"AN INQUIRY INTO THE NATURE AND CAUSES OF THE WEALTH OF NATIONS.\n\n\nBy Adam Smith\n\n\n\n\nINTRODUCTION AND PLAN OF THE WORK.\n\n\nThe annual labour of every nation is the fund which originally supplies\nit with all the necessaries and conveniencies of life which it annually\nconsumes, and which consist always either in the immediate produce\nof that labour, or in what is purchased with that produce from other\nnations.\n\nAccording, therefore, as this produce, or what is purchased with it,\nbears a greater or smaller proportion to the number of those who are\nto consume it, the nation will be better or worse supplied with all the\nnecessaries and conveniencies for which it has occasion.\n\nBut this proportion must in every nation be regulated by two different\ncircumstances: first, by the skill, dexterity, and judgment with which\nits labour is generally applied; and, secondly, by the proportion\nbetween the number of those who are employed in useful labour, and that\nof those who are not so employed. Whatever be the soil, climate,\nor extent of territory of any particular nation, the abundance or\nscantiness of its annual supply must, in that particular situation,\ndepend upon those two circumstances.\n\nThe abundance or scantiness of this supply, too, seems to depend more\nupon the former of those two circumstances than upon the latter. Among\nthe savage nations of hunters and fishers, every individual who is able\nto work is more or less employed in useful labour, and endeavours to\nprovide, as well as he can, the necessaries and conveniencies of life,\nfor himself, and such of his family or tribe as are either too old, or\ntoo young, or too infirm, to go a-hunting and fishing. Such nations,\nhowever, are so miserably poor, that, from mere want, they are\nfrequently reduced, or at least think themselves reduced, to the\nnecessity sometimes of directly destroying, and sometimes of abandoning\ntheir infants, their old people, and those afflicted with lingering\ndiseases, to perish with hunger, or to be devoured by wild beasts. Among\ncivilized and thriving nations, on the contrary, though a great number\nof people do not labour at all, many of whom consume the produce of ten\ntimes, frequently of a hundred times, more labour than the greater part\nof those who work; yet the produce of the whole labour of the society is\nso great, that all are often abundantly supplied; and a workman, even of\nthe lowest and poorest order, if he is frugal and industrious, may enjoy\na greater share of the necessaries and conveniencies of life than it is\npossible for any savage to acquire.\n\nThe causes of this improvement in the productive powers of labour, and\nthe order according to which its produce is naturally distributed among\nthe different ranks and conditions of men in the society, make the\nsubject of the first book of this Inquiry.\n\nWhatever be the actual state of the skill, dexterity, and judgment, with\nwhich labour is applied in any nation, the abundance or scantiness of\nits annual supply must depend, during the continuance of that state,\nupon the proportion between the number of those who are annually\nemployed in useful labour, and that of those who are not so employed.\nThe number of useful and productive labourers, it will hereafter appear,\nis everywhere in proportion to the quantity of capital stock which is\nemployed in setting them to work, and to the particular way in which\nit is so employed. The second book, therefore, treats of the nature of\ncapital stock, of the manner in which it is gradually accumulated,\nand of the different quantities of labour which it puts into motion,\naccording to the different ways in which it is employed.\n\nNations tolerably well advanced as to skill, dexterity, and judgment,\nin the application of labour, have followed very different plans in the\ngeneral conduct or direction of it; and those plans have not all been\nequally favourable to the greatness of its produce. The policy of some\nnations has given extraordinary encouragement to the industry of the\ncountry; that of others to the industry of towns. Scarce any nation has\ndealt equally and impartially with every sort of industry. Since the\ndown-fall of the Roman empire, the policy of Europe has been more\nfavourable to arts, manufactures, and commerce, the industry of towns,\nthan to agriculture, the Industry of the country. The circumstances\nwhich seem to have introduced and established this policy are explained\nin the third book.\n\nThough those different plans were, perhaps, first introduced by the\nprivate interests and prejudices of particular orders of men, without\nany regard to, or foresight of, their consequences upon the general\nwelfare of the society; yet they have given occasion to very different\ntheories of political economy; of which some magnify the importance\nof that industry which is carried on in towns, others of that which\nis carried on in the country. Those theories have had a considerable\ninfluence, not only upon the opinions of men of learning, but upon the\npublic conduct of princes and sovereign states. I have endeavoured,\nin the fourth book, to explain as fully and distinctly as I can those\ndifferent theories, and the principal effects which they have produced\nin different ages and nations.\n\nTo explain in what has consisted the revenue of the great body of the\npeople, or what has been the nature of those funds, which, in different\nages and nations, have supplied their annual consumption, is the object\nof these four first books. The fifth and last book treats of the revenue\nof the sovereign, or commonwealth. In this book I have endeavoured\nto shew, first, what are the necessary expenses of the sovereign,\nor commonwealth; which of those expenses ought to be defrayed by the\ngeneral contribution of the whole society, and which of them, by that\nof some particular part only, or of some particular members of it:\nsecondly, what are the different methods in which the whole society may\nbe made to contribute towards defraying the expenses incumbent on the\nwhole society, and what are the principal advantages and inconveniencies\nof each of those methods; and, thirdly and lastly, what are the reasons\nand causes which have induced almost all modern governments to mortgage\nsome part of this revenue, or to contract debts; and what have been the\neffects of those debts upon the real wealth, the annual produce of the\nland and labour of the society.\n\n\n\n\nBOOK I. OF THE CAUSES OF IMPROVEMENT IN THE PRODUCTIVE POWERS OF LABOUR,\nAND OF THE ORDER ACCORDING TO WHICH ITS PRODUCE IS NATURALLY DISTRIBUTED\nAMONG THE DIFFERENT RANKS OF THE PEOPLE.\n\n\n\nCHAPTER I. OF THE DIVISION OF LABOUR.\n\nThe greatest improvements in the productive powers of labour, and the\ngreater part of the skill, dexterity, and judgment, with which it is\nanywhere directed, or applied, seem to have been the effects of the\ndivision of labour. The effects of the division of labour, in the\ngeneral business of society, will be more easily understood, by\nconsidering in what manner it operates in some particular manufactures.\nIt is commonly supposed to be carried furthest in some very trifling\nones; not perhaps that it really is carried further in them than in\nothers of more importance: but in those trifling manufactures which are\ndestined to supply the small wants of but a small number of people, the\nwhole number of workmen must necessarily be small; and those employed in\nevery different branch of the work can often be collected into the same\nworkhouse, and placed at once under the view of the spectator.\n\nIn those great manufactures, on the contrary, which are destined to\nsupply the great wants of the great body of the people, every different\nbranch of the work employs so great a number of workmen, that it is\nimpossible to collect them all into the same workhouse. We can seldom\nsee more, at one time, than those employed in one single branch. Though\nin such manufactures, therefore, the work may really be divided into a\nmuch greater number of parts, than in those of a more trifling nature,\nthe division is not near so obvious, and has accordingly been much less\nobserved.\n\nTo take an example, therefore, from a very trifling manufacture, but one\nin which the division of labour has been very often taken notice of, the\ntrade of a pin-maker: a workman not educated to this business (which the\ndivision of labour has rendered a distinct trade), nor acquainted with\nthe use of the machinery employed in it (to the invention of which the\nsame division of labour has probably given occasion), could scarce,\nperhaps, with his utmost industry, make one pin in a day, and certainly\ncould not make twenty. But in the way in which this business is now\ncarried on, not only the whole work is a peculiar trade, but it is\ndivided into a number of branches, of which the greater part are\nlikewise peculiar trades. One man draws out the wire; another straights\nit; a third cuts it; a fourth points it; a fifth grinds it at the top\nfor receiving the head; to make the head requires two or three distinct\noperations; to put it on is a peculiar business; to whiten the pins is\nanother; it is even a trade by itself to put them into the paper; and\nthe important business of making a pin is, in this manner, divided into\nabout eighteen distinct operations, which, in some manufactories, are\nall performed by distinct hands, though in others the same man will\nsometimes perform two or three of them. I have seen a small manufactory\nof this kind, where ten men only were employed, and where some of them\nconsequently performed two or three distinct operations. But though they\nwere very poor, and therefore but indifferently accommodated with the\nnecessary machinery, they could, when they exerted themselves, make\namong them about twelve pounds of pins in a day. There are in a pound\nupwards of four thousand pins of a middling size. Those ten persons,\ntherefore, could make among them upwards of forty-eight thousand pins\nin a day. Each person, therefore, making a tenth part of forty-eight\nthousand pins, might be considered as making four thousand eight hundred\npins in a day. But if they had all wrought separately and independently,\nand without any of them having been educated to this peculiar business,\nthey certainly could not each of them have made twenty, perhaps not\none pin in a day; that is, certainly, not the two hundred and fortieth,\nperhaps not the four thousand eight hundredth, part of what they are at\npresent capable of performing, in consequence of a proper division and\ncombination of their different operations.\n\nIn every other art and manufacture, the effects of the division of\nlabour are similar to what they are in this very trifling one, though,\nin many of them, the labour can neither be so much subdivided, nor\nreduced to so great a simplicity of operation. The division of labour,\nhowever, so far as it can be introduced, occasions, in every art,\na proportionable increase of the productive powers of labour. The\nseparation of different trades and employments from one another, seems\nto have taken place in consequence of this advantage. This separation,\ntoo, is generally carried furthest in those countries which enjoy the\nhighest degree of industry and improvement; what is the work of one\nman, in a rude state of society, being generally that of several in an\nimproved one. In every improved society, the farmer is generally nothing\nbut a farmer; the manufacturer, nothing but a manufacturer. The labour,\ntoo, which is necessary to produce any one complete manufacture, is\nalmost always divided among a great number of hands. How many\ndifferent trades are employed in each branch of the linen and woollen\nmanufactures, from the growers of the flax and the wool, to the\nbleachers and smoothers of the linen, or to the dyers and dressers of\nthe cloth! The nature of agriculture, indeed, does not admit of so many\nsubdivisions of labour, nor of so complete a separation of one business\nfrom another, as manufactures. It is impossible to separate so entirely\nthe business of the grazier from that of the corn-farmer, as the trade\nof the carpenter is commonly separated from that of the smith. The\nspinner is almost always a distinct person from the weaver; but the\nploughman, the harrower, the sower of the seed, and the reaper of the\ncorn, are often the same. The occasions for those different sorts\nof labour returning with the different seasons of the year, it is\nimpossible that one man should be constantly employed in any one of\nthem. This impossibility of making so complete and entire a separation\nof all the different branches of labour employed in agriculture, is\nperhaps the reason why the improvement of the productive powers of\nlabour, in this art, does not always keep pace with their improvement\nin manufactures. The most opulent nations, indeed, generally excel all\ntheir neighbours in agriculture as well as in manufactures; but they are\ncommonly more distinguished by their superiority in the latter than in\nthe former. Their lands are in general better cultivated, and having\nmore labour and expense bestowed upon them, produce more in proportion\nto the extent and natural fertility of the ground. But this superiority\nof produce is seldom much more than in proportion to the superiority of\nlabour and expense. In agriculture, the labour of the rich country is\nnot always much more productive than that of the poor; or, at least, it\nis never so much more productive, as it commonly is in manufactures. The\ncorn of the rich country, therefore, will not always, in the same degree\nof goodness, come cheaper to market than that of the poor. The corn of\nPoland, in the same degree of goodness, is as cheap as that of France,\nnotwithstanding the superior opulence and improvement of the latter\ncountry. The corn of France is, in the corn-provinces, fully as good,\nand in most years nearly about the same price with the corn of England,\nthough, in opulence and improvement, France is perhaps inferior to\nEngland. The corn-lands of England, however, are better cultivated than\nthose of France, and the corn-lands of France are said to be much\nbetter cultivated than those of Poland. But though the poor country,\nnotwithstanding the inferiority of its cultivation, can, in some\nmeasure, rival the rich in the cheapness and goodness of its corn, it\ncan pretend to no such competition in its manufactures, at least if\nthose manufactures suit the soil, climate, and situation, of the rich\ncountry. The silks of France are better and cheaper than those of\nEngland, because the silk manufacture, at least under the present high\nduties upon the importation of raw silk, does not so well suit the\nclimate of England as that of France. But the hardware and the coarse\nwoollens of England are beyond all comparison superior to those of\nFrance, and much cheaper, too, in the same degree of goodness. In Poland\nthere are said to be scarce any manufactures of any kind, a few of those\ncoarser household manufactures excepted, without which no country can\nwell subsist.\n\nThis great increase in the quantity of work, which, in consequence\nof the division of labour, the same number of people are capable of\nperforming, is owing to three different circumstances; first, to the\nincrease of dexterity in every particular workman; secondly, to the\nsaving of the time which is commonly lost in passing from one species\nof work to another; and, lastly, to the invention of a great number of\nmachines which facilitate and abridge labour, and enable one man to do\nthe work of many.\n\nFirst, the improvement of the dexterity of the workmen, necessarily\nincreases the quantity of the work he can perform; and the division of\nlabour, by reducing every man's business to some one simple operation,\nand by making this operation the sole employment of his life,\nnecessarily increases very much the dexterity of the workman. A common\nsmith, who, though accustomed to handle the hammer, has never been\nused to make nails, if, upon some particular occasion, he is obliged\nto attempt it, will scarce, I am assured, be able to make above two or\nthree hundred nails in a day, and those, too, very bad ones. A smith who\nhas been accustomed to make nails, but whose sole or principal business\nhas not been that of a nailer, can seldom, with his utmost diligence,\nmake more than eight hundred or a thousand nails in a day. I have seen\nseveral boys, under twenty years of age, who had never exercised\nany other trade but that of making nails, and who, when they exerted\nthemselves, could make, each of them, upwards of two thousand three\nhundred nails in a day. The making of a nail, however, is by no means\none of the simplest operations. The same person blows the bellows, stirs\nor mends the fire as there is occasion, heats the iron, and forges every\npart of the nail: in forging the head, too, he is obliged to change his\ntools. The different operations into which the making of a pin, or of a\nmetal button, is subdivided, are all of them much more simple, and the\ndexterity of the person, of whose life it has been the sole business to\nperform them, is usually much greater. The rapidity with which some of\nthe operations of those manufactures are performed, exceeds what the\nhuman hand could, by those who had never seen them, be supposed capable\nof acquiring.\n\nSecondly, The advantage which is gained by saving the time commonly lost\nin passing from one sort of work to another, is much greater than we\nshould at first view be apt to imagine it. It is impossible to pass\nvery quickly from one kind of work to another, that is carried on in a\ndifferent place, and with quite different tools. A country weaver, who\ncultivates a small farm, must loose a good deal of time in passing from\nhis loom to the field, and from the field to his loom. When the two\ntrades can be carried on in the same workhouse, the loss of time is, no\ndoubt, much less. It is, even in this case, however, very considerable.\nA man commonly saunters a little in turning his hand from one sort of\nemployment to another. When he first begins the new work, he is seldom\nvery keen and hearty; his mind, as they say, does not go to it, and for\nsome time he rather trifles than applies to good purpose. The habit of\nsauntering, and of indolent careless application, which is naturally, or\nrather necessarily, acquired by every country workman who is obliged to\nchange his work and his tools every half hour, and to apply his hand in\ntwenty different ways almost every day of his life, renders him almost\nalways slothful and lazy, and incapable of any vigorous application,\neven on the most pressing occasions. Independent, therefore, of his\ndeficiency in point of dexterity, this cause alone must always reduce\nconsiderably the quantity of work which he is capable of performing.\n\nThirdly, and lastly, everybody must be sensible how much labour is\nfacilitated and abridged by the application of proper machinery. It is\nunnecessary to give any example. I shall only observe, therefore,\nthat the invention of all those machines by which labour is so much\nfacilitated and abridged, seems to have been originally owing to the\ndivision of labour. Men are much more likely to discover easier and\nreadier methods of attaining any object, when the whole attention of\ntheir minds is directed towards that single object, than when it is\ndissipated among a great variety of things. But, in consequence of the\ndivision of labour, the whole of every man's attention comes naturally\nto be directed towards some one very simple object. It is naturally to\nbe expected, therefore, that some one or other of those who are employed\nin each particular branch of labour should soon find out easier and\nreadier methods of performing their own particular work, whenever the\nnature of it admits of such improvement. A great part of the machines\nmade use of in those manufactures in which labour is most subdivided,\nwere originally the invention of common workmen, who, being each of them\nemployed in some very simple operation, naturally turned their thoughts\ntowards finding out easier and readier methods of performing it. Whoever\nhas been much accustomed to visit such manufactures, must frequently\nhave been shewn very pretty machines, which were the inventions of such\nworkmen, in order to facilitate and quicken their own particular part\nof the work. In the first fire engines {this was the current designation\nfor steam engines}, a boy was constantly employed to open and shut\nalternately the communication between the boiler and the cylinder,\naccording as the piston either ascended or descended. One of those boys,\nwho loved to play with his companions, observed that, by tying a string\nfrom the handle of the valve which opened this communication to\nanother part of the machine, the valve would open and shut without\nhis assistance, and leave him at liberty to divert himself with his\nplay-fellows. One of the greatest improvements that has been made\nupon this machine, since it was first invented, was in this manner the\ndiscovery of a boy who wanted to save his own labour.\n\nAll the improvements in machinery, however, have by no means been\nthe inventions of those who had occasion to use the machines. Many\nimprovements have been made by the ingenuity of the makers of the\nmachines, when to make them became the business of a peculiar trade;\nand some by that of those who are called philosophers, or men of\nspeculation, whose trade it is not to do any thing, but to observe\nevery thing, and who, upon that account, are often capable of combining\ntogether the powers of the most distant and dissimilar objects in the\nprogress of society, philosophy or speculation becomes, like every other\nemployment, the principal or sole trade and occupation of a particular\nclass of citizens. Like every other employment, too, it is subdivided\ninto a great number of different branches, each of which affords\noccupation to a peculiar tribe or class of philosophers; and this\nsubdivision of employment in philosophy, as well as in every other\nbusiness, improve dexterity, and saves time. Each individual becomes\nmore expert in his own peculiar branch, more work is done upon the\nwhole, and the quantity of science is considerably increased by it.\n\nIt is the great multiplication of the productions of all the different\narts, in consequence of the division of labour, which occasions, in a\nwell-governed society, that universal opulence which extends itself to\nthe lowest ranks of the people. Every workman has a great quantity of\nhis own work to dispose of beyond what he himself has occasion for; and\nevery other workman being exactly in the same situation, he is enabled\nto exchange a great quantity of his own goods for a great quantity\nor, what comes to the same thing, for the price of a great quantity of\ntheirs. He supplies them abundantly with what they have occasion for,\nand they accommodate him as amply with what he has occasion for, and a\ngeneral plenty diffuses itself through all the different ranks of the\nsociety.\n\nObserve the accommodation of the most common artificer or daylabourer in\na civilized and thriving country, and you will perceive that the number\nof people, of whose industry a part, though but a small part, has been\nemployed in procuring him this accommodation, exceeds all computation.\nThe woollen coat, for example, which covers the day-labourer, as coarse\nand rough as it may appear, is the produce of the joint labour of a\ngreat multitude of workmen. The shepherd, the sorter of the wool, the\nwool-comber or carder, the dyer, the scribbler, the spinner, the weaver,\nthe fuller, the dresser, with many others, must all join their different\narts in order to complete even this homely production. How many\nmerchants and carriers, besides, must have been employed in transporting\nthe materials from some of those workmen to others who often live in a\nvery distant part of the country? How much commerce and navigation in\nparticular, how many ship-builders, sailors, sail-makers, rope-makers,\nmust have been employed in order to bring together the different drugs\nmade use of by the dyer, which often come from the remotest corners\nof the world? What a variety of labour, too, is necessary in order to\nproduce the tools of the meanest of those workmen! To say nothing of\nsuch complicated machines as the ship of the sailor, the mill of the\nfuller, or even the loom of the weaver, let us consider only what\na variety of labour is requisite in order to form that very simple\nmachine, the shears with which the shepherd clips the wool. The miner,\nthe builder of the furnace for smelting the ore, the feller of\nthe timber, the burner of the charcoal to be made use of in the\nsmelting-house, the brickmaker, the bricklayer, the workmen who attend\nthe furnace, the millwright, the forger, the smith, must all of them\njoin their different arts in order to produce them. Were we to examine,\nin the same manner, all the different parts of his dress and household\nfurniture, the coarse linen shirt which he wears next his skin, the\nshoes which cover his feet, the bed which he lies on, and all the\ndifferent parts which compose it, the kitchen-grate at which he prepares\nhis victuals, the coals which he makes use of for that purpose, dug from\nthe bowels of the earth, and brought to him, perhaps, by a long sea and\na long land-carriage, all the other utensils of his kitchen, all the\nfurniture of his table, the knives and forks, the earthen or pewter\nplates upon which he serves up and divides his victuals, the different\nhands employed in preparing his bread and his beer, the glass window\nwhich lets in the heat and the light, and keeps out the wind and the\nrain, with all the knowledge and art requisite for preparing that\nbeautiful and happy invention, without which these northern parts of the\nworld could scarce have afforded a very comfortable habitation, together\nwith the tools of all the different workmen employed in producing those\ndifferent conveniencies; if we examine, I say, all these things, and\nconsider what a variety of labour is employed about each of them, we\nshall be sensible that, without the assistance and co-operation of many\nthousands, the very meanest person in a civilized country could not be\nprovided, even according to, what we very falsely imagine, the easy and\nsimple manner in which he is commonly accommodated. Compared, indeed,\nwith the more extravagant luxury of the great, his accommodation must no\ndoubt appear extremely simple and easy; and yet it may be true, perhaps,\nthat the accommodation of an European prince does not always so much\nexceed that of an industrious and frugal peasant, as the accommodation\nof the latter exceeds that of many an African king, the absolute masters\nof the lives and liberties of ten thousand naked savages.\n\n\n\n\nCHAPTER II. OF THE PRINCIPLE WHICH GIVES OCCASION TO THE DIVISION OF\nLABOUR.\n\nThis division of labour, from which so many advantages are derived,\nis not originally the effect of any human wisdom, which foresees and\nintends that general opulence to which it gives occasion. It is the\nnecessary, though very slow and gradual, consequence of a certain\npropensity in human nature, which has in view no such extensive utility;\nthe propensity to truck, barter, and exchange one thing for another.\n\nWhether this propensity be one of those original principles in human\nnature, of which no further account can be given, or whether, as seems\nmore probable, it be the necessary consequence of the faculties of\nreason and speech, it belongs not to our present subject to inquire. It\nis common to all men, and to be found in no other race of animals,\nwhich seem to know neither this nor any other species of contracts. Two\ngreyhounds, in running down the same hare, have sometimes the appearance\nof acting in some sort of concert. Each turns her towards his companion,\nor endeavours to intercept her when his companion turns her towards\nhimself. This, however, is not the effect of any contract, but of the\naccidental concurrence of their passions in the same object at that\nparticular time. Nobody ever saw a dog make a fair and deliberate\nexchange of one bone for another with another dog. Nobody ever saw one\nanimal, by its gestures and natural cries signify to another, this is\nmine, that yours; I am willing to give this for that. When an animal\nwants to obtain something either of a man, or of another animal, it\nhas no other means of persuasion, but to gain the favour of those\nwhose service it requires. A puppy fawns upon its dam, and a spaniel\nendeavours, by a thousand attractions, to engage the attention of its\nmaster who is at dinner, when it wants to be fed by him. Man sometimes\nuses the same arts with his brethren, and when he has no other means of\nengaging them to act according to his inclinations, endeavours by every\nservile and fawning attention to obtain their good will. He has not\ntime, however, to do this upon every occasion. In civilized society he\nstands at all times in need of the co-operation and assistance of\ngreat multitudes, while his whole life is scarce sufficient to gain the\nfriendship of a few persons. In almost every other race of animals, each\nindividual, when it is grown up to maturity, is entirely independent,\nand in its natural state has occasion for the assistance of no other\nliving creature. But man has almost constant occasion for the help\nof his brethren, and it is in vain for him to expect it from their\nbenevolence only. He will be more likely to prevail if he can interest\ntheir self-love in his favour, and shew them that it is for their own\nadvantage to do for him what he requires of them. Whoever offers to\nanother a bargain of any kind, proposes to do this. Give me that which\nI want, and you shall have this which you want, is the meaning of every\nsuch offer; and it is in this manner that we obtain from one another the\nfar greater part of those good offices which we stand in need of. It is\nnot from the benevolence of the butcher, the brewer, or the baker that\nwe expect our dinner, but from their regard to their own interest. We\naddress ourselves, not to their humanity, but to their self-love, and\nnever talk to them of our own necessities, but of their advantages.\nNobody but a beggar chooses to depend chiefly upon the benevolence of\nhis fellow-citizens. Even a beggar does not depend upon it entirely.\nThe charity of well-disposed people, indeed, supplies him with the whole\nfund of his subsistence. But though this principle ultimately provides\nhim with all the necessaries of life which he has occasion for, it\nneither does nor can provide him with them as he has occasion for them.\nThe greater part of his occasional wants are supplied in the same manner\nas those of other people, by treaty, by barter, and by purchase. With\nthe money which one man gives him he purchases food. The old clothes\nwhich another bestows upon him he exchanges for other clothes which suit\nhim better, or for lodging, or for food, or for money, with which he can\nbuy either food, clothes, or lodging, as he has occasion.\n\nAs it is by treaty, by barter, and by purchase, that we obtain from one\nanother the greater part of those mutual good offices which we stand in\nneed of, so it is this same trucking disposition which originally gives\noccasion to the division of labour. In a tribe of hunters or shepherds,\na particular person makes bows and arrows, for example, with more\nreadiness and dexterity than any other. He frequently exchanges them for\ncattle or for venison, with his companions; and he finds at last that\nhe can, in this manner, get more cattle and venison, than if he himself\nwent to the field to catch them. From a regard to his own interest,\ntherefore, the making of bows and arrows grows to be his chief business,\nand he becomes a sort of armourer. Another excels in making the frames\nand covers of their little huts or moveable houses. He is accustomed\nto be of use in this way to his neighbours, who reward him in the\nsame manner with cattle and with venison, till at last he finds it his\ninterest to dedicate himself entirely to this employment, and to become\na sort of house-carpenter. In the same manner a third becomes a smith\nor a brazier; a fourth, a tanner or dresser of hides or skins, the\nprincipal part of the clothing of savages. And thus the certainty of\nbeing able to exchange all that surplus part of the produce of his own\nlabour, which is over and above his own consumption, for such parts\nof the produce of other men's labour as he may have occasion for,\nencourages every man to apply himself to a particular occupation, and\nto cultivate and bring to perfection whatever talent of genius he may\npossess for that particular species of business.\n\nThe difference of natural talents in different men, is, in reality, much\nless than we are aware of; and the very different genius which appears\nto distinguish men of different professions, when grown up to maturity,\nis not upon many occasions so much the cause, as the effect of\nthe division of labour. The difference between the most dissimilar\ncharacters, between a philosopher and a common street porter, for\nexample, seems to arise not so much from nature, as from habit, custom,\nand education. When they came in to the world, and for the first six or\neight years of their existence, they were, perhaps, very much alike,\nand neither their parents nor play-fellows could perceive any remarkable\ndifference. About that age, or soon after, they come to be employed in\nvery different occupations. The difference of talents comes then to be\ntaken notice of, and widens by degrees, till at last the vanity of\nthe philosopher is willing to acknowledge scarce any resemblance. But\nwithout the disposition to truck, barter, and exchange, every man must\nhave procured to himself every necessary and conveniency of life which\nhe wanted. All must have had the same duties to perform, and the same\nwork to do, and there could have been no such difference of employment\nas could alone give occasion to any great difference of talents.\n\nAs it is this disposition which forms that difference of talents,\nso remarkable among men of different professions, so it is this same\ndisposition which renders that difference useful. Many tribes of\nanimals, acknowledged to be all of the same species, derive from nature\na much more remarkable distinction of genius, than what, antecedent\nto custom and education, appears to take place among men. By nature a\nphilosopher is not in genius and disposition half so different from a\nstreet porter, as a mastiff is from a grey-hound, or a grey-hound from\na spaniel, or this last from a shepherd's dog. Those different tribes of\nanimals, however, though all of the same species are of scarce any\nuse to one another. The strength of the mastiff is not in the least\nsupported either by the swiftness of the greyhound, or by the sagacity\nof the spaniel, or by the docility of the shepherd's dog. The effects\nof those different geniuses and talents, for want of the power or\ndisposition to barter and exchange, cannot be brought into a common\nstock, and do not in the least contribute to the better accommodation\nand conveniency of the species. Each animal is still obliged to support\nand defend itself, separately and independently, and derives no sort\nof advantage from that variety of talents with which nature has\ndistinguished its fellows. Among men, on the contrary, the most\ndissimilar geniuses are of use to one another; the different produces of\ntheir respective talents, by the general disposition to truck, barter,\nand exchange, being brought, as it were, into a common stock, where\nevery man may purchase whatever part of the produce of other men's\ntalents he has occasion for.\n\n\n\n\nCHAPTER III. THAT THE DIVISION OF LABOUR IS LIMITED BY THE EXTENT OF THE\nMARKET.\n\nAs it is the power of exchanging that gives occasion to the division\nof labour, so the extent of this division must always be limited by the\nextent of that power, or, in other words, by the extent of the market.\nWhen the market is very small, no person can have any encouragement to\ndedicate himself entirely to one employment, for want of the power to\nexchange all that surplus part of the produce of his own labour, which\nis over and above his own consumption, for such parts of the produce of\nother men's labour as he has occasion for.\n\nThere are some sorts of industry, even of the lowest kind, which can be\ncarried on nowhere but in a great town. A porter, for example, can find\nemployment and subsistence in no other place. A village is by much too\nnarrow a sphere for him; even an ordinary market-town is scarce large\nenough to afford him constant occupation. In the lone houses and very\nsmall villages which are scattered about in so desert a country as the\nhighlands of Scotland, every farmer must be butcher, baker, and brewer,\nfor his own family. In such situations we can scarce expect to find\neven a smith, a carpenter, or a mason, within less than twenty miles of\nanother of the same trade. The scattered families that live at eight\nor ten miles distance from the nearest of them, must learn to perform\nthemselves a great number of little pieces of work, for which, in more\npopulous countries, they would call in the assistance of those workmen.\nCountry workmen are almost everywhere obliged to apply themselves to\nall the different branches of industry that have so much affinity to one\nanother as to be employed about the same sort of materials. A country\ncarpenter deals in every sort of work that is made of wood; a country\nsmith in every sort of work that is made of iron. The former is not only\na carpenter, but a joiner, a cabinet-maker, and even a carver in wood,\nas well as a wheel-wright, a plough-wright, a cart and waggon-maker. The\nemployments of the latter are still more various. It is impossible there\nshould be such a trade as even that of a nailer in the remote and inland\nparts of the highlands of Scotland. Such a workman at the rate of a\nthousand nails a-day, and three hundred working days in the year, will\nmake three hundred thousand nails in the year. But in such a situation\nit would be impossible to dispose of one thousand, that is, of one day's\nwork in the year. As by means of water-carriage, a more extensive market\nis opened to every sort of industry than what land-carriage alone can\nafford it, so it is upon the sea-coast, and along the banks of navigable\nrivers, that industry of every kind naturally begins to subdivide and\nimprove itself, and it is frequently not till a long time after that\nthose improvements extend themselves to the inland parts of the country.\nA broad-wheeled waggon, attended by two men, and drawn by eight horses,\nin about six weeks time, carries and brings back between London and\nEdinburgh near four ton weight of goods. In about the same time a ship\nnavigated by six or eight men, and sailing between the ports of London\nand Leith, frequently carries and brings back two hundred ton weight of\ngoods. Six or eight men, therefore, by the help of water-carriage,\ncan carry and bring back, in the same time, the same quantity of goods\nbetween London and Edinburgh as fifty broad-wheeled waggons, attended by\na hundred men, and drawn by four hundred horses. Upon two hundred tons\nof goods, therefore, carried by the cheapest land-carriage from London\nto Edinburgh, there must be charged the maintenance of a hundred men\nfor three weeks, and both the maintenance and what is nearly equal to\nmaintenance the wear and tear of four hundred horses, as well as of\nfifty great waggons. Whereas, upon the same quantity of goods carried by\nwater, there is to be charged only the maintenance of six or eight men,\nand the wear and tear of a ship of two hundred tons burthen, together\nwith the value of the superior risk, or the difference of the insurance\nbetween land and water-carriage. Were there no other communication\nbetween those two places, therefore, but by land-carriage, as no goods\ncould be transported from the one to the other, except such whose price\nwas very considerable in proportion to their weight, they could carry\non but a small part of that commerce which at present subsists between\nthem, and consequently could give but a small part of that encouragement\nwhich they at present mutually afford to each other's industry. There\ncould be little or no commerce of any kind between the distant parts of\nthe world. What goods could bear the expense of land-carriage between\nLondon and Calcutta? Or if there were any so precious as to be able to\nsupport this expense, with what safety could they be transported through\nthe territories of so many barbarous nations? Those two cities, however,\nat present carry on a very considerable commerce with each other, and by\nmutually affording a market, give a good deal of encouragement to each\nother's industry.\n\nSince such, therefore, are the advantages of water-carriage, it is\nnatural that the first improvements of art and industry should be made\nwhere this conveniency opens the whole world for a market to the produce\nof every sort of labour, and that they should always be much later in\nextending themselves into the inland parts of the country. The inland\nparts of the country can for a long time have no other market for the\ngreater part of their goods, but the country which lies round about\nthem, and separates them from the sea-coast, and the great navigable\nrivers. The extent of the market, therefore, must for a long time be\nin proportion to the riches and populousness of that country, and\nconsequently their improvement must always be posterior to the\nimprovement of that country. In our North American colonies, the\nplantations have constantly followed either the sea-coast or the banks\nof the navigable rivers, and have scarce anywhere extended themselves to\nany considerable distance from both.\n\nThe nations that, according to the best authenticated history, appear to\nhave been first civilized, were those that dwelt round the coast of the\nMediterranean sea. That sea, by far the greatest inlet that is known in\nthe world, having no tides, nor consequently any waves, except such as\nare caused by the wind only, was, by the smoothness of its surface,\nas well as by the multitude of its islands, and the proximity of its\nneighbouring shores, extremely favourable to the infant navigation of\nthe world; when, from their ignorance of the compass, men were afraid\nto quit the view of the coast, and from the imperfection of the art\nof ship-building, to abandon themselves to the boisterous waves of the\nocean. To pass beyond the pillars of Hercules, that is, to sail out of\nthe straits of Gibraltar, was, in the ancient world, long considered as\na most wonderful and dangerous exploit of navigation. It was late before\neven the Phoenicians and Carthaginians, the most skilful navigators and\nship-builders of those old times, attempted it; and they were, for a\nlong time, the only nations that did attempt it.\n\nOf all the countries on the coast of the Mediterranean sea, Egypt seems\nto have been the first in which either agriculture or manufactures were\ncultivated and improved to any considerable degree. Upper Egypt extends\nitself nowhere above a few miles from the Nile; and in Lower Egypt, that\ngreat river breaks itself into many different canals, which, with the\nassistance of a little art, seem to have afforded a communication by\nwater-carriage, not only between all the great towns, but between all\nthe considerable villages, and even to many farm-houses in the country,\nnearly in the same manner as the Rhine and the Maese do in Holland at\npresent. The extent and easiness of this inland navigation was probably\none of the principal causes of the early improvement of Egypt.\n\nThe improvements in agriculture and manufactures seem likewise to have\nbeen of very great antiquity in the provinces of Bengal, in the East\nIndies, and in some of the eastern provinces of China, though the great\nextent of this antiquity is not authenticated by any histories of whose\nauthority we, in this part of the world, are well assured. In Bengal,\nthe Ganges, and several other great rivers, form a great number of\nnavigable canals, in the same manner as the Nile does in Egypt. In the\neastern provinces of China, too, several great rivers form, by their\ndifferent branches, a multitude of canals, and, by communicating with\none another, afford an inland navigation much more extensive than that\neither of the Nile or the Ganges, or, perhaps, than both of them put\ntogether. It is remarkable, that neither the ancient Egyptians, nor the\nIndians, nor the Chinese, encouraged foreign commerce, but seem all to\nhave derived their great opulence from this inland navigation.\n\nAll the inland parts of Africa, and all that part of Asia which lies\nany considerable way north of the Euxine and Caspian seas, the ancient\nScythia, the modern Tartary and Siberia, seem, in all ages of the world,\nto have been in the same barbarous and uncivilized state in which we\nfind them at present. The sea of Tartary is the frozen ocean, which\nadmits of no navigation; and though some of the greatest rivers in the\nworld run through that country, they are at too great a distance from\none another to carry commerce and communication through the greater\npart of it. There are in Africa none of those great inlets, such as the\nBaltic and Adriatic seas in Europe, the Mediterranean and Euxine seas\nin both Europe and Asia, and the gulfs of Arabia, Persia, India, Bengal,\nand Siam, in Asia, to carry maritime commerce into the interior parts of\nthat great continent; and the great rivers of Africa are at too great\na distance from one another to give occasion to any considerable inland\nnavigation. The commerce, besides, which any nation can carry on by\nmeans of a river which does not break itself into any great number of\nbranches or canals, and which runs into another territory before it\nreaches the sea, can never be very considerable, because it is always\nin the power of the nations who possess that other territory to obstruct\nthe communication between the upper country and the sea. The navigation\nof the Danube is of very little use to the different states of Bavaria,\nAustria, and Hungary, in comparison of what it would be, if any of them\npossessed the whole of its course, till it falls into the Black sea.\n\n\n\n\nCHAPTER IV. OF THE ORIGIN AND USE OF MONEY.\n\nWhen the division of labour has been once thoroughly established, it\nis but a very small part of a man's wants which the produce of his\nown labour can supply. He supplies the far greater part of them by\nexchanging that surplus part of the produce of his own labour, which\nis over and above his own consumption, for such parts of the produce\nof other men's labour as he has occasion for. Every man thus lives by\nexchanging, or becomes, in some measure, a merchant, and the society\nitself grows to be what is properly a commercial society.\n\nBut when the division of labour first began to take place, this power of\nexchanging must frequently have been very much clogged and embarrassed\nin its operations. One man, we shall suppose, has more of a certain\ncommodity than he himself has occasion for, while another has less. The\nformer, consequently, would be glad to dispose of; and the latter to\npurchase, a part of this superfluity. But if this latter should chance\nto have nothing that the former stands in need of, no exchange can be\nmade between them. The butcher has more meat in his shop than he himself\ncan consume, and the brewer and the baker would each of them be willing\nto purchase a part of it. But they have nothing to offer in exchange,\nexcept the different productions of their respective trades, and the\nbutcher is already provided with all the bread and beer which he has\nimmediate occasion for. No exchange can, in this case, be made between\nthem. He cannot be their merchant, nor they his customers; and they are\nall of them thus mutually less serviceable to one another. In order to\navoid the inconveniency of such situations, every prudent man in every\nperiod of society, after the first establishment of the division of\nlabour, must naturally have endeavoured to manage his affairs in such a\nmanner, as to have at all times by him, besides the peculiar produce\nof his own industry, a certain quantity of some one commodity or other,\nsuch as he imagined few people would be likely to refuse in exchange\nfor the produce of their industry. Many different commodities, it\nis probable, were successively both thought of and employed for this\npurpose. In the rude ages of society, cattle are said to have been the\ncommon instrument of commerce; and, though they must have been a most\ninconvenient one, yet, in old times, we find things were frequently\nvalued according to the number of cattle which had been given in\nexchange for them. The armour of Diomede, says Homer, cost only nine\noxen; but that of Glaucus cost a hundred oxen. Salt is said to be the\ncommon instrument of commerce and exchanges in Abyssinia; a species of\nshells in some parts of the coast of India; dried cod at Newfoundland;\ntobacco in Virginia; sugar in some of our West India colonies; hides\nor dressed leather in some other countries; and there is at this day a\nvillage in Scotland, where it is not uncommon, I am told, for a workman\nto carry nails instead of money to the baker's shop or the ale-house.\n\nIn all countries, however, men seem at last to have been determined by\nirresistible reasons to give the preference, for this employment, to\nmetals above every other commodity. Metals can not only be kept with\nas little loss as any other commodity, scarce any thing being less\nperishable than they are, but they can likewise, without any loss, be\ndivided into any number of parts, as by fusion those parts can easily\nbe re-united again; a quality which no other equally durable commodities\npossess, and which, more than any other quality, renders them fit to be\nthe instruments of commerce and circulation. The man who wanted to buy\nsalt, for example, and had nothing but cattle to give in exchange for\nit, must have been obliged to buy salt to the value of a whole ox, or a\nwhole sheep, at a time. He could seldom buy less than this, because what\nhe was to give for it could seldom be divided without loss; and if he\nhad a mind to buy more, he must, for the same reasons, have been obliged\nto buy double or triple the quantity, the value, to wit, of two or three\noxen, or of two or three sheep. If, on the contrary, instead of sheep\nor oxen, he had metals to give in exchange for it, he could easily\nproportion the quantity of the metal to the precise quantity of the\ncommodity which he had immediate occasion for.\n\nDifferent metals have been made use of by different nations for this\npurpose. Iron was the common instrument of commerce among the ancient\nSpartans, copper among the ancient Romans, and gold and silver among all\nrich and commercial nations.\n\nThose metals seem originally to have been made use of for this purpose\nin rude bars, without any stamp or coinage. Thus we are told by Pliny\n(Plin. Hist Nat. lib. 33, cap. 3), upon the authority of Timaeus, an\nancient historian, that, till the time of Servius Tullius, the Romans\nhad no coined money, but made use of unstamped bars of copper, to\npurchase whatever they had occasion for. These rude bars, therefore,\nperformed at this time the function of money.\n\nThe use of metals in this rude state was attended with two very\nconsiderable inconveniences; first, with the trouble of weighing, and\nsecondly, with that of assaying them. In the precious metals, where a\nsmall difference in the quantity makes a great difference in the value,\neven the business of weighing, with proper exactness, requires at least\nvery accurate weights and scales. The weighing of gold, in particular,\nis an operation of some nicety in the coarser metals, indeed, where\na small error would be of little consequence, less accuracy would, no\ndoubt, be necessary. Yet we should find it excessively troublesome if\nevery time a poor man had occasion either to buy or sell a farthing's\nworth of goods, he was obliged to weigh the farthing. The operation of\nassaying is still more difficult, still more tedious; and, unless a part\nof the metal is fairly melted in the crucible, with proper dissolvents,\nany conclusion that can be drawn from it is extremely uncertain. Before\nthe institution of coined money, however, unless they went through this\ntedious and difficult operation, people must always have been liable to\nthe grossest frauds and impositions; and instead of a pound weight of\npure silver, or pure copper, might receive, in exchange for their goods,\nan adulterated composition of the coarsest and cheapest materials, which\nhad, however, in their outward appearance, been made to resemble those\nmetals. To prevent such abuses, to facilitate exchanges, and thereby\nto encourage all sorts of industry and commerce, it has been found\nnecessary, in all countries that have made any considerable advances\ntowards improvement, to affix a public stamp upon certain quantities of\nsuch particular metals, as were in those countries commonly made use of\nto purchase goods. Hence the origin of coined money, and of those public\noffices called mints; institutions exactly of the same nature with those\nof the aulnagers and stamp-masters of woollen and linen cloth. All of\nthem are equally meant to ascertain, by means of a public stamp, the\nquantity and uniform goodness of those different commodities when\nbrought to market.\n\nThe first public stamps of this kind that were affixed to the current\nmetals, seem in many cases to have been intended to ascertain, what it\nwas both most difficult and most important to ascertain, the goodness or\nfineness of the metal, and to have resembled the sterling mark which\nis at present affixed to plate and bars of silver, or the Spanish mark\nwhich is sometimes affixed to ingots of gold, and which, being struck\nonly upon one side of the piece, and not covering the whole surface,\nascertains the fineness, but not the weight of the metal. Abraham weighs\nto Ephron the four hundred shekels of silver which he had agreed to pay\nfor the field of Machpelah. They are said, however, to be the current\nmoney of the merchant, and yet are received by weight, and not by tale,\nin the same manner as ingots of gold and bars of silver are at present.\nThe revenues of the ancient Saxon kings of England are said to have been\npaid, not in money, but in kind, that is, in victuals and provisions of\nall sorts. William the Conqueror introduced the custom of paying them\nin money. This money, however, was for a long time, received at the\nexchequer, by weight, and not by tale.\n\nThe inconveniency and difficulty of weighing those metals with\nexactness, gave occasion to the institution of coins, of which the\nstamp, covering entirely both sides of the piece, and sometimes the\nedges too, was supposed to ascertain not only the fineness, but the\nweight of the metal. Such coins, therefore, were received by tale, as at\npresent, without the trouble of weighing.\n\nThe denominations of those coins seem originally to have expressed the\nweight or quantity of metal contained in them. In the time of Servius\nTullius, who first coined money at Rome, the Roman as or pondo contained\na Roman pound of good copper. It was divided, in the same manner as our\nTroyes pound, into twelve ounces, each of which contained a real ounce\nof good copper. The English pound sterling, in the time of Edward I.\ncontained a pound, Tower weight, of silver of a known fineness. The\nTower pound seems to have been something more than the Roman pound, and\nsomething less than the Troyes pound. This last was not introduced into\nthe mint of England till the 18th of Henry the VIII. The French livre\ncontained, in the time of Charlemagne, a pound, Troyes weight, of silver\nof a known fineness. The fair of Troyes in Champaign was at that time\nfrequented by all the nations of Europe, and the weights and measures\nof so famous a market were generally known and esteemed. The Scots money\npound contained, from the time of Alexander the First to that of Robert\nBruce, a pound of silver of the same weight and fineness with the\nEnglish pound sterling. English, French, and Scots pennies, too,\ncontained all of them originally a real penny-weight of silver, the\ntwentieth part of an ounce, and the two hundred-and-fortieth part of a\npound. The shilling, too, seems originally to have been the denomination\nof a weight. \"When wheat is at twelve shillings the quarter,\" says an\nancient statute of Henry III. \"then wastel bread of a farthing shall\nweigh eleven shillings and fourpence\". The proportion, however, between\nthe shilling, and either the penny on the one hand, or the pound on the\nother, seems not to have been so constant and uniform as that between\nthe penny and the pound. During the first race of the kings of France,\nthe French sou or shilling appears upon different occasions to have\ncontained five, twelve, twenty, and forty pennies. Among the ancient\nSaxons, a shilling appears at one time to have contained only five\npennies, and it is not improbable that it may have been as variable\namong them as among their neighbours, the ancient Franks. From the time\nof Charlemagne among the French, and from that of William the Conqueror\namong the English, the proportion between the pound, the shilling, and\nthe penny, seems to have been uniformly the same as at present, though\nthe value of each has been very different; for in every country of the\nworld, I believe, the avarice and injustice of princes and sovereign\nstates, abusing the confidence of their subjects, have by degrees\ndiminished the real quantity of metal, which had been originally\ncontained in their coins. The Roman as, in the latter ages of the\nrepublic, was reduced to the twenty-fourth part of its original value,\nand, instead of weighing a pound, came to weigh only half an ounce. The\nEnglish pound and penny contain at present about a third only; the Scots\npound and penny about a thirty-sixth; and the French pound and penny\nabout a sixty-sixth part of their original value. By means of those\noperations, the princes and sovereign states which performed them were\nenabled, in appearance, to pay their debts and fulfil their engagements\nwith a smaller quantity of silver than would otherwise have been\nrequisite. It was indeed in appearance only; for their creditors were\nreally defrauded of a part of what was due to them. All other debtors in\nthe state were allowed the same privilege, and might pay with the same\nnominal sum of the new and debased coin whatever they had borrowed in\nthe old. Such operations, therefore, have always proved favourable to\nthe debtor, and ruinous to the creditor, and have sometimes produced\na greater and more universal revolution in the fortunes of private\npersons, than could have been occasioned by a very great public\ncalamity.\n\nIt is in this manner that money has become, in all civilized nations,\nthe universal instrument of commerce, by the intervention of which goods\nof all kinds are bought and sold, or exchanged for one another.\n\nWhat are the rules which men naturally observe, in exchanging them\neither for money, or for one another, I shall now proceed to examine.\nThese rules determine what may be called the relative or exchangeable\nvalue of goods.\n\nThe word VALUE, it is to be observed, has two different meanings, and\nsometimes expresses the utility of some particular object, and sometimes\nthe power of purchasing other goods which the possession of that object\nconveys. The one may be called 'value in use;' the other, 'value\nin exchange.' The things which have the greatest value in use have\nfrequently little or no value in exchange; and, on the contrary, those\nwhich have the greatest value in exchange have frequently little or no\nvalue in use. Nothing is more useful than water; but it will purchase\nscarce any thing; scarce any thing can be had in exchange for it. A\ndiamond, on the contrary, has scarce any value in use; but a very great\nquantity of other goods may frequently be had in exchange for it.