malt is seldom brewed into less than two barrels of strong, +and one barrel of small beer; frequently into two barrels and a-half of +strong beer. The different taxes upon small beer amount to one shilling +and fourpence a-barrel. In the country brewery, therefore, the different +taxes upon malt, beer, and ale, seldom amount to less than twenty-three +shillings and fourpence, frequently to twenty-six shillings, upon the +produce of a quarter of malt. Taking the whole kingdom at an average, +therefore, the whole amount of the duties upon malt, beer, and ale, +cannot be estimated at less than twenty-four or twenty-five shillings +upon the produce of a quarter of malt. But by taking off all the +different duties upon beer and ale, and by trebling the malt tax, or by +raising it from six to eighteen shillings upon the quarter of malt, a +greater revenue, it is said, might be raised by this single tax, than +what is at present drawn from all those heavier taxes. + + L. s. d. + + In 1772, the old malt tax produced 722,023 11 11 + The additional 356,776 7 9-3/4 + In 1773, the old tax produced 561,627 3 7-1/2 + The additional 278,650 15 3-3/4 + In 1774, the old tax produced 624,614 17 5-3/4 + The additional 310,745 2 8-1/2 + In 1775, the old tax produced 657,357 0 8-1/4 + The additional 323,785 12 6-1/4 + ____________________________ + + 4)3,835,580 12 0-3/4 + ____________________________ + + Average of these four years 958,895 3 0-3/16 + ____________________________ + + In 1772, the country excise produced 1,243,120 5 3 + The London brewery 408,260 7 2-3/4 + In 1773, the country excise 1,245,808 3 3 + The London brewery 405,406 17 10-1/2 + In 1774, the country excise 1,246,373 14 5-1/2 + The London brewery 320,601 18 0-1/4 + In 1775, the country excise 1,214,583 6 1-1/4 + The London brewery 463,670 7 0-1/4 + ____________________________ + + 4)6,547,832 19 2-1/4 + ____________________________ + + Average of these four years 1,636,958 4 9-1/2 + To which adding the average malt-tax, or 958,895 3 0-3/16 + ____________________________ + The whole amount of those different + taxes comes out to be 2,595,853 7 9-11/16 + ____________________________ + + But, by trebling the malt tax, or by + raising it from six to eighteen + shillings upon the quarter of + malt, that single tax would produce 2,876,685 9 0-9/16 + + A sum which exceeds the foregoing by 280,832 1 2-14/16 + +Under the old malt tax, indeed, is comprehended a tax of four shillings +upon the hogshead of cyder, and another of ten shillings upon the barrel +of mum. In 1774, the tax upon cyder produced only L.3083 : 6 : 8. It +probably fell somewhat short of its usual amount; all the different +taxes upon cyder, having, that year, produced less than ordinary. The +tax upon mum, though much heavier, is still less productive, on account +of the smaller consumption of that liquor. But to balance whatever may +be the ordinary amount of those two taxes, there is comprehended under +what is called the country excise, first, the old excise of six +shillings and eightpence upon the hogshead of cyder; secondly, a like +tax of six shillings and eightpence upon the hogshead of verjuice; +thirdly, another of eight shillings and ninepence upon the hogshead of +vinegar; and, lastly, a fourth tax of elevenpence upon the gallon of +mead or metheglin. The produce of those different taxes will probably +much more than counterbalance that of the duties imposed, by what is +called the annual malt tax, upon cyder and mum. + +Malt is consumed, not only in the brewery of beer and ale, but in the +manufacture of low wines and spirits. If the malt tax were to be raised +to eighteen shillings upon the quarter, it might be necessary to make +some abatement in the different excises which are imposed upon those +particular sorts of low wines and spirits, of which malt makes any part +of the materials. In what are called malt spirits, it makes commonly but +a third part of the materials; the other two-thirds being either raw +barley, or one-third barley and one-third wheat. In the distillery of +malt spirits, both the opportunity and the temptation to smuggle are +much greater than either in a brewery or in a malt-house; the +opportunity, on account of the smaller bulk and greater value of the +commodity, and the temptation, on account of the superior height of the +duties, which amounted to 3s. 10-2/3d.[73] upon the gallon of spirits. +By increasing the duties upon malt, and reducing those upon the +distillery, both the opportunities and the temptation to smuggle would +be diminished, which might occasion a still further augmentation of +revenue. + +It has for some time past been the policy of Great Britain to discourage +the consumption of spirituous liquors, on account of their supposed +tendency to ruin the health and to corrupt the morals of the common +people. According to this policy, the abatement of the taxes upon the +distillery ought not to be so great as to reduce, in any respect, the +price of those liquors. Spirituous liquors might remain as dear as ever; +while, at the same time, the wholesome and invigorating liquors of beer +and ale might be considerably reduced in their price. The people might +thus be in part relieved from one of the burdens of which they at +present complain the most; while, at the same time, the revenue might be +considerably augmented. + +The objections of Dr. Davenant to this alteration in the present system +of excise duties, seem to be without foundation. Those objections are, +that the tax, instead of dividing itself, as at present, pretty equally +upon the profit of the maltster, upon that of the brewer, and upon that +of the retailer, would so far as it affected profit, fall altogether +upon that of the maltster; that the maltster could not so easily get +back the amount of the tax in the advanced price of his malt, as the +brewer and retailer in the advanced price of their liquor; and that so +heavy a tax upon malt might reduce the rent and profit of barley land. + +No tax can ever reduce, for any considerable time, the rate of profit in +any particular trade, which must always keep its level with other trades +in the neighbourhood. The present duties upon malt, beer, and ale, do +not affect the profits of the dealers in those commodities, who all get +back the tax with an additional profit, in the enhanced price of their +goods. A tax, indeed, may render the goods upon which it is imposed so +dear, as to diminish the consumption of them. But the consumption of +malt is in malt liquors; and a tax of eighteen shillings upon the +quarter of malt could not well render those liquors dearer than the +different taxes, amounting to twenty-four or twenty-five shillings, do +at present. Those liquors, on the contrary, would probably become +cheaper, and the consumption of them would be more likely to increase +than to diminish. + +It is not very easy to understand why it should be more difficult for +the maltster to get back eighteen shillings in the advanced price of his +malt, than it is at present for the brewer to get back twenty-four or +twenty-five, sometimes thirty shillings, in that of his liquor. The +maltster, indeed, instead of a tax of six shillings, would be obliged to +advance one of eighteen shillings upon every quarter of malt. But the +brewer is at present obliged to advance a tax of twenty-four or +twenty-five, sometimes thirty shillings, upon every quarter of malt +which he brews. It could not be more inconvenient for the maltster to +advance a lighter tax, than it is at present for the brewer to advance a +heavier one. The maltster does not always keep in his granaries a stock +of malt, which it will require a longer time to dispose of than the +stock of beer and ale which the brewer frequently keeps in his cellars. +The former, therefore, may frequently get the returns of his money as +soon as the latter. But whatever inconveniency might arise to the +maltster from being obliged to advance a heavier tax, it could easily be +remedied, by granting him a few months longer credit than is at present +commonly given to the brewer. + +Nothing could reduce the rent and profit of barley land, which did not +reduce the demand for barley. But a change of system, which reduced the +duties upon a quarter of malt brewed into beer and ale, from twenty-four +and twenty-five shillings to eighteen shillings, would be more likely to +increase than diminish that demand. The rent and profit of barley land, +besides, must always be nearly equal to those of other equally fertile +and equally well cultivated land. If they were less, some part of the +barley land would soon be turned to some other purpose; and if they were +greater, more land would soon be turned to the raising of barley. When +the ordinary price of any particular produce of land is at what may be +called a monopoly price, a tax upon it necessarily reduces the rent and +profit of the land which grows it. A tax upon the produce of those +precious vineyards, of which the wine falls so much short of the +effectual demand, that its price is always above the natural proportion +to that of the produce of other equally fertile and equally well +cultivated land, would necessarily reduce the rent and profit of those +vineyards. The price of the wines being already the highest that could +be got for the quantity commonly sent to market, it could not be raised +higher without diminishing that quantity; and the quantity could not be +diminished without still greater loss, because the lands could not be +turned to any other equally valuable produce. The whole weight of the +tax, therefore, would fall upon the rent and profit; properly upon the +rent of the vineyard. When it has been proposed to lay any new tax upon +sugar, our sugar planters have frequently complained that the whole +weight of such taxes fell not upon the consumer, but upon the producer; +they never having been able to raise the price of their sugar after the +tax higher than it was before. The price had, it seems, before the tax, +been a monopoly price; and the arguments adduced to show that sugar was +an improper subject of taxation, demonstrated perhaps that it was a +proper one; the gains of monopolists, whenever they can be come at, +being certainly of all subjects the most proper. But the ordinary price +of barley has never been a monopoly price; and the rent and profit of +barley land have never been above their natural proportion to those of +other equally fertile and equally well cultivated land. The different +taxes which have been imposed upon malt, beer, and ale, have never +lowered the price of barley; have never reduced the rent and profit of +barley land. The price of malt to the brewer has constantly risen in +proportion to the taxes imposed upon it; and those taxes, together with +the different duties upon beer and ale, have constantly either raised +the price, or, what comes to the same thing, reduced the quality of +those commodities to the consumer. The final payment of those taxes has +fallen constantly upon the consumer, and not upon the producer. + +The only people likely to suffer by the change of system here proposed, +are those who brew for their own private use. But the exemption, which +this superior rank of people at present enjoy, from very heavy taxes +which are paid by the poor labourer and artificer, is surely most +unjust and unequal, and ought to be taken away, even though this change +was never to take place. It has probably been the interest of this +superior order of people, however, which has hitherto prevented a change +of system that could not well fail both to increase the revenue and to +relieve the people. + +Besides such duties as those of customs and excise above mentioned, +there are several others which affect the price of goods more unequally +and more indirectly. Of this kind are the duties, which, in French, are +called peages, which in old Saxon times were called the duties of +passage, and which seem to have been originally established for the same +purpose as our turnpike tolls, or the tolls upon our canals and +navigable rivers, for the maintenance of the road or of the navigation. +Those duties, when applied to such purposes, are most properly imposed +according to the bulk or weight of the goods. As they were originally +local and provincial duties, applicable to local and provincial +purposes, the administration of them was, in most cases, entrusted to +the particular town, parish, or lordship, in which they were levied; +such communities being, in some way or other, supposed to be accountable +for the application. The sovereign, who is altogether unaccountable, has +in many countries assumed to himself the administration of those duties; +and though he has in most cases enhanced very much the duty, he has in +many entirely neglected the application. If the turnpike tolls of Great +Britain should ever become one of the resources of government, we may +learn, by the example of many other nations, what would probably be the +consequence. Such tolls, no doubt, are finally paid by the consumer; but +the consumer is not taxed in proportion to his expense, when he pays, +not according to the value, but according to the bulk or weight of what +he consumes. When such duties are imposed, not according to the bulk or +weight, but according to the supposed value of the goods, they become +properly a sort of inland customs or excise, which obstruct very much +the most important of all branches of commerce, the interior commerce of +the country. + +In some small states, duties similar to those passage duties are imposed +upon goods carried across the territory, either by land or by water, +from one foreign country to another. These are in some countries called +transit-duties. Some of the little Italian states which are situated +upon the Po, and the rivers which run into it, derive some revenue from +duties of this kind, which are paid altogether by foreigners, and which, +perhaps, are the only duties that one state can impose upon the subjects +of another, without obstructing, in any respect, the industry or +commerce of its own. The most important transit-duty in the world, is +that levied by the king of Denmark upon all merchant ships which pass +through the Sound. + +Such taxes upon luxuries, as the greater part of the duties of customs +and excise, though they all fall indifferently upon every different +species of revenue, and are paid finally, or without any retribution, by +whoever consumes the commodities upon which they are imposed, yet they +do not always fall equally or proportionally upon the revenue of every +individual. As every man's humour regulates the degree of his +consumption, every man contributes rather according to his humour, than +in proportion to his revenue: the profuse contribute more, the +parsimonious less, than their proper proportion. During the minority of +a man of great fortune, he contributes commonly very little, by his +consumption, towards the support of that state from whose protection he +derives a great revenue. Those who live in another country, contribute +nothing by their consumption towards the support of the government of +that country, in which is situated the source of their revenue. If in +this latter country there should be no land tax, nor any considerable +duty upon the transference either of moveable or immoveable property, as +is the case in Ireland, such absentees may derive a great revenue from +the protection of a government, to the support of which they do not +contribute a single shilling. This inequality is likely to be greatest +in a country of which the government is, in some respects, subordinate +and dependant upon that of some other. The people who possess the most +extensive property in the dependant, will, in this case, generally chuse +to live in the governing country. Ireland is precisely in this +situation; and we cannot therefore wonder, that the proposal of a tax +upon absentees should be so very popular in that country. It might, +perhaps, be a little difficult to ascertain either what sort, or what +degree of absence, would subject a man to be taxed as an absentee, or at +what precise time the tax should either begin or end. If you except, +however, this very peculiar situation, any inequality in the +contribution of individuals which can arise from such taxes, is much +more than compensated by the very circumstance which occasions that +inequality; the circumstance that every man's contribution is altogether +voluntary; it being altogether in his power, either to consume, or not +to consume, the commodity taxed. Where such taxes, therefore, are +properly assessed, and upon proper commodities, they are paid with less +grumbling than any other. When they are advanced by the merchant or +manufacturer, the consumer, who finally pays them, soon comes to +confound them with the price of the commodities, and almost forgets that +he pays any tax. + +Such taxes are, or may be, perfectly certain; or may be assessed, so as +to leave no doubt concerning either what ought to be paid, or when it +ought to be paid; concerning either the quantity or the time of payment. +Whatever uncertainty there may sometimes be, either in the duties of +customs in Great Britain, or in other duties of the same kind in other +countries, it cannot arise from the nature of those duties, but from the +inaccurate or unskilful manner in which the law that imposes them is +expressed. + +Taxes upon luxuries generally are, and always may be, paid piece-meal, +or in proportion as the contributors have occasion to purchase the goods +upon which they are imposed. In the time and mode of payment, they are, +or may be, of all taxes the most convenient. Upon the whole, such taxes, +therefore, are perhaps as agreeable to the three first of the four +general maxims concerning taxation, as any other. They offend in every +respect against the fourth. + +Such taxes, in proportion to what they bring into the public treasury of +the state, always take out, or keep out, of the pockets of the people, +more than almost any other taxes. They seem to do this in all the four +different ways in which it is possible to do it. + +First, the levying of such taxes, even when imposed in the most +judicious manner, requires a great number of custom-house and excise +officers, whose salaries and perquisites are a real tax upon the people, +which brings nothing into the treasury of the state. This expense, +however, it must be acknowledged, is more moderate in Great Britain +than in most other countries. In the year which ended on the 5th +of July, 1775, the gross produce of the different duties, under the +management of the commissioners of excise in England, amounted to +L.5,507,308 : 18 : 8-1/4, which was levied at an expense of little more +than five and a-half per cent. From this gross produce, however, there +must be deducted what was paid away in bounties and drawbacks upon the +exportation of exciseable goods, which will reduce the neat produce +below five millions.[74] The levying of the salt duty, and excise duty, +but under a different management, is much more expensive. The neat +revenue of the customs does not amount to two millions and a-half, which +is levied at an expense of more than ten per cent., in the salaries of +officers and other incidents. But the perquisites of custom-house +officers are everywhere much greater than their salaries; at some ports +more than double or triple those salaries. If the salaries of officers, +and other incidents, therefore, amount to more than ten per cent. upon +the neat revenue of the customs, the whole expense of levying that +revenue may amount, in salaries and perquisites together, to more than +twenty or thirty per cent. The officers of excise receive few or no +perquisites; and the administration of that branch of the revenue being +of more recent establishment, is in general less corrupted than that of +the customs, into which length of time has introduced and authorized +many abuses. By charging upon malt the whole revenue which is at present +levied by the different duties upon malt and malt liquors, a saving, it +is supposed, of more than L.50,000, might be made in the annual expense +of the excise. By confining the duties of customs to a few sorts of +goods, and by levying those duties according to the excise laws, a much +greater saving might probably be made in the annual expense of the +customs. + +Secondly, such taxes necessarily occasion some obstruction or +discouragement to certain branches of industry. As they always raise the +price of the commodity taxed, they so far discourage its consumption, +and consequently its production. If it is a commodity of home growth or +manufacture, less labour comes to be employed in raising and producing +it. If it is a foreign commodity of which the tax increases in this +manner the price, the commodities of the same kind which are made at +home may thereby, indeed, gain some advantage in the home market, and a +greater quantity of domestic industry may thereby be turned toward +preparing them. But though this rise of price in a foreign commodity, +may encourage domestic industry in one particular branch, it necessarily +discourages that industry in almost every other. The dearer the +Birmingham manufacturer buys his foreign wine, the cheaper he +necessarily sells that part of his hardware with which, or, what comes +to the same thing, with the price of which, he buys it. That part of his +hardware, therefore, becomes of less value to him, and he has less +encouragement to work at it. The dearer the consumers in one country pay +for the surplus produce of another, the cheaper they necessarily sell +that part of their own surplus produce with which, or, what comes to the +same thing, with the price of which, they buy it. That part of their own +surplus produce becomes of less value to them, and they have less +encouragement to increase its quantity. All taxes upon consumable +commodities, therefore, tend to reduce the quantity of productive labour +below what it otherwise would be, either in preparing the commodities +taxed, if they are home commodities, or in preparing these with which +they are purchased, if they are foreign commodities. Such taxes, too, +always alter, more or less, the natural direction of national industry, +and turn it into a channel always different from, and generally less +advantageous, than that in which is would have run of its own accord. + +Thirdly, the hope of evading such taxes by smuggling, gives frequent +occasion to forfeitures and other penalties, which entirely ruin the +smuggler; a person who, though no doubt highly blameable for violating +the laws of his country, is frequently incapable of violating those of +natural justice, and would have been, in every respect, an excellent +citizen, had not the laws of his country made that a crime which nature +never meant to be so. In those corrupted governments, where there is at +least a general suspicion of much unnecessary expense, and great +misapplication of the public revenue, the laws which guard it are little +respected. Not many people are scrupulous about smuggling, when, without +perjury, they can find an easy and safe opportunity of doing so. To +pretend to have any scruple about buying smuggled goods, though a +manifest encouragement to the violation of the revenue laws, and to the +perjury which almost always attends it, would, in most countries, be +regarded as one of those pedantic pieces of hypocrisy which, instead of +gaining credit with anybody, serve only to expose the person who affects +to practise them to the suspicion of being a greater knave than most of +his neighbours. By this indulgence of the public, the smuggler is often +encouraged to continue a trade, which he is thus taught to consider as +in some measure innocent; and when the severity of the revenue laws is +ready to fall upon him, he is frequently disposed to defend with +violence, what he has been accustomed to regard as his just property. +From being at first, perhaps, rather imprudent than criminal, he at last +too often becomes one of the hardiest and most determined violators of +the laws of society. By the ruin of the smuggler, his capital, which had +before been employed in maintaining productive labour, is absorbed +either in the revenue of the state, or in that of the revenue officer; +and is employed in maintaining unproductive, to the diminution of the +general capital of the society, and of the useful industry which it +might otherwise have maintained. + +Fourthly, such taxes, by subjecting at least the dealers in the taxed +commodities, to the frequent visits and odious examination of the +tax-gatherers, expose them sometimes, no doubt, to some degree of +oppression, and always to much trouble and vexation; and though +vexation, as has already been said, is not strictly speaking expense, it +is certainly equivalent to the expense at which every man would be +willing to redeem himself from it. The laws of excise, though more +effectual for the purpose for which they were instituted, are, in this +respect, more vexatious than those of the customs. When a merchant has +imparted goods subject to certain duties of customs; when he has paid +those duties, and lodged the goods in his warehouse; he is not, in most +cases, liable to any further trouble or vexation from the custom-house +officer. It is otherwise with goods subject to duties of excise. The +dealers have no respite from the continual visits and examination of the +excise officers. The duties of excise are, upon this account, more +unpopular than those of the customs; and so are the officers who levy +them. Those officers, it is pretended, though in general, perhaps, they +do their duty fully as well as those of the customs; yet, as that duty +obliges them to be frequently very troublesome to some of their +neighbours, commonly contract a certain hardness of character, which the +others frequently have not. This observation, however, may very probably +be the mere suggestion of fraudulent dealers, whose smuggling is either +prevented or detected by their diligence. + +The inconveniencies, however, which are, perhaps, in some degree +inseparable from taxes upon consumable commodities, fall as light upon +the people of Great Britain as upon those of any other country of which +the government is nearly as expensive. Our state is not perfect, and +might be mended; but it is as good, or better, than that of most of our +neighbours. + +In consequence of the notion, that duties upon consumable goods were +taxes upon the profits of merchants, those duties have, in some +countries, been repeated upon every successive sale of the goods. If the +profits of the merchant-importer or merchant-manufacturer were taxed, +equality seemed to require that those of all the middle buyers, who +intervened between either of them and the consumer, should likewise be +taxed. The famous alcavala of Spain seems to have been established upon +this principle. It was at first a tax of ten per cent, afterwards of +fourteen per cent. and it is at present only six per cent. upon the sale +of every sort of property, whether moveable or immoveable; and it is +repeated every time the property is sold.[75] The levying of this tax +requires a multitude of revenue officers, sufficient to guard the +transportation of goods, not only from one province to another, but from +one shop to another. It subjects, not only the dealers in some sorts of +goods, but those in all sorts, every farmer, every manufacturer, every +merchant and shopkeeper, to the continual visit and examination of the +tax-gatherers. Through the greater part of the country in which a tax of +this kind is established, nothing can be produced for distant sale. The +produce of every part of the country must be proportioned to the +consumption of the neighbourhood. It is to the alcavala, accordingly, +that Ustaritz imputes the ruin of the manufactures of Spain. He might +have imputed to it, likewise, the declension of agriculture, it being +imposed not only upon manufactures, but upon the rude produce of the +land. + +In the kingdom of Naples, there is a similar tax of three per cent. upon +the value of all contracts, and consequently upon that of all contracts +of sale. It is both lighter than the Spanish tax, and the greater part +of towns and parishes are allowed to pay a composition in lieu of it. +They levy this composition in what manner they please, generally in a +way that gives no interruption to the interior commerce of the place. +The Neapolitan tax, therefore, is not near so ruinous as the Spanish +one. + +The uniform system of taxation, which, with a few exceptions of no great +consequence, takes place in all the different parts of the united +kingdom of Great Britain, leaves the interior commerce of the country, +the inland and coasting trade, almost entirely free. The inland trade is +almost perfectly free; and the greater part of goods may be carried from +one end of the kingdom to the other, without requiring any permit or +let-pass, without being subject to question, visit or examination, from +the revenue officers. There are a few exceptions, but they are such as +can give no interruption to any important branch of inland commerce of +the country. Goods carried coastwise, indeed, require certificates or +coast-cockets. If you except coals, however, the rest are almost all +duty-free. This freedom of interior commerce, the effect of the +uniformity of the system of taxation, is perhaps one of the principal +causes of the prosperity of Great Britain; every great country being +necessarily the best and most extensive market for the greater part of +the productions of its own industry. If the same freedom in consequence +of the same uniformity, could be extended to Ireland and the +plantations, both the grandeur of the state, and the prosperity of every +part of the empire, would probably be still greater than at present. + +In France, the different revenue laws which take place in the different +provinces, require a multitude of revenue officers to surround, not only +the frontiers of the kingdom, but those of almost each particular +province, in order either to prevent the importation of certain goods, +or to subject it to the payment of certain duties, to the no small +interruption of the interior commerce of the country. Some provinces are +allowed to compound for the gabelle, or salt tax; others are exempted +from it altogether. Some provinces are exempted from the exclusive sale +of tobacco, which the farmers-general enjoy through the greater part of +the kingdom. The aides, which correspond to the excise in England, are +very different in different provinces. Some provinces are exempted from +them, and pay a composition or equivalent. In those in which they take +place, and are in farm, there are many local duties which do not extend +beyond a particular town or district. The traites, which correspond to +our customs, divide the kingdom into three great parts; first, the +provinces subject to the tariff of 1664, which are called the provinces +of the five great farms, and under which are comprehended Picardy, +Normandy, and the greater part of the interior provinces of the kingdom; +secondly, the provinces subject to the tariff of 1667, which are called +the provinces reckoned foreign, and under which are comprehended the +greater part of the frontier provinces; and, thirdly, those provinces +which are said to be treated as foreign, or which, because they are +allowed a free commerce with foreign countries, are, in their commerce +with the other provinces of France, subjected to the same duties as +other foreign countries. These are Alsace, the three bishoprics of +Mentz, Toul, and Verdun, and the three cities of Dunkirk, Bayonne, and +Marseilles. Both in the provinces of the five great farms (called so on +account of an ancient division of the duties of customs into five great +branches, each of which was originally the subject of a particular farm, +though they are now all united into one), and in those which are said to +be reckoned foreign, there are many local duties which do not extend +beyond a particular town or district. There are some such even in the +provinces which are said to be treated as foreign, particularly in the +city of Marseilles. It is unnecessary to observe how much both the +restraints upon the interior commerce of the country, and the number of +the revenue officers, must be multiplied, in order to guard the +frontiers of those different provinces and districts which are subject +to such different systems of taxation. + +Over and above the general restraints arising from this complicated +system of revenue laws, the commerce of wine (after corn, perhaps, the +most important production of France) is, in the greater part of the +provinces, subject to particular restraints arising from the favour +which has been shown to the vineyards of particular provinces and +districts above those of others. The provinces most famous for their +wines, it will be found, I believe, are those in which the trade in that +article is subject to the fewest restraints of this kind. The extensive +market which such provinces enjoy, encourages good management both in +the cultivation of their vineyards, and in the subsequent preparation of +their wines. + +Such various and complicated revenue laws are not peculiar to France. +The little duchy of Milan is divided into six provinces, in each of +which there is a different system of taxation, with regard to several +different sorts of consumable goods. The still smaller territories of +the duke of Parma are divided into three or four, each of which has, in +the same manner, a system of its own. Under such absurd management, +nothing but the great fertility of the soil, and happiness of the +climate, could preserve such countries from soon relapsing into the +lowest state of poverty and barbarism. + +Taxes upon consumable commodities may either be levied by an +administration, of which the officers are appointed by government, and +immediately accountable to government, of which the revenue must, in +this case, vary from year to year, according to the occasional +variations in the produce of the tax; or they may be let in farm for a +rent certain, the farmer being allowed to appoint his own officers, who, +though obliged to levy the tax in the manner directed by the law, are +under his immediate inspection, and are immediately accountable to him. +The best and most frugal way of levying a tax can never be by farm. Over +and above what is necessary for paying the stipulated rent, the salaries +of the officers, and the whole expense of administration, the farmer +must always draw from the produce of the tax a certain profit, +proportioned at least to the advance which he makes, to the risk which +he runs, to the trouble which he is at, and to the knowledge and skill +which it requires to manage so very complicated a concern. Government, +by establishing an administration under their own immediate inspection, +of the same kind with that which the farmer establishes, might at least +save this profit, which is almost always exorbitant. To farm any +considerable branch of the public revenue requires either a great +capital, or a great credit; circumstances which would alone restrain the +competition for such an undertaking to a very small number of people. Of +the few who have this capital or credit, a still smaller number have the +necessary knowledge or experience; another circumstance which restrains +the competition still further. The very few who are in condition to +become competitors, find it more for their interest to combine together; +to become copartners, instead of competitors; and, when the farm is set +up to auction, to offer no rent but what is much below the rent value. +In countries where the public revenues are in farm, the farmers are +generally the most opulent people. Their wealth would alone excite the +public indignation; and the vanity which almost always accompanies such +upstart fortunes, the foolish ostentation with which they commonly +display that wealth, excite that indignation still more. + +The farmers of the public revenue never find the laws too severe, which +punish any attempt to evade the payment of a tax. They have no bowels +for the contributors, who are not their subjects, and whose universal +bankruptcy, if it should happen the day after the farm is expired, would +not much affect their interest. In the greatest exigencies of the state, +when the anxiety of the sovereign for the exact payment of his revenue +is necessarily the greatest, they seldom fail to complain, that without +laws more rigorous than those which actually took place, it will be +impossible for them to pay even the usual rent. In those moments of +public distress, their commands cannot be disputed. The revenue laws, +therefore, become gradually more and more severe. The most sanguinary +are always to be found in countries where the greater part of the public +revenue is in farm; the mildest, in countries where it is levied under +the immediate inspection of the sovereign. Even a bad sovereign feels +more compassion for his people than can ever be expected from the +farmers of his revenue. He knows that the permanent grandeur of his +family depends upon the prosperity of his people, and he will never +knowingly ruin that prosperity for the sake of any momentary interest of +his own. It is otherwise with the farmers of his revenue, whose grandeur +may frequently be the effect of the ruin, and not of the prosperity, of +his people. + +A tax is sometimes not only farmed for a certain rent, but the farmer +has, besides, the monopoly of the commodity taxed. In France, the duties +upon tobacco and salt are levied in this manner. In such cases, the +farmer, instead of one, levies two exorbitant profits upon the people; +the profit of the farmer, and the still more exorbitant one of the +monopolist. Tobacco being a luxury, every man is allowed to buy or not +to buy as he chuses; but salt being a necessary, every man is obligated +to buy of the farmer a certain quantity of it; because, if he did not +buy this quantity of the farmer, he would, it is presumed, buy it of +some smuggler. The taxes upon both commodities are exorbitant. The +temptation to smuggle, consequently, is to many people irresistible; +while, at the same time, the rigour of the law, and the vigilance of the +farmer's officers, render the yielding to the temptation almost +certainly ruinous. The smuggling of salt and tobacco sends every year +several hundred people to the galleys, besides a very considerable +number whom it sends to the gibbet. Those taxes, levied in this manner, +yield a very considerable revenue to government. In 1767, the farm of +tobacco was let for twenty-two millions five hundred and forty-one +thousand two hundred and seventy-eight livres a-year; that of salt for +thirty-six millions four hundred and ninety-two thousand four hundred +and four livres. The farm, in both cases, was to commence in 1768, and +to last for six years. These who consider the blood of the people as +nothing, in comparison with the revenue of the prince, may, perhaps, +approve of this method of levying taxes. Similar taxes and monopolies of +salt and tobacco have been established in many other countries, +particularly in the Austrian and Prussian dominions, and in the greater +part of the states of Italy. + +In France, the greater part of the actual revenue of the crown is +derived from eight different sources; the taille, the capitation, the +two vingtiemes, the gabelles, the aides, the traites, the domaine, and +the farm of tobacco. The five last are, in the greater part of the +provinces, under farm. The three first are everywhere levied by an +administration, under the immediate inspection and direction of +government; and it is universally acknowledged, that in proportion to +what they take out of the pockets of the people, they bring more into +the treasury of the prince than the other five, of which the +administration is much more wasteful and expensive. + +The finances of France seem, in their present state, to admit of three +very obvious reformations. First, by abolishing the taille and the +capitation, and by increasing the number of the vingtiemes, so as to +produce an additional revenue equal to the amount of those other taxes, +the revenue of the crown might be preserved; the expense of collection +might be much diminished; the vexation of the inferior ranks of people, +which the taille and capitation occasion, might be entirely prevented; +and the superior ranks might not be more burdened than the greater part +of them are at present. The vingtieme, I have already observed, is a tax +very nearly of the same kind with what is called the land tax of +England. The burden of the taille, it is acknowledged, falls finally +upon the proprietors of land; and as the greater part of the capitation +is assessed upon those who are subject to the taille, at so much a-pound +of that other tax, the final payment of the greater part of it must +likewise fall upon the same order of people. Though the number of the +vingtiemes, therefore, was increased, so as to produce an additional +revenue equal to the amount of both those taxes, the superior ranks of +people might not be more burdened than they are at present; many +individuals, no doubt, would, on account of the great inequalities with +which the taille is commonly assessed upon the estates and tenants of +different individuals. The interest and opposition of such favoured +subjects, are the obstacles most likely to prevent this, or any other +reformation of the same kind. Secondly, by rendering the gabelle, the +aides, the traites, the taxes upon tobacco, all the different customs +and excises, uniform in all the different parts of the kingdom, those +taxes might be levied at much less expense, and the interior commerce of +the kingdom might be rendered as free as that of England. Thirdly, and +lastly, by subjecting all those taxes to an administration under the +immediate inspection and direction of government, the exorbitant profits +of the farmers-general might be added to the revenue of the state. The +opposition arising from the private interest of individuals, is likely +to be as effectual for preventing the two last as the first-mentioned +scheme of reformation. + +The French system of taxation seems, in every respect, inferior to the +British. In Great Britain, ten millions sterling are annually levied +upon less than eight millions of people, without its being possible to +say that any particular order is oppressed. From the Collections of the +Abbé Expilly, and the observations of the author of the Essay upon the +Legislation and Commerce of Corn, it appears probable that France, +including the provinces of Lorraine and Bar, contains about twenty-three +or twenty-four millions of people; three times the number, perhaps, +contained in Great Britain. The soil and climate of France are better +than those of Great Britain. The country has been much longer in a state +of improvement and cultivation, and is, upon that account, better +stocked with all those things which it requires a long time to raise up +and accumulate; such as great towns, and convenient and well-built +houses, both in town and country. With these advantages, it might be +expected, that in France a revenue of thirty millions might be levied +for the support of the state, with as little inconvenience as a revenue +of ten millions is in Great Britain. In 1765 and 1766, the whole revenue +paid into the treasury of France, according to the best, though, I +acknowledge, very imperfect accounts which I could get of it, usually +run between 308 and 325 millions of livres; that is, it did not amount +to fifteen millions sterling; not the half of what might have been +expected, had the people contributed in the same proportion to their +numbers as the people of Great Britain. The people of France, however, +it is generally acknowledged, are much more oppressed by taxes than the +people of Great Britain. France, however, is certainly the great empire +in Europe, which, after that of Great Britain, enjoys the mildest and +most indulgent government. + +In Holland, the heavy taxes upon the necessaries of life have ruined, it +is said, their principal manufacturers, and are likely to discourage, +gradually, even their fisheries and their trade in ship-building. The +taxes upon the necessaries of life are inconsiderable in Great Britain, +and no manufacture has hitherto been ruined by them. The British taxes +which bear hardest on manufactures, are some duties upon the importation +of raw materials, particularly upon that of raw silk. The revenue of the +States-General and of the different cities, however, is said to amount +to more than five millions two hundred and fifty thousand pounds +sterling; and as the inhabitants of the United Provinces cannot well be +supposed to amount to more than a third part of those of Great Britain, +they must, in proportion to their number, be much more heavily taxed. + +After all the proper subjects of taxation have been exhausted, if the +exigencies of the state still continue to require new taxes, they must +be imposed upon improper ones. The taxes upon the necessaries of life, +therefore, may be no impeachment of the wisdom of that republic, which, +in order to acquire and to maintain its independency, has, in spite of +its great frugality, been involved in such expensive wars as have +obliged it to contract great debts. The singular countries of Holland +and Zealand, besides, require a considerable expense even to preserve +their existence, or to prevent their being swallowed up by the sea, +which must have contributed to increase considerably the load of taxes +in those two provinces. The republican form of government seems to be +the principal support of the present grandeur of Holland. The owners of +great capitals, the great mercantile families, have generally either +some direct share, or some indirect influence, in the administration of +that government. For the sake of the respect and authority which they +derive from this situation, they are willing to live in a country where +their capital, if they employ it themselves, will bring them less +profit, and if they lend it to another, less interest; and where the +very moderate revenue which they can draw from it will purchase less of +the necessaries and conveniencies of life than in any other part of +Europe. The residence of such wealthy people necessarily keeps alive, in +spite of all disadvantages, a certain degree of industry in the country. +Any public calamity which should destroy the republican form of +government, which should throw the whole administration into the hands +of nobles and of soldiers, which should annihilate altogether the +importance of those wealthy merchants, would soon render it disagreeable +to them to live in a country where they were no longer likely to be much +respected. They would remove both their residence and their capital to +some other country, and the industry and commerce of Holland would soon +follow the capitals which supported them. + + + + +CHAP. III. + +OF PUBLIC DEBTS. + + +In that rude state of society which precedes the extension of commerce +and the improvement of manufactures; when those expensive luxuries, +which commerce and manufactures can alone introduce, are altogether +unknown; the person who possesses a large revenue, I have endeavoured to +show in the third book of this Inquiry, can spend or enjoy that revenue +in no other way than by maintaining nearly as many people as it can +maintain. A large revenue may at all times be said to consist in the +command of a large quantity of the necessaries of life. In that rude +state of things, it is commonly paid in a large quantity of those +necessaries, in the materials of plain food and coarse clothing, in corn +and cattle, in wool and raw hides. When neither commerce nor +manufactures furnish any thing for which the owner can exchange the +greater part of those materials which are over and above his own +consumption, he can do nothing with the surplus, but feed and clothe +nearly as many people as it will feed and clothe. A hospitality in which +there is no luxury, and a liberality in which there is no ostentation, +occasion, in this situation of things, the principal expenses of the +rich and the great. But these I have likewise endeavoured to show, in +the same book, are expenses by which people are not very apt to ruin +themselves. There is not, perhaps, any selfish pleasure so frivolous, of +which the pursuit has not sometimes ruined even sensible men. A passion +for cock-fighting has ruined many. But the instances, I believe, are not +very numerous, of people who have been ruined by a hospitality or +liberality of this kind; though the hospitality of luxury, and the +liberality of ostentation have ruined many. Among our feudal ancestors, +the long time during which estates used to continue in the same family, +sufficiently demonstrates the general disposition of people to live +within their income. Though the rustic hospitality, constantly exercised +by the great landholders, may not, to us in the present times, seem +consistent with that order which we are apt to consider as inseparably +connected with good economy; yet we must certainly allow them to have +been at least so far frugal, as not commonly to have spent their whole +income. A part of their wool and raw hides, they had generally an +opportunity of selling for money. Some part of this money, perhaps, they +spent in purchasing the few objects of vanity and luxury, with which the +circumstances of the times could furnish them; but some part of it they +seem commonly to have hoarded. They could not well, indeed, do any thing +else but hoard whatever money they saved. To trade, was disgraceful to a +gentleman; and to lend money at interest, which at that time was +considered as usury, and prohibited by law, would have been still more +so. In those times of violence and disorder, besides, it was convenient +to have a hoard of money at hand, that in case they should be driven +from their own home, they might have something of known value to carry +with them to some place of safety. The same violence which made it +convenient to hoard, made it equally convenient to conceal the hoard. +The frequency of treasure-trove, or of treasure found, of which no owner +was known, sufficiently demonstrates the frequency, in those times, +both of hoarding and of concealing the hoard. Treasure-trove was then +considered as an important branch of the revenue of the sovereign. All +the treasure-trove of the kingdom would scarce, perhaps, in the present +times, make an important branch of the revenue of a private gentleman of +a good estate. + +The same disposition, to save and to hoard, prevailed in the sovereign, +as well as in the subjects. Among nations, to whom commerce and +manufactures are little known, the sovereign, it has already been +observed in the fourth book, is in a situation which naturally disposes +him to the parsimony requisite for accumulation. In that situation, the +expense, even of a sovereign, cannot be directed by that vanity which +delights in the gaudy finery of a court. The ignorance of the times +affords but few of the trinkets in which that finery consists. Standing +armies are not then necessary; so that the expense, even of a sovereign, +like that of any other great lord, can be employed in scarce any thing +but bounty to his tenants, and hospitality to his retainers. But bounty +and hospitality very seldom lead to extravagance; though vanity almost +always does. All the ancient sovereigns of Europe, accordingly, it has +already been observed, had treasures. Every Tartar chief, in the present +times, is said to have one. + +In a commercial country, abounding with every sort of expensive luxury, +the sovereign, in the same manner as almost all the great proprietors in +his dominions, naturally spends a great part of his revenue in +purchasing those luxuries. His own and the neighbouring countries supply +him abundantly with all the costly trinkets which compose the splendid, +but insignificant, pageantry of a court. For the sake of an inferior +pageantry of the same kind, his nobles dismiss their retainers, make +their tenants independent, and become gradually themselves as +insignificant as the greater part of the wealthy burghers in his +dominions. The same frivolous passions, which influence their conduct, +influence his. How can it be supposed that he should be the only rich +man in his dominions who is insensible to pleasures of this kind? If he +does not, what he is very likely to do, spend upon those pleasures so +great a part of his revenue as to debilitate very much the defensive +power of the state, it cannot well be expected that he should not spend +upon them all that part of it which is over and above what is necessary +for supporting that defensive power. His ordinary expense becomes equal +to his ordinary revenue, and it is well if it does not frequently exceed +it. The amassing of treasure can no longer be expected; and when +extraordinary exigencies require extraordinary expenses, he must +necessarily call upon his subjects for an extraordinary aid. The present +and the late king of Prussia are the only great princes of Europe, who, +since the death of Henry IV. of France, in 1610, are supposed to have +amassed any considerable treasure. The parsimony which leads to +accumulation has become almost as rare in republican as in monarchical +governments. The Italian republics, the United Provinces of the +Netherlands, are all in debt. The canton of Berne is the single republic +in Europe which has amassed any considerable treasure. The other Swiss +republics have not. The taste for some sort of pageantry, for splendid +buildings, at least, and other public ornaments, frequently prevails as +much in the apparently sober senate-house of a little republic, as in +the dissipated court of the greatest king. + +The want of parsimony, in time of peace, imposes the necessity of +contracting debt in time of war. When war comes, there is no money in +the treasury, but what is necessary for carrying on the ordinary expense +of the peace establishment. In war, an establishment of three or four +times that expense becomes necessary for the defence of the state; and +consequently, a revenue three or four times greater than the peace +revenue. Supposing that the sovereign should have, what he scarce ever +has, the immediate means of augmenting his revenue in proportion to the +augmentation of his expense; yet still the produce of the taxes, from +which this increase of revenue must be drawn, will not begin to come +into the treasury, till perhaps ten or twelve months after they are +imposed. But the moment in which war begins, or rather the moment in +which it appears likely to begin, the army must be augmented, the fleet +must be fitted out, the garrisoned towns must be put into a posture of +defence; that army, that fleet, those garrisoned towns, must be +furnished with arms, ammunition, and provisions. An immediate and great +expense must be incurred in that moment of immediate danger, which will +not wait for the gradual and slow returns of the new taxes. In this +exigency, government can have no other resource but in borrowing. + +The same commercial state of society which, by the operation of moral +causes, brings government in this manner into the necessity of +borrowing, produces in the subjects both an ability and an inclination +to lend. If it commonly brings along with it the necessity of borrowing, +it likewise brings with it the facility of doing so. + +A country abounding with merchants and manufacturers, necessarily +abounds with a set of people through whose hands, not only their own +capitals, but the capitals of all those who either lend them money, or +trust them with goods, pass as frequently, or more frequently, than the +revenue of a private man, who, without trade or business, lives upon his +income, passes through his hands. The revenue of such a man can +regularly pass through his hands only once in a year. But the whole +amount of the capital and credit of a merchant, who deals in a trade of +which the returns are very quick, may sometimes pass through his hands +two, three, or four times in a year. A country abounding with merchants +and manufacturers, therefore, necessarily abounds with a set of people, +who have it at all times in their power to advance, if they chuse to do +so, a very large sum of money to government. Hence the ability in the +subjects of a commercial state to lend. + +Commerce and manufactures can seldom flourish long in any state which +does not enjoy a regular administration of justice; in which the people +do not feel themselves secure in the possession of their property; in +which the faith of contracts is not supported by law; and in which the +authority of the state is not supposed to be regularly employed in +enforcing the payment of debts from all those who are able to pay. +Commerce and manufactures, in short, can seldom flourish in any state, +in which there is not a certain degree of confidence in the justice of +government. The same confidence which disposes great merchants and +manufacturers upon ordinary occasions, to trust their property to the +protection of a particular government, disposes them, upon extraordinary +occasions, to trust that government with the use of their property. By +lending money to government, they do not even for a moment diminish +their ability to carry on their trade and manufactures; on the contrary, +they commonly augment it. The necessities of the state render +government, upon most occasions willing to borrow upon terms extremely +advantageous to the lender. The security which it grants to the original +creditor, is made transferable to any other creditor; and from the +universal confidence in the justice of the state, generally sells in the +market for more than was originally paid for it. The merchant or monied +man makes money by lending money to government, and instead of +diminishing, increases his trading capital. He generally considers it as +a favour, therefore, when the administration admits him to a share in +the first subscription for a new loan. Hence the inclination or +willingness in the subjects of a commercial state to lend. + +The government of such a state is very apt to repose itself upon this +ability and willingness of its subjects to lend it their money on +extraordinary occasions. It foresees the facility of borrowing, and +therefore dispenses itself from the duty of saving. + +In a rude state of society, there are no great mercantile or +manufacturing capitals. The individuals, who hoard whatever money they +can save, and who conceal their hoard, do so from a distrust of the +justice of government; from a fear, that if it was known that they had a +hoard, and where that hoard was to be found, they would quickly be +plundered. In such a state of things, few people would be able, and +nobody would be willing to lend their money to government on +extraordinary exigencies. The sovereign feels that he must provide for +such exigencies by saving, because he foresees the absolute +impossibility of borrowing. This foresight increases still further his +natural disposition to save. + +The progress of the enormous debts which at present oppress, and will in +the long-run probably ruin, all the great nations of Europe, has been +pretty uniform. Nations, like private men, have generally begun to +borrow upon what may be called personal credit, without assigning or +mortgaging any particular fund for the payment of the debt; and when +this resource has failed them, they have gone on to borrow upon +assignments or mortgages of particular funds. + +What is called the unfunded debt of Great Britain, is contracted in the +former of those two ways. It consists partly in a debt which bears, or +is supposed to bear, no interest, and which resembles the debts that a +private man contracts upon account; and partly in a debt which bears +interest, and which resembles what a private man contracts upon his bill +or promissory-note. The debts which are due, either for extraordinary +services, or for services either not provided for, or not paid at the +time when they are performed; part of the extraordinaries of the army, +navy, and ordnance, the arrears of subsidies to foreign princes, those +of seamen's wages, &c. usually constitute a debt of the first kind. Navy +and exchequer bills, which are issued sometimes in payment of a part of +such debts, and sometimes for other purposes, constitutes a debt of the +second kind; exchequer bills bearing interest from the day on which they +are issued, and navy bills six months after they are issued. The bank of +England, either by voluntarily discounting those bills at their current +value, or by agreeing with government for certain considerations to +circulate exchequer bills, that is, to receive them at par, paying the +interest which happens to be due upon them, keeps up the value, and +facilitates their circulation, and thereby frequently enables government +to contract a very large debt of this kind. In France, where there is no +bank, the state bills (billets d'etat[76]) have sometimes sold at sixty +and seventy per cent. discount. During the great recoinage in king +William's time, when the bank of England thought proper to put a stop to +its usual transactions, exchequer bills and tallies are said to have +sold from twenty-five to sixty per cent. discount; owing partly, no +doubt, to the supposed instability of the new government established by +the Revolution, but partly, too, to the want of the support of the bank +of England. + +When this resource is exhausted, and it becomes necessary, in order to +raise money, to assign or mortgage some particular branch of the public +revenue for the payment of the debt, government has, upon different +occasions, done this in two different ways. Sometimes it has made this +assignment or mortgage for a short period of time only, a year, or a few +years, for example; and sometimes for perpetuity. In the one case, the +fund was supposed sufficient to pay, within the limited time, both +principal and interest of the money borrowed. In the other, it was +supposed sufficient to pay the interest only, or a perpetual annuity +equivalent to the interest, government being at liberty to redeem, at +any time, this annuity, upon paying back the principal sum borrowed. +When money was raised in the one way, it was said to be raised by +anticipation; when in the other, by perpetual funding, or, more shortly, +by funding. + +In Great Britain, the annual land and malt taxes are regularly +anticipated every year, by virtue of a borrowing clause constantly +inserted into the acts which impose them. The bank of England generally +advances at an interest, which, since the Revolution, has varied from +eight to three per cent., the sums of which those taxes are granted, and +receives payment as their produce gradually comes in. If there is a +deficiency, which there always is, it is provided for in the supplies of +the ensuing year. The only considerable branch of the public revenue +which yet remains unmortgaged, is thus regularly spent before it comes +in. Like an improvident spendthrift, whose pressing occasions will not +allow him to wait for the regular payment of his revenue, the state is +in the constant practice of borrowing of its own factors and agents, and +of paying interest for the use of its own money. + +In the reign of king William, and during a great part of that of queen +Anne, before we had become so familiar as we are now with the practice +of perpetual funding, the greater part of the new taxes were imposed but +for a short period of time (for four, five, six, or seven years only), +and a great part of the grants of every year consisted in loans upon +anticipations of the produce of those taxes. The produce being +frequently insufficient for paying, within the limited term, the +principal and interest of the money borrowed, deficiencies arose; to +make good which, it became necessary to prolong the term. + +In 1697, by the 8th of William III., c. 20, the deficiencies of several +taxes were charged upon what was then called the first general mortgage +or fund, consisting of a prolongation to the first of August 1706, of +several different taxes, which would have expired within a shorter +term, and of which the produce was accumulated into one general fund. +The deficiencies charged upon this prolonged term amounted to +L.5,160,459 : 14 : 9-1/2. + +In 1701, those duties, with some others, were still further prolonged, +for the like purposes, till the first of August 1710, and were called +the second general mortgage or fund. The deficiencies charged upon it +amounted to L.2,055,999 : 7 : 11-1/2. + +In 1707, those duties were still further prolonged, as a fund for new +loans, to the first of August 1712, and were called the third general +mortgage or fund. The sum borrowed upon it was L.983,254 : 11 : 9-1/4. + +In 1708, those duties were all (except the old subsidy of tonnage and +poundage, of which one moiety only was made a part of this fund, and a +duty upon the importation of Scotch linen, which had been taken off by +the articles of union) still further continued, as a fund for new loans, +to the first of August 1714, and were called the fourth general mortgage +or fund. The sum borrowed upon it was L.925,176 : 9 : 2-1/4. + +In 1709, those duties were all (except the old subsidy of tonnage and +poundage, which was now left out of this fund altogether) still further +continued, for the same purpose, to the first of August 1716, and were +called the fifth general mortgage or fund. The sum borrowed upon it was +L.922,029 : 6s. + +In 1710, those duties were again prolonged to the first of August 1720, +and were called the sixth general mortgage or fund. The sum borrowed +upon it was L.1,296,552 : 9 : 11-3/4. + +In 1711, the same duties (which at this time were thus subject to four +different anticipations), together with several others, were continued +for ever, and made a fund for paying the interest of the capital of +the South-sea company, which had that year advanced to government, +for paying debts, and making good deficiencies, the sum of +L.9,177,967 : 15 : 4, the greatest loan which at that time had ever +been made. + +Before this period, the principal, so far as I have been able to +observe, the only taxes, which, in order to pay the interest of a debt, +had been imposed for perpetuity, were these for paying the interest of +the money which had been advanced to government by the bank and +East-India company, and of what it was expected would be advanced, but +which was never advanced, by a projected land bank. The bank fund at +this time amounted to L.3,375,027 : 17 : 10-1/2, for which was paid an +annuity or interest of L.206,501 : 13 : 5. The East-India fund amounted +to L.3,200,000, for which was paid an annuity or interest of L.160,000; +the bank fund being at six per cent., the East-India fund at five per +cent. interest. + +In 1715, by the first of George I., c. 12, the different taxes which had +been mortgaged for paying the bank annuity, together with several +others, which, by this act, were likewise rendered perpetual, were +accumulated into one common fund, called the aggregate fund, which was +charged not only with the payment of the bank annuity, but with several +other annuities and burdens of different kinds. This fund was afterwards +augmented by the third of George I., c. 8., and by the fifth of George +I., c. 3, and the different duties which were then added to it were +likewise rendered perpetual. + +In 1717, by the third of George I., c. 7, several other taxes were +rendered perpetual, and accumulated into another common fund, called the +general fund, for the payment of certain annuities, amounting in the +whole to L.724,849 : 6 : 10-1/2. + +In consequence of those different acts, the greater part of the taxes, +which before had been anticipated only for a short term of years were +rendered perpetual, as a fund for paying, not the capital, but the +interest only, of the money which had been borrowed upon them by +different successive anticipations. + +Had money never been raised but by anticipation, the course of a few +years would have liberated the public revenue, without any other +attention of government besides that of not overloading the fund, by +charging it with more debt than it could pay within the limited term, +and not of anticipating a second time before the expiration of the first +anticipation. But the greater part of European governments have been +incapable of those attentions. They have frequently overloaded the fund, +even upon the first anticipation; and when this happened not to be the +case, they have generally taken care to overload it, by anticipating a +second and a third time, before the expiration of the first +anticipation. The fund becoming in this manner altogether insufficient +for paying both principal and interest of the money borrowed upon it, it +became necessary to charge it with the interest only, or a perpetual +annuity equal to the interest; and such improvident anticipations +necessarily gave birth to the more ruinous practice of perpetual +funding. But though this practice necessarily puts off the liberation of +the public revenue from a fixed period, to one so indefinite that it is +not very likely ever to arrive; yet, as a greater sum can, in all cases, +be raised by this new practice than by the old one of anticipation, the +former, when men have once become familiar with it, has, in the great +exigencies of the state, been universally preferred to the latter. To +relieve the present exigency, is always the object which principally +interests those immediately concerned in the administration of public +affairs. The future liberation of the public revenue they leave to the +care of posterity. + +During the reign of queen Anne, the market rate of interest had fallen +from six to five per cent.; and, in the twelfth year of her reign, five +per cent. was declared to be the highest rate which could lawfully be +taken for money borrowed upon private security. Soon after the greater +part of the temporary taxes of Great Britain had been rendered +perpetual, and distributed into the aggregate, South-sea, and general +funds, the creditors of the public, like those of private persons, were +induced to accept of five per cent. for the interest of their money, +which occasioned a saving of one per cent. upon the capital of the +greater part of the debts which had been thus funded for perpetuity, or +of one-sixth of the greater part of the annuities which were paid out of +the three great funds above mentioned. This saving left a considerable +surplus in the produce of the different taxes which had been accumulated +into those funds, over and above what was necessary for paying the +annuities which were now charged upon them, and laid the foundation of +what has since been called the sinking fund. In 1717, it amounted to +L.323,434 : 7 : 7-1/2. In 1727, the interest of the greater part of the +public debts was still further reduced to four per cent.; and, in 1753 +and 1757, to three and a-half, and three per cent., which reductions +still further augmented the sinking fund. + +A sinking fund, though instituted for the payment of old, facilitates +very much the contracting of new debts. It is a subsidiary fund, always +at hand, to be mortgaged in aid of any other doubtful fund, upon which +money is proposed to be raised in any exigency of the state. Whether the +sinking fund of Great Britain has been more frequently applied to the +one or to other of those two purposes, will sufficiently appear by and +by. + +Besides these two methods of borrowing, by anticipations and by a +perpetual funding, there are two other methods, which hold a sort of +middle place between them; these are, that of borrowing upon annuities +for terms of years, and that of borrowing upon annuities for lives. + +During the reigns of king William and queen Anne, large sums were +frequently borrowed upon annuities for terms of years, which were +sometimes longer and sometimes shorter. In 1693, an act was passed for +borrowing one million upon an annuity of fourteen per cent., or +L.140,000 a-year, for sixteen years. In 1691, an act was passed for +borrowing a million upon annuities for lives, upon terms which, in the +present times, would appear very advantageous; but the subscription was +not filled up. In the following year, the deficiency was made good, by +borrowing upon annuities for lives, at fourteen per cent. or a little +more than seven years purchase. In 1695, the persons who had purchased +those annuities were allowed to exchange them for others of ninety-six +years, upon paying into the exchequer sixty-three pounds in the hundred; +that is, the difference between fourteen per cent. for life, and +fourteen per cent. for ninety-six years, was sold for sixty-three +pounds, or for four and a-half years purchase. Such was the supposed +instability of government, that even these terms procured few +purchasers. In the reign of queen Anne, money was, upon different +occasions, borrowed both upon annuities for lives, and upon annuities +for terms of thirty-two, of eighty-nine, of ninety-eight, and of +ninety-nine years. In 1719, the proprietors of the annuities for +thirty-two years were induced to accept, in lieu of them, South-sea +stock to the amount of eleven and a-half years purchase of the +annuities, together with an additional quantity of stock, equal to the +arrears which happened then to be due upon them. In 1720, the greater +part of the other annuities for terms of years, both long and short, +were subscribed into the same fund. The long annuities, at that time, +amounted to L.666,821 : 8 : 3-1/2 a-year. On the 5th of January 1775, +the remainder of them, or what was not subscribed at that time, amounted +only to L.136,453 : 12 : 8. + +During the two wars which began in 1739 and in 1755, little money was +borrowed, either upon annuities for terms of years, or upon those for +lives. An annuity for ninety-eight or ninety-nine years, however, is +worth nearly as much as a perpetuity, and should therefore, one might +think, be a fund for borrowing nearly as much. But those who, in order +to make family settlements, and to provide for remote futurity, buy into +the public stocks, would not care to purchase into one of which the +value was continually diminishing; and such people make a very +considerable proportion, both of the proprietors and purchasers of +stock. An annuity for a long term of years, therefore, though its +intrinsic value may be very nearly the same with that of a perpetual +annuity, will not find nearly the same number of purchasers. The +subscribers to a new loan, who mean generally to sell their subscription +as soon as possible, prefer greatly a perpetual annuity, redeemable by +parliament, to an irredeemable annuity, for a long term of years, of +only equal amount. The value of the former may be supposed always the +same, or very nearly the same; and it makes, therefore, a more +convenient transferable stock than the latter. + +During the two last-mentioned wars, annuities, either for terms of years +or for lives, were seldom granted, but as premiums to the subscribers of +a new loan, over and above the redeemable annuity or interest, upon the +credit of which the loan was supposed to be made. They were granted, not +as the proper fund upon which the money was borrowed, but as an +additional encouragement to the lender. + +Annuities for lives have occasionally been granted in two different +ways; either upon separate lives, or upon lots of lives, which, in +French, are called tontines, from