\n\nIn order to investigate the principles which regulate the exchangeable\nvalue of commodities, I shall endeavour to shew,\n\nFirst, what is the real measure of this exchangeable value; or wherein\nconsists the real price of all commodities.\n\nSecondly, what are the different parts of which this real price is\ncomposed or made up.\n\nAnd, lastly, what are the different circumstances which sometimes raise\nsome or all of these different parts of price above, and sometimes sink\nthem below, their natural or ordinary rate; or, what are the causes\nwhich sometimes hinder the market price, that is, the actual price\nof commodities, from coinciding exactly with what may be called their\nnatural price.\n\nI shall endeavour to explain, as fully and distinctly as I can, those\nthree subjects in the three following chapters, for which I must very\nearnestly entreat both the patience and attention of the reader: his\npatience, in order to examine a detail which may, perhaps, in some\nplaces, appear unnecessarily tedious; and his attention, in order to\nunderstand what may perhaps, after the fullest explication which I am\ncapable of giving it, appear still in some degree obscure. I am always\nwilling to run some hazard of being tedious, in order to be sure that\nI am perspicuous; and, after taking the utmost pains that I can to be\nperspicuous, some obscurity may still appear to remain upon a subject,\nin its own nature extremely abstracted.\n\n\n\n\n\n\nCHAPTER V. OF THE REAL AND NOMINAL PRICE OF COMMODITIES, OR OF THEIR\nPRICE IN LABOUR, AND THEIR PRICE IN MONEY.\n\nEvery man is rich or poor according to the degree in which he can afford\nto enjoy the necessaries, conveniencies, and amusements of human life.\nBut after the division of labour has once thoroughly taken place, it is\nbut a very small part of these with which a man's own labour can supply\nhim. The far greater part of them he must derive from the labour of\nother people, and he must be rich or poor according to the quantity of\nthat labour which he can command, or which he can afford to purchase.\nThe value of any commodity, therefore, to the person who possesses it,\nand who means not to use or consume it himself, but to exchange it for\nother commodities, is equal to the quantity of labour which it enables\nhim to purchase or command. Labour therefore, is the real measure of the\nexchangeable value of all commodities.\n\nThe real price of every thing, what every thing really costs to the man\nwho wants to acquire it, is the toil and trouble of acquiring it. What\nevery thing is really worth to the man who has acquired it and who wants\nto dispose of it, or exchange it for something else, is the toil and\ntrouble which it can save to himself, and which it can impose upon\nother people. What is bought with money, or with goods, is purchased\nby labour, as much as what we acquire by the toil of our own body. That\nmoney, or those goods, indeed, save us this toil. They contain the value\nof a certain quantity of labour, which we exchange for what is supposed\nat the time to contain the value of an equal quantity. Labour was the\nfirst price, the original purchase money that was paid for all things.\nIt was not by gold or by silver, but by labour, that all the wealth of\nthe world was originally purchased; and its value, to those who possess\nit, and who want to exchange it for some new productions, is precisely\nequal to the quantity of labour which it can enable them to purchase or\ncommand.\n\nWealth, as Mr Hobbes says, is power. But the person who either acquires,\nor succeeds to a great fortune, does not necessarily acquire or succeed\nto any political power, either civil or military. His fortune may,\nperhaps, afford him the means of acquiring both; but the mere possession\nof that fortune does not necessarily convey to him either. The power\nwhich that possession immediately and directly conveys to him, is the\npower of purchasing a certain command over all the labour, or over\nall the produce of labour which is then in the market. His fortune is\ngreater or less, precisely in proportion to the extent of this power,\nor to the quantity either of other men's labour, or, what is the same\nthing, of the produce of other men's labour, which it enables him to\npurchase or command. The exchangeable value of every thing must always\nbe precisely equal to the extent of this power which it conveys to its\nowner.\n\nBut though labour be the real measure of the exchangeable value of all\ncommodities, it is not that by which their value is commonly estimated.\nIt is often difficult to ascertain the proportion between two different\nquantities of labour. The time spent in two different sorts of work will\nnot always alone determine this proportion. The different degrees of\nhardship endured, and of ingenuity exercised, must likewise be taken\ninto account. There may be more labour in an hour's hard work, than in\ntwo hours easy business; or in an hour's application to a trade which\nit cost ten years labour to learn, than in a month's industry, at an\nordinary and obvious employment. But it is not easy to find any accurate\nmeasure either of hardship or ingenuity. In exchanging, indeed, the\ndifferent productions of different sorts of labour for one another, some\nallowance is commonly made for both. It is adjusted, however, not by\nany accurate measure, but by the higgling and bargaining of the market,\naccording to that sort of rough equality which, though not exact, is\nsufficient for carrying on the business of common life.\n\nEvery commodity, besides, is more frequently exchanged for, and thereby\ncompared with, other commodities, than with labour. It is more natural,\ntherefore, to estimate its exchangeable value by the quantity of some\nother commodity, than by that of the labour which it can produce.\nThe greater part of people, too, understand better what is meant by a\nquantity of a particular commodity, than by a quantity of labour. The\none is a plain palpable object; the other an abstract notion, which\nthough it can be made sufficiently intelligible, is not altogether so\nnatural and obvious.\n\nBut when barter ceases, and money has become the common instrument of\ncommerce, every particular commodity is more frequently exchanged for\nmoney than for any other commodity. The butcher seldom carries his beef\nor his mutton to the baker or the brewer, in order to exchange them for\nbread or for beer; but he carries them to the market, where he exchanges\nthem for money, and afterwards exchanges that money for bread and for\nbeer. The quantity of money which he gets for them regulates, too, the\nquantity of bread and beer which he can afterwards purchase. It is more\nnatural and obvious to him, therefore, to estimate their value by the\nquantity of money, the commodity for which he immediately exchanges\nthem, than by that of bread and beer, the commodities for which he can\nexchange them only by the intervention of another commodity; and\nrather to say that his butcher's meat is worth three-pence or fourpence\na-pound, than that it is worth three or four pounds of bread, or\nthree or four quarts of small beer. Hence it comes to pass, that the\nexchangeable value of every commodity is more frequently estimated by\nthe quantity of money, than by the quantity either of labour or of any\nother commodity which can be had in exchange for it.\n\nGold and silver, however, like every other commodity, vary in their\nvalue; are sometimes cheaper and sometimes dearer, sometimes of easier\nand sometimes of more difficult purchase. The quantity of labour which\nany particular quantity of them can purchase or command, or the quantity\nof other goods which it will exchange for, depends always upon the\nfertility or barrenness of the mines which happen to be known about the\ntime when such exchanges are made. The discovery of the abundant mines\nof America, reduced, in the sixteenth century, the value of gold and\nsilver in Europe to about a third of what it had been before. As it cost\nless labour to bring those metals from the mine to the market, so, when\nthey were brought thither, they could purchase or command less labour;\nand this revolution in their value, though perhaps the greatest, is\nby no means the only one of which history gives some account. But as a\nmeasure of quantity, such as the natural foot, fathom, or handful, which\nis continually varying in its own quantity, can never be an accurate\nmeasure of the quantity of other things; so a commodity which is itself\ncontinually varying in its own value, can never be an accurate measure\nof the value of other commodities. Equal quantities of labour, at all\ntimes and places, may be said to be of equal value to the labourer. In\nhis ordinary state of health, strength, and spirits; in the ordinary\ndegree of his skill and dexterity, he must always lay down the same\nportion of his ease, his liberty, and his happiness. The price which\nhe pays must always be the same, whatever may be the quantity of goods\nwhich he receives in return for it. Of these, indeed, it may sometimes\npurchase a greater and sometimes a smaller quantity; but it is their\nvalue which varies, not that of the labour which purchases them. At\nall times and places, that is dear which it is difficult to come at, or\nwhich it costs much labour to acquire; and that cheap which is to be\nhad easily, or with very little labour. Labour alone, therefore, never\nvarying in its own value, is alone the ultimate and real standard\nby which the value of all commodities can at all times and places be\nestimated and compared. It is their real price; money is their nominal\nprice only.\n\nBut though equal quantities of labour are always of equal value to the\nlabourer, yet to the person who employs him they appear sometimes to be\nof greater, and sometimes of smaller value. He purchases them sometimes\nwith a greater, and sometimes with a smaller quantity of goods, and to\nhim the price of labour seems to vary like that of all other things. It\nappears to him dear in the one case, and cheap in the other. In reality,\nhowever, it is the goods which are cheap in the one case, and dear in\nthe other.\n\nIn this popular sense, therefore, labour, like commodities, may be\nsaid to have a real and a nominal price. Its real price may be said to\nconsist in the quantity of the necessaries and conveniencies of life\nwhich are given for it; its nominal price, in the quantity of money. The\nlabourer is rich or poor, is well or ill rewarded, in proportion to the\nreal, not to the nominal price of his labour.\n\nThe distinction between the real and the nominal price of commodities\nand labour is not a matter of mere speculation, but may sometimes be of\nconsiderable use in practice. The same real price is always of the same\nvalue; but on account of the variations in the value of gold and silver,\nthe same nominal price is sometimes of very different values. When a\nlanded estate, therefore, is sold with a reservation of a perpetual\nrent, if it is intended that this rent should always be of the same\nvalue, it is of importance to the family in whose favour it is reserved,\nthat it should not consist in a particular sum of money. Its value would\nin this case be liable to variations of two different kinds: first, to\nthose which arise from the different quantities of gold and silver which\nare contained at different times in coin of the same denomination;\nand, secondly, to those which arise from the different values of equal\nquantities of gold and silver at different times.\n\nPrinces and sovereign states have frequently fancied that they had a\ntemporary interest to diminish the quantity of pure metal contained in\ntheir coins; but they seldom have fancied that they had any to augment\nit. The quantity of metal contained in the coins, I believe of all\nnations, has accordingly been almost continually diminishing, and hardly\never augmenting. Such variations, therefore, tend almost always to\ndiminish the value of a money rent.\n\nThe discovery of the mines of America diminished the value of gold and\nsilver in Europe. This diminution, it is commonly supposed, though I\napprehend without any certain proof, is still going on gradually, and\nis likely to continue to do so for a long time. Upon this supposition,\ntherefore, such variations are more likely to diminish than to augment\nthe value of a money rent, even though it should be stipulated to be\npaid, not in such a quantity of coined money of such a denomination (in\nso many pounds sterling, for example), but in so many ounces, either of\npure silver, or of silver of a certain standard.\n\nThe rents which have been reserved in corn, have preserved their value\nmuch better than those which have been reserved in money, even where the\ndenomination of the coin has not been altered. By the 18th of Elizabeth,\nit was enacted, that a third of the rent of all college leases should be\nreserved in corn, to be paid either in kind, or according to the current\nprices at the nearest public market. The money arising from this corn\nrent, though originally but a third of the whole, is, in the present\ntimes, according to Dr. Blackstone, commonly near double of what\narises from the other two-thirds. The old money rents of colleges must,\naccording to this account, have sunk almost to a fourth part of their\nancient value, or are worth little more than a fourth part of the corn\nwhich they were formerly worth. But since the reign of Philip and\nMary, the denomination of the English coin has undergone little or no\nalteration, and the same number of pounds, shillings, and pence,\nhave contained very nearly the same quantity of pure silver. This\ndegradation, therefore, in the value of the money rents of colleges, has\narisen altogether from the degradation in the price of silver.\n\nWhen the degradation in the value of silver is combined with the\ndiminution of the quantity of it contained in the coin of the same\ndenomination, the loss is frequently still greater. In Scotland, where\nthe denomination of the coin has undergone much greater alterations\nthan it ever did in England, and in France, where it has undergone still\ngreater than it ever did in Scotland, some ancient rents, originally\nof considerable value, have, in this manner, been reduced almost to\nnothing.\n\nEqual quantities of labour will, at distant times, be purchased more\nnearly with equal quantities of corn, the subsistence of the labourer,\nthan with equal quantities of gold and silver, or, perhaps, of any other\ncommodity. Equal quantities of corn, therefore, will, at distant times,\nbe more nearly of the same real value, or enable the possessor to\npurchase or command more nearly the same quantity of the labour of other\npeople. They will do this, I say, more nearly than equal quantities of\nalmost any other commodity; for even equal quantities of corn will not\ndo it exactly. The subsistence of the labourer, or the real price of\nlabour, as I shall endeavour to shew hereafter, is very different upon\ndifferent occasions; more liberal in a society advancing to opulence,\nthan in one that is standing still, and in one that is standing still,\nthan in one that is going backwards. Every other commodity, however,\nwill, at any particular time, purchase a greater or smaller quantity\nof labour, in proportion to the quantity of subsistence which it can\npurchase at that time. A rent, therefore, reserved in corn, is liable\nonly to the variations in the quantity of labour which a certain\nquantity of corn can purchase. But a rent reserved in any other\ncommodity is liable, not only to the variations in the quantity of\nlabour which any particular quantity of corn can purchase, but to\nthe variations in the quantity of corn which can be purchased by any\nparticular quantity of that commodity.\n\nThough the real value of a corn rent, it is to be observed, however,\nvaries much less from century to century than that of a money rent,\nit varies much more from year to year. The money price of labour, as I\nshall endeavour to shew hereafter, does not fluctuate from year to year\nwith the money price of corn, but seems to be everywhere accommodated,\nnot to the temporary or occasional, but to the average or ordinary price\nof that necessary of life. The average or ordinary price of corn, again\nis regulated, as I shall likewise endeavour to shew hereafter, by the\nvalue of silver, by the richness or barrenness of the mines which supply\nthe market with that metal, or by the quantity of labour which must be\nemployed, and consequently of corn which must be consumed, in order to\nbring any particular quantity of silver from the mine to the market. But\nthe value of silver, though it sometimes varies greatly from century to\ncentury, seldom varies much from year to year, but frequently continues\nthe same, or very nearly the same, for half a century or a century\ntogether. The ordinary or average money price of corn, therefore, may,\nduring so long a period, continue the same, or very nearly the same,\ntoo, and along with it the money price of labour, provided, at least,\nthe society continues, in other respects, in the same, or nearly in the\nsame, condition. In the mean time, the temporary and occasional price\nof corn may frequently be double one year of what it had been the\nyear before, or fluctuate, for example, from five-and-twenty to fifty\nshillings the quarter. But when corn is at the latter price, not only\nthe nominal, but the real value of a corn rent, will be double of what\nit is when at the former, or will command double the quantity either of\nlabour, or of the greater part of other commodities; the money price of\nlabour, and along with it that of most other things, continuing the same\nduring all these fluctuations.\n\nLabour, therefore, it appears evidently, is the only universal, as well\nas the only accurate, measure of value, or the only standard by which\nwe can compare the values of different commodities, at all times, and\nat all places. We cannot estimate, it is allowed, the real value of\ndifferent commodities from century to century by the quantities of\nsilver which were given for them. We cannot estimate it from year to\nyear by the quantities of corn. By the quantities of labour, we can,\nwith the greatest accuracy, estimate it, both from century to century,\nand from year to year. From century to century, corn is a better measure\nthan silver, because, from century to century, equal quantities of\ncorn will command the same quantity of labour more nearly than equal\nquantities of silver. From year to year, on the contrary, silver is\na better measure than corn, because equal quantities of it will more\nnearly command the same quantity of labour.\n\nBut though, in establishing perpetual rents, or even in letting very\nlong leases, it may be of use to distinguish between real and nominal\nprice; it is of none in buying and selling, the more common and ordinary\ntransactions of human life.\n\nAt the same time and place, the real and the nominal price of all\ncommodities are exactly in proportion to one another. The more or less\nmoney you get for any commodity, in the London market, for example,\nthe more or less labour it will at that time and place enable you to\npurchase or command. At the same time and place, therefore, money is the\nexact measure of the real exchangeable value of all commodities. It is\nso, however, at the same time and place only.\n\nThough at distant places there is no regular proportion between the real\nand the money price of commodities, yet the merchant who carries goods\nfrom the one to the other, has nothing to consider but the money price,\nor the difference between the quantity of silver for which he buys them,\nand that for which he is likely to sell them. Half an ounce of silver at\nCanton in China may command a greater quantity both of labour and of\nthe necessaries and conveniencies of life, than an ounce at London. A\ncommodity, therefore, which sells for half an ounce of silver at Canton,\nmay there be really dearer, of more real importance to the man who\npossesses it there, than a commodity which sells for an ounce at London\nis to the man who possesses it at London. If a London merchant, however,\ncan buy at Canton, for half an ounce of silver, a commodity which he can\nafterwards sell at London for an ounce, he gains a hundred per cent. by\nthe bargain, just as much as if an ounce of silver was at London exactly\nof the same value as at Canton. It is of no importance to him that half\nan ounce of silver at Canton would have given him the command of more\nlabour, and of a greater quantity of the necessaries and conveniencies\nof life than an ounce can do at London. An ounce at London will always\ngive him the command of double the quantity of all these, which half an\nounce could have done there, and this is precisely what he wants.\n\nAs it is the nominal or money price of goods, therefore, which finally\ndetermines the prudence or imprudence of all purchases and sales, and\nthereby regulates almost the whole business of common life in which\nprice is concerned, we cannot wonder that it should have been so much\nmore attended to than the real price.\n\nIn such a work as this, however, it may sometimes be of use to compare\nthe different real values of a particular commodity at different times\nand places, or the different degrees of power over the labour of other\npeople which it may, upon different occasions, have given to those who\npossessed it. We must in this case compare, not so much the different\nquantities of silver for which it was commonly sold, as the different\nquantities or labour which those different quantities of silver could\nhave purchased. But the current prices of labour, at distant times and\nplaces, can scarce ever be known with any degree of exactness. Those\nof corn, though they have in few places been regularly recorded, are in\ngeneral better known, and have been more frequently taken notice of\nby historians and other writers. We must generally, therefore, content\nourselves with them, not as being always exactly in the same proportion\nas the current prices of labour, but as being the nearest approximation\nwhich can commonly be had to that proportion. I shall hereafter have\noccasion to make several comparisons of this kind.\n\nIn the progress of industry, commercial nations have found it convenient\nto coin several different metals into money; gold for larger payments,\nsilver for purchases of moderate value, and copper, or some other coarse\nmetal, for those of still smaller consideration, They have always,\nhowever, considered one of those metals as more peculiarly the measure\nof value than any of the other two; and this preference seems generally\nto have been given to the metal which they happen first to make use\nof as the instrument of commerce. Having once begun to use it as their\nstandard, which they must have done when they had no other money, they\nhave generally continued to do so even when the necessity was not the\nsame.\n\nThe Romans are said to have had nothing but copper money till within\nfive years before the first Punic war (Pliny, lib. xxxiii. cap. 3),\nwhen they first began to coin silver. Copper, therefore, appears to\nhave continued always the measure of value in that republic. At Rome all\naccounts appear to have been kept, and the value of all estates to have\nbeen computed, either in asses or in sestertii. The as was always the\ndenomination of a copper coin. The word sestertius signifies two asses\nand a half. Though the sestertius, therefore, was originally a silver\ncoin, its value was estimated in copper. At Rome, one who owed a great\ndeal of money was said to have a great deal of other people's copper.\n\nThe northern nations who established themselves upon the ruins of the\nRoman empire, seem to have had silver money from the first beginning of\ntheir settlements, and not to have known either gold or copper coins for\nseveral ages thereafter. There were silver coins in England in the time\nof the Saxons; but there was little gold coined till the time of Edward\nIII nor any copper till that of James I. of Great Britain. In England,\ntherefore, and for the same reason, I believe, in all other modern\nnations of Europe, all accounts are kept, and the value of all goods\nand of all estates is generally computed, in silver: and when we mean to\nexpress the amount of a person's fortune, we seldom mention the number\nof guineas, but the number of pounds sterling which we suppose would be\ngiven for it.\n\nOriginally, in all countries, I believe, a legal tender of payment could\nbe made only in the coin of that metal which was peculiarly considered\nas the standard or measure of value. In England, gold was not considered\nas a legal tender for a long time after it was coined into money. The\nproportion between the values of gold and silver money was not fixed\nby any public law or proclamation, but was left to be settled by the\nmarket. If a debtor offered payment in gold, the creditor might either\nreject such payment altogether, or accept of it at such a valuation of\nthe gold as he and his debtor could agree upon. Copper is not at present\na legal tender, except in the change of the smaller silver coins.\n\nIn this state of things, the distinction between the metal which was the\nstandard, and that which was not the standard, was something more than a\nnominal distinction.\n\nIn process of time, and as people became gradually more familiar\nwith the use of the different metals in coin, and consequently better\nacquainted with the proportion between their respective values, it has,\nin most countries, I believe, been found convenient to ascertain this\nproportion, and to declare by a public law, that a guinea, for example,\nof such a weight and fineness, should exchange for one-and-twenty\nshillings, or be a legal tender for a debt of that amount. In this state\nof things, and during the continuance of any one regulated proportion of\nthis kind, the distinction between the metal, which is the standard,\nand that which is not the standard, becomes little more than a nominal\ndistinction.\n\nIn consequence of any change, however, in this regulated proportion,\nthis distinction becomes, or at least seems to become, something more\nthan nominal again. If the regulated value of a guinea, for example,\nwas either reduced to twenty, or raised to two-and-twenty shillings,\nall accounts being kept, and almost all obligations for debt being\nexpressed, in silver money, the greater part of payments could in either\ncase be made with the same quantity of silver money as before; but would\nrequire very different quantities of gold money; a greater in the\none case, and a smaller in the other. Silver would appear to be more\ninvariable in its value than gold. Silver would appear to measure the\nvalue of gold, and gold would not appear to measure the value of silver.\nThe value of gold would seem to depend upon the quantity of silver which\nit would exchange for, and the value of silver would not seem to depend\nupon the quantity of gold which it would exchange for. This difference,\nhowever, would be altogether owing to the custom of keeping accounts,\nand of expressing the amount of all great and small sums rather\nin silver than in gold money. One of Mr Drummond's notes for\nfive-and-twenty or fifty guineas would, after an alteration of this\nkind, be still payable with five-and-twenty or fifty guineas, in the\nsame manner as before. It would, after such an alteration, be payable\nwith the same quantity of gold as before, but with very different\nquantities of silver. In the payment of such a note, gold would appear\nto be more invariable in its value than silver. Gold would appear to\nmeasure the value of silver, and silver would not appear to measure\nthe value of gold. If the custom of keeping accounts, and of expressing\npromissory-notes and other obligations for money, in this manner should\never become general, gold, and not silver, would be considered as the\nmetal which was peculiarly the standard or measure of value.\n\nIn reality, during the continuance of any one regulated proportion\nbetween the respective values of the different metals in coin, the value\nof the most precious metal regulates the value of the whole coin. Twelve\ncopper pence contain half a pound avoirdupois of copper, of not the\nbest quality, which, before it is coined, is seldom worth seven-pence\nin silver. But as, by the regulation, twelve such pence are ordered to\nexchange for a shilling, they are in the market considered as worth a\nshilling, and a shilling can at any time be had for them. Even before\nthe late reformation of the gold coin of Great Britain, the gold, that\npart of it at least which circulated in London and its neighbourhood,\nwas in general less degraded below its standard weight than the greater\npart of the silver. One-and-twenty worn and defaced shillings, however,\nwere considered as equivalent to a guinea, which, perhaps, indeed, was\nworn and defaced too, but seldom so much so. The late regulations have\nbrought the gold coin as near, perhaps, to its standard weight as it\nis possible to bring the current coin of any nation; and the order\nto receive no gold at the public offices but by weight, is likely to\npreserve it so, as long as that order is enforced. The silver coin still\ncontinues in the same worn and degraded state as before the reformation\nof the cold coin. In the market, however, one-and-twenty shillings of\nthis degraded silver coin are still considered as worth a guinea of this\nexcellent gold coin.\n\nThe reformation of the gold coin has evidently raised the value of the\nsilver coin which can be exchanged for it.\n\nIn the English mint, a pound weight of gold is coined into forty-four\nguineas and a half, which at one-and-twenty shillings the guinea, is\nequal to forty-six pounds fourteen shillings and sixpence. An ounce of\nsuch gold coin, therefore, is worth £ 3:17:10½ in silver. In England, no\nduty or seignorage is paid upon the coinage, and he who carries a pound\nweight or an ounce weight of standard gold bullion to the mint, gets\nback a pound weight or an ounce weight of gold in coin, without any\ndeduction. Three pounds seventeen shillings and tenpence halfpenny an\nounce, therefore, is said to be the mint price of gold in England, or\nthe quantity of gold coin which the mint gives in return for standard\ngold bullion.\n\nBefore the reformation of the gold coin, the price of standard gold\nbullion in the market had, for many years, been upwards of £3:18s.\nsometimes £ 3:19s, and very frequently £4 an ounce; that sum, it is\nprobable, in the worn and degraded gold coin, seldom containing more\nthan an ounce of standard gold. Since the reformation of the gold coin,\nthe market price of standard gold bullion seldom exceeds £ 3:17:7 an\nounce. Before the reformation of the gold coin, the market price was\nalways more or less above the mint price. Since that reformation, the\nmarket price has been constantly below the mint price. But that market\nprice is the same whether it is paid in gold or in silver coin. The late\nreformation of the gold coin, therefore, has raised not only the value\nof the gold coin, but likewise that of the silver coin in proportion to\ngold bullion, and probably, too, in proportion to all other commodities;\nthough the price of the greater part of other commodities being\ninfluenced by so many other causes, the rise in the value of either\ngold or silver coin in proportion to them may not be so distinct and\nsensible.\n\nIn the English mint, a pound weight of standard silver bullion is coined\ninto sixty-two shillings, containing, in the same manner, a pound weight\nof standard silver. Five shillings and twopence an ounce, therefore,\nis said to be the mint price of silver in England, or the quantity of\nsilver coin which the mint gives in return for standard silver bullion.\nBefore the reformation of the gold coin, the market price of standard\nsilver bullion was, upon different occasions, five shillings and\nfourpence, five shillings and fivepence, five shillings and sixpence,\nfive shillings and sevenpence, and very often five shillings and\neightpence an ounce. Five shillings and sevenpence, however, seems to\nhave been the most common price. Since the reformation of the gold coin,\nthe market price of standard silver bullion has fallen occasionally to\nfive shillings and threepence, five shillings and fourpence, and five\nshillings and fivepence an ounce, which last price it has scarce\never exceeded. Though the market price of silver bullion has fallen\nconsiderably since the reformation of the gold coin, it has not fallen\nso low as the mint price.\n\nIn the proportion between the different metals in the English coin,\nas copper is rated very much above its real value, so silver is rated\nsomewhat below it. In the market of Europe, in the French coin and\nin the Dutch coin, an ounce of fine gold exchanges for about fourteen\nounces of fine silver. In the English coin, it exchanges for about\nfifteen ounces, that is, for more silver than it is worth, according to\nthe common estimation of Europe. But as the price of copper in bars\nis not, even in England, raised by the high price of copper in English\ncoin, so the price of silver in bullion is not sunk by the low rate of\nsilver in English coin. Silver in bullion still preserves its proper\nproportion to gold, for the same reason that copper in bars preserves\nits proper proportion to silver.\n\nUpon the reformation of the silver coin, in the reign of William III.,\nthe price of silver bullion still continued to be somewhat above the\nmint price. Mr Locke imputed this high price to the permission of\nexporting silver bullion, and to the prohibition of exporting silver\ncoin. This permission of exporting, he said, rendered the demand for\nsilver bullion greater than the demand for silver coin. But the number\nof people who want silver coin for the common uses of buying and selling\nat home, is surely much greater than that of those who want silver\nbullion either for the use of exportation or for any other use. There\nsubsists at present a like permission of exporting gold bullion, and\na like prohibition of exporting gold coin; and yet the price of gold\nbullion has fallen below the mint price. But in the English coin, silver\nwas then, in the same manner as now, under-rated in proportion to gold;\nand the gold coin (which at that time, too, was not supposed to require\nany reformation) regulated then, as well as now, the real value of the\nwhole coin. As the reformation of the silver coin did not then reduce\nthe price of silver bullion to the mint price, it is not very probable\nthat a like reformation will do so now.\n\nWere the silver coin brought back as near to its standard weight as\nthe gold, a guinea, it is probable, would, according to the present\nproportion, exchange for more silver in coin than it would purchase\nin bullion. The silver coin containing its full standard weight, there\nwould in this case, be a profit in melting it down, in order, first to\nsell the bullion for gold coin, and afterwards to exchange this gold\ncoin for silver coin, to be melted down in the same manner. Some\nalteration in the present proportion seems to be the only method of\npreventing this inconveniency.\n\nThe inconveniency, perhaps, would be less, if silver was rated in the\ncoin as much above its proper proportion to gold as it is at present\nrated below it, provided it was at the same time enacted, that silver\nshould not be a legal tender for more than the change of a guinea, in\nthe same manner as copper is not a legal tender for more than the\nchange of a shilling. No creditor could, in this case, be cheated in\nconsequence of the high valuation of silver in coin; as no creditor can\nat present be cheated in consequence of the high valuation of copper.\nThe bankers only would suffer by this regulation. When a run comes upon\nthem, they sometimes endeavour to gain time, by paying in sixpences,\nand they would be precluded by this regulation from this discreditable\nmethod of evading immediate payment. They would be obliged, in\nconsequence, to keep at all times in their coffers a greater quantity of\ncash than at present; and though this might, no doubt, be a considerable\ninconveniency to them, it would, at the same time, be a considerable\nsecurity to their creditors.\n\nThree pounds seventeen shillings and tenpence halfpenny (the mint price\nof gold) certainly does not contain, even in our present excellent\ngold coin, more than an ounce of standard gold, and it may be thought,\ntherefore, should not purchase more standard bullion. But gold in coin\nis more convenient than gold in bullion; and though, in England, the\ncoinage is free, yet the gold which is carried in bullion to the mint,\ncan seldom be returned in coin to the owner till after a delay of\nseveral weeks. In the present hurry of the mint, it could not be\nreturned till after a delay of several months. This delay is equivalent\nto a small duty, and renders gold in coin somewhat more valuable than an\nequal quantity of gold in bullion. If, in the English coin, silver was\nrated according to its proper proportion to gold, the price of silver\nbullion would probably fall below the mint price, even without any\nreformation of the silver coin; the value even of the present worn and\ndefaced silver coin being regulated by the value of the excellent gold\ncoin for which it can be changed.\n\nA small seignorage or duty upon the coinage of both gold and silver,\nwould probably increase still more the superiority of those metals in\ncoin above an equal quantity of either of them in bullion. The\ncoinage would, in this case, increase the value of the metal coined in\nproportion to the extent of this small duty, for the same reason that\nthe fashion increases the value of plate in proportion to the price of\nthat fashion. The superiority of coin above bullion would prevent the\nmelting down of the coin, and would discourage its exportation. If, upon\nany public exigency, it should become necessary to export the coin, the\ngreater part of it would soon return again, of its own accord. Abroad,\nit could sell only for its weight in bullion. At home, it would buy more\nthan that weight. There would be a profit, therefore, in bringing it\nhome again. In France, a seignorage of about eight per cent. is imposed\nupon the coinage, and the French coin, when exported, is said to return\nhome again, of its own accord.\n\nThe occasional fluctuations in the market price of gold and silver\nbullion arise from the same causes as the like fluctuations in that of\nall other commodities. The frequent loss of those metals from various\naccidents by sea and by land, the continual waste of them in gilding and\nplating, in lace and embroidery, in the wear and tear of coin, and in\nthat of plate, require, in all countries which possess no mines of their\nown, a continual importation, in order to repair this loss and this\nwaste. The merchant importers, like all other merchants, we may believe,\nendeavour, as well as they can, to suit their occasional importations\nto what they judge is likely to be the immediate demand. With all their\nattention, however, they sometimes overdo the business, and sometimes\nunderdo it. When they import more bullion than is wanted, rather than\nincur the risk and trouble of exporting it again, they are sometimes\nwilling to sell a part of it for something less than the ordinary or\naverage price. When, on the other hand, they import less than is wanted,\nthey get something more than this price. But when, under all those\noccasional fluctuations, the market price either of gold or silver\nbullion continues for several years together steadily and constantly,\neither more or less above, or more or less below the mint price, we\nmay be assured that this steady and constant, either superiority or\ninferiority of price, is the effect of something in the state of the\ncoin, which, at that time, renders a certain quantity of coin either of\nmore value or of less value than the precise quantity of bullion which\nit ought to contain. The constancy and steadiness of the effect supposes\na proportionable constancy and steadiness in the cause.\n\nThe money of any particular country is, at any particular time and\nplace, more or less an accurate measure or value, according as the\ncurrent coin is more or less exactly agreeable to its standard, or\ncontains more or less exactly the precise quantity of pure gold or pure\nsilver which it ought to contain. If in England, for example, forty-four\nguineas and a half contained exactly a pound weight of standard gold,\nor eleven ounces of fine gold, and one ounce of alloy, the gold coin of\nEngland would be as accurate a measure of the actual value of goods at\nany particular time and place as the nature of the thing would admit.\nBut if, by rubbing and wearing, forty-four guineas and a half generally\ncontain less than a pound weight of standard gold, the diminution,\nhowever, being greater in some pieces than in others, the measure of\nvalue comes to be liable to the same sort of uncertainty to which all\nother weights and measures are commonly exposed. As it rarely happens\nthat these are exactly agreeable to their standard, the merchant adjusts\nthe price of his goods as well as he can, not to what those weights\nand measures ought to be, but to what, upon an average, he finds, by\nexperience, they actually are. In consequence of a like disorder in the\ncoin, the price of goods comes, in the same manner, to be adjusted, not\nto the quantity of pure gold or silver which the coin ought to contain,\nbut to that which, upon an average, it is found, by experience, it\nactually does contain.\n\nBy the money price of goods, it is to be observed, I understand always\nthe quantity of pure gold or silver for which they are sold, without any\nregard to the denomination of the coin. Six shillings and eight pence,\nfor example, in the time of Edward I., I consider as the same money\nprice with a pound sterling in the present times, because it contained,\nas nearly as we can judge, the same quantity of pure silver.\n\n\n\n\nCHAPTER VI. OF THE COMPONENT PART OF THE PRICE OF COMMODITIES.\n\nIn that early and rude state of society which precedes both the\naccumulation of stock and the appropriation of land, the proportion\nbetween the quantities of labour necessary for acquiring different\nobjects, seems to be the only circumstance which can afford any rule\nfor exchanging them for one another. If among a nation of hunters, for\nexample, it usually costs twice the labour to kill a beaver which it\ndoes to kill a deer, one beaver should naturally exchange for or be\nworth two deer. It is natural that what is usually the produce of two\ndays or two hours labour, should be worth double of what is usually the\nproduce of one day's or one hour's labour.\n\nIf the one species of labour should be more severe than the other, some\nallowance will naturally be made for this superior hardship; and the\nproduce of one hour's labour in the one way may frequently exchange for\nthat of two hour's labour in the other.\n\nOr if the one species of labour requires an uncommon degree of dexterity\nand ingenuity, the esteem which men have for such talents, will\nnaturally give a value to their produce, superior to what would be due\nto the time employed about it. Such talents can seldom be acquired but\nin consequence of long application, and the superior value of their\nproduce may frequently be no more than a reasonable compensation for the\ntime and labour which must be spent in acquiring them. In the advanced\nstate of society, allowances of this kind, for superior hardship and\nsuperior skill, are commonly made in the wages of labour; and something\nof the same kind must probably have taken place in its earliest and\nrudest period.\n\nIn this state of things, the whole produce of labour belongs to the\nlabourer; and the quantity of labour commonly employed in acquiring or\nproducing any commodity, is the only circumstance which can regulate\nthe quantity of labour which it ought commonly to purchase, command, or\nexchange for.\n\nAs soon as stock has accumulated in the hands of particular persons,\nsome of them will naturally employ it in setting to work industrious\npeople, whom they will supply with materials and subsistence, in order\nto make a profit by the sale of their work, or by what their labour adds\nto the value of the materials. In exchanging the complete manufacture\neither for money, for labour, or for other goods, over and above what\nmay be sufficient to pay the price of the materials, and the wages of\nthe workmen, something must be given for the profits of the undertaker\nof the work, who hazards his stock in this adventure. The value which\nthe workmen add to the materials, therefore, resolves itself in this\ncase into two parts, of which the one pays their wages, the other the\nprofits of their employer upon the whole stock of materials and wages\nwhich he advanced. He could have no interest to employ them, unless\nhe expected from the sale of their work something more than what was\nsufficient to replace his stock to him; and he could have no interest to\nemploy a great stock rather than a small one, unless his profits were to\nbear some proportion to the extent of his stock.\n\nThe profits of stock, it may perhaps be thought, are only a different\nname for the wages of a particular sort of labour, the labour of\ninspection and direction. They are, however, altogether different, are\nregulated by quite different principles, and bear no proportion to the\nquantity, the hardship, or the ingenuity of this supposed labour of\ninspection and direction. They are regulated altogether by the value\nof the stock employed, and are greater or smaller in proportion to\nthe extent of this stock. Let us suppose, for example, that in some\nparticular place, where the common annual profits of manufacturing stock\nare ten per cent. there are two different manufactures, in each of which\ntwenty workmen are employed, at the rate of fifteen pounds a year each,\nor at the expense of three hundred a-year in each manufactory. Let us\nsuppose, too, that the coarse materials annually wrought up in the one\ncost only seven hundred pounds, while the finer materials in the other\ncost seven thousand. The capital annually employed in the one will, in\nthis case, amount only to one thousand pounds; whereas that employed\nin the other will amount to seven thousand three hundred pounds. At the\nrate of ten per cent. therefore, the undertaker of the one will expect a\nyearly profit of about one hundred pounds only; while that of the other\nwill expect about seven hundred and thirty pounds. But though their\nprofits are so very different, their labour of inspection and direction\nmay be either altogether or very nearly the same. In many great works,\nalmost the whole labour of this kind is committed to some principal\nclerk. His wages properly express the value of this labour of inspection\nand direction. Though in settling them some regard is had commonly, not\nonly to his labour and skill, but to the trust which is reposed in him,\nyet they never bear any regular proportion to the capital of which he\noversees the management; and the owner of this capital, though he is\nthus discharged of almost all labour, still expects that his profit\nshould bear a regular proportion to his capital. In the price of\ncommodities, therefore, the profits of stock constitute a component part\naltogether different from the wages of labour, and regulated by quite\ndifferent principles.\n\nIn this state of things, the whole produce of labour does not always\nbelong to the labourer. He must in most cases share it with the owner of\nthe stock which employs him. Neither is the quantity of labour commonly\nemployed in acquiring or producing any commodity, the only circumstance\nwhich can regulate the quantity which it ought commonly to purchase,\ncommand or exchange for. An additional quantity, it is evident, must be\ndue for the profits of the stock which advanced the wages and furnished\nthe materials of that labour.\n\nAs soon as the land of any country has all become private property, the\nlandlords, like all other men, love to reap where they never sowed, and\ndemand a rent even for its natural produce. The wood of the forest, the\ngrass of the field, and all the natural fruits of the earth, which,\nwhen land was in common, cost the labourer only the trouble of gathering\nthem, come, even to him, to have an additional price fixed upon them.\nHe must then pay for the licence to gather them, and must give up to the\nlandlord a portion of what his labour either collects or produces. This\nportion, or, what comes to the same thing, the price of this portion,\nconstitutes the rent of land, and in the price of the greater part of\ncommodities, makes a third component part.\n\nThe real value of all the different component parts of price, it must be\nobserved, is measured by the quantity of labour which they can, each of\nthem, purchase or command. Labour measures the value, not only of that\npart of price which resolves itself into labour, but of that which\nresolves itself into rent, and of that which resolves itself into\nprofit.\n\nIn every society, the price of every commodity finally resolves itself\ninto some one or other, or all of those three parts; and in every\nimproved society, all the three enter, more or less, as component parts,\ninto the price of the far greater part of commodities.\n\nIn the price of corn, for example, one part pays the rent of the\nlandlord, another pays the wages or maintenance of the labourers and\nlabouring cattle employed in producing it, and the third pays the profit\nof the farmer. These three parts seem either immediately or ultimately\nto make up the whole price of corn. A fourth part, it may perhaps be\nthought is necessary for replacing the stock of the farmer, or for\ncompensating the wear and tear of his labouring cattle, and other\ninstruments of husbandry. But it must be considered, that the price of\nany instrument of husbandry, such as a labouring horse, is itself made\nup of the same time parts; the rent of the land upon which he is reared,\nthe labour of tending and rearing him, and the profits of the farmer,\nwho advances both the rent of this land, and the wages of this labour.\nThough the price of the corn, therefore, may pay the price as well as\nthe maintenance of the horse, the whole price still resolves itself,\neither immediately or ultimately, into the same three parts of rent,\nlabour, and profit.\n\nIn the price of flour or meal, we must add to the price of the corn, the\nprofits of the miller, and the wages of his servants; in the price of\nbread, the profits of the baker, and the wages of his servants; and in\nthe price of both, the labour of transporting the corn from the house of\nthe farmer to that of the miller, and from that of the miller to that of\nthe baker, together with the profits of those who advance the wages of\nthat labour.\n\nThe price of flax resolves itself into the same three parts as that of\ncorn. In the price of linen we must add to this price the wages of\nthe flax-dresser, of the spinner, of the weaver, of the bleacher, etc.\ntogether with the profits of their respective employers.\n\nAs any particular commodity comes to be more manufactured, that part\nof the price which resolves itself into wages and profit, comes to be\ngreater in proportion to that which resolves itself into rent. In the\nprogress of the manufacture, not only the number of profits increase,\nbut every subsequent profit is greater than the foregoing; because the\ncapital from which it is derived must always be greater. The capital\nwhich employs the weavers, for example, must be greater than that which\nemploys the spinners; because it not only replaces that capital with its\nprofits, but pays, besides, the wages of the weavers: and the profits\nmust always bear some proportion to the capital.\n\nIn the most improved societies, however, there are always a few\ncommodities of which the price resolves itself into two parts only the\nwages of labour, and the profits of stock; and a still smaller number,\nin which it consists altogether in the wages of labour. In the price of\nsea-fish, for example, one part pays the labour of the fisherman, and\nthe other the profits of the capital employed in the fishery. Rent very\nseldom makes any part of it, though it does sometimes, as I shall shew\nhereafter. It is otherwise, at least through the greater part of Europe,\nin river fisheries. A salmon fishery pays a rent; and rent, though it\ncannot well be called the rent of land, makes a part of the price of a\nsalmon, as well as wares and profit. In some parts of Scotland, a few\npoor people make a trade of gathering, along the sea-shore, those little\nvariegated stones commonly known by the name of Scotch pebbles. The\nprice which is paid to them by the stone-cutter, is altogether the wages\nof their labour; neither rent nor profit makes an part of it.\n\nBut the whole price of any commodity must still finally resolve itself\ninto some one or other or all of those three parts; as whatever part of\nit remains after paying the rent of the land, and the price of the whole\nlabour employed in raising, manufacturing, and bringing it to market,\nmust necessarily be profit to somebody.\n\nAs the price or exchangeable value of every particular commodity, taken\nseparately, resolves itself into some one or other, or all of those\nthree parts; so that of all the commodities which compose the whole\nannual produce of the labour of every country, taken complexly, must\nresolve itself into the same three parts, and be parcelled out among\ndifferent inhabitants of the country, either as the wages of their\nlabour, the profits of their stock, or the rent of their land. The whole\nof what is annually either collected or produced by the labour of every\nsociety, or, what comes to the same thing, the whole price of it, is in\nthis manner originally distributed among some of its different members.\nWages, profit, and rent, are the three original sources of all revenue,\nas well as of all exchangeable value. All other revenue is ultimately\nderived from some one or other of these.\n\nWhoever derives his revenue from a fund which is his own, must draw it\neither from his labour, from his stock, or from his land. The revenue\nderived from labour is called wages; that derived from stock, by the\nperson who manages or employs it, is called profit; that derived from it\nby the person who does not employ it himself, but lends it to another,\nis called the interest or the use of money. It is the compensation\nwhich the borrower pays to the lender, for the profit which he has\nan opportunity of making by the use of the money. Part of that profit\nnaturally belongs to the borrower, who runs the risk and takes the\ntrouble of employing it, and part to the lender, who affords him the\nopportunity of making this profit. The interest of money is always a\nderivative revenue, which, if it is not paid from the profit which is\nmade by the use of the money, must be paid from some other source of\nrevenue, unless perhaps the borrower is a spendthrift, who contracts a\nsecond debt in order to pay the interest of the first. The revenue\nwhich proceeds altogether from land, is called rent, and belongs to the\nlandlord. The revenue of the farmer is derived partly from his labour,\nand partly from his stock. To him, land is only the instrument which\nenables him to earn the wages of this labour, and to make the profits of\nthis stock. All taxes, and all the revenue which is founded upon them,\nall salaries, pensions, and annuities of every kind, are ultimately\nderived from some one or other of those three original sources of\nrevenue, and are paid either immediately or mediately from the wages of\nlabour, the profits of stock, or the rent of land.\n\nWhen those three different sorts of revenue belong to different persons,\nthey are readily distinguished; but when they belong to the same, they\nare sometimes confounded with one another, at least in common language.\n\nA gentleman who farms a part of his own estate, after paying the expense\nof cultivation, should gain both the rent of the landlord and the profit\nof the farmer. He is apt to denominate, however, his whole gain, profit,\nand thus confounds rent with profit, at least in common language. The\ngreater part of our North American and West Indian planters are in this\nsituation. They farm, the greater part of them, their own estates: and\naccordingly we seldom hear of the rent of a plantation, but frequently\nof its profit.\n\nCommon farmers seldom employ any overseer to direct the general\noperations of the farm. They generally, too, work a good deal with their\nown hands, as ploughmen, harrowers, etc. What remains of the crop, after\npaying the rent, therefore, should not only replace to them their stock\nemployed in cultivation, together with its ordinary profits, but pay\nthem the wages which are due to them, both as labourers and overseers.\nWhatever remains, however, after paying the rent and keeping up the\nstock, is called profit. But wages evidently make a part of it. The\nfarmer, by saving these wages, must necessarily gain them. Wages,\ntherefore, are in this case confounded with profit.\n\nAn independent manufacturer, who has stock enough both to purchase\nmaterials, and to maintain himself till he can carry his work to market,\nshould gain both the wages of a journeyman who works under a master,\nand the profit which that master makes by the sale of that journeyman's\nwork. His whole gains, however, are commonly called profit, and wages\nare, in this case, too, confounded with profit.\n\nA gardener who cultivates his own garden with his own hands, unites in\nhis own person the three different characters, of landlord, farmer, and\nlabourer. His produce, therefore, should pay him the rent of the\nfirst, the profit of the second, and the wages of the third. The whole,\nhowever, is commonly considered as the earnings of his labour. Both rent\nand profit are, in this case, confounded with wages.\n\nAs in a civilized country there are but few commodities of which the\nexchangeable value arises from labour only, rent and profit contributing\nlargely to that of the far greater part of them, so the annual produce\nof its labour will always be sufficient to purchase or command a much\ngreater quantity of labour than what was employed in raising, preparing,\nand bringing that produce to market. If the society were annually to\nemploy all the labour which it can annually purchase, as the quantity\nof labour would increase greatly every year, so the produce of every\nsucceeding year would be of vastly greater value than that of the\nforegoing. But there is no country in which the whole annual produce is\nemployed in maintaining the industrious. The idle everywhere consume a\ngreat part of it; and, according to the different proportions in which\nit is annually divided between those two different orders of people, its\nordinary or average value must either annually increase or diminish, or\ncontinue the same from one year to another.\n\n\n\n\nCHAPTER VII. OF THE NATURAL AND MARKET PRICE OF COMMODITIES.\n\nThere is in every society or neighbourhood an ordinary or average rate,\nboth of wages and profit, in every different employment of labour and\nstock. This rate is naturally regulated, as I shall shew hereafter,\npartly by the general circumstances of the society, their riches or\npoverty, their advancing, stationary, or declining condition, and partly\nby the particular nature of each employment.