the name of their inventor. When +annuities are granted upon separate lives, the death of every individual +annuitant disburdens the public revenue, so far as it was affected by +his annuity. When annuities are granted upon tontines, the liberation of +the public revenue does not commence till the death of all the +annuitants comprehended in one lot, which may, sometimes consist of +twenty or thirty persons, of whom the survivors succeed to the annuities +of all those who die before them; the last survivor succeeding to the +annuities of the whole lot. Upon the same revenue, more money can always +be raised by tontines than by annuities for separate lives. An annuity, +with a right of survivorship, is really worth more than an equal annuity +for a separate life; and, from the confidence which every man naturally +has in his own good fortune, the principle upon which is founded the +success of all lotteries, such an annuity generally sells for something +more than it is worth. In countries where it is usual for government to +raise money by granting annuities, tontines are, upon this account, +generally preferred to annuities for separate lives. The expedient which +will raise most money, is almost always preferred to that which is +likely to bring about, in the speediest manner, the liberation of the +public revenue. + +In France, a much greater proportion of the public debts consists in +annuities for lives than in England. According to a memoir presented by +the parliament of Bourdeaux to the king, in 1764, the whole public debt +of France is estimated at twenty-four hundred millions of livres; of +which the capital, for which annuities for lives had been granted, is +supposed to amount to three hundred millions, the eighth part of the +whole public debt. The annuities themselves are computed to amount to +thirty millions a-year, the fourth part of one hundred and twenty +millions, the supposed interest of that whole debt. These estimations, I +know very well, are not exact; but having been presented by so very +respectable a body as approximations to the truth, they may, I +apprehend, be considered as such. It is not the different degrees of +anxiety in the two governments of France and England for the liberation +of the public revenue, which occasions this difference in their +respective modes of borrowing; it arises altogether from the different +views and interests of the lenders. + +In England, the seat of government being in the greatest mercantile city +in the world, the merchants are generally the people who advance money +to government. By advancing it, they do not mean to diminish, but, on +the contrary, to increase their mercantile capitals; and unless they +expected to sell, with some profit, their share in the subscription for +a new loan, they never would subscribe. But if, by advancing their +money, they were to purchase, instead of perpetual annuities, annuities +for lives only, whether their own or those of other people, they would +not always be so likely to sell them with a profit. Annuities upon their +own lives they would always sell with loss; because no man will give for +an annuity upon the life of another, whose age and state of health are +nearly the same with his own, the same price which he would give for one +upon his own. An annuity upon the life of a third person, indeed, is, no +doubt, of equal value to the buyer and the seller; but its real value +begins to diminish from the moment it is granted, and continues to do +so, more and more, as long as it subsists. It can never, therefore, make +so convenient a transferable stock as a perpetual annuity, of which the +real value may be supposed always the same, or very nearly the same. + +In France, the seat of government not being in a great mercantile city, +merchants do not make so great a proportion of the people who advance +money to government. The people concerned in the finances, the +farmers-general, the receivers of the taxes which are not in farm, the +court-bankers, &c. make the greater part of those who advance their +money in all public exigencies. Such people are commonly men of mean +birth, but of great wealth, and frequently of great pride. They are too +proud to marry their equals, and women of quality disdain to marry them. +They frequently resolve, therefore, to live bachelors; and having +neither any families of their own, nor much regard for those of their +relations, whom they are not always very fond of acknowledging, they +desire only to live in splendour during their own time, and are not +unwilling that their fortune should end with themselves. The number of +rich people, besides, who are either averse to marry, or whose condition +of life renders it either improper or inconvenient for them to do so, is +much greater in France than in England. To such people, who have little +or no care for posterity, nothing can be more convenient than to +exchange their capital for a revenue, which is to last just as long, and +no longer, than they wish it to do. + +The ordinary expense of the greater part of modern governments, in time +of peace, being equal, or nearly equal, to their ordinary revenue, when +war comes, they are both unwilling and unable to increase their revenue +in proportion to the increase of their expense. They are unwilling, for +fear of offending the people, who, by so great and so sudden an increase +of taxes, would soon be disgusted with the war; and they are unable, +from not well knowing what taxes would be sufficient to produce the +revenue wanted. The facility of borrowing delivers them from the +embarrassment which this fear and inability would otherwise occasion. By +means of borrowing, they are enabled, with a very moderate increase of +taxes, to raise, from year to year, money sufficient for carrying on the +war; and by the practice of perpetual funding, they are enabled, with +the smallest possible increase of taxes, to raise annually the largest +possible sum of money. In great empires, the people who live in the +capital, and in the provinces remote from the scene of action, feel, +many of them, scarce any inconveniency from the war, but enjoy, at their +ease, the amusement of reading in the newspapers the exploits of their +own fleets and armies. To them this amusement compensates the small +difference between the taxes which they pay on account of the war, and +those which they had been accustomed to pay in time of peace. They are +commonly dissatisfied with the return of peace, which puts an end to +their amusement, and to a thousand visionary hopes of conquest and +national glory, from a longer continuance of the war. + +The return of peace, indeed, seldom relieves them from the greater part +of the taxes imposed during the war. These are mortgaged for the +interest of the debt contracted, in order to carry it on. If, over and +above paying the interest of this debt, and defraying the ordinary +expense of government, the old revenue, together with the new taxes, +produce some surplus revenue, it may, perhaps, be converted into a +sinking fund for paying off the debt. But, in the first place, this +sinking fund, even supposing it should be applied to no other purpose, +is generally altogether inadequate for paying, in the course of any +period during which it can reasonably be expected that peace should +continue, the whole debt contracted during the war; and, in the second +place, this fund is almost always applied to other purposes. + +The new taxes were imposed for the sole purpose of paying the interest +of the money borrowed upon them. If they produce more, it is generally +something which was neither intended nor expected, and is, therefore, +seldom very considerable. Sinking funds have generally arisen, not so +much from any surplus of the taxes which was over and above what was +necessary for paying the interest or annuity originally charged upon +them, as from a subsequent reduction of that interest; that of Holland +in 1655, and that of the ecclesiastical state in 1685, were both formed +in this manner. Hence the usual insufficiency of such funds. + +During the most profound peace, various events occur, which require an +extraordinary expense; and government finds it always more convenient to +defray this expense by misapplying the sinking fund, than by imposing a +new tax. Every new tax is immediately felt more or less by the people. +It occasions always some murmur, and meets with some opposition. The +more taxes may have been multiplied, the higher they may have been +raised upon every different subject of taxation; the more loudly the +people complain of every new tax, the more difficult it becomes, too, +either to find out new subjects of taxation, or to raise much higher the +taxes already imposed upon the old. A momentary suspension of the +payment of debt is not immediately felt by the people, and occasions +neither murmur nor complaint. To borrow of the sinking fund is always an +obvious and easy expedient for getting out of the present difficulty. +The more the public debts may have been accumulated, the more necessary +it may have become to study to reduce them; the more dangerous, the more +ruinous it may be to missapply any part of the sinking fund; the less +likely is the public debt to be reduced to any considerable degree, the +more likely, the more certainly, is the sinking fund to be misapplied +towards defraying all the extraordinary expenses which occur in time of +peace. When a nation is already overburdened with taxes, nothing but the +necessities of a new war, nothing but either the animosity of national +vengeance, or the anxiety for national security, can induce the people +to submit, with tolerable patience, to a new tax. Hence the usual +misapplication of the sinking fund. + +In Great Britain, from the time that we had first recourse to the +ruinous expedient of perpetual funding, the reduction of the public +debt, in time of peace, has never borne any proportion to its +accumulation in time of war. It was in the war which began in 1668, and +was concluded by the treaty of Ryswick, in 1697, that the foundation of +the present enormous debt of Great Britain was first laid. + +On the 31st of December 1697, the public debts of Great Britain, funded +and unfunded, amounted to L.21,515,742 : 13 : 8-1/2. A great part of +those debts had been contracted upon short anticipations, and some part +upon annuities for lives; so that, before the 31st of December 1701, in +less than four years, there had partly been paid off, and partly +reverted to the public, the sum of L.5,121,041 : 12 : 0-3/4; a greater +reduction of the public debt than has ever since been brought about in +so short a period of time. The remaining debt, therefore, amounted only +to L.16,394,701 : 1 : 7-1/4. + +In the war which began in 1702, and which was concluded by the treaty of +Utrecht, the public debts were still more accumulated. On the 31st of +December 1714, they amounted to L.53,681,076 : 5 : 6-1/12. The +subscription into the South-sea fund, of the short and long annuities, +increased the capital of the public debt; so that, on the 31st of +December 1722, it amounted to L.55,282,978 : 1 : 3-5/6. The reduction of +the debt began in 1723, and went on so slowly, that, on the 31st of +December 1739, during seventeen years of profound peace, the whole sum +paid off was no more than L.8,328,354 : 17 : 11-3/12, the capital of the +public debt, at that time, amounting to L.46,954,623 : 3 : 4-7/12. + +The Spanish war, which began in 1739, and the French war which soon +followed it, occasioned a further increase of the debt, which, on the +31st of December 1748, after the war had been concluded by the treaty of +Aix-la-Chapelle, amounted to L.78,293,313 : 1 : 10-3/4. The most +profound peace of 17 years continuance, had taken no more than +L.8,328,354 : 17 : 11-1/4 from it. A war, of less than nine years +continuance, added L.31,338,689 : 18 : 6-1/6 to it.[77] + +During the administration of Mr. Pelham, the interest of the public debt +was reduced, or at least measures were taken for reducing it, from four +to three per cent.; the sinking fund was increased, and some part of the +public debt was paid off. In 1755, before the breaking out of the late +war, the funded debt of Great Britain amounted to L.72,289,673. On the +5th of January 1763, at the conclusion of the peace, the funded debt +amounted to L.122,603,336 : 8 : 2-1/4. The unfunded debt has been stated +at L.13,927,589 : 2 : 2. But the expense occasioned by the war did not +end with the conclusion of the peace; so that, though on the 5th +of January 1764, the funded debt was increased (partly by a new +loan, and partly by funding a part of the unfunded debt) to +L.129,586,789 : 10 : 1-3/4, there still remained (according to the very +well informed author of Considerations on the Trade and Finances of +Great Britain) an unfunded debt, which was brought to account in that +and the following year, of L.9,975,017, 12s. 2-15/44d. In 1764, +therefore, the public debt of Great Britain, funded and unfunded +together, amounted, according to this author, to L.139,561,807 : 2 : 4. +The annuities for lives, too, which had been granted as premiums to the +subscribers to the new loans in 1757, estimated at fourteen-years +purchase, were valued at L.472,500; and the annuities for long terms of +years, granted as premiums likewise, in 1761 and 1762, estimated at +twenty-seven years and a-half purchase, were valued at L.6,826,875. +During a peace of about seven years continuance, the prudent and truly +patriotic administration of Mr. Pelham was not able to pay off an old +debt of six millions. During a war of nearly the same continuance, a new +debt of more than seventy-five millions was contracted. + +On the 5th of January 1775, the funded debt of Great Britain amounted +to L.124,996,086, 1s. 6-1/4d. The unfunded, exclusive of a large +civil-list debt, to L.4,150,236 : 3 : 11-7/8. Both together, to +L.129,146,322 : 5 : 6. According to this account, the whole debt +paid off, during eleven years of profound peace, amounted only to +L.10,415,476 : 16 : 9-7/8. Even this small reduction of debt, however, +has not been all made from the savings out of the ordinary revenue of +the state. Several extraneous sums, altogether independent of that +ordinary revenue, have contributed towards it. Amongst these we may +reckon an additional shilling in the pound land tax, for three +years; the two millions received from the East-India company, as +indemnification for their territorial acquisitions; and the one hundred +and ten thousand pounds received from the bank for the renewal of their +charter. To these must be added several other sums, which, as they arose +out of the late war, ought perhaps to be considered as deductions from +the expenses of it. The principal are, + + The produce of French prizes L.690,449 18 9 + Composition for French prisoners 670,000 0 0 + What has been received from the sale of the ceded 95,500 0 0 + islands ______________ + Total, L.1,455,949 18 9 + +If we add to this sum the balance of the earl of Chatham's and Mr. +Calcraft's accounts, and other army savings of the same kind, together +with what has been received from the bank, the East-India company, and +the additional shilling in the pound land tax, the whole must be a good +deal more than five millions. The debt, therefore, which, since the +peace, has been paid out of the savings from the ordinary revenue of the +state, has not, one year with another, amounted to half a million +a-year. The sinking fund has, no doubt, been considerably augmented +since the peace, by the debt which had been paid off, by the reduction +of the redeemable four per cents to three per cents, and by the +annuities for lives which have fallen in; and, if peace were to +continue, a million, perhaps, might now be annually spared out of it +towards the discharge of the debt. Another million, accordingly, was +paid in the course of last year; but at the same time, a large +civil-list debt was left unpaid, and we are now involved in a new war, +which, in its progress, may prove as expensive as any of our former +wars.[78] The new debt which will probably be contracted before the end +of the next campaign, may, perhaps, be nearly equal to all the old debt +which has been paid off from the savings out of the ordinary revenue of +the state. It would be altogether chimerical, therefore, to expect that +the public debt should ever be completely discharged, by any savings +which are likely to be made from that ordinary revenue as it stands at +present. + +The public funds of the different indebted nations of Europe, +particularly those of England, have, by one author, been represented as +the accumulation of a great capital, superadded to the other capital of +the country, by means of which its trade is extended, its manufactures +are multiplied, and its lands cultivated and improved, much beyond what +they could have been by means of that other capital only. He does not +consider that the capital which the first creditors of the public +advanced to government, was, from the moment in which he advanced it, a +certain portion of the annual produce, turned away from serving in the +function of a capital, to serve in that of a revenue; from maintaining +productive labourers, to maintain unproductive ones, and to be spent and +wasted, generally in the course of the year, without even the hope of +any future reproduction. In return for the capital which they advanced, +they obtained, indeed, an annuity of the public funds, in most cases, of +more than equal value. This annuity, no doubt, replaced to them their +capital, and enabled them to carry on their trade and business to the +same, or, perhaps, to a greater extent than before; that is, they were +enabled, either to borrow of other people a new capital, upon the credit +of this annuity or, by selling it, to get from other people a new +capital of their own, equal, or superior, to that which they had +advanced to government. This new capital, however, which they in this +manner either bought or borrowed of other people, must have existed in +the country before, and must have been employed, as all capitals are, in +maintaining productive labour. When it came into the hands of those who +had advanced their money to government, though it was, in some respects, +a new capital to them, it was not so to the country, but was only a +capital withdrawn from certain employments, in order to be turned +towards others. Though it replaced to them what they had advanced to +government, it did not replace it to the country. Had they not advanced +this capital to government, there would have been in the country two +capitals, two portions of the annual produce, instead of one, employed +in maintaining productive labour. + +When, for defraying the expense of government, a revenue is raised +within the year, from the produce of free or unmortgaged taxes, a +certain portion of the revenue of private people is only turned away +from maintaining one species of unproductive labour, towards maintaining +another. Some part of what they pay in those taxes, might, no doubt, +have been accumulated into capital, and consequently employed in +maintaining productive labour; but the greater part would probably have +been spent, and consequently employed in maintaining unproductive +labour. The public expense, however, when defrayed in this manner, no +doubt hinders, more or less, the further accumulation of new capital; +but it does not necessarily occasion the destruction of any +actually-existing capital. + +When the public expense is defrayed by funding, it is defrayed by the +annual destruction of some capital which had before existed in the +country; by the perversion of some portion of the annual produce which +had before been destined for the maintenance of productive labour, +towards that of unproductive labour. As in this case, however, the taxes +are lighter than they would have been, had a revenue sufficient for +defraying the same expense been raised within the year; the private +revenue of individuals is necessarily less burdened, and consequently +their ability to save and accumulate some part of that revenue into +capital, is a good deal less impaired. If the method of funding destroys +more old capital, it, at the same time, hinders less the accumulation or +acquisition of new capital, than that of defraying the public expense by +a revenue raised within the year. Under the system of funding, the +frugality and industry of private people can more easily repair the +breaches which the waste and extravagance of government may occasionally +make in the general capital of the society. + +It is only during the continuance of war, however, that the system of +funding has this advantage over the other system. Were the expense of +war to be defrayed always by a revenue raised within the year, the taxes +from which that extraordinary revenue was drawn would last no longer +than the war. The ability of private people to accumulate, though less +during the war, would have been greater during the peace, than under the +system of funding. War would not necessarily have occasioned the +destruction of any old capitals, and peace would have occasioned the +accumulation of many more new. Wars would, in general, be more speedily +concluded, and less wantonly undertaken. The people feeling, during +continuance of war, the complete burden of it, would soon grow weary of +it; and government, in order to humour them, would not be under the +necessity of carrying it on longer than it was necessary to do so. The +foresight of the heavy and unavoidable burdens of war would hinder the +people from wantonly calling for it when there was no real or solid +interest to fight for. The seasons during which the ability of private +people to accumulate was somewhat impaired, would occur more rarely, and +be of shorter continuance. Those, on the contrary, during which that +ability was in the highest vigour, would be of much longer duration than +they can well be under the system of funding. + +When funding, besides, has made a certain progress, the multiplication +of taxes which it brings along with it, sometimes impairs as much the +ability of private people to accumulate, even in time of peace, as the +other system would in time of war. The peace revenue of Great Britain +amounts at present to more than ten millions a year. If free and +unmortgaged, it might be sufficient, with proper management, and without +contracting a shilling of new debt, to carry on the most vigorous war. +The private revenue of the inhabitants of Great Britain is at present as +much incumbered in time of peace, their ability to accumulate is as much +impaired, as it would have been in the time of the most expensive war, +had the pernicious system of funding never been adopted. + +In the payment of the interest of the public debt, it has been said, it +is the right hand which pays the left. The money does not go out of the +country. It is only a part of the revenue of one set of the inhabitants +which is transferred to another; and the nation is not a farthing the +poorer. This apology is founded altogether in the sophistry of the +mercantile system; and, after the long examinatior, which I have already +bestowed upon that system, it may, perhaps, be unnecessary to say any +thing further about it. It supposes, besides, that the whole public debt +is owing to the inhabitants of the country, which happens not to be +true; the Dutch, as well as several other foreign nations, having a very +considerable share in our public funds. But though the whole debt were +owing to the inhabitants of the country, it would not, upon that +account, be less pernicious. + +Land and capital stock are the two original sources of all revenue, both +private and public. Capital stock pays the wages of productive labour, +whether employed in agriculture, manufactures, or commerce. The +management of those two original sources of revenue belongs to two +different sets of people; the proprietors of land, and the owners or +employers of capital stock. + +The proprietor of land is interested, for the sake of his own revenue, +to keep his estate in as good condition as he can, by building and +repairing his tenants houses, by making and maintaining the necessary +drains and inclosures, and all those other expensive improvements which +it properly belongs to the landlord to make and maintain. But, by +different land taxes, the revenue of the landlord may be so much +diminished, and, by different duties upon the necessaries and +conveniencies of life, that diminished revenue maybe rendered of so +little real value, that he may find himself altogether unable to make or +maintain those expensive improvements. When the landlord, however, +ceases to do his part, it is altogether impossible that the tenant +should continue to do his. As the distress of the landlord increases, +the agriculture of the country must necessarily decline. + +When, by different taxes upon the necessaries and conveniencies of life, +the owners and employers of capital stock find, that whatever revenue +they derive from it, will not, in a particular country, purchase the +same quantity of those necessaries and conveniencies which an equal +revenue would in almost any other, they will be disposed to remove to +some other. And when, in order to raise those taxes, all or the greater +part of merchants and manufacturers, that is, all or the greater part of +the employers of great capitals, come to be continually exposed to the +mortifying and vexatious visits of the tax-gatherers, this disposition +to remove will soon be changed into an actual removing. The industry of +the country will necessarily fall with the removal of the capital which +supported it, and the ruin of trade and manufactures will follow the +declension of agriculture. + +To transfer from the owners of those two great sources of revenue, land, +and capital stock, from the persons immediately interested in the good +condition of every particular portion of land, and in the good +management of every particular portion of capital stock, to another set +of persons (the creditors of the public, who have no such particular +interest), the greater part of the revenue arising from either, must, in +the long-run, occasion both the neglect of land, and the waste or +removal of capital stock. A creditor of the public has, no doubt, a +general interest in the prosperity of the agriculture, manufactures, and +commerce of the country; and consequently in the good condition of its +land, and in the good management of its capital stock. Should there be +any general failure or declension in any of these things, the produce of +the different taxes might no longer be sufficient to pay him the annuity +or interest which is due to him. But a creditor of the public, +considered merely as such, has no interest in the good condition of any +particular portion of land, or in the good management of any particular +portion of capital stock. As a creditor of the public, he has no +knowledge of any such particular portion. He has no inspection of it. He +can have no care about it. Its ruin may in some cases be unknown to him, +and cannot directly affect him. + +The practice of funding has gradually enfeebled every state which has +adopted it. The Italian republics seem to have begun it. Genoa and +Venice, the only two remaining which can pretend to an independent +existence, have both been enfeebled by it. Spain seems to have learned +the practice from the Italian republics, and (its taxes being probably +less judicious than theirs) it has, in proportion to its natural +strength, been still more enfeebled. The debts of Spain are of very old +standing. It was deeply in debt before the end of the sixteenth century, +about a hundred years before England owed a shilling. France, +notwithstanding all its natural resources, languishes under an +oppressive load of the same kind. The republic of the United Provinces +is as much enfeebled by its debts as either Genoa or Venice. Is it +likely that, in Great Britain alone, a practice, which has brought +either weakness or dissolution into every other country, should prove +altogether innocent? + +The system of taxation established in those different countries, it may +be said, is inferior to that of England. I believe it is so. But it +ought to be remembered, that when the wisest government has exhausted +all the proper subjects of taxation, it must, in cases of urgent +necessity, have recourse to improper ones. The wise republic of Holland +has, upon some occasions, been obliged to have recourse to taxes as +inconvenient as the greater part of those of Spain. Another war, begun +before any considerable liberation of the public revenue had been +brought about, and growing in its progress as expensive as the last war, +may, from irresistible necessity, render the British system of taxation +as oppressive as that of Holland, or even as that of Spain. To the +honour of our present system of taxation, indeed, it has hitherto given +so little embarrassment to industry, that, during the course even of the +most expensive wars, the frugality and good conduct of individuals seem +to have been able, by saving and accumulation, to repair all the +breaches which the waste and extravagance of government had made in the +general capital of the society. At the conclusion of the late war, the +most expensive that Great Britain ever waged, her agriculture was as +flourishing, her manufacturers as numerous and as fully employed, and +her commerce as extensive, as they had ever been before. The capital, +therefore, which supported all those different branches of industry, +must have been equal to what it had ever been before. Since the peace, +agriculture has been still further improved; the rents of houses have +risen in every town and village of the country, a proof of the +increasing wealth and revenue of the people; and the annual amount of +the greater part of the old taxes, of the principal branches of the +excise and customs, in particular, has been continually increasing, an +equally clear proof of an increasing consumption, and consequently of an +increasing produce, which could alone support that consumption. Great +Britain seems to support with ease, a burden which, half a century ago, +nobody believed her capable of supporting. Let us not, however, upon +this account, rashly conclude that she is capable of supporting any +burden; not even be too confident that she could support, without great +distress, a burden a little greater than what has already been laid upon +her. + +When national debts have once been accumulated to a certain degree, +there is scarce, I believe, a single instance of their having been +fairly and completely paid. The liberation of the public revenue, if it +has ever been brought about at all, has always been brought about by a +bankruptcy; sometimes by an avowed one, though frequently by a pretended +payment. + +The raising of the denomination of the coin has been the most usual +expedient by which a real public bankruptcy has been disguised under the +appearance of a pretended payment. If a sixpence, for example, should, +either by act of parliament or royal proclamation, be raised to the +denomination of a shilling, and twenty sixpences to that of a pound +sterling; the person who, under the old denomination, had borrowed +twenty shillings, or near four ounces of silver, would, under the new, +pay with twenty sixpences, or with something less than two ounces. A +national debt of about a hundred and twenty-eight millions, near the +capital of the funded and unfunded debt of Great Britain, might, in this +manner, be paid with about sixty-four millions of our present money. It +would, indeed, be a pretended payment only, and the creditors of the +public would really be defrauded of ten shillings in the pound of what +was due to them. The calamity, too, would extend much further than to +the creditors of the public, and those of every private person would +suffer a proportionable loss; and this without any advantage, but in +most cases with a great additional loss, to the creditors of the public. +If the creditors of the public, indeed, were generally much in debt to +other people, they might in some measure compensate their loss by paying +their creditors in the same coin in which the public had paid them. But +in most countries, the creditors of the public are, the greater part of +them, wealthy people, who stand more in the relation of creditors than +in that of debtors, towards the rest of their fellow-citizens. A +pretended payment of this kind, therefore, instead of alleviating, +aggravates, in most cases, the loss of the creditors of the public; and, +without any advantage to the public, extends the calamity to a great +number of other innocent people. It occasions a general and most +pernicious subversion of the fortunes of private people; enriching, in +most cases, the idle and profuse debtor, at the expense of the +industrious and frugal creditor; and transporting a great part of the +national capital from the hands which were likely to increase and +improve it, to those who are likely to dissipate and destroy it. When it +becomes necessary for a state to declare itself bankrupt, in the same +manner as when it becomes necessary for an individual to do so, a fair, +open, and avowed bankruptcy, is always the measure which is both least +dishonourable to the debtor, and least hurtful to the creditor. The +honour of a state is surely very poorly provided for, when, in order to +cover the disgrace of a real bankruptcy, it has recourse to a juggling +trick of this kind, so easily seen through, and at the same time so +extremely pernicious. + +Almost all states, however, ancient as well as modern, when reduced to +this necessity, have, upon some occasions, played this very juggling +trick. The Romans, at the end of the first Punic war, reduced the As, +the coin or denomination by which they computed the value of all their +other coins, from containing twelve ounces of copper, to contain only +two ounces; that is, they raised two ounces of copper to a denomination +which had always before expressed the value of twelve ounces. The +republic was, in this manner, enabled to pay the great debts which it +had contracted with the sixth part of what it really owed. So sudden and +so great a bankruptcy, we should in the present times be apt to imagine, +must have occasioned a very violent popular clamour. It does not appear +to have occasioned any. The law which enacted it was, like all other +laws relating to the coin, introduced and carried through the assembly +of the people by a tribune, and was probably a very popular law. In +Rome, as in all other ancient republics, the poor people were constantly +in debt to the rich and the great, who, in order to secure their votes +at the annual elections, used to lend them money at exorbitant interest, +which, being never paid, soon accumulated into a sum too great for the +debtor to pay, or for any body else to pay for him. The debtor, for fear +of a very severe execution, was obliged, without any further gratuity, +to vote for the candidate whom the creditor recommended. In spite of all +the laws against bribery and corruption, the bounty of the candidates, +together with the occasional distributions of coin which were ordered by +the senate, were the principal funds from which, during the latter times +of the Roman republic, the poorer citizens derived their subsistence. To +deliver themselves from this subjection to their creditors, the poorer +citizens were continually calling out, either for an entire abolition of +debts, or for what they called new tables; that is, for a law which +should entitle them to a complete acquittance, upon paying only a +certain proportion of their accumulated debts. The law which reduced the +coin of all denominations to a sixth part of its former value, as it +enabled them to pay their debts with a sixth part of what they really +owed, was equivalent to the most advantageous new tables. In order to +satisfy the people, the rich and the great were, upon several different +occasions, obliged to consent to laws, both for abolishing debts, and +for introducing new tables; and they probably were induced to consent +to this law, partly for the same reason, and partly that, by liberating +the public revenue, they might restore vigour to that government, +of which they themselves had the principal direction. An operation +of this kind would at once reduce a debt of L.128,000,000 to +L.21,333,333 : 6 : 8. In the course of the second Punic war, the As was +still further reduced, first, from two ounces of copper to one ounce, +and afterwards from one ounce to half an ounce; that is, to the +twenty-fourth part of its original value. By combining the three Roman +operations into one, a debt of a hundred and twenty-eight millions of +our present money, might in this manner be reduced all at once to a debt +of L.5,333,333 : 6 : 8. Even the enormous debt of Great Britain might in +this manner soon be paid. + +By means of such expedients, the coin of, I believe, all nations, has +been gradually reduced more and more below its original value, and the +same nominal sum has been gradually brought to contain a smaller and a +smaller quantity of silver. + +Nations have sometimes, for the same purpose, adulterated the standard +of their coin; that is, have mixed a greater quantity of alloy in it. If +in the pound weight of our silver coin, for example, instead of eighteen +penny-weight, according to the present standard, there were mixed eight +ounces of alloy; a pound sterling, or twenty shillings of such coin, +would be worth little more than six shillings and eightpence of our +present money. The quantity of silver contained in six shillings and +eightpence of our present money, would thus be raised very nearly to the +denomination of a pound sterling. The adulteration of the standard has +exactly the same effect with what the French call an augmentation, or a +direct raising of the denomination of the coin. + +An augmentation, or a direct raising of the denomination of the coin, +always is, and from its nature must be, an open and avowed operation. By +means of it, pieces of a smaller weight and bulk are called by the same +name, which had before been given to pieces of a greater weight and +bulk. The adulteration of the standard, on the contrary, has generally +been a concealed operation. By means of it, pieces are issued from the +mint, of the same denomination, and, as nearly as could be contrived, of +the same weight, bulk, and appearance, with pieces which had been +current before of much greater value. When king John of France,[79] in +order to pay his debts, adulterated his coin, all the officers of his +mint were sworn to secrecy. Both operations are unjust. But a simple +augmentation is an injustice of open violence; whereas an adulteration +is an injustice of treacherous fraud. This latter operation, therefore, +as soon as it has been discovered, and it could never be concealed very +long, has always excited much greater indignation than the former. The +coin, after any considerable augmentation, has very seldom been brought +back to its former weight; but after the greatest adulterations, it has +almost always been brought back to its former fineness. It has scarce +ever happened, that the fury and indignation of the people could +otherwise be appeased. + +In the end of the reign of Henry VIII., and in the beginning of that of +Edward VI., the English coin was not only raised in its denomination, +but adulterated in its standard. The like frauds were practised in +Scotland during the minority of James VI. They have occasionally been +practised in most other countries. + +That the public revenue of Great Britain can never be completely +liberated, or even that any considerable progress can ever be made +towards that liberation, while the surplus of that revenue, or what is +over and above defraying the annual expense of the peace establishment, +is so very small, it seems altogether in vain to expect. That +liberation, it is evident, can never be brought about, without either +some very considerable augmentation of the public revenue, or some +equally considerable reduction of the public expense. + +A more equal land tax, a more equal tax upon the rent of houses, and +such alterations in the present system of customs and excise as those +which have been mentioned in the foregoing chapter, might, perhaps, +without increasing the burden of the greater part of the people, but +only distributing the weight of it more equally upon the whole, produce +a considerable augmentation of revenue. The most sanguine projector, +however, could scarce flatter himself, that any augmentation of this +kind would be such as could give any reasonable hopes, either of +liberating the public revenue altogether, or even of making such +progress towards that liberation in time of peace, as either to prevent +or to compensate the further accumulation of the public debt in the next +war. + +By extending the British system of taxation to all the different +provinces of the empire, inhabited by people either of British or +European extraction, a much greater augmentation of revenue might be +expected. This, however, could scarce, perhaps, be done, consistently +with the principles of the British constitution, without admitting into +the British parliament, or, if you will, into the states-general of the +British empire, a fair and equal representation of all those different +provinces; that of each province bearing the same proportion to the +produce of its taxes, as the representation of Great Britain might bear +to the produce of the taxes levied upon Great Britain. The private +interest of many powerful individuals, the confirmed prejudices of +great bodies of people, seem, indeed, at present, to oppose to so great +a change, such obstacles as it may be very difficult, perhaps altogether +impossible, to surmount. Without, however, pretending to determine +whether such a union be practicable or impracticable, it may not, +perhaps, be improper, in a speculative work of this kind, to consider +how far the British system of taxation might be applicable to all the +different provinces of the empire; what revenue might be expected from +it, if so applied; and in what manner a general union of this kind might +be likely to affect the happiness and prosperity of the different +provinces comprehended within it. Such a speculation, can, at worst, be +regarded but as a new Utopia, less amusing, certainly, but no more +useless and chimerical than the old one. + +The land tax, the stamp duties, and the different duties of customs and +excise, constitute the four principal branches of the British taxes. + +Ireland is certainly as able, and our American and West India +plantations more able, to pay a land tax, than Great Britain. Where the +landlord is subject neither to tythe nor poor's rate, he must certainly +be more able to pay such a tax, than where he is subject to both those +other burdens. The tythe, where there is no modus, and where it is +levied in kind, diminishes more what would otherwise be the rent of the +landlord, than a land tax which really amounted to five shillings in the +pound. Such a tythe will be found, in most cases, to amount to more than +a fourth part of the real rent of the land, or of what remains after +replacing completely the capital of the farmer, together with his +reasonable profit. If all moduses and all impropriations were taken +away, the complete church tythe of Great Britain and Ireland could not +well be estimated at less than six or seven millions. If there was no +tythe either in Great Britain or Ireland, the landlords could afford to +pay six or seven millions additional land tax, without being more +burdened than a very great part of them are at present. America pays no +tythe, and could, therefore, very well afford to pay a land tax. The +lands in America and the West Indies, indeed, are, in general, not +tenanted nor leased out to farmers. They could not, therefore, be +assessed according to any rent roll. But neither were the lands of Great +Britain, in the 4th of William and Mary, assessed according to any rent +roll, but according to a very loose and inaccurate estimation. The lands +in America might be assessed either in the same manner, or in according +to an equitable valuation, in consequence of an accurate survey, like +that which was lately made in the Milanese, and in the dominions of +Austria, Prussia, and Sardinia. + +Stamp duties, it is evident, might be levied without any variation, in +all countries where the forms of law process, and the deeds by which +property, both real and personal, is transferred, are the same, or +nearly the same. + +The extension of the custom-house laws of Great Britain to Ireland and +the plantations, provided it was accompanied, as in justice it ought to +be, with an extension of the freedom of trade, would be in the highest +degree advantageous to both. All the invidious restraints which at +present oppress the trade of Ireland, the distinction between the +enumerated and non-enumerated commodities of America, would be entirely +at an end. The countries north of Cape Finisterre would be as open to +every part of the produce of America, as those south of that cape are to +some parts of that produce at present. The trade between all the +different parts of the British empire would, in consequence of this +uniformity in the customs-house laws, be as free as the coasting trade +of Great Britain is at present. The British empire would thus afford, +within itself, an immense internal market for every part of the produce +of all its different provinces. So great an extension of market would +soon compensate, both to Ireland and the plantations, all that they +could suffer from the increase of the duties of customs. + +The excise is the only part of the British system of taxation, which +would require to be varied in any respect, according as it was applied +to the different provinces of the empire. It might be applied to Ireland +without any variation; the produce and consumption of that kingdom being +exactly of the same nature with those of Great Britain. In its +application to America and the West Indies, of which the produce and +consumption are so very different from those of Great Britain, some +modification might be necessary, in the same manner as in its +application to the cyder and beer counties of England. + +A fermented liquor, for example, which is called beer, but which, as it +is made of molasses, bears very little resemblance to our beer, makes a +considerable part of the common drink of the people in America. This +liquor, as it can be kept only for a few days, cannot, like our beer, be +prepared and stored up for sale in great breweries, but every private +family must brew it for their own use, in the same manner as they cook +their victuals. But to subject every private family to the odious visits +and examination of the tax-gatherers, in the same manner as we subject +the keepers of alehouses and the brewers for public sale, would be +altogether inconsistent with liberty. If, for the sake of equality, it +was thought necessary to lay a tax upon this liquor, it might be taxed +by taxing the material of which it is made, either at the place of +manufacture, or, if the circumstances of the trade rendered such an +excise improper, by laying a duty upon its importation into the colony +in which it was to be consumed. Besides the duty of one penny a-gallon +imposed by the British parliament upon the importation of molasses into +America, there is a provincial tax of this kind upon their importation +into Massachusetts Bay, in ships belonging to any other colony, of +eightpence the hogshead; and another upon their importation from the +northern colonies into South Carolina, of fivepence the gallon. Or, if +neither of these methods was found convenient, each family might +compound for its consumption of this liquor, either according to the +number of persons of which it consisted, in the same manner as private +families compound for the malt tax in England; or according to the +different ages and sexes of those persons, in the same manner as several +different taxes are levied in Holland; or, nearly as Sir Matthew Decker +proposes, that all taxes upon consumable commodities should be levied in +England. This mode of taxation, it has already been observed, when +applied to objects of a speedy consumption, is not a very convenient +one. It might be adopted, however, in cases where no better could be +done. + +Sugar, rum, and tobacco, are commodities which are nowhere necessaries +of life, which are become objects of almost universal consumption, and +which are, therefore, extremely proper subjects of taxation. If a union +with the colonies were to take place, those commodities might be taxed, +either before they go out of the hands of the manufacturer or grower; +or, if this mode of taxation did not suit the circumstances of those +persons, they might be deposited in public warehouses, both at the place +of manufacture, and at all the different ports of the empire, to which +they might afterwards be transported, to remain there, under the joint +custody of the owner and the revenue officer, till such time as they +should be delivered out, either to the consumer, to the +merchant-retailer for home consumption, or to the merchant-exporter; the +tax not to be advanced till such delivery. When delivered out for +exportation, to go duty-free, upon proper security being given, that +they should really be exported out of the empire. These are, perhaps, +the principal commodities, with regard to which the union with the +colonies might require some considerable change in the present system of +British taxation. + +What might be the amount of the revenue which this system of taxation, +extended to all the different provinces of the empire, might produce, it +must, no doubt, be altogether impossible to ascertain with tolerable +exactness. By means of this system, there is annually levied in Great +Britain, upon less than eight millions of people, more than ten millions +of revenue. Ireland contains more than two millions of people, and, +according to the accounts laid before the congress, the twelve +associated provinces of America contain more than three. Those accounts, +however, may have been exaggerated, in order, perhaps, either to +encourage their own people, or to intimidate those of this country; and +we shall suppose, therefore, that our North American and West Indian +colonies, taken together, contain no more than three millions; or that +the whole British empire, in Europe and America, contains no more than +thirteen millions of inhabitants. If, upon less than eight millions of +inhabitants, this system of taxation raises a revenue of more than ten +millions sterling; it ought, upon thirteen millions of inhabitants, to +raise a revenue of more than sixteen millions two hundred and fifty +thousand pounds sterling. From this revenue, supposing that this system +could produce it, must be deducted the revenue usually raised in Ireland +and the plantations, for defraying the expense of the respective civil +governments. The expense of the civil and military establishment of +Ireland, together with the interest of the public debt, amounts, at a +medium of the two years which ended March 1775, to something less than +seven hundred and fifty thousand pounds a-year. By a very exact account +of the revenue of the principal colonies of America and the West Indies, +it amounted, before the commencement of the present disturbances, to a +hundred and forty-one thousand eight hundred pounds. In this account, +however, the revenue of Maryland, of North Carolina, and of all our late +acquisitions, both upon the continent, and in the islands, is omitted; +which may, perhaps, make a difference of thirty or forty thousand +pounds. For the sake of even numbers, therefore, let us suppose that the +revenue necessary for supporting the civil government of Ireland and the +plantations may amount to a million. There would remain, consequently, a +revenue of fifteen millions two hundred and fifty thousand pounds, to be +applied towards defraying the general expense of the empire, and towards +paying the public debt. But if, from the present revenue of Great +Britain, a million could, in peaceable times, be spared towards the +payment of that debt, six millions two hundred and fifty thousand pounds +could very well be spared from this improved revenue. This great sinking +fund, too, might be augmented every year by the interest of the debt +which had been discharged the year before; and might, in this manner, +increase so very rapidly, as to be sufficient in a few years to +discharge the whole debt, and thus to restore completely the at-present +debilitated and languishing vigour of the empire. In the mean time, the +people might be relieved from some of the most burdensome taxes; from +those which are imposed either upon the necessaries of life, or upon the +materials of manufacture. The labouring poor would thus be enabled to +live better, to work cheaper, and to send their goods cheaper to +market. The cheapness of their goods would increase the demand for them, +and consequently for the labour of those who produced them. This +increase in the demand for labour would both increase the numbers, and +improve the circumstances of the labouring poor. Their consumption would +increase, and, together with it, the revenue arising from all those +articles of their consumption upon which the taxes might be allowed to +remain. + +The revenue arising from this system of taxation, however, might not +immediately increase in proportion to the number of people who were +subjected to it. Great indulgence would for some time be due to those +provinces of the empire which were thus subjected to burdens to which +they had not before been accustomed; and even when the same taxes came +to be levied everywhere as exactly as possible, they would not +everywhere produce a revenue proportioned to the numbers of the people. +In a poor country, the consumption of the principal commodities subject +to the duties of customs and excise, is very small; and in a thinly +inhabited country, the opportunities of smuggling are very great. The +consumption of malt liquors among the inferior ranks of people in +Scotland is very small; and the excise upon malt, beer, and ale, +produces less there than in England, in proportion to the numbers of the +people and the rate of the duties, which upon malt is different, on +account of a supposed difference of quality. In these particular +branches of the excise, there is not, I apprehend, much more smuggling +in the one country than in the other. The duties upon the distillery, +and the greater part of the duties of customs, in proportion to the +numbers of people in the respective countries, produce less in Scotland +than in England, not only on account of the smaller consumption of the +taxed commodities, but of the much greater facility of smuggling. In +Ireland, the inferior ranks of people are still poorer than in Scotland, +and many parts of the country are almost as thinly inhabited. In +Ireland, therefore, the consumption of the taxed commodities might, in +proportion to the number of the people, be still less than in Scotland, +and the facility of smuggling nearly the same. In America and the West +Indies, the white people, even of the lowest rank, are in much better +circumstances than those of the same rank in England; and their +consumption of all the luxuries in which they usually indulge +themselves, is probably much greater. The blacks, indeed, who make the +greater part of the inhabitants, both of the southern colonies upon the +continent and of the West India islands, as they are in a state of +slavery, are, no doubt, in a worse condition than the poorest people +either in Scotland or Ireland. We must not, however, upon that account, +imagine that they are worse fed, or that their consumption of articles +which might be subjected to moderate duties, is less than that even of +the lower ranks of people in England. In order that they may work well, +it is the interest of their master that they should be fed well, and +kept in good heart, in the same manner as it is his interest that his +working cattle should be so. The blacks, accordingly, have almost +everywhere their allowance of rum, and of molasses or spruce-beer, in +the same manner as the white servants; and this allowance would not +probably be withdrawn, though those articles should be subjected to +moderate duties. The consumption of the taxed commodities, therefore, in +proportion to the number of inhabitants, would probably be as great in +America and the West Indies as in any part of the British empire. The +opportunities of smuggling, indeed, would be much greater; America, in +proportion to the extent of the country, being much more thinly +inhabited than either Scotland or Ireland. If the revenue, however, +which is at present raised by the different duties upon malt and malt +liquors, were to be levied by a single duty upon malt, the opportunity +of smuggling in the most important branch of the excise would be almost +entirely taken away; and if the duties of customs, instead of being +imposed upon almost all the different articles of importation, were +confined to a few of the most general use and consumption, and if the +levying of those duties were subjected to the excise laws, the +opportunity of smuggling, though not so entirely taken away, would be +very much diminished. In consequence of those two apparently very simple +and easy alterations, the duties of customs and excise might probably +produce a revenue as great, in proportion to the consumption of the most +thinly inhabited province, as they do at present, in proportion to that +of the most populous. + +The Americans, it has been said, indeed, have no gold or silver money, +the interior commerce of the country being carried on by a paper +currency; and the gold and silver, which occasionally come among them, +being all sent to Great Britain, in return for the commodities which +they receive from us. But without gold and silver, it is added, there is +no possibility of paying taxes. We already get all the gold and silver +which they have. How is it possible to draw from them what they have +not? + +The present scarcity of gold and silver money in America, is not the +effect of the poverty of that country, or of the inability of the people +there to purchase those metals. In a country where the wages of labour +are so much higher, and the price of provisions so much lower than in +England, the greater part of the people must surely have wherewithal to +purchase a greater quantity, if it were either necessary or convenient +for them to do so. The scarcity of those metals, therefore, must be the +effect of choice, and not of necessity. + +It is for transacting either domestic or foreign business, that gold or +silver money is either necessary or convenient. + +The domestic business of every country, it has been shewn in the second +book of this Inquiry, may, at least in peaceable times, be transacted by +means of a paper currency, with nearly the same degree of conveniency as +by gold and silver money. It is convenient for the Americans, who could +always employ with profit, in the improvement of their lands, a greater +stock than they can easily get, to save as much as possible the expense +of so costly an instrument of commerce as gold and silver; and rather to +employ that part of their surplus produce which would be necessary for +purchasing those metals, in purchasing the instruments of trade, the +materials of clothing, several parts of household furniture, and the +iron work necessary for building and extending their settlements and +plantations; in purchasing not dead stock, but active and productive +stock. The colony governments find it for their interest to supply the +people with such a quantity of paper money as is fully sufficient, and +generally more than sufficient, for transacting their domestic business. +Some of those governments, that of Pennsylvania, particularly, derive a +revenue from lending this paper money to their subjects, at an interest +of so much per cent. Others, like that of Massachusetts Bay, advance, +upon extraordinary emergencies, a paper money of this kind for defraying +the public expense; and afterwards, when it suits the conveniency of the +colony, redeem it at the depreciated value to which it gradually falls. +In 1747,[80] that colony paid in this manner the greater part of its +public debts, with the tenth part of the money for which its bills had +been granted. It suits the conveniency of the planters, to save the +expense of employing gold and silver money in their domestic +transactions; and it suits the conveniency of the colony governments, to +supply them with a medium, which, though attended with some very +considerable disadvantages, enables them to save that expense. The +redundancy of paper money necessarily banishes gold and silver from the +domestic transactions of the colonies, for the same reason that it has +banished those metals from the greater part of the domestic transactions +in Scotland; and in both countries, it is not the poverty, but the +enterprizing and projecting spirit of the people, their desire of +employing all the stock which they can get, as active and productive +stock, which has occasioned this redundancy of paper money. + +In the exterior commerce which the different colonies carry on with +Great Britain, gold and silver are more or less employed, exactly in +proportion as they are more or less necessary. Where those metals are +not necessary, they seldom appear. Where they are necessary, they are +generally found. + +In the commerce between Great Britain and the tobacco colonies, the +British goods are generally advanced to the colonists at a pretty long +credit, and are afterwards paid for in tobacco, rated at a certain +price. It is more convenient for the colonists to pay in tobacco than in +gold and silver. It would be more convenient for any merchant to pay for +the goods which his correspondents had sold to him, in some other sort +of goods which he might happen to deal in, than in money. Such a +merchant would have no occasion to keep any part of his stock by him +unemployed, and in ready money, for answering occasional demands. He +could have, at all times, a larger quantity of goods in his shop or +warehouse, and he could deal to a greater extent. But it seldom happens +to be convenient for all the correspondents of a merchant to receive +payment for the goods which they sell to him, in goods of some other +kind which he happens to deal in. The British merchants who trade to +Virginia and Maryland, happen to be a particular set of correspondents, +to whom it is more convenient to receive payment for the goods which +they sell to those colonies in tobacco, than in gold and silver. They +expect to make a profit by the sale of the tobacco; they could make none +by that of the gold and silver. Gold and silver, therefore, very seldom +appear in the commerce between Great Britain and the tobacco colonies. +Maryland and Virginia have as little occasion for those metals in their +foreign, as in their domestic commerce. They are said, accordingly, to +have less gold and silver money than any other colonies in America. They +are reckoned, however, as thriving, and consequently as rich, as any of +their neighbours. + +In the northern colonies, Pennsylvania, New York, New Jersey, the four +governments of New England, &c. the value of their own produce which +they export to Great Britain is not equal to that of the manufactures +which they import for their own use, and for that of some of the other +colonies, to which they are the carriers. A balance, therefore, must be +paid to the mother-country in gold and silver, and this balance they +generally find. + +In the sugar colonies, the value of the produce annually exported to +Great Britain is much greater than that of all the goods imported from +thence. If the sugar and rum annually sent to the mother-country were +paid for in those colonies, Great Britain would be obliged to send out, +every year, a very large balance in money; and the trade to the West +Indies would, by a certain species of politicians, be considered as +extremely disadvantageous. But it so happens, that many of the +principal proprietors of the sugar plantations reside in Great Britain. +Their rents are remitted to them in sugar and rum, the produce of their +estates. The sugar and rum which the West India merchants purchase in +those colonies upon their own account, are not equal in value to the +goods which they annually sell there. A balance, therefore, must +necessarily he paid to them in gold and silver, and this balance, too, +is generally found. + +The difficulty and irregularity of payment from the different colonies +to Great Britain, have not been at all in proportion to the greatness or +smallness of the balances which were respectively due from them. +Payments have, in general, been more regular from the northern than from +the tobacco colonies, though the former have generally paid a pretty +large balance in money, while the latter have either paid no balance, or +a much smaller one. The difficulty of getting payment from our different +sugar colonies has been greater or less in proportion, not so much to +the extent of the balances respectively due from them, as to the +quantity of uncultivated land which they contained; that is, to the +greater or smaller temptation which the planters have been under of +over-trading, or of undertaking the settlement and plantation of greater +quantities of waste land than suited the extent of their capitals. The +returns from the great island of Jamaica, where there is still much +uncultivated land, have, upon this account, been, in general, more +irregular and uncertain than those from the smaller islands of +Barbadoes, Antigua, and St. Christopher's, which have, for these many +years, been completely cultivated, and have, upon that account, afforded +less field for the speculations of the planter. The new acquisitions of +Grenada, Tobago, St. Vincent's, and Dominica, have opened a new field +for speculations of this kind; and the returns from those islands have +of late been as irregular and uncertain as those from the great island +of Jamaica. + +It is not, therefore, the poverty of the colonies which occasions, in +the greater part of them, the present scarcity of gold and silver money. +Their great demand for active and productive stock makes it convenient +for them to have as little dead stock as possible, and disposes them, +upon that account, to content themselves with a cheaper, though less +commodious instrument of commerce, than gold and silver. They are +thereby enabled to convert the value of that gold and silver into the +instruments of trade, into the materials of clothing, into household +furniture, and into the iron work necessary for building and extending +their settlements and plantations. In those branches of business which +cannot be transacted without gold and silver money, it appears, that +they can always find the necessary quantity of those metals; and if they +frequently do not find it, their failure is generally the effect, not of +their necessary poverty, but of their unnecessary and excessive +enterprise. It is not because they are poor that their payments are +irregular and uncertain, but because they are too eager to become +excessively rich. Though all that part of the produce of the colony +taxes, which was over and above what was necessary for defraying the +expense of their own civil and military establishments, were to be +remitted to Great Britain in gold and silver, the colonies have +abundantly wherewithal to purchase the requisite quantity of those +metals. They would in this case be obliged, indeed, to exchange a part +of their surplus produce, with which they now purchase active and +productive stock, for dead stock. In transacting their domestic +business, they would be obliged to employ a costly, instead of a cheap +instrument of commerce; and the expense of purchasing this costly +instrument might damp somewhat the vivacity and ardour of their +excessive enterprise in the improvement of land. It might not, however, +be necessary to remit any part of the American revenue in gold and +silver. It might be remitted in bills drawn upon, and accepted by, +particular merchants or companies in Great Britain, to whom a part of +the surplus produce of America had been consigned, who would pay into +the treasury the American revenue in money, after having themselves +received the value of it in goods; and the whole business might +frequently be transacted without exporting a single ounce of gold or +silver from America. + +It is not contrary to justice, that both Ireland and America should +contribute towards the discharge of the public debt of Great Britain. +That debt has been contracted in support of the government established +by the Revolution; a government to which the protestants of Ireland owe, +not only the whole authority which they at present enjoy in their own +country, but every security which they possess for their liberty, their +property, and their religion; a government to which several of the +colonies of America owe their present charters, and consequently their +present constitution; and to which all the colonies of America owe the +liberty, security, and property, which they have ever since enjoyed. +That public debt has been contracted in the defence, not of Great +Britain alone, but of all the different provinces of the empire. The +immense debt contracted in the late war in particular, and a great part +of that contracted in the war before, were both properly contracted in +defence of America. + +By a union with Great Britain, Ireland would gain, besides the freedom +of trade, other advantages much more important, and which would much +more than compensate any increase of taxes that might accompany that +union. By the union with England, the middling and inferior ranks of +people in Scotland gained a complete deliverance from the power of an +aristocracy, which had always before oppressed them. By a union with +Great Britain, the greater part of people of all ranks in Ireland would +gain an equally complete deliverance from a much more oppressive +aristocracy; an aristocracy not founded, like that of Scotland, in the +natural and respectable distinctions of birth and fortune, but in the +most odious of all distinctions, those of religious and political +prejudices; distinctions which, more than any other, animate both the +insolence of the oppressors, and the hatred and indignation of the +oppressed, and which commonly render the inhabitants of the same country +more hostile to one another than those of different countries ever are. +Without a union with Great Britain, the inhabitants of Ireland are not +likely, for many ages, to consider themselves as one people. + +No oppressive aristocracy has ever prevailed in the colonies. Even they, +however, would, in point of happiness and tranquillity, gain +considerably by a union with Great Britain. It would, at least, deliver +them from those rancourous and virulent factions which are inseparable +from small democracies, and which have so frequently divided the +affections of their people, and disturbed the tranquillity of their +governments, in their form so nearly democratical. In the case of a +total separation from Great Britain, which, unless prevented by a union +of this kind, seems very likely to take place, those factions would be +ten times more virulent than ever. Before the commencement of the +present disturbances, the coercive power of the mother-country had +always been able to restrain those factions from breaking out into any +thing worse than gross brutality and insult. If that coercive power were +entirely taken away, they would probably soon break out into open +violence and bloodshed. In all great countries which are united under +one uniform government, the spirit of party commonly prevails less in +the remote provinces than in the centre of the empire. The distance of +those provinces from the capital, from the principal seat of the great +scramble of faction and ambition, makes them enter less into the views +of any of the contending parties, and renders them more indifferent and +impartial spectators of the conduct of all. The spirit of party prevails +less in Scotland than in England. In the case of a union, it would +probably prevail less in Ireland than in Scotland; and the colonies +would probably soon enjoy a degree of concord and unanimity, at present +unknown in any part of the British empire. Both Ireland and the +colonies, indeed, would be subjected to heavier taxes than any which +they at present pay. In consequence, however, of a diligent and faithful +application of the public revenue towards the discharge of the national +debt, the greater part of those taxes might not be of long continuance, +and the public revenue of Great Britain might soon be reduced to what +was necessary for maintaining a moderate peace-establishment. + +The territorial acquisitions of the East-India Company, the undoubted +right of the Crown, that is, of the state and people of Great Britain, +might be rendered another source of revenue, more abundant, perhaps, +than all those already mentioned. Those countries are represented as +more fertile, more extensive, and, in proportion to their extent, much +richer and more populous than Great Britain. In order to draw a great +revenue from them, it would not probably be necessary to introduce any +new system of taxation into countries which are already sufficiently, +and more than sufficiently, taxed. It might, perhaps, be more proper to +lighten than to aggravate the burden of those unfortunate countries, and +to endeavour to draw a revenue from them, not by imposing new taxes, but +by preventing the embezzlement and misapplication of the greater part of +those which they already pay. + +If it should be found impracticable for Great Britain to draw any +considerable augmentation of revenue from any of the resources above +mentioned, the only resource which can remain to her, is a diminution of +her expense. In the mode of collecting and in that of expending the +public revenue, though in both there may be still room for improvement, +Great Britain seems to be at least as economical as any of her +neighbours. The military establishment which she maintains for her own +defence in time of peace, is more moderate than that of any European +state, which can pretend to rival her either in wealth or in power. None +of those articles, therefore, seem to admit of any considerable +reduction of expense. The expense of the peace-establishment of the +colonies was, before the commencement of the present disturbances, very +considerable, and is an expense which may, and, if no revenue can be +drawn from them, ought certainly to be saved altogether. This constant +expense in time of peace, though very great, is insignificant in +comparison with what the defence of the colonies has cost us in time of +war. The last war, which was undertaken altogether on account of the +colonies, cost Great Britain, it has already been observed, upwards of +ninety millions. The Spanish war of 1739 was principally undertaken on +their account; in which, and in the French war that was the consequence +of it, Great Britain, spent upwards of forty millions; a great part of +which ought justly to be charged to the colonies. In those two wars, the +colonies cost Great Britain much more than double the sum which the +national debt amounted to before the commencement of the first of them. +Had it not been for those wars, that debt might, and probably would by +this time, have been completely paid; and had it not been for the +colonies, the former of those wars might not, and the latter certainly +would not, have been undertaken. It was because the colonies were +supposed to be provinces of the British Empire, that this expense was +laid out upon them. But countries which contribute neither revenue nor +military force towards the support of the empire, cannot be considered +as provinces. They may, perhaps, be considered as appendages, as a sort +of splendid and shewy equipage of the empire. But if the empire can no +longer support the expense of keeping up this equipage, it ought +certainly to lay it down; and if it cannot raise its revenue in +proportion to its expense, it ought at least to accommodate its expense +to its revenue. If the colonies, notwithstanding their refusal to submit +to British taxes, are still to be considered as provinces of the British +empire, their defence, in some future war, may cost Great Britain as +great an expense as it ever has done in any former war. The rulers of +Great Britain have, for more than a century past, amused the people with +the imagination that they possessed a great empire on the west side of +the Atlantic. This empire, however, has hitherto existed in imagination +only. It has hitherto been, not an empire, but the project of an empire; +not a gold mine, but the project of a gold mine; a project which has +cost, which continues to cost, and which, if pursued in the same way as +it has been hitherto, is likely to cost, immense expense, without being +likely to bring any profit; for the effects of the monopoly of the +colony trade, it has been shewn, are to the great body of the people, +mere loss instead of profit. It is surely now time that our rulers +should either realize this golden dream, in which they have been +indulging themselves, perhaps, as well as the people; or that they +should awake from it themselves, and endeavour to awaken the people. +If the project cannot be completed, it ought to be given up. If any +of the provinces of the British empire cannot be made to contribute +towards the support of the whole empire, it is surely time that Great +Britain should free herself from the expense of defending those +provinces in time of war, and of supporting any part of their civil or +military establishments in time of peace; and endeavour to accommodate +her future views and designs to the real mediocrity of her +circumstances. + + + + +FOOTNOTES: + + +[1] It is mentioned, that when about three years old, he was stolen from +the door of his uncle, Mr. Douglas, in Strathenry, where his mother had +been on a visit, by some tinkers, or gypsies. He was rescued in Leslie +wood by his uncle, who was thus the happy instrument, Mr. Stewart +observes, of preserving to the world, a genius, which was destined, not +only to extend the boundaries of science, but to enlighten and reform +the commercial policy of Europe. + +[2] Boswell's Life of Johnson, vol. iv. p. 17 + +[3] Edinburgh Review, vol. i. p. 432. + +[4] It may not be uninteresting to mention what has been said of the +manner in which the writings of Mr. Smith were composed.