\n\nThere is likewise in every society or neighbourhood an ordinary\nor average rate of rent, which is regulated, too, as I shall shew\nhereafter, partly by the general circumstances of the society or\nneighbourhood in which the land is situated, and partly by the natural\nor improved fertility of the land.\n\nThese ordinary or average rates may be called the natural rates of\nwages, profit and rent, at the time and place in which they commonly\nprevail.\n\nWhen the price of any commodity is neither more nor less than what is\nsufficient to pay the rent of the land, the wages of the labour, and the\nprofits of the stock employed in raising, preparing, and bringing it to\nmarket, according to their natural rates, the commodity is then sold for\nwhat may be called its natural price.\n\nThe commodity is then sold precisely for what it is worth, or for what\nit really costs the person who brings it to market; for though, in\ncommon language, what is called the prime cost of any commodity does not\ncomprehend the profit of the person who is to sell it again, yet, if he\nsells it at a price which does not allow him the ordinary rate of profit\nin his neighbourhood, he is evidently a loser by the trade; since, by\nemploying his stock in some other way, he might have made that profit.\nHis profit, besides, is his revenue, the proper fund of his subsistence.\nAs, while he is preparing and bringing the goods to market, he advances\nto his workmen their wages, or their subsistence; so he advances to\nhimself, in the same manner, his own subsistence, which is generally\nsuitable to the profit which he may reasonably expect from the sale of\nhis goods. Unless they yield him this profit, therefore, they do not\nrepay him what they may very properly be said to have really cost him.\n\nThough the price, therefore, which leaves him this profit, is not always\nthe lowest at which a dealer may sometimes sell his goods, it is the\nlowest at which he is likely to sell them for any considerable time; at\nleast where there is perfect liberty, or where he may change his trade\nas often as he pleases.\n\nThe actual price at which any commodity is commonly sold, is called its\nmarket price. It may either be above, or below, or exactly the same with\nits natural price.\n\nThe market price of every particular commodity is regulated by the\nproportion between the quantity which is actually brought to market,\nand the demand of those who are willing to pay the natural price of the\ncommodity, or the whole value of the rent, labour, and profit, which\nmust be paid in order to bring it thither. Such people may be called\nthe effectual demanders, and their demand the effectual demand; since it\nmaybe sufficient to effectuate the bringing of the commodity to market.\nIt is different from the absolute demand. A very poor man may be said,\nin some sense, to have a demand for a coach and six; he might like to\nhave it; but his demand is not an effectual demand, as the commodity can\nnever be brought to market in order to satisfy it.\n\nWhen the quantity of any commodity which is brought to market falls\nshort of the effectual demand, all those who are willing to pay the\nwhole value of the rent, wages, and profit, which must be paid in order\nto bring it thither, cannot be supplied with the quantity which they\nwant. Rather than want it altogether, some of them will be willing to\ngive more. A competition will immediately begin among them, and the\nmarket price will rise more or less above the natural price, according\nas either the greatness of the deficiency, or the wealth and wanton\nluxury of the competitors, happen to animate more or less the eagerness\nof the competition. Among competitors of equal wealth and luxury,\nthe same deficiency will generally occasion a more or less eager\ncompetition, according as the acquisition of the commodity happens to\nbe of more or less importance to them. Hence the exorbitant price of the\nnecessaries of life during the blockade of a town, or in a famine.\n\nWhen the quantity brought to market exceeds the effectual demand, it\ncannot be all sold to those who are willing to pay the whole value of\nthe rent, wages, and profit, which must be paid in order to bring it\nthither. Some part must be sold to those who are willing to pay less,\nand the low price which they give for it must reduce the price of the\nwhole. The market price will sink more or less below the natural price,\naccording as the greatness of the excess increases more or less the\ncompetition of the sellers, or according as it happens to be more or\nless important to them to get immediately rid of the commodity. The same\nexcess in the importation of perishable, will occasion a much greater\ncompetition than in that of durable commodities; in the importation of\noranges, for example, than in that of old iron.\n\nWhen the quantity brought to market is just sufficient to supply the\neffectual demand, and no more, the market price naturally comes to be\neither exactly, or as nearly as can be judged of, the same with the\nnatural price. The whole quantity upon hand can be disposed of for\nthis price, and can not be disposed of for more. The competition of the\ndifferent dealers obliges them all to accept of this price, but does not\noblige them to accept of less.\n\nThe quantity of every commodity brought to market naturally suits itself\nto the effectual demand. It is the interest of all those who employ\ntheir land, labour, or stock, in bringing any commodity to market, that\nthe quantity never should exceed the effectual demand; and it is the\ninterest of all other people that it never should fall short of that\ndemand.\n\nIf at any time it exceeds the effectual demand, some of the component\nparts of its price must be paid below their natural rate. If it is rent,\nthe interest of the landlords will immediately prompt them to withdraw\na part of their land; and if it is wages or profit, the interest of the\nlabourers in the one case, and of their employers in the other, will\nprompt them to withdraw a part of their labour or stock, from this\nemployment. The quantity brought to market will soon be no more than\nsufficient to supply the effectual demand. All the different parts of\nits price will rise to their natural rate, and the whole price to its\nnatural price.\n\nIf, on the contrary, the quantity brought to market should at any time\nfall short of the effectual demand, some of the component parts of its\nprice must rise above their natural rate. If it is rent, the interest of\nall other landlords will naturally prompt them to prepare more land for\nthe raising of this commodity; if it is wages or profit, the interest\nof all other labourers and dealers will soon prompt them to employ more\nlabour and stock in preparing and bringing it to market. The quantity\nbrought thither will soon be sufficient to supply the effectual demand.\nAll the different parts of its price will soon sink to their natural\nrate, and the whole price to its natural price.\n\nThe natural price, therefore, is, as it were, the central price,\nto which the prices of all commodities are continually gravitating.\nDifferent accidents may sometimes keep them suspended a good deal above\nit, and sometimes force them down even somewhat below it. But whatever\nmay be the obstacles which hinder them from settling in this centre of\nrepose and continuance, they are constantly tending towards it.\n\nThe whole quantity of industry annually employed in order to bring\nany commodity to market, naturally suits itself in this manner to the\neffectual demand. It naturally aims at bringing always that precise\nquantity thither which may be sufficient to supply, and no more than\nsupply, that demand.\n\nBut, in some employments, the same quantity of industry will, in\ndifferent years, produce very different quantities of commodities;\nwhile, in others, it will produce always the same, or very nearly the\nsame. The same number of labourers in husbandry will, in different\nyears, produce very different quantities of corn, wine, oil, hops, etc.\nBut the same number of spinners or weavers will every year produce the\nsame, or very nearly the same, quantity of linen and woollen cloth. It\nis only the average produce of the one species of industry which can\nbe suited, in any respect, to the effectual demand; and as its actual\nproduce is frequently much greater, and frequently much less, than its\naverage produce, the quantity of the commodities brought to market will\nsometimes exceed a good deal, and sometimes fall short a good deal,\nof the effectual demand. Even though that demand, therefore, should\ncontinue always the same, their market price will be liable to great\nfluctuations, will sometimes fall a good deal below, and sometimes\nrise a good deal above, their natural price. In the other species of\nindustry, the produce of equal quantities of labour being always the\nsame, or very nearly the same, it can be more exactly suited to the\neffectual demand. While that demand continues the same, therefore, the\nmarket price of the commodities is likely to do so too, and to be either\naltogether, or as nearly as can be judged of, the same with the natural\nprice. That the price of linen and woollen cloth is liable neither to\nsuch frequent, nor to such great variations, as the price of corn,\nevery man's experience will inform him. The price of the one species of\ncommodities varies only with the variations in the demand; that of the\nother varies not only with the variations in the demand, but with the\nmuch greater, and more frequent, variations in the quantity of what is\nbrought to market, in order to supply that demand.\n\nThe occasional and temporary fluctuations in the market price of any\ncommodity fall chiefly upon those parts of its price which resolve\nthemselves into wages and profit. That part which resolves itself into\nrent is less affected by them. A rent certain in money is not in the\nleast affected by them, either in its rate or in its value. A rent which\nconsists either in a certain proportion, or in a certain quantity, of\nthe rude produce, is no doubt affected in its yearly value by all the\noccasional and temporary fluctuations in the market price of that\nrude produce; but it is seldom affected by them in its yearly rate.\nIn settling the terms of the lease, the landlord and farmer endeavour,\naccording to their best judgment, to adjust that rate, not to the\ntemporary and occasional, but to the average and ordinary price of the\nproduce.\n\nSuch fluctuations affect both the value and the rate, either of wages or\nof profit, according as the market happens to be either overstocked or\nunderstocked with commodities or with labour, with work done, or with\nwork to be done. A public mourning raises the price of black cloth\n( with which the market is almost always understocked upon such\noccasions), and augments the profits of the merchants who possess any\nconsiderable quantity of it. It has no effect upon the wages of the\nweavers. The market is understocked with commodities, not with labour,\nwith work done, not with work to be done. It raises the wages of\njourneymen tailors. The market is here understocked with labour. There\nis an effectual demand for more labour, for more work to be done, than\ncan be had. It sinks the price of coloured silks and cloths, and thereby\nreduces the profits of the merchants who have any considerable quantity\nof them upon hand. It sinks, too, the wages of the workmen employed\nin preparing such commodities, for which all demand is stopped for six\nmonths, perhaps for a twelvemonth. The market is here overstocked both\nwith commodities and with labour.\n\nBut though the market price of every particular commodity is in this\nmanner continually gravitating, if one may say so, towards the natural\nprice; yet sometimes particular accidents, sometimes natural causes, and\nsometimes particular regulations of policy, may, in many commodities,\nkeep up the market price, for a long time together, a good deal above\nthe natural price.\n\nWhen, by an increase in the effectual demand, the market price of some\nparticular commodity happens to rise a good deal above the natural\nprice, those who employ their stocks in supplying that market, are\ngenerally careful to conceal this change. If it was commonly known,\ntheir great profit would tempt so many new rivals to employ their stocks\nin the same way, that, the effectual demand being fully supplied, the\nmarket price would soon be reduced to the natural price, and, perhaps,\nfor some time even below it. If the market is at a great distance from\nthe residence of those who supply it, they may sometimes be able to\nkeep the secret for several years together, and may so long enjoy their\nextraordinary profits without any new rivals. Secrets of this kind,\nhowever, it must be acknowledged, can seldom be long kept; and the\nextraordinary profit can last very little longer than they are kept.\n\nSecrets in manufactures are capable of being longer kept than secrets in\ntrade. A dyer who has found the means of producing a particular colour\nwith materials which cost only half the price of those commonly made use\nof, may, with good management, enjoy the advantage of his discovery as\nlong as he lives, and even leave it as a legacy to his posterity. His\nextraordinary gains arise from the high price which is paid for his\nprivate labour. They properly consist in the high wages of that labour.\nBut as they are repeated upon every part of his stock, and as their\nwhole amount bears, upon that account, a regular proportion to it, they\nare commonly considered as extraordinary profits of stock.\n\nSuch enhancements of the market price are evidently the effects of\nparticular accidents, of which, however, the operation may sometimes\nlast for many years together.\n\nSome natural productions require such a singularity of soil and\nsituation, that all the land in a great country, which is fit for\nproducing them, may not be sufficient to supply the effectual demand.\nThe whole quantity brought to market, therefore, may be disposed of to\nthose who are willing to give more than what is sufficient to pay the\nrent of the land which produced them, together with the wages of the\nlabour and the profits of the stock which were employed in preparing\nand bringing them to market, according to their natural rates. Such\ncommodities may continue for whole centuries together to be sold at this\nhigh price; and that part of it which resolves itself into the rent of\nland, is in this case the part which is generally paid above its natural\nrate. The rent of the land which affords such singular and esteemed\nproductions, like the rent of some vineyards in France of a peculiarly\nhappy soil and situation, bears no regular proportion to the rent\nof other equally fertile and equally well cultivated land in its\nneighbourhood. The wages of the labour, and the profits of the stock\nemployed in bringing such commodities to market, on the contrary, are\nseldom out of their natural proportion to those of the other employments\nof labour and stock in their neighbourhood.\n\nSuch enhancements of the market price are evidently the effect of\nnatural causes, which may hinder the effectual demand from ever being\nfully supplied, and which may continue, therefore, to operate for ever.\n\nA monopoly granted either to an individual or to a trading company, has\nthe same effect as a secret in trade or manufactures. The monopolists,\nby keeping the market constantly understocked by never fully supplying\nthe effectual demand, sell their commodities much above the natural\nprice, and raise their emoluments, whether they consist in wages or\nprofit, greatly above their natural rate.\n\nThe price of monopoly is upon every occasion the highest which can\nbe got. The natural price, or the price of free competition, on the\ncontrary, is the lowest which can be taken, not upon every occasion\nindeed, but for any considerable time together. The one is upon every\noccasion the highest which can be squeezed out of the buyers, or which\nit is supposed they will consent to give; the other is the lowest which\nthe sellers can commonly afford to take, and at the same time continue\ntheir business.\n\nThe exclusive privileges of corporations, statutes of apprenticeship,\nand all those laws which restrain in particular employments, the\ncompetition to a smaller number than might otherwise go into them, have\nthe same tendency, though in a less degree. They are a sort of enlarged\nmonopolies, and may frequently, for ages together, and in whole classes\nof employments, keep up the market price of particular commodities above\nthe natural price, and maintain both the wages of the labour and the\nprofits of the stock employed about them somewhat above their natural\nrate.\n\nSuch enhancements of the market price may last as long as the\nregulations of policy which give occasion to them.\n\nThe market price of any particular commodity, though it may continue\nlong above, can seldom continue long below, its natural price. Whatever\npart of it was paid below the natural rate, the persons whose interest\nit affected would immediately feel the loss, and would immediately\nwithdraw either so much land or no much labour, or so much stock, from\nbeing employed about it, that the quantity brought to market would soon\nbe no more than sufficient to supply the effectual demand. Its market\nprice, therefore, would soon rise to the natural price; this at least\nwould be the case where there was perfect liberty.\n\nThe same statutes of apprenticeship and other corporation laws, indeed,\nwhich, when a manufacture is in prosperity, enable the workman to raise\nhis wages a good deal above their natural rate, sometimes oblige him,\nwhen it decays, to let them down a good deal below it. As in the one\ncase they exclude many people from his employment, so in the other\nthey exclude him from many employments. The effect of such regulations,\nhowever, is not near so durable in sinking the workman's wages below, as\nin raising them above their natural rate. Their operation in the one way\nmay endure for many centuries, but in the other it can last no longer\nthan the lives of some of the workmen who were bred to the business in\nthe time of its prosperity. When they are gone, the number of those who\nare afterwards educated to the trade will naturally suit itself to the\neffectual demand. The policy must be as violent as that of Indostan or\nancient Egypt (where every man was bound by a principle of religion to\nfollow the occupation of his father, and was supposed to commit the\nmost horrid sacrilege if he changed it for another), which can in any\nparticular employment, and for several generations together, sink either\nthe wages of labour or the profits of stock below their natural rate.\n\nThis is all that I think necessary to be observed at present concerning\nthe deviations, whether occasional or permanent, of the market price of\ncommodities from the natural price.\n\nThe natural price itself varies with the natural rate of each of its\ncomponent parts, of wages, profit, and rent; and in every society this\nrate varies according to their circumstances, according to their riches\nor poverty, their advancing, stationary, or declining condition. I\nshall, in the four following chapters, endeavour to explain, as fully\nand distinctly as I can, the causes of those different variations.\n\nFirst, I shall endeavour to explain what are the circumstances which\nnaturally determine the rate of wages, and in what manner those\ncircumstances are affected by the riches or poverty, by the advancing,\nstationary, or declining state of the society.\n\nSecondly, I shall endeavour to shew what are the circumstances which\nnaturally determine the rate of profit; and in what manner, too, those\ncircumstances are affected by the like variations in the state of the\nsociety.\n\nThough pecuniary wages and profit are very different in the different\nemployments of labour and stock; yet a certain proportion seems commonly\nto take place between both the pecuniary wages in all the different\nemployments of labour, and the pecuniary profits in all the different\nemployments of stock. This proportion, it will appear hereafter, depends\npartly upon the nature of the different employments, and partly upon the\ndifferent laws and policy of the society in which they are carried on.\nBut though in many respects dependent upon the laws and policy, this\nproportion seems to be little affected by the riches or poverty of that\nsociety, by its advancing, stationary, or declining condition, but to\nremain the same, or very nearly the same, in all those different states.\nI shall, in the third place, endeavour to explain all the different\ncircumstances which regulate this proportion.\n\nIn the fourth and last place, I shall endeavour to shew what are the\ncircumstances which regulate the rent of land, and which either raise or\nlower the real price of all the different substances which it produces.\n\n\n\n\nCHAPTER VIII. OF THE WAGES OF LABOUR.\n\nThe produce of labour constitutes the natural recompence or wages of\nlabour.\n\nIn that original state of things which precedes both the appropriation\nof land and the accumulation of stock, the whole produce of labour\nbelongs to the labourer. He has neither landlord nor master to share\nwith him.\n\nHad this state continued, the wages of labour would have augmented with\nall those improvements in its productive powers, to which the division\nof labour gives occasion. All things would gradually have become\ncheaper. They would have been produced by a smaller quantity of labour;\nand as the commodities produced by equal quantities of labour would\nnaturally in this state of things be exchanged for one another, they\nwould have been purchased likewise with the produce of a smaller\nquantity.\n\nBut though all things would have become cheaper in reality, in\nappearance many things might have become dearer, than before, or have\nbeen exchanged for a greater quantity of other goods. Let us suppose,\nfor example, that in the greater part of employments the productive\npowers of labour had been improved to tenfold, or that a day's\nlabour could produce ten times the quantity of work which it had done\noriginally; but that in a particular employment they had been improved\nonly to double, or that a day's labour could produce only twice the\nquantity of work which it had done before. In exchanging the produce of\na day's labour in the greater part of employments for that of a day's\nlabour in this particular one, ten times the original quantity of work\nin them would purchase only twice the original quantity in it. Any\nparticular quantity in it, therefore, a pound weight, for example, would\nappear to be five times dearer than before. In reality, however, it\nwould be twice as cheap. Though it required five times the quantity of\nother goods to purchase it, it would require only half the quantity of\nlabour either to purchase or to produce it. The acquisition, therefore,\nwould be twice as easy as before.\n\nBut this original state of things, in which the labourer enjoyed\nthe whole produce of his own labour, could not last beyond the first\nintroduction of the appropriation of land and the accumulation of\nstock. It was at an end, therefore, long before the most considerable\nimprovements were made in the productive powers of labour; and it would\nbe to no purpose to trace further what might have been its effects upon\nthe recompence or wages of labour.\n\nAs soon as land becomes private property, the landlord demands a share\nof almost all the produce which the labourer can either raise or collect\nfrom it. His rent makes the first deduction from the produce of the\nlabour which is employed upon land.\n\nIt seldom happens that the person who tills the ground has wherewithal\nto maintain himself till he reaps the harvest. His maintenance is\ngenerally advanced to him from the stock of a master, the farmer who\nemploys him, and who would have no interest to employ him, unless he\nwas to share in the produce of his labour, or unless his stock was to be\nreplaced to him with a profit. This profit makes a second deduction from\nthe produce of the labour which is employed upon land.\n\nThe produce of almost all other labour is liable to the like deduction\nof profit. In all arts and manufactures, the greater part of the workmen\nstand in need of a master, to advance them the materials of their work,\nand their wages and maintenance, till it be completed. He shares in the\nproduce of their labour, or in the value which it adds to the materials\nupon which it is bestowed; and in this share consists his profit.\n\nIt sometimes happens, indeed, that a single independent workman has\nstock sufficient both to purchase the materials of his work, and to\nmaintain himself till it be completed. He is both master and workman,\nand enjoys the whole produce of his own labour, or the whole value which\nit adds to the materials upon which it is bestowed. It includes what are\nusually two distinct revenues, belonging to two distinct persons, the\nprofits of stock, and the wages of labour.\n\nSuch cases, however, are not very frequent; and in every part of Europe\ntwenty workmen serve under a master for one that is independent, and the\nwages of labour are everywhere understood to be, what they usually\nare, when the labourer is one person, and the owner of the stock which\nemploys him another.\n\nWhat are the common wages of labour, depends everywhere upon the\ncontract usually made between those two parties, whose interests are\nby no means the same. The workmen desire to get as much, the masters to\ngive as little, as possible. The former are disposed to combine in order\nto raise, the latter in order to lower, the wages of labour.\n\nIt is not, however, difficult to foresee which of the two parties must,\nupon all ordinary occasions, have the advantage in the dispute, and\nforce the other into a compliance with their terms. The masters, being\nfewer in number, can combine much more easily: and the law, besides,\nauthorises, or at least does not prohibit, their combinations, while it\nprohibits those of the workmen. We have no acts of parliament against\ncombining to lower the price of work, but many against combining to\nraise it. In all such disputes, the masters can hold out much longer. A\nlandlord, a farmer, a master manufacturer, or merchant, though they did\nnot employ a single workman, could generally live a year or two upon the\nstocks, which they have already acquired. Many workmen could not subsist\na week, few could subsist a month, and scarce any a year, without\nemployment. In the long run, the workman may be as necessary to his\nmaster as his master is to him; but the necessity is not so immediate.\n\nWe rarely hear, it has been said, of the combinations of masters, though\nfrequently of those of workmen. But whoever imagines, upon this account,\nthat masters rarely combine, is as ignorant of the world as of the\nsubject. Masters are always and everywhere in a sort of tacit, but\nconstant and uniform, combination, not to raise the wages of labour\nabove their actual rate. To violate this combination is everywhere a\nmost unpopular action, and a sort of reproach to a master among his\nneighbours and equals. We seldom, indeed, hear of this combination,\nbecause it is the usual, and, one may say, the natural state of\nthings, which nobody ever hears of. Masters, too, sometimes enter into\nparticular combinations to sink the wages of labour even below this\nrate. These are always conducted with the utmost silence and secrecy\ntill the moment of execution; and when the workmen yield, as they\nsometimes do without resistance, though severely felt by them, they\nare never heard of by other people. Such combinations, however, are\nfrequently resisted by a contrary defensive combination of the workmen,\nwho sometimes, too, without any provocation of this kind, combine,\nof their own accord, to raise the price of their labour. Their usual\npretences are, sometimes the high price of provisions, sometimes the\ngreat profit which their masters make by their work. But whether their\ncombinations be offensive or defensive, they are always abundantly heard\nof. In order to bring the point to a speedy decision, they have always\nrecourse to the loudest clamour, and sometimes to the most shocking\nviolence and outrage. They are desperate, and act with the folly and\nextravagance of desperate men, who must either starve, or frighten their\nmasters into an immediate compliance with their demands. The masters,\nupon these occasions, are just as clamorous upon the other side, and\nnever cease to call aloud for the assistance of the civil magistrate,\nand the rigorous execution of those laws which have been enacted with\nso much severity against the combination of servants, labourers, and\njourneymen. The workmen, accordingly, very seldom derive any advantage\nfrom the violence of those tumultuous combinations, which, partly from\nthe interposition of the civil magistrate, partly from the superior\nsteadiness of the masters, partly from the necessity which the greater\npart of the workmen are under of submitting for the sake of present\nsubsistence, generally end in nothing but the punishment or ruin of the\nringleaders.\n\nBut though, in disputes with their workmen, masters must generally have\nthe advantage, there is, however, a certain rate, below which it seems\nimpossible to reduce, for any considerable time, the ordinary wages even\nof the lowest species of labour.\n\nA man must always live by his work, and his wages must at least be\nsufficient to maintain him. They must even upon most occasions be\nsomewhat more, otherwise it would be impossible for him to bring up a\nfamily, and the race of such workmen could not last beyond the first\ngeneration. Mr Cantillon seems, upon this account, to suppose that the\nlowest species of common labourers must everywhere earn at least double\ntheir own maintenance, in order that, one with another, they may be\nenabled to bring up two children; the labour of the wife, on account of\nher necessary attendance on the children, being supposed no more than\nsufficient to provide for herself: But one half the children born, it\nis computed, die before the age of manhood. The poorest labourers,\ntherefore, according to this account, must, one with another, attempt to\nrear at least four children, in order that two may have an equal chance\nof living to that age. But the necessary maintenance of four children,\nit is supposed, may be nearly equal to that of one man. The labour of an\nable-bodied slave, the same author adds, is computed to be worth double\nhis maintenance; and that of the meanest labourer, he thinks, cannot be\nworth less than that of an able-bodied slave. Thus far at least seems\ncertain, that, in order to bring up a family, the labour of the husband\nand wife together must, even in the lowest species of common labour, be\nable to earn something more than what is precisely necessary for\ntheir own maintenance; but in what proportion, whether in that\nabove-mentioned, or many other, I shall not take upon me to determine.\n\nThere are certain circumstances, however, which sometimes give\nthe labourers an advantage, and enable them to raise their wages\nconsiderably above this rate, evidently the lowest which is consistent\nwith common humanity.\n\nWhen in any country the demand for those who live by wages, labourers,\njourneymen, servants of every kind, is continually increasing; when\nevery year furnishes employment for a greater number than had been\nemployed the year before, the workmen have no occasion to combine\nin order to raise their wages. The scarcity of hands occasions a\ncompetition among masters, who bid against one another in order to get\nworkmen, and thus voluntarily break through the natural combination of\nmasters not to raise wages. The demand for those who live by wages, it\nis evident, cannot increase but in proportion to the increase of the\nfunds which are destined to the payment of wages. These funds are of two\nkinds, first, the revenue which is over and above what is necessary for\nthe maintenance; and, secondly, the stock which is over and above what\nis necessary for the employment of their masters.\n\nWhen the landlord, annuitant, or monied man, has a greater revenue than\nwhat he judges sufficient to maintain his own family, he employs either\nthe whole or a part of the surplus in maintaining one or more menial\nservants. Increase this surplus, and he will naturally increase the\nnumber of those servants.\n\nWhen an independent workman, such as a weaver or shoemaker, has got more\nstock than what is sufficient to purchase the materials of his own work,\nand to maintain himself till he can dispose of it, he naturally employs\none or more journeymen with the surplus, in order to make a profit by\ntheir work. Increase this surplus, and he will naturally increase the\nnumber of his journeymen.\n\nThe demand for those who live by wages, therefore, necessarily increases\nwith the increase of the revenue and stock of every country, and cannot\npossibly increase without it. The increase of revenue and stock is the\nincrease of national wealth. The demand for those who live by wages,\ntherefore, naturally increases with the increase of national wealth, and\ncannot possibly increase without it.\n\nIt is not the actual greatness of national wealth, but its continual\nincrease, which occasions a rise in the wages of labour. It is not,\naccordingly, in the richest countries, but in the most thriving, or in\nthose which are growing rich the fastest, that the wages of labour\nare highest. England is certainly, in the present times, a much richer\ncountry than any part of North America. The wages of labour, however,\nare much higher in North America than in any part of England. In the\nprovince of New York, common labourers earned in 1773, before the\ncommencement of the late disturbances, three shillings and sixpence\ncurrency, equal to two shillings sterling, a-day; ship-carpenters, ten\nshillings and sixpence currency, with a pint of rum, worth sixpence\nsterling, equal in all to six shillings and sixpence sterling;\nhouse-carpenters and bricklayers, eight shillings currency, equal to\nfour shillings and sixpence sterling; journeymen tailors, five shillings\ncurrency, equal to about two shillings and tenpence sterling. These\nprices are all above the London price; and wages are said to be as\nhigh in the other colonies as in New York. The price of provisions is\neverywhere in North America much lower than in England. A dearth has\nnever been known there. In the worst seasons they have always had a\nsufficiency for themselves, though less for exportation. If the money\nprice of labour, therefore, be higher than it is anywhere in the\nmother-country, its real price, the real command of the necessaries and\nconveniencies of life which it conveys to the labourer, must be higher\nin a still greater proportion.\n\nBut though North America is not yet so rich as England, it is much\nmore thriving, and advancing with much greater rapidity to the further\nacquisition of riches. The most decisive mark of the prosperity of\nany country is the increase of the number of its inhabitants. In Great\nBritain, and most other European countries, they are not supposed to\ndouble in less than five hundred years. In the British colonies in North\nAmerica, it has been found that they double in twenty or five-and-twenty\nyears. Nor in the present times is this increase principally owing\nto the continual importation of new inhabitants, but to the great\nmultiplication of the species. Those who live to old age, it is said,\nfrequently see there from fifty to a hundred, and sometimes many more,\ndescendants from their own body. Labour is there so well rewarded, that\na numerous family of children, instead of being a burden, is a source of\nopulence and prosperity to the parents. The labour of each child, before\nit can leave their house, is computed to be worth a hundred pounds clear\ngain to them. A young widow with four or five young children, who, among\nthe middling or inferior ranks of people in Europe, would have so little\nchance for a second husband, is there frequently courted as a sort of\nfortune. The value of children is the greatest of all encouragements to\nmarriage. We cannot, therefore, wonder that the people in North America\nshould generally marry very young. Notwithstanding the great increase\noccasioned by such early marriages, there is a continual complaint of\nthe scarcity of hands in North America. The demand for labourers, the\nfunds destined for maintaining them increase, it seems, still faster\nthan they can find labourers to employ.\n\nThough the wealth of a country should be very great, yet if it has been\nlong stationary, we must not expect to find the wages of labour very\nhigh in it. The funds destined for the payment of wages, the revenue\nand stock of its inhabitants, may be of the greatest extent; but if they\nhave continued for several centuries of the same, or very nearly of the\nsame extent, the number of labourers employed every year could easily\nsupply, and even more than supply, the number wanted the following year.\nThere could seldom be any scarcity of hands, nor could the masters be\nobliged to bid against one another in order to get them. The hands,\non the contrary, would, in this case, naturally multiply beyond their\nemployment. There would be a constant scarcity of employment, and the\nlabourers would be obliged to bid against one another in order to get\nit. If in such a country the wages off labour had ever been more than\nsufficient to maintain the labourer, and to enable him to bring up a\nfamily, the competition of the labourers and the interest of the masters\nwould soon reduce them to the lowest rate which is consistent with\ncommon humanity. China has been long one of the richest, that is, one of\nthe most fertile, best cultivated, most industrious, and most populous,\ncountries in the world. It seems, however, to have been long stationary.\nMarco Polo, who visited it more than five hundred years ago, describes\nits cultivation, industry, and populousness, almost in the same terms\nin which they are described by travellers in the present times. It had,\nperhaps, even long before his time, acquired that full complement of\nriches which the nature of its laws and institutions permits it to\nacquire. The accounts of all travellers, inconsistent in many other\nrespects, agree in the low wages of labour, and in the difficulty which\na labourer finds in bringing up a family in China. If by digging the\nground a whole day he can get what will purchase a small quantity of\nrice in the evening, he is contented. The condition of artificers is,\nif possible, still worse. Instead of waiting indolently in their\nwork-houses for the calls of their customers, as in Europe, they are\ncontinually running about the streets with the tools of their respective\ntrades, offering their services, and, as it were, begging employment.\nThe poverty of the lower ranks of people in China far surpasses that\nof the most beggarly nations in Europe. In the neighbourhood of Canton,\nmany hundred, it is commonly said, many thousand families have no\nhabitation on the land, but live constantly in little fishing-boats\nupon the rivers and canals. The subsistence which they find there is\nso scanty, that they are eager to fish up the nastiest garbage thrown\noverboard from any European ship. Any carrion, the carcase of a dead dog\nor cat, for example, though half putrid and stinking, is as welcome\nto them as the most wholesome food to the people of other countries.\nMarriage is encouraged in China, not by the profitableness of children,\nbut by the liberty of destroying them. In all great towns, several are\nevery night exposed in the street, or drowned like puppies in the water.\nThe performance of this horrid office is even said to be the avowed\nbusiness by which some people earn their subsistence.\n\nChina, however, though it may, perhaps, stand still, does not seem to\ngo backwards. Its towns are nowhere deserted by their inhabitants. The\nlands which had once been cultivated, are nowhere neglected. The same,\nor very nearly the same, annual labour, must, therefore, continue to\nbe performed, and the funds destined for maintaining it must not,\nconsequently, be sensibly diminished. The lowest class of labourers,\ntherefore, notwithstanding their scanty subsistence, must some way or\nanother make shift to continue their race so far as to keep up their\nusual numbers.\n\nBut it would be otherwise in a country where the funds destined for the\nmaintenance of labour were sensibly decaying. Every year the demand\nfor servants and labourers would, in all the different classes of\nemployments, be less than it had been the year before. Many who had been\nbred in the superior classes, not being able to find employment in their\nown business, would be glad to seek it in the lowest. The lowest\nclass being not only overstocked with its own workmen, but with the\noverflowings of all the other classes, the competition for employment\nwould be so great in it, as to reduce the wages of labour to the most\nmiserable and scanty subsistence of the labourer. Many would not be able\nto find employment even upon these hard terms, but would either starve,\nor be driven to seek a subsistence, either by begging, or by the\nperpetration perhaps, of the greatest enormities. Want, famine, and\nmortality, would immediately prevail in that class, and from thence\nextend themselves to all the superior classes, till the number\nof inhabitants in the country was reduced to what could easily be\nmaintained by the revenue and stock which remained in it, and which had\nescaped either the tyranny or calamity which had destroyed the rest.\nThis, perhaps, is nearly the present state of Bengal, and of some other\nof the English settlements in the East Indies. In a fertile country,\nwhich had before been much depopulated, where subsistence, consequently,\nshould not be very difficult, and where, notwithstanding, three or four\nhundred thousand people die of hunger in one year, we maybe assured that\nthe funds destined for the maintenance of the labouring poor are fast\ndecaying. The difference between the genius of the British constitution,\nwhich protects and governs North America, and that of the mercantile\ncompany which oppresses and domineers in the East Indies, cannot,\nperhaps, be better illustrated than by the different state of those\ncountries.\n\nThe liberal reward of labour, therefore, as it is the necessary effect,\nso it is the natural symptom of increasing national wealth. The scanty\nmaintenance of the labouring poor, on the other hand, is the natural\nsymptom that things are at a stand, and their starving condition, that\nthey are going fast backwards.\n\nIn Great Britain, the wages of labour seem, in the present times, to be\nevidently more than what is precisely necessary to enable the labourer\nto bring up a family. In order to satisfy ourselves upon this point, it\nwill not be necessary to enter into any tedious or doubtful calculation\nof what may be the lowest sum upon winch it is possible to do this.\nThere are many plain symptoms, that the wages of labour are nowhere in\nthis country regulated by this lowest rate, which is consistent with\ncommon humanity.\n\nFirst, in almost every part of Great Britain there is a distinction,\neven in the lowest species of labour, between summer and winter wages.\nSummer wages are always highest. But, on account of the extraordinary\nexpense of fuel, the maintenance of a family is most expensive in\nwinter. Wages, therefore, being highest when this expense is lowest, it\nseems evident that they are not regulated by what is necessary for this\nexpense, but by the quantity and supposed value of the work. A labourer,\nit may be said, indeed, ought to save part of his summer wages, in order\nto defray his winter expense; and that, through the whole year, they do\nnot exceed what is necessary to maintain his family through the whole\nyear. A slave, however, or one absolutely dependent on us for immediate\nsubsistence, would not be treated in this manner. His daily subsistence\nwould be proportioned to his daily necessities.\n\nSecondly, the wages of labour do not, in Great Britain, fluctuate\nwith the price of provisions. These vary everywhere from year to year,\nfrequently from month to month. But in many places, the money price\nof labour remains uniformly the same, sometimes for half a century\ntogether. If, in these places, therefore, the labouring poor can\nmaintain their families in dear years, they must be at their ease in\ntimes of moderate plenty, and in affluence in those of extraordinary\ncheapness. The high price of provisions during these ten years past, has\nnot, in many parts of the kingdom, been accompanied with any sensible\nrise in the money price of labour. It has, indeed, in some; owing,\nprobably, more to the increase of the demand for labour, than to that of\nthe price of provisions.\n\nThirdly, as the price of provisions varies more from year to year than\nthe wages of labour, so, on the other hand, the wages of labour vary\nmore from place to place than the price of provisions. The prices of\nbread and butchers' meat are generally the same, or very nearly the\nsame, through the greater part of the united kingdom. These, and most\nother things which are sold by retail, the way in which the labouring\npoor buy all things, are generally fully as cheap, or cheaper, in great\ntowns than in the remoter parts of the country, for reasons which I\nshall have occasion to explain hereafter. But the wages of labour in\na great town and its neighbourhood, are frequently a fourth or a fifth\npart, twenty or five-and--twenty per cent. higher than at a few miles\ndistance. Eighteen pence a day may be reckoned the common price of\nlabour in London and its neighbourhood. At a few miles distance, it\nfalls to fourteen and fifteen pence. Tenpence may be reckoned its price\nin Edinburgh and its neighbourhood. At a few miles distance, it falls to\neightpence, the usual price of common labour through the greater part\nof the low country of Scotland, where it varies a good deal less than\nin England. Such a difference of prices, which, it seems, is not\nalways sufficient to transport a man from one parish to another,\nwould necessarily occasion so great a transportation of the most bulky\ncommodities, not only from one parish to another, but from one end of\nthe kingdom, almost from one end of the world to the other, as would\nsoon reduce them more nearly to a level. After all that has been said\nof the levity and inconstancy of human nature, it appears evidently from\nexperience, that man is, of all sorts of luggage, the most difficult\nto be transported. If the labouring poor, therefore, can maintain their\nfamilies in those parts of the kingdom where the price of labour is\nlowest, they must be in affluence where it is highest.\n\nFourthly, the variations in the price of labour not only do not\ncorrespond, either in place or time, with those in the price of\nprovisions, but they are frequently quite opposite.\n\nGrain, the food of the common people, is dearer in Scotland than in\nEngland, whence Scotland receives almost every year very large supplies.\nBut English corn must be sold dearer in Scotland, the country to which\nit is brought, than in England, the country from which it comes; and in\nproportion to its quality it cannot be sold dearer in Scotland than the\nScotch corn that comes to the same market in competition with it. The\nquality of grain depends chiefly upon the quantity of flour or meal\nwhich it yields at the mill; and, in this respect, English grain is so\nmuch superior to the Scotch, that though often dearer in appearance,\nor in proportion to the measure of its bulk, it is generally cheaper in\nreality, or in proportion to its quality, or even to the measure of its\nweight. The price of labour, on the contrary, is dearer in England\nthan in Scotland. If the labouring poor, therefore, can maintain\ntheir families in the one part of the united kingdom, they must be in\naffluence in the other. Oatmeal, indeed, supplies the common people in\nScotland with the greatest and the best part of their food, which is, in\ngeneral, much inferior to that of their neighbours of the same rank in\nEngland. This difference, however, in the mode of their subsistence, is\nnot the cause, but the effect, of the difference in their wages; though,\nby a strange misapprehension, I have frequently heard it represented as\nthe cause. It is not because one man keeps a coach, while his neighbour\nwalks a-foot, that the one is rich, and the other poor; but because the\none is rich, he keeps a coach, and because the other is poor, he walks\na-foot.\n\nDuring the course of the last century, taking one year with another,\ngrain was dearer in both parts of the united kingdom than during that\nof the present. This is a matter of fact which cannot now admit of\nany reasonable doubt; and the proof of it is, if possible, still more\ndecisive with regard to Scotland than with regard to England. It is\nin Scotland supported by the evidence of the public fiars, annual\nvaluations made upon oath, according to the actual state of the markets,\nof all the different sorts of grain in every different county of\nScotland. If such direct proof could require any collateral evidence\nto confirm it, I would observe, that this has likewise been the case\nin France, and probably in most other parts of Europe. With regard to\nFrance, there is the clearest proof. But though it is certain, that in\nboth parts of the united kingdom grain was somewhat dearer in the last\ncentury than in the present, it is equally certain that labour was much\ncheaper. If the labouring poor, therefore, could bring up their families\nthen, they must be much more at their ease now. In the last century,\nthe most usual day-wages of common labour through the greater part\nof Scotland were sixpence in summer, and fivepence in winter. Three\nshillings a-week, the same price, very nearly still continues to be paid\nin some parts of the Highlands and Western islands. Through the greater\npart of the Low country, the most usual wages of common labour are now\neight pence a-day; tenpence, sometimes a shilling, about Edinburgh,\nin the counties which border upon England, probably on account of that\nneighbourhood, and in a few other places where there has lately been\na considerable rise in the demand for labour, about Glasgow,\nCarron, Ayrshire, etc. In England, the improvements of agriculture,\nmanufactures, and commerce, began much earlier than in Scotland. The\ndemand for labour, and consequently its price, must necessarily have\nincreased with those improvements. In the last century, accordingly, as\nwell as in the present, the wages of labour were higher in England than\nin Scotland. They have risen, too, considerably since that time, though,\non account of the greater variety of wages paid there in different\nplaces, it is more difficult to ascertain how much. In 1614, the pay of\na foot soldier was the same as in the present times, eightpence a-day.\nWhen it was first established, it would naturally be regulated by the\nusual wages of common labourers, the rank of people from which foot\nsoldiers are commonly drawn. Lord-chief-justice Hales, who wrote in\nthe time of Charles II. computes the necessary expense of a labourer's\nfamily, consisting of six persons, the father and mother, two children\nable to do something, and two not able, at ten shillings a-week, or\ntwenty-six pounds a-year. If they cannot earn this by their labour, they\nmust make it up, he supposes, either by begging or stealing. He appears\nto have enquired very carefully into this subject {See his scheme for\nthe maintenance of the poor, in Burn's History of the Poor Laws.}. In\n1688, Mr Gregory King, whose skill in political arithmetic is so much\nextolled by Dr Davenant, computed the ordinary income of labourers and\nout-servants to be fifteen pounds a-year to a family, which he\nsupposed to consist, one with another, of three and a half persons. His\ncalculation, therefore, though different in appearance, corresponds\nvery nearly at bottom with that of Judge Hales. Both suppose the weekly\nexpense of such families to be about twenty-pence a-head. Both\nthe pecuniary income and expense of such families have increased\nconsiderably since that time through the greater part of the kingdom,\nin some places more, and in some less, though perhaps scarce anywhere\nso much as some exaggerated accounts of the present wages of labour have\nlately represented them to the public. The price of labour, it must\nbe observed, cannot be ascertained very accurately anywhere, different\nprices being often paid at the same place and for the same sort of\nlabour, not only according to the different abilities of the workman,\nbut according to the easiness or hardness of the masters. Where wages\nare not regulated by law, all that we can pretend to determine is, what\nare the most usual; and experience seems to shew that law can never\nregulate them properly, though it has often pretended to do so.\n\nThe real recompence of labour, the real quantity of the necessaries and\nconveniencies of life which it can procure to the labourer, has, during\nthe course of the present century, increased perhaps in a still greater\nproportion than its money price. Not only grain has become somewhat\ncheaper, but many other things, from which the industrious poor derive\nan agreeable and wholesome variety of food, have become a great deal\ncheaper. Potatoes, for example, do not at present, through the greater\npart of the kingdom, cost half the price which they used to do thirty\nor forty years ago. The same thing may be said of turnips, carrots,\ncabbages; things which were formerly never raised but by the spade, but\nwhich are now commonly raised by the plough. All sort of garden stuff,\ntoo, has become cheaper. The greater part of the apples, and even of the\nonions, consumed in Great Britain, were, in the last century, imported\nfrom Flanders. The great improvements in the coarser manufactories of\nboth linen and woollen cloth furnish the labourers with cheaper and\nbetter clothing; and those in the manufactories of the coarser metals,\nwith cheaper and better instruments of trade, as well as with many\nagreeable and convenient pieces of household furniture. Soap, salt,\ncandles, leather, and fermented liquors, have, indeed, become a good\ndeal dearer, chiefly from the taxes which have been laid upon them.\nThe quantity of these, however, which the labouring poor an under any\nnecessity of consuming, is so very small, that the increase in their\nprice does not compensate the diminution in that of so many other\nthings. The common complaint, that luxury extends itself even to the\nlowest ranks of the people, and that the labouring poor will not now\nbe contented with the same food, clothing, and lodging, which satisfied\nthem in former times, may convince us that it is not the money price of\nlabour only, but its real recompence, which has augmented.\n\nIs this improvement in the circumstances of the lower ranks of the\npeople to be regarded as an advantage, or as an inconveniency, to\nthe society? The answer seems at first abundantly plain. Servants,\nlabourers, and workmen of different kinds, make up the far greater part\nof every great political society. But what improves the circumstances\nof the greater part, can never be regarded as any inconveniency to the\nwhole. No society can surely be flourishing and happy, of which the far\ngreater part of the members are poor and miserable. It is but equity,\nbesides, that they who feed, clothe, and lodge the whole body of the\npeople, should have such a share of the produce of their own labour as\nto be themselves tolerably well fed, clothed, and lodged.\n\nPoverty, though it no doubt discourages, does not always prevent,\nmarriage. It seems even to be favourable to generation. A half-starved\nHighland woman frequently bears more than twenty children, while a\npampered fine lady is often incapable of bearing any, and is generally\nexhausted by two or three. Barrenness, so frequent among women of\nfashion, is very rare among those of inferior station. Luxury, in the\nfair sex, while it inflames, perhaps, the passion for enjoyment, seems\nalways to weaken, and frequently to destroy altogether, the powers of\ngeneration.\n\nBut poverty, though it does not prevent the generation, is extremely\nunfavourable to the rearing of children. The tender plant is produced;\nbut in so cold a soil, and so severe a climate, soon withers and dies.\nIt is not uncommon, I have been frequently told, in the Highlands of\nScotland, for a mother who has born twenty children not to have two\nalive. Several officers of great experience have assured me, that, so\nfar from recruiting their regiment, they have never been able to supply\nit with drums and fifes, from all the soldiers' children that were\nborn in it. A greater number of fine children, however, is seldom seen\nanywhere than about a barrack of soldiers. Very few of them, it seems,\narrive at the age of thirteen or fourteen. In some places, one half the\nchildren die before they are four years of age, in many places before\nthey are seven, and in almost all places before they are nine or ten.\nThis great mortality, however will everywhere be found chiefly among the\nchildren of the common people, who cannot afford to tend them with\nthe same care as those of better station. Though their marriages are\ngenerally more fruitful than those of people of fashion, a smaller\nproportion of their children arrive at maturity. In foundling hospitals,\nand among the children brought up by parish charities, the mortality is\nstill greater than among those of the common people.\n\nEvery species of animals naturally multiplies in proportion to the means\nof their subsistence, and no species can ever multiply be yond it. But\nin civilized society, it is only among the inferior ranks of people\nthat the scantiness of subsistence can set limits to the further\nmultiplication of the human species; and it can do so in no other way\nthan by destroying a great part of the children which their fruitful\nmarriages produce.\n\nThe liberal reward of labour, by enabling them to provide better for\ntheir children, and consequently to bring up a greater number, naturally\ntends to widen and extend those limits. It deserves to be remarked, too,\nthat it necessarily does this as nearly as possible in the proportion\nwhich the demand for labour requires. If this demand is continually\nincreasing, the reward of labour must necessarily encourage in such a\nmanner the marriage and multiplication of labourers, as may enable them\nto supply that continually increasing demand by a continually increasing\npopulation. If the reward should at any time be less than what was\nrequisite for this purpose, the deficiency of hands would soon raise\nit; and if it should at any time be more, their excessive multiplication\nwould soon lower it to this necessary rate. The market would be so much\nunderstocked with labour in the one case, and so much overstocked in the\nother, as would soon force back its price to that proper rate which the\ncircumstances of the society required. It is in this manner that the\ndemand for men, like that for any other commodity, necessarily regulates\nthe production of men, quickens it when it goes on too slowly, and stops\nit when it advances too fast. It is this demand which regulates and\ndetermines the state of propagation in all the different countries of\nthe world; in North America, in Europe, and in China; which renders it\nrapidly progressive in the first, slow and gradual in the second, and\naltogether stationary in the last.\n\nThe wear and tear of a slave, it has been said, is at the expense of his\nmaster; but that of a free servant is at his own expense. The wear and\ntear of the latter, however, is, in reality, as much at the expense\nof his master as that of the former. The wages paid to journeymen and\nservants of every kind must be such as may enable them, one with another\nto continue the race of journeymen and servants, according as the\nincreasing, diminishing, or stationary demand of the society, may happen\nto require. But though the wear and tear of a free servant be equally at\nthe expense of his master, it generally costs him much less than that of\na slave. The fund destined for replacing or repairing, if I may say\nso, the wear and tear of the slave, is commonly managed by a negligent\nmaster or careless overseer. That destined for performing the same\noffice with regard to the freeman is managed by the freeman himself. The\ndisorders which generally prevail in the economy of the rich, naturally\nintroduce themselves into the management of the former; the strict\nfrugality and parsimonious attention of the poor as naturally establish\nthemselves in that of the latter. Under such different management, the\nsame purpose must require very different degrees of expense to execute\nit. It appears, accordingly, from the experience of all ages and\nnations, I believe, that the work done by freemen comes cheaper in the\nend than that performed by slaves. It is found to do so even at Boston,\nNew-York, and Philadelphia, where the wages of common labour are so very\nhigh.\n\nThe liberal reward of labour, therefore, as it is the effect of\nincreasing wealth, so it is the cause of increasing population. To\ncomplain of it, is to lament over the necessary cause and effect of the\ngreatest public prosperity.\n\nIt deserves to be remarked, perhaps, that it is in the progressive\nstate, while the society is advancing to the further acquisition,\nrather than when it has acquired its full complement of riches, that the\ncondition of the labouring poor, of the great body of the people,\nseems to be the happiest and the most comfortable. It is hard in the\nstationary, and miserable in the declining state. The progressive state\nis, in reality, the cheerful and the hearty state to all the different\norders of the society; the stationary is dull; the declining melancholy.\n\nThe liberal reward of labour, as it encourages the propagation, so it\nincreases the industry of the common people. The wages of labour are\nthe encouragement of industry, which, like every other human quality,\nimproves in proportion to the encouragement it receives. A plentiful\nsubsistence increases the bodily strength of the labourer, and the\ncomfortable hope of bettering his condition, and of ending his days,\nperhaps, in ease and plenty, animates him to exert that strength to\nthe utmost. Where wages are high, accordingly, we shall always find the\nworkmen more active, diligent, and expeditious, than where they are low;\nin England, for example, than in Scotland; in the neighbourhood of great\ntowns, than in remote country places. Some workmen, indeed, when they\ncan earn in four days what will maintain them through the week, will be\nidle the other three. This, however, is by no means the case with the\ngreater part. Workmen, on the contrary, when they are liberally paid by\nthe piece, are very apt to overwork themselves, and to ruin their health\nand constitution in a few years. A carpenter in London, and in some\nother places, is not supposed to last in his utmost vigour above eight\nyears. Something of the same kind happens in many other trades, in\nwhich the workmen are paid by the piece; as they generally are in\nmanufactures, and even in country labour, wherever wages are higher than\nordinary. Almost every class of artificers is subject to some peculiar\ninfirmity occasioned by excessive application to their peculiar\nspecies of work. Ramuzzini, an eminent Italian physician, has written a\nparticular book concerning such diseases. We do not reckon our soldiers\nthe most industrious set of people among us; yet when soldiers have been\nemployed in some particular sorts of work, and liberally paid by the\npiece, their officers have frequently been obliged to stipulate with the\nundertaker, that they should not be allowed to earn above a certain\nsum every day, according to the rate at which they were paid. Till this\nstipulation was made, mutual emulation, and the desire of greater gain,\nfrequently prompted them to overwork themselves, and to hurt their\nhealth by excessive labour. Excessive application, during four days\nof the week, is frequently the real cause of the idleness of the other\nthree, so much and so loudly complained of. Great labour, either of mind\nor body, continued for several days together is, in most men, naturally\nfollowed by a great desire of relaxation, which, if not restrained by\nforce, or by some strong necessity, is almost irresistible. It is\nthe call of nature, which requires to be relieved by some indulgence,\nsometimes of ease only, but sometimes too of dissipation and diversion.\nIf it is not complied with, the consequences are often dangerous and\nsometimes fatal, and such as almost always, sooner or later, bring on\nthe peculiar infirmity of the trade. If masters would always listen\nto the dictates of reason and humanity, they have frequently occasion\nrather to moderate, than to animate the application of many of their\nworkmen. It will be found, I believe, in every sort of trade, that the\nman who works so moderately, as to be able to work constantly, not\nonly preserves his health the longest, but, in the course of the year,\nexecutes the greatest quantity of work.\n\nIn cheap years it is pretended, workmen are generally more idle, and\nin dear times more industrious than ordinary. A plentiful subsistence,\ntherefore, it has been concluded, relaxes, and a scanty one quickens\ntheir industry. That a little more plenty than ordinary may render\nsome workmen idle, cannot be well doubted; but that it should have this\neffect upon the greater part, or that men in general should work better\nwhen they are ill fed, than when they are well fed, when they are\ndisheartened than when they are in good spirits, when they are\nfrequently sick than when they are generally in good health, seems not\nvery probable. Years of dearth, it is to be observed, are generally\namong the common people years of sickness and mortality, which cannot\nfail to diminish the produce of their industry.\n\nIn years of plenty, servants frequently leave their masters, and trust\ntheir subsistence to what they can make by their own industry. But the\nsame cheapness of provisions, by increasing the fund which is destined\nfor the maintenance of servants, encourages masters, farmers especially,\nto employ a greater number. Farmers, upon such occasions, expect more\nprofit from their corn by maintaining a few more labouring servants,\nthan by selling it at a low price in the market. The demand for servants\nincreases, while the number of those who offer to supply that demand\ndiminishes. The price of labour, therefore, frequently rises in cheap\nyears.\n\nIn years of scarcity, the difficulty and uncertainty of subsistence\nmake all such people eager to return to service. But the high price of\nprovisions, by diminishing the funds destined for the maintenance of\nservants, disposes masters rather to diminish than to increase the\nnumber of those they have. In dear years, too, poor independent workmen\nfrequently consume the little stock with which they had used to supply\nthemselves with the materials of their work, and are obliged to become\njourneymen for subsistence. More people want employment than easily get\nit; many are willing to take it upon lower terms than ordinary; and the\nwages of both servants and journeymen frequently sink in dear years.\n\nMasters of all sorts, therefore, frequently make better bargains with\ntheir servants in dear than in cheap years, and find them more humble\nand dependent in the former than in the latter. They naturally,\ntherefore, commend the former as more favourable to industry. Landlords\nand farmers, besides, two of the largest classes of masters, have\nanother reason for being pleased with dear years. The rents of the\none, and the profits of the other, depend very much upon the price of\nprovisions. Nothing can be more absurd, however, than to imagine that\nmen in general should work less when they work for themselves, than when\nthey work for other people. A poor independent workman will generally be\nmore industrious than even a journeyman who works by the piece. The one\nenjoys the whole produce of his own industry, the other shares it with\nhis master. The one, in his separate independent state, is less liable\nto the temptations of bad company, which, in large manufactories,\nso frequently ruin the morals of the other. The superiority of the\nindependent workman over those servants who are hired by the month or by\nthe year, and whose wages and maintenance are the same, whether they do\nmuch or do little, is likely to be still greater. Cheap years tend\nto increase the proportion of independent workmen to journeymen and\nservants of all kinds, and dear years to diminish it.\n\nA French author of great knowledge and ingenuity, Mr Messance, receiver\nof the taillies in the election of St Etienne, endeavours to shew that\nthe poor do more work in cheap than in dear years, by comparing the\nquantity and value of the goods made upon those different occasions\nin three different manufactures; one of coarse woollens, carried on at\nElbeuf; one of linen, and another of silk, both which extend through the\nwhole generality of Rouen. It appears from his account, which is copied\nfrom the registers of the public offices, that the quantity and value\nof the goods made in all those three manufactories has generally been\ngreater in cheap than in dear years, and that it has always been;\ngreatest in the cheapest, and least in the dearest years. All the three\nseem to be stationary manufactures, or which, though their produce may\nvary somewhat from year to year, are, upon the whole, neither going\nbackwards nor forwards.\n\nThe manufacture of linen in Scotland, and that of coarse woollens in the\nWest Riding of Yorkshire, are growing manufactures, of which the produce\nis generally, though with some variations, increasing both in quantity\nand value. Upon examining, however, the accounts which have been\npublished of their annual produce, I have not been able to observe that\nits variations have had any sensible connection with the dearness\nor cheapness of the seasons. In 1740, a year of great scarcity, both\nmanufactures, indeed, appear to have declined very considerably. But in\n1756, another year or great scarcity, the Scotch manufactures made more\nthan ordinary advances. The Yorkshire manufacture, indeed, declined, and\nits produce did not rise to what it had been in 1755, till 1766, after\nthe repeal of the American stamp act. In that and the following year, it\ngreatly exceeded what it had ever been before, and it has continued to\nadvance ever since.\n\nThe produce of all great manufactures for distant sale must necessarily\ndepend, not so much upon the dearness or cheapness of the seasons in\nthe countries where they are carried on, as upon the circumstances which\naffect the demand in the countries where they are consumed; upon peace\nor war, upon the prosperity or declension of other rival manufactures\nand upon the good or bad humour of their principal customers. A great\npart of the extraordinary work, besides, which is probably done in\ncheap years, never enters the public registers of manufactures. The\nmen-servants, who leave their masters, become independent labourers.\nThe women return to their parents, and commonly spin, in order to make\nclothes for themselves and their families. Even the independent workmen\ndo not always, work for public sale, but are employed by some of their\nneighbours in manufactures for family use. The produce of their labour,\ntherefore, frequently makes no figure in those public registers, of\nwhich the records are sometimes published with so much parade, and from\nwhich our merchants and manufacturers would often vainly pretend to\nannounce the prosperity or declension of the greatest empires.\n\nThrough the variations in the price of labour not only do not always\ncorrespond with those in the price of provisions, but are frequently\nquite opposite, we must not, upon this account, imagine that the price\nof provisions has no influence upon that of labour. The money price of\nlabour is necessarily regulated by two circumstances; the demand for\nlabour, and the price of the necessaries and conveniencies of life. The\ndemand for labour, according as it happens to be increasing, stationary,\nor declining, or to require an increasing, stationary, or declining\npopulation, determines the quantities of the necessaries and\nconveniencies of life which must be given to the labourer; and the money\nprice of labour is determined by what is requisite for purchasing this\nquantity. Though the money price of labour, therefore, is sometimes\nhigh where the price of provisions is low, it would be still higher, the\ndemand continuing the same, if the price of provisions was high.\n\nIt is because the demand for labour increases in years of sudden\nand extraordinary plenty, and diminishes in those of sudden and\nextraordinary scarcity, that the money price of labour sometimes rises\nin the one, and sinks in the other.\n\nIn a year of sudden and extraordinary plenty, there are funds in the\nhands of many of the employers of industry, sufficient to maintain and\nemploy a greater number of industrious people than had been employed the\nyear before; and this extraordinary number cannot always be had. Those\nmasters, therefore, who want more workmen, bid against one another, in\norder to get them, which sometimes raises both the real and the money\nprice of their labour.\n\nThe contrary of this happens in a year of sudden and extraordinary\nscarcity. The funds destined for employing industry are less than they\nhad been the year before. A considerable number of people are thrown out\nof employment, who bid one against another, in order to get it, which\nsometimes lowers both the real and the money price of labour. In 1740,\na year of extraordinary scarcity, many people were willing to work\nfor bare subsistence. In the succeeding years of plenty, it was more\ndifficult to get labourers and servants. The scarcity of a dear year, by\ndiminishing the demand for labour, tends to lower its price, as the high\nprice of provisions tends to raise it. The plenty of a cheap year, on\nthe contrary, by increasing the demand, tends to raise the price\nof labour, as the cheapness of provisions tends to lower it. In the\nordinary variations of the prices of provisions, those two opposite\ncauses seem to counterbalance one another, which is probably, in part,\nthe reason why the wages of labour are everywhere so much more steady\nand permanent than the price of provisions.\n\nThe increase in the wages of labour necessarily increases the price of\nmany commodities, by increasing that part of it which resolves itself\ninto wages, and so far tends to diminish their consumption, both at home\nand abroad. The same cause, however, which raises the wages of labour,\nthe increase of stock, tends to increase its productive powers, and to\nmake a smaller quantity of labour produce a greater quantity of work.\nThe owner of the stock which employs a great number of labourers\nnecessarily endeavours, for his own advantage, to make such a proper\ndivision and distribution of employment, that they may be enabled to\nproduce the greatest quantity of work possible. For the same reason,\nhe endeavours to supply them with the best machinery which either he or\nthey can think of. What takes place among the labourers in a particular\nworkhouse, takes place, for the same reason, among those of a great\nsociety. The greater their number, the more they naturally divide\nthemselves into different classes and subdivisions of employments. More\nheads are occupied in inventing the most proper machinery for executing\nthe work of each, and it is, therefore, more likely to be invented.\nThere me many commodities, therefore, which, in consequence of these\nimprovements, come to be produced by so much less labour than before,\nthat the increase of its price is more than compensated by the\ndiminution of its quantity.\n\n\n\n\nCHAPTER IX. OF THE PROFITS OF STOCK.\n\nThe rise and fall in the profits of stock depend upon the same causes\nwith the rise and fall in the wages of labour, the increasing or\ndeclining state of the wealth of the society; but those causes affect\nthe one and the other very differently.\n\nThe increase of stock, which raises wages, tends to lower profit. When\nthe stocks of many rich merchants are turned into the same trade, their\nmutual competition naturally tends to lower its profit; and when there\nis a like increase of stock in all the different trades carried on in\nthe same society, the same competition must produce the same effect in\nthem all.\n\nIt is not easy, it has already been observed, to ascertain what are the\naverage wages of labour, even in a particular place, and at a particular\ntime. We can, even in this case, seldom determine more than what are the\nmost usual wages. But even this can seldom be done with regard to the\nprofits of stock. Profit is so very fluctuating, that the person who\ncarries on a particular trade, cannot always tell you himself what is\nthe average of his annual profit. It is affected, not only by every\nvariation of price in the commodities which he deals in, but by the\ngood or bad fortune both of his rivals and of his customers, and by a\nthousand other accidents, to which goods, when carried either by sea\nor by land, or even when stored in a warehouse, are liable. It varies,\ntherefore, not only from year to year, but from day to day, and almost\nfrom hour to hour. To ascertain what is the average profit of all\nthe different trades carried on in a great kingdom, must be much more\ndifficult; and to judge of what it may have been formerly, or in remote\nperiods of time, with any degree of precision, must be altogether\nimpossible.\n\nBut though it may be impossible to determine, with any degree of\nprecision, what are or were the average profits of stock, either in the\npresent or in ancient times, some notion may be formed of them from the\ninterest of money. It may be laid down as a maxim, that wherever a great\ndeal can be made by the use of money, a great deal will commonly be\ngiven for the use of it; and that, wherever little can be made by it,\nless will commonly he given for it. Accordingly, therefore, as the usual\nmarket rate of interest varies in any country, we may be assured that\nthe ordinary profits of stock must vary with it, must sink as it sinks,\nand rise as it rises. The progress of interest, therefore, may lead us\nto form some notion of the progress of profit.\n\nBy the 37th of Henry VIII. all interest above ten per cent. was declared\nunlawful. More, it seems, had sometimes been taken before that. In\nthe reign of Edward VI. religious zeal prohibited all interest. This\nprohibition, however, like all others of the same kind, is said to have\nproduced no effect, and probably rather increased than diminished the\nevil of usury. The statute of Henry VIII. was revived by the 13th of\nElizabeth, cap. 8. and ten per cent. continued to be the legal rate of\ninterest till the 21st of James I. when it was restricted to eight per\ncent. It was reduced to six per cent. soon after the Restoration, and by\nthe 12th of Queen Anne, to five per cent. All these different statutory\nregulations seem to have been made with great propriety. They seem to\nhave followed, and not to have gone before, the market rate of interest,\nor the rate at which people of good credit usually borrowed. Since the\ntime of Queen Anne, five per cent. seems to have been rather above than\nbelow the market rate. Before the late war, the government borrowed at\nthree per cent.; and people of good credit in the capital, and in many\nother parts of the kingdom, at three and a-half, four, and four and\na-half per cent.\n\nSince the time of Henry VIII. the wealth and revenue of the country have\nbeen continually advancing, and in the course of their progress, their\npace seems rather to have been gradually accelerated than retarded. They\nseem not only to have been going on, but to have been going on faster\nand faster. The wages of labour have been continually increasing during\nthe same period, and, in the greater part of the different branches of\ntrade and manufactures, the profits of stock have been diminishing.\n\nIt generally requires a greater stock to carry on any sort of trade in a\ngreat town than in a country village. The great stocks employed in every\nbranch of trade, and the number of rich competitors, generally reduce\nthe rate of profit in the former below what it is in the latter. But the\nwages of labour are generally higher in a great town than in a country\nvillage. In a thriving town, the people who have great stocks to employ,\nfrequently cannot get the number of workmen they want, and therefore bid\nagainst one another, in order to get as many as they can, which raises\nthe wages of labour, and lowers the profits of stock. In the remote\nparts of the country, there is frequently not stock sufficient to employ\nall the people, who therefore bid against one another, in order to get\nemployment, which lowers the wages of labour, and raises the profits of\nstock.\n\nIn Scotland, though the legal rate of interest is the same as in\nEngland, the market rate is rather higher. People of the best credit\nthere seldom borrow under five per cent. Even private bankers in\nEdinburgh give four per cent. upon their promissory-notes, of which\npayment, either in whole or in part may be demanded at pleasure. Private\nbankers in London give no interest for the money which is deposited with\nthem. There are few trades which cannot be carried on with a smaller\nstock in Scotland than in England. The common rate of profit, therefore,\nmust be somewhat greater. The wages of labour, it has already been\nobserved, are lower in Scotland than in England. The country, too, is\nnot only much poorer, but the steps by which it advances to a better\ncondition, for it is evidently advancing, seem to be much slower and\nmore tardy. The legal rate of interest in France has not during the\ncourse of the present century, been always regulated by the market rate\n{See Denisart, Article Taux des Interests, tom. iii, p.13}. In 1720,\ninterest was reduced from the twentieth to the fiftieth penny, or from\nfive to two per cent. In 1724, it was raised to the thirtieth penny,\nor to three and a third per cent. In 1725, it was again raised to the\ntwentieth penny, or to five per cent. In 1766, during the administration\nof Mr Laverdy, it was reduced to the twenty-fifth penny, or to four per\ncent. The Abbé Terray raised it afterwards to the old rate of five\nper cent. The supposed purpose of many of those violent reductions of\ninterest was to prepare the way for reducing that of the public debts;\na purpose which has sometimes been executed. France is, perhaps, in the\npresent times, not so rich a country as England; and though the legal\nrate of interest has in France frequently been lower than in England,\nthe market rate has generally been higher; for there, as in other\ncountries, they have several very safe and easy methods of evading the\nlaw. The profits of trade, I have been assured by British merchants who\nhad traded in both countries, are higher in France than in England;\nand it is no doubt upon this account, that many British subjects chuse\nrather to employ their capitals in a country where trade is in disgrace,\nthan in one where it is highly respected. The wages of labour are lower\nin France than in England. When you go from Scotland to England, the\ndifference which you may remark between the dress and countenance of\nthe common people in the one country and in the other, sufficiently\nindicates the difference in their condition. The contrast is still\ngreater when you return from France. France, though no doubt a richer\ncountry than Scotland, seems not to be going forward so fast. It is\na common and even a popular opinion in the country, that it is going\nbackwards; an opinion which I apprehend, is ill-founded, even with\nregard to France, but which nobody can possibly entertain with regard\nto Scotland, who sees the country now, and who saw it twenty or thirty\nyears ago.\n\nThe province of Holland, on the other hand, in proportion to the extent\nof its territory and the number of its people, is a richer country than\nEngland. The government there borrow at two per cent. and private people\nof good credit at three. The wages of labour are said to be higher in\nHolland than in England, and the Dutch, it is well known, trade upon\nlower profits than any people in Europe. The trade of Holland, it has\nbeen pretended by some people, is decaying, and it may perhaps be true\nthat some particular branches of it are so; but these symptoms seem\nto indicate sufficiently that there is no general decay. When profit\ndiminishes, merchants are very apt to complain that trade decays, though\nthe diminution of profit is the natural effect of its prosperity, or of\na greater stock being employed in it than before. During the late war,\nthe Dutch gained the whole carrying trade of France, of which they still\nretain a very large share. The great property which they possess both in\nFrench and English funds, about forty millions, it is said in the latter\n(in which, I suspect, however, there is a considerable exaggeration ),\nthe great sums which they lend to private people, in countries where the\nrate of interest is higher than in their own, are circumstances which\nno doubt demonstrate the redundancy of their stock, or that it has\nincreased beyond what they can employ with tolerable profit in the\nproper business of their own country; but they do not demonstrate that\nthat business has decreased. As the capital of a private man, though\nacquired by a particular trade, may increase beyond what he can employ\nin it, and yet that trade continue to increase too, so may likewise the\ncapital of a great nation.\n\nIn our North American and West Indian colonies, not only the wages\nof labour, but the interest of money, and consequently the profits of\nstock, are higher than in England. In the different colonies, both the\nlegal and the market rate of interest run from six to eight percent.\nHigh wages of labour and high profits of stock, however, are things,\nperhaps, which scarce ever go together, except in the peculiar\ncircumstances of new colonies. A new colony must always, for some time,\nbe more understocked in proportion to the extent of its territory, and\nmore underpeopled in proportion to the extent of its stock, than the\ngreater part of other countries. They have more land than they have\nstock to cultivate. What they have, therefore, is applied to the\ncultivation only of what is most fertile and most favourably situated,\nthe land near the sea-shore, and along the banks of navigable rivers.\nSuch land, too, is frequently purchased at a price below the value even\nof its natural produce. Stock employed in the purchase and improvement\nof such lands, must yield a very large profit, and, consequently, afford\nto pay a very large interest. Its rapid accumulation in so profitable\nan employment enables the planter to increase the number of his hands\nfaster than he can find them in a new settlement. Those whom he can\nfind, therefore, are very liberally rewarded. As the colony increases,\nthe profits of stock gradually diminish. When the most fertile and best\nsituated lands have been all occupied, less profit can be made by the\ncultivation of what is inferior both in soil and situation, and less\ninterest can be afforded for the stock which is so employed. In the\ngreater part of our colonies, accordingly, both the legal and the market\nrate of interest have been considerably reduced during the course of the\npresent century. As riches, improvement, and population, have increased,\ninterest has declined. The wages of labour do not sink with the profits\nof stock. The demand for labour increases with the increase of stock,\nwhatever be its profits; and after these are diminished, stock may not\nonly continue to increase, but to increase much faster than before. It\nis with industrious nations, who are advancing in the acquisition of\nriches, as with industrious individuals. A great stock, though with\nsmall profits, generally increases faster than a small stock with great\nprofits. Money, says the proverb, makes money. When you have got a\nlittle, it is often easy to get more. The great difficulty is to get\nthat little. The connection between the increase of stock and that of\nindustry, or of the demand for useful labour, has partly been explained\nalready, but will be explained more fully hereafter, in treating of the\naccumulation of stock.\n\nThe acquisition of new territory, or of new branches of trade, may\nsometimes raise the profits of stock, and with them the interest of\nmoney, even in a country which is fast advancing in the acquisition of\nriches. The stock of the country, not being sufficient for the whole\naccession of business which such acquisitions present to the different\npeople among whom it is divided, is applied to those particular branches\nonly which afford the greatest profit. Part of what had before been\nemployed in other trades, is necessarily withdrawn from them, and turned\ninto some of the new and more profitable ones. In all those old trades,\ntherefore, the competition comes to be Jess than before. The market\ncomes to be less fully supplied with many different sorts of goods.\nTheir price necessarily rises more or less, and yields a greater profit\nto those who deal in them, who can, therefore, afford to borrow at a\nhigher interest. For some time after the conclusion of the late war,\nnot only private people of the best credit, but some of the greatest\ncompanies in London, commonly borrowed at five per cent. who, before\nthat, had not been used to pay more than four, and four and a half\nper cent. The great accession both of territory and trade by our\nacquisitions in North America and the West Indies, will sufficiently\naccount for this, without supposing any diminution in the capital stock\nof the society. So great an accession of new business to be carried on\nby the old stock, must necessarily have diminished the quantity employed\nin a great number of particular branches, in which the competition\nbeing less, the profits must have been greater. I shall hereafter have\noccasion to mention the reasons which dispose me to believe that the\ncapital stock of Great Britain was not diminished, even by the enormous\nexpense of the late war.\n\nThe diminution of the capital stock of the society, or of the funds\ndestined for the maintenance of industry, however, as it lowers the\nwages of labour, so it raises the profits of stock, and consequently the\ninterest of money. By the wages of labour being lowered, the owners of\nwhat stock remains in the society can bring their goods at less expense\nto market than before; and less stock being employed in supplying the\nmarket than before, they can sell them dearer. Their goods cost them\nless, and they get more for them. Their profits, therefore, being\naugmented at both ends, can well afford a large interest. The great\nfortunes so suddenly and so easily acquired in Bengal and the other\nBritish settlements in the East Indies, may satisfy us, that as the\nwages of labour are very low, so the profits of stock are very high in\nthose ruined countries. The interest of money is proportionably so. In\nBengal, money is frequently lent to the farmers at forty, fifty, and\nsixty per cent. and the succeeding crop is mortgaged for the payment.\nAs the profits which can afford such an interest must eat up almost the\nwhole rent of the landlord, so such enormous usury must in its turn\neat up the greater part of those profits. Before the fall of the Roman\nrepublic, a usury of the same kind seems to have been common in the\nprovinces, under the ruinous administration of their proconsuls. The\nvirtuous Brutus lent money in Cyprus at eight-and-forty per cent. as we\nlearn from the letters of Cicero.\n\nIn a country which had acquired that full complement of riches which the\nnature of its soil and climate, and its situation with respect to other\ncountries, allowed it to acquire, which could, therefore, advance no\nfurther, and which was not going backwards, both the wages of labour\nand the profits of stock would probably be very low. In a country fully\npeopled in proportion to what either its territory could maintain, or\nits stock employ, the competition for employment would necessarily be so\ngreat as to reduce the wages of labour to what was barely sufficient\nto keep up the number of labourers, and the country being already\nfully peopled, that number could never be augmented. In a country fully\nstocked in proportion to all the business it had to transact, as great\na quantity of stock would be employed in every particular branch as the\nnature and extent of the trade would admit. The competition, therefore,\nwould everywhere be as great, and, consequently, the ordinary profit as\nlow as possible.\n\nBut, perhaps, no country has ever yet arrived at this degree of\nopulence. China seems to have been long stationary, and had, probably,\nlong ago acquired that full complement of riches which is consistent\nwith the nature of its laws and institutions. But this complement may be\nmuch inferior to what, with other laws and institutions, the nature\nof its soil, climate, and situation, might admit of. A country which\nneglects or despises foreign commerce, and which admits the vessel of\nforeign nations into one or two of its ports only, cannot transact the\nsame quantity of business which it might do with different laws and\ninstitutions. In a country, too, where, though the rich, or the owners\nof large capitals, enjoy a good deal of security, the poor, or the\nowners of small capitals, enjoy scarce any, but are liable, under the\npretence of justice, to be pillaged and plundered at any time by the\ninferior mandarins, the quantity of stock employed in all the different\nbranches of business transacted within it, can never be equal to what\nthe nature and extent of that business might admit. In every different\nbranch, the oppression of the poor must establish the monopoly of the\nrich, who, by engrossing the whole trade to themselves, will be able to\nmake very large profits. Twelve per cent. accordingly, is said to be\nthe common interest of money in China, and the ordinary profits of stock\nmust be sufficient to afford this large interest.\n\nA defect in the law may sometimes raise the rate of interest\nconsiderably above what the condition of the country, as to wealth or\npoverty, would require. When the law does not enforce the performance\nof contracts, it puts all borrowers nearly upon the same footing with\nbankrupts, or people of doubtful credit, in better regulated countries.\nThe uncertainty of recovering his money makes the lender exact the same\nusurious interest which is usually required from bankrupts. Among the\nbarbarous nations who overran the western provinces of the Roman empire,\nthe performance of contracts was left for many ages to the faith of\nthe contracting parties. The courts of justice of their kings seldom\nintermeddled in it. The high rate of interest which took place in those\nancient times, may, perhaps, be partly accounted for from this cause.\n\nWhen the law prohibits interest altogether, it does not prevent it. Many\npeople must borrow, and nobody will lend without such a consideration\nfor the use of their money as is suitable, not only to what can be made\nby the use of it, but to the difficulty and danger of evading the law.\nThe high rate of interest among all Mahometan nations is accounted for\nby M. Montesquieu, not from their poverty, but partly from this, and\npartly from the difficulty of recovering the money.\n\nThe lowest ordinary rate of profit must always be something more than\nwhat is sufficient to compensate the occasional losses to which every\nemployment of stock is exposed. It is this surplus only which is neat\nor clear profit. What is called gross profit, comprehends frequently\nnot only this surplus, but what is retained for compensating such\nextraordinary losses. The interest which the borrower can afford to pay\nis in proportion to the clear profit only. The lowest ordinary rate of\ninterest must, in the same manner, be something more than sufficient to\ncompensate the occasional losses to which lending, even with tolerable\nprudence, is exposed. Were it not, mere charity or friendship could be\nthe only motives for lending.\n\nIn a country which had acquired its full complement of riches, where, in\nevery particular branch of business, there was the greatest quantity of\nstock that could be employed in it, as the ordinary rate of clear profit\nwould be very small, so the usual market rate of interest which could\nbe afforded out of it would be so low as to render it impossible for any\nbut the very wealthiest people to live upon the interest of their money.\nAll people of small or middling fortunes would be obliged to superintend\nthemselves the employment of their own stocks. It would be necessary\nthat almost every man should be a man of business, or engage in some\nsort of trade. The province of Holland seems to be approaching near\nto this state. It is there unfashionable not to be a man of business.\nNecessity makes it usual for almost every man to be so, and custom\neverywhere regulates fashion. As it is ridiculous not to dress, so is\nit, in some measure, not to be employed like other people. As a man of\na civil profession seems awkward in a camp or a garrison, and is even\nin some danger of being despised there, so does an idle man among men of\nbusiness.\n\nThe highest ordinary rate of profit may be such as, in the price of the\ngreater part of commodities, eats up the whole of what should go to the\nrent of the land, and leaves only what is sufficient to pay the labour\nof preparing and bringing them to market, according to the lowest\nrate at which labour can anywhere be paid, the bare subsistence of the\nlabourer. The workman must always have been fed in some way or other\nwhile he was about the work, but the landlord may not always have been\npaid. The profits of the trade which the servants of the East India\nCompany carry on in Bengal may not, perhaps, be very far from this rate.\n\nThe proportion which the usual market rate of interest ought to bear to\nthe ordinary rate of clear profit, necessarily varies as profit rises or\nfalls. Double interest is in Great Britain reckoned what the merchants\ncall a good, moderate, reasonable profit; terms which, I apprehend, mean\nno more than a common and usual profit. In a country where the ordinary\nrate of clear profit is eight or ten per cent. it may be reasonable that\none half of it should go to interest, wherever business is carried on\nwith borrowed money. The stock is at the risk of the borrower, who, as\nit were, insures it to the lender; and four or five per cent. may, in\nthe greater part of trades, be both a sufficient profit upon the risk of\nthis insurance, and a sufficient recompence for the trouble of employing\nthe stock. But the proportion between interest and clear profit might\nnot be the same in countries where the ordinary rate of profit was\neither a good deal lower, or a good deal higher. If it were a good deal\nlower, one half of it, perhaps, could not be afforded for interest; and\nmore might be afforded if it were a good deal higher.\n\nIn countries which are fast advancing to riches, the low rate of profit\nmay, in the price of many commodities, compensate the high wages of\nlabour, and enable those countries to sell as cheap as their less\nthriving neighbours, among whom the wages of labour may be lower.\n\nIn reality, high profits tend much more to raise the price of work than\nhigh wages. If, in the linen manufacture, for example, the wages of the\ndifferent working people, the flax-dressers, the spinners, the weavers,\netc. should all of them be advanced twopence a-day, it would be\nnecessary to heighten the price of a piece of linen only by a number of\ntwopences equal to the number of people that had been employed about it,\nmultiplied by the number of days during which they had been so employed.\nThat part of the price of the commodity which resolved itself into the\nwages, would, through all the different stages of the manufacture,\nrise only in arithmetical proportion to this rise of wages. But if the\nprofits of all the different employers of those working people should\nbe raised five per cent. that part of the price of the commodity which\nresolved itself into profit would, through all the different stages of\nthe manufacture, rise in geometrical proportion to this rise of profit.\nThe employer of the flax dressers would, in selling his flax, require\nan additional five per cent. upon the whole value of the materials and\nwages which he advanced to his workmen. The employer of the spinners\nwould require an additional five per cent. both upon the advanced price\nof the flax, and upon the wages of the spinners. And the employer of the\nweavers would require alike five per cent. both upon the advanced price\nof the linen-yarn, and upon the wages of the weavers. In raising the\nprice of commodities, the rise of wages operates in the same manner as\nsimple interest does in the accumulation of debt. The rise of profit\noperates like compound interest. Our merchants and master manufacturers\ncomplain much of the bad effects of high wages in raising the price, and\nthereby lessening the sale of their goods, both at home and abroad. They\nsay nothing concerning the bad effects of high profits; they are silent\nwith regard to the pernicious effects of their own gains; they complain\nonly of those of other people.\n\n\n\n\nCHAPTER X. OF WAGES AND PROFIT IN THE DIFFERENT EMPLOYMENTS OF LABOUR\nAND STOCK.\n\nThe whole of the advantages and disadvantages of the different\nemployments of labour and stock, must, in the same neighbourhood, be\neither perfectly equal, or continually tending to equality. If, in the\nsame neighbourhood, there was any employment evidently either more or\nless advantageous than the rest, so many people would crowd into it\nin the one case, and so many would desert it in the other, that its\nadvantages would soon return to the level of other employments. This, at\nleast, would be the case in a society where things were left to follow\ntheir natural course, where there was perfect liberty, and where every\nman was perfectly free both to choose what occupation he thought proper,\nand to change it as often as he thought proper. Every man's\ninterest would prompt him to seek the advantageous, and to shun the\ndisadvantageous employment.\n\nPecuniary wages and profit, indeed, are everywhere in Europe extremely\ndifferent, according to the different employments of labour and stock.\nBut this difference arises, partly from certain circumstances in\nthe employments themselves, which, either really, or at least in the\nimagination of men, make up for a small pecuniary gain in some, and\ncounterbalance a great one in others, and partly from the policy of\nEurope, which nowhere leaves things at perfect liberty.\n\nThe particular consideration of those circumstances, and of that policy,\nwill divide this Chapter into two parts.\n\n\nPART I. Inequalities arising from the nature of the employments\nthemselves.\n\nThe five following are the principal circumstances which, so far as I\nhave been able to observe, make up for a small pecuniary gain in some\nemployments, and counterbalance a great one in others. First, the\nagreeableness or disagreeableness of the employments themselves;\nsecondly, the easiness and cheapness, or the difficulty and expense of\nlearning them; thirdly, the constancy or inconstancy of employment in\nthem; fourthly, the small or great trust which must be reposed in those\nwho exercise them; and, fifthly, the probability or improbability of\nsuccess in them.\n\nFirst, the wages of labour vary with the ease or hardship, the\ncleanliness or dirtiness, the honourableness or dishonourableness, of\nthe employment. Thus in most places, take the year round, a journeyman\ntailor earns less than a journeyman weaver. His work is much easier. A\njourneyman weaver earns less than a journeyman smith. His work is not\nalways easier, but it is much cleanlier. A journeyman blacksmith, though\nan artificer, seldom earns so much in twelve hours, as a collier, who is\nonly a labourer, does in eight. His work is not quite so dirty, is less\ndangerous, and is carried on in day-light, and above ground. Honour\nmakes a great part of the reward of all honourable professions. In\npoint of pecuniary gain, all things considered, they are generally\nunder-recompensed, as I shall endeavour to shew by and by. Disgrace has\nthe contrary effect. The trade of a butcher is a brutal and an odious\nbusiness; but it is in most places more profitable than the greater part\nof common trades. The most detestable of all employments, that of public\nexecutioner, is, in proportion to the quantity of work done, better paid\nthan any common trade whatever.\n\nHunting and fishing, the most important employments of mankind in\nthe rude state of society, become, in its advanced state, their most\nagreeable amusements, and they pursue for pleasure what they once\nfollowed from necessity. In the advanced state of society, therefore,\nthey are all very poor people who follow as a trade, what other\npeople pursue as a pastime. Fishermen have been so since the time of\nTheocritus. {See Idyllium xxi.}. A poacher is everywhere a very poor man\nin Great Britain. In countries where the rigour of the law suffers no\npoachers, the licensed hunter is not in a much better condition. The\nnatural taste for those employments makes more people follow them,\nthan can live comfortably by them; and the produce of their labour, in\nproportion to its quantity, comes always too cheap to market, to afford\nany thing but the most scanty subsistence to the labourers.\n\nDisagreeableness and disgrace affect the profits of stock in the same\nmanner as the wages of labour. The keeper of an inn or tavern, who is\nnever master of his own house, and who is exposed to the brutality of\nevery drunkard, exercises neither a very agreeable nor a very creditable\nbusiness. But there is scarce any common trade in which a small stock\nyields so great a profit.\n\nSecondly, the wages of labour vary with the easiness and cheapness, or\nthe difficulty and expense, of learning the business.\n\nWhen any expensive machine is erected, the extraordinary work to be\nperformed by it before it is worn out, it must be expected, will replace\nthe capital laid out upon it, with at least the ordinary profits. A\nman educated at the expense of much labour and time to any of those\nemployments which require extraordinary dexterity and skill, may be\ncompared to one of those expensive machines. The work which he learns to\nperform, it must be expected, over and above the usual wages of common\nlabour, will replace to him the whole expense of his education, with at\nleast the ordinary profits of an equally valuable capital. It must do\nthis too in a reasonable time, regard being had to the very uncertain\nduration of human life, in the same manner as to the more certain\nduration of the machine.\n\nThe difference between the wages of skilled labour and those of common\nlabour, is founded upon this principle.\n\nThe policy of Europe considers the labour of all mechanics, artificers,\nand manufacturers, as skilled labour; and that of all country labourers\nus common labour. It seems to suppose that of the former to be of a more\nnice and delicate nature than that of the latter. It is so perhaps in\nsome cases; but in the greater part it is quite otherwise, as I shall\nendeavour to shew by and by. The laws and customs of Europe, therefore,\nin order to qualify any person for exercising the one species of labour,\nimpose the necessity of an apprenticeship, though with different degrees\nof rigour in different places. They leave the other free and open to\nevery body. During the continuance of the apprenticeship, the whole\nlabour of the apprentice belongs to his master. In the meantime he must,\nin many cases, be maintained by his parents or relations, and, in almost\nall cases, must be clothed by them. Some money, too, is commonly given\nto the master for teaching him his trade. They who cannot give money,\ngive time, or become bound for more than the usual number of years; a\nconsideration which, though it is not always advantageous to the\nmaster, on account of the usual idleness of apprentices, is always\ndisadvantageous to the apprentice. In country labour, on the contrary,\nthe labourer, while he is employed about the easier, learns the more\ndifficult parts of his business, and his own labour maintains him\nthrough all the different stages of his employment. It is reasonable,\ntherefore, that in Europe the wages of mechanics, artificers, and\nmanufacturers, should be somewhat higher than those of common labourers.\nThey are so accordingly, and their superior gains make them, in most\nplaces, be considered as a superior rank of people. This superiority,\nhowever, is generally very small: the daily or weekly earnings of\njourneymen in the more common sorts of manufactures, such as those of\nplain linen and woollen cloth, computed at an average, are, in most\nplaces, very little more than the day-wages of common labourers. Their\nemployment, indeed, is more steady and uniform, and the superiority of\ntheir earnings, taking the whole year together, may be somewhat greater.\nIt seems evidently, however, to be no greater than what is sufficient\nto compensate the superior expense of their education. Education in the\ningenious arts, and in the liberal professions, is still more tedious\nand expensive. The pecuniary recompence, therefore, of painters and\nsculptors, of lawyers and physicians, ought to be much more liberal; and\nit is so accordingly.\n\nThe profits of stock seem to be very little affected by the easiness\nor difficulty of learning the trade in which it is employed. All the\ndifferent ways in which stock is commonly employed in great towns seem,\nin reality, to be almost equally easy and equally difficult to learn.\nOne branch, either of foreign or domestic trade, cannot well be a much\nmore intricate business than another.\n\nThirdly, the wages of labour in different occupations vary with the\nconstancy or inconstancy of employment.\n\nEmployment is much more constant in some trades than in others. In\nthe greater part of manufactures, a journeyman maybe pretty sure of\nemployment almost every day in the year that he is able to work. A mason\nor bricklayer, on the contrary, can work neither in hard frost nor in\nfoul weather, and his employment at all other times depends upon the\noccasional calls of his customers. He is liable, in consequence, to be\nfrequently without any. What he earns, therefore, while he is employed,\nmust not only maintain him while he is idle, but make him some\ncompensation for those anxious and desponding moments which the thought\nof so precarious a situation must sometimes occasion. Where the computed\nearnings of the greater part of manufacturers, accordingly, are nearly\nupon a level with the day-wages of common labourers, those of masons\nand bricklayers are generally from one-half more to double those wages.\nWhere common labourers earn four or five shillings a-week, masons and\nbricklayers frequently earn seven and eight; where the former earn six,\nthe latter often earn nine and ten; and where the former earn nine and\nten, as in London, the latter commonly earn fifteen and eighteen. No\nspecies of skilled labour, however, seems more easy to learn than that\nof masons and bricklayers. Chairmen in London, during the summer season,\nare said sometimes to be employed as bricklayers. The high wages of\nthose workmen, therefore, are not so much the recompence of their skill,\nas the compensation for the inconstancy of their employment.\n\nA house-carpenter seems to exercise rather a nicer and a more ingenious\ntrade than a mason. In most places, however, for it is not universally\nso, his day-wages are somewhat lower. His employment, though it depends\nmuch, does not depend so entirely upon the occasional calls of his\ncustomers; and it is not liable to be interrupted by the weather.\n\nWhen the trades which generally afford constant employment, happen in\na particular place not to do so, the wages of the workmen always rise a\ngood deal above their ordinary proportion to those of common labour. In\nLondon, almost all journeymen artificers are liable to be called upon\nand dismissed by their masters from day to day, and from week to week,\nin the same manner as day-labourers in other places. The lowest order\nof artificers, journeymen tailors, accordingly, earn their half-a-crown\na-day, though eighteen pence may be reckoned the wages of common labour.\nIn small towns and country villages, the wages of journeymen tailors\nfrequently scarce equal those of common labour; but in London they are\noften many weeks without employment, particularly during the summer.\n\nWhen the inconstancy of employment is combined with the hardship,\ndisagreeableness, and dirtiness of the work, it sometimes raises\nthe wages of the most common labour above those of the most skilful\nartificers. A collier working by the piece is supposed, at Newcastle, to\nearn commonly about double, and, in many parts of Scotland, about three\ntimes, the wages of common labour. His high wages arise altogether\nfrom the hardship, disagreeableness, and dirtiness of his work. His\nemployment may, upon most occasions, be as constant as he pleases. The\ncoal-heavers in London exercise a trade which, in hardship, dirtiness,\nand disagreeableness, almost equals that of colliers; and, from the\nunavoidable irregularity in the arrivals of coal-ships, the employment\nof the greater part of them is necessarily very inconstant. If colliers,\ntherefore, commonly earn double and triple the wages of common labour,\nit ought not to seem unreasonable that coal-heavers should sometimes\nearn four and five times those wages. In the inquiry made into their\ncondition a few years ago, it was found that, at the rate at which they\nwere then paid, they could earn from six to ten shillings a-day. Six\nshillings are about four times the wages of common labour in London;\nand, in every particular trade, the lowest common earnings may always\nbe considered as those of the far greater number. How extravagant\nsoever those earnings may appear, if they were more than sufficient to\ncompensate all the disagreeable circumstances of the business, there\nwould soon be so great a number of competitors, as, in a trade which has\nno exclusive privilege, would quickly reduce them to a lower rate.\n\nThe constancy or inconstancy of employment cannot affect the ordinary\nprofits of stock in any particular trade. Whether the stock is or is not\nconstantly employed, depends, not upon the trade, but the trader.\n\nFourthly, the wages of labour vary according to the small or great trust\nwhich must be reposed in the workmen.\n\nThe wages of goldsmiths and jewellers are everywhere superior to\nthose of many other workmen, not only of equal, but of much superior\ningenuity, on account of the precious materials with which they are\nentrusted. We trust our health to the physician, our fortune, and\nsometimes our life and reputation, to the lawyer and attorney. Such\nconfidence could not safely be reposed in people of a very mean or low\ncondition. Their reward must be such, therefore, as may give them that\nrank in the society which so important a trust requires. The long time\nand the great expense which must be laid out in their education, when\ncombined with this circumstance, necessarily enhance still further the\nprice of their labour.\n\nWhen a person employs only his own stock in trade, there is no trust;\nand the credit which he may get from other people, depends, not upon the\nnature of the trade, but upon their opinion of his fortune, probity and\nprudence. The different rates of profit, therefore, in the different\nbranches of trade, cannot arise from the different degrees of trust\nreposed in the traders.\n\nFifthly, the wages of labour in different employments vary according to\nthe probability or improbability of success in them.\n\nThe probability that any particular person shall ever be qualified for\nthe employments to which he is educated, is very different in different\noccupations. In the greatest part of mechanic trades success is almost\ncertain; but very uncertain in the liberal professions. Put your son\napprentice to a shoemaker, there is little doubt of his learning to make\na pair of shoes; but send him to study the law, it as at least twenty to\none if he ever makes such proficiency as will enable him to live by the\nbusiness. In a perfectly fair lottery, those who draw the prizes ought\nto gain all that is lost by those who draw the blanks. In a profession,\nwhere twenty fail for one that succeeds, that one ought to gain all that\nshould have been gained by the unsuccessful twenty. The counsellor at\nlaw, who, perhaps, at near forty years of age, begins to make something\nby his profession, ought to receive the retribution, not only of his\nown so tedious and expensive education, but of that of more than twenty\nothers, who are never likely to make any thing by it. How extravagant\nsoever the fees of counsellors at law may sometimes appear, their real\nretribution is never equal to this. Compute, in any particular place,\nwhat is likely to be annually gained, and what is likely to be annually\nspent, by all the different workmen in any common trade, such as that\nof shoemakers or weavers, and you will find that the former sum will\ngenerally exceed the latter. But make the same computation with regard\nto all the counsellors and students of law, in all the different Inns of\nCourt, and you will find that their annual gains bear but a very small\nproportion to their annual expense, even though you rate the former as\nhigh, and the latter as low, as can well be done. The lottery of the\nlaw, therefore, is very far from being a perfectly fair lottery; and\nthat as well as many other liberal and honourable professions, is, in\npoint of pecuniary gain, evidently under-recompensed.\n\nThose professions keep their level, however, with other occupations;\nand, notwithstanding these discouragements, all the most generous and\nliberal spirits are eager to crowd into them. Two different causes\ncontribute to recommend them. First, the desire of the reputation which\nattends upon superior excellence in any of them; and, secondly, the\nnatural confidence which every man has, more or less, not only in his\nown abilities, but in his own good fortune.\n\nTo excel in any profession, in which but few arrive at mediocrity, it\nis the most decisive mark of what is called genius, or superior talents.\nThe public admiration which attends upon such distinguished abilities\nmakes always a part of their reward; a greater or smaller, in proportion\nas it is higher or lower in degree. It makes a considerable part of that\nreward in the profession of physic; a still greater, perhaps, in that of\nlaw; in poetry and philosophy it makes almost the whole.