--'Mr. Smith +observed to me, not long before his death,' says Mr. Stewart, 'that +after all his practice in writing, he composed as slowly, and with as +great difficulty as at first.' He added, at the same time, that Mr. Hume +had acquired so great a facility in this respect, that the last volume +of his History was printed from the original copy, with a few marginal +corrections. Mr. Smith, when be was employed in composition, generally +walked up and down his apartment, dictating to a secretary. All Mr. +Hume's works, it has been said, were written with his own hand. + +[5] This observation, as may easily be perceived, cannot apply in +certain indirect imposts, such as those for the support of the roads; +which, as they cannot be confounded with the price of any consumable +commodity, combine all the inconveniencies of indirect, with those of +direct imposts. + +[6] Plin. Hist. Nat. lib. 33, cap. 3. + +[7] Pliny, lib. xxxiii. cap. 3. + +[8] This was written in 1773, before the commencement of the late +disturbances. + +[9] See his scheme for the maintenance of the poor, in Burn's History of +the Poor Laws. + +[10] See Denisart, Article Taux des Interests, tom. iii, p. 18. + +[11] See Idyllium xxi. + +[12] See Madox Firma Burgi p. 26 &c. + +[13] See the Statute of Labourers, 25, Ed. III. + +[14] Voyages d'un Philosophe. + +[15] Douglas's Summary, vol. ii, p. 372, 373. + +[16] See his Preface to Anderson's Diplomata Scotiæ. + +[17] Lowndes's Essay on the Silver Coin, 68. + +[18] See Tracts on the Corn Trade, Tract 3. + +[19] Solorzano, vol. ii. + +[20] Postscript to the Universal Merchant, p. 15 and 16. This postscript +was not printed till 1756, three years after the publication of the +book, which has never had a second edition. The postscript is, +therefore, to be found in few copies; it corrects several error in the +book. + +[21] See Ruddiman's Preface to Anderson's Diplomata, &c. Scotiæ. + +[22] Lib. x, c. 29. + +[23] Lib. ix, c. 17. + +[24] Kalm's Travels, vol. i, p. 343, 344. + +[25] See Smith's Memoirs of Wool, vol. i. c. 5, 6, 7. also vol. ii. + +[26] Wanting in the account. The year 1646 supplied by Bishop Fleetwood. + +[27] See Ruddiman's Preface to Anderson's Diplomata, &c. Scotiæ. + +[28] The method described in the text was by no means either the must +common or the most expensive one in which those adventurers sometimes +raised money by circulation. It frequently happened, that A in Edinburgh +would enable B in London to pay the first bill of exchange, by drawing, +a few days before it became due, a second bill at three months date upon +the same B in London. This bill, being payable to his own order, A sold +in Edinburgh at par; and with its contents purchased bills upon London, +payable at sight to the order of B, to whom he sent them by the post. +Towards the end of the late war, the exchange between Edinburgh and +London was frequently three per cent. against Edinburgh, and those bills +at sight must frequently have cost A that premium. This transaction, +therefore, being repeated at least four times in the year, and being +loaded with a commission of at least one half per cent, upon each +repetition, must at that period have cost A, at least, fourteen per +cent. in the year. At other times A would enable B to discharge the +first bill of exchange, by drawing, a few days before it became due, a +second bill at two months date, not upon B, but upon some third person, +C, for example, in London. This other bill was made payable to the order +of B, who, upon its being accepted by C, discounted it with some banker +in London; and A enabled C to discharge it, by drawing, a few days +before it became due, a third bill likewise at two months date, +sometimes upon his first correspondent B and sometimes upon some fourth +or fifth person, D or E, for example. This third bill was made payable +to the order of C, who, as soon as it was accepted, discounted it in the +same manner with some banker in London. Such operations being repeated +at least six times in the year, and being loaded with a commission of at +least one half per cent. upon each repetition, together with legal +interest of five per cent. this method of raising money, in the same +manner as described in the text, must have cost A something more than +eight per cent. By saving, however, the exchange between Edinburgh and +London, it was less expensive than that mentioned in the foregoing part +of this note; but then it required an established credit with more +houses than one in London, an advantage which many of these adventurers +could not always find it easy to procure. + +[29] James Postlethwaite's History of the Public Revenue, p. 301 + +[30] Some French authors of great learning and ingenuity have used those +words in a different sense. In the last chapter of the fourth book, I +shall endeavour to shew that their sense is an improper one. + +[31] See Brady's Historical Treatise of Cities and Boroughs, p. 3. &c. + +[32] See Madox, Firma Burgi, p. 18; also History of the Exchequer, chap. +10, sect. v, p. 223, first edition. + +[33] See Madox, Firma Burgi. See also Pfeffel in the Remarkable events +under Frederick II. and his Successors of the House of Suabia. + +[34] See Madox + +[35] See Pfeffel + +[36] See Sandi Istoria civile de Vinezia, part 2, vol. i, page 247 and +256. + +[37] The following are the prices at which the bank of Amsterdam at +present (September 1775) receives bullion and coin of different kinds: + + SILVER. + + Mexico dollars } Guilders. + French crowns } B--22 per mark. + English silver coin } + Mexico dollars, new coin 21 10 + Ducatoons 3 0 + Rix-dollars 2 8 + +Bar silver, containing 11-12ths fine silver, 21 per mark, and in this +proportion down to 1-4th fine, on which 5 guilders are given. + +Fine bars, 28 per mark. + + GOLD. + + Portugal coin } + Guineas } B--310 per mark. + Louis d'ors, new } + Ditto old 300 + New ducats 4 19 8 per ducat. + +Bar or ingot gold is received in proportion to its fineness, compared +with the above foreign gold coin. Upon fine bars the bank gives 340 per +mark. In general, however, something more is given upon coin of a known +fineness, than upon gold and silver bars, of which the fineness cannot +be ascertained but by a process of melting and assaying. + +[38] This paragraph was written in the year 1775. + +[39] See the accounts at the end of this Book. + +[40] Before the 13th of the present king, the following were the duties +payable upon the importation of the different sorts of grain: + + _Grain._ _Duties._ _Duties._ _Duties._ + Beans to 28s. per qr. 19s. 10d. after till 40s. 16s. 8d. then 12d. + Barley to 28s. 19s. 10d. 32s. 16s. 12d. + Malt is prohibited by the annual malt-tax bill. + Oats to 16s. 5s. 10d. after 9-1/2d. + Pease to 40s. 16s. 0d. after 9-3/4d. + Rye to 36s. 19s. 10d. till 40s. 16s. 8d. then 12d. + Wheat to 44s. 21s. 9d. till 53s. 4d. 17s. then 8s. + till L 4, and after that about 1s. 4d. + Buck-wheat to 32s. per qr. to pay 16s. + +These different duties were imposed, partly by the 22d of Charles II. in +place of the old subsidy, partly by the new subsidy, by the one-third +and two-thirds subsidy, and by the subsidy 1747. + +[41] See Dictionnaire des Monnoies, tom. ii. article Seigneurage, p. +489, par M. Abbot de Baringhen, Conseiller-Commissaire en la Cour des +Monnoies à Paris. + +[42] The interest of every proprietor of India stock, however, is by no +means the same with that of the country in the government of which his +vote gives him some influence.--See book v, chap. i, part ii. + +[43] See book I chap. I + +[44] See the Journal of Mr. De Lange, in Bell's Travels, vol. ii. p. +258, 276, 293. + +[45] Plin. 1. ix. c. 30. + +[46] Plin. 1. viii. c. 48. + +[47] They are to be found in Tyrol's History of England. + +[48] Since publishing the first two editions of this book, I have got +good reasons to believe that all the turnpike tolls levied in Great +Britain do not produce a neat revenue that amounts to half a million; a +sum which, under the management of government, would not be sufficient +to keep in repair five of the principal roads in the kingdom. + +[49] I have now good reason to believe that all those conjectural sums +are by much too large. + +[50] See Memoires concernant les Droits et Impositions en Europe, tome +i. page 73. This work was compiled by the order of the court, for the +use of a commission employed for some years past in considering the +proper means for reforming the finances of France. The account of the +French taxes, which takes up three volumes in quarto, may be regarded as +perfectly authentic. That of those of other European nations was +compiled from such information as the French ministers at the different +courts could procure. It is much shorter, and probably not quite so +exact as that of the French taxes. + +[51] See Memoires concernant les Droits et Impositions en Europe tome i. +p. 73. + +[52] See Sketches of the History of Man page 474, and Seq. + +[53] Memoires concernant les Droits, p. 240, 241. + +[54] Memoires concernant les Droits, &c. tom. i. p. 114, 115, 116, &c. + +[55] Id. tom. i. p. 83, 84. + +[56] Id. p. 280, &c.; also p. 287, &c. to 316. + +[57] Memoires concernant les Droits, &c. tom. ii. p. 139, &c. + +[58] Since the first publication of this book, a tax nearly upon the +above-mentioned principles has been imposed. + +[59] Memoires concernant les Droits, &c. p. 223. + +[60] Memoires concernant les Droits, tom. i, p. 74. + +[61] Memoires concernant les Droits, tom. i, p. 163, 167, 171. + +[62] Memoires concernant les Droits, &c. tom. ii. p. 17. + +[63] Lib. 55. See also Burman, de Vectigalibus Pop. Rom. cap. xi. and +Bouchaud de l'impot du vingtieme sur les successions. + +[64] See Memoires concernant les Droits, &c. tom. i. p. 225. + +[65] Memoires concernant les Droits, &c. tom. i. p. 154. + +[66] Id. p. 157. + +[67] Memoires concernant les Droits, &c. tom. i. p. 223, 224, 225. + +[68] Memoires concernant les Droits, &c. tom. ii. p. 108. + +[69] Memoires concernant les Droits, &c. tom. iii. p. 87. + +[70] See book i. chap. 8. + +[71] Memoires concernant les Droits, &c., p. 210, 211. + +[72] Le Reformateur + +[73] Though the duties directly imposed upon proof spirits amount only +to 2s. 6d. per gallon, these, added to the duties upon the low wines, +from which they are distilled, amount to 3s. 10-2/3d. Both low wines and +proof spirits are, to prevent frauds, now rated according to what they +gauge in the wash. + +[74] The neat production of that year, after deducting all expenses and +allowances, amounted to L.4,975,652 : 19 : 6. + +[75] Memoires concernant les Droits, &c. tom. 1, p. 45 + +[76] See Examen des Reflections Politiques sut les Finances. + +[77] See James Postlethwaite's History of the Public Revenue. + +[78] It has proved more expensive than any one of our former wars, and +has involved us in an additional debt of more than one hundred millions. +During a profound peace of eleven years, little more than ten millions +of debt was paid; during a war of seven years, more than one hundred +millions was contracted. + +[79] See Du Cange Glossary, voce Moneta; the Benedictine Edition. + +[80] See Hutchinson's History of Massachusetts Bay vol. ii, page 436, et +seq. + + + + +INDEX. + + + A + + _Absentee_ tax, the propriety of, considered with reference to + Ireland, 379. + + _Accounts_ of money, in modern Europe, all kept, and the value of + goods computed, in silver, 16. + + _Actors_, public, paid for the contempt attending their profession, + 44. + + _Africa_, cause assigned for the barbarous state of the interior + parts of that continent, 9. + + _African company_, establishment and constitution of, 309. Receive + an annual allowance from parliament for forts and garrisons, 310. + The company not under sufficient controul, ib. History of the Royal + African company, 311. Decline of, ib. Rise of the present company, + ib. + + _Age_, the foundation of rank and precedency in rude as well as + civilized societies, 297. + + _Aggregate fund_, in the British finances, explained, 388. + + _Agio_ of the bank of Amsterdam explained, 194. Of the bank of + Hamburgh, 195. The agio at Amsterdam, how kept at a medium rate, + 197. + + _Agriculture_, the labour of, does not admit of such subdivisions + as manufactures, 3. This impossibility of separation prevents + agriculture from improving equally with manufactures, ib. Natural + state of, in a new colony, 38. Requires more knowledge and + experience than most mechanical professions, and yet is carried on + without any restrictions, 53. The terms of rent, how adjusted + between landlord and tenant, 60. Is extended by good roads and + navigable canals, 62. Under what circumstances pasture land is more + valuable than arable, 63. Gardening not a very gainful employment, + 64. Vines the most profitable article of culture, 65. Estimates of + profit from projects very fallacious, ib. Cattle and tillage + mutually improve each other, 93. Remarks on that of Scotland, ib. + On that of North America, 94. Poultry, a profitable article in + husbandry, ib. Hogs, 95. Dairy, 96. Evidences of land being + completely improved, ib. The extension of cultivation, as it raises + the price of animal food, reduces that of vegetables, 103. By whom + and how practised under feudal government, 137. Its operations not + so much intended to increase, as to direct the fertility of nature, + 149. Has been the cause of the prosperity of the British colonies + in America, 150. The profits of, exaggerated by projectors, 154. On + equal terms, is naturally preferred to trade, 156. Artificers + necessary to the carrying it on, ib. Was not attended to by the + northern destroyers of the Roman empire, 157. The ancient policy of + Europe unfavourable to, 162. Was promoted by the commerce and + manufactures of towns, 170. The wealth arising from, more solid and + durable than that which proceeds from commerce, 172. Is not + encouraged by the bounty on the exportation of corn, 207. Why the + proper business of new companies, 251. The present agricultural + system of political economy adopted in France, described, 275. Is + discouraged by restrictions and prohibitions in trade, 279. Is + favoured beyond manufactures in China, 282. And in Indostan, 283. + Does not require so extensive a market as manufactures, 284. To + check manufactures in order to promote agriculture, false policy, + 285. Landlords ought to be encouraged to cultivate part of their + own land, 350. + + _Alcavala_, the tax in Spain so called, explained and considered, + 381. The ruin of the Spanish manufactures attributed to this tax, + ib. + + _Alehouses_, the number of, not the efficient cause of drunkenness, + 148, 200. + + _Allodial rights_, mistaken for feudal rights, 168. The + introduction of the feudal law tended to moderate the authority of + the allodial lords, ib. + + _Ambassadors_, the first motive of their appointment, 307. + + _America_, why labour is dearer in North America than in England, + 29. Great increase of population there, ib. Common rate of interest + there, 38. Is a new market for the produce of its own silver mines, + 85. The first accounts of the two empires of Peru and Mexico + greatly exaggerated, ib. Improving state of the Spanish colonies + there, 86. Account of the paper currency of the British colonies, + 134. Cause of the rapid prosperity of the British colonies there, + 150. Why manufactures for distant sale have never been established + there, 156. Its speedy improvement owing to assistance from foreign + capitals, 157. The purchase and improvement of uncultivated land + the most profitable employment of capitals, 171. Commercial + alterations produced by the discovery of, 181. But two civilized + nations found on the whole continent, ib. The wealth of the North + American colonies increased, though the balance of trade continued + against them, 203. Madeira wine, how introduced there, 204. + Historical review of the European settlements in, 229. Of Spain, + 232, 233. Of Holland, 234. Of France, ib. Of Britain, ib. + Ecclesiastical government in the several European colonies, 235. + Fish a principal article of trade from North America to Spain, + Portugal, and the Mediterranean, 237. Naval stores to Britain, 238. + Little credit due to the policy of Europe from the success of the + colonies, 242. The discovery and colonization of, how far + advantageous to Europe, 243. And to America, ib. The colonies in, + governed by a spirit of monopoly, 261. The interest of the consumer + in Britain sacrificed to that of the producer, by the system of + colonization, 274. Plan for extending the British system of + taxation, over all the provinces of, 397, 398. The question, how + the Americans could pay taxes without specie, considered, 402. + Ought in justice to contribute to discharge the public debt in + Britain, 402. Expediency of their union with Britain, 403. The + British empire there a mere project, 404. + + _Amsterdam_, agio of the bank of, explained, 194. Occasion of its + establishment, 195. Advantages attending payments there, ib. Rate + demanded for keeping money there, ib. Prices at which bullion and + coin are received, 196, _note_. This bank the great warehouse of + Europe for bullion, 197. Demands upon, how made and answered, ib. + The agio, how kept at a medium rate, ib. The treasure of, whether + all preserved in its repositories, 198. The amount of its treasure + only to be conjectured, ib. Fees paid to the bank for transacting + business, ib. + + _Annuities_, for terms of years, and for lives, in the British + finances, historical account of, 389. + + _Apothecaries_, the profit on their drugs, unjustly stigmatized as + exorbitant, 46. + + _Apprenticeship_, the nature and intention of this bond of + servitude, explained, 42. The limitations imposed on various trades + as to the number of apprentices, 50. The statute of apprenticeship + in England, ib. Apprenticeships in France and Scotland, 51. General + remarks on the tendency and operation of long apprenticeships, ib. + The statute of, ought to be repealed, 191. + + _Arabs_, their manner of supporting war, 289. + + _Army_, three different ways by which a nation may maintain one + in a distant country, 178. Standing, distinction between and a + militia, 292. Historical review of, 294. The Macedonian army, ib. + Carthaginian army, ib. Roman army, ib. Is alone able to perpetuate + the civilization of a country, 296. Is the speediest engine for + civilizing a barbarous country, ib. Under what circumstances + dangerous to, and under what favourable to liberty, ib. + + _Artificers_ prohibited by law from going to foreign countries, + 273. Residing abroad, and not returning on notice, exposed to + outlawry, ib. See _Manufactures_. + + _Asdrubal_, his army greatly improved by discipline, 294. How + defeated, ib. + + _Assembly_, houses of, in the British colonies, the constitutional + freedom of, shewn, 240. + + _Assiento Contract_, 312. + + _Assize_ of bread and ale, remarks on that statute, 75, 77. + + _Augustus_, emperor, emancipates the slaves of Vedius Pollio for + his cruelty, 241. + + + B + + _Balance_ of annual produce and consumption explained, 203. May be + in favour of a nation, when the balance of trade is against it, ib. + + _Balance_ of trade, no certain criterion to determine on which side + it turns between two countries, 192. The current doctrine of, on + which most regulations of trade are founded, absurd, 199. If even, + by the exchange of their native commodities, both sides may be + gainers, ib. How the balance would stand if native commodities on + one side were paid with foreign commodities on the other, ib. How + the balance stands when commodities are purchased with gold and + silver, ib., 200. The ruin of countries often predicted from the + doctrine of an unfavourable balance of trade, 202. + + _Banks_, great increase of trade in Scotland since the + establishment of them in the principal towns, 120. Their usual + course of business, 121. Consequences of their issuing too much + paper, 122. Necessary caution for some time observed by them with + regard to giving credit to their customers, 124. Limits of the + advances they may imprudently make to traders, 125. How injured by + the practice of drawing and redrawing bills, 126, 127. History of + the Ayr bank, 128. History of the bank of England, 130. The nature + and public advantage of banks considered, 131. Bankers might carry + on their business with less paper, 132. Effects of the optional + clauses in the Scotch notes, 133. Origin of their establishment, + 194. Bank money explained, 195. Bank of England, the conduct of, in + regard to the coinage, 226. Joint stock companies, why well adapted + to the trade of banking, 317, 318. A doubtful question, whether + the government of Great Britain is equal to the management of the + bank to profit, 344. + + _Bankers_, the credit of their notes how established, 118. The nature + of the banking business explained, ib., 121. The multiplication and + competition of bankers, under proper regulations of service to + public credit, 135. + + _Baretti_, Mr. his account of the quantity of Portugal gold sent + weekly to England, 225. + + _Barons_, feudal, their power contracted by the grant of municipal + privileges, 163. Their extensive authority, 168. How they lost + their authority over their vassals, 169. And the power to disturb + their country, 170. + + _Barter_, the exchange of one commodity for another, the propensity + to, of extensive operation, and peculiar to man, 6. Is not + sufficient to carry on the mutual intercourse of mankind, 10. See + _Commerce_. + + _Batavia_, causes of the prosperity of the Dutch settlement there, + 263. + + _Beaver skins_, review of the policy used in the trade for, 273. + + _Beef_, cheaper now in London than in the reign of James I., 63. + Compared with the prices of wheat at the corresponding times, 64. + + _Benefices_, ecclesiastical, the tenure of, why rendered secure, + 335. The power of collating to, how taken from the pope, in England + and France, 338. General equality of, among the presbyterians, 340. + Good effects of this equality, ib. + + _Bengal_, to what circumstances its early improvement in + agriculture and manufactures was owing, 9. Present miserable state + of the country, 30. Remarks on the high rates of interest there, + 39. Oppressive conduct of the English there, to suit their trade in + opium, 263. Why more remarkable for the exportation of manufactures + than of grain, 284. + + _Berne_, brief history of the republic of, 164. Establishment of + the reformation there, 338. Application of the revenue of the + catholic clergy, 341. Derives a revenue from the interest of its + treasure, 344. + + _Bills of Exchange_, punctuality in the payment of, how secured, + 126. The pernicious practice of drawing and redrawing explained, + ib. The arts made use of to disguise this mutual traffic in bills, + 127. + + _Birth_, superiority of, how it confers respect and authority, 298. + + _Bishops_, the ancient mode of electing them, and how altered, 335, + 337. + + _Body_, natural and political, analogy between, 280. + + _Bohemia_, account of the tax there on the industry of artificers, + 366. + + _Bounty_, on the exportation of corn, the tendency of this measure + examined, 81. + + _Bounties_, why given in commerce, 183. On exportation, the policy + of granting them considered, 205. On the exportation of corn, 206. + This bounty imposes two taxes on the people, 207. Evil tendency of + this bounty, 209. The bounty only beneficial to the exporter and + importer, ib. Motives of the country gentlemen in granting the + bounty, 210. A trade which requires a bounty, necessarily a losing + trade, ib. Tonnage bounties to the fisheries considered, 211. + Account of the white-herring fishery, 212. Remarks on other + bounties, 213. A review of the principles on which they are + generally granted, 267. Those granted on American produce founded + on mistaken policy, 268. How they affect the consumer, 274. + + _Bourdeaux_, why a town of great trade, 138. + + _Brazil_ grew to be a powerful colony under neglect, 233. The Dutch + invaders expelled by the Portuguese colonists, ib. Computed number + of inhabitants there, ib. The trade of the principal provinces + oppressed by the Portuguese, 236. + + _Bread_, its relative value with butcher's meat compared, 62, 63. + + _Brewery_, reasons for transferring the taxes on to the malt, 376. + + _Bridges_, how to be erected and maintained, 303. + + _Britain_, Great, evidences that labour is sufficiently paid for + there, 30. The price of provisions nearly the same in most places, + 31. Great variations in the price of labour, ib. Vegetables + imported from Flanders in the last century, 32. Historical account + of the alterations interest of money has undergone, 37. Double + interest deemed a reasonable mercantile profit, 40. In what + respects the carrying trade is advantageous to, 152, 153. Appears + to enjoy more of the carrying trade of Europe than it really has, + 153. It is the only country of Europe in which the obligation of + purveyance is abolished, 161. Its funds for the support of foreign + wars inquired into, 178, 179. Why never likely to be much affected + by the free importation of Irish cattle, 186. Nor salt provisions, + ib. Could be little affected by the importation of foreign corn, + 187. The policy of the commercial restraints on the trade with + France examined, 192. The trade with France might be more + advantageous to each country than that with any other, 202. Why one + of the richest countries in Europe, while Spain and Portugal are + among the poorest, 221. Review of her American colonies, 234. The + trade of her colonies, how regulated, 236. Distinction between + enumerated and non-enumerated commodities explained, 237. Restrains + manufactures in America, 238, 239. Indulgences granted to the + colonists, 239. Constitutional freedom of her colony government, + 240. The sugar colonies of, worse governed than those of France, + 241. Disadvantages resulting from retaining the exclusive trade of + tobacco with Maryland and Virginia, 244, 245. The navigation act + has increased the colony trade, at the expense of many other + branches of foreign trade, 245. The advantage of the colony trade + estimated, 247. A gradual relaxation of the exclusive trade + recommended, 250. Events which have concurred to prevent the ill + effects of the loss of the colony trade, ib. The natural good + effects of the colony trade more than counterbalance the bad + effects of the monopoly, 251. To maintain a monopoly, the principal + end of the dominion assumed over the colonies, 254. Has derived + nothing but loss from this dominion, ib. Is perhaps the only state + which has only increased its expenses by extending its empire, 256. + The constitution of, would have been completed by admitting of + American representation, 258. Review of the administration of the + East India Company, 264, 265. The interest of the consumer + sacrificed to that of the producer in raising an empire in America, + 274. The annual revenue of, compared with its annual rents and + interest of capital stock, 345, 346. The land-tax of, considered, + 348. Tithes, 352. Window-tax, 357. Stamp-duties, 363, 365. + Poll-taxes in the reign of William III., 367. The uniformity of + taxation in, favourable to internal trade, 382. The system of + taxation in, compared with that in France, 384. Account of the + unfunded debt of, 387. Funded debt, 388. Aggregate and general + funds, ib. Sinking fund, 389. Annuities for terms of years and for + lives, ib. Perpetual annuities the best transferable stock, 391. + The reduction of the public debts during peace bears no proportion + to their accumulation during war, 392. The trade with the tobacco + colonies, how carried on, without the intervention of specie, 401. + The trade with the sugar colonies explained, ib. Ireland and + America ought in justice to contribute towards the discharge of her + public debts, 402. How the territorial acquisitions of the East + India Company might be rendered a source of revenue, 403. If no + such assistance can be obtained, her only resource pointed out, ib. + + _Bullion_, the money of the great mercantile republic, 179. See + _Gold_ and _Silver_. + + _Burghs_, free, the origin of, 163. To what circumstances they owed + their corporate jurisdictions, ib. Why admitted to send + representatives to parliament, 164. Are allowed to protect refugees + from the country, 165. + + _Burn_, Dr. his observation on the laws relating to the settlements + of the poor, 58, 59. + + _Butcher's meat_, nowhere a necessary of life, 370. + + + C + + _Calvinists_, origin of that sect, 339. Their principles of church + government, ib. + + _Cameron_, Mr. of Lochiel, exercised, within thirty years since, a + criminal jurisdiction over his own tenants, 168. + + _Canada_, the French colony there, long under the government of an + exclusive company, 234. But improved speedily after the dissolution + of the company, ib. + + _Canals_, navigable, the advantages of, 62. How to be made and + maintained, 303. That of Languedoc, the support of, how secured, + ib. May be successfully managed by joint stock companies, 317. + + _Cantillon_, Mr. remarks on his account of the earnings of the + labouring poor, 28. + + _Cape of Good Hope_, causes of the prosperity of the Dutch + settlement there, 263. + + _Capital_, in trade, explained, and how employed, 112. + Distinguished into circulating and, fixed capitals, ib. + Characteristic of fixed capitals, 113. The several kinds of fixed + capitals specified, ib. Characteristic of circulating capitals, and + the several kinds of, 114. Fixed capitals supported by those which + are circulating, ib. Circulating capitals how supported, ib. + Intention of a fixed capital, 116. The expense of maintaining the + fixed and circulating capitals illustrated, ib. Money, as an + article of circulating capital, considered, ib. Money no measure of + capital, 118. What quantity of industry any capital can employ, + 120. Capitals, how far they may be extended by paper credit, 125. + Must always be replaced with profit by the annual produce of land + and labour, 136. The proportion between capital and revenue + regulates the proportion between industry and idleness, 138. How it + is increased or diminished, ib. National evidences of the increase + of, 141. In what instances private expenses contribute to enlarge + the national capital, 142. The increase of, reduces profits by + competition, 145. The different ways of employing a capital, 147. + How replaced to the different classes of traders, 148. That + employed in agriculture puts into motion a greater quantity of + productive labour than any equal capital employed in manufacturers, + 149. That of a manufacturer should reside within the country, 150. + The operation of capitals employed in agriculture, manufactures, + and foreign trade compared, ib. The prosperity of a country depends + on the due proportion of its capital applied to these three grand + objects, 151. Different returns of capitals employed in foreign + trade, 152. Is rather employed in agriculture than in trade and + manufactures, on equal terms, 155, 156. Is rather employed in + manufactures than in foreign trade, 156. The natural progress of + the employment of, 157. Acquired by trade, is very precarious, + until realized by the cultivation and improvement of land, 172. The + employment of, in the different species of trade, how determined, + 183. + + _Capitation taxes_, the nature of, considered, 367. In England, ib. + In France, ib. + + _Carriage_, land and water, compared, 8. Water carriage contributes + to improve arts and industry in all countries where it can be used, + 9, 62, 87. Land, how facilitated and reduced in price by public + works, 303. + + _Carrying trade_, the nature and operation of, examined, 152. Is + the symptom, but not the cause of national wealth, and hence points + out the two richest countries in Europe, 153. Trades may appear to + be carrying trades which are not so, ib. The disadvantages of, to + individuals, 183. The Dutch, how excluded from being the carriers + to Great Britain, 187, 188. Drawbacks of duties originally granted + for the encouragement of, 205. + + _Carthaginian army_, its superiority over the Roman army accounted + for, 294. + + _Cattle_ and _Corn_, their value compared, in the different stages + of agriculture, 62. The price of, reduced by artificial grasses, + 63. To what height the price of cattle may rise in an improving + country, 92, 93. The raising a stock of, necessary for the supply + of manure to farms, 93. Cattle must bear a good price to be well + fed, ib. The price of, rises in Scotland in consequence of the + union with England ib. Great multiplication of European cattle in + America, 94. Are killed in some countries merely for the sake of + the hides and tallow, 97. The market for these articles more + extensive than for the carcase, ib. This market sometimes brought + nearer home by the establishment of manufactures, ib. How the + extension of cultivation raises the price of animal food, 103. Is + perhaps the only commodity more expensive to transport by sea than + by land, 186. Great Britain never likely to be much affected by the + free importation of Irish cattle, ib. + + _Certificates_, parish, the laws relating to, with observations on + them, 58. + + _Child_, Sir Josiah, his observation on trading companies, 309. + + _Children_, riches unfavourable to the production, and extreme + poverty to the raising, of them, 33. The mortality still greater + among those maintained by charity, ib. + + _China_, to what the early improvement in arts and industry there + was owing, 9. Concurrent testimonies of the misery of the lower + ranks of the Chinese, 30. Is not, however, a declining country, ib. + High rate of interest of money there, 40. Great state assumed by + the grandees, 86. The price of labour there lower than in the + greater mpart of Europe, 87. Silver the most profitable article to + send thither, ib. The proportional value of gold to silver, how + rated there, 89. The value of gold and silver much higher there + than in any part of Europe, 101. Agriculture favoured there beyond + manufactures, 282. Foreign trade not favoured there, 283. Extension + of the home market, ib. Great attention paid to the roads there, + 305, 306. In what the principal revenue of the sovereign consists, + 353. The revenue of, partly raised in kind, ib. + + _Church_, the richer the church the poorer the state, 341. Amount + of the revenue of church of Scotland, 342. The revenue of the + church heavier taxed in Prussia than lay proprietors, 351. The + nature and effect of tithes considered, 352. + + _Circulation_, the dangerous practice