\n\nThere are some very agreeable and beautiful talents, of which the\npossession commands a certain sort of admiration, but of which the\nexercise, for the sake of gain, is considered, whether from reason or\nprejudice, as a sort of public prostitution. The pecuniary recompence,\ntherefore, of those who exercise them in this manner, must be\nsufficient, not only to pay for the time, labour, and expense of\nacquiring the talents, but for the discredit which attends the\nemployment of them as the means of subsistence. The exorbitant rewards\nof players, opera-singers, opera-dancers, etc. are founded upon those\ntwo principles; the rarity and beauty of the talents, and the discredit\nof employing them in this manner. It seems absurd at first sight, that\nwe should despise their persons, and yet reward their talents with\nthe most profuse liberality. While we do the one, however, we must of\nnecessity do the other, Should the public opinion or prejudice ever\nalter with regard to such occupations, their pecuniary recompence would\nquickly diminish. More people would apply to them, and the competition\nwould quickly reduce the price of their labour. Such talents, though\nfar from being common, are by no means so rare as imagined. Many people\npossess them in great perfection, who disdain to make this use of them;\nand many more are capable of acquiring them, if any thing could be made\nhonourably by them.\n\nThe over-weening conceit which the greater part of men have of their own\nabilities, is an ancient evil remarked by the philosophers and moralists\nof all ages. Their absurd presumption in their own good fortune has been\nless taken notice of. It is, however, if possible, still more universal.\nThere is no man living, who, when in tolerable health and spirits, has\nnot some share of it. The chance of gain is by every man more or less\nover-valued, and the chance of loss is by most men under-valued, and by\nscarce any man, who is in tolerable health and spirits, valued more than\nit is worth.\n\nThat the chance of gain is naturally overvalued, we may learn from the\nuniversal success of lotteries. The world neither ever saw, nor ever\nwill see, a perfectly fair lottery, or one in which the whole gain\ncompensated the whole loss; because the undertaker could make nothing by\nit. In the state lotteries, the tickets are really not worth the price\nwhich is paid by the original subscribers, and yet commonly sell in the\nmarket for twenty, thirty, and sometimes forty per cent. advance. The\nvain hopes of gaining some of the great prizes is the sole cause of\nthis demand. The soberest people scarce look upon it as a folly to pay\na small sum for the chance of gaining ten or twenty thousand pounds,\nthough they know that even that small sum is perhaps twenty or thirty\nper cent. more than the chance is worth. In a lottery in which no prize\nexceeded twenty pounds, though in other respects it approached much\nnearer to a perfectly fair one than the common state lotteries, there\nwould not be the same demand for tickets. In order to have a better\nchance for some of the great prizes, some people purchase several\ntickets; and others, small shares in a still greater number. There is\nnot, however, a more certain proposition in mathematics, than that the\nmore tickets you adventure upon, the more likely you are to be a loser.\nAdventure upon all the tickets in the lottery, and you lose for certain;\nand the greater the number of your tickets, the nearer you approach to\nthis certainty.\n\nThat the chance of loss is frequently undervalued, and scarce ever\nvalued more than it is worth, we may learn from the very moderate profit\nof insurers. In order to make insurance, either from fire or sea-risk,\na trade at all, the common premium must be sufficient to compensate the\ncommon losses, to pay the expense of management, and to afford such a\nprofit as might have been drawn from an equal capital employed in any\ncommon trade. The person who pays no more than this, evidently pays no\nmore than the real value of the risk, or the lowest price at which he\ncan reasonably expect to insure it. But though many people have made a\nlittle money by insurance, very few have made a great fortune; and,\nfrom this consideration alone, it seems evident enough that the ordinary\nbalance of profit and loss is not more advantageous in this than in\nother common trades, by which so many people make fortunes. Moderate,\nhowever, as the premium of insurance commonly is, many people despise\nthe risk too much to care to pay it. Taking the whole kingdom at an\naverage, nineteen houses in twenty, or rather, perhaps, ninety-nine in\na hundred, are not insured from fire. Sea-risk is more alarming to the\ngreater part of people; and the proportion of ships insured to those not\ninsured is much greater. Many sail, however, at all seasons, and even in\ntime of war, without any insurance. This may sometimes, perhaps, be done\nwithout any imprudence. When a great company, or even a great merchant,\nhas twenty or thirty ships at sea, they may, as it were, insure one\nanother. The premium saved up on them all may more than compensate such\nlosses as they are likely to meet with in the common course of chances.\nThe neglect of insurance upon shipping, however, in the same manner as\nupon houses, is, in most cases, the effect of no such nice calculation,\nbut of mere thoughtless rashness, and presumptuous contempt of the risk.\n\nThe contempt of risk, and the presumptuous hope of success, are in no\nperiod of life more active than at the age at which young people choose\ntheir professions. How little the fear of misfortune is then capable\nof balancing the hope of good luck, appears still more evidently in the\nreadiness of the common people to enlist as soldiers, or to go to sea,\nthan in the eagerness of those of better fashion to enter into what are\ncalled the liberal professions.\n\nWhat a common soldier may lose is obvious enough. Without regarding\nthe danger, however, young volunteers never enlist so readily as at\nthe beginning of a new war; and though they have scarce any chance of\npreferment, they figure to themselves, in their youthful fancies, a\nthousand occasions of acquiring honour and distinction which never\noccur. These romantic hopes make the whole price of their blood. Their\npay is less than that of common labourers, and, in actual service, their\nfatigues are much greater.\n\nThe lottery of the sea is not altogether so disadvantageous as that of\nthe army. The son of a creditable labourer or artificer may frequently\ngo to sea with his father's consent; but if he enlists as a soldier,\nit is always without it. Other people see some chance of his making\nsomething by the one trade; nobody but himself sees any of his making\nany thing by the other. The great admiral is less the object of public\nadmiration than the great general; and the highest success in the sea\nservice promises a less brilliant fortune and reputation than equal\nsuccess in the land. The same difference runs through all the inferior\ndegrees of preferment in both. By the rules of precedency, a captain in\nthe navy ranks with a colonel in the army; but he does not rank with him\nin the common estimation. As the great prizes in the lottery are less,\nthe smaller ones must be more numerous. Common sailors, therefore, more\nfrequently get some fortune and preferment than common soldiers; and the\nhope of those prizes is what principally recommends the trade. Though\ntheir skill and dexterity are much superior to that of almost any\nartificers; and though their whole life is one continual scene of\nhardship and danger; yet for all this dexterity and skill, for all those\nhardships and dangers, while they remain in the condition of common\nsailors, they receive scarce any other recompence but the pleasure of\nexercising the one and of surmounting the other. Their wages are not\ngreater than those of common labourers at the port which regulates the\nrate of seamen's wages. As they are continually going from port to port,\nthe monthly pay of those who sail from all the different ports of Great\nBritain, is more nearly upon a level than that of any other workmen in\nthose different places; and the rate of the port to and from which the\ngreatest number sail, that is, the port of London, regulates that of\nall the rest. At London, the wages of the greater part of the different\nclasses of workmen are about double those of the same classes at\nEdinburgh. But the sailors who sail from the port of London, seldom earn\nabove three or four shillings a month more than those who sail from the\nport of Leith, and the difference is frequently not so great. In time of\npeace, and in the merchant-service, the London price is from a guinea to\nabout seven-and-twenty shillings the calendar month. A common labourer\nin London, at the rate of nine or ten shillings a week, may earn in\nthe calendar month from forty to five-and-forty shillings. The sailor,\nindeed, over and above his pay, is supplied with provisions. Their\nvalue, however, may not perhaps always exceed the difference between his\npay and that of the common labourer; and though it sometimes should, the\nexcess will not be clear gain to the sailor, because he cannot share\nit with his wife and family, whom he must maintain out of his wages at\nhome.\n\nThe dangers and hair-breadth escapes of a life of adventures, instead\nof disheartening young people, seem frequently to recommend a trade\nto them. A tender mother, among the inferior ranks of people, is often\nafraid to send her son to school at a sea-port town, lest the sight of\nthe ships, and the conversation and adventures of the sailors, should\nentice him to go to sea. The distant prospect of hazards, from which\nwe can hope to extricate ourselves by courage and address, is not\ndisagreeable to us, and does not raise the wages of labour in any\nemployment. It is otherwise with those in which courage and address can\nbe of no avail. In trades which are known to be very unwholesome, the\nwages of labour are always remarkably high. Unwholesomeness is a species\nof disagreeableness, and its effects upon the wages of labour are to be\nranked under that general head.\n\nIn all the different employments of stock, the ordinary rate of profit\nvaries more or less with the certainty or uncertainty of the returns.\nThese are, in general, less uncertain in the inland than in the foreign\ntrade, and in some branches of foreign trade than in others; in the\ntrade to North America, for example, than in that to Jamaica. The\nordinary rate of profit always rises more or less with the risk. It does\nnot, however, seem to rise in proportion to it, or so as to compensate\nit completely. Bankruptcies are most frequent in the most hazardous\ntrades. The most hazardous of all trades, that of a smuggler, though,\nwhen the adventure succeeds, it is likewise the most profitable, is the\ninfallible road to bankruptcy. The presumptuous hope of success seems to\nact here as upon all other occasions, and to entice so many adventurers\ninto those hazardous trades, that their competition reduces the profit\nbelow what is sufficient to compensate the risk. To compensate it\ncompletely, the common returns ought, over and above the ordinary\nprofits of stock, not only to make up for all occasional losses, but to\nafford a surplus profit to the adventurers, of the same nature with the\nprofit of insurers. But if the common returns were sufficient for all\nthis, bankruptcies would not be more frequent in these than in other\ntrades.\n\nOf the five circumstances, therefore, which vary the wages of\nlabour, two only affect the profits of stock; the agreeableness or\ndisagreeableness of the business, and the risk or security with which\nit is attended. In point of agreeableness or disagreeableness, there\nis little or no difference in the far greater part of the different\nemployments of stock, but a great deal in those of labour; and the\nordinary profit of stock, though it rises with the risk, does not always\nseem to rise in proportion to it. It should follow from all this, that,\nin the same society or neighbourhood, the average and ordinary rates of\nprofit in the different employments of stock should be more nearly upon\na level than the pecuniary wages of the different sorts of labour.\n\nThey are so accordingly. The difference between the earnings of a common\nlabourer and those of a well employed lawyer or physician, is evidently\nmuch greater than that between the ordinary profits in any two different\nbranches of trade. The apparent difference, besides, in the profits of\ndifferent trades, is generally a deception arising from our not always\ndistinguishing what ought to be considered as wages, from what ought to\nbe considered as profit.\n\nApothecaries' profit is become a bye-word, denoting something uncommonly\nextravagant. This great apparent profit, however, is frequently no more\nthan the reasonable wages of labour. The skill of an apothecary is a\nmuch nicer and more delicate matter than that of any artificer whatever;\nand the trust which is reposed in him is of much greater importance.\nHe is the physician of the poor in all cases, and of the rich when the\ndistress or danger is not very great. His reward, therefore, ought to\nbe suitable to his skill and his trust; and it arises generally from the\nprice at which he sells his drugs. But the whole drugs which the best\nemployed apothecary in a large market-town, will sell in a year, may\nnot perhaps cost him above thirty or forty pounds. Though he should sell\nthem, therefore, for three or four hundred, or at a thousand per cent.\nprofit, this may frequently be no more than the reasonable wages of his\nlabour, charged, in the only way in which he can charge them, upon the\nprice of his drugs. The greater part of the apparent profit is real\nwages disguised in the garb of profit.\n\nIn a small sea-port town, a little grocer will make forty or fifty per\ncent. upon a stock of a single hundred pounds, while a considerable\nwholesale merchant in the same place will scarce make eight or ten\nper cent. upon a stock of ten thousand. The trade of the grocer may be\nnecessary for the conveniency of the inhabitants, and the narrowness\nof the market may not admit the employment of a larger capital in the\nbusiness. The man, however, must not only live by his trade, but live by\nit suitably to the qualifications which it requires. Besides possessing\na little capital, he must be able to read, write, and account and must\nbe a tolerable judge, too, of perhaps fifty or sixty different sorts of\ngoods, their prices, qualities, and the markets where they are to be had\ncheapest. He must have all the knowledge, in short, that is necessary\nfor a great merchant, which nothing hinders him from becoming but the\nwant of a sufficient capital. Thirty or forty pounds a year cannot\nbe considered as too great a recompence for the labour of a person\nso accomplished. Deduct this from the seemingly great profits of his\ncapital, and little more will remain, perhaps, than the ordinary profits\nof stock. The greater part of the apparent profit is, in this case too,\nreal wages.\n\nThe difference between the apparent profit of the retail and that of\nthe wholesale trade, is much less in the capital than in small towns\nand country villages. Where ten thousand pounds can be employed in the\ngrocery trade, the wages of the grocer's labour must be a very trifling\naddition to the real profits of so great a stock. The apparent profits\nof the wealthy retailer, therefore, are there more nearly upon a level\nwith those of the wholesale merchant. It is upon this account that goods\nsold by retail are generally as cheap, and frequently much cheaper, in\nthe capital than in small towns and country villages. Grocery goods, for\nexample, are generally much cheaper; bread and butchers' meat frequently\nas cheap. It costs no more to bring grocery goods to the great town than\nto the country village; but it costs a great deal more to bring corn and\ncattle, as the greater part of them must be brought from a much greater\ndistance. The prime cost of grocery goods, therefore, being the same in\nboth places, they are cheapest where the least profit is charged upon\nthem. The prime cost of bread and butchers' meat is greater in the\ngreat town than in the country village; and though the profit is less,\ntherefore they are not always cheaper there, but often equally cheap.\nIn such articles as bread and butchers' meat, the same cause which\ndiminishes apparent profit, increases prime cost. The extent of the\nmarket, by giving employment to greater stocks, diminishes apparent\nprofit; but by requiring supplies from a greater distance, it increases\nprime cost. This diminution of the one and increase of the other, seem,\nin most cases, nearly to counterbalance one another; which is probably\nthe reason that, though the prices of corn and cattle are commonly\nvery different in different parts of the kingdom, those of bread and\nbutchers' meat are generally very nearly the same through the greater\npart of it.\n\nThough the profits of stock, both in the wholesale and retail trade, are\ngenerally less in the capital than in small towns and country villages,\nyet great fortunes are frequently acquired from small beginnings in\nthe former, and scarce ever in the latter. In small towns and country\nvillages, on account of the narrowness of the market, trade cannot\nalways be extended as stock extends. In such places, therefore, though\nthe rate of a particular person's profits may be very high, the sum or\namount of them can never be very great, nor consequently that of his\nannual accumulation. In great towns, on the contrary, trade can be\nextended as stock increases, and the credit of a frugal and thriving\nman increases much faster than his stock. His trade is extended in\nproportion to the amount of both; and the sum or amount of his profits\nis in proportion to the extent of his trade, and his annual accumulation\nin proportion to the amount of his profits. It seldom happens, however,\nthat great fortunes are made, even in great towns, by any one regular,\nestablished, and well-known branch of business, but in consequence of\na long life of industry, frugality, and attention. Sudden fortunes,\nindeed, are sometimes made in such places, by what is called the trade\nof speculation. The speculative merchant exercises no one regular,\nestablished, or well-known branch of business. He is a corn merchant\nthis year, and a wine merchant the next, and a sugar, tobacco, or tea\nmerchant the year after. He enters into every trade, when he foresees\nthat it is likely to lie more than commonly profitable, and he quits it\nwhen he foresees that its profits are likely to return to the level of\nother trades. His profits and losses, therefore, can bear no regular\nproportion to those of any one established and well-known branch of\nbusiness. A bold adventurer may sometimes acquire a considerable fortune\nby two or three successful speculations, but is just as likely to lose\none by two or three unsuccessful ones. This trade can be carried on\nnowhere but in great towns. It is only in places of the most extensive\ncommerce and correspondence that the intelligence requisite for it can\nbe had.\n\nThe five circumstances above mentioned, though they occasion\nconsiderable inequalities in the wages of labour and profits of stock,\noccasion none in the whole of the advantages and disadvantages, real or\nimaginary, of the different employments of either. The nature of those\ncircumstances is such, that they make up for a small pecuniary gain in\nsome, and counterbalance a great one in others.\n\nIn order, however, that this equality may take place in the whole of\ntheir advantages or disadvantages, three things are requisite, even\nwhere there is the most perfect freedom. First the employments must be\nwell known and long established in the neighbourhood; secondly, they\nmust be in their ordinary, or what may be called their natural state;\nand, thirdly, they must be the sole or principal employments of those\nwho occupy them.\n\nFirst, This equality can take place only in those employments which are\nwell known, and have been long established in the neighbourhood.\n\nWhere all other circumstances are equal, wages are generally higher in\nnew than in old trades. When a projector attempts to establish a new\nmanufacture, he must at first entice his workmen from other employments,\nby higher wages than they can either earn in their own trades, or than\nthe nature of his work would otherwise require; and a considerable time\nmust pass away before he can venture to reduce them to the common level.\nManufactures for which the demand arises altogether from fashion and\nfancy, are continually changing, and seldom last long enough to be\nconsidered as old established manufactures. Those, on the contrary, for\nwhich the demand arises chiefly from use or necessity, are less liable\nto change, and the same form or fabric may continue in demand for whole\ncenturies together. The wages of labour, therefore, are likely to be\nhigher in manufactures of the former, than in those of the latter kind.\nBirmingham deals chiefly in manufactures of the former kind; Sheffield\nin those of the latter; and the wages of labour in those two different\nplaces are said to be suitable to this difference in the nature of their\nmanufactures.\n\nThe establishment of any new manufacture, of any new branch of commerce,\nor of any new practice in agriculture, is always a speculation from\nwhich the projector promises himself extraordinary profits. These\nprofits sometimes are very great, and sometimes, more frequently,\nperhaps, they are quite otherwise; but, in general, they bear no regular\nproportion to those of other old trades in the neighbourhood. If the\nproject succeeds, they are commonly at first very high. When the\ntrade or practice becomes thoroughly established and well known, the\ncompetition reduces them to the level of other trades.\n\nSecondly, this equality in the whole of the advantages and disadvantages\nof the different employments of labour and stock, can take place only\nin the ordinary, or what may be called the natural state of those\nemployments.\n\nThe demand for almost every different species of labour is sometimes\ngreater, and sometimes less than usual. In the one case, the advantages\nof the employment rise above, in the other they fall below the common\nlevel. The demand for country labour is greater at hay-time and harvest\nthan during the greater part of the year; and wages rise with the\ndemand. In time of war, when forty or fifty thousand sailors are forced\nfrom the merchant service into that of the king, the demand for sailors\nto merchant ships necessarily rises with their scarcity; and\ntheir wages, upon such occasions, commonly rise from a guinea and\nseven-and-twenty shillings to forty shilling's and three pounds a-month.\nIn a decaying manufacture, on the contrary, many workmen, rather than\nquit their own trade, are contented with smaller wages than would\notherwise be suitable to the nature of their employment.\n\nThe profits of stock vary with the price of the commodities in which it\nis employed. As the price of any commodity rises above the ordinary or\naverage rate, the profits of at least some part of the stock that is\nemployed in bringing it to market, rise above their proper level, and as\nit falls they sink below it. All commodities are more or less liable\nto variations of price, but some are much more so than others. In\nall commodities which are produced by human industry, the quantity\nof industry annually employed is necessarily regulated by the annual\ndemand, in such a manner that the average annual produce may, as\nnearly as possible, be equal to the average annual consumption. In some\nemployments, it has already been observed, the same quantity of industry\nwill always produce the same, or very nearly the same quantity of\ncommodities. In the linen or woollen manufactures, for example, the same\nnumber of hands will annually work up very nearly the same quantity\nof linen and woollen cloth. The variations in the market price of such\ncommodities, therefore, can arise only from some accidental variation\nin the demand. A public mourning raises the price of black cloth. But\nas the demand for most sorts of plain linen and woollen cloth is pretty\nuniform, so is likewise the price. But there are other employments in\nwhich the same quantity of industry will not always produce the same\nquantity of commodities. The same quantity of industry, for example,\nwill, in different years, produce very different quantities of\ncorn, wine, hops, sugar tobacco, etc. The price of such commodities,\ntherefore, varies not only with the variations of demand, but with\nthe much greater and more frequent variations of quantity, and is\nconsequently extremely fluctuating; but the profit of some of the\ndealers must necessarily fluctuate with the price of the commodities.\nThe operations of the speculative merchant are principally employed\nabout such commodities. He endeavours to buy them up when he foresees\nthat their price is likely to rise, and to sell them when it is likely\nto fall.\n\nThirdly, this equality in the whole of the advantages and disadvantages\nof the different employments of labour and stock, can take place only in\nsuch as are the sole or principal employments of those who occupy them.\n\nWhen a person derives his subsistence from one employment, which does\nnot occupy the greater part of his time, in the intervals of his\nleisure he is often willing to work at another for less wages than would\notherwise suit the nature of the employment.\n\nThere still subsists, in many parts of Scotland, a set of people called\ncottars or cottagers, though they were more frequent some years ago\nthan they are now. They are a sort of out-servants of the landlords\nand farmers. The usual reward which they receive from their master is a\nhouse, a small garden for pot-herbs, as much grass as will feed a cow,\nand, perhaps, an acre or two of bad arable land. When their master has\noccasion for their labour, he gives them, besides, two pecks of oatmeal\na-week, worth about sixteen pence sterling. During a great part of the\nyear, he has little or no occasion for their labour, and the cultivation\nof their own little possession is not sufficient to occupy the time\nwhich is left at their own disposal. When such occupiers were more\nnumerous than they are at present, they are said to have been willing\nto give their spare time for a very small recompence to any body, and to\nhave wrought for less wages than other labourers. In ancient times, they\nseem to have been common all over Europe. In countries ill cultivated,\nand worse inhabited, the greater part of landlords and farmers could\nnot otherwise provide themselves with the extraordinary number of hands\nwhich country labour requires at certain seasons. The daily or weekly\nrecompence which such labourers occasionally received from their\nmasters, was evidently not the whole price of their labour. Their\nsmall tenement made a considerable part of it. This daily or weekly\nrecompence, however, seems to have been considered as the whole of it,\nby many writers who have collected the prices of labour and provisions\nin ancient times, and who have taken pleasure in representing both as\nwonderfully low.\n\nThe produce of such labour comes frequently cheaper to market than\nwould otherwise be suitable to its nature. Stockings, in many parts of\nScotland, are knit much cheaper than they can anywhere be wrought upon\nthe loom. They are the work of servants and labourers who derive the\nprincipal part of their subsistence from some other employment. More\nthan a thousand pair of Shetland stockings are annually imported into\nLeith, of which the price is from fivepence to seven-pence a pair. At\nLerwick, the small capital of the Shetland islands, tenpence a-day,\nI have been assured, is a common price of common labour. In the same\nislands, they knit worsted stockings to the value of a guinea a pair and\nupwards.\n\nThe spinning of linen yarn is carried on in Scotland nearly in the same\nway as the knitting of stockings, by servants, who are chiefly hired for\nother purposes. They earn but a very scanty subsistence, who endeavour\nto get their livelihood by either of those trades. In most parts of\nScotland, she is a good spinner who can earn twentypence a-week.\n\nIn opulent countries, the market is generally so extensive, that any one\ntrade is sufficient to employ the whole labour and stock of those who\noccupy it. Instances of people living by one employment, and, at the\nsame time, deriving some little advantage from another, occur chiefly\nin pour countries. The following instance, however, of something of the\nsame kind, is to be found in the capital of a very rich one. There is no\ncity in Europe, I believe, in which house-rent is dearer than in London,\nand yet I know no capital in which a furnished apartment can be hired so\ncheap. Lodging is not only much cheaper in London than in Paris; it is\nmuch cheaper than in Edinburgh, of the same degree of goodness; and,\nwhat may seem extraordinary, the dearness of house-rent is the cause of\nthe cheapness of lodging. The dearness of house-rent in London arises,\nnot only from those causes which render it dear in all great capitals,\nthe dearness of labour, the dearness of all the materials of building,\nwhich must generally be brought from a great distance, and, above\nall, the dearness of ground-rent, every landlord acting the part of a\nmonopolist, and frequently exacting a higher rent for a single acre of\nbad land in a town, than can be had for a hundred of the best in the\ncountry; but it arises in part from the peculiar manners and customs of\nthe people, which oblige every master of a family to hire a whole house\nfrom top to bottom. A dwelling-house in England means every thing that\nis contained under the same roof. In France, Scotland, and many other\nparts of Europe, it frequently means no more than a single storey. A\ntradesman in London is obliged to hire a whole house in that part of the\ntown where his customers live. His shop is upon the ground floor, and he\nand his family sleep in the garret; and he endeavours to pay a part of\nhis house-rent by letting the two middle storeys to lodgers. He expects\nto maintain his family by his trade, and not by his lodgers. Whereas\nat Paris and Edinburgh, people who let lodgings have commonly no other\nmeans of subsistence; and the price of the lodging must pay, not only\nthe rent of the house, but the whole expense of the family.\n\n\nPART II.--Inequalities occasioned by the Policy of Europe.\n\nSuch are the inequalities in the whole of the advantages and\ndisadvantages of the different employments of labour and stock, which\nthe defect of any of the three requisites above mentioned must occasion,\neven where there is the most perfect liberty. But the policy of Europe,\nby not leaving things at perfect liberty, occasions other inequalities\nof much greater importance.\n\nIt does this chiefly in the three following ways. First, by restraining\nthe competition in some employments to a smaller number than would\notherwise be disposed to enter into them; secondly, by increasing it in\nothers beyond what it naturally would be; and, thirdly, by obstructing\nthe free circulation of labour and stock, both from employment to\nemployment, and from place to place.\n\nFirst, The policy of Europe occasions a very important inequality in the\nwhole of the advantages and disadvantages of the different employments\nof labour and stock, by restraining the competition in some employments\nto a smaller number than might otherwise be disposed to enter into them.\n\nThe exclusive privileges of corporations are the principal means it\nmakes use of for this purpose.\n\nThe exclusive privilege of an incorporated trade necessarily restrains\nthe competition, in the town where it is established, to those who are\nfree of the trade. To have served an apprenticeship in the town, under\na master properly qualified, is commonly the necessary requisite\nfor obtaining this freedom. The bye-laws of the corporation regulate\nsometimes the number of apprentices which any master is allowed to have,\nand almost always the number of years which each apprentice is\nobliged to serve. The intention of both regulations is to restrain the\ncompetition to a much smaller number than might otherwise be disposed\nto enter into the trade. The limitation of the number of apprentices\nrestrains it directly. A long term of apprenticeship restrains it more\nindirectly, but as effectually, by increasing the expense of education.\n\nIn Sheffield, no master cutler can have more than one apprentice at a\ntime, by a bye-law of the corporation. In Norfolk and Norwich, no master\nweaver can have more than two apprentices, under pain of forfeiting\nfive pounds a-month to the king. No master hatter can have more than two\napprentices anywhere in England, or in the English plantations, under\npain of forfeiting; five pounds a-month, half to the king, and half to\nhim who shall sue in any court of record. Both these regulations, though\nthey have been confirmed by a public law of the kingdom, are evidently\ndictated by the same corporation-spirit which enacted the bye-law of\nSheffield. The silk-weavers in London had scarce been incorporated a\nyear, when they enacted a bye-law, restraining any master from having\nmore than two apprentices at a time. It required a particular act of\nparliament to rescind this bye-law.\n\nSeven years seem anciently to have been, all over Europe, the usual term\nestablished for the duration of apprenticeships in the greater part\nof incorporated trades. All such incorporations were anciently\ncalled universities, which, indeed, is the proper Latin name for any\nincorporation whatever. The university of smiths, the university of\ntailors, etc. are expressions which we commonly meet with in the old\ncharters of ancient towns. When those particular incorporations, which\nare now peculiarly called universities, were first established, the term\nof years which it was necessary to study, in order to obtain the degree\nof master of arts, appears evidently to have been copied from the term\nof apprenticeship in common trades, of which the incorporations were\nmuch more ancient. As to have wrought seven years under a master\nproperly qualified, was necessary, in order to entitle my person to\nbecome a master, and to have himself apprentices in a common trade;\nso to have studied seven years under a master properly qualified, was\nnecessary to entitle him to become a master, teacher, or doctor (words\nanciently synonymous), in the liberal arts, and to have scholars or\napprentices (words likewise originally synonymous) to study under him.\n\nBy the 5th of Elizabeth, commonly called the Statute of Apprenticeship,\nit was enacted, that no person should, for the future, exercise any\ntrade, craft, or mystery, at that time exercised in England, unless he\nhad previously served to it an apprenticeship of seven years at least;\nand what before had been the bye-law of many particular corporations,\nbecame in England the general and public law of all trades carried on in\nmarket towns. For though the words of the statute are very general,\nand seem plainly to include the whole kingdom, by interpretation its\noperation has been limited to market towns; it having been held that, in\ncountry villages, a person may exercise several different trades, though\nhe has not served a seven years apprenticeship to each, they being\nnecessary for the conveniency of the inhabitants, and the number of\npeople frequently not being sufficient to supply each with a particular\nset of hands. By a strict interpretation of the words, too, the\noperation of this statute has been limited to those trades which were\nestablished in England before the 5th of Elizabeth, and has never\nbeen extended to such as have been introduced since that time. This\nlimitation has given occasion to several distinctions, which, considered\nas rules of police, appear as foolish as can well be imagined. It has\nbeen adjudged, for example, that a coach-maker can neither himself make\nnor employ journeymen to make his coach-wheels, but must buy them of a\nmaster wheel-wright; this latter trade having been exercised in England\nbefore the 5th of Elizabeth. But a wheel-wright, though he has never\nserved an apprenticeship to a coachmaker, may either himself make or\nemploy journeymen to make coaches; the trade of a coachmaker not being\nwithin the statute, because not exercised in England at the time when it\nwas made. The manufactures of Manchester, Birmingham, and Wolverhampton,\nare many of them, upon this account, not within the statute, not having\nbeen exercised in England before the 5th of Elizabeth.\n\nIn France, the duration of apprenticeships is different in different\ntowns and in different trades. In Paris, five years is the term required\nin a great number; but, before any person can be qualified to exercise\nthe trade as a master, he must, in many of them, serve five years more\nas a journeyman. During this latter term, he is called the companion of\nhis master, and the term itself is called his companionship.\n\nIn Scotland, there is no general law which regulates universally\nthe duration of apprenticeships. The term is different in different\ncorporations. Where it is long, a part of it may generally be redeemed\nby paying a small fine. In most towns, too, a very small fine is\nsufficient to purchase the freedom of any corporation. The weavers of\nlinen and hempen cloth, the principal manufactures of the country,\nas well as all other artificers subservient to them, wheel-makers,\nreel-makers, etc. may exercise their trades in any town-corporate\nwithout paying any fine. In all towns-corporate, all persons are free to\nsell butchers' meat upon any lawful day of the week. Three years is,\nin Scotland, a common term of apprenticeship, even in some very nice\ntrades; and, in general, I know of no country in Europe, in which\ncorporation laws are so little oppressive.\n\nThe property which every man has in his own labour, as it is the\noriginal foundation of all other property, so it is the most sacred\nand inviolable. The patrimony of a poor man lies in the strength and\ndexterity of his hands; and to hinder him from employing this strength\nand dexterity in what manner he thinks proper, without injury to his\nneighbour, is a plain violation of this most sacred property. It is a\nmanifest encroachment upon the just liberty, both of the workman, and\nof those who might be disposed to employ him. As it hinders the one\nfrom working at what he thinks proper, so it hinders the others from\nemploying whom they think proper. To judge whether he is fit to be\nemployed, may surely be trusted to the discretion of the employers,\nwhose interest it so much concerns. The affected anxiety of the\nlawgiver, lest they should employ an improper person, is evidently as\nimpertinent as it is oppressive.\n\nThe institution of long apprenticeships can give no security that\ninsufficient workmanship shall not frequently be exposed to public\nsale. When this is done, it is generally the effect of fraud, and not of\ninability; and the longest apprenticeship can give no security against\nfraud. Quite different regulations are necessary to prevent this abuse.\nThe sterling mark upon plate, and the stamps upon linen and woollen\ncloth, give the purchaser much greater security than any statute of\napprenticeship. He generally looks at these, but never thinks it\nworth while to enquire whether the workman had served a seven years\napprenticeship.\n\nThe institution of long apprenticeships has no tendency to form young\npeople to industry. A journeyman who works by the piece is likely to\nbe industrious, because he derives a benefit from every exertion of his\nindustry. An apprentice is likely to be idle, and almost always is so,\nbecause he has no immediate interest to be otherwise. In the inferior\nemployments, the sweets of labour consist altogether in the recompence\nof labour. They who are soonest in a condition to enjoy the sweets of\nit, are likely soonest to conceive a relish for it, and to acquire the\nearly habit of industry. A young man naturally conceives an aversion to\nlabour, when for a long time he receives no benefit from it. The boys\nwho are put out apprentices from public charities are generally bound\nfor more than the usual number of years, and they generally turn out\nvery idle and worthless.\n\nApprenticeships were altogether unknown to the ancients. The reciprocal\nduties of master and apprentice make a considerable article in every\nmodern code. The Roman law is perfectly silent with regard to them. I\nknow no Greek or Latin word (I might venture, I believe, to assert\nthat there is none) which expresses the idea we now annex to the word\napprentice, a servant bound to work at a particular trade for the\nbenefit of a master, during a term of years, upon condition that the\nmaster shall teach him that trade.\n\nLong apprenticeships are altogether unnecessary. The arts, which are\nmuch superior to common trades, such as those of making clocks and\nwatches, contain no such mystery as to require a long course of\ninstruction. The first invention of such beautiful machines, indeed, and\neven that of some of the instruments employed in making them, must no\ndoubt have been the work of deep thought and long time, and may justly\nbe considered as among the happiest efforts of human ingenuity. But when\nboth have been fairly invented, and are well understood, to explain to\nany young man, in the completest manner, how to apply the instruments,\nand how to construct the machines, cannot well require more than the\nlessons of a few weeks; perhaps those of a few days might be sufficient.\nIn the common mechanic trades, those of a few days might certainly be\nsufficient. The dexterity of hand, indeed, even in common trades, cannot\nbe acquired without much practice and experience. But a young man would\npractice with much more diligence and attention, if from the beginning\nhe wrought as a journeyman, being paid in proportion to the little work\nwhich he could execute, and paying in his turn for the materials which\nhe might sometimes spoil through awkwardness and inexperience. His\neducation would generally in this way be more effectual, and always less\ntedious and expensive. The master, indeed, would be a loser. He would\nlose all the wages of the apprentice, which he now saves, for seven\nyears together. In the end, perhaps, the apprentice himself would be a\nloser. In a trade so easily learnt he would have more competitors, and\nhis wages, when he came to be a complete workman, would be much less\nthan at present. The same increase of competition would reduce the\nprofits of the masters, as well as the wages of workmen. The trades, the\ncrafts, the mysteries, would all be losers. But the public would be a\ngainer, the work of all artificers coming in this way much cheaper to\nmarket.\n\nIt is to prevent his reduction of price, and consequently of wages and\nprofit, by restraining that free competition which would most certainly\noccasion it, that all corporations, and the greater part of corporation\nlaws have been established. In order to erect a corporation, no other\nauthority in ancient times was requisite, in many parts of Europe, but\nthat of the town-corporate in which it was established. In England,\nindeed, a charter from the king was likewise necessary. But this\nprerogative of the crown seems to have been reserved rather for\nextorting money from the subject, than for the defence of the common\nliberty against such oppressive monopolies. Upon paying a fine to the\nking, the charter seems generally to have been readily granted; and when\nany particular class of artificers or traders thought proper to act as\na corporation, without a charter, such adulterine guilds, as they were\ncalled, were not always disfranchised upon that account, but obliged\nto fine annually to the king, for permission to exercise their usurped\nprivileges {See Madox Firma Burgi p. 26 etc.}. The immediate inspection\nof all corporations, and of the bye-laws which they might think proper\nto enact for their own government, belonged to the town-corporate in\nwhich they were established; and whatever discipline was exercised\nover them, proceeded commonly, not from the king, but from that greater\nincorporation of which those subordinate ones were only parts or\nmembers.\n\nThe government of towns-corporate was altogether in the hands of traders\nand artificers, and it was the manifest interest of every particular\nclass of them, to prevent the market from being overstocked, as they\ncommonly express it, with their own particular species of industry;\nwhich is in reality to keep it always understocked. Each class was eager\nto establish regulations proper for this purpose, and, provided it was\nallowed to do so, was willing to consent that every other class should\ndo the same. In consequence of such regulations, indeed, each class was\nobliged to buy the goods they had occasion for from every other within\nthe town, somewhat dearer than they otherwise might have done. But, in\nrecompence, they were enabled to sell their own just as much dearer; so\nthat, so far it was as broad as long, as they say; and in the dealings\nof the different classes within the town with one another, none of them\nwere losers by these regulations. But in their dealings with the country\nthey were all great gainers; and in these latter dealings consist the\nwhole trade which supports and enriches every town.\n\nEvery town draws its whole subsistence, and all the materials of its\nindustry, from the: country. It pays for these chiefly in two ways.\nFirst, by sending back to the country a part of those materials wrought\nup and manufactured; in which case, their price is augmented by the\nwages of the workmen, and the profits of their masters or immediate\nemployers; secondly, by sending to it a part both of the rude and\nmanufactured produce, either of other countries, or of distant parts\nof the same country, imported into the town; in which case, too, the\noriginal price of those goods is augmented by the wages of the carriers\nor sailors, and by the profits of the merchants who employ them. In what\nis gained upon the first of those branches of commerce, consists the\nadvantage which the town makes by its manufactures; in what is gained\nupon the second, the advantage of its inland and foreign trade. The\nwages of the workmen, and the profits of their different employers,\nmake up the whole of what is gained upon both. Whatever regulations,\ntherefore, tend to increase those wages and profits beyond what they\notherwise: would be, tend to enable the town to purchase, with a smaller\nquantity of its labour, the produce of a greater quantity of the labour\nof the country. They give the traders and artificers in the town an\nadvantage over the landlords, farmers, and labourers, in the country,\nand break down that natural equality which would otherwise take place in\nthe commerce which is carried on between them. The whole annual produce\nof the labour of the society is annually divided between those two\ndifferent sets of people. By means of those regulations, a greater share\nof it is given to the inhabitants of the town than would otherwise fall\nto them, and a less to those of' the country.\n\nThe price which the town really pays for the provisions and materials\nannually imported into it, is the quantity of manufactures and other\ngoods annually exported from it. The dearer the latter are sold, the\ncheaper the former are bought. The industry of the town becomes more,\nand that of the country less advantageous.\n\nThat the industry which is carried on in towns is, everywhere in Europe,\nmore advantageous than that which is carried on in the country, without\nentering into any very nice computations, we may satisfy ourselves by\none very simple and obvious observation. In every country of Europe, we\nfind at least a hundred people who have acquired great fortunes, from\nsmall beginnings, by trade and manufactures, the industry which properly\nbelongs to towns, for one who has done so by that which properly belongs\nto the country, the raising of rude produce by the improvement and\ncultivation of land. Industry, therefore, must be better rewarded, the\nwages of labour and the profits of stock must evidently be greater, in\nthe one situation than in the other. But stock and labour naturally seek\nthe most advantageous employment. They naturally, therefore, resort as\nmuch as they can to the town, and desert the country.\n\nThe inhabitants of a town being collected into one place, can easily\ncombine together. The most insignificant trades carried on in towns\nhave, accordingly, in some place or other, been incorporated; and even\nwhere they have never been incorporated, yet the corporation-spirit,\nthe jealousy of strangers, the aversion to take apprentices, or to\ncommunicate the secret of their trade, generally prevail in them, and\noften teach them, by voluntary associations and agreements, to prevent\nthat free competition which they cannot prohibit by bye-laws. The trades\nwhich employ but a small number of hands, run most easily into such\ncombinations. Half-a-dozen wool-combers, perhaps, are necessary to\nkeep a thousand spinners and weavers at work. By combining not to take\napprentices, they can not only engross the employment, but reduce the\nwhole manufacture into a sort of slavery to themselves, and raise the\nprice of their labour much above what is due to the nature of their\nwork.\n\nThe inhabitants of the country, dispersed in distant places, cannot\neasily combine together. They have not only never been incorporated,\nbut the incorporation spirit never has prevailed among them. No\napprenticeship has ever been thought necessary to qualify for husbandry,\nthe great trade of the country. After what are called the fine arts,\nand the liberal professions, however, there is perhaps no trade which\nrequires so great a variety of knowledge and experience. The innumerable\nvolumes which have been written upon it in all languages, may satisfy\nus, that among the wisest and most learned nations, it has never been\nregarded as a matter very easily understood. And from all those volumes\nwe shall in vain attempt to collect that knowledge of its various and\ncomplicated operations which is commonly possessed even by the common\nfarmer; how contemptuously soever the very contemptible authors of some\nof them may sometimes affect to speak of him. There is scarce any common\nmechanic trade, on the contrary, of which all the operations may not\nbe as completely and distinctly explained in a pamphlet of a very few\npages, as it is possible for words illustrated by figures to explain\nthem. In the history of the arts, now publishing by the French Academy\nof Sciences, several of them are actually explained in this manner. The\ndirection of operations, besides, which must be varied with every change\nof the weather, as well as with many other accidents, requires much more\njudgment and discretion, than that of those which are always the same,\nor very nearly the same.\n\nNot only the art of the farmer, the general direction of the operations\nof husbandry, but many inferior branches of country labour require much\nmore skill and experience than the greater part of mechanic trades.\nThe man who works upon brass and iron, works with instruments, and upon\nmaterials of which the temper is always the same, or very nearly the\nsame. But the man who ploughs the ground with a team of horses or oxen,\nworks with instruments of which the health, strength, and temper, are\nvery different upon different occasions. The condition of the materials\nwhich he works upon, too, is as variable as that of the instruments\nwhich he works with, and both require to be managed with much judgment\nand discretion. The common ploughman, though generally regarded as the\npattern of stupidity and ignorance, is seldom defective in this judgment\nand discretion. He is less accustomed, indeed, to social intercourse,\nthan the mechanic who lives in a town. His voice and language are more\nuncouth, and more difficult to be understood by those who are not used\nto them. His understanding, however, being accustomed to consider a\ngreater variety of objects, is generally much superior to that of the\nother, whose whole attention, from morning till night, is commonly\noccupied in performing one or two very simple operations. How much the\nlower ranks of people in the country are really superior to those of the\ntown, is well known to every man whom either business or curiosity has\nled to converse much with both. In China and Indostan, accordingly, both\nthe rank and the wages of country labourers are said to be superior to\nthose of the greater part of artificers and manufacturers. They would\nprobably be so everywhere, if corporation laws and the corporation\nspirit did not prevent it.\n\nThe superiority which the industry of the towns has everywhere in Europe\nover that of the country, is not altogether owing to corporations and\ncorporation laws. It is supported by many other regulations. The high\nduties upon foreign manufactures, and upon all goods imported by alien\nmerchants, all tend to the same purpose. Corporation laws enable the\ninhabitants of towns to raise their prices, without fearing to be\nundersold by the free competition of their own countrymen. Those\nother regulations secure them equally against that of foreigners. The\nenhancement of price occasioned by both is everywhere finally paid by\nthe landlords, farmers, and labourers, of the country, who have seldom\nopposed the establishment of such monopolies. They have commonly neither\ninclination nor fitness to enter into combinations; and the clamour and\nsophistry of merchants and manufacturers easily persuade them, that the\nprivate interest of a part, and of a subordinate part, of the society,\nis the general interest of the whole.\n\nIn Great Britain, the superiority of the industry of the towns over that\nof the country seems to have been greater formerly than in the\npresent times. The wages of country labour approach nearer to those of\nmanufacturing labour, and the profits of stock employed in agriculture\nto those of trading and manufacturing stock, than they are said to\nhave none in the last century, or in the beginning of the present. This\nchange may be regarded as the necessary, though very late consequence of\nthe extraordinary encouragement given to the industry of the towns. The\nstocks accumulated in them come in time to be so great, that it can no\nlonger be employed with the ancient profit in that species of industry\nwhich is peculiar to them. That industry has its limits like every\nother; and the increase of stock, by increasing the competition,\nnecessarily reduces the profit. The lowering of profit in the town\nforces out stock to the country, where, by creating a new demand for\ncountry labour, it necessarily raises its wages. It then spreads itself,\nif I my say so, over the face of the land, and, by being employed in\nagriculture, is in part restored to the country, at the expense of\nwhich, in a great measure, it had originally been accumulated in the\ntown. That everywhere in Europe the greatest improvements of the\ncountry have been owing to such over flowings of the stock originally\naccumulated in the towns, I shall endeavour to shew hereafter, and at\nthe same time to demonstrate, that though some countries have, by this\ncourse, attained to a considerable degree of opulence, it is in itself\nnecessarily slow, uncertain, liable to be disturbed and interrupted by\ninnumerable accidents, and, in every respect, contrary to the order of\nnature and of reason. The interests, prejudices, laws, and customs, which\nhave given occasion to it, I shall endeavour to explain as fully and\ndistinctly as I can in the third and fourth books of this Inquiry.\n\nPeople of the same trade seldom meet together, even for merriment and\ndiversion, but the conversation ends in a conspiracy against the public,\nor in some contrivance to raise prices. It is impossible, indeed, to\nprevent such meetings, by any law which either could be executed, or\nwould be consistent with liberty and justice. But though the law cannot\nhinder people of the same trade from sometimes assembling together, it\nought to do nothing to facilitate such assemblies, much less to render\nthem necessary.\n\nA regulation which obliges all those of the same trade in a particular\ntown to enter their names and places of abode in a public register,\nfacilitates such assemblies. It connects individuals who might never\notherwise be known to one another, and gives every man of the trade a\ndirection where to find every other man of it.\n\nA regulation which enables those of the same trade to tax themselves, in\norder to provide for their poor, their sick, their widows and orphans,\nby giving them a common interest to manage, renders such assemblies\nnecessary.\n\nAn incorporation not only renders them necessary, but makes the act\nof the majority binding upon the whole. In a free trade, an effectual\ncombination cannot be established but by the unanimous consent of\nevery single trader, and it cannot last longer than every single trader\ncontinues of the same mind. The majority of a corporation can enact a\nbye-law, with proper penalties, which will limit the competition more\neffectually and more durably than any voluntary combination whatever.\n\nThe pretence that corporations are necessary for the better government\nof the trade, is without any foundation. The real and effectual\ndiscipline which is exercised over a workman, is not that of his\ncorporation, but that of his customers. It is the fear of losing their\nemployment which restrains his frauds and corrects his negligence. An\nexclusive corporation necessarily weakens the force of this discipline.\nA particular set of workmen must then be employed, let them behave well\nor ill. It is upon this account that, in many large incorporated towns,\nno tolerable workmen are to be found, even in some of the most necessary\ntrades. If you would have your work tolerably executed, it must be done\nin the suburbs, where the workmen, having no exclusive privilege, have\nnothing but their character to depend upon, and you must then smuggle it\ninto the town as well as you can.\n\nIt is in this manner that the policy of Europe, by restraining the\ncompetition in some employments to a smaller number than would otherwise\nbe disposed to enter into them, occasions a very important inequality\nin the whole of the advantages and disadvantages of the different\nemployments of labour and stock.\n\nSecondly, The policy of Europe, by increasing the competition in\nsome employments beyond what it naturally would be, occasions another\ninequality, of an opposite kind, in the whole of the advantages and\ndisadvantages of the different employments of labour and stock.\n\nIt has been considered as of so much importance that a proper number of\nyoung people should be educated for certain professions, that\nsometimes the public, and sometimes the piety of private founders, have\nestablished many pensions, scholarships, exhibitions, bursaries, etc.\nfor this purpose, which draw many more people into those trades than\ncould otherwise pretend to follow them. In all Christian countries, I\nbelieve, the education of the greater part of churchmen is paid for\nin this manner. Very few of them are educated altogether at their own\nexpense. The long, tedious, and expensive education, therefore, of those\nwho are, will not always procure them a suitable reward, the church\nbeing crowded with people, who, in order to get employment, are willing\nto accept of a much smaller recompence than what such an education would\notherwise have entitled them to; and in this manner the competition of\nthe poor takes away the reward of the rich. It would be indecent, no\ndoubt, to compare either a curate or a chaplain with a journeyman in\nany common trade. The pay of a curate or chaplain, however, may very\nproperly be considered as of the same nature with the wages of a\njourneyman. They are all three paid for their work according to the\ncontract which they may happen to make with their respective superiors.