of raising money by, explained, + 127. In traffic, the two different branches of, considered, 132. + + _Cities_, circumstances which contributed to their opulence, 165. + Those of Italy the first that rose to consequence, ib. The commerce + and manufactures of, have occasioned the improvement and + cultivation of the country, 170. + + _Clergy_, a supply of, provided for, by public and private + foundations for their education, 55. Curates worse paid than many + mechanics, ib. Of an established religion, why unsuccessful against + the teachers of a new religion, 330. Why they persecute their + adversaries, ib. The zeal of the inferior clergy of the church of + Rome, how kept alive, ib. Utility of ecclesiastical establishments, + 331. How connected with the civil magistrate, ib., 332. Unsafe for + the civil magistrate to differ with them, 334. Must be managed + without violence, ib., 335. Of the church of Rome, one great army + cantoned over Europe, ib., 336. Their power similar to that of the + temporal barons during the feudal monkish ages, ib. How the power + of the Romish clergy declined, 337. Evils attending allowing + parishes to elect their own ministers, 339. + + _Clothing_, more plentiful than food in uncultivated countries, 68. + The materials for, the first articles rude nations have to offer, + ib. + + _Coal_ must generally be cheaper than wood to gain the preference + for fuel, 70. The price of, how reduced, ib. The exportation of, + subjected to a duty higher than the prime cost of, at the pit, 273. + The cheapest of all fuel, 370. The tax on absurdly regulated, ib. + + _Coal mines_, their different degrees of fertility, 70. When + fertile, are sometimes unprofitable by situation, ib. The + proportion of rent generally paid for, ib., 71. The machinery + necessary to, expensive, 112. + + _Coal trade_ from Newcastle to London employs more shipping than + all the other carrying trade of England, 153. + + _Cochin China_, remarks on the principal article of cultivation + there, 66. + + _Coin_, stamped, the origin and peculiar advantages of, in + commerce, 11. The different species of, in different ages and + countries, ib. Causes of the alterations in the value of, ib., 12, + 13, 14. How the standard coin of different nations came to be of + different metals, 16. A reform in the English coinage suggested, + 19. Silver, consequences attending the debasement of, 82. Coinage + of France and Britain examined, 193. Why coin is privately melted + down, 225. The mint chiefly employed to keep up the quantity thus + diminished, ib. A duty to pay the coinage would preserve money from + being melted or counterfeited, ib. Standard of the gold coin in + France, ib. How a seignorage on coin would operate, 226. A tax + upon coinage is advanced by every body, and finally paid by nobody, + ib. A revenue lost by government defraying the expense of coinage, + 227. Amount of the annual coinage before the late reformation of + the gold coin, ib. The law for the encouragement of, founded on + prejudice, ib. Consequences of raising the denomination as an + expedient to facilitate the payment of public debts, 395. + Adulteration of, 397. + + _Colbert_, M., the policy of his commercial regulations disputed, + 189, 275. His character, 275. + + _Colleges_, cause of the depreciation of their money rents inquired + into, 14. The endowments of, from whence they generally arise, 318. + Whether they have in general answered the purposes of their + institution, ib. These endowments have diminished the necessity of + application in the teachers, 319. The privileges of graduates by + residence, and charitable foundation of scholarships, injurious to + collegiate education, 320. Discipline of, ib. + + _Colliers_ and _Coal-heavers_, their high earnings accounted for, 43. + + _Colonies_, new, the natural progress of, 38. Modern, the + commercial advantages derived from them, 183. Ancient, on what + principles founded, 227, 228. Ancient Grecian colonies not retained + under subjection to the parent states, ib. Distinction between the + Roman and Greek colonies, 228. Circumstances that led to the + establishment of European colonies in the East Indies and America, + ib. The East Indies discovered by Vasco de Gama, 229. The West, + Indies discovered by Columbus, ib. Gold the object of the first + Spanish enterprises there, 230. And of all those of all other + European nations, 231. Causes of the prosperity of new colonies, + ib. Rapid progress of the ancient Greek colonies, 232. The Roman + colonies slow in improvement, ib. The remoteness of America and the + West Indies greatly in favour of the European colonies there, ib. + Review of the British American colonies, 234. Expense of the civil + establishments in British America, 235. Ecclesiastical government, + ib. General view of the restraints laid upon the trade of the + European colonies, 236. The trade of the British colonies, how + regulated, ib. The different kinds of non-enumerated commodities + specified, 237. Enumerated commodities, 238. Restraints upon their + manufactures, ib. Indulgences granted them by Britain, 239. Were + free in every other respect except as to their foreign trade, 240. + Little credit due to the policy of Europe from the success of the + colonies, 242. Throve by the disorder and injustice of the European + governments, ib. Have contributed to augment the industry of all + the countries of Europe, 243. Exclusive privileges of trade a dead + weight upon all these exertions both in Europe and America, ib. + Have in general been a source of expense instead of revenue to + their mother countries, 244. Have only benefited their mother + countries by the exclusive trade carried on with them, ib. + Consequences of the navigation act, 245. The advantage of the + colony trade to Britain estimated, 247. A gradual relaxation of the + exclusive commerce recommended, 250. Events which have prevented + Britain from sensibly feeling the loss of the colony trade, ib. The + effects of the colony trade, and the monopoly of that trade, + distinguished, ib. To maintain a monopoly, the principal end of the + dominion Great Britain assumes over the colonies, 254. Amount of + the ordinary peace establishment of, ib. The two late wars Britain + sustained, colony wars, to support a monopoly, ib. Two modes by + which they might be taxed, 255. Their assemblies not likely to tax + them, ib. Taxes by parliamentary requisition as little likely to be + raised, 256. Representatives of, might he seated into the British + parliament with good effect, 257. Answer to objections against + American representation, 258. The interest of the consumer in + Britain sacrificed to that of the producer in raising an empire in + America, 274. + + _Columbus_, the motive that led to his discovery of Americas, 229. + Why he gave the name of Indies to the islands he discovered, ib. + His triumphal exhibition of their productions, 230. + + _Columella_, his instructions for fencing a kitchen garden, 64. + Advises the planting of vineyards, 65. + + _Commerce_, the different common standards or mediums made use of + to facilitate the exchange of commodities in the early stages of, + 10. Origin of money, ib. Definition of the term value, 12. Treaties + of, though advantageous to the merchants and manufacturers of the + favoured countries, necessarily, disadvantageous to those of the + favouring country, 222. Translation of the commercial treaty + between England and Portugal, concluded in 1703, by Mr. Methuen, + 223. Restraints laid upon the European colonies in America, 236. + The present splendour of the mercantile system owing to the + discovery and colonization of America, 259. Review of the plan by + which it proposes to enrich a country, 266. The interest of the + consumer constantly sacrificed to that of the producer, 274. See + _Agriculture_, _Banks_, _Capital_, _Manufactures_, _Merchant_, + _Money_, _Stock_, _Trade_, &c. + + _Commodities_, the barter of, insufficient for the mutual supply of + the wants of mankind, 10. Metals found to be the best medium to + facilitate the exchange of, ib. Labour an invariable standard for + the value of, 14. Real and nominal prices of, distinguished, ib. + Component parts of the prices of, explained and illustrated, 21. + Natural and market prices of, distinguished and how regulated, 23. + The ordinary proportion between the value of two commodities, not + necessarily the same as between the quantities of them commonly in + the market, 89. The price of rude produce, how affected by the + advance of wealth and improvement, 91, 92. Foreign are primarily + purchased with the produce of domestic industry, 151. When + advantageously exported in a rude state, even by a foreign capital, + 156. The quantity of, in every country, naturally regulated by the + demand, 176. Wealth in goods, and in money, compared, 177. + Exportation of, to a proper market, always attended with more + profit than that of gold and silver, 179. The natural advantages of + countries in particular productions sometimes not possible to + struggle against, 185. + + _Company_, mercantile, incapable of consulting their true interests + when they become sovereigns, 264. An exclusive company a public + nuisance, 265. Trading, how first formed, 307. Regulated and + joint-stock companies distinguished, ib. Regulated companies in + Great Britain specified, ib., 308. Are useless, 308. Constant view + of such companies, ib. Forts and garrisons, why never maintained by + regulated companies, 309. The nature of joint-stock companies + explained, 310, 311, 316. A monopoly necessary to enable a + joint-stock company to carry on a foreign trade, 317. What kind of + joint-stock companies need no exclusive privileges, ib. Joint-stock + companies, why well adapted to the trade of banking, ib. The trade + of insurance may be carried on successfully by a joint-stock + company, ib. Also, inland navigations, and the supply of water to a + great city, ib. Ill success of joint-stock companies in other + undertakings, 318. + + _Competition_, the effect of, in the purchase of commodities, 23. + Among the venders, ib., 37. + + _Concordat_ in France, its object, 337. + + _Congress_, American, its strength owing to the important + characters it confers on the members of it, 257. + + _Conversion price_, in the payment of rents in Scotland, explained, + 76, 77. + + _Copper_, the standard measure of value among the ancient Romans, + 16. Is no legal tender in England, ib. + + _Cori_, the largest quadruped on the island of St. Domingo, + described, 229. + + _Corn_, the raising of, in different countries, not subject to the + same degree of rivalship, as manufactures, 3, 4. Is the best + standard for reserved rents, 14. The price of, how regulated, 15. + The price of, the best standard for comparing the different values + of particular commodities at different times and places, 16. The + three component parts in the price of, 21. Is dearer in Scotland + than in England, 31. Its value compared with that of butcher's + meat, in the different periods of agriculture, 62. Compared with + silver, 75. Circumstances in a historical view of the prices of + corn that have misled writers in treating of the value of silver at + different periods, 76. Is always a more accurate measure of value + than any other commodity, 79. Why dearer in great towns than in the + country, 80. Why dearer in some rich commercial countries, as + Holland and Genoa, ib. Rose in its nominal price on the discovery + of the American mines, 81. And in consequence of the civil war + under king Charles I., ib. And in consequence of the bounty on the + exportation of, 82. Tendency of the bounty examined, 83. + Chronological table of the prices of, 108. The least profitable + article of growth in the British West Indian colonies, 159. The + restraints formerly laid upon the trade of, unfavourable to the + cultivation of land, 162. The free importation of, could little + affect the farmers of Great Britain, 187. The policy of the bounty + on the exportation of, examined, 206. The reduction in the price + of, not produced by the bounty, ib. Tillage not encouraged by the + bounty, ib. The money price of, regulates that of all other + home-made commodities, 207. Illustration, 208. Ill effects of the + bounty, ib. Motives of the country gentlemen in granting the + bounty, 209. The natural value of not to be altered by altering the + money price, 210. The four several branches of the corn trade + specified, 213. The inland dealer, for his own interest, will not + raise the price of, higher than the scarcity of the season + requires, ib. Corn a commodity the least liable to be monopolised, + 214. The inland dealers too numerous and dispersed to form a + general combination, ib. Dearths, never artificial, but when + government interferes improperly to prevent them, ib. The freedom + of the corn trade the best security against a famine, 215. Old + English statute to prohibit the corn trade, ib. Consequences of + farmers being forced to become corn dealers, ib. The use of corn + dealers to the farmers, 216. The prohibitory statute against the + corn trade softened, 217. But still under the influence of popular + prejudices, ib., 218. The average quantity imported and exported + compared with the consumption and annual produce, ib. Tendency of a + free importation of, 219. The home-market the most important one + for corn, ib. Impropriety of the statute 22 Car. II. for regulating + the importation of wheat, confessed by the suspension of its + execution by temporary statutes, ib. Duties payable on the + importation of grain before 13 Geo. III. ib. _note_, ib. The + home-market indirectly supplied by the exportation of corn, ib. How + a liberal system of free exportation and importation and among all + nations would operate, 220. The laws concerning corn, similar to + those relating to religion, 221. The home-market supplied by the + carrying trade, ib. The system of laws connected with the + establishment of the bounty, undeserving of praise, ib. Remarks on + the statute 13 Geo. III. ib. + + _Corporations_, tendency of the exclusive privileges of, on trade, + 26. By what authority erected, 50, 52. The advantages they derive + from the surrounding country, ib. Check the operations of + competition, 54. Their internal regulations combinations against + the public, ib. Are injurious even to the members of them, ib. The + laws of, obstruct the free circulation of labour from one + employment to another, 57. Origin of, 163. Are exempted by their + privileges from the power of the feudal barons, 164. The European + East India companies disadvantageous to the eastern commerce, 181, + 182. The exclusive privileges of corporations ought to be + destroyed, 191. + + _Cottagers_, in Scotland, their situation described, 49. Are cheap + manufacturers of stockings, ib. The diminution of, in England, + considered, 95. + + _Coward_, character of, 329. + + _Credit_. See _Paper Money_. + + _Crusades_, to the Holy land, favourable to the revival of + commerce, 165. + + _Currency of states_, remarks on, 194. + + _Customs_, the motives and tendency of drawbacks from the duties + of, 203. The revenue of the customs increased by drawbacks, 205. + Occasion of first imposing the duties of, 307. Origin of those + duties, 371. Three ancient branches of, 372. Drawbacks of, ib. Are + regulated according to the mercantile system, ib., 373. Frauds + practised to obtain drawbacks and bounties, ib. The duties of, in + many instances uncertain, ib. Improvement of, suggested, 374. + Computation of the expense of collecting them, 380. + + + D + + _Dairy_, the business of, generally carried on as a save-all, 96. + Circumstances which impede or promote the attention to it, ib. + English and Scotch dairies, ib. + + _Danube_, the navigation of that river, why of little use to the + interior parts of the country from whence it flows, 9. + + _Davenant_, Dr. his objections to the transferring the duties on + beer to the malt considered, 377. + + _Dearths_, never caused by combinations among the dealers in corn, + but by some general calamity, 214. The free exercise of the corn + trade the best palliative against the inconveniencies of a dearth, + 217. Corn dealers the best friends to the people at such seasons, + 218. + + _Debts_, public, the origin of, traced, 386. Are accelerated by the + expenses attending war, ib. Account of the unfunded debt of Great + Britain, 387. The funded debt, 388. Aggregate and general funds, + 389. Sinking fund, ib. Annuities for terms of years and for lives, + ib. The reduction of, during peace, bears no proportion to its + accumulation during war, 391. The plea of the interest being no + burden to the nation considered, 394. Are seldom fairly paid when + accumulated to a certain degree, 396. Might easily be discharged, + by extending the British system of taxation over all the provinces + of the empire, 397. Ireland and America ought to contribute to + discharge the public debts of Britain, 402. + + _Decker_, Sir Matthew, his observations on the accumulation of + taxes, 369. His proposal for transferring all taxes to the + consumer, by annual payments, considered, 371. + + _Demand_, though the increase of, may at first raise the price of + goods, it never fails to reduce it afterwards, 314. + + _Denmark_, account of the settlements of, in the West Indies, 234. + + _Diamonds_, the mines of, not always worth working for, 73. + + _Discipline_, the great importance of, in war, 293. Instances of, + ib. + + _Diversions_, public, their political use, 334. + + _Domingo_, St. mistaken by Columbus for a part of the East Indies, + 229. Its principal productions, ib. The natives soon stripped of + all their gold, 230. Historical view of the French colony there, + 234. + + _Doomsday-book_, the intention of that compilation, 351. + + _Dorians_, ancient, where the colonies of, settled, 227. + + _Dramatic exhibitions_, the political use of, 334. + + _Drawbacks_, in commerce, explained, 182. The motives to, and + tendency of, explained, 203. On wines, currants, and wrought silks, + ib. On tobacco and sugar, 204. On wines, particularly considered, + ib. Were originally granted to encourage the carrying trade, 205. + The revenue of the customs increased by them, ib. Drawbacks allowed + in favour of the colonies, 213. + + _Drugs_, regulations of their importation and exportation, 272. + + _Drunkenness_, the motive to this vice inquired into, 200. + + _Dutch_, their settlements in America slow in in improvement, + because under the government of an exclusive company, 234. Their + East India trade checked by monopoly, 261. Measures taken by, to + secure the monopoly of the spice trade. See _Holland_. + + + E + + _East Indies_, representation of the miserable state of the + provinces of, under the English government there, 30. Historical + view of the European trade with those countries, 86. Rice countries + more populous and rich than corn countries, ib. The real price of + labour lower in China and Indostan than in the greater part of + Europe, 87. Gold and silver the most profitable commodities to + carry thither, ib. The proportional value of gold to silver, how + rated there, 89. Great extension of foreign commerce by the + discovery of a passage to, round the Cape of Good Hope, 181. + Historical review of the intercourse with, ib., 182. Effect of the + annual exportation of silver to, from Europe, ib. The trade with, + chiefly carried on by exclusive companies, 261. Tendency of their + monopolies, ib. + + _East India company_, a monopoly against the very nation in which + it is erected, 261. The operation of such a company in a poor and + in a rich country compared, ib. That country whose capital is not + large enough to extend to such a distant trade ought not to engage + in it, 262. The mercantile habits of trading companies render them + incapable of consulting their true interests when they become + sovereigns, 264. The genius of the administration of the English + company, ib. Subordinate practices of their agents and clerks, 265. + The bad conduct of agents in India owing to their situation, ib. + Such an exclusive company a nuisance in every respect, 266. Brief + review of their history, 313. Their privileges invaded, ib. A rival + company formed, ib. The two companies united, 314. Are infected by + the spirit of war and conquest, ib. Agreements between the company + and government, ib. Interference of government in their territorial + administration, 315. And in the direction at home, ib. Why unfit to + govern a great empire, ib. Their sovereign and commercial + characters incompatible, 344. How the territorial acquisitions of, + might be rendered a source of revenue, 403. + + _Economists_, sect of, in France, their political tenets, 275. + + _Edinburgh_, its present share of trade owing to the removal of the + court and parliament, 138. + + _Education_, the principal cause of the various talents observable + in different men, 7. Those parts of, for which there are no public + institutions, generally the best taught, 320. In universities, a + view of, 323. Of travelling for, 324. Course of, in the republics + of ancient Greece, ib. In ancient Rome, ib. The ancient teachers + superior to those in modern times, 326. Public institutions + injurious to good education, ib. Inquiry how far the public ought + to attend to the education of the people, 327. The different + opportunities of education in the different ranks of the people, + 328. The advantages of proper attention in the state to the + education of the people, 329. + + _Egypt_, the first country in which agriculture and manufactures + appear to have been cultivated, 9. Agriculture was greatly favoured + there, 283. Was long the granary of the Roman empire, 284. + + _Ejectment_, action of, in England, when invented, and its + operation, 160. + + _Employments_, the advantages and disadvantages of the different + kinds of, in the same neighbourhood, continually tend to equality, + 41. The differences or inequalities among, specified, ib. The + constancy or precariousness of, influences the rate of wages, 43. + + _England_, the dates of its several species of coinage, silver, + gold, and copper, 16. Why labour is cheaper there than in North + America, 29. The rate of population in both countries compared, ib. + The produce and labour of, have gradually increased from the + earliest accounts in history, while writers are representing the + country as rapidly declining, 141. Enumeration of obstructions and + calamities which the prosperity of the country has surmounted, ib. + Circumstances that favour commerce and manufactures, 171. Laws in + favour of agriculture, ib. Why formerly unable to carry on foreign + wars of long duration, 180. Why the commerce with France has been + subjected to so many discouragements, 202. Foundation of the enmity + between these countries, ib. Translation of the commercial treaty + concluded in 1703 with Portugal, 223. Inquiry into the value of the + trade with Portugal, ib., 224. Might procure gold without the + Portugal trade, ib. Consequences of securing the colony trade by + the navigation act, 245. + + _Engrossing_. See _Forstalling_. + + _Entails_, the law of, prevents the division of land by alienation, + 157. Intention of, 158. + + _Europe_, general review of the several nations of, as to their + improvement since the discovery of America, 85. The two richest + countries in, enjoy the greatest shares of the carrying trade, 153. + Inquiry into the advantages derived by, from the discovery and + colonization of America, 243. The particular advantages derived by + each colonizing country, 244. And by others which have no colonies, + 259. + + _Exchange_, the operation of, in the commercial intercourse of + different countries, 174. The course of, an uncertain criterion of + the balance of trade between two countries, 192, 193. Is generally + in favour of those countries which pay in bank money, against those + which pay in common currency, 198. + + _Excise_, the principal objects of, 371. The duties of, more clear + and distinct than the customs, 373. Affects only a few articles of + the most general consumption, ib. The scheme of Sir Robert Walpole + defended, 375. The excise upon home-made fermented and spiritous + liquors the most productive, 376. Expense of levying excise duties + computed, 380. The laws of, more vexatious than those of the + customs, 381. + + _Exercise_, military, alteration in, produced by the invention of + fire-arms, 292. + + _Expenses_, private, how they influence the national capital, 33. + Advantage of bestowing them on durable commodities, ib. + + _Export trade_, the principles of, explained, 153. When rude produce + may be advantageously exported, even by a foreign capital, 156, + 157. Why encouraged by European nations, 182, 183. By what means + promoted, ib. The motives to, and tendency of, drawbacks of duties, + 203. The grants of bounties on, considered, 205. Exportation of the + materials of manufactures, review of the restraints and prohibitions + of, 268. + + + F + + _Faith_, articles of, how regulated by the civil magistrate, 354. + + _Families_ seldom remain on large estates many generations in + commercial countries, 170. + + _Famine_. See _Dearth_. + + _Farmers of land_, the several articles that compose their gain + distinguished, 22. Require more knowledge and experience than the + generality of manufacturers, 53. In what their capitals consist, + 112. The great quantity of productive labour put into motion by + their capitals, 149. Artificers necessary to them, 156. Their + situation better in England than in any other part of Europe, 160. + Labour under great disadvantages everywhere, 161. Origin of long + leases of farms, 170. Are a class of men least subject to the + wretched spirit of monopoly, 187. Were forced by old statutes to + become the only dealers in corn, 215. Could not sell corn cheaper + than any other corn merchant, 216. Could seldom sell it so cheap, + ib. The culture of land obstructed by this division of their + capitals, 217. The use of corn-dealers to the farmers, ib. How they + contribute to the annual production of the land, according to the + French agricultural system of political economy, 275. + + _Farmers_ of the public revenue, their character, 383, 391. + + _Feudal government_, miserable state of the occupiers of land + under, 137. Trade and interest of money under, ib. Chiefs, their + power, 157. Slaves, their situation, 159. Tenures of land, ib. + Taxation, 161. Original poverty and servile state of the tradesmen + in towns, 162. Immunities seldom granted but for valuable + considerations, 163. Origin of free burghs, ib. The power of the + barons reduced by municipal privileges, ib. The cause and effect of + ancient hospitality, 167. Extensive power of the ancient barons, + 168. Was not established in England until the Norman conquest, ib. + Was silently subverted by manufactures and commerce, 169. + + _Feudal wars_, how supported, 290. Military exercises not well + attended to, under, 291. Standing armies gradually introduced to + supply the place of the feudal militia, 295. Account of the + casualties or taxes under, 363. Revenues under, how enjoyed by the + great landholders, 385. + + _Fairs_, public, in Scotland, the nature of the institution, + explained, 76, 77. + + _Fines_ for the renewal of leases, the motive for exacting them, + and their tendency, 349. + + _Fire-arms_, alteration in the art of war effected by the invention + of, 292, 295. The invention of, favourable to the extension of + civilisation, 296. + + _Fish_, the component parts of the price of, explained, 21. The + multiplication of, at market, by human industry, both limited and + uncertain, 99. How an increase of demand raises the price of fish, + 100. + + _Fisheries_, observations on the tonnage bounties granted to, 211. + To the herring fishery ib. The boat fishery ruined by this bounty, + 212. + + _Flanders_, the ancient commercial prosperity of, perpetuated by + the solid improvements of agriculture, 172. + + _Flax_, the component parts of the price of, explained, 21. + + _Fleetwood_, Bishop, remarks on his Chronicon Pretiosum, 77, 78. + + _Flour_, the component parts of the price of, explained, 21. + + _Food_, will always purchase as much labor as it can maintain on + the spot, 61. Bread and butcher's meat compared, 62, 63. Is the + original source of every other production, 69. The abundance of, + constitutes the principal part of the riches of the world, and + gives the principal value to many other kinds of riches, 73. + + _Forestalling_ and _engrossing_, the popular fear of, like the + suspicions of witchcraft, 218. + + _Forts_, when necessary for the protection of commerce, 306. + + _France_, fluctuations in the legal rate of interest for money + there during the course of the present century, 37, 38. Remarks on + the trade and riches of, ib. The nature of apprenticeships there, + 51. The propriety of restraining the planting of vineyards + examined, 65. Variations in the price of grain there, 73. The money + price of labour has sunk gradually with the money price of corn, + 84. Foundation of the Mississippi scheme, 130. Little trade or + industry to be found in the parliament towns of, 138. Description + of the class of farmers called metayers, 159. Laws relating to the + tenure of land, 161. Services formerly exacted besides rent, ib. + The taille, what, and in operation in checking the cultivation of + land, ib. Origin of the magistrates and councils of cities, 164. No + direct legal encouragement given to agriculture, 171. Ill policy of + M. Colbert's commercial regulations, 189. French goods heavily + taxed in Great Britain, 192. The commercial intercourse between + France and England, now chiefly carried on by smugglers, ib. The + policy of the commercial restraints between France and Britain + considered, ib. State of the coinage there, 194. Why the commerce + with England has been subjected to discouragement, 202. Foundation + of the enmity between these countries, ib. Remarks concerning the + seignorage on coin, 225. Standard of the gold coin there, ib. The + trade of the French colonies, how regulated, 237. The government of + the colonies conducted with moderation, 241. The sugar colonies of, + better governed than those of Britain, ib. The kingdom of, how + taxed, 256. The members of the league fought more in defence of + their own importance than for any other cause, 258. The present + agricultural system of political economy adopted by philosophers + there described, 275. Under what direction the funds for the + repair of the roads are placed, 305. General state of the roads, + ib. The universities badly governed, 319. Remarks on the management + of the parliaments of, 335. Measures taken in, to reduce the power + of the clergy, 337. Account of the mode of rectifying the + inequalities of the predial taille in the generality of Montauban, + 352. The personal taille explained, 360. The inequalities in, how + remedied, 361. How the personal taille discourages cultivation, ib. + The vingtieme, 362. Stamp duties and the controle, 364, 365. The + capitation tax, how rated, 367. Restraints upon the interior trade + of the country by the local variety of the revenue laws, 382. The + duties on tobacco and salt, how levied, 383. The different sources + of revenue in, 384. How the finances of, might be reformed, ib. The + French system of taxation compared with that in Britain, ib. The + nature of tontines explained, 390. Estimate of the whole national + debt of, ib. + + _Frugality_, generally a predominating principle in human nature, 140. + + _Fuller's earth_, the exportation of why prohibited, 271. + + _Funds_, British, brief historical view of, 387. Operation of, + politically considered, 393. The practice of funding has gradually + enfeebled every state that has adopted it, 395. + + _Fur trade_, the first principles of, 68. + + + G + + _Gama_, Vasco de, the first European who discovered a naval track + to the East Indies, 229. + + _Gardening_, the gains from, distinguished into the component + parts, 22. Not a profitable employment, 64. + + _Gems_, See _Stones_. + + _General_ fund in the British finances explained, 389. + + _Genoa_, why corn is dear in the territory of, 80. + + _Glasgow_, the trade of, doubled in fifteen years, by erecting banks + there, 120. Why a city of greater trade than Edinburgh, 138. + + _Gold_, not the standard value in England, 16. Its value measured + by silver, 17. Reformation of the gold coin, ib. Mint price of gold + in England, ib. The working the mines of, in Peru, very + unprofitable, 71. Qualities for which this metal is valued, 72. The + proportionate value of, to silver, how rated before and after the + discovery of the American mines, 89. Is cheaper in the Spanish + market than silver, 90. Great quantities of, remitted annually from + Portugal to England, 223. Why little of it remains in England, ib. + Is always to be had for its value, 224. + + _Gold_ and _Silver_, the prices of, how affected by the increase of + the quantity of the metals, 79. Are commodities that naturally seek + the best market, 80. Are metals of the least value among the + poorest nations, ib. The increase in the quantity of, by means of + wealth and improvement, has no tendency to diminish their value, + 81. The annual consumption of those metals very considerable, 87. + Annual importation of, into Spain and Portugal, 88. Are not likely + to multiply beyond the demand, ib. The durability of, the cause of + the steadiness of their price, ib. On what circumstances the + quantity of, in every particular country, depends, 100. The low + value of these metals in a country no evidence of its wealth, nor + their high value of its poverty, 101. If not employed at home, will + be sent abroad notwithstanding all prohibitions, 139. The reason + why European nations have studied to accumulate these metals, 174. + Commercial arguments in favour of their exportation, ib. These and + all other commodities are mutually the prices of each other, 175. + The quantity of, in every country, regulated by the effectual + demand, 176. Why the prices of these metals do not fluctuate so + much as those of other commodities, ib. To preserve a due quantity + of, in a country, no proper object of attention for the government, + 176. The accumulated gold and silver in a country distinguished + into three parts, 178. A great quantity of bullion alternately + exported and imported for the purposes of foreign trade, 179. + Annual amount of these metals imported into Spain and Portugal, + 180. The importation of, not the principal benefit derived from + foreign trade, 181. The value of, how affected by the discovery of + the American mines, ib. And by the passage round the Cape of Good + Hope to the East Indies, ib. Effect of the annual exportation of + silver to the East Indies, 182. The commercial means pursued to + increase the quantity of these metals in a country, ib., 192. + Bullion, how received and paid at the bank of Amsterdam, 195. At + what prices, 196, _note_. A trading country without mines not + likely to be exhausted by an annual exportation of these metals, + 200. The value of, in Spain and Portugal, depreciated by + restraining the exportation of them, 208. Are not imported for the + purposes of plate or coin, but for foreign trade, 224. The search + after mines of, the most ruinous of all projects, 230. Are valuable + because scarce and difficult to be procured, 231. + + _Gorgias_, evidence of the wealth he acquired by teaching, 56. + + _Government_, civil, indispensibly necessary for the security of + private property, 297. Subordination in society, by what means + introduced, ib. Inequality of fortune introduces civil government + for its preservation, 299. The administration of justice a source + of revenue in early times, ib. Why government ought not to have the + management of turnpikes, 304. Nor of other public works, 306. Want + of parsimony during peace imposes a necessity of contracting debts, + to carry on a war, 386. Must support a regular administration of + justice to cause manufactures and commerce to flourish, 387. Origin + of a national debt, ib. Progression of public debts, ib. War, why + generally agreeable to the people, 391. + + _Governors_, political, the greatest spendthrifts in society, 142. + + _Grasses_, artificial, tend to reduce the price of butcher's meat, 63. + + _Graziers_, subject to monopolies obtained by manufactures to their + prejudice, 271. + + _Greece_, foreign trade promoted in several of the ancient states + of, 284. Military exercises a part of general education, 291. + Soldiers not a distinct profession in, ib. Course of education in + the republics of, 324. The morals of the Greeks inferior to those + of the Romans, ib. Schools of the philosophers and rhetoricians, + 325. Law no science among the Greeks, ib. Courts, of justice, ib. + The martial spirit of the people, how supported, 329. + + _Greek colonies_, how distinguished from Roman colonies, 227, 228. + Rapid progress of these colonies, 232. + + _Greek language_, how introduced as a part of university education, + 322. Philosophy, the three great branches of, ib. + + _Ground rents_, great variations of, according to situation, 354. + Are a more proper subject of taxation, than houses, 355. + + _Gum senega_, review of the regulations imposed on the trade for, 272. + + _Gunpowder_, great revolution effected in the art of war by the + invention of, 292, 296. This invention favourable to the extension + of civilization, 296. + + _Gustavus Vasa_, how enabled to establish the Reformation in Sweden, + 338. + + + H + + _Hanseatic league_, causes that rendered it formidable, 164. Why no + vestige remains of the wealth of the Hans towns, 172. + + _Hamburgh_, agio of the bank of, explained, 195. Sources of the + revenue of that city, 343, 344. The inhabitants of, how taxed to + the state, 359. + + _Hamburgh company_, some account