\nTill after the middle of the fourteenth century, five merks, containing\nabout as much silver as ten pounds of our present money, was in England\nthe usual pay of a curate or a stipendiary parish priest, as we find it\nregulated by the decrees of several different national councils. At the\nsame period, fourpence a-day, containing the same quantity of silver as\na shilling of our present money, was declared to be the pay of a master\nmason; and threepence a-day, equal to ninepence of our present money,\nthat of a journeyman mason. {See the Statute of Labourers, 25, Ed. III.}\nThe wages of both these labourer's, therefore, supposing them to have\nbeen constantly employed, were much superior to those of the curate. The\nwages of the master mason, supposing him to have been without employment\none-third of the year, would have fully equalled them. By the 12th of\nQueen Anne, c. 12. it is declared, \"That whereas, for want of sufficient\nmaintenance and encouragement to curates, the cures have, in several\nplaces, been meanly supplied, the bishop is, therefore, empowered\nto appoint, by writing under his hand and seal, a sufficient certain\nstipend or allowance, not exceeding fifty, and not less than twenty\npounds a-year\". Forty pounds a-year is reckoned at present very good\npay for a curate; and, notwithstanding this act of parliament, there\nare many curacies under twenty pounds a-year. There are journeymen\nshoemakers in London who earn forty pounds a-year, and there is scarce\nan industrious workman of any kind in that metropolis who does not earn\nmore than twenty. This last sum, indeed, does not exceed what frequently\nearned by common labourers in many country parishes. Whenever the law\nhas attempted to regulate the wages of workmen, it has always been\nrather to lower them than to raise them. But the law has, upon many\noccasions, attempted to raise the wages of curates, and, for the dignity\nof the church, to oblige the rectors of parishes to give them more\nthan the wretched maintenance which they themselves might be willing\nto accept of. And, in both cases, the law seems to have been equally\nineffectual, and has never either been able to raise the wages of\ncurates, or to sink those of labourers to the degree that was intended;\nbecause it has never been able to hinder either the one from being\nwilling to accept of less than the legal allowance, on account of the\nindigence of their situation and the multitude of their competitors, or\nthe other from receiving more, on account of the contrary competition\nof those who expected to derive either profit or pleasure from employing\nthem.\n\nThe great benefices and other ecclesiastical dignities support the\nhonour of the church, notwithstanding the mean circumstances of some\nof its inferior members. The respect paid to the profession, too, makes\nsome compensation even to them for the meanness of their pecuniary\nrecompence. In England, and in all Roman catholic countries, the lottery\nof the church is in reality much more advantageous than is necessary.\nThe example of the churches of Scotland, of Geneva, and of several other\nprotestant churches, may satisfy us, that in so creditable a profession,\nin which education is so easily procured, the hopes of much more\nmoderate benefices will draw a sufficient number of learned, decent, and\nrespectable men into holy orders.\n\nIn professions in which there are no benefices, such as law and physic,\nif an equal proportion of people were educated at the public expense,\nthe competition would soon be so great as to sink very much their\npecuniary reward. It might then not be worth any man's while to educate\nhis son to either of those professions at his own expense. They would\nbe entirely abandoned to such as had been educated by those public\ncharities, whose numbers and necessities would oblige them in general\nto content themselves with a very miserable recompence, to the entire\ndegradation of the now respectable professions of law and physic.\n\nThat unprosperous race of men, commonly called men of letters, are\npretty much in the situation which lawyers and physicians probably would\nbe in, upon the foregoing supposition. In every part of Europe, the\ngreater part of them have been educated for the church, but have been\nhindered by different reasons from entering into holy orders. They have\ngenerally, therefore, been educated at the public expense; and their\nnumbers are everywhere so great, as commonly to reduce the price of\ntheir labour to a very paltry recompence.\n\nBefore the invention of the art of printing, the only employment by\nwhich a man of letters could make any thing by his talents, was that\nof a public or private teacher, or by communicating to other people the\ncurious and useful knowledge which he had acquired himself; and this is\nstill surely a more honourable, a more useful, and, in general, even a\nmore profitable employment than that other of writing for a bookseller,\nto which the art of printing has given occasion. The time and study,\nthe genius, knowledge, and application requisite to qualify an eminent\nteacher of the sciences, are at least equal to what is necessary for the\ngreatest practitioners in law and physic. But the usual reward of the\neminent teacher bears no proportion to that of the lawyer or physician,\nbecause the trade of the one is crowded with indigent people, who have\nbeen brought up to it at the public expense; whereas those of the other\ntwo are encumbered with very few who have not been educated at their\nown. The usual recompence, however, of public and private teachers,\nsmall as it may appear, would undoubtedly be less than it is, if the\ncompetition of those yet more indigent men of letters, who write for\nbread, was not taken out of the market. Before the invention of the art\nof printing, a scholar and a beggar seem to have been terms very nearly\nsynonymous. The different governors of the universities, before that\ntime, appear to have often granted licences to their scholars to beg.\n\nIn ancient times, before any charities of this kind had been established\nfor the education of indigent people to the learned professions, the\nrewards of eminent teachers appear to have been much more considerable.\nIsocrates, in what is called his discourse against the sophists,\nreproaches the teachers of his own times with inconsistency. \"They\nmake the most magnificent promises to their scholars,\" says he, \"and\nundertake to teach them to be wise, to be happy, and to be just; and, in\nreturn for so important a service, they stipulate the paltry reward\nof four or five minae.\" \"They who teach wisdom,\" continues he, \"ought\ncertainly to be wise themselves; but if any man were to sell such a\nbargain for such a price, he would be convicted of the most evident\nfolly.\" He certainly does not mean here to exaggerate the reward, and\nwe may be assured that it was not less than he represents it. Four minae\nwere equal to thirteen pounds six shillings and eightpence; five minae\nto sixteen pounds thirteen shillings and fourpence. Something not less\nthan the largest of those two sums, therefore, must at that time have\nbeen usually paid to the most eminent teachers at Athens. Isocrates\nhimself demanded ten minae, or £ 33:6:8 from each scholar. When\nhe taught at Athens, he is said to have had a hundred scholars. I\nunderstand this to be the number whom he taught at one time, or who\nattended what we would call one course of lectures; a number which will\nnot appear extraordinary from so great a city to so famous a teacher,\nwho taught, too, what was at that time the most fashionable of all\nsciences, rhetoric. He must have made, therefore, by each course\nof lectures, a thousand minae, or £ 3335:6:8. A thousand minae,\naccordingly, is said by Plutarch, in another place, to have been his\ndidactron, or usual price of teaching. Many other eminent teachers in\nthose times appear to have acquired great fortunes. Georgias made a\npresent to the temple of Delphi of his own statue in solid gold. We must\nnot, I presume, suppose that it was as large as the life. His way of\nliving, as well as that of Hippias and Protagoras, two other eminent\nteachers of those times, is represented by Plato as splendid, even to\nostentation. Plato himself is said to have lived with a good deal of\nmagnificence. Aristotle, after having been tutor to Alexander, and most\nmunificently rewarded, as it is universally agreed, both by him and his\nfather, Philip, thought it worth while, notwithstanding, to return to\nAthens, in order to resume the teaching of his school. Teachers of the\nsciences were probably in those times less common than they came to be\nin an age or two afterwards, when the competition had probably somewhat\nreduced both the price of their labour and the admiration for their\npersons. The most eminent of them, however, appear always to have\nenjoyed a degree of consideration much superior to any of the like\nprofession in the present times. The Athenians sent Carneades the\nacademic, and Diogenes the stoic, upon a solemn embassy to Rome; and\nthough their city had then declined from its former grandeur, it was\nstill an independent and considerable republic.\n\nCarneades, too, was a Babylonian by birth; and as there never was a\npeople more jealous of admitting foreigners to public offices than the\nAthenians, their consideration for him must have been very great.\n\nThis inequality is, upon the whole, perhaps rather advantageous than\nhurtful to the public. It may somewhat degrade the profession of a\npublic teacher; but the cheapness of literary education is surely an\nadvantage which greatly overbalances this trifling inconveniency.\nThe public, too, might derive still greater benefit from it, if the\nconstitution of those schools and colleges, in which education is\ncarried on, was more reasonable than it is at present through the\ngreater part of Europe.\n\nThirdly, the policy of Europe, by obstructing the free circulation of\nlabour and stock, both from employment to employment, and from place to\nplace, occasions, in some cases, a very inconvenient inequality in\nthe whole of the advantages and disadvantages of their different\nemployments.\n\nThe statute of apprenticeship obstructs the free circulation of labour\nfrom one employment to another, even in the same place. The exclusive\nprivileges of corporations obstruct it from one place to another, even\nin the same employment.\n\nIt frequently happens, that while high wages are given to the workmen in\none manufacture, those in another are obliged to content themselves with\nbare subsistence. The one is in an advancing state, and has therefore a\ncontinual demand for new hands; the other is in a declining state,\nand the superabundance of hands is continually increasing. Those two\nmanufactures may sometimes be in the same town, and sometimes in the\nsame neighbourhood, without being able to lend the least assistance\nto one another. The statute of apprenticeship may oppose it in the one\ncase, and both that and an exclusive corporation in the other. In many\ndifferent manufactures, however, the operations are so much alike, that\nthe workmen could easily change trades with one another, if those absurd\nlaws did not hinder them. The arts of weaving plain linen and plain\nsilk, for example, are almost entirely the same. That of weaving plain\nwoollen is somewhat different; but the difference is so insignificant,\nthat either a linen or a silk weaver might become a tolerable workman in\na very few days. If any of those three capital manufactures, therefore,\nwere decaying, the workmen might find a resource in one of the other two\nwhich was in a more prosperous condition; and their wages would\nneither rise too high in the thriving, nor sink too low in the decaying\nmanufacture. The linen manufacture, indeed, is in England, by a\nparticular statute, open to every body; but as it is not much cultivated\nthrough the greater part of the country, it can afford no general\nresource to the work men of other decaying manufactures, who, wherever\nthe statute of apprenticeship takes place, have no other choice, but\ndither to come upon the parish, or to work as common labourers; for\nwhich, by their habits, they are much worse qualified than for any sort\nof manufacture that bears any resemblance to their own. They generally,\ntherefore, chuse to come upon the parish.\n\nWhatever obstructs the free circulation of labour from one employment to\nanother, obstructs that of stock likewise; the quantity of stock which\ncan be employed in any branch of business depending very much upon that\nof the labour which can be employed in it. Corporation laws, however,\ngive less obstruction to the free circulation of stock from one place\nto another, than to that of labour. It is everywhere much easier for a\nwealthy merchant to obtain the privilege of trading in a town-corporate,\nthan for a poor artificer to obtain that of working in it.\n\nThe obstruction which corporation laws give to the free circulation\nof labour is common, I believe, to every part of Europe. That which is\ngiven to it by the poor laws is, so far as I know, peculiar to England.\nIt consists in the difficulty which a poor man finds in obtaining a\nsettlement, or even in being allowed to exercise his industry in any\nparish but that to which he belongs. It is the labour of artificers\nand manufacturers only of which the free circulation is obstructed by\ncorporation laws. The difficulty of obtaining settlements obstructs even\nthat of common labour. It may be worth while to give some account of\nthe rise, progress, and present state of this disorder, the greatest,\nperhaps, of any in the police of England.\n\nWhen, by the destruction of monasteries, the poor had been deprived\nof the charity of those religious houses, after some other ineffectual\nattempts for their relief, it was enacted, by the 43d of Elizabeth, c.\n2. that every parish should be bound to provide for its own poor, and\nthat overseers of the poor should be annually appointed, who, with the\nchurch-wardens, should raise, by a parish rate, competent sums for this\npurpose.\n\nBy this statute, the necessity of providing for their own poor was\nindispensably imposed upon every parish. Who were to be considered\nas the poor of each parish became, therefore, a question of some\nimportance. This question, after some variation, was at last determined\nby the 13th and 14th of Charles II. when it was enacted, that forty days\nundisturbed residence should gain any person a settlement in any parish;\nbut that within that time it should be lawful for two justices of the\npeace, upon complaint made by the church-wardens or overseers of the\npoor, to remove any new inhabitant to the parish where he was last\nlegally settled; unless he either rented a tenement of ten pounds\na-year, or could give such security for the discharge of the parish\nwhere he was then living, as those justices should judge sufficient.\n\nSome frauds, it is said, were committed in consequence of this statute;\nparish officers sometime's bribing their own poor to go clandestinely to\nanother parish, and, by keeping themselves concealed for forty days, to\ngain a settlement there, to the discharge of that to which they properly\nbelonged. It was enacted, therefore, by the 1st of James II. that the\nforty days undisturbed residence of any person necessary to gain a\nsettlement, should be accounted only from the time of his delivering\nnotice, in writing, of the place of his abode and the number of his\nfamily, to one of the church-wardens or overseers of the parish where he\ncame to dwell.\n\nBut parish officers, it seems, were not always more honest with regard\nto their own than they had been with regard to other parishes, and\nsometimes connived at such intrusions, receiving the notice, and taking\nno proper steps in consequence of it. As every person in a parish,\ntherefore, was supposed to have an interest to prevent as much as\npossible their being burdened by such intruders, it was further enacted\nby the 3rd of William III. that the forty days residence should be\naccounted only from the publication of such notice in writing on Sunday\nin the church, immediately after divine service.\n\n\"After all,\" says Doctor Burn, \"this kind of settlement, by continuing\nforty days after publication of notice in writing, is very seldom\nobtained; and the design of the acts is not so much for gaining of\nsettlements, as for the avoiding of them by persons coming into a parish\nclandestinely, for the giving of notice is only putting a force upon\nthe parish to remove. But if a person's situation is such, that it is\ndoubtful whether he is actually removable or not, he shall, by giving of\nnotice, compel the parish either to allow him a settlement uncontested,\nby suffering him to continue forty days, or by removing him to try the\nright.\"\n\nThis statute, therefore, rendered it almost impracticable for a poor man\nto gain a new settlement in the old way, by forty days inhabitancy. But\nthat it might not appear to preclude altogether the common people of\none' parish from ever establishing themselves with security in another,\nit appointed four other ways by which a settlement might be gained\nwithout any notice delivered or published. The first was, by being taxed\nto parish rates and paying them; the second, by being elected into an\nannual parish office, and serving in it a year; the third, by serving\nan apprenticeship in the parish; the fourth, by being hired into service\nthere for a year, and continuing in the same service during the whole of\nit. Nobody can gain a settlement by either of the two first ways, but\nby the public deed of the whole parish, who are too well aware of the\nconsequences to adopt any new-comer, who has nothing but his labour to\nsupport him, either by taxing him to parish rates, or by electing him\ninto a parish office.\n\nNo married man can well gain any settlement in either of the two last\nways. An apprentice is scarce ever married; and it is expressly enacted,\nthat no married servant shall gain any settlement by being hired for\na year. The principal effect of introducing settlement by service, has\nbeen to put out in a great measure the old fashion of hiring for a year;\nwhich before had been so customary in England, that even at this day, if\nno particular term is agreed upon, the law intends that every servant\nis hired for a year. But masters are not always willing to give their\nservants a settlement by hiring them in this manner; and servants are\nnot always willing to be so hired, because, as every last settlement\ndischarges all the foregoing, they might thereby lose their original\nsettlement in the places of their nativity, the habitation of their\nparents and relations.\n\nNo independent workman, it is evident, whether labourer or artificer,\nis likely to gain any new settlement, either by apprenticeship or by\nservice. When such a person, therefore, carried his industry to a new\nparish, he was liable to be removed, how healthy and industrious soever,\nat the caprice of any churchwarden or overseer, unless he either rented\na tenement of ten pounds a-year, a thing impossible for one who has\nnothing but his labour to live by, or could give such security for\nthe discharge of the parish as two justices of the peace should judge\nsufficient.\n\nWhat security they shall require, indeed, is left altogether to their\ndiscretion; but they cannot well require less than thirty pounds, it\nhaving been enacted, that the purchase even of a freehold estate of less\nthan thirty pounds value, shall not gain any person a settlement, as not\nbeing sufficient for the discharge of the parish. But this is a security\nwhich scarce any man who lives by labour can give; and much greater\nsecurity is frequently demanded.\n\nIn order to restore, in some measure, that free circulation of labour\nwhich those different statutes had almost entirely taken away, the\ninvention of certificates was fallen upon. By the 8th and 9th of William\nIII. it was enacted that if any person should bring a certificate\nfrom the parish where he was last legally settled, subscribed by the\nchurch-wardens and overseers of the poor, and allowed by two justices\nof the peace, that every other parish should be obliged to receive him;\nthat he should not be removable merely upon account of his being likely\nto become chargeable, but only upon his becoming actually chargeable;\nand that then the parish which granted the certificate should be obliged\nto pay the expense both of his maintenance and of his removal. And\nin order to give the most perfect security to the parish where such\ncertificated man should come to reside, it was further enacted by the\nsame statute, that he should gain no settlement there by any means\nwhatever, except either by renting a tenement of ten pounds a-year, or\nby serving upon his own account in an annual parish office for one\nwhole year; and consequently neither by notice nor by service, nor by\napprenticeship, nor by paying parish rates. By the 12th of Queen Anne,\ntoo, stat. 1, c.18, it was further enacted, that neither the servants\nnor apprentices of such certificated man should gain any settlement in\nthe parish where he resided under such certificate.\n\nHow far this invention has restored that free circulation of labour,\nwhich the preceding statutes had almost entirely taken away, we may\nlearn from the following very judicious observation of Doctor Burn. \"It\nis obvious,\" says he, \"that there are divers good reasons for requiring\ncertificates with persons coming to settle in any place; namely,\nthat persons residing under them can gain no settlement, neither by\napprenticeship, nor by service, nor by giving notice, nor by paying\nparish rates; that they can settle neither apprentices nor servants;\nthat if they become chargeable, it is certainly known whither to remove\nthem, and the parish shall be paid for the removal, and for their\nmaintenance in the mean time; and that, if they fall sick, and cannot be\nremoved, the parish which gave the certificate must maintain them;\nnone of all which can be without a certificate. Which reasons will hold\nproportionably for parishes not granting certificates in ordinary cases;\nfor it is far more than an equal chance, but that they will have the\ncertificated persons again, and in a worse condition.\" The moral of this\nobservation seems to be, that certificates ought always to be required\nby the parish where any poor man comes to reside, and that they ought\nvery seldom to be granted by that which he purposes to leave. \"There is\nsomewhat of hardship in this matter of certificates,\" says the same very\nintelligent author, in his History of the Poor Laws, \"by putting it in\nthe power of a parish officer to imprison a man as it were for life,\nhowever inconvenient it may be for him to continue at that place where\nhe has had the misfortune to acquire what is called a settlement, or\nwhatever advantage he may propose himself by living elsewhere.\"\n\nThough a certificate carries along with it no testimonial of good\nbehaviour, and certifies nothing but that the person belongs to the\nparish to which he really does belong, it is altogether discretionary in\nthe parish officers either to grant or to refuse it. A mandamus was once\nmoved for, says Doctor Burn, to compel the church-wardens and overseers\nto sign a certificate; but the Court of King's Bench rejected the motion\nas a very strange attempt.\n\nThe very unequal price of labour which we frequently find in England, in\nplaces at no great distance from one another, is probably owing to the\nobstruction which the law of settlements gives to a poor man who would\ncarry his industry from one parish to another without a certificate. A\nsingle man, indeed who is healthy and industrious, may sometimes reside\nby sufferance without one; but a man with a wife and family who should\nattempt to do so, would, in most parishes, be sure of being removed;\nand, if the single man should afterwards marry, he would generally be\nremoved likewise. The scarcity of hands in one parish, therefore,\ncannot always be relieved by their superabundance in another, as it is\nconstantly in Scotland, and I believe, in all other countries where\nthere is no difficulty of settlement. In such countries, though wages\nmay sometimes rise a little in the neighbourhood of a great town, or\nwherever else there is an extraordinary demand for labour, and sink\ngradually as the distance from such places increases, till they fall\nback to the common rate of the country; yet we never meet with those\nsudden and unaccountable differences in the wages of neighbouring places\nwhich we sometimes find in England, where it is often more difficult for\na poor man to pass the artificial boundary of a parish, than an arm\nof the sea, or a ridge of high mountains, natural boundaries which\nsometimes separate very distinctly different rates of wages in other\ncountries.\n\nTo remove a man who has committed no misdemeanour, from the parish where\nhe chooses to reside, is an evident violation of natural liberty and\njustice. The common people of England, however, so jealous of their\nliberty, but like the common people of most other countries, never\nrightly understanding wherein it consists, have now, for more than a\ncentury together, suffered themselves to be exposed to this oppression\nwithout a remedy. Though men of reflection, too, have some times\ncomplained of the law of settlements as a public grievance; yet it\nhas never been the object of any general popular clamour, such as that\nagainst general warrants, an abusive practice undoubtedly, but such\na one as was not likely to occasion any general oppression. There is\nscarce a poor man in England, of forty years of age, I will venture to\nsay, who has not, in some part of his life, felt himself most cruelly\noppressed by this ill-contrived law of settlements.\n\nI shall conclude this long chapter with observing, that though anciently\nit was usual to rate wages, first by general laws extending over the\nwhole kingdom, and afterwards by particular orders of the justices of\npeace in every particular county, both these practices have now gone\nentirely into disuse. \"By the experience of above four hundred years,\"\nsays Doctor Burn, \"it seems time to lay aside all endeavours to bring\nunder strict regulations, what in its own nature seems incapable of\nminute limitation; for if all persons in the same kind of work were to\nreceive equal wages, there would be no emulation, and no room left for\nindustry or ingenuity.\"\n\nParticular acts of parliament, however, still attempt sometimes to\nregulate wages in particular trades, and in particular places. Thus the\n8th of George III. prohibits, under heavy penalties, all master tailors\nin London, and five miles round it, from giving, and their workmen\nfrom accepting, more than two shillings and sevenpence halfpenny a-day,\nexcept in the case of a general mourning. Whenever the legislature\nattempts to regulate the differences between masters and their workmen,\nits counsellors are always the masters. When the regulation, therefore,\nis in favour of the workmen, it is always just and equitable; but it is\nsometimes otherwise when in favour of the masters. Thus the law which\nobliges the masters in several different trades to pay their workmen in\nmoney, and not in goods, is quite just and equitable. It imposes no real\nhardship upon the masters. It only obliges them to pay that value in\nmoney, which they pretended to pay, but did not always really pay, in\ngoods. This law is in favour of the workmen; but the 8th of George III.\nis in favour of the masters. When masters combine together, in order to\nreduce the wages of their workmen, they commonly enter into a private\nbond or agreement, not to give more than a certain wage, under a certain\npenalty. Were the workmen to enter into a contrary combination of the\nsame kind, not to accept of a certain wage, under a certain penalty, the\nlaw would punish them very severely; and, if it dealt impartially, it\nwould treat the masters in the same manner. But the 8th of George III.\nenforces by law that very regulation which masters sometimes attempt to\nestablish by such combinations. The complaint of the workmen, that\nit puts the ablest and most industrious upon the same footing with an\nordinary workman, seems perfectly well founded.\n\nIn ancient times, too, it was usual to attempt to regulate the profits\nof merchants and other dealers, by regulating the price of provisions\nand ether goods. The assize of bread is, so far as I know, the only\nremnant of this ancient usage. Where there is an exclusive corporation,\nit may, perhaps, be proper to regulate the price of the first necessary\nof life; but, where there is none, the competition will regulate it\nmuch better than any assize. The method of fixing the assize of bread,\nestablished by the 31st of George II. could not be put in practice in\nScotland, on account of a defect in the law, its execution depending\nupon the office of clerk of the market, which does not exist there. This\ndefect was not remedied till the third of George III. The want of an\nassize occasioned no sensible inconveniency; and the establishment\nof one in the few places where it has yet taken place has produced\nno sensible advantage. In the greater part of the towns in Scotland,\nhowever, there is an incorporation of bakers, who claim exclusive\nprivileges, though they are not very strictly guarded. The proportion\nbetween the different rates, both of wages and profit, in the different\nemployments of labour and stock, seems not to be much affected, as\nhas already been observed, by the riches or poverty, the advancing,\nstationary, or declining state of the society. Such revolutions in the\npublic welfare, though they affect the general rates both of wages\nand profit, must, in the end, affect them equally in all different\nemployments. The proportion between them, therefore, must remain the\nsame, and cannot well be altered, at least for any considerable time, by\nany such revolutions.\n\n\n\n\nCHAPTER XI. OF THE RENT OF LAND.\n\nRent, considered as the price paid for the use of land, is naturally the\nhighest which the tenant can afford to pay in the actual circumstances\nof the land. In adjusting the terms of the lease, the landlord\nendeavours to leave him no greater share of the produce than what is\nsufficient to keep up the stock from which he furnishes the seed, pays\nthe labour, and purchases and maintains the cattle and other instruments\nof husbandry, together with the ordinary profits of farming stock in\nthe neighbourhood. This is evidently the smallest share with which the\ntenant can content himself, without being a loser, and the landlord\nseldom means to leave him any more. Whatever part of the produce, or,\nwhat is the same thing, whatever part of its price, is over and above\nthis share, he naturally endeavours to reserve to himself as the rent of\nhis land, which is evidently the highest the tenant can afford to pay in\nthe actual circumstances of the land. Sometimes, indeed, the liberality,\nmore frequently the ignorance, of the landlord, makes him accept of\nsomewhat less than this portion; and sometimes, too, though more rarely,\nthe ignorance of the tenant makes him undertake to pay somewhat more,\nor to content himself with somewhat less, than the ordinary profits of\nfarming stock in the neighbourhood. This portion, however, may still\nbe considered as the natural rent of land, or the rent at which it is\nnaturally meant that land should, for the most part, be let.\n\nThe rent of land, it may be thought, is frequently no more than a\nreasonable profit or interest for the stock laid out by the landlord\nupon its improvement. This, no doubt, may be partly the case upon some\noccasions; for it can scarce ever be more than partly the case. The\nlandlord demands a rent even for unimproved land, and the supposed\ninterest or profit upon the expense of improvement is generally an\naddition to this original rent. Those improvements, besides, are not\nalways made by the stock of the landlord, but sometimes by that of\nthe tenant. When the lease comes to be renewed, however, the landlord\ncommonly demands the same augmentation of rent as if they had been all\nmade by his own.\n\nHe sometimes demands rent for what is altogether incapable of human\nimprovements. Kelp is a species of sea-weed, which, when burnt, yields\nan alkaline salt, useful for making glass, soap, and for several other\npurposes. It grows in several parts of Great Britain, particularly in\nScotland, upon such rocks only as lie within the high-water mark, which\nare twice every day covered with the sea, and of which the produce,\ntherefore, was never augmented by human industry. The landlord, however,\nwhose estate is bounded by a kelp shore of this kind, demands a rent for\nit as much as for his corn-fields.\n\nThe sea in the neighbourhood of the islands of Shetland is more than\ncommonly abundant in fish, which makes a great part of the subsistence\nof their inhabitants. But, in order to profit by the produce of the\nwater, they must have a habitation upon the neighbouring land. The rent\nof the landlord is in proportion, not to what the farmer can make by\nthe land, but to what he can make both by the land and the water. It is\npartly paid in sea-fish; and one of the very few instances in which\nrent makes a part of the price of that commodity, is to be found in that\ncountry.\n\nThe rent of land, therefore, considered as the price paid for the use of\nthe land, is naturally a monopoly price. It is not at all proportioned\nto what the landlord may have laid out upon the improvement of the land,\nor to what he can afford to take, but to what the farmer can afford to\ngive.\n\nSuch parts only of the produce of land can commonly be brought to\nmarket, of which the ordinary price is sufficient to replace the stock\nwhich must be employed in bringing them thither, together with its\nordinary profits. If the ordinary price is more than this, the surplus\npart of it will naturally go to the rent of the land. If it is not more,\nthough the commodity may be brought to market, it can afford no rent\nto the landlord. Whether the price is, or is not more, depends upon the\ndemand.\n\nThere are some parts of the produce of land, for which the demand must\nalways be such as to afford a greater price than what is sufficient to\nbring them to market; and there are others for which it either may or\nmay not be such as to afford this greater price. The former must always\nafford a rent to the landlord. The latter sometimes may and sometimes\nmay not, according to different circumstances.\n\nRent, it is to be observed, therefore, enters into the composition of\nthe price of commodities in a different way from wages and profit. High\nor low wages and profit are the causes of high or low price; high or\nlow rent is the effect of it. It is because high or low wages and profit\nmust be paid, in order to bring a particular commodity to market, that\nits price is high or low. But it is because its price is high or low,\na great deal more, or very little more, or no more, than what is\nsufficient to pay those wages and profit, that it affords a high rent,\nor a low rent, or no rent at all.\n\nThe particular consideration, first, of those parts of the produce of\nland which always afford some rent; secondly, of those which sometimes\nmay and sometimes may not afford rent; and, thirdly, of the variations\nwhich, in the different periods of improvement, naturally take place in\nthe relative value of those two different sorts of rude produce, when\ncompared both with one another and with manufactured commodities, will\ndivide this chapter into three parts.\n\n\nPART I.--Of the Produce of Land which always affords Rent.\n\nAs men, like all other animals, naturally multiply in proportion to the\nmeans of their subsistence, food is always more or less in demand. It\ncan always purchase or command a greater or smaller quantity of labour,\nand somebody can always be found who is willing to do something in order\nto obtain it. The quantity of labour, indeed, which it can purchase,\nis not always equal to what it could maintain, if managed in the most\neconomical manner, on account of the high wages which are sometimes\ngiven to labour; but it can always purchase such a quantity of labour as\nit can maintain, according to the rate at which that sort of labour is\ncommonly maintained in the neighbourhood.\n\nBut land, in almost any situation, produces a greater quantity of\nfood than what is sufficient to maintain all the labour necessary for\nbringing it to market, in the most liberal way in which that labour is\never maintained. The surplus, too, is always more than sufficient to\nreplace the stock which employed that labour, together with its profits.\nSomething, therefore, always remains for a rent to the landlord.\n\nThe most desert moors in Norway and Scotland produce some sort of\npasture for cattle, of which the milk and the increase are always more\nthan sufficient, not only to maintain all the labour necessary for\ntending them, and to pay the ordinary profit to the farmer or the owner\nof the herd or flock, but to afford some small rent to the landlord. The\nrent increases in proportion to the goodness of the pasture. The same\nextent of ground not only maintains a greater number of cattle, but as\nthey we brought within a smaller compass, less labour becomes requisite\nto tend them, and to collect their produce. The landlord gains both\nways; by the increase of the produce, and by the diminution of the\nlabour which must be maintained out of it.\n\nThe rent of land not only varies with its fertility, whatever be its\nproduce, but with its situation, whatever be its fertility. Land in the\nneighbourhood of a town gives a greater rent than land equally fertile\nin a distant part of the country. Though it may cost no more labour to\ncultivate the one than the other, it must always cost more to bring the\nproduce of the distant land to market. A greater quantity of labour,\ntherefore, must be maintained out of it; and the surplus, from which are\ndrawn both the profit of the farmer and the rent of the landlord, must\nbe diminished. But in remote parts of the country, the rate of profit,\nas has already been shewn, is generally higher than in the neighbourhood\nof a large town. A smaller proportion of this diminished surplus,\ntherefore, must belong to the landlord.\n\nGood roads, canals, and navigable rivers, by diminishing the expense of\ncarriage, put the remote parts of the country more nearly upon a level\nwith those in the neighbourhood of the town. They are upon that account\nthe greatest of all improvements. They encourage the cultivation of the\nremote, which must always be the most extensive circle of the country.\nThey are advantageous to the town by breaking down the monopoly of the\ncountry in its neighbourhood. They are advantageous even to that part of\nthe country. Though they introduce some rival commodities into the old\nmarket, they open many new markets to its produce. Monopoly, besides,\nis a great enemy to good management, which can never be universally\nestablished, but in consequence of that free and universal competition\nwhich forces every body to have recourse to it for the sake of self\ndefence. It is not more than fifty years ago, that some of the counties\nin the neighbourhood of London petitioned the parliament against the\nextension of the turnpike roads into the remoter counties. Those remoter\ncounties, they pretended, from the cheapness of labour, would be able to\nsell their grass and corn cheaper in the London market than themselves,\nand would thereby reduce their rents, and ruin their cultivation. Their\nrents, however, have risen, and their cultivation has been improved\nsince that time.\n\nA corn field of moderate fertility produces a much greater quantity\nof food for man, than the best pasture of equal extent. Though its\ncultivation requires much more labour, yet the surplus which remains\nafter replacing the seed and maintaining all that labour, is likewise\nmuch greater. If a pound of butcher's meat, therefore, was never\nsupposed to be worth more than a pound of bread, this greater surplus\nwould everywhere be of greater value and constitute a greater fund, both\nfor the profit of the farmer and the rent of the landlord. It seems to\nhave done so universally in the rude beginnings of agriculture.\n\nBut the relative values of those two different species of food, bread\nand butcher's meat, are very different in the different periods of\nagriculture. In its rude beginnings, the unimproved wilds, which then\noccupy the far greater part of the country, are all abandoned to cattle.\nThere is more butcher's meat than bread; and bread, therefore, is the\nfood for which there is the greatest competition, and which consequently\nbrings the greatest price. At Buenos Ayres, we are told by Ulloa, four\nreals, one-and-twenty pence halfpenny sterling, was, forty or fifty\nyears ago, the ordinary price of an ox, chosen from a herd of two or\nthree hundred. He says nothing of the price of bread, probably because\nhe found nothing remarkable about it. An ox there, he says, costs little\nmore than the labour of catching him. But corn can nowhere be raised\nwithout a great deal of labour; and in a country which lies upon the\nriver Plate, at that time the direct road from Europe to the silver\nmines of Potosi, the money-price of labour could be very cheap. It is\notherwise when cultivation is extended over the greater part of the\ncountry. There is then more bread than butcher's meat. The competition\nchanges its direction, and the price of butcher's meat becomes greater\nthan the price of bread.\n\nBy the extension, besides, of cultivation, the unimproved wilds become\ninsufficient to supply the demand for butcher's meat. A great part of\nthe cultivated lands must be employed in rearing and fattening cattle;\nof which the price, therefore, must be sufficient to pay, not only the\nlabour necessary for tending them, but the rent which the landlord, and\nthe profit which the farmer, could have drawn from such land employed in\ntillage. The cattle bred upon the most uncultivated moors, when brought\nto the same market, are, in proportion to their weight or goodness, sold\nat the same price as those which are reared upon the most improved land.\nThe proprietors of those moors profit by it, and raise the rent of their\nland in proportion to the price of their cattle. It is not more than a\ncentury ago, that in many parts of the Highlands of Scotland, butcher's\nmeat was as cheap or cheaper than even bread made of oatmeal. The Union\nopened the market of England to the Highland cattle. Their ordinary\nprice, at present, is about three times greater than at the beginning\nof the century, and the rents of many Highland estates have been tripled\nand quadrupled in the same time. In almost every part of Great Britain,\na pound of the best butcher's meat is, in the present times, generally\nworth more than two pounds of the best white bread; and in plentiful\nyears it is sometimes worth three or four pounds.\n\nIt is thus that, in the progress of improvement, the rent and profit of\nunimproved pasture come to be regulated in some measure by the rent and\nprofit of what is improved, and these again by the rent and profit of\ncorn. Corn is an annual crop; butcher's meat, a crop which requires four\nor five years to grow. As an acre of land, therefore, will produce a\nmuch smaller quantity of the one species of food than of the other, the\ninferiority of the quantity must be compensated by the superiority of\nthe price. If it was more than compensated, more corn-land would be\nturned into pasture; and if it was not compensated, part of what was in\npasture would be brought back into corn.\n\nThis equality, however, between the rent and profit of grass and those\nof corn; of the land of which the immediate produce is food for cattle,\nand of that of which the immediate produce is food for men, must be\nunderstood to take place only through the greater part of the improved\nlands of a great country. In some particular local situations it is\nquite otherwise, and the rent and profit of grass are much superior to\nwhat can be made by corn.\n\nThus, in the neighbourhood of a great town, the demand for milk, and for\nforage to horses, frequently contribute, together with the high price of\nbutcher's meat, to raise the value of grass above what may be called its\nnatural proportion to that of corn. This local advantage, it is evident,\ncannot be communicated to the lands at a distance.\n\nParticular circumstances have sometimes rendered some countries so\npopulous, that the whole territory, like the lands in the neighbourhood\nof a great town, has not been sufficient to produce both the grass\nand the corn necessary for the subsistence of their inhabitants. Their\nlands, therefore, have been principally employed in the production of\ngrass, the more bulky commodity, and which cannot be so easily brought\nfrom a great distance; and corn, the food of the great body of the\npeople, has been chiefly imported from foreign countries. Holland is\nat present in this situation; and a considerable part of ancient Italy\nseems to have been so during the prosperity of the Romans. To feed\nwell, old Cato said, as we are told by Cicero, was the first and\nmost profitable thing in the management of a private estate; to feed\ntolerably well, the second; and to feed ill, the third. To plough,\nhe ranked only in the fourth place of profit and advantage. Tillage,\nindeed, in that part of ancient Italy which lay in the neighbour hood of\nRome, must have been very much discouraged by the distributions of corn\nwhich were frequently made to the people, either gratuitously, or at a\nvery low price. This corn was brought from the conquered provinces, of\nwhich several, instead of taxes, were obliged to furnish a tenth part of\ntheir produce at a stated price, about sixpence a-peck, to the republic.\nThe low price at which this corn was distributed to the people, must\nnecessarily have sunk the price of what could be brought to the Roman\nmarket from Latium, or the ancient territory of Rome, and must have\ndiscouraged its cultivation in that country.\n\nIn an open country, too, of which the principal produce is corn, a\nwell-inclosed piece of grass will frequently rent higher than any corn\nfield in its neighbourhood. It is convenient for the maintenance of the\ncattle employed in the cultivation of the corn; and its high rent is,\nin this case, not so properly paid from the value of its own produce, as\nfrom that of the corn lands which are cultivated by means of it. It is\nlikely to fall, if ever the neighbouring lands are completely inclosed.\nThe present high rent of inclosed land in Scotland seems owing to\nthe scarcity of inclosure, and will probably last no longer than that\nscarcity. The advantage of inclosure is greater for pasture than for\ncorn. It saves the labour of guarding the cattle, which feed better,\ntoo, when they are not liable to be disturbed by their keeper or his\ndog.\n\nBut where there is no local advantage of this kind, the rent and profit\nof corn, or whatever else is the common vegetable food of the people,\nmust naturally regulate upon the land which is fit for producing it, the\nrent and profit of pasture.\n\nThe use of the artificial grasses, of turnips, carrots, cabbages,\nand the other expedients which have been fallen upon to make an equal\nquantity of land feed a greater number of cattle than when in natural\ngrass, should somewhat reduce, it might be expected, the superiority\nwhich, in an improved country, the price of butcher's meat naturally has\nover that of bread. It seems accordingly to have done so; and there is\nsome reason for believing that, at least in the London market, the price\nof butcher's meat, in proportion to the price of bread, is a good deal\nlower in the present times than it was in the beginning of the last\ncentury.\n\nIn the Appendix to the life of Prince Henry, Doctor Birch has given\nus an account of the prices of butcher's meat as commonly paid by that\nprince. It is there said, that the four quarters of an ox, weighing\nsix hundred pounds, usually cost him nine pounds ten shillings, or\nthereabouts; that is thirty-one shillings and eight-pence per hundred\npounds weight. Prince Henry died on the 6th of November 1612, in the\nnineteenth year of his age.\n\nIn March 1764, there was a parliamentary inquiry into the causes of the\nhigh price of provisions at that time. It was then, among other proof\nto the same purpose, given in evidence by a Virginia merchant, that in\nMarch 1763, he had victualled his ships for twentyfour or twenty-five\nshillings the hundred weight of beef, which he considered as the\nordinary price; whereas, in that dear year, he had paid twenty-seven\nshillings for the same weight and sort. This high price in 1764 is,\nhowever, four shillings and eight-pence cheaper than the ordinary price\npaid by Prince Henry; and it is the best beef only, it must be observed,\nwhich is fit to be salted for those distant voyages.\n\nThe price paid by Prince Henry amounts to 3d. 4/5ths per pound weight of\nthe whole carcase, coarse and choice pieces taken together; and at that\nrate the choice pieces could not have been sold by retail for less than\n4½d. or 5d. the pound.\n\nIn the parliamentary inquiry in 1764, the witnesses stated the price of\nthe choice pieces of the best beef to be to the consumer 4d. and 4½d.\nthe pound; and the coarse pieces in general to be from seven farthings\nto 2½d. and 2¾d.; and this, they said, was in general one halfpenny\ndearer than the same sort of pieces had usually been sold in the month\nof March. But even this high price is still a good deal cheaper than\nwhat we can well suppose the ordinary retail price to have been in the\ntime of Prince Henry.\n\nDuring the first twelve years of the last century, the average price of\nthe best wheat at the Windsor market was £ 1:18:3½d. the quarter of nine\nWinchester bushels.\n\nBut in the twelve years preceding 1764 including that year, the average\nprice of the same measure of the best wheat at the same market was £\n2:1:9½d.\n\nIn the first twelve years of the last century, therefore, wheat appears\nto have been a good deal cheaper, and butcher's meat a good deal dearer,\nthan in the twelve years preceding 1764, including that year.\n\nIn all great countries, the greater part of the cultivated lands are\nemployed in producing either food for men or food for cattle. The rent\nand profit of these regulate the rent and profit of all other cultivated\nland. If any particular produce afforded less, the land would soon be\nturned into corn or pasture; and if any afforded more, some part of the\nlands in corn or pasture would soon be turned to that produce.\n\nThose productions, indeed, which require either a greater original\nexpense of improvement, or a greater annual expense of cultivation in\norder to fit the land for them, appear commonly to afford, the one a\ngreater rent, the other a greater profit, than corn or pasture. This\nsuperiority, however, will seldom be found to amount to more than a\nreasonable interest or compensation for this superior expense.\n\nIn a hop garden, a fruit garden, a kitchen garden, both the rent of the\nlandlord, and the profit of the farmer, are generally greater than\nin acorn or grass field. But to bring the ground into this condition\nrequires more expense. Hence a greater rent becomes due to the landlord.\nIt requires, too, a more attentive and skilful management. Hence a\ngreater profit becomes due to the farmer. The crop, too, at least in the\nhop and fruit garden, is more precarious. Its price, therefore, besides\ncompensating all occasional losses, must afford something like the\nprofit of insurance. The circumstances of gardeners, generally mean,\nand always moderate, may satisfy us that their great ingenuity is not\ncommonly over-recompensed. Their delightful art is practised by so many\nrich people for amusement, that little advantage is to be made by those\nwho practise it for profit; because the persons who should naturally\nbe their best customers, supply themselves with all their most precious\nproductions.\n\nThe advantage which the landlord derives from such improvements, seems\nat no time to have been greater than what was sufficient to compensate\nthe original expense of making them. In the ancient husbandry, after the\nvineyard, a well-watered kitchen garden seems to have been the part\nof the farm which was supposed to yield the most valuable produce. But\nDemocritus, who wrote upon husbandry about two thousand years ago,\nand who was regarded by the ancients as one of the fathers of the art,\nthought they did not act wisely who inclosed a kitchen garden. The\nprofit, he said, would not compensate the expense of a stone-wall: and\nbricks (he meant, I suppose, bricks baked in the sun) mouldered with the\nrain and the winter-storm, and required continual repairs. Columella,\nwho reports this judgment of Democritus, does not controvert it, but\nproposes a very frugal method of inclosing with a hedge of brambles and\nbriars, which he says he had found by experience to be both a lasting\nand an impenetrable fence; but which, it seems, was not commonly known\nin the time of Democritus. Palladius adopts the opinion of Columella,\nwhich had before been recommended by Varro. In the judgment of those\nancient improvers, the produce of a kitchen garden had, it seems, been\nlittle more than sufficient to pay the extraordinary culture and the\nexpense of watering; for in countries so near the sun, it was thought\nproper, in those times as in the present, to have the command of a\nstream of water, which could be conducted to every bed in the garden.\nThrough the greater part of Europe, a kitchen garden is not at\npresent supposed to deserve a better inclosure than mat recommended\nby Columella. In Great Britain, and some other northern countries, the\nfiner fruits cannot be brought to perfection but by the assistance of a\nwall. Their price, therefore, in such countries, must be sufficient\nto pay the expense of building and maintaining what they cannot be had\nwithout. The fruit-wall frequently surrounds the kitchen garden, which\nthus enjoys the benefit of an inclosure which its own produce could\nseldom pay for.\n\nThat the vineyard, when properly planted and brought to perfection,\nwas the most valuable part of the farm, seems to have been an undoubted\nmaxim in the ancient agriculture, as it is in the modern, through all\nthe wine countries. But whether it was advantageous to plant a new\nvineyard, was a matter of dispute among the ancient Italian husbandmen,\nas we learn from Columella. He decides, like a true lover of all curious\ncultivation, in favour of the vineyard; and endeavours to shew, by a\ncomparison of the profit and expense, that it was a most advantageous\nimprovement. Such comparisons, however, between the profit and expense\nof new projects are commonly very fallacious; and in nothing more so\nthan in agriculture. Had the gain actually made by such plantations been\ncommonly as great as he imagined it might have been, there could have\nbeen no dispute about it. The same point is frequently at this day\na matter of controversy in the wine countries. Their writers on\nagriculture, indeed, the lovers and promoters of high cultivation, seem\ngenerally disposed to decide with Columella in favour of the vineyard.\nIn France, the anxiety of the proprietors of the old vineyards to\nprevent the planting of any new ones, seems to favour their opinion, and\nto indicate a consciousness in those who must have the experience,\nthat this species of cultivation is at present in that country more\nprofitable than any other. It seems, at the same time, however, to\nindicate another opinion, that this superior profit can last no longer\nthan the laws which at present restrain the free cultivation of the\nvine. In 1731, they obtained an order of council, prohibiting both the\nplanting of new vineyards, and the renewal of these old ones, of which\nthe cultivation had been interrupted for two years, without a particular\npermission from the king, to be granted only in consequence of an\ninformation from the intendant of the province, certifying that he had\nexamined the land, and that it was incapable of any other culture. The\npretence of this order was the scarcity of corn and pasture, and the\nsuperabundance of wine. But had this superabundance been real, it would,\nwithout any order of council, have effectually prevented the plantation\nof new vineyards, by reducing the profits of this species of cultivation\nbelow their natural proportion to those of corn and pasture. With regard\nto the supposed scarcity of corn occasioned by the multiplication of\nvineyards, corn is nowhere in France more carefully cultivated than\nin the wine provinces, where the land is fit for producing it: as in\nBurgundy, Guienne, and the Upper Languedoc. The numerous hands employed\nin the one species of cultivation necessarily encourage the other, by\naffording a ready market for its produce. To diminish the number\nof those who are capable of paying it, is surely a most unpromising\nexpedient for encouraging the cultivation of corn. It is like the policy\nwhich would promote agriculture, by discouraging manufactures.\n\nThe rent and profit of those productions, therefore, which require\neither a greater original expense of improvement in order to fit the\nland for them, or a greater annual expense of cultivation, though often\nmuch superior to those of corn and pasture, yet when they do no more\nthan compensate such extraordinary expense, are in reality regulated by\nthe rent and profit of those common crops.\n\nIt sometimes happens, indeed, that the quantity of land which can be\nfitted for some particular produce, is too small to supply the effectual\ndemand. The whole produce can be disposed of to those who are willing to\ngive somewhat more than what is sufficient to pay the whole rent, wages,\nand profit, necessary for raising and bringing it to market, according\nto their natural rates, or according to the rates at which they are paid\nin the greater part of other cultivated land. The surplus part of the\nprice which remains after defraying the whole expense of improvement and\ncultivation, may commonly, in this case, and in this case only, bear\nno regular proportion to the like surplus in corn or pasture, but may\nexceed it in almost any degree; and the greater part of this excess\nnaturally goes to the rent of the landlord.\n\nThe usual and natural proportion, for example, between the rent and\nprofit of wine, and those of corn and pasture, must be understood to\ntake place only with regard to those vineyards which produce nothing but\ngood common wine, such as can be raised almost anywhere, upon any light,\ngravelly, or sandy soil, and which has nothing to recommend it but its\nstrength and wholesomeness. It is with such vineyards only, that the\ncommon land of the country can be brought into competition; for with\nthose of a peculiar quality it is evident that it cannot.\n\nThe vine is more affected by the difference of soils than any other\nfruit-tree. From some it derives a flavour which no culture or\nmanagement can equal, it is supposed, upon any other. This flavour, real\nor imaginary, is sometimes peculiar to the produce of a few vineyards;\nsometimes it extends through the greater part of a small district, and\nsometimes through a considerable part of a large province. The whole\nquantity of such wines that is brought to market falls short of the\neffectual demand, or the demand of those who would be willing to pay the\nwhole rent, profit, and wages, necessary for preparing and bringing them\nthither, according to the ordinary rate, or according to the rate at\nwhich they are paid in common vineyards. The whole quantity, therefore,\ncan be disposed of to those who are willing to pay more, which\nnecessarily raises their price above that of common wine. The difference\nis greater or less, according as the fashionableness and scarcity of the\nwine render the competition of the buyers more or less eager. Whatever\nit be, the greater part of it goes to the rent of the landlord. For\nthough such vineyards are in general more carefully cultivated than most\nothers, the high price of the wine seems to be, not so much the effect,\nas the cause of this careful cultivation. In so valuable a produce, the\nloss occasioned by negligence is so great, as to force even the most\ncareless to attention. A small part of this high price, therefore, is\nsufficient to pay the wages of the extraordinary labour bestowed upon\ntheir cultivation, and the profits of the extraordinary stock which puts\nthat labour into motion.\n\nThe sugar colonies possessed by the European nations in the West Indies\nmay be compared to those precious vineyards. Their whole produce falls\nshort of the effectual demand of Europe, and can be disposed of to those\nwho are willing to give more than what is sufficient to pay the whole\nrent, profit, and wages, necessary for preparing and bringing it to\nmarket, according to the rate at which they are commonly paid by any\nother produce. In Cochin China, the finest white sugar generally sells\nfor three piastres the quintal, about thirteen shillings and sixpence\nof our money, as we are told by Mr Poivre {Voyages d'un Philosophe.}, a\nvery careful observer of the agriculture of that country. What is there\ncalled the quintal, weighs from a hundred and fifty to two hundred Paris\npounds, or a hundred and seventy-five Paris pounds at a medium, which\nreduces the price of the hundred weight English to about eight shillings\nsterling; not a fourth part of what is commonly paid for the brown or\nmuscovada sugars imported from our colonies, and not a sixth part\nof what is paid for the finest white sugar. The greater part of the\ncultivated lands in Cochin China are employed in producing corn and\nrice, the food of the great body of the people. The respective prices of\ncorn, rice, and sugar, are there probably in the natural proportion,\nor in that which naturally takes place in the different crops of the\ngreater part of cultivated land, and which recompenses the landlord and\nfarmer, as nearly as can be computed, according to what is usually the\noriginal expense of improvement, and the annual expense of cultivation.\nBut in our sugar colonies, the price of sugar bears no such proportion\nto that of the produce of a rice or corn field either in Europe or\nAmerica. It is commonly said that a sugar planter expects that the rum\nand the molasses should defray the whole expense of his cultivation,\nand that his sugar should be all clear profit. If this be true, for I\npretend not to affirm it, it is as if a corn farmer expected to defray\nthe expense of his cultivation with the chaff and the straw, and that\nthe grain should be all clear profit. We see frequently societies of\nmerchants in London, and other trading towns, purchase waste lands in\nour sugar colonies, which they expect to improve and cultivate with\nprofit, by means of factors and agents, notwithstanding the great\ndistance and the uncertain returns, from the defective administration of\njustice in those countries. Nobody will attempt to improve and cultivate\nin the same manner the most fertile lands of Scotland, Ireland, or\nthe corn provinces of North America, though, from the more exact\nadministration of justice in these countries, more regular returns might\nbe expected.\n\nIn Virginia and Maryland, the cultivation of tobacco is preferred,\nas most profitable, to that of corn. Tobacco might be cultivated with\nadvantage through the greater part of Europe; but, in almost every part\nof Europe, it has become a principal subject of taxation; and to collect\na tax from every different farm in the country where this plant might\nhappen to be cultivated, would be more difficult, it has been supposed,\nthan to levy one upon its importation at the custom-house. The\ncultivation of tobacco has, upon this account, been most absurdly\nprohibited through the greater part of Europe, which necessarily gives\na sort of monopoly to the countries where it is allowed; and as Virginia\nand Maryland produce the greatest quantity of it, they share largely,\nthough with some competitors, in the advantage of this monopoly. The\ncultivation of tobacco, however, seems not to be so advantageous as that\nof sugar. I have never even heard of any tobacco plantation that was\nimproved and cultivated by the capital of merchants who resided in Great\nBritain; and our tobacco colonies send us home no such wealthy planters\nas we see frequently arrive from our sugar islands. Though, from the\npreference given in those colonies to the cultivation of tobacco above\nthat of corn, it would appear that the effectual demand of Europe for\ntobacco is not completely supplied, it probably is more nearly so than\nthat for sugar; and though the present price of tobacco is probably more\nthan sufficient to pay the whole rent, wages, and profit, necessary for\npreparing and bringing it to market, according to the rate at which\nthey are commonly paid in corn land, it must not be so much more as the\npresent price of sugar. Our tobacco planters, accordingly, have shewn\nthe same fear of the superabundance of tobacco, which the proprietors of\nthe old vineyards in France have of the superabundance of wine. By\nact of assembly, they have restrained its cultivation to six thousand\nplants, supposed to yield a thousand weight of tobacco, for every negro\nbetween sixteen and sixty years of age. Such a negro, over and above\nthis quantity of tobacco, can manage, they reckon, four acres of Indian\ncorn. To prevent the market from being overstocked, too, they have\nsometimes, in plentiful years, we are told by Dr Douglas {Douglas's\nSummary, vol. ii. p. 379, 373.} (I suspect he has been ill informed),\nburnt a certain quantity of tobacco for every negro, in the same manner\nas the Dutch are said to do of spices. If such violent methods are\nnecessary to keep up the present price of tobacco, the superior\nadvantage of its culture over that of corn, if it still has any, will\nnot probably be of long continuance.\n\nIt is in this manner that the rent of the cultivated land, of which the\nproduce is human food, regulates the rent of the greater part of other\ncultivated land. No particular produce can long afford less, because the\nland would immediately be turned to another use; and if any particular\nproduce commonly affords more, it is because the quantity of land which\ncan be fitted for it is too small to supply the effectual demand.\n\nIn Europe, corn is the principal produce of land, which serves\nimmediately for human food. Except in particular situations, therefore,\nthe rent of corn land regulates in Europe that of all other cultivated\nland. Britain need envy neither the vineyards of France, nor the olive\nplantations of Italy. Except in particular situations, the value of\nthese is regulated by that of corn, in which the fertility of Britain is\nnot much inferior to that of either of those two countries.\n\nIf, in any country, the common and favourite vegetable food of the\npeople should be drawn from a plant of which the most common land, with\nthe same, or nearly the same culture, produced a much greater quantity\nthan the most fertile does of corn; the rent of the landlord, or the\nsurplus quantity of food which would remain to him, after paying\nthe labour, and replacing the stock of the farmer, together with its\nordinary profits, would necessarily be much greater. Whatever was the\nrate at which labour was commonly maintained in that country, this\ngreater surplus could always maintain a greater quantity of it, and,\nconsequently, enable the landlord to purchase or command a greater\nquantity of it. The real value of his rent, his real power and\nauthority, his command of the necessaries and conveniencies of life with\nwhich the labour of other people could supply him, would necessarily be\nmuch greater.\n\nA rice field produces a much greater quantity of food than the most\nfertile corn field. Two crops in the year, from thirty to sixty bushels\neach, are said to be the ordinary produce of an acre. Though its\ncultivation, therefore, requires more labour, a much greater surplus\nremains after maintaining all that labour. In those rice countries,\ntherefore, where rice is the common and favourite vegetable food of\nthe people, and where the cultivators are chiefly maintained with it, a\ngreater share of this greater surplus should belong to the landlord than\nin corn countries. In Carolina, where the planters, as in other British\ncolonies, are generally both farmers and landlords, and where rent,\nconsequently, is confounded with profit, the cultivation of rice is\nfound to be more profitable than that of corn, though their fields\nproduce only one crop in the year, and though, from the prevalence\nof the customs of Europe, rice is not there the common and favourite\nvegetable food of the people.\n\nA good rice field is a bog at all seasons, and at one season a bog\ncovered with water. It is unfit either for corn, or pasture, or\nvineyard, or, indeed, for any other vegetable produce that is very\nuseful to men; and the lands which are fit for those purposes are not\nfit for rice. Even in the rice countries, therefore, the rent of rice\nlands cannot regulate the rent of the other cuitivated land which can\nnever be turned to that produce.\n\nThe food produced by a field of potatoes is not inferior in quantity to\nthat produced by a field of rice, and much superior to what is produced\nby a field of wheat. Twelve thousand weight of potatoes from an acre\nof land is not a greater produce than two thousand weight of wheat. The\nfood or solid nourishment, indeed, which can be drawn from each of those\ntwo plants, is not altogether in proportion to their weight, on account\nof the watery nature of potatoes. Allowing, however, half the weight\nof this root to go to water, a very large allowance, such an acre of\npotatoes will still produce six thousand weight of solid nourishment,\nthree times the quantity produced by the acre of wheat. An acre of\npotatoes is cultivated with less expense than an acre of wheat;\nthe fallow, which generally precedes the sowing of wheat, more than\ncompensating the hoeing and other extraordinary culture which is always\ngiven to potatoes. Should this root ever become in any part of Europe,\nlike rice in some rice countries, the common and favourite vegetable\nfood of the people, so as to occupy the same proportion of the lands\nin tillage, which wheat and other sorts of grain for human food do at\npresent, the same quantity of cultivated land would maintain a much\ngreater number of people; and the labourers being generally fed with\npotatoes, a greater surplus would remain after replacing all the stock,\nand maintaining all the labour employed in cultivation. A greater share\nof this surplus, too, would belong to the landlord. Population would\nincrease, and rents would rise much beyond what they are at present.\n\nThe land which is fit for potatoes, is fit for almost every other useful\nvegetable. If they occupied the same proportion of cultivated land which\ncorn does at present, they would regulate, in the same manner, the rent\nof the greater part of other cultivated land.\n\nIn some parts of Lancashire, it is pretended, I have been told, that\nbread of oatmeal is a heartier food for labouring people than wheaten\nbread, and I have frequently heard the same doctrine held in Scotland. I\nam, however, somewhat doubtful of the truth of it. The common people in\nScotland, who are fed with oatmeal, are in general neither so strong\nnor so handsome as the same rank of people in England, who are fed with\nwheaten bread. They neither work so well, nor look so well; and as there\nis not the same difference between the people of fashion in the two\ncountries, experience would seem to shew, that the food of the common\npeople in Scotland is not so suitable to the human constitution as that\nof their neighbours of the same rank in England. But it seems to be\notherwise with potatoes. The chairmen, porters, and coal-heavers in\nLondon, and those unfortunate women who live by prostitution, the\nstrongest men and the most beautiful women perhaps in the British\ndominions, are said to be, the greater part of them, from the lowest\nrank of people in Ireland, who are generally fed with this root. No food\ncan afford a more decisive proof of its nourishing quality, or of its\nbeing peculiarly suitable to the health of the human constitution.\n\nIt is difficult to preserve potatoes through the year, and impossible to\nstore them like corn, for two or three years together. The fear of not\nbeing able to sell them before they rot, discourages their cultivation,\nand is, perhaps, the chief obstacle to their ever becoming in any great\ncountry, like bread, the principal vegetable food of all the different\nranks of the people.\n\n\nPART II.--Of the Produce of Land, which sometimes does, and sometimes\ndoes not, afford Rent.\n\nHuman food seems to be the only produce of land, which always and\nnecessarily affords some rent to the landlord. Other sorts of\nproduce sometimes may, and sometimes may not, according to different\ncircumstances.\n\nAfter food, clothing and lodging are the two great wants of mankind.\n\nLand, in its original rude state, can afford the materials of clothing\nand lodging to a much greater number of people than it can feed. In its\nimproved state, it can sometimes feed a greater number of people than\nit can supply with those materials; at least in the way in which\nthey require them, and are willing to pay for them. In the one state,\ntherefore, there is always a superabundance of these materials, which\nare frequently, upon that account, of little or no value. In the other,\nthere is often a scarcity, which necessarily augments their value. In\nthe one state, a great part of them is thrown away as useless and the\nprice of what is used is considered as equal only to the labour and\nexpense of fitting it for use, and can, therefore, afford no rent to\nthe landlord. In the other, they are all made use of, and there is\nfrequently a demand for more than can be had. Somebody is always willing\nto give more for every part of them, than what is sufficient to pay the\nexpense of bringing them to market. Their price, therefore, can always\nafford some rent to the landlord.\n\nThe skins of the larger animals were the original materials of clothing.\nAmong nations of hunters and shepherds, therefore, whose food consists\nchiefly in the flesh of those animals, everyman, by providing himself\nwith food, provides himself with the materials of more clothing than\nhe can wear. If there was no foreign commerce, the greater part of them\nwould be thrown away as things of no value. This was probably the case\namong the hunting nations of North America, before their country was\ndiscovered by the Europeans, with whom they now exchange their surplus\npeltry, for blankets, fire-arms, and brandy, which gives it some value.\nIn the present commercial state of the known world, the most barbarous\nnations, I believe, among whom land property is established, have some\nforeign commerce of this kind, and find among their wealthier neighbours\nsuch a demand for all the materials of clothing, which their land\nproduces, and which can neither be wrought up nor consumed at home, as\nraises their price above what it costs to send them to those wealthier\nneighbours. It affords, therefore, some rent to the landlord. When the\ngreater part of the Highland cattle were consumed on their own hills,\nthe exportation of their hides made the most considerable article of the\ncommerce of that country, and what they were exchanged for afforded some\naddition to the rent of the Highland estates. The wool of England, which\nin old times, could neither be consumed nor wrought up at home, found a\nmarket in the then wealthier and more industrious country of Flanders,\nand its price afforded something to the rent of the land which produced\nit. In countries not better cultivated than England was then, or than\nthe Highlands of Scotland are now, and which had no foreign commerce,\nthe materials of clothing would evidently be so superabundant, that a\ngreat part of them would be thrown away as useless, and no part could\nafford any rent to the landlord.\n\nThe materials of lodging cannot always be transported to so great a\ndistance as those of clothing, and do not so readily become an object\nof foreign commerce. When they are superabundant in the country which\nproduces them, it frequently happens, even in the present commercial\nstate of the world, that they are of no value to the landlord. A good\nstone quarry in the neighbourhood of London would afford a considerable\nrent. In many parts of Scotland and Wales it affords none. Barren\ntimber for building is of great value in a populous and well-cultivated\ncountry, and the land which produces it affords a considerable rent. But\nin many parts of North America, the landlord would be much obliged to\nany body who would carry away the greater part of his large trees. In\nsome parts of the Highlands of Scotland, the bark is the only part of\nthe wood which, for want of roads and water-carriage, can be sent to\nmarket; the timber is left to rot upon the ground. When the materials\nof lodging are so superabundant, the part made use of is worth only the\nlabour and expense of fitting it for that use. It affords no rent to\nthe landlord, who generally grants the use of it to whoever takes\nthe trouble of asking it. The demand of wealthier nations, however,\nsometimes enables him to get a rent for it. The paving of the streets\nof London has enabled the owners of some barren rocks on the coast of\nScotland to draw a rent from what never afforded any before. The woods\nof Norway, and of the coasts of the Baltic, find a market in many parts\nof Great Britain, which they could not find at home, and thereby afford\nsome rent to their proprietors.\n\nCountries are populous, not in proportion to the number of people whom\ntheir produce can clothe and lodge, but in proportion to that of\nthose whom it can feed. When food is provided, it is easy to find the\nnecessary clothing and lodging. But though these are at hand, it may\noften be difficult to find food. In some parts of the British dominions,\nwhat is called a house may be built by one day's labour of one man. The\nsimplest species of clothing, the skins of animals, require somewhat\nmore labour to dress and prepare them for use. They do not, however,\nrequire a great deal. Among savage or barbarous nations, a hundredth, or\nlittle more than a hundredth part of the labour of the whole year, will\nbe sufficient to provide them with such clothing and lodging as satisfy\nthe greater part of the people. All the other ninety-nine parts are\nfrequently no more than enough to provide them with food.\n\nBut when, by the improvement and cultivation of land, the labour of one\nfamily can provide food for two, the labour of half the society becomes\nsufficient to provide food for the whole. The other half, therefore, or\nat least the greater part of them, can be employed in providing other\nthings, or in satisfying the other wants and fancies of mankind.\nClothing and lodging, household furniture, and what is called equipage,\nare the principal objects of the greater part of those wants and\nfancies. The rich man consumes no more food than his poor neighbour.\nIn quality it may be very different, and to select and prepare it may\nrequire more labour and art; but in quantity it is very nearly the same.\nBut compare the spacious palace and great wardrobe of the one, with the\nhovel and the few rags of the other, and you will be sensible that the\ndifference between their clothing, lodging, and household furniture, is\nalmost as great in quantity as it is in quality. The desire of food is\nlimited in every man by the narrow capacity of the human stomach;\nbut the desire of the conveniencies and ornaments of building, dress,\nequipage, and household furniture, seems to have no limit or certain\nboundary. Those, therefore, who have the command of more food than they\nthemselves can consume, are always willing to exchange the surplus,\nor, what is the same thing, the price of it, for gratifications of this\nother kind. What is over and above satisfying the limited desire, is\ngiven for the amusement of those desires which cannot be satisfied, but\nseem to be altogether endless. The poor, in order to obtain food, exert\nthemselves to gratify those fancies of the rich; and to obtain it more\ncertainly, they vie with one another in the cheapness and perfection of\ntheir work. The number of workmen increases with the increasing quantity\nof food, or with the growing improvement and cultivation of the lands;\nand as the nature of their business admits of the utmost subdivisions of\nlabour, the quantity of materials which they can work up, increases in\na much greater proportion than their numbers. Hence arises a demand for\nevery sort of material which human invention can employ, either usefully\nor ornamentally, in building, dress, equipage, or household furniture;\nfor the fossils and minerals contained in the bowels of the earth, the\nprecious metals, and the precious stones.\n\nFood is, in this manner, not only the original source of rent, but every\nother part of the produce of land which afterwards affords rent, derives\nthat part of its value from the improvement of the powers of labour in\nproducing food, by means of the improvement and cultivation of land.\n\nThose other parts of the produce of land, however, which afterwards\nafford rent, do not afford it always. Even in improved and cultivated\ncountries, the demand for them is not always such as to afford a greater\nprice than what is sufficient to pay the labour, and replace, together\nwith its ordinary profits, the stock which must be employed in bringing\nthem to market. Whether it is or is not such, depends upon different\ncircumstances.\n\nWhether a coal mine, for example, can afford any rent, depends partly\nupon its fertility, and partly upon its situation.\n\nA mine of any kind may be said to be either fertile or barren, according\nas the quantity of mineral which can be brought from it by a certain\nquantity of labour, is greater or less than what can be brought by an\nequal quantity from the greater part of other mines of the same kind.\n\nSome coal mines, advantageously situated, cannot be wrought on account\nof their barrenness. The produce does not pay the expense. They can\nafford neither profit nor rent.\n\nThere are some, of which the produce is barely sufficient to pay the\nlabour, and replace, together with its ordinary profits, the stock\nemployed in working them. They afford some profit to the undertaker\nof the work, but no rent to the landlord. They can be wrought\nadvantageously by nobody but the landlord, who, being himself the\nundertaker of the work, gets the ordinary profit of the capital which he\nemploys in it. Many coal mines in Scotland are wrought in this manner,\nand can be wrought in no other. The landlord will allow nobody else to\nwork them without paying some rent, and nobody can afford to pay any.\n\nOther coal mines in the same country, sufficiently fertile, cannot be\nwrought on account of their situation. A quantity of mineral, sufficient\nto defray the expense of working, could be brought from the mine by the\nordinary, or even less than the ordinary quantity of labour: but in\nan inland country, thinly inhabited, and without either good roads or\nwater-carriage, this quantity could not be sold.\n\nCoals are a less agreeable fuel than wood: they are said too to be less\nwholesome. The expense of coals, therefore, at the place where they are\nconsumed, must generally be somewhat less than that of wood.\n\nThe price of wood, again, varies with the state of agriculture, nearly\nin the same manner, and exactly for the same reason, as the price of\ncattle. In its rude beginnings, the greater part of every country is\ncovered with wood, which is then a mere incumbrance, of no value to\nthe landlord, who would gladly give it to any body for the cutting. As\nagriculture advances, the woods are partly cleared by the progress of\ntillage, and partly go to decay in consequence of the increased number\nof cattle. These, though they do not increase in the same proportion\nas corn, which is altogether the acquisition of human industry, yet\nmultiply under the care and protection of men, who store up in the\nseason of plenty what may maintain them in that of scarcity; who,\nthrough the whole year, furnish them with a greater quantity of food\nthan uncultivated nature provides for them; and who, by destroying and\nextirpating their enemies, secure them in the free enjoyment of all that\nshe provides. Numerous herds of cattle, when allowed to wander through\nthe woods, though they do not destroy the old trees, hinder any young\nones from coming up; so that, in the course of a century or two, the\nwhole forest goes to ruin. The scarcity of wood then raises its price.\nIt affords a good rent; and the landlord sometimes finds that he can\nscarce employ his best lands more advantageously than in growing barren\ntimber, of which the greatness of the profit often compensates the\nlateness of the returns. This seems, in the present times, to be nearly\nthe state of things in several parts of Great Britain, where the profit\nof planting is found to be equal to that of either corn or pasture. The\nadvantage which the landlord derives from planting can nowhere exceed,\nat least for any considerable time, the rent which these could afford\nhim; and in an inland country, which is highly cuitivated, it will\nfrequently not fall much short of this rent. Upon the sea-coast of a\nwell-improved country, indeed, if coals can conveniently be had for\nfuel, it may sometimes be cheaper to bring barren timber for building\nfrom less cultivated foreign countries than to raise it at home. In\nthe new town of Edinburgh, built within these few years, there is not,\nperhaps, a single stick of Scotch timber.\n\nWhatever may be the price of wood, if that of coals is such that the\nexpense of a coal fire is nearly equal to that of a wood one we may be\nassured, that at that place, and in these circumstances, the price of\ncoals is as high as it can be. It seems to be so in some of the inland\nparts of England, particularly in Oxfordshire, where it is usual, even\nin the fires of the common people, to mix coals and wood together, and\nwhere the difference in the expense of those two sorts of fuel cannot,\ntherefore, be very great. Coals, in the coal countries, are everywhere\nmuch below this highest price. If they were not, they could not bear\nthe expense of a distant carriage, either by land or by water. A\nsmall quantity only could be sold; and the coal masters and the coal\nproprietors find it more for their interest to sell a great quantity at\na price somewhat above the lowest, than a small quantity at the highest.\nThe most fertile coal mine, too, regulates the price of coals at all the\nother mines in its neighbourhood. Both the proprietor and the undertaker\nof the work find, the one that he can get a greater rent, the other\nthat he can get a greater profit, by somewhat underselling all their\nneighbours. Their neighbours are soon obliged to sell at the same price,\nthough they cannot so well afford it, and though it always diminishes,\nand sometimes takes away altogether, both their rent and their profit.\nSome works are abandoned altogether; others can afford no rent, and can\nbe wrought only by the proprietor.\n\nThe lowest price at which coals can be sold for any considerable time,\nis, like that of all other commodities, the price which is barely\nsufficient to replace, together with its ordinary profits, the stock\nwhich must be employed in bringing them to market. At a coal mine for\nwhich the landlord can get no rent, but, which he must either work\nhimself or let it alone altogether, the price of coals must generally be\nnearly about this price.\n\nRent, even where coals afford one, has generally a smaller share in\ntheir price than in that of most other parts of the rude produce of\nland. The rent of an estate above ground, commonly amounts to what is\nsupposed to be a third of the gross produce; and it is generally a rent\ncertain and independent of the occasional variations in the crop. In\ncoal mines, a fifth of the gross produce is a very great rent, a tenth\nthe common rent; and it is seldom a rent certain, but depends upon the\noccasional variations in the produce. These are so great, that in a\ncountry where thirty years purchase is considered as a moderate price\nfor the property of a landed estate, ten years purchase is regarded as a\ngood price for that of a coal mine.\n\nThe value of a coal mine to the proprietor, frequently depends as\nmuch upon its situation as upon its fertility. That of a metallic\nmine depends more upon its fertility, and less upon its situation. The\ncoarse, and still more the precious metals, when separated from the ore,\nare so valuable, that they can generally bear the expense of a very long\nland, and of the most distant sea carriage. Their market is not confined\nto the countries in the neighbourhood of the mine, but extends to the\nwhole world. The copper of Japan makes an article of commerce in Europe;\nthe iron of Spain in that of Chili and Peru. The silver of Peru finds\nits way, not only to Europe, but from Europe to China.\n\nThe price of coals in Westmoreland or Shropshire can have little effect\non their price at Newcastle; and their price in the Lionnois can have\nnone at all. The productions of such distant coal mines can never be\nbrought into competition with one another. But the productions of the\nmost distant metallic mines frequently may, and in fact commonly are.\n\nThe price, therefore, of the coarse, and still more that of the precious\nmetals, at the most fertile mines in the world, must necessarily more\nor less affect their price at every other in it. The price of copper\nin Japan must have some influence upon its price at the copper mines in\nEurope. The price of silver in Peru, or the quantity either of labour or\nof other goods which it will purchase there, must have some influence\non its price, not only at the silver mines of Europe, but at those of\nChina. After the discovery of the mines of Peru, the silver mines of\nEurope were, the greater part of them, abandoned. The value of silver\nwas so much reduced, that their produce could no longer pay the expense\nof working them, or replace, with a profit, the food, clothes, lodging,\nand other necessaries which were consumed in that operation. This was\nthe case, too, with the mines of Cuba and St. Domingo, and even with the\nancient mines of Peru, after the discovery of those of Potosi. The\nprice of every metal, at every mine, therefore, being regulated in\nsome measure by its price at the most fertile mine in the world that is\nactually wrought, it can, at the greater part of mines, do very little\nmore than pay the expense of working, and can seldom afford a very high\nrent to the landlord. Rent accordingly, seems at the greater part of\nmines to have but a small share in the price of the coarse, and a still\nsmaller in that of the precious metals. Labour and profit make up the\ngreater part of both.\n\nA sixth part of the gross produce may be reckoned the average rent of\nthe tin mines of Cornwall, the most fertile that are known in the world,\nas we are told by the Rev. Mr. Borlace, vice-warden of the stannaries.\nSome, he says, afford more, and some do not afford so much. A sixth\npart of the gross produce is the rent, too, of several very fertile lead\nmines in Scotland.\n\nIn the silver mines of Peru, we are told by Frezier and Ulloa, the\nproprietor frequently exacts no other acknowledgment from the undertaker\nof the mine, but that he will grind the ore at his mill, paying him the\nordinary multure or price of grinding. Till 1736, indeed, the tax of the\nking of Spain amounted to one fifth of the standard silver, which till\nthen might be considered as the real rent of the greater part of the\nsilver mines of Peru, the richest which have been known in the world. If\nthere had been no tax, this fifth would naturally have belonged to the\nlandlord, and many mines might have been wrought which could not then be\nwrought, because they could not afford this tax. The tax of the duke of\nCornwall upon tin is supposed to amount to more than five per cent. or\none twentieth part of the value; and whatever may be his proportion, it\nwould naturally, too, belong to the proprietor of the mine, if tin was\nduty free. But if you add one twentieth to one sixth, you will find that\nthe whole average rent of the tin mines of Cornwall, was to the whole\naverage rent of the silver mines of Peru, as thirteen to twelve. But the\nsilver mines of Peru are not now able to pay even this low rent; and the\ntax upon silver was, in 1736, reduced from one fifth to one tenth. Even\nthis tax upon silver, too, gives more temptation to smuggling than the\ntax of one twentieth upon tin; and smuggling must be much easier in\nthe precious than in the bulky commodity. The tax of the king of Spain,\naccordingly, is said to be very ill paid, and that of the duke of\nCornwall very well. Rent, therefore, it is probable, makes a greater\npart of the price of tin at the most fertile tin mines than it does of\nsilver at the most fertile silver mines in the world. After replacing\nthe stock employed in working those different mines, together with\nits ordinary profits, the residue which remains to the proprietor is\ngreater, it seems, in the coarse, than in the precious metal.\n\nNeither are the profits of the undertakers of silver mines commonly\nvery great in Peru. The same most respectable and well-informed authors\nacquaint us, that when any person undertakes to work a new mine in Peru,\nhe is universally looked upon as a man destined to bankruptcy and ruin,\nand is upon that account shunned and avoided by every body. Mining, it\nseems, is considered there in the same light as here, as a lottery, in\nwhich the prizes do not compensate the blanks, though the greatness\nof some tempts many adventurers to throw away their fortunes in such\nunprosperous projects.\n\nAs the sovereign, however, derives a considerable part of his revenue\nfrom the produce of silver mines, the law in Peru gives every possible\nencouragement to the discovery and working of new ones. Whoever\ndiscovers a new mine, is entitled to measure off two hundred and\nforty-six feet in length, according to what he supposes to be the\ndirection of the vein, and half as much in breadth. He becomes\nproprietor of this portion of the mine, and can work it without paving\nany acknowledgment to the landlord. The interest of the duke of Cornwall\nhas given occasion to a regulation nearly of the same kind in that\nancient dutchy. In waste and uninclosed lands, any person who discovers\na tin mine may mark out its limits to a certain extent, which is called\nbounding a mine. The bounder becomes the real proprietor of the mine,\nand may either work it himself, or give it in lease to another, without\nthe consent of the owner of the land, to whom, however, a very small\nacknowledgment must be paid upon working it. In both regulations,\nthe sacred rights of private property are sacrificed to the supposed\ninterests of public revenue.\n\nThe same encouragement is given in Peru to the discovery and working of\nnew gold mines; and in gold the king's tax amounts only to a twentieth\npart of the standard rental. It was once a fifth, and afterwards a\ntenth, as in silver; but it was found that the work could not bear even\nthe lowest of these two taxes. If it is rare, however, say the same\nauthors, Frezier and Ulloa, to find a person who has made his fortune by\na silver, it is still much rarer to find one who has done so by a gold\nmine. This twentieth part seems to be the whole rent which is paid by\nthe greater part of the gold mines of Chili and Peru. Gold, too, is much\nmore liable to be smuggled than even silver; not only on account of the\nsuperior value of the metal in proportion to its bulk, but on account\nof the peculiar way in which nature produces it. Silver is very seldom\nfound virgin, but, like most other metals, is generally mineralized\nwith some other body, from which it is impossible to separate it in\nsuch quantities as will pay for the expense, but by a very laborious and\ntedious operation, which cannot well be carried on but in work-houses\nerected for the purpose, and, therefore, exposed to the inspection\nof the king's officers. Gold, on the contrary, is almost always found\nvirgin. It is sometimes found in pieces of some bulk; and, even when\nmixed, in small and almost insensible particles, with sand, earth, and\nother extraneous bodies, it can be separated from them by a very short\nand simple operation, which can be carried on in any private house by\nany body who is possessed of a small quantity of mercury. If the king's\ntax, therefore, is but ill paid upon silver, it is likely to be much\nworse paid upon gold; and rent must make a much smaller part of the\nprice of gold than that of silver.\n\nThe lowest price at which the precious metals can be sold, or the\nsmallest quantity of other goods for which they can be exchanged, during\nany considerable time, is regulated by the same principles which fix the\nlowest ordinary price of all other goods. The stock which must commonly\nbe employed, the food, clothes, and lodging, which must commonly be\nconsumed in bringing them from the mine to the market, determine it.\nIt must at least be sufficient to replace that stock, with the ordinary\nprofits.\n\nTheir highest price, however, seems not to be necessarily determined by\nany thing but the actual scarcity or plenty of these metals themselves.\nIt is not determined by that of any other commodity, in the same manner\nas the price of coals is by that of wood, beyond which no scarcity can\never raise it. Increase the scarcity of gold to a certain degree, and\nthe smallest bit of it may become more precious than a diamond, and\nexchange for a greater quantity of other goods.\n\nThe demand for those metals arises partly from their utility, and\npartly from their beauty. If you except iron, they are more useful than,\nperhaps, any other metal. As they are less liable to rust and impurity,\nthey can more easily be kept clean; and the utensils, either of the\ntable or the kitchen, are often, upon that account, more agreeable when\nmade of them. A silver boiler is more cleanly than a lead, copper, or\ntin one; and the same quality would render a gold boiler still better\nthan a silver one. Their principal merit, however, arises from their\nbeauty, which renders them peculiarly fit for the ornaments of dress and\nfurniture. No paint or dye can give so splendid a colour as gilding. The\nmerit of their beauty is greatly enhanced by their scarcity. With the\ngreater part of rich people, the chief enjoyment of riches consists in\nthe parade of riches; which, in their eye, is never so complete as when\nthey appear to possess those decisive marks of opulence which nobody can\npossess but themselves. In their eyes, the merit of an object, which\nis in any degree either useful or beautiful, is greatly enhanced by\nits scarcity, or by the great labour which it requires to collect any\nconsiderable quantity of it; a labour which nobody can afford to pay but\nthemselves. Such objects they are willing to purchase at a higher price\nthan things much more beautiful and useful, but more common. These\nqualities of utility, beauty, and scarcity, are the original foundation\nof the high price of those metals, or of the great quantity of other\ngoods for which they can everywhere be exchanged. This value was\nantecedent to, and independent of their being employed as coin, and\nwas the quality which fitted them for that employment. That employment,\nhowever, by occasioning a new demand, and by diminishing the quantity\nwhich could be employed in any other way, may have afterwards\ncontributed to keep up or increase their value.\n\nThe demand for the precious stones arises altogether from their beauty.\nThey are of no use but as ornaments; and the merit of their beauty is\ngreatly enhanced by their scarcity, or by the difficulty and expense of\ngetting them from the mine. Wages and profit accordingly make up, upon\nmost occasions, almost the whole of the high price. Rent comes in but\nfor a very small share, frequently for no share; and the most fertile\nmines only afford any considerable rent. When Tavernier, a jeweller,\nvisited the diamond mines of Golconda and Visiapour, he was informed\nthat the sovereign of the country, for whose benefit they were wrought,\nhad ordered all of them to be shut up except those which yielded the\nlargest and finest stones. The other, it seems, were to the proprietor\nnot worth the working.\n\nAs the prices, both of the precious metals and of the precious stones,\nis regulated all over the world by their price at the most fertile mine\nin it, the rent which a mine of either can afford to its proprietor\nis in proportion, not to its absolute, but to what may be called its\nrelative fertility, or to its superiority over other mines of the same\nkind. If new mines were discovered, as much superior to those of Potosi,\nas they were superior to those of Europe, the value of silver might be\nso much degraded as to render even the mines of Potosi not worth the\nworking. Before the discovery of the Spanish West Indies, the most\nfertile mines in Europe may have afforded as great a rent to their\nproprietors as the richest mines in Peru do at present. Though the\nquantity of silver was much less, it might have exchanged for an equal\nquantity of other goods, and the proprietor's share might have enabled\nhim to purchase or command an equal quantity either of labour or of\ncommodities.\n\nThe value, both of the produce and of the rent, the real revenue which\nthey afforded, both to the public and to the proprietor, might have been\nthe same.\n\nThe most abundant mines, either of the precious metals, or of the\nprecious stones, could add little to the wealth of the world. A\nproduce, of which the value is principally derived from its scarcity, is\nnecessarily degraded by its abundance. A service of plate, and the other\nfrivolous ornaments of dress and furniture, could be purchased for a\nsmaller quantity of commodities; and in this would consist the sole\nadvantage which the world could derive from that abundance.\n\nIt is otherwise in estates above ground. The value, both of their\nproduce and of their rent, is in proportion to their absolute, and not\nto their relative fertility. The land which produces a certain quantity\nof food, clothes, and lodging, can always feed, clothe, and lodge, a\ncertain number of people; and whatever may be the proportion of the\nlandlord, it will always give him a proportionable command of the labour\nof those people, and of the commodities with which that labour can\nsupply him. The value of the most barren land is not diminished by the\nneighbourhood of the most fertile. On the contrary, it is generally\nincreased by it. The great number of people maintained by the fertile\nlands afford a market to many parts of the produce of the barren, which\nthey could never have found among those whom their own produce could\nmaintain.\n\nWhatever increases the fertility of land in producing food, increases\nnot only the value of the lands upon which the improvement is bestowed,\nbut contributes likewise to increase that of many other lands, by\ncreating a new demand for their produce. That abundance of food, of\nwhich, in consequence of the improvement of land, many people have the\ndisposal beyond what they themselves can consume, is the great cause\nof the demand, both for the precious metals and the precious stones,\nas well as for every other conveniency and ornament of dress, lodging,\nhousehold furniture, and equipage. Food not only constitutes the\nprincipal part of the riches of the world, but it is the abundance of\nfood which gives the principal part of their value to many other sorts\nof riches. The poor inhabitants of Cuba and St. Domingo, when they were\nfirst discovered by the Spaniards, used to wear little bits of gold as\nornaments in their hair and other parts of their dress. They seemed\nto value them as we would do any little pebbles of somewhat more than\nordinary beauty, and to consider them as just worth the picking up, but\nnot worth the refusing to any body who asked them, They gave them to\ntheir new guests at the first request, without seeming to think that\nthey had made them any very valuable present. They were astonished to\nobserve the rage of the Spaniards to obtain them; and had no notion that\nthere could anywhere be a country in which many people had the disposal\nof so great a superfluity of food; so scanty always among themselves,\nthat, for a very small quantity of those glittering baubles, they would\nwillingly give as much as might maintain a whole family for many\nyears. Could they have been made to understand this, the passion of the\nSpaniards would not have surprised them.\n\n\nPART III.--Of the variations in the Proportion between the respective\nValues of that sort of Produce which always affords Rent, and of that\nwhich sometimes does, and sometimes does not, afford Rent.\n\nThe increasing abundance of food, in consequence of the increasing\nimprovement and cultivation, must necessarily increase the demand for\nevery part of the produce of land which is not food, and which can\nbe applied either to use or to ornament. In the whole progress of\nimprovement, it might, therefore, be expected there should be only one\nvariation in the comparative values of those two different sorts of\nproduce. The value of that sort which sometimes does, and sometimes\ndoes not afford rent, should constantly rise in proportion to that which\nalways affords some rent. As art and industry advance, the materials of\nclothing and lodging, the useful fossils and materials of the earth,\nthe precious metals and the precious stones, should gradually come to be\nmore and more in demand, should gradually exchange for a greater and a\ngreater quantity of food; or, in other words, should gradually become\ndearer and dearer. This, accordingly, has been the case with most of\nthese things upon most occasions, and would have been the case with all\nof them upon all occasions, if particular accidents had not, upon some\noccasions, increased the supply of some of them in a still greater\nproportion than the demand.\n\nThe value of a free-stone quarry, for example, will necessarily increase\nwith the increasing improvement and population of the country round\nabout it, especially if it should be the only one in the neighbourhood.\nBut the value of a silver mine, even though there should not be another\nwithin a thousand miles of it, will not necessarily increase with the\nimprovement of the country in which it is situated. The market for the\nproduce of a free-stone quarry can seldom extend more than a few miles\nround about it, and the demand must generally be in proportion to the\nimprovement and population of that small district; but the market for\nthe produce of a silver mine may extend over the whole known world.\nUnless the world in general, therefore, be advancing in improvement and\npopulation, the demand for silver might not be at all increased by the\nimprovement even of a large country in the neighbourhood of the mine.\nEven though the world in general were improving, yet if, in the course\nof its improvements, new mines should be discovered, much more fertile\nthan any which had been known before, though the demand for silver would\nnecessarily increase, yet the supply might increase in so much a greater\nproportion, that the real price of that metal might gradually fall;\nthat is, any given quantity, a pound weight of it, for example, might\ngradually purchase or command a smaller and a smaller quantity of\nlabour, or exchange for a smaller and a smaller quantity of corn, the\nprincipal part of the subsistence of the labourer.\n\nThe great market for silver is the commercial and civilized part of the\nworld.\n\nIf, by the general progress of improvement, the demand of this market\nshould increase, while, at the same time, the supply did not increase\nin the same proportion, the value of silver would gradually rise in\nproportion to that of corn. Any given quantity of silver would exchange\nfor a greater and a greater quantity of corn; or, in other words, the\naverage money price of corn would gradually become cheaper and cheaper.\n\nIf, on the contrary, the supply, by some accident, should increase, for\nmany years together, in a greater proportion than the demand, that metal\nwould gradually become cheaper and cheaper; or, in other words, the\naverage money price of corn would, in spite of all improvements,\ngradually become dearer and dearer.\n\nBut if, on the other hand, the supply of that metal should increase\nnearly in the same proportion as the demand, it would continue to\npurchase or exchange for nearly the same quantity of corn; and the\naverage money price of corn would, in spite of all improvements.\ncontinue very nearly the same.\n\nThese three seem to exhaust all the possible combinations of events\nwhich can happen in the progress of improvement; and during the course\nof the four centuries preceding the present, if we may judge by what has\nhappened both in France and Great Britain, each of those three different\ncombinations seems to have taken place in the European market, and\nnearly in the same order, too, in which I have here set them down.\n\nDigression concerning the Variations in the value of Silver during the\nCourse of the Four last Centuries.\n\nFirst Period.--In 1350, and for some time before, the average price of\nthe quarter of wheat in England seems not to have been estimated\nlower than four ounces of silver, Tower weight, equal to about twenty\nshillings of our present money. From this price it seems to have fallen\ngradually to two ounces of silver, equal to about ten shillings of our\npresent money, the price at which we find it estimated in the beginning\nof the sixteenth century, and at which it seems to have continued to be\nestimated till about 1570.\n\nIn 1350, being the 25th of Edward III. was enacted what is called\nthe Statute of Labourers. In the preamble, it complains much of the\ninsolence of servants, who endeavoured to raise their wages upon their\nmasters. It therefore ordains, that all servants and labourers should,\nfor the future, be contented with the same wages and liveries (liveries\nin those times signified not only clothes, but provisions) which they\nhad been accustomed to receive in the 20th year of the king, and the\nfour preceding years; that, upon this account, their livery-wheat should\nnowhere be estimated higher than tenpence a-bushel, and that it should\nalways be in the option of the master to deliver them either the wheat\nor the money. Tenpence: a-bushel, therefore, had, in the 25th of Edward\nIII. been reckoned a very moderate price of wheat, since it required a\nparticular statute to oblige servants to accept of it in exchange for\ntheir usual livery of provisions; and it had been reckoned a reasonable\nprice ten years before that, or in the 16th year of the king, the\nterm to which the statute refers. But in the 16th year of Edward III.\ntenpence contained about half an ounce of silver, Tower weight, and\nwas nearly equal to half-a-crown of our present money. Four ounces of\nsilver, Tower weight, therefore, equal to six shillings and eightpence\nof the money of those times, and to near twenty shillings of that of\nthe present, must have been reckoned a moderate price for the quarter of\neight bushels.\n\nThis statute is surely a better evidence of what was reckoned, in those\ntimes, a moderate price of grain, than the prices of some particular\nyears, which have generally been recorded by historians and other\nwriters, on account of their extraordinary dearness or cheapness, and\nfrom which, therefore, it is difficult to form any judgment concerning\nwhat may have been the ordinary price. There are, besides, other reasons\nfor believing that, in the beginning of the fourteenth century, and\nfor some time before, the common price of wheat was not less than four\nounces of silver the quarter, and that of other grain in proportion.\n\nIn 1309, Ralph de Born, prior of St Augustine's, Canterbury, gave a\nfeast upon his installation-day, of which William Thorn has preserved,\nnot only the bill of fare, but the prices of many particulars. In that\nfeast were consumed, 1st, fifty-three quarters of wheat, which cost\nnineteen pounds, or seven shillings, and twopence a-quarter, equal to\nabout one-and-twenty shillings and sixpence of our present money; 2dly,\nfifty-eight quarters of malt, which cost seventeen pounds ten shillings,\nor six shillings a-quarter, equal to about eighteen shillings of our\npresent money; 3dly, twenty quarters of oats, which cost four pounds, or\nfour shillings a-quarter, equal to about twelve shillings of our present\nmoney. The prices of malt and oats seem here to lie higher than their\nordinary proportion to the price of wheat.\n\nThese prices are not recorded, on account of their extraordinary\ndearness or cheapness, but are mentioned accidentally, as the prices\nactually paid for large quantities of grain consumed at a feast, which\nwas famous for its magnificence.\n\nIn 1262, being the 51st of Henry III. was revived an ancient statute,\ncalled the assize of bread and ale, which, the king says in the\npreamble, had been made in the times of his progenitors, some time kings\nof England. It is probably, therefore, as old at least as the time of\nhis grandfather, Henry II. and may have been as old as the Conquest. It\nregulates the price of bread according as the prices of wheat may happen\nto be, from one shilling to twenty shillings the quarter of the money of\nthose times. But statutes of this kind are generally presumed to provide\nwith equal care for all deviations from the middle price, for those\nbelow it, as well as for those above it. Ten shillings, therefore,\ncontaining six ounces of silver, Tower weight, and equal to about thirty\nshillings of our present money, must, upon this supposition, have been\nreckoned the middle price of the quarter of wheat when this statute was\nfirst enacted, and must have continued to be so in the 51st of Henry\nIII. We cannot, therefore, be very wrong in supposing that the middle\nprice was not less than one-third of the highest price at which\nthis statute regulates the price of bread, or than six shillings and\neightpence of the money of those times, containing four ounces of\nsilver, Tower weight.\n\nFrom these different facts, therefore, we seem to have some reason to\nconclude that, about the middle of the fourteenth century, and for a\nconsiderable time before, the average or ordinary price of the quarter\nof wheat was not supposed to be less than four ounces of silver, Tower\nweight.\n\nFrom about the middle of the fourteenth to the beginning of the\nsixteenth century, what was reckoned the reasonable and moderate, that\nis, the ordinary or average price of wheat, seems to have sunk gradually\nto about one half of this price; so as at last to have fallen to about\ntwo ounces of silver, Tower weight, equal to about ten shillings of our\npresent money. It continued to be estimated at this price till about\n1570.\n\nIn the household book of Henry, the fifth earl of Northumberland, drawn\nup in 1512 there are two different estimations of wheat. In one of them\nit is computed at six shilling and eightpence the quarter, in the\nother at five shillings and eightpence only. In 1512, six shillings and\neightpence contained only two ounces of silver, Tower weight, and were\nequal to about ten shillings of our present money.\n\nFrom the 25th of Edward III. to the beginning of the reign of Elizabeth,\nduring the space of more than two hundred years, six shillings and\neightpence, it appears from several different statutes, had continued\nto be considered as what is called the moderate and reasonable, that is,\nthe ordinary or average price of wheat. The quantity of silver, however,\ncontained in that nominal sum was, during the course of this period,\ncontinually diminishing in consequence of some alterations which were\nmade in the coin. But the increase of the value of silver had, it seems,\nso far compensated the diminution of the quantity of it contained in the\nsame nominal sum, that the legislature did not think it worth while to\nattend to this circumstance.\n\nThus, in 1436, it was enacted, that wheat might be exported without a\nlicence when the price was so low as six shillings and eightpence: and\nin 1463, it was enacted, that no wheat should be imported if the price\nwas not above six shillings and eightpence the quarter: The legislature\nhad imagined, that when the price was so low, there could be no\ninconveniency in exportation, but that when it rose higher, it\nbecame prudent to allow of importation. Six shillings and eightpence,\ntherefore, containing about the same quantity of silver as thirteen\nshillings and fourpence of our present money (one-third part less than\nthe same nominal sum contained in the time of Edward III), had, in those\ntimes, been considered as what is called the moderate and reasonable\nprice of wheat.\n\nIn 1554, by the 1st and 2nd of Philip and Mary, and in 1558, by the\n1st of Elizabeth, the exportation of wheat was in the same manner\nprohibited, whenever the price of the quarter should exceed six\nshillings and eightpence, which did not then contain two penny worth\nmore silver than the same nominal sum does at present. But it had soon\nbeen found, that to restrain the exportation of wheat till the price\nwas so very low, was, in reality, to prohibit it altogether. In 1562,\ntherefore, by the 5th of Elizabeth, the exportation of wheat was allowed\nfrom certain ports, whenever the price of the quarter should not exceed\nten shillings, containing nearly the same quantity of silver as the like\nnominal sum does at present. This price had at this time, therefore,\nbeen considered as what is called the moderate and reasonable price of\nwheat. It agrees nearly with the estimation of the Northumberland book\nin 1512.\n\nThat in France the average price of grain was, in the same manner,\nmuch lower in the end of the fifteenth and beginning of the sixteenth\ncentury, than in the two centuries preceding, has been observed both\nby Mr Dupré de St Maur, and by the elegant author of the Essay on the\nPolicy of Grain. Its price, during the same period, had probably sunk in\nthe same manner through the greater part of Europe.\n\nThis rise in the value of silver, in proportion to that of corn, may\neither have been owing altogether to the increase of the demand for that\nmetal, in consequence of increasing improvement and cultivation, the\nsupply, in the mean time, continuing the same as before; or, the demand\ncontinuing the same as before, it may have been owing altogether to the\ngradual diminution of the supply: the greater part of the mines which\nwere then known in the world being much exhausted, and, consequently,\nthe expense of working them much increased; or it may have been owing\npartly to the one, and partly to the other of those two circumstances.\nIn the end of the fifteenth and beginning of the sixteenth centuries,\nthe greater part of Europe was approaching towards a more settled from\nof government than it had enjoyed for several ages before. The increase\nof security would naturally increase industry and improvement; and the\ndemand for the precious metals, as well as for every other luxury\nand ornament, would naturally increase with the increase of riches.