of, 308. + + _Hearth money_, why abolished in England, 356, 357. + + _Henry VIII._ of England, prepares the way for the Reformation, by + shutting out the authority of the pope, 338. + + _Herring buss bounty_, remarks on, 211. Fraudulent claims of the + bounty, ib. The boat fishery the most natural and profitable, 212. + Account of the British white herring fishery, ib. Account of the + busses fitted out in Scotland, the amount of their cargoes, and the + bounties on them, 287, _Append._ + + _Hides_, the produce of rude countries commonly carried to a + distant market, 97. Price of, in England three centuries ago, 98. + Salted hides inferior to fresh ones, 98, 99. The price of, how + affected by circumstances in cultivated and in uncultivated + countries, ib. + + _Highlands of Scotland_, interesting remarks on the population of, + 33. Military character of the Highlanders, 293. + + _Hobbes_, Mr. remarks on his definition of wealth, 13. + + _Hogs_, circumstances which render their flesh cheap or dear, 95. + + _Holland_, observations on the riches, and trade of the republic + of, 38. Not to follow some business unfashionable there, 40. Cause + of the dearness of corn there, 80. Enjoys the greatest share in the + carrying trade of Europe, 153. How the Dutch were excluded from + being the carriers to Great Britain, 188. Is a country that + prospers under the heaviest taxation, 189. Account of the bank of + Amsterdam, 194, 195. This republic derives even its subsistence + from foreign trade, 202, 203. Tax paid on houses there, 356. + Account of the tax upon successions, 363. Stamp duties, 364. High + amount of the taxes in, 370, 384. Its prosperity depends on the + republican form of government, 385. + + _Honoraries_, from pupils to teachers in colleges tendency of, to + quicken their diligence, 319. + + _Hose_, in the time of Edward IV., how made, 104. + + _Hospitality_, ancient, the cause and effect of, 169, 385. + + _House_, different acceptations of the term in England, and some + other countries, 49. Houses considered as part of the national + stock, 113. Houses produce no revenue, ib. The rent of, + distinguished into two parts, 354. Operation of a tax upon house + rent, payable by the tenant, ib. House rent, the best test of the + tenant's circumstances, 355. Proper regulation of a tax on, ib. How + taxed in Holland, 356. Hearth money, ib. Window tax, 357. + + _Hudson's Bay company_, the nature of their establishment and + trade, 312. Their profits not so high as has been reported, ib. + + _Hunters_, war, how supported by a nation of, 289. Cannot be very + numerous, 290. No established administration of justice needful + among them, 297. Age the sole foundation of rank and precedency + among, ib. No considerable inequality of fortune or subordination + to be found among them, 298. No hereditary honours in such a + society, ib. + + _Husbandmen_, war, how supported by a nation of, 290. + + _Husbandry._ See _Agriculture_. + + + I, J + + _Jamaica_, the returns of trade from that island, why irregular, 402. + + _Idleness_ unfashionable in Holland, 40. + + _Jewels._ See _Stones_. + + _Importation_, why restraints have been imposed on, with the two + kinds of, 182. How restrained to secure a monopoly of the home + market to domestic industry, 183. The true policy of these + restraints doubtful, ib. The free importation of foreign + manufactures more dangerous than that of raw materials, 186. How + far it may be proper to continue the free importation of certain + foreign goods, 189. How far it may be proper to restore the free + importation of goods, after it has been interrupted, ib. Of the + materials of manufacture, review of the legal encouragements given + to, 266. + + _Independents_, the principles of that sect, explained, 332. + + _Indies._ See _East_ and _West_. + + _Indostan_, the several classes of people there kept distinct, 283. + The natives of, how prevented from undertaking long sea voyages, + ib. + + _Industry_, the different kinds of, seldom dealt impartially with + by any nation, 1, 2. The species of, frequently local, 8. Naturally + suited to the demand, 24. Is increased by the liberal reward of + labour, 34. How affected by seasons of plenty and scarcity, ib., + 35. Is more advantageously exerted in towns than in the country, + 53. The average produce of, always suited to the average + consumption, 79. Is promoted by the circulation of paper money, + 119. Three requisites to putting industry in motion, 120. How the + general character of nations is estimated by, 137. And idleness, + the proportion between, how regulated, ib. Is employed for + subsistence before it extends to conveniencies and luxury, 155. + Whether the general industry of a society is promoted by commercial + restraints on importation, 183. Private interest naturally points + to that employment most advantageous to the society, ib. But + without intending or knowing it, 184. Legal regulations of private + industry dangerous assumptions of power, 185. Domestic industry + ought not to be employed on what can be purchased cheaper from + abroad, ib. Of the society, can augment only in proportion as its + capital augments, ib. When it may be necessary to impose some + burden upon foreign industry to favour that at home, 187. The free + exercise of industry ought to be allowed to all, 191. The natural + effort of every individual to better his condition, will, if + unrestrained, result in the prosperity of the society, 221. + + _Insurance_, from fire and sea risks, the nature and profits of + examined, 45. The trade of insurance may be successfully carried on + by a joint-stock company, 317, 318. + + _Interest_, landed, monied, and trading, distinguished, 144. + + _Interest_ for the use of money, the foundation of that allowance + explained, 22. Historical view of the alterations of, in England, + and other countries, 37. Remarks on the high rates of, in Bengal, + 39. And in China, 40. May be raised by defective laws, independent + on the influence of wealth or poverty, ib. The lowest ordinary rate + of, must somewhat more than compensate occasional losses, ib. The + common relative proportion between interest and mercantile profits + inquired into, ib. Was not lowered, in consequence of the discovery + of the American mines, 145. How the legal rate of, ought to be + fixed, 146. Consequences of its being fixed too high or too low, + ib., 147. The market rate of, regulates the price of land, ib. + Whether a proper object of taxation, 357. + + _Ireland_, why never likely to furnish cattle to the prejudice of + Great Britain, 186. The proposed absentee tax there considered, + 379. Ought in justice to contribute towards the discharge of the + public debt of Great Britain, 402. Expediency of an union with + Great Britain, ib. + + _Isocrates_, the handsome income he made by teaching, 56. + + _Italy_, the only great country in Europe which has been cultivated + and improved in every part by means of its foreign commerce, 172. + Was originally colonized by the Dorians, 227. + + _Jurisdictions_, territorial, did not originate in the feudal law, + 168. + + _Justice_, the administration of, a duty of the sovereign, 297. In + early times a source of revenue to him, 299. The making justice + subservient to the revenue a source of great abuses, ib. Is never + administered gratis, 300. The whole administration of, but an + inconsiderable part of the expense of government, ib. How the whole + expense of justice might be defrayed from the fees of court, ib. + The interference of the jurisdictions of the several English courts + of law accounted for, 301. Law language, how corrupted, 302. The + judicial and executive power, why divided, ib. By whom the expense + of administration of, ought to be borne, 342. + + + K + + _Kalm_, the Swedish traveller, his account of the husbandry of the + British colonies in North America, 94. + + _Kelp_, a rent demanded for the rocks on which it grows, 61. + + _King_, Mr. his account of the average price of wheat, 83. + + _King_, under feudal institutions, no more than the greatest baron + in the nation, 168. Was unable to restrain the violence of his + barons, 169. Treasure-trove an important branch of revenue to, 385, + 386. His situation, how favourable for the accumulating treasure, + ib. In a commercial country, naturally spends his revenue in + luxuries, ib. Is hence driven to call upon his subjects for + extraordinary aids, ib. + + _Kings_ and their ministers the greatest spendthrifts in a country, + 149. + + + L + + _Labour_, the fund which originally supplies every nation with its + annual consumption, 1. How the proportion between labour and + consumption in regulated, ib. The different kinds of industry + seldom dealt impartially with by any nation, 2. The division of + labour considered, ib., 3. This division increases the quantity of + work, 4. Instances in illustration, 5. From what principle the + division of labour originates, 6. The divisibility of governed by + the market, 8. Labour the real measure of the exchangeable value of + commodities, 12. Different kinds of, not easily estimated by + immediate comparison, 13. Is compared by the intermediate standard + of money, ib. In an invariable standard for the value of + commodities, 14. Has a real and a nominal price, ib. The quantity + of labour employed on different objects, the only rule for + exchanging them in the rude stages of society, 20. Difference + between the wages of labour and profits on stock in manufactures, + ib. The whole labour of a country never exerted, 22. Is in every + instance suited to the demand, 24. The effect of extraordinary + calls for, 25. The deductions made from the produce of labour + employed upon land, 27. Why dearer in North America than in + England, 29. Is cheap in countries that are stationary, ib. The + demand for, would continually decrease, in a declining country, 30. + The province of Bengal cited as an instance, ib. Is not badly paid + for in Great Britain, ib., 31. An increasing demand for, favourable + to population, 33. That of freemen cheaper to the employers than + that of slaves, ib. The money price of, how regulated, 36. Is + liberally rewarded in new colonies, 38. Common labour and skilful + labour distinguished, 42. The free circulation of, from one + employment to another, obstructed by corporation laws, 57. The + unequal prices of, in different places, probably owing to the law + of settlements, 59. Can always procure subsistence on the spot, + where it is purchased, 61. The money price of, in different + countries, how governed, 80. Is set into motion by stock employed + for profit, 106. The division of, depends on the accumulation of + stock, 111. Machines to facilitate labour advantageous to society, + 116. Productive and unproductive distinguished, 135. Various orders + of men specified whose labour in unproductive, 136. Unproductive + labourers all maintained by revenue, ib. The price of, how raised + by the increase of the national capital, 145. Its price, though + nominally raised, may continue the same, 146. Is liberally rewarded + in new colonies, 231. Of artificers and manufacturers, never adds + any value to the whole amount of the rude produce of the land, + according to the French agricultural system of political economy, + 277. This doctrine shewn to be erroneous, 281. The productive + powers of labour, how to be improved, ib. + + _Labourers_, useful and productive, everywhere proportioned to the + capital stock on which they are employed, 1, 2. Share the produce + of their labour, in most cases, with the owners of the stock on + which they are employed, 20. Their wages a continued subject of + contest between them and their masters, 28. Are seldom successful + in their outrageous combinations, ib. The sufficiency of their + earnings a point not easily determined, ib. Their wages sometimes + raised by increase of work, ib. Their demands limited by the funds + destined for payment, 29. Are continually wanted in North America, + ib. Miserable condition of those in China, ib., 30. Are not ill + paid in Great Britain, ib., 31. If able to maintain their families + in dear years, they must be at their ease in plentiful seasons, ib. + A proof furnished in the complaints of their luxury, 33. Why worse + paid than artificers, 42. Their interests, strictly connected with + the interests of the society, 106. Labour the only source of their + revenue, 112. Effects of a life of labour on the understandings of + the poor, 327. + + _Land_, the demand of rent for, how founded, 21. The rent paid + enters into the greater part of all commodities, ib. Generally + produces more food than will maintain the labour necessary to bring + it to market, 61. Good roads and navigable canals equalize + difference of situation, 62. That employed in raising food for men + and cattle regulates the rent of all other cultivated land, 64, 67. + Can clothe and lodge more than it can feed while uncultivated, and + the contrary when improved, 68. The culture of land producing food + creates a demand for the produce of other lands, 73. Produces by + agriculture a much greater quantity of vegetable than of animal + food, 79. The full improvement of, requires a stock of cattle to + supply manure, 93. Cause and effect of the diminution of cottagers, + 95. Signs of the land being completely improved, 96. The whole + annual produce, or the price of it, naturally divides itself into + rent, wages, and profit of stock, 106. The usual price of, depends + on the common rate of interest for money, 147. The profits of + cultivation exaggerated by projectors, 154. The cultivation of, + naturally preferred to trade and manufactures, on equal terms, 155. + Artificers necessary to the cultivation of, 156. Was all + appropriated, though not cultivated, by the northern destroyers of + the Roman empire, 157. Origin of the law of primogeniture under the + feudal government, ib. Entails, 158. Obstacles to the improvement + of land under feudal proprietors, ib. Feudal tenures, 159, 160. + Feudal taxation, 161. The improvement of land checked in France, by + the taille, ib. Occupiers of, labour under great disadvantages, ib. + Origin of long leases of, 169. Small proprietors the best improvers + of, 170. Small purchasers of, cannot hope to raise fortunes by + cultivation, ib., 171. Tenures of, in the British American + colonies, 235. Is the most permanent source of revenue, 345. The + rent of a whole country not equal to the ordinary levy upon the + people, ib. The revenue from, proportioned not to the rent, but to + the produce, 346. Reasons for selling the crown lands, ib. The land + tax of Great Britain considered, 348. An improved land-tax + suggested, 349. A land-tax, however equally rated by a general + survey, will soon become unequal, 352. Tithes a very unequal tax, + ib. Tithes discourage improvement, ib. + + _Landholders_, why frequently inattentive to their own particular + interests, 106. How they contribute to the annual production of the + land, according to the French agricultural system of political + economy, 275. Should be encouraged to cultivate a part of their own + land, 350. + + _Latin language_, how it became an essential part of university + education, 321. + + _Law_, the language of, how corrupted, 302. Did not improve into a + science in ancient Greece, 325. Remarks on the courts of justice in + Greece and Rome, ib., 326. + + _Law_, Mr. account of his banking scheme for the improvement of + Scotland, 130. + + _Lawyers_, why amply rewarded for their labour, 44. Great amount of + their fees, 300. + + _Leases_, the various usual conditions of, 349, 350. + + _Leather_, restrictions on the exportation of unmanufactured, 271. + + _Lectures_ in universities frequently improper for instruction, + 320. + + _Levity_, the vices of, ruinous to the common people, and therefore + severely censured by them, 332, 333. + + _Liberty_, three duties only necessary for a sovereign to attend to + for supporting a system of, 286. + + _Lima_, computed number of inhabitants in that city, 233. + + _Linen manufacture_, narrow policy of the master manufacturers in, + 266. + + _Literature_, the rewards of, reduced by competition, 56. Was more + profitable in ancient Greece, ib. The cheapness of literary + education an advantage to the public, 57. + + _Loans of money_, the nature of, analysed, 144. The extensive + operation of, ib. + + _Locke_, Mr. remarks on his opinion of the difference between the + market and mint prices of silver bullion, 18. His account of the + cause of lowering the rates of interest for money, examined, 145. + His distinction between money and moveable goods, 173. + + _Lodgings_, cheaper in London than in any other capital city in + Europe, 49. + + _Logic_, the origin and employment of, 322. + + _Lotteries_, the true nature of, and the causes of their success, + explained, 45. + + _Luck_, instances of the universal reliance mankind have on it, 45. + + _Lutherans_, origin and principles of that sect, 339. + + _Luxuries_, distinguished from necessaries, 368. Operation of taxes + on, ib. The good and bad properties of taxes on, 380. + + + M + + _Macedon_, Philip of, the superiority that discipline gave his army + over that of his enemies, 294. + + _Machines_ for facilitating mechanical operations, how invented and + improved, 4, 5. Are advantageous to every society, 116. + + _Madder_, the cultivation of, long confined to Holland by English + tithes, 353. + + _Madeira wines_, how introduced into North America and Britain, 204. + + _Malt_, reasons for transferring the duties on brewing to, 378. + Distillery, how to prevent smuggling, 377. + + _Manufactures_, the great advantages resulting from a division of + labour in, 3. Instances in illustration, 5. Why profits increase in + the higher stages of, 21. Of what parts the gain consists, 22. The + private advantages of secrets in, 25. Peculiar advantages of soil + and situation, ib. Monopolies, ib. Corporation privileges, 26. The + deductions made from labour employed on manufactures, 27. Inquiry + how far they are affected by seasons of plenty and scarcity, 35. + Are not no materially affected by circumstances in the country + where they are carried on, as in the places where they are + consumed, ib. New manufactures generally give higher wages than old + ones, 48. Are more profitably carried on in towns than in the open + country, 53. By what means the prices of, are reduced while the + society continues improving, 103. Instances in hardware, ib. + Instances in the woollen manufacture, 104. What fixed capitals are + required to carry on particular manufactures, 112. Manufactures for + distant sale, why not established in North America, 156. Why + preferred to foreign trade for the employment of a capital, ib. + Motives to the establishment of manufactures for distant sale, 165. + How shifted from one country to another, ib., 166. Natural + circumstances which contribute to the establishment of them, ib. + Their effect on the government and manners of a country, 167. The + independence of artisans explained, 169. May flourish amidst the + ruin of a country, and begin to decay on the return of its + prosperity, 180. Inquiry how far manufactures might be affected by + a freedom of trade, 190. British restraints on manufactures in + North America, 238, 239. The exportation of instruments in, + prohibited, 273. By the principal support of foreign trade, 283. + Require a more extensive market than rude produce of the land, ib. + Were exercised by slaves in ancient Greece, 284. High prices of, in + Greece and at Rome, 285. False policy to check manufactures in + order to promote agriculture, ib. In Great Britain, why principally + fixed in the coal countries, 370. + + _Manufacturers_, those thrown out of one business can transfer + their industry to colateral employments, 190. A spirit of + combination among them to support monopolies, 191. Manufacturers + prohibited by old statutes from keeping a shop, or selling their + own goods by retail, 215, 216. The use of wholesale dealers to + manufacturers, 217. An unproductive class of the people, according + to the French agricultural system of political economy, 276. The + error of this doctrine shewn, 280. How manufacturers augment the + revenue of a country, 281. + + _Manure_, the supply of, in most places depends on the stock of + cattle raised, 93. + + _Maritime countries_, why the first that are civilized and + improved, 9. + + _Martial spirit_, how supported in the ancient republics of Greece + and Rome, 329. The want of it now supplied by standing armies, ib. + The establishment of a militia little able to support it, ib. + + _Mediterranean sea_, peculiarly favourable for the first attempts + in navigation, 9. + + _Meggens_, Mr. his account of the annual importation of gold and + silver into Spain and Portugal, 88. His relative proportion of + each, 89. + + _Mercantile system_ explained, 372. + + _Mercenary troops_, origin and reason of, 291. The numbers of, how + limited, ib. + + _Merchants_, their judgments more to be depended on respecting the + interest of their particular branches of trade, than with regard to + the public interest, 106, 107. Their capitals altogether + circulating, 112. Their dealings extended by the aid of bankers + notes, 121, 124. Customs of, first established to supply the want + of laws, and afterwards admitted as laws, 126. The manner of + negociating bills of exchange, explained, ib. The pernicious + tendency of drawing and redrawing, ib., 127. In what method their + capitals are employed, 147. Their capitals, dispersed and unfixed, + 149. The principles of foreign trade examined, 153. Are the best of + improvers when they turn country gentlemen, 167. Their preference + among the different species of trade, how determined, 183. Are + actuated by a narrow spirit of monopoly, 201. The several branches + of the corn trade specified and considered, 215. The government of + a company of, the worst a country can be under, 234. Of London, not + good economists, 253. An unproductive class of men, according to + the present agricultural system of political economy in France, + 277. The quick return of mercantile capitals enables merchants to + advance money to government, 386, 387. Their capitals increased by + lending money to the state, 387. + + _Mercier_, de la Riviere, M. character of his natural and essential + order of political societies, 282. + + _Metals_, why the best medium of commerce, 10. Origin of stamped + coins, 11. Why different metals became the standard of value among + different nations, 16. The durability of, the cause of the + steadiness of their price, 88. On what the quantity of precious + metals in every particular country depends, 100. Restraints upon + the exportation of, 272. + + _Metaphysics_, the science of, explained, 323. + + _Metayers_, description of the class of farmers so called in + France, 159. + + _Methodists_, the teachers among, why popular preachers, 330. + + _Methuen_, Mr. translation of the commercial treaty concluded by + him between England and Portugal, 223. + + _Mexico_, was a less civilized country than Peru, when first + visited by the Spaniards, 85. Present populousness of the capital + city, 233. Low state of arts at the first discovery of that empire, + ib. + + _Militia_, why allowed to be formed in cities, and its formidable + nature, 164. The origin and nature of, explained, 292. How + distinguished from a regular standing army, ib. Must always be + inferior to a standing army, 293. A few campaigns of service may + make a militia equal to a standing army, ib. Instances, 294. + + _Milk_, a most perishable commodity, how manufactured for store, 96. + + _Mills_, wind and water, their late introduction into England, 105. + + _Mines_, distinguished by their fertility or barrenness, 70. + Comparison between those of coal and those of metals, 71. The + competition between, extends to all parts of the world, ib. The + working of, a lottery, 72. Diamond mines not always worth working, + 73. Tax paid to the king of Spain from the Peruvian mines, 85. The + discovery of mines not dependent on human skill or industry, 100. + In Hungary, why worked at less expense than the neighbouring ones + in Turkey, 284. + + _Mining_, projects of, uncertain and ruinous, and unfit for legal + encouragement, 230. + + _Mirabeau_, Marquis de, his character of the economical table, 282. + + _Mississippi_ scheme in France, the real foundation of, 130. + + _Modus_ for tithe, a relief to the farmer, 353. + + _Money_, the origin of, traced, 10. Is the representative of + labour, 13. The value of, greatly depreciated by the discovery of + the American mines, 14. How different metals became the standard + money of different nations, 16. The only part of the circulating + capital of a society, of which the maintenance can diminish their + neat revenue, 116. Makes no part of the revenue of a society, 117. + The term money, in common acceptation, of ambiguous meaning, ib. + The circulating money, in society, no measure of its revenue, 118. + Paper money, ib. Effect of paper on the circulation of cash, ib., + 119. Inquiry into the proportion the circulating money of any + country bears to the annual produce circulated by it, 120. Paper + can never exceed the value of the cash, of which it supplies the + place, in any country, 122. The pernicious practice of raising + money by circulation, explained, 126. The true cause of its + exportation, 139. Loans of, the principles of, analysed, 144. + Monied interest distinguished from the landed and trading interest, + ib. Inquiry into the real causes of the reduction of interest, 145. + Money and wealth synonymous terms in popular language, 173. And + moveable goods compared, ib. The accumulation of, studied by the + European nations, 174. The mercantile arguments for liberty to + export gold and silver, ib. The validity of these arguments + examined, 175. Money and goods mutually the price of each other, + ib. Over-trading causes complaints of the scarcity of money, 176. + Why more easy to buy goods with money, than to buy money with + goods, 177. Inquiry into the circulating quantity of, in Great + Britain, 178. Effect of the discovery of the American mines on the + value of, 181. Money and wealth different things, 182. Bank money + explained, 195. See _Coins_, _Gold_, and _Silver_. + + _Monopolies_ in trade or manufactures, the tendency of, 25. Are + enemies to good management, 62. Tendency of making a monopoly, of + colony trade, 251. Countries which have colonies obliged to share + their advantages with many other countries, 260. The chief engine + in the mercantile system, 261. How monopolies derange the natural + distribution of the stock of the society, ib. Are supported by + unjust and cruel laws, 268. Of a temporary nature, how far + justifiable, 316. Perpetual monopolies injurious to the people at + large, ib. + + _Montauban_, the inequalities in the predial taille in that + generality, how rectified, 352. + + _Montesquieu_, reasons given by him for the high rates of interest + among all Mahometan nations, 40. Examination of his idea of the + cause of lowering the rate of interest of money, 145. + + _Morality_, two different systems of, in every civilized society, + 332. The principal points of distinction between them, 333. The + ties of obligation in each system, ib. Why the morals of the common + people are more regular in sectaries than under the established + church, ib. The excesses of, how to be corrected, ib. + + _Morellet_, M. his account of joint-stock companies, defective, 317. + + _Mun_, Mr. his illustration of the operation of money exported for + commercial purposes, 174. + + _Music_, why a part of the ancient Grecian education, 324. And + dancing, great amusement among barbarous nations, ib. + + + N + + _Nations_, sometimes driven to inhuman customs, by poverty, 1. The + number of useful and productive labourers in, always proportioned + to the capital stock on which they are employed, 1, 2. The several + sorts of industry seldom dealt impartially by, 2. Maritime nations, + why the first improved, 8. How ruined by a neglect of public + economy, 140. Evidences of the increase of a national capital, 141. + How the expenses of individuals may increase the national capital, + 142. + + _Navigation_, inland, a great means of improving a country in arts + and industry, 9. The advantages of, 62. May be successfully managed + by joint-stock companies, 317. + + _Navigation act of England_, the principal dispositions of, 187. + Motives that dictated, this law, 188. Its political and commercial + tendency, ib. Its consequences, so far as it affected the colony + trade with England, 245. Diminished the foreign trade with Europe, + 246. Has kept up high profits in the British trade, ib. Subjects + Britain to a disadvantage in every branch of trade of which she has + not the monopoly, ib., 247. + + _Necessaries_ distinguished from luxuries, 368. Operation of taxes + on, ib. Principal necessaries taxed, 369. + + _Negro slaves_, why not much employed in raising corn in the + English colonies, 159. Why more numerous on sugar than on tobacco + plantations, ib. + + _Nile_, river, the cause of the early improvement of agriculture and + manufactures in Egypt, 9. + + + O + + _Oats_, bread made of, not so suitable to the human constitution as + that made of wheat, 68. + + _Ontology_, the science of, explained, 323. + + _Oxford_, the professorships there, sinecures, 319. + + + P + + _Paper money_, the credit of, how established, 118. Its operation + explained, ib. Its effect on the circulation of cash, ib., 119. + Promotes industry, ib. Operation of the several banking companies + established in Scotland, 120. Can never exceed the value of the + gold and silver, of which it supplies the place in any country, + 122. Consequences of too much paper being issued, ib. The practice + of drawing and redrawing explained, with its pernicious effects, + 126. The advantages and disadvantages of paper credit, stated, 131. + Ill effects of notes issued for small sums, 132. Suppressing small + notes renders money more plentiful, ib. The currency of, does not + affect the prices of goods, 133. Account of the paper currency in + North America, 134. Expedient of the government of Pennsylvania to + raise money, 345. Why convenient for the domestic purposes of the + North Americans, 400. + + _Paris_ enjoys a little more trade than is necessary for the + consumption of its inhabitants, 138. + + _Parish ministers_, evils attending vesting the election of, in the + people, 339. + + _Parsimony_ is the immediate cause of the increase of capitals, + 138. Promotes industry, ib. Frugal men public benefactors, 140. Is + the only means by which artificers and manufacturers can add to the + revenue and wealth of society, according to the French agricultural + system of political economy, 277. + + _Pasture land_, under what circumstances more profitable than + arable land, 62, 63. Why it ought to be inclosed, 63. + + _Patronage_, the right of, why established in Scotland, 340. + + _Pay_, military, origin and reason of, 291. + + _Pennsylvania_, account of the paper currency there, 134. Good + consequences of the government there having no religious + establishment, 332. Derive a revenue from their paper currency, + 401. + + _People_, how divided into productive and unproductive classes + according to the present French system of agricultural political + economy, 275. The unproductive class greatly useful to the others, + 277. The great body of, how rendered unwarlike, 292. The different + opportunities of education in the different ranks of, 328. The + inferior ranks of, the greatest consumers, 375. The luxurious + expenses of these ranks ought only to be taxed, 376. + + _Persecution_ for religious opinions, the true cause of, 330. + + _Peru_, the discovery of the silver mines in, occasioned those in + Europe to be in a great measure abandoned, 71. These mines yield + but small profit to the proprietors, ib. Tax paid to the king of + Spain from these mines, 85. The early accounts of the splendour and + state of arts, in this country greatly exaggerated, 85, 86. Present + state of, under the Spanish government, 86. The working of the + mines there becomes gradually more expensive, 90. Low state of arts + there when first discovered, 233. Is probably more populous now + than at any former period, ib. + + _Philosophy_, natural, the origin and objects of, 322. Moral, the + nature of, explained, ib. Logic, the origin and employment of, ib. + + _Physicians_, why amply rewarded for their labour, 43, 44. + + _Physics_, the ancient system of, explained, 322. + + _Pin-making_, the extraordinary advantage of a division of labour + in this art, 3. + + _Plate_ of private families, the melting it down to supply state + exigencies, an insignificant resource, 178. New plate is chiefly + made from old, 225. + + _Ploughmen_, their knowledge more extensive than the generality of + mechanics, 53. + + _Pneumatics_, the science of, explained, 323. + + _Poivre_, M. his account of the agriculture of Chochin-China, 66. + + _Poland_, a country still kept in poverty by the feudal system of + its government, 101. + + _Political economy_, the two distinct objects and two different + systems of, 173. The present agricultural system of, adopted by + French philosophers, described, 275. Classes of the people who + contribute to the annual produce of the land, ib. How proprietors + contribute, ib. How cultivators contribute, ib. Artificers and + manufacturers unproductive, 276. The unproductive classes + maintained by the others, 277. Bad tendency of restrictions and + prohibitions in trade, 279. How this system is delineated by M. + Quesnai. The bad effects of an injudicious political economy, how + corrected, 280. The capital error in this system pointed out, ib. + + _Poll-taxes_, origin of, under the feudal government, 162, 163. Why + esteemed badges of slavery, 362. The nature of, considered, 367. + + _Poor_, history of the laws made for the provision of, in England, 57. + + _Pope of Rome_, the great power formerly assumed by, 335. His power + how reduced, 337. Rapid progress of the Reformation, 338. + + _Population_, riches and extreme poverty equally unfavourable to, + 33. Is limited by the means of subsistence, ib., 69. + + _Porter_, the proportion of malt used in the brewing of, 376. + + _Portugal_, the cultivation of the country not advanced by its + commerce, 171, 172. The value of gold and silver there depreciated + by prohibiting their exportation, 208. Translation of the + commercial treaty concluded in 1703 with England, 223. A large + share of the Portugal gold sent annually to England, ib. Motives + that led to the discovery of a passage to the East round the Cape + of Good Hope, 229. Lost its manufactures by acquiring rich and + fertile colonies, 251. + + _Post-office_, a mercantile project, well calculated for being + managed by a government, 344. + + _Potatoes_, remarks on, as an article of food, 67. Culture and + great produce of, ib. The difficulty of preserving them the great + obstacle to cultivating them for general diet, 68. + + _Poverty_, sometimes urges nations to inhuman customs, 1. Is no + check to the production of children, 33. But very unfavourable to + raising them, ib. + + _Poultry_, the cause of their cheapness, 95. Is a more important + article of rural economy in France than in England, ib. + + _Pragmatic sanction in France_, the object of, 337. Is followed by + the concordat, ib. + + _Preferments_, ecclesiastical, the means by which a national clergy + ought to be managed by the civil magistrate, 335. Alterations in + the mode of electing to them, ib., 337. + + _Presbyterian church government_, the nature of, described, 340. + Character of the clergy of, ib., 341. + + _Prices_, real and nominal, of commodities, distinguished, 14. + Money price of goods explained, 19. Rent for land enters into the + price of the greater part of all commodities, 21. The component + parts of the price of goods explained, ib. Natural and market + prices distinguished, and how governed, 23, 36. Though raised at + first by an increase of demand, always reduced by it in the result, + 314. + + _Primogeniture_, origin and motive of the law of succession by, + under the feudal government, 157. In contrary to the real interest + of families, 158. + + _Princes_, why not well calculated to manage mercantile projects + for the sake of a revenue, 344. + + _Prodigality_, the natural tendency of, both to the individual and + to the public, 138. Prodigal men enemies to their country, 140. + + _Produce_ of land and labour the source of all revenue, 136. The + value of, how to be increased, 141. + + _Professors in Universities_, circumstances which determine their + merit, 340, 341. + + _Profit_, the various articles of gain that pass under the common + idea of, 22. An average rate of, in all countries, 23. Averages of, + extremely difficult to ascertain, 37. Interest of money the best + standard of, ib. The diminution of, a natural consequence of + prosperity, 38. Clear and gross profit distinguished, 40. The + nature of the highest ordinary rate of, defined, ib. Double + interest deemed in Great Britain a reasonable mercantile profit, + ib. In thriving countries low profit may compensate the high wages + of labour, 41. The operation of high profits and high wages + compared, ib. Compensates inconvenience and disgrace, 42. Of stock, + how affected, 46. Large profits must be made from small capitals, + 47. Why goods are cheaper in the metropolis than in country + villages, ib. Great fortunes more frequently made by trade in large + towns than in small ones, ib. Is naturally low in rich, and high in + poor countries, 106. How that of the different classes of traders + is raised, 148. Private, the sole motive of employing capitals in + any branch of business, 154. When raised by monopolies, encourage + luxury, 253. + + _Projects_, unsuccessful in arts, injurious to a country, 140. + + _Property_, passions which prompt mankind to the invasion of, 297. + Civil government necessary for the production of, ib. Wealth a + source of authority, 298. + + _Provisions_, how far the variations in the price of, affect labour + and industry, 30, 34, 36. Whether cheaper in the metropolis or in + country villages, 47. The prices of, better regulated by + competition than by law, 60. A rise in the prices of, must be + uniform, to shew that it proceeds from a depreciation of the value + of silver, 102. + + _Provisers_, object of the statute of, in England, 337. + + _Prussia_, mode of assessing the land-tax there, 351. + + _Public works_ and _institutions_, how to be maintained, 302. + Equity of tolls for passage over roads, bridges and canals, 303. + Why government ought not to have the management of turnpikes, 304. + Nor of other public works, 306. + + _Purveyance_, a service still exacted in most parts of Europe, 161. + + + Q + + _Quakers of Pennsylvania_, inference from their resolution to + emancipate all their negro slaves, 159. + + _Quesnai_, M. view of his agricultural system of political economy, + 279. His doctrine generally subscribed to, 282. + + _Quito_, populousness of that city, 233. + + + R + + _Reformation_, rapid progress of the doctrines of, in Germany, 338. + In Sweden and Switzerland, ib. In England and Scotland, ib. 339. + Origin of the Lutheran and the Calvinistic sects, ib. + + _Regulated companies_. See _Companies_. + + _Religion_, the object of instruction in, 330. Advantage the + teachers of a new religion enjoy over those of one that is + established, ib. Origin of persecutions for heretical opinions, ib. + How the zeal of the inferior clergy of the church of Rome is kept + alive, ib. Utility of ecclesiastical establishments, 331. How + united with the civil power, ib., 332. + + _Rent_, reserved, ought not to consist of money, 14. But of corn, + ib. Of land, constitutes a third part of the price of most kinds of + goods, 21. An average rate of, in all countries, and how regulated, + 23. Makes the first deduction from the produce of labour employed + upon land, 27. The terms of, how adjusted between landlord and + tenant, 60, 61. Is sometimes demanded for what is altogether + incapable of human improvement, 61. Is paid for, and produced, by + land in almost all situations, ib. The general proportion paid for + coal mines, 71. And metal mines, ib. Mines of precious stones + frequently yield no rent, 73. How paid in ancient times, 76. Is + raised, either directly or indirectly, by every improvement in the + circumstances of society, 105. Gross and neat rent distinguished, + 115. How raised and paid under feudal governments, 137. Present + average proportion of, compared with the produce of the land, ib. + Of houses distinguished into two parts, 354. Difference between + rent of house and rent of land, 355. Rent of a house the best + estimate of a tenants circumstances, ib. + + _Retainers_, under the feudal system of government described, 167. + How the connection between them and their lords was broken, 169. + + _Revenue_, the original source of, pointed out, 22. Of a country, + of what it consists, 115. The neat revenue of a society diminished + by supporting a circulating stock of money, 116. Money no part of + revenue, 117. Is not to be computed in money, but in what money + will purchase, ib. How produced, and how appropriated, in the first + instance. 136. Produce of land, ib. Produce of manufactures, ib. + Must always replace capital, ib. The proportion between revenue and + capital regulates the proportion between idleness and industry, + 138. Both the savings and the spendings of, annually, consumed, ib. + Of every society, equal to the exchangeable value of the whole + produce of its industry, 184. Of the customs, increase by + drawbacks, 205. Why government ought not to take the management of + turnpikes, to derive a revenue from them, 304. Public works of a + local nature always better maintained by provincial revenues than + by the general revenue of the state, 306. The abuses in provincial + revenues trifling, when compared with those in the revenue of a + great empire, ib. The greater the revenue of the church, the + smaller must be that of the state, 341. The revenue of the state + ought to be raised proportionably from the whole society, 342. + Local expenses ought to be defrayed by a local revenue, 343. + Inquiry into the sources of public revenue, ib. Of the republic of + Hamburgh, ib., 344. Whether the government of Britain could + undertake the management of the bank, to derive a revenue from it, + ib. The post office, a mercantile project, well calculated for + being managed by government, ib. Princes not well qualified to + improve their fortunes by trade, ib. The English East India Company + good traders before they became sovereigns, but each character now + spoils the other, ib. Expedient of the government of Pennsylvania + to raise money, 345. Rent of land the most permanent fund, ib. + Feudal revenues, ib. Of Great Britain, ib. Revenue from land + proportioned not to the rent but to the produce, 346. Reasons for + selling the crown lands, ib., 347. An improved land-tax suggested, + 349. The nature and effect of tithes explained, 352. Why a revenue + cannot be raised in kind, 353. When raised in money, how affected + by different modes of valuation, ib. A proportionable tax on houses + the best source of revenue, 355. Remedies for the diminution of, + according to their causes, 374. Bad effects of farming out public + revenues, 381. The different sources of revenue in France, 384. How + expended in the rude state of society, 385. + + _Rice_, a very productive article of cultivation, 67. Requires a + soil unfit for raising any other kind of food, ib. Rice countries + more populous than corn countries, 86. + + _Riches_, the chief enjoyment of, consists in the parade of, 72, 73. + + _Risk_, instances of the inattention mankind pay to it, 45. + + _Roads_, good, the public advantages of, 62. How to be made and + maintained, 303. The maintenance of, why improper to be trusted to + private interest, 304. General state of, in France, 305. In China, + ib. + + _Romans_, why copper became the standard of value among them, 16. + The extravagant prices paid by them for certain luxuries for the + table accounted for, 92. The value of silver higher among them than + at the present time, ib. The republic of, founded on a division of + land among the citizens, 228. The Agrarian law only executed upon + one or two occasions, ib. How the citizens who had no land + subsisted, ib. Distinction between the Roman and Greek colonies, + ib. The improvement of the former slower than that of the latter, + 232. Origin of the social war, 257. The republic ruined by + extending the privilege of Roman citizens to the greater part of + the inhabitants of Italy, 258. When contributions were first raised + to maintain those who went to the wars, 290. Soldiers not a + distinct profession there, 291. Improvement of the Roman armies by + discipline, 294. How that discipline was lost, 295. The fall of the + western empire, how effected, ib. Remarks on the education of the + ancient Romans, 324. Their morals superior to those of the Greeks, + ib. State of law, and forms of justice, 325. The martial spirit of + the people, how supported, 329. Great reductions of the coin + practised by, at particular exigencies, 396. + + _Rome_, modern, how the zeal of the inferior clergy of, is kept + alive, 330. The clergy of, one great spiritual army dispersed in + different quarters over Europe, 335. Their power during the feudal + monkish ages similar to that of the temporal barons, 336. Their + power, how reduced, 337. + + _Rouen_, why a town of great trade, 138. + + _Ruddiman_, Mr. remarks on his account of the ancient price of + wheat in Scotland, 77. + + _Russia_, was civilized under Peter the Great by a standing army, 296. + + + S + + _Sailors_, why no sensible inconvenience felt by the great numbers + disbanded at the close of a war, 190. + + _Salt_, account of foreign salt imported into Scotland, and of + Scotch salt delivered duty free for the fishery, 288, _Append_. Is + an object of heavy taxation everywhere, 369. The collection of the + duty on, expensive, 380. + + _Sardinia_, the land-tax how assessed there, 352. + + _Saxon lords_, their authority and jurisdiction as great before the + Conquest as those of the Normans were afterwards, 168. + + _Schools_, parochial, observations on, 328. + + _Science_ is the great antidote to the poison of enthusiasm and + superstition, 333. + + _Scipio_, his Spanish militia rendered superior to the Carthaginian + militia by discipline and service, 294. + + _Scotland_, compared with England as to the prices of labour and + provisions, 31. Remarks on the population of the Highlands, 33. + The market rate of interest higher than the legal rate, 37. The + situation of cottagers there described, 49. Apprenticeships and + corporations, 51. The common people of, why neither so strong nor + so handsome as the same class in England, 68. Cause of the frequent + emigrations from, 80. Progress of agriculture there before the + union with England, 93. Present obstructions to better husbandry, + ib., 94. The price of wool reduced by the Union, 99. Operation of + the several banking companies established there, 120. Amount of + the circulating money there before the Union, ib. Amount of the + present circulating cash, 121. Course of dealings in the Scotch + banks ib. Difficulties occasioned by these banks issuing too much + paper, 123. Necessary caution for some time observed by the banks + in giving credit to their customers, with the good effects of it, + 124. The scheme of drawing and redrawing adopted by traders, 126. + Its pernicious tendency explained, ib., 127. History of the Ayr + bank. 128. Mr. Law's scheme to improve the country, 130. The prices + of goods in, not altered by paper currency, 133. Effect of the + optional clauses in their notes, ib. Cause of the speedy + establishment of the Reformation there, 339. The disorders + attending popular elections of the clergy there, occasioned the + right of patronage to be established, ib. Amount of the whole + revenue of the clergy, 342. + + _Sea service_ and military service by land, compared, 45. + + _Sects in religion_, the more numerous, the better for society, + 332. Why they generally profess the austere system of morality, + 333. + + _Self-love_ the governing principle in the intercourse of human + society, 6. + + _Servants_, menial, distinguished from hired workmen, 135. The + various orders of men who rank in the former class in reference to + their labour, 136. Their labour unproductive, 280. + + _Settlements_ of the poor, brief review of the English laws + relating to, 57. The removals of the poor a violation of natural + liberty, 59. The law of, ought to be repealed, 191. + + _Sheep_, frequently killed in Spain for the sake of the fleece and + the tallow, 97. Severe laws against the exportation of them and + their wool, 268. + + _Shepherds_, war, how supported by a nation of, 289. Inequality of + fortune among, the source of great authority, 298. Birth and family + highly honoured in nations of shepherds, ib. Inequality of fortune + first began to take place in the age of shepherds, 299. And + introduced civil government, ib. + + _Shetland_, how rents are estimated and paid there, 61. + + _Silk manufacture_, how transferred from Lucca to Venice, 166. + + _Silver_, the first standard coinage of the northern subverters of + the Roman empires, 16. Its proportional value to gold regulated by + law, 17. Is the measure of the value of gold, ib. Mint price of + silver in England, ib. Inquiry into the difference between the mint + and market price of bullion, ib., 18. How to preserve the silver + coin from being melted down for profit, 18. The mines of, in + Europe, why generally abandoned, 71. Evidences of the small profit + they yield to the proprietors in Peru, ib. Qualities for which this + metal is valued, 72. The most abundant mines of, would add little + to the wealth of the world, 73. But the increase in the quantity + of, would depreciate its own value, 74. Circumstances that might + counteract this effect, ib. Historical view of the variations in + the value of, during the four last centuries, ib., 75. Remarks on + its rise in value compared with corn, 76. Circumstances that might + have misled writers in reviewing the value of silver, ib. Corn the + best standard for judging of the real value of silver, 79. The + price of, how affected by the increase of quantity, ib. The value + of, sunk by the discovery of the American mines, 81. When the + reduction of its value from this cause appears to have been + completed, ib. Tax paid from the Peruvian mines to the king of + Spain, 85. The value of silver kept up by an extension of the + market, ib. Is the most profitable commodity that can be sent to + China, 86. The value of, how proportioned to that of gold before + and after the discovery of the American mines, 89. The quantity + commonly in the market in proportion to that of gold probably + greater than their relative values indicate, ib. The value of, + probably rising, and why, 90, 91. The opinion of a depreciation of + its value not well founded, 100. The real value of, degraded by the + bounty on the exportation of corn, 207. + + _Sinking fund_ in the British finances explained, 389. Is + inadequate to the discharge of former debts, and almost wholly + applied to other purposes, 391. Motives to the misapplication of + it, ib., 392. + + _Slaves_, the labour of, dearer to the masters than that of + freemen, 53. Under feudal lords, circumstances of their situation, + 159. Countries where this order of men still remains, ib. Why the + service of slave is preferred to that of freemen, ib. Their labour + why unprofitable, ib. Causes of the abolishing of slavery + throughout the greater part of Europe, 160. Receive more protection + from the magistrate in an arbitrary government than in one that is + free, 241. Why employed in manufactures by the ancient Grecians, + 284. Why no improvements are to be expected from them, ib. + + _Smuggling_, a tempting, but generally a ruinous employment, 46. + Encouraged by high duties, 373. Remedies against, 374. The crime + of, morally considered, 381. + + _Society_, human, the first principles of, 6. + + _Soldiers_, remarks on their motives for engaging in the military + line, 45. Comparison between the land and sea service, ib. Why no + sensible inconvenience felt by the disbanding of great numbers + after a war is over, 190. Reason of their first serving for pay, + 291. How they became a distinct class of the people, 292. How + distinguished from the militia, ib. Alteration in their exercise + produced by the invention of fire-arms, ib. + + _South Sea company_, amazing capital once enjoyed by, 311. + Mercantile and stock-jobbing projects of, 312. Assiento contract, + ib. Whale fishery, ib. The capital of, turned into annuity stock, + ib., 388. + + _Sovereign_ and _trader_, inconsistent characters, 344. + + _Sovereign_, three duties only necessary for him to attend to for + supporting a system of natural liberty, 286. How he is to protect + the society from external violence, 289, 296. And the members of it + from the injustice and oppression of each other, 297. And to + maintain public works and institutions, 302. + + _Spain_, One of the poorest countries in Europe, notwithstanding + its rich mines, 101. Its commerce has produced no considerable + manufactures for distant sale, and the greater part of the country + remains uncultivated, 171, 172. Spanish mode of estimating their + American discoveries, 173. The value of gold, and silver there + depreciated by laying a tax on the exportation of them, 208. + Agriculture and manufactures there discouraged by the redundancy of + gold and silver, ib., 209. Natural consequences that would result + from taking away this tax, ib. The real and pretended motives of + the court of Castile for taking possession of the countries + discovered by Columbus, 230. The tax on gold and silver, how + reduced, ib. Gold the object of all the enterprises to the new + world, ib. The colonies of, less populous than those of any other + European nation, 232, 233. Asserted an exclusive claim to all + America, until the miscarriage of their invincible armada, ib. + Policy of the trade with the colonies, 236. The American + establishments of, effected by private adventurers, who received + little beyond permission from the government, 242. Lost its + manufactures by acquiring rich and fertile colonies, 251. The + alcavala tax there explained, 381. The ruin of the Spanish + manufactures attributed to it, ib. + + _Speculation_, a distinct employment in improved society, 5. + Speculative merchants described, 47. + + _Stage_, public performers on, paid for the contempt attending their + profession, 44. The political use of dramatic representations, 334. + + _Stamp duties_ in England and Holland, remarks on, 363, 364, 365. + + _Steel-bow_ tenants in Scotland, what, 160. + + _Stock_, the profits raised on, in manufactures, explained, 20. In + trade, an increase of, raises wages, and diminishes profit, 36. + Must be larger in a great town than in a country village, 37. + Natural consequences of a deficiency of stock in new colonies, 38. + The profits on, little affected by the easiness or difficulty of + learning a trade, 43. But by the risk or disagreeableness of the + business, 46. Stock employed for profit sets into motion the + greater part of useful labour, 106. No accumulation of, necessary + in the rude state of society, 111. The accumulation of, necessary + to the division of labour, ib. Stock distinguished into two parts, + 112. The general stock of a country or society explained, 113. + Houses, ib. Improved land, ib. Personal abilities, ib. Money and + provisions, 114. Raw materials and manufactured goods, ib. Stock of + individuals, how employed, 115. Is frequently buried or concealed + in arbitrary countries, ib. The profits on, decrease in proportion + as the quantity increases, 137. On what principles stock is lent + and borrowed at interest, 144. That of every society divided among + different employments, in the proportion most agreeable to the + public interest, by the private views of individuals, 260. The + natural distribution of, deranged by monopolizing systems, 261. + Every derangement of, injurious to the society, 262. Mercantile, is + barren and unproductive, according to the French agricultural + system of political economy, 277. How far the revenue from, is an + object of taxation, 357. A tax on, intended under the land-tax, + 358. + + _Stockings_, why cheaply manufactured in Scotland, 49. When first + introduced into England, 104. + + _Stone quarries_, their value depends on situation, 69, 74. + + _Stones_, precious, of no use but for ornament, and how the price + of, is regulated, 73. The most abundant mines, would add little to + the wealth of the world, ib. + + _Subordination_, how introduced into society, 297. Personal + qualifications, ib. Age and fortune, ib. Birth, 298. Birth and + fortune two great sources of personal distinction, ib. + + _Subsidy_, old, in the English customs, the drawbacks upon, 203. + Origin and import of the term, 372. + + _Sugar_, a very profitable article of cultivation, 66, 159. + Drawbacks on the importation of, from England, 204. Might be + cultivated by the drill-plough, instead of all hand-labour by + slaves, 241. A proper subject for taxation, as an article sold at + monopoly price, 378. + + _Sumptuary laws_, superfluous restraints on the common people, 142. + + _Surinam_, present state of the Dutch colony there, 234. + + _Switzerland_, establishment of the Reformation in Berne and Zurich, + 338. The clergy there zealous and industrious, 342. Taxes how paid + there, 359, 363. + + + T + + _Taille_, in France, the nature of that tax, and its operation, + explained, 161. + + _Talents_, natural, not so various in different men as is supposed, 7. + + _Tartars_, their manner of conducting war, 289. Their invasions + dreadful, ib. + + _Tavernier_, his account of the diamond mines of Golconda and + Visiapour, 73. + + _Taxes_, the origin of, under the feudal government, 162. The + sources from whence they must arise, 347. Unequal taxes, ib. Ought + to be clear and certain, ib. Ought to be levied at the times most + convenient for payment, ib. Ought to take as little as possible out + of the pockets of the people more than is brought into the public + treasury, 348. How they may be made more burdensome to the people + than beneficial to the sovereign, ib. The land-tax of Great + Britain, ib. Land-tax of Venice, 349. Improvements suggested for a + land-tax, ib. Mode of assessing the land-tax in Prussia, 351. + Tithes a very unequal tax, and a discouragement to improvement, + 352. Operation of tax on house rent, payable by the tenant, 354. A + proportionable tax on houses the best source of revenue, 355. How + far the revenue from stock is a proper object of taxation, 357. + Whether interest of money is proper for taxation, ib. How taxes are + paid at Hamburgh, 339. In Switzerland, ib. Taxes upon particular + employments, ib. Poll-taxes, 362. Taxes badges of liberty, ib. + Taxes upon the transfer of property, 362. Stamp duties, 363. On + whom the several kinds of taxes principally fall, 364. Taxes upon + the wages of labour, 365. Capitation taxes, 367. Taxes upon + consumable commodities, 368. Upon necessaries, ib. Upon luxuries, + ib. Principal necessaries taxed, 369. Absurdities in taxation, 370. + Different parts of Europe very highly taxed, ib. Two different + methods of taxing consumable commodities, ib. Sir Matthew Decker's + scheme of taxation considered, 371. Excise and customs, ib. + Taxation sometimes not an instrument of revenue, but of monopoly, + 373. Improvements of the customs suggested, 374. Taxes paid in the + price of a commodity little adverted to, 379, 380. On luxuries, the + good and bad properties of, ib. Bad effects of farming them out, + 383. How the finances of France might be reformed, 384. French and + English taxations compared, ib. New taxes always generate + discontent, 391, 392. How far the British system of taxation might + be applicable to all the different provinces of the empire, 397. + Such a plan might speedily discharge the national debt, 399. + + _Tea_, great importation and consumption of that drug in Britain, + 86. + + _Teachers in Universities_, tendency of endowments to diminish + their application, 319. The jurisdictions to which they are subject + little calculated to quicken their diligence, ib. Are frequently + obliged to gain protection by servility, ib. Defects in their + establishments, ib., 320. Teachers among the ancient Greeks and + Romans superior to those of modern times, 326. Circumstances which + draw good ones to, or drain them from, the universities, 340. Their + employment naturally renders them eminent in letters, 341. + + _Tenures_, feudal, general observations on, 137. Described, 157. + + _Theology_, monkish, the complexion of, 323. + + _Thoulouse_, salary paid to counsellor or judge in the parliament + of, 301. + + _Tin_, average rent of the mines of in Cornwall, 71. Yield a + greater profit to the proprietors than the silver mines of Peru, + ib., 72. Regulations under which tin mines are worked, ib. + + _Tobacco_, the culture of, why restrained in Europe, 66. Not so + profitable an article of cultivation in the West Indies as sugar, + ib. The amount and course of the British trade with, explained, + 153. The whole duty upon, drawn back on exportation, 204. + Consequences of the exclusive trade Britain enjoys with Maryland + and Virginia in this article, 244. + + _Tolls_, for passage over roads, bridges, and navigable canals, the + equity of, shewn, 303. Upon carriages of luxury, ought to be higher + than upon carriages of utility, ib. The management of turnpikes + often an object of just complaint, 304. Why government ought not to + have the management of turnpikes, ib., 379. + + _Tonnage_ and _poundage_, origin of those duties, 372. + + _Tontine_ in the French finances, what, with the derivation of the + name, 390. + + _Towns_, the places where industry is most profitably exerted, 53. + The spirit of combination prevalent among manufacturers, ib., 54. + According to what circumstances the general character of the + inhabitants as to industry is formed, 137. The reciprocal nature of + the trade between them and the country explained, 155. Subsist on + the surplus produce of the country, ib. How first formed, 156. Are + continual fairs, ib. The original poverty and servile state of the + inhabitants of, 162. Their early exemptions and privileges, how + obtained, ib. The inhabitants of, obtained liberty much earlier + than the occupiers of land in the country, 163. Origin of free + burghs, ib. Origin of corporations, ib. Why allowed to form + militia, 164. How the increase and riches of commercial towns + contributed to the improvement of the countries to which they + belonged, 167. + + _Trade_, double interest deemed a reasonable mercantile profit in, + 40. Four general classes of, equally necessary to, and dependent + on, each other, 147. Wholesale, three different sorts of, 151. The + different returns of home and foreign trade, ib. The nature and + operation of the carrying trade examined, 152. The principles of + foreign trade examined, 153. The trade between town and country + explained, 155. Original poverty and servile state of the + inhabitants of towns under feudal government, 162. Exemptions and + privileges granted to them, ib. Extension of commerce by rude + nations selling their own raw produce for the manufactures of more + civilised countries, 165. Its salutary effects on the government + and manners of a country, 167. Subverted the feudal authority, 168. + The independence of tradesmen and artizans explained, 169. The + capitals acquired by, very precarious, until some part has been + realised by the cultivation and improvement of land, 172. + Over-trading, the cause of complaints of the scarcity of money, + 176. The importation of gold and silver not the principal benefit + derived from foreign trade, 181. Effect produced in trade and + manufactures by the discovery of America, ib. And by the discovery + of a passage to the East Indies round the Cape of Good Hope, ib. + Error of commercial writers in estimating national wealth by gold + and silver, 182. Inquiry into the cause and effect of restraints + upon trade, ib. Individuals, by pursuing their own interest, + unknowingly promote that of the public, 184. Legal regulations, of + trade unsafe, ib. Retaliatory regulations between nations, 189. + Measures for laying trade open ought to be carried into execution + slowly, 191. Policy of the restraints on trade between France and + Britain considered, 192. No certain criterion to determine on which + side the balance of trade between two countries turns, ib. Most of + the regulations of, founded on a mistaken doctrine of the balance + of trade, 199. Is generally founded on narrow principles of policy, + 201. Drawbacks of duties, 203. The dealer who employs his whole + stock on one single branch of business has an advantage of the same + kind with the workman who employs his whole labour on a single + operation, 216. Consequences of drawing it from a number of small + channels into one great channel, 249. Colony trade, and the + monopoly of that trade distinguished, 250. The interest of the + consumer constantly sacrificed to that of the producer, 274. + Advantages attending a perfect freedom of, to landed nations, + according to the present agricultural system of political economy + in France, 278. Origin of foreign trade, 279. Consequences of high + duties and prohibitions in landed nations, ib. How trade augments + the revenue of a country, 281. Nature of the trading intercourse + between the inhabitants of towns and those of the country, 285. + + _Trades_, cause and effect of the separation of, 3. Origin of, 7. + + _Transit duties_ explained, 379. + + _Travelling_ for education, summary view of the effects of, 324. + + _Treasures_, why formerly accumulated by princes, 180. + + _Treasure-trove_, the term explained, 115. Why an important branch + of revenue under the ancient feudal governments, 385. + + _Turkey company_, short historical view of, 308. + + _Turnpikes_. See _Tolls_. + + _Tithes_, why an unequal tax, 352. The levying of, a great + discouragement to improvements, ib. The fixing a modus for, + a relief to the farmer, 353. + + + V + + _Value_, the term defined, 12. + + _Vedius Pollio_, his cruelty to his slaves checked by the Roman + emperor Augustus, which could not have been done under the + republican form of government, 241. + + _Venice_, origin of the silk manufacture in that city, 166. Traded + in East India goods before the sea track round the Cape of Good + Hope was discovered, 228, 229. Nature of the land-tax in that + republic, 349. + + _Venison_, the price of, in Britain, does not compensate the + expense of a deer park, 94. + + _Vicesima hereditatum_ among the ancient Romans, the nature of, + explained, 363. + + _Villages_, how first formed, 156. + + _Villenage_, probable cause of the wearing out of that tenure in + Europe, 160, 161. + + _Vineyard_, the most profitable part of agriculture, both among + the ancients and moderns, 65. Great advantages derived from + peculiarities of soil in, ib. + + _Universities_, the emoluments of the teachers in, how far calculated + to promote their diligence, 319. The professors at Oxford have + mostly given up teaching, ib. Those in France subject to + incompetent jurisdictions, ib. The privileges of graduates + improperly obtained, 320. Abuse of lectureships, ib. The discipline + of, seldom calculated for the benefit of the students, ib. Are in + England more corrupted than the public schools, 321. Original + foundation of, ib. How Latin became an essential article in + academical education, ib. How the study of the Greek language was + introduced, ib., 322. The three great branches of the Greek + philosophy, ib. Are now divided into five branches, ib. The monkish + course of education in, 323. Have not been very ready to adopt + improvements, ib. Are not well calculated to prepare men for the + world, 324. How filled with good professors or drained of them, + 340. Where the worst and best professors are generally to be met + with, ib., 341.--See _Colleges_ and _Teachers_. + + + W + + _Wages_ of labour, how settled between masters and workmen, 27. + The workmen generally obliged to comply with the terms of their + employers, ib. The opposition of workmen outrageous, and seldom + successful, 28. Circumstances which operate to raise wages, ib. + The extent of wages limited by the funds from which they arise, + ib. Why higher in North America than in England, ib. Are low in + countries that are stationary, ib. Not oppressively low in Great + Britain, 30. A distinction made here between the wages in summer + and in winter, 31. If sufficient in dear years, they must be ample + in seasons of plenty, ib. Different rates of, in different places, + ib. Liberal wages encourage industry and propagation, 33. An + advance of, necessarily raises the price of many commodities, 36. + An average of, not easily ascertained, 37. The operation of high + wages and high profits compared, 41. Causes of the variations of, + in different employments, ib. Are generally higher in new, than in + old trades, 48, 57. Legal regulations of, destroy industry and + ingenuity, 59, 60. Natural effect of a direct tax upon, 365. + + _Walpole_, Sir Robert, his excise scheme defended, 375. + + _Wants_ of mankind, how supplied through the operation of labour, + 9, 10. How extended, in proportion to their supply, 69. The far + greater part of them supplied from the produce of other men's + labour, 111. + + _Wars_, foreign, the funds for the maintenance of, in the present + century, have little dependence on the quantity of gold and silver + in a nation, 178, 179. How supported by a nation of hunters, 289. + By a nation of shepherds, ib. By a nation of husbandmen, 290. Men + of military age, what proportion they bear to the whole society, + ib. Feudal wars, how supported, ib. Causes which, in the advanced + state of society, rendered it impossible for those who took the + field, to maintain themselves, ib. How the art of war became a + distinct profession, 291. Distinction between the militia and + regular forces, 292. Alteration in the art of war produced by the + invention of fire-arms, ib., 296. Importance of discipline, 293. + Macedonian army, 294. Carthaginian army, ib. Roman army, ib. Feudal + armies, 295. A well regulated standing army, the only defence of a + civilized country, and the only means for speedily civilizing a + barbarous country, 296. The want of parsimony during peace, imposes + on states the necessity of contracting debts to carry on war, 386, + 391. Why war is agreeable to those who live secure from the + immediate calamities of it, 391. Advantages of raising the supplies + for, within the year, 394. + + _Watch_ movements, great reduction in the prices of, owing to + mechanical improvements, 103. + + _Wealth_ and money, synonymous terms, in popular language, 173, + 182. Spanish and Tartarian estimate of, compared, 173. The great + authority conferred by the possession of, 298. + + _Weavers_, the profits of, why necessarily greater than those of + spinners, 21. + + _West Indies_, discovered by Columbus, 229. How they obtained this + name, ib. The original native productions of, ib. The thirst of + gold the object of all the Spanish enterprises there, 230. And of + those of every other European nation, 231. The remoteness of, + greatly in favour of the European colonies there, 232. The sugar + colonies of France better governed than those of Britain, 241. + + _Wheat_. See _Corn_. + + _Window-tax_ in Britain, how rated, 357. Tends to reduce house + rent, ib. + + _Windsor_ market, chronological table of the prices of corn at, 109. + + _Wine_, the cheapness of, would be a cause of sobriety, 200. The + carrying trade in, encouraged by English statutes, 204. + + _Wood_, the price of, rises in proportion as a country is + cultivated, 70. The growth of young trees prevented by cattle, ib. + When the planting of trees becomes a profitable employment, ib. + + _Wool_, the produce of rude countries, commonly carried to a + distant market, 97. The price of, in England, has fallen + considerably since the time of Edward III., ib. Causes of this + diminution in price, 98. The price of, considerably reduced in + Scotland, by the Union with England, 99. Severity of the laws + against the exportation of, 268. Restraints upon the inland + commerce of, 269. Restraints upon the coasting trade of, ib. Pleas + on which these restraints are founded, ib. The price of wool + depressed by these regulations, 270. The exportation of, ought to + be allowed, subject to a duty, 271. + + _Woollen_ cloth, the present prices of, compared with those at the + close of the fifteenth century, 104. Three mechanical improvements + introduced in the manufacture of, ib., 105. + + +THE END. + + +STEREOTYPED. + +_Edinburgh_:--_DUNCAN STEVENSON_, Printer to the University. + + + + +TRANSCRIBER'S NOTES: + + +1. Passages in italics are surrounded by _underscores_. + +2. Footnotes have been renumbered moved to the end of this text version. + +3. The original text includes one Greek word, the letters of which have +been replaced with transliterations. + +4. A couple of words use oe ligature in the original. + +5. The mixed fractions are represnted using hyphen and forward slash in +this text version. For example, 10-1/2 indicates ten and a half. + +6. Obvious errors in punctuation have been silently corrected. + +7. Missing letters/words in improperly scanned images have been silently +added. + +8. The following misprints have been corrected: + + Pg xiv, "ralate" changed to "relate" (relate to the imitative) + Pg xviii, "uxuries" changed to "luxuries" (their luxuries,) + Pg xx, "induustry" changed to "industry" (resources of industry?) + Pg xxiii, "exhibting" changed to "exhibiting" (exhibiting to him) + Pg xxx, "beeen" changed to "been" (never been better shown;) + Pg 17, "cold" changed to "gold" (of the gold coin. In the market,) + Pg 30, "poplousness" changed to "populousness" (and populousness,) + Pg 35, "taillies" changed to "tallies" (tallies in the election) + Pg 101, "barrennes" changed to "barrenness" (only of the barrenness) + Pg 112, "requirs" changed to "requires" (master tailor requires) + Pg 118, "the the" changed to "the" (different operations of the) + Pg 147, "univesally" changed to "universally" (are universally) + Pg 153, "natrually" changed to "naturally" (violence, naturally) + Pg 176, "god" changed to "good" (though with a good deal) + Pg 210, "wich" changed to "which" (value of silver which varies) + Pg 237, "interferred" changed to "interfered" (interfered too much) + Pg 246, "fallan" changed to "fallen" (British profit has fallen) + Pg 259, "restrain" changed to "restraint" (By this restraint) + Pg 281, "manufacterers" changed to "manufacturers" (over that of + artificers and manufacturers.) + Pg 288, "85,159-5/11" changed to "85,179-5/11" + Pg 290, "seige" changed to "siege" (till the siege of Veii,) + Pg 342, "re-respective" changed to "respective" (to their respective + abilities.) + Pg 353, "pruduce" changed to "produce" (fifth part of the produce.) + Pg 364, "more" changed to "money" (have the money to pay.) + Pg 406, "dicovery" changed to "discovery" (The discovery and + colonization of,) + Pg 415, "evidince" changed to "evidence" (evidence of its wealth,) + Pg 415, "of of" changed to "of" (restraining the exportation of) + Pg 415, "for for" changed to "for" (but for foreign trade,) + +9. 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