\nA greater annual produce would require a greater quantity of coin\nto circulate it; and a greater number of rich people would require a\ngreater quantity of plate and other ornaments of silver. It is natural\nto suppose, too, that the greater part of the mines which then supplied\nthe European market with silver might be a good deal exhausted, and have\nbecome more expensive in the working. They had been wrought, many of\nthem, from the time of the Romans.\n\nIt has been the opinion, however, of the greater part of those who have\nwritten upon the prices of commodities in ancient times, that, from the\nConquest, perhaps from the invasion of Julius Caesar, till the\ndiscovery of the mines of America, the value of silver was continually\ndiminishing. This opinion they seem to have been led into, partly by\nthe observations which they had occasion to make upon the prices both of\ncorn and of some other parts of the rude produce of land, and partly by\nthe popular notion, that as the quantity of silver naturally increases\nin every country with the increase of wealth, so its value diminishes as\nit quantity increases.\n\nIn their observations upon the prices of corn, three different\ncircumstances seem frequently to have misled them.\n\nFirst, in ancient times, almost all rents were paid in kind; in a\ncertain quantity of corn, cattle, poultry, etc. It sometimes happened,\nhowever, that the landlord would stipulate, that he should be at liberty\nto demand of the tenant, either the annual payment in kind or a certain\nsum of money instead of it. The price at which the payment in kind was\nin this manner exchanged for a certain sum of money, is in Scotland\ncalled the conversion price. As the option is always in the landlord to\ntake either the substance or the price, it is necessary, for the safety\nof the tenant, that the conversion price should rather be below than\nabove the average market price. In many places, accordingly, it is not\nmuch above one half of this price. Through the greater part of Scotland\nthis custom still continues with regard to poultry, and in some places\nwith regard to cattle. It might probably have continued to take place,\ntoo, with regard to corn, had not the institution of the public fiars\nput an end to it. These are annual valuations, according to the judgment\nof an assize, of the average price of all the different sorts of grain,\nand of all the different qualities of each, according to the actual\nmarket price in every different county. This institution rendered it\nsufficiently safe for the tenant, and much more convenient for the\nlandlord, to convert, as they call it, the corn rent, rather at what\nshould happen to be the price of the fiars of each year, than at any\ncertain fixed price. But the writers who have collected the prices of\ncorn in ancient times seem frequently to have mistaken what is called\nin Scotland the conversion price for the actual market price. Fleetwood\nacknowledges, upon one occasion, that he had made this mistake. As he\nwrote his book, however, for a particular purpose, he does not think\nproper to make this acknowledgment till after transcribing this\nconversion price fifteen times. The price is eight shillings the\nquarter of wheat. This sum in 1423, the year at which he begins with\nit, contained the same quantity of silver as sixteen shillings of\nour present money. But in 1562, the year at which he ends with it, it\ncontained no more than the same nominal sum does at present.\n\nSecondly, they have been misled by the slovenly manner in which some\nancient statutes of assize had been sometimes transcribed by lazy\ncopiers, and sometimes, perhaps, actually composed by the legislature.\n\nThe ancient statutes of assize seem to have begun always with\ndetermining what ought to be the price of bread and ale when the price\nof wheat and barley were at the lowest; and to have proceeded gradually\nto determine what it ought to be, according as the prices of those two\nsorts of grain should gradually rise above this lowest price. But\nthe transcribers of those statutes seem frequently to have thought it\nsufficient to copy the regulation as far as the three or four first and\nlowest prices; saving in this manner their own labour, and judging,\nI suppose, that this was enough to show what proportion ought to be\nobserved in all higher prices.\n\nThus, in the assize of bread and ale, of the 51st of Henry III. the\nprice of bread was regulated according to the different prices of wheat,\nfrom one shilling to twenty shillings the quarter of the money of those\ntimes. But in the manuscripts from which all the different editions of\nthe statutes, preceding that of Mr Ruffhead, were printed, the copiers\nhad never transcribed this regulation beyond the price of twelve\nshillings. Several writers, therefore, being misled by this faulty\ntranscription, very naturally conclude that the middle price, or six\nshillings the quarter, equal to about eighteen shillings of our present\nmoney, was the ordinary or average price of wheat at that time.\n\nIn the statute of Tumbrel and Pillory, enacted nearly about the same\ntime, the price of ale is regulated according to every sixpence rise in\nthe price of barley, from two shillings, to four shillings the quarter.\nThat four shillings, however, was not considered as the highest price to\nwhich barley might frequently rise in those times, and that these\nprices were only given as an example of the proportion which ought to be\nobserved in all other prices, whether higher or lower, we may infer from\nthe last words of the statute: \"Et sic deinceps crescetur vel diminuetur\nper sex denarios.\" The expression is very slovenly, but the meaning is\nplain enough, \"that the price of ale is in this manner to be increased\nor diminished according to every sixpence rise or fall in the price\nof barley.\" In the composition of this statute, the legislature itself\nseems to have been as negligent as the copiers were in the transcription\nof the other.\n\nIn an ancient manuscript of the Regiam Majestatem, an old Scotch law\nbook, there is a statute of assize, in which the price of bread is\nregulated according to all the different prices of wheat, from tenpence\nto three shillings the Scotch boll, equal to about half an English\nquarter. Three shillings Scotch, at the time when this assize is\nsupposed to have been enacted, were equal to about nine shillings\nsterling of our present money Mr Ruddiman seems {See his Preface\nto Anderson's Diplomata Scotiae.} to conclude from this, that three\nshillings was the highest price to which wheat ever rose in those\ntimes, and that tenpence, a shilling, or at most two shillings, were\nthe ordinary prices. Upon consulting the manuscript, however, it appears\nevidently, that all these prices are only set down as examples of the\nproportion which ought to be observed between the respective prices of\nwheat and bread. The last words of the statute are \"reliqua judicabis\nsecundum praescripta, habendo respectum ad pretium bladi.\"--\"You shall\njudge of the remaining cases, according to what is above written, having\nrespect to the price of corn.\"\n\nThirdly, they seem to have been misled too, by the very low price\nat which wheat was sometimes sold in very ancient times; and to have\nimagined, that as its lowest price was then much lower than in later\ntimes its ordinary price must likewise have been much lower. They might\nhave found, however, that in those ancient times its highest price was\nfully as much above, as its lowest price was below any thing that had\never been known in later times. Thus, in 1270, Fleetwood gives us two\nprices of the quarter of wheat. The one is four pounds sixteen shillings\nof the money of those times, equal to fourteen pounds eight shillings of\nthat of the present; the other is six pounds eight shillings, equal to\nnineteen pounds four shillings of our present money. No price can\nbe found in the end of the fifteenth, or beginning of the sixteenth\ncentury, which approaches to the extravagance of these. The price of\ncorn, though at all times liable to variation varies most in those\nturbulent and disorderly societies, in which the interruption of all\ncommerce and communication hinders the plenty of one part of the country\nfrom relieving the scarcity of another. In the disorderly state of\nEngland under the Plantagenets, who governed it from about the middle of\nthe twelfth till towards the end of the fifteenth century, one district\nmight be in plenty, while another, at no great distance, by having\nits crop destroyed, either by some accident of the seasons, or by the\nincursion of some neighbouring baron, might be suffering all the horrors\nof a famine; and yet if the lands of some hostile lord were interposed\nbetween them, the one might not be able to give the least assistance to\nthe other. Under the vigorous administration of the Tudors, who governed\nEngland during the latter part of the fifteenth, and through the whole\nof the sixteenth century, no baron was powerful enough to dare to\ndisturb the public security.\n\nThe reader will find at the end of this chapter all the prices of\nwheat which have been collected by Fleetwood, from 1202 to 1597, both\ninclusive, reduced to the money of the present times, and digested,\naccording to the order of time, into seven divisions of twelve years\neach. At the end of each division, too, he will find the average price\nof the twelve years of which it consists. In that long period of time,\nFleetwood has been able to collect the prices of no more than eighty\nyears; so that four years are wanting to make out the last twelve years.\nI have added, therefore, from the accounts of Eton college, the prices\nof 1598, 1599, 1600, and 1601. It is the only addition which I have\nmade. The reader will see, that from the beginning of the thirteenth\ntill after the middle of the sixteenth century, the average price of\neach twelve years grows gradually lower and lower; and that towards\nthe end of the sixteenth century it begins to rise again. The prices,\nindeed, which Fleetwood has been able to collect, seem to have been\nthose chiefly which were remarkable for extraordinary dearness or\ncheapness; and I do not pretend that any very certain conclusion can be\ndrawn from them. So far, however, as they prove any thing at all, they\nconfirm the account which I have been endeavouring to give. Fleetwood\nhimself, however, seems, with most other writers, to have believed,\nthat, during all this period, the value of silver, in consequence of its\nincreasing abundance, was continually diminishing. The prices of\ncorn, which he himself has collected, certainly do not agree with this\nopinion. They agree perfectly with that of Mr Dupré de St Maur, and with\nthat which I have been endeavouring to explain. Bishop Fleetwood and Mr\nDupré de St Maur are the two authors who seem to have collected, with\nthe greatest diligence and fidelity, the prices of things in ancient\ntimes. It is some what curious that, though their opinions are so very\ndifferent, their facts, so far as they relate to the price of corn at\nleast, should coincide so very exactly.\n\nIt is not, however, so much from the low price of corn, as from that of\nsome other parts of the rude produce of land, that the most judicious\nwriters have inferred the great value of silver in those very ancient\ntimes. Corn, it has been said, being a sort of manufacture, was, in\nthose rude ages, much dearer in proportion than the greater part of\nother commodities; it is meant, I suppose, than the greater part of\nunmanufactured commodities, such as cattle, poultry, game of all\nkinds, etc. That in those times of poverty and barbarism these were\nproportionably much cheaper than corn, is undoubtedly true. But this\ncheapness was not the effect of the high value of silver, but of the\nlow value of those commodities. It was not because silver would in such\ntimes purchase or represent a greater quantity of labour, but because\nsuch commodities would purchase or represent a much smaller quantity\nthan in times of more opulence and improvement. Silver must certainly\nbe cheaper in Spanish America than in Europe; in the country where it is\nproduced, than in the country to which it is brought, at the expense of\na long carriage both by land and by sea, of a freight, and an insurance.\nOne-and-twenty pence halfpenny sterling, however, we are told by Ulloa,\nwas, not many years ago, at Buenos Ayres, the price of an ox chosen from\na herd of three or four hundred. Sixteen shillings sterling, we are told\nby Mr Byron, was the price of a good horse in the capital of Chili. In\na country naturally fertile, but of which the far greater part is\naltogether uncultivated, cattle, poultry, game of all kinds, etc. as\nthey can be acquired with a very small quantity of labour, so they will\npurchase or command but a very small quantity. The low money price for\nwhich they may be sold, is no proof that the real value of silver is\nthere very high, but that the real value of those commodities is very\nlow.\n\nLabour, it must always be remembered, and not any particular commodity,\nor set of commodities, is the real measure of the value both of silver\nand of all other commodities.\n\nBut in countries almost waste, or but thinly inhabited, cattle, poultry,\ngame of all kinds, etc. as they are the spontaneous productions of\nNature, so she frequently produces them in much greater quantities than\nthe consumption of the inhabitants requires. In such a state of things,\nthe supply commonly exceeds the demand. In different states of society,\nin different states of improvement, therefore, such commodities will\nrepresent, or be equivalent, to very different quantities of labour.\n\nIn every state of society, in every stage of improvement, corn is the\nproduction of human industry. But the average produce of every sort\nof industry is always suited, more or less exactly, to the average\nconsumption; the average supply to the average demand. In every\ndifferent stage of improvement, besides, the raising of equal quantities\nof corn in the same soil and climate, will, at an average, require\nnearly equal quantities of labour; or, what comes to the same thing,\nthe price of nearly equal quantities; the continual increase of the\nproductive powers of labour, in an improved state of cultivation,\nbeing more or less counterbalanced by the continual increasing price\nof cattle, the principal instruments of agriculture. Upon all these\naccounts, therefore, we may rest assured, that equal quantities of corn\nwill, in every state of society, in every stage of improvement, more\nnearly represent, or be equivalent to, equal quantities of labour, than\nequal quantities of any other part of the rude produce of land. Corn,\naccordingly, it has already been observed, is, in all the different\nstages of wealth and improvement, a more accurate measure of value\nthan any other commodity or set of commodities. In all those different\nstages, therefore, we can judge better of the real value of silver, by\ncomparing it with corn, than by comparing it with any other commodity or\nset of commodities.\n\nCorn, besides, or whatever else is the common and favourite vegetable\nfood of the people, constitutes, in every civilized country, the\nprincipal part of the subsistence of the labourer. In consequence of\nthe extension of agriculture, the land of every country produces a much\ngreater quantity of vegetable than of animal food, and the labourer\neverywhere lives chiefly upon the wholesome food that is cheapest and\nmost abundant. Butcher's meat, except in the most thriving countries, or\nwhere labour is most highly rewarded, makes but an insignificant part of\nhis subsistence; poultry makes a still smaller part of it, and game no\npart of it. In France, and even in Scotland, where labour is somewhat\nbetter rewarded than in France, the labouring poor seldom eat butcher's\nmeat, except upon holidays, and other extraordinary occasions. The money\nprice of labour, therefore, depends much more upon the average money\nprice of corn, the subsistence of the labourer, than upon that of\nbutcher's meat, or of any other part of the rude produce of land. The\nreal value of gold and silver, therefore, the real quantity of labour\nwhich they can purchase or command, depends much more upon the quantity\nof corn which they can purchase or command, than upon that of butcher's\nmeat, or any other part of the rude produce of land.\n\nSuch slight observations, however, upon the prices either of corn or of\nother commodities, would not probably have misled so many intelligent\nauthors, had they not been influenced at the same time by the popular\nnotion, that as the quantity of silver naturally increases in every\ncountry with the increase of wealth, so its value diminishes as its\nquantity increases. This notion, however, seems to be altogether\ngroundless.\n\nThe quantity of the precious metals may increase in any country from\ntwo different causes; either, first, from the increased abundance of the\nmines which supply it; or, secondly, from the increased wealth of the\npeople, from the increased produce of their annual labour. The first of\nthese causes is no doubt necessarily connected with the diminution of\nthe value of the precious metals; but the second is not.\n\nWhen more abundant mines are discovered, a greater quantity of\nthe precious metals is brought to market; and the quantity of the\nnecessaries and conveniencies of life for which they must be exchanged\nbeing the same as before, equal quantities of the metals must be\nexchanged for smaller quantities of commodities. So far, therefore,\nas the increase of the quantity of the precious metals in any country\narises from the increased abundance of the mines, it is necessarily\nconnected with some diminution of their value.\n\nWhen, on the contrary, the wealth of any country increases, when the\nannual produce of its labour becomes gradually greater and greater,\na greater quantity of coin becomes necessary in order to circulate a\ngreater quantity of commodities: and the people, as they can afford it,\nas they have more commodities to give for it, will naturally purchase a\ngreater and a greater quantity of plate. The quantity of their coin will\nincrease from necessity; the quantity of their plate from vanity and\nostentation, or from the same reason that the quantity of fine statues,\npictures, and of every other luxury and curiosity, is likely to increase\namong them. But as statuaries and painters are not likely to be worse\nrewarded in times of wealth and prosperity, than in times of poverty and\ndepression, so gold and silver are not likely to be worse paid for.\n\nThe price of gold and silver, when the accidental discovery of more\nabundant mines does not keep it down, as it naturally rises with the\nwealth of every country; so, whatever be the state of the mines, it is\nat all times naturally higher in a rich than in a poor country. Gold and\nsilver, like all other commodities, naturally seek the market where the\nbest price is given for them, and the best price is commonly given for\nevery thing in the country which can best afford it. Labour, it must be\nremembered, is the ultimate price which is paid for every thing; and\nin countries where labour is equally well rewarded, the money price of\nlabour will be in proportion to that of the subsistence of the labourer.\nBut gold and silver will naturally exchange for a greater quantity of\nsubsistence in a rich than in a poor country; in a country which abounds\nwith subsistence, than in one which is but indifferently supplied with\nit. If the two countries are at a great distance, the difference may be\nvery great; because, though the metals naturally fly from the worse to\nthe better market, yet it may be difficult to transport them in such\nquantities as to bring their price nearly to a level in both. If the\ncountries are near, the difference will be smaller, and may sometimes\nbe scarce perceptible; because in this case the transportation will be\neasy. China is a much richer country than any part of Europe, and the\ndifference between the price of subsistence in China and in Europe is\nvery great. Rice in China is much cheaper than wheat is any where\nin Europe. England is a much richer country than Scotland, but the\ndifference between the money price of corn in those two countries is\nmuch smaller, and is but just perceptible. In proportion to the quantity\nor measure, Scotch corn generally appears to be a good deal cheaper than\nEnglish; but, in proportion to its quality, it is certainly somewhat\ndearer. Scotland receives almost every year very large supplies from\nEngland, and every commodity must commonly be somewhat dearer in the\ncountry to which it is brought than in that from which it comes. English\ncorn, therefore, must be dearer in Scotland than in England; and yet in\nproportion to its quality, or to the quantity and goodness of the flour\nor meal which can be made from it, it cannot commonly be sold higher\nthere than the Scotch corn which comes to market in competition with it.\n\nThe difference between the money price of labour in China and in Europe,\nis still greater than that between the money price of subsistence;\nbecause the real recompence of labour is higher in Europe than in China,\nthe greater part of Europe being in an improving state, while China\nseems to be standing still. The money price of labour is lower in\nScotland than in England, because the real recompence of labour is much\nlower: Scotland, though advancing to greater wealth, advances much more\nslowly than England. The frequency of emigration from Scotland, and the\nrarity of it from England, sufficiently prove that the demand for labour\nis very different in the two countries. The proportion between the real\nrecompence of labour in different countries, it must be remembered, is\nnaturally regulated, not by their actual wealth or poverty, but by their\nadvancing, stationary, or declining condition.\n\nGold and silver, as they are naturally of the greatest value among the\nrichest, so they are naturally of the least value among the poorest\nnations. Among savages, the poorest of all nations, they are scarce of\nany value.\n\nIn great towns, corn is always dearer than in remote parts of the\ncountry. This, however, is the effect, not of the real cheapness of\nsilver, but of the real dearness of corn. It does not cost less labour\nto bring silver to the great town than to the remote parts of the\ncountry; but it costs a great deal more to bring corn.\n\nIn some very rich and commercial countries, such as Holland and the\nterritory of Genoa, corn is dear for the same reason that it is dear in\ngreat towns. They do not produce enough to maintain their inhabitants.\nThey are rich in the industry and skill of their artificers and\nmanufacturers, in every sort of machinery which can facilitate and\nabridge labour; in shipping, and in all the other instruments and means\nof carriage and commerce: but they are poor in corn, which, as it must\nbe brought to them from distant countries, must, by an addition to its\nprice, pay for the carriage from those countries. It does not cost less\nlabour to bring silver to Amsterdam than to Dantzic; but it costs a\ngreat deal more to bring corn. The real cost of silver must be nearly\nthe same in both places; but that of corn must be very different.\nDiminish the real opulence either of Holland or of the territory of\nGenoa, while the number of their inhabitants remains the same; diminish\ntheir power of supplying themselves from distant countries; and the\nprice of corn, instead of sinking with that diminution in the quantity\nof their silver, which must necessarily accompany this declension,\neither as its cause or as its effect, will rise to the price of a\nfamine. When we are in want of necessaries, we must part with all\nsuperfluities, of which the value, as it rises in times of opulence\nand prosperity, so it sinks in times of poverty and distress. It is\notherwise with necessaries. Their real price, the quantity of labour\nwhich they can purchase or command, rises in times of poverty and\ndistress, and sinks in times of opulence and prosperity, which are\nalways times of great abundance; for they could not otherwise be times\nof opulence and prosperity. Corn is a necessary, silver is only a\nsuperfluity.\n\nWhatever, therefore, may have been the increase in the quantity of the\nprecious metals, which, during the period between the middle of the\nfourteenth and that of the sixteenth century, arose from the increase\nof wealth and improvement, it could have no tendency to diminish their\nvalue, either in Great Britain, or in my other part of Europe. If those\nwho have collected the prices of things in ancient times, therefore,\nhad, during this period, no reason to infer the diminution of the value\nof silver from any observations which they had made upon the prices\neither of corn, or of other commodities, they had still less reason to\ninfer it from any supposed increase of wealth and improvement.\n\nSecond Period.--But how various soever may have been the opinions of the\nlearned concerning the progress of the value of silver during the first\nperiod, they are unanimous concerning it during the second.\n\nFrom about 1570 to about 1640, during a period of about seventy years,\nthe variation in the proportion between the value of silver and that\nof corn held a quite opposite course. Silver sunk in its real value, or\nwould exchange for a smaller quantity of labour than before; and corn\nrose in its nominal price, and, instead of being commonly sold for about\ntwo ounces of silver the quarter, or about ten shillings of our present\nmoney, came to be sold for six and eight ounces of silver the quarter,\nor about thirty and forty shillings of our present money.\n\nThe discovery of the abundant mines of America seems to have been the\nsole cause of this diminution in the value of silver, in proportion to\nthat of corn. It is accounted for, accordingly, in the same manner by\nevery body; and there never has been any dispute, either about the fact,\nor about the cause of it. The greater part of Europe was, during this\nperiod, advancing in industry and improvement, and the demand for silver\nmust consequently have been increasing; but the increase of the supply\nhad, it seems, so far exceeded that of the demand, that the value of\nthat metal sunk considerably. The discovery of the mines of America, it\nis to be observed, does not seem to have had any very sensible effect\nupon the prices of things in England till after 1570; though even the\nmines of Potosi had been discovered more than twenty years before.\n\nFrom 1595 to 1620, both inclusive, the average price of the quarter of\nnine bushels of the best wheat, at Windsor market, appears, from the\naccounts of Eton college, to have been £ 2:1:6 9/13. From which sum,\nneglecting the fraction, and deducting a ninth, or 4s. 7 1/3d., the\nprice of the quarter of eight bushels comes out to have been £ 1:16:10\n2/3. And from this sum, neglecting likewise the fraction, and deducting\na ninth, or 4s. 1 1/9d., for the difference between the price of the\nbest wheat and that of the middle wheat, the price of the middle wheat\ncomes out to have been about £ 1:12:8 8/9, or about six ounces and\none-third of an ounce of silver.\n\nFrom 1621 to 1636, both inclusive, the average price of the same measure\nof the best wheat, at the same market, appears, from the same accounts,\nto have been £ 2:10s.; from which, making the like deductions as in the\nforegoing case, the average price of the quarter of eight bushels of\nmiddle wheat comes out to have been £ 1:19:6, or about seven ounces and\ntwo-thirds of an ounce of silver.\n\nThird Period.--Between 1630 and 1640, or about 1636, the effect of the\ndiscovery of the mines of America, in reducing the value of silver,\nappears to have been completed, and the value of that metal seems never\nto have sunk lower in proportion to that of corn than it was about\nthat time. It seems to have risen somewhat in the course of the present\ncentury, and it had probably begun to do so, even some time before the\nend of the last.\n\nFrom 1637 to 1700, both inclusive, being the sixty-four last years of\nthe last century the average price of the quarter of nine bushels of the\nbest wheat, at Windsor market, appears, from the same accounts, to have\nbeen £ 2:11:0 1/3, which is only 1s. 0 1/3d. dearer than it had been\nduring the sixteen years before. But, in the course of these sixty-four\nyears, there happened two events, which must have produced a much\ngreater scarcity of corn than what the course of the season is would\notherwise have occasioned, and which, therefore, without supposing any\nfurther reduction in the value of silver, will much more than account\nfor this very small enhancement of price.\n\nThe first of these events was the civil war, which, by discouraging\ntillage and interrupting commerce, must have raised the price of\ncorn much above what the course of the seasons would otherwise have\noccasioned. It must have had this effect, more or less, at all the\ndifferent markets in the kingdom, but particularly at those in the\nneighbourhood of London, which require to be supplied from the greatest\ndistance. In 1648, accordingly, the price of the best wheat, at Windsor\nmarket, appears, from the same accounts, to have been £ 4:5s., and, in\n1649, to have been £ 4, the quarter of nine bushels. The excess of\nthose two years above £ 2:10s. (the average price of the sixteen years\npreceding 1637 is £ 3:5s., which, divided among the sixty four last\nyears of the last century, will alone very nearly account for that small\nenhancement of price which seems to have taken place in them.) These,\nhowever, though the highest, are by no means the only high prices which\nseem to have been occasioned by the civil wars.\n\nThe second event was the bounty upon the exportation of corn, granted\nin 1688. The bounty, it has been thought by many people, by encouraging\ntillage, may, in a long course of years, have occasioned a greater\nabundance, and, consequently, a greater cheapness of corn in the home\nmarket, than what would otherwise have taken place there. How far the\nbounty could produce this effect at any time I shall examine hereafter:\nI shall only observe at present, that between 1688 and 1700, it had\nnot time to produce any such effect. During this short period, its only\neffect must have been, by encouraging the exportation of the surplus\nproduce of every year, and thereby hindering the abundance of one year\nfrom compensating the scarcity of another, to raise the price in the\nhome market. The scarcity which prevailed in England, from 1693 to 1699,\nboth inclusive, though no doubt principally owing to the badness of\nthe seasons, and, therefore, extending through a considerable part\nof Europe, must have been somewhat enhanced by the bounty. In 1699,\naccordingly, the further exportation of corn was prohibited for nine\nmonths.\n\nThere was a third event which occurred in the course of the same period,\nand which, though it could not occasion any scarcity of corn, nor,\nperhaps, any augmentation in the real quantity of silver which was\nusually paid for it, must necessarily have occasioned some augmentation\nin the nominal sum. This event was the great debasement of the silver\ncoin, by clipping and wearing. This evil had begun in the reign of\nCharles II. and had gone on continually increasing till 1695; at which\ntime, as we may learn from Mr Lowndes, the current silver coin was, at\nan average, near five-and-twenty per cent. below its standard value. But\nthe nominal sum which constitutes the market price of every commodity\nis necessarily regulated, not so much by the quantity of silver, which,\naccording to the standard, ought to be contained in it, as by that\nwhich, it is found by experience, actually is contained in it. This\nnominal sum, therefore, is necessarily higher when the coin is much\ndebased by clipping and wearing, than when near to its standard value.\n\nIn the course of the present century, the silver coin has not at any\ntime been more below its standard weight than it is at present. But\nthough very much defaced, its value has been kept up by that of the gold\ncoin, for which it is exchanged. For though, before the late recoinage,\nthe gold coin was a good deal defaced too, it was less so than the\nsilver. In 1695, on the contrary, the value of the silver coin was not\nkept up by the gold coin; a guinea then commonly exchanging for thirty\nshillings of the worn and clipt silver. Before the late recoinage of the\ngold, the price of silver bullion was seldom higher than five shillings\nand sevenpence an ounce, which is but fivepence above the mint price.\nBut in 1695, the common price of silver bullion was six shillings and\nfivepence an ounce, {Lowndes's Essay on the Silver Coin, 68.} which is\nfifteen pence above the mint price. Even before the late recoinage of\nthe gold, therefore, the coin, gold and silver together, when compared\nwith silver bullion, was not supposed to be more than eight per cent.\nbelow its standard value, In 1695, on the contrary, it had been supposed\nto be near five-and-twenty per cent. below that value. But in the\nbeginning of the present century, that is, immediately after the great\nrecoinage in King William's time, the greater part of the current silver\ncoin must have been still nearer to its standard weight than it is at\npresent. In the course of the present century, too, there has been\nno great public calamity, such as a civil war, which could either\ndiscourage tillage, or interrupt the interior commerce of the country.\nAnd though the bounty which has taken place through the greater part of\nthis century, must always raise the price of corn somewhat higher than\nit otherwise would be in the actual state of tillage; yet, as in the\ncourse of this century, the bounty has had full time to produce all the\ngood effects commonly imputed to it to encourage tillage, and thereby\nto increase the quantity of corn in the home market, it may, upon the\nprinciples of a system which I shall explain and examine hereafter, be\nsupposed to have done something to lower the price of that commodity the\none way, as well as to raise it the other. It is by many people supposed\nto have done more. In the sixty-four years of the present century,\naccordingly, the average price of the quarter of nine bushels of the\nbest wheat, at Windsor market, appears, by the accounts of Eton college,\nto have been £ 2:0:6 10/32, which is about ten shillings and sixpence,\nor more than five-and-twenty percent. cheaper than it had been during\nthe sixty-four last years of the last century; and about nine shillings\nand sixpence cheaper than it had been during the sixteen years preceding\n1636, when the discovery of the abundant mines of America may be\nsupposed to have produced its full effect; and about one shilling\ncheaper than it had been in the twenty-six years preceding 1620, before\nthat discovery can well be supposed to have produced its full effect.\nAccording to this account, the average price of middle wheat, during\nthese sixty-four first years of the present century, comes out to have\nbeen about thirty-two shillings the quarter of eight bushels.\n\nThe value of silver, therefore, seems to have risen somewhat in\nproportion to that of corn during the course of the present century,\nand it had probably begun to do so even some time before the end of the\nlast.\n\n\nIn 1687, the price of the quarter of nine bushels of the best wheat, at\nWindsor market, was £ 1:5:2, the lowest price at which it had ever been\nfrom 1595.\n\nIn 1688, Mr Gregory King, a man famous for his knowledge in matters of\nthis kind, estimated the average price of wheat, in years of moderate\nplenty, to be to the grower 3s. 6d. the bushel, or eight-and-twenty\nshillings the quarter. The grower's price I understand to be the same\nwith what is sometimes called the contract price, or the price at which\na farmer contracts for a certain number of years to deliver a certain\nquantity of corn to a dealer. As a contract of this kind saves the\nfarmer the expense and trouble of marketing, the contract price is\ngenerally lower than what is supposed to be the average market price.\nMr King had judged eight-and-twenty shillings the quarter to be at that\ntime the ordinary contract price in years of moderate plenty. Before the\nscarcity occasioned by the late extraordinary course of bad seasons,\nit was, I have been assured, the ordinary contract price in all common\nyears.\n\nIn 1688 was granted the parliamentary bounty upon the exportation\nof corn. The country gentlemen, who then composed a still greater\nproportion of the legislature than they do at present, had felt that the\nmoney price of corn was falling. The bounty was an expedient to raise it\nartificially to the high price at which it had frequently been sold in\nthe times of Charles I. and II. It was to take place, therefore, till\nwheat was so high as fortyeight shillings the quarter; that is, twenty\nshillings, or 5-7ths dearer than Mr King had, in that very year,\nestimated the grower's price to be in times of moderate plenty. If his\ncalculations deserve any part of the reputation which they have obtained\nvery universally, eight-and-forty shillings the quarter was a price\nwhich, without some such expedient as the bounty, could not at that\ntime be expected, except in years of extraordinary scarcity. But the\ngovernment of King William was not then fully settled. It was in no\ncondition to refuse anything to the country gentlemen, from whom it\nwas, at that very time, soliciting the first establishment of the annual\nland-tax.\n\nThe value of silver, therefore, in proportion to that of corn, had\nprobably risen somewhat before the end of the last century; and it seems\nto have continued to do so during the course of the greater part of the\npresent, though the necessary operation of the bounty must have hindered\nthat rise from being so sensible as it otherwise would have been in the\nactual state of tillage.\n\nIn plentiful years, the bounty, by occasioning an extraordinary\nexportation, necessarily raises the price of corn above what it\notherwise would be in those years. To encourage tillage, by keeping up\nthe price of corn, even in the most plentiful years, was the avowed end\nof the institution.\n\nIn years of great scarcity, indeed, the bounty has generally been\nsuspended. It must, however, have had some effect upon the prices of\nmany of those years. By the extraordinary exportation which it occasions\nin years of plenty, it must frequently hinder the plenty of one year\nfrom compensating the scarcity of another.\n\nBoth in years of plenty and in years of scarcity, therefore, the bounty\nraises the price of corn above what it naturally would be in the actual\nstate of tillage. If during the sixty-four first years of the present\ncentury, therefore, the average price has been lower than during the\nsixty-four last years of the last century, it must, in the same state of\ntillage, have been much more so, had it not been for this operation of\nthe bounty.\n\nBut, without the bounty, it may be said the state of tillage would not\nhave been the same. What may have been the effects of this institution\nupon the agriculture of the country, I shall endeavour to explain\nhereafter, when I come to treat particularly of bounties. I shall only\nobserve at present, that this rise in the value of silver, in proportion\nto that of corn, has not been peculiar to England. It has been observed\nto have taken place in France during the same period, and nearly in the\nsame proportion, too, by three very faithful, diligent, and laborious\ncollectors of the prices of corn, Mr Dupré de St Maur, Mr Messance,\nand the author of the Essay on the Police of Grain. But in France, till\n1764, the exportation of grain was by law prohibited; and it is somewhat\ndifficult to suppose, that nearly the same diminution of price which\ntook place in one country, notwithstanding this prohibition, should,\nin another, be owing to the extraordinary encouragement given to\nexportation.\n\nIt would be more proper, perhaps, to consider this variation in the\naverage money price of corn as the effect rather of some gradual rise in\nthe real value of silver in the European market, than of any fall in the\nreal average value of corn. Corn, it has already been observed, is, at\ndistant periods of time, a more accurate measure of value than either\nsilver or, perhaps, any other commodity. When, after the discovery of\nthe abundant mines of America, corn rose to three and four times its\nformer money price, this change was universally ascribed, not to any\nrise in the real value of corn, but to a fall in the real value of\nsilver. If, during the sixty-four first years of the present century,\ntherefore, the average money price of corn has fallen somewhat below\nwhat it had been during the greater part of the last century, we should,\nin the same manner, impute this change, not to any fall in the real\nvalue of corn, but to some rise in the real value of silver in the\nEuropean market.\n\nThe high price of corn during these ten or twelve years past, indeed,\nhas occasioned a suspicion that the real value of silver still continues\nto fall in the European market. This high price of corn, however, seems\nevidently to have been the effect of the extraordinary unfavourableness\nof the seasons, and ought, therefore, to be regarded, not as a\npermanent, but as a transitory and occasional event. The seasons, for\nthese ten or twelve years past, have been unfavourable through the\ngreater part of Europe; and the disorders of Poland have very much\nincreased the scarcity in all those countries, which, in dear years,\nused to be supplied from that market. So long a course of bad seasons,\nthough not a very common event, is by no means a singular one; and\nwhoever has inquired much into the history of the prices of corn in\nformer times, will be at no loss to recollect several other examples\nof the same kind. Ten years of extraordinary scarcity, besides, are not\nmore wonderful than ten years of extraordinary plenty. The low price\nof corn, from 1741 to 1750, both inclusive, may very well be set in\nopposition to its high price during these last eight or ten years. From\n1741 to 1750, the average price of the quarter of nine bushels of the\nbest wheat, at Windsor market, it appears from the accounts of Eton\ncollege, was only £ 1:13:9 4/5, which is nearly 6s.3d. below the average\nprice of the sixty-four first years of the present century. The average\nprice of the quarter of eight bushels of middle wheat comes out,\naccording to this account, to have been, during these ten years, only £\n1:6:8.\n\nBetween 1741 and 1750, however, the bounty must have hindered the price\nof corn from falling so low in the home market as it naturally would\nhave done. During these ten years, the quantity of all sorts of grain\nexported, it appears from the custom-house books, amounted to no less\nthan 8,029,156 quarters, one bushel. The bounty paid for this amounted\nto £ 1,514,962:17:4 1/2. In 1749, accordingly, Mr Pelham, at that time\nprime minister, observed to the house of commons, that, for the three\nyears preceding, a very extraordinary sum had been paid as bounty for\nthe exportation of corn. He had good reason to make this observation,\nand in the following year he might have had still better. In that single\nyear, the bounty paid amounted to no less than £ 324,176:10:6. {See\nTracts on the Corn Trade, Tract 3,} It is unnecessary to observe how\nmuch this forced exportation must have raised the price of corn above\nwhat it otherwise would have been in the home market.\n\nAt the end of the accounts annexed to this chapter the reader will find\nthe particular account of those ten years separated from the rest. He\nwill find there, too, the particular account of the preceding ten years,\nof which the average is likewise below, though not so much below, the\ngeneral average of the sixty-four first years of the century. The year\n1740, however, was a year of extraordinary scarcity. These twenty\nyears preceding 1750 may very well be set in opposition to the twenty\npreceding 1770. As the former were a good deal below the general average\nof the century, notwithstanding the intervention of one or two dear\nyears; so the latter have been a good deal above it, notwithstanding\nthe intervention of one or two cheap ones, of 1759, for example. If the\nformer have not been as much below the general average as the latter\nhave been above it, we ought probably to impute it to the bounty. The\nchange has evidently been too sudden to be ascribed to any change in the\nvalue of silver, which is always slow and gradual. The suddenness of the\neffect can be accounted for only by a cause which can operate suddenly,\nthe accidental variations of the seasons.\n\nThe money price of labour in Great Britain has, indeed, risen during the\ncourse of the present century. This, however, seems to be the effect,\nnot so much of any diminution in the value of silver in the European\nmarket, as of an increase in the demand for labour in Great Britain,\narising from the great, and almost universal prosperity of the country.\nIn France, a country not altogether so prosperous, the money price of\nlabour has, since the middle of the last century, been observed to sink\ngradually with the average money price of corn. Both in the last century\nand in the present, the day wages of common labour are there said to\nhave been pretty uniformly about the twentieth part of the average price\nof the septier of wheat; a measure which contains a little more than\nfour Winchester bushels. In Great Britain, the real recompence\nof labour, it has already been shewn, the real quantities of the\nnecessaries and conveniencies of life which are given to the labourer,\nhas increased considerably during the course of the present century.\nThe rise in its money price seems to have been the effect, not of any\ndiminution of the value of silver in the general market of Europe, but\nof a rise in the real price of labour, in the particular market of Great\nBritain, owing to the peculiarly happy circumstances of the country.\n\nFor some time after the first discovery of America, silver would\ncontinue to sell at its former, or not much below its former price.\nThe profits of mining would for some time be very great, and much above\ntheir natural rate. Those who imported that metal into Europe, however,\nwould soon find that the whole annual importation could not be disposed\nof at this high price. Silver would gradually exchange for a smaller and\na smaller quantity of goods. Its price would sink gradually lower and\nlower, till it fell to its natural price; or to what was just sufficient\nto pay, according to their natural rates, the wages of the labour, the\nprofits of the stock, and the rent of the land, which must be paid in\norder to bring it from the mine to the market. In the greater part of\nthe silver mines of Peru, the tax of the king of Spain, amounting to a\ntenth of the gross produce, eats up, it has already been observed,\nthe whole rent of the land. This tax was originally a half; it soon\nafterwards fell to a third, then to a fifth, and at last to a tenth, at\nwhich late it still continues. In the greater part of the silver mines\nof Peru, this, it seems, is all that remains, after replacing the stock\nof the undertaker of the work, together with its ordinary profits; and\nit seems to be universally acknowledged that these profits, which were\nonce very high, are now as low as they can well be, consistently with\ncarrying on the works.\n\nThe tax of the king of Spain was reduced to a fifth of the registered\nsilver in 1504 {Solorzano, vol, ii.}, one-and-forty years before 1545,\nthe date of the discovery of the mines of Potosi. In the course of\nninety years, or before 1636, these mines, the most fertile in all\nAmerica, had time sufficient to produce their full effect, or to reduce\nthe value of silver in the European market as low as it could well fall,\nwhile it continued to pay this tax to the king of Spain. Ninety years is\ntime sufficient to reduce any commodity, of which there is no monopoly,\nto its natural price, or to the lowest price at which, while it pays\na particular tax, it can continue to be sold for any considerable time\ntogether.\n\nThe price of silver in the European market might, perhaps, have fallen\nstill lower, and it might have become necessary either to reduce the tax\nupon it, not only to one-tenth, as in 1736, but to one twentieth, in the\nsame manner as that upon gold, or to give up working the greater part\nof the American mines which are now wrought. The gradual increase of\nthe demand for silver, or the gradual enlargement of the market for the\nproduce of the silver mines of America, is probably the cause which has\nprevented this from happening, and which has not only kept up the\nvalue of silver in the European market, but has perhaps even raised it\nsomewhat higher than it was about the middle of the last century.\n\nSince the first discovery of America, the market for the produce of its\nsilver mines has been growing gradually more and more extensive.\n\nFirst, the market of Europe has become gradually more and more\nextensive. Since the discovery of America, the greater part of Europe\nhas been much improved. England, Holland, France, and Germany; even\nSweden, Denmark, and Russia, have all advanced considerably, both in\nagriculture and in manufactures. Italy seems not to have gone backwards.\nThe fall of Italy preceded the conquest of Peru. Since that time it\nseems rather to have recovered a little. Spain and Portugal, indeed, are\nsupposed to have gone backwards. Portugal, however, is but a very small\npart of Europe, and the declension of Spain is not, perhaps, so great as\nis commonly imagined. In the beginning of the sixteenth century, Spain\nwas a very poor country, even in comparison with France, which has been\nso much improved since that time. It was the well known remark of\nthe emperor Charles V. who had travelled so frequently through both\ncountries, that every thing abounded in France, but that every thing\nwas wanting in Spain. The increasing produce of the agriculture and\nmanufactures of Europe must necessarily have required a gradual increase\nin the quantity of silver coin to circulate it; and the increasing\nnumber of wealthy individuals must have required the like increase in\nthe quantity of their plate and other ornaments of silver.\n\nSecondly, America is itself a new market, for the produce of its\nown silver mines; and as its advances in agriculture, industry,\nand population, are much more rapid than those of the most thriving\ncountries in Europe, its demand must increase much more rapidly. The\nEnglish colonies are altogether a new market, which, partly for coin,\nand partly for plate, requires a continual augmenting supply of silver\nthrough a great continent where there never was any demand before.\nThe greater part, too, of the Spanish and Portuguese colonies, are\naltogether new markets. New Granada, the Yucatan, Paraguay, and the\nBrazils, were, before discovered by the Europeans, inhabited by savage\nnations, who had neither arts nor agriculture. A considerable degree\nof both has now been introduced into all of them. Even Mexico and\nPeru, though they cannot be considered as altogether new markets, are\ncertainly much more extensive ones than they ever were before. After all\nthe wonderful tales which have been published concerning the splendid\nstate of those countries in ancient times, whoever reads, with any\ndegree of sober judgment, the history of their first discovery and\nconquest, will evidently discern that, in arts, agriculture, and\ncommerce, their inhabitants were much more ignorant than the Tartars\nof the Ukraine are at present. Even the Peruvians, the more civilized\nnation of the two, though they made use of gold and silver as ornaments,\nhad no coined money of any kind. Their whole commerce was carried on by\nbarter, and there was accordingly scarce any division of labour among\nthem. Those who cultivated the ground, were obliged to build their own\nhouses, to make their own household furniture, their own clothes, shoes,\nand instruments of agriculture. The few artificers among them are\nsaid to have been all maintained by the sovereign, the nobles, and the\npriests, and were probably their servants or slaves. All the ancient\narts of Mexico and Peru have never furnished one single manufacture\nto Europe. The Spanish armies, though they scarce ever exceeded five\nhundred men, and frequently did not amount to half that number, found\nalmost everywhere great difficulty in procuring subsistence. The famines\nwhich they are said to have occasioned almost wherever they went, in\ncountries, too, which at the same time are represented as very populous\nand well cultivated, sufficiently demonstrate that the story of this\npopulousness and high cultivation is in a great measure fabulous. The\nSpanish colonies are under a government in many respects less favourable\nto agriculture, improvement, and population, than that of the English\ncolonies. They seem, however, to be advancing in all those much more\nrapidly than any country in Europe. In a fertile soil and happy climate,\nthe great abundance and cheapness of land, a circumstance common to all\nnew colonies, is, it seems, so great an advantage, as to compensate\nmany defects in civil government. Frezier, who visited Peru in 1713,\nrepresents Lima as containing between twenty-five and twenty-eight\nthousand inhabitants. Ulloa, who resided in the same country between\n1740 and 1746, represents it as containing more than fifty thousand.\nThe difference in their accounts of the populousness of several other\nprincipal towns of Chili and Peru is nearly the same; and as there seems\nto be no reason to doubt of the good information of either, it marks\nan increase which is scarce inferior to that of the English colonies.\nAmerica, therefore, is a new market for the produce of its own silver\nmines, of which the demand must increase much more rapidly than that of\nthe most thriving country in Europe.\n\nThirdly, the East Indies is another market for the produce of the\nsilver mines of America, and a market which, from the time of the first\ndiscovery of those mines, has been continually taking off a greater and\na greater quantity of silver. Since that time, the direct trade between\nAmerica and the East Indies, which is carried on by means of the\nAcapulco ships, has been continually augmenting, and the indirect\nintercourse by the way of Europe has been augmenting in a still greater\nproportion. During the sixteenth century, the Portuguese were the only\nEuropean nation who carried on any regular trade to the East Indies. In\nthe last years of that century, the Dutch began to encroach upon\nthis monopoly, and in a few years expelled them from their principal\nsettlements in India. During the greater part of the last century, those\ntwo nations divided the most considerable part of the East India trade\nbetween them; the trade of the Dutch continually augmenting in a still\ngreater proportion than that of the Portuguese declined. The English and\nFrench carried on some trade with India in the last century, but it\nhas been greatly augmented in the course of the present. The East\nIndia trade of the Swedes and Danes began in the course of the present\ncentury. Even the Muscovites now trade regularly with China, by a sort\nof caravans which go over land through Siberia and Tartary to Pekin. The\nEast India trade of all these nations, if we except that of the\nFrench, which the last war had well nigh annihilated, has been almost\ncontinually augmenting. The increasing consumptions of East India goods\nin Europe is, it seems, so great, as to afford a gradual increase of\nemployment to them all. Tea, for example, was a drug very little used in\nEurope, before the middle of the last century. At present, the value of\nthe tea annually imported by the English East India company, for the\nuse of their own countrymen, amounts to more than a million and a half\na year; and even this is not enough; a great deal more being constantly\nsmuggled into the country from the ports of Holland, from Gottenburgh\nin Sweden, and from the coast of France, too, as long as the French East\nIndia company was in prosperity. The consumption of the porcelain of\nChina, of the spiceries of the Moluccas, of the piece goods of Bengal,\nand of innumerable other articles, has increased very nearly in a like\nproportion. The tonnage, accordingly, of all the European shipping\nemployed in the East India trade, at any one time during the last\ncentury, was not, perhaps, much greater than that of the English East\nIndia company before the late reduction of their shipping.\n\nBut in the East Indies, particularly in China and Indostan, the value\nof the precious metals, when the Europeans first began to trade to those\ncountries, was much higher than in Europe; and it still continues to be\nso. In rice countries, which generally yield two, sometimes three crops\nin the year, each of them more plentiful than any common crop of corn,\nthe abundance of food must be much greater than in any corn country\nof equal extent. Such countries are accordingly much more populous. In\nthem, too, the rich, having a greater superabundance of food to dispose\nof beyond what they themselves can consume, have the means of purchasing\na much greater quantity of the labour of other people. The retinue of a\ngrandee in China or Indostan accordingly is, by all accounts, much more\nnumerous and splendid than that of the richest subjects in Europe. The\nsame superabundance of food, of which they have the disposal, enables\nthem to give a greater quantity of it for all those singular and rare\nproductions which nature furnishes but in very small quantities; such\nas the precious metals and the precious stones, the great objects of the\ncompetition of the rich. Though the mines, therefore, which supplied\nthe Indian market, had been as abundant as those which supplied the\nEuropean, such commodities would naturally exchange for a greater\nquantity of food in India than in Europe. But the mines which supplied\nthe Indian market with the precious metals seem to have been a good deal\nless abundant, and those which supplied it with the precious stones\na good deal more so, than the mines which supplied the European. The\nprecious metals, therefore, would naturally exchange in India for a\nsomewhat greater quantity of the precious stones, and for a much greater\nquantity of food than in Europe. The money price of diamonds, the\ngreatest of all superfluities, would be somewhat lower, and that of\nfood, the first of all necessaries, a great deal lower in the one\ncountry than in the other. But the real price of labour, the real\nquantity of the necessaries of life which is given to the labourer, it\nhas already been observed, is lower both in China and Indostan, the two\ngreat markets of India, than it is through the greater part of Europe.\nThe wages of the labourer will there purchase a smaller quantity of\nfood: and as the money price of food is much lower in India than in\nEurope, the money price of labour is there lower upon a double account;\nupon account both of the small quantity of food which it will purchase,\nand of the low price of that food. But in countries of equal art and\nindustry, the money price of the greater part of manufactures will be\nin proportion to the money price of labour; and in manufacturing art\nand industry, China and Indostan, though inferior, seem not to be much\ninferior to any part of Europe. The money price of the greater part of\nmanufactures, therefore, will naturally be much lower in those great\nempires than it is anywhere in Europe. Through the greater part of\nEurope, too, the expense of land-carriage increases very much both the\nreal and nominal price of most manufactures. It costs more labour, and\ntherefore more money, to bring first the materials, and afterwards the\ncomplete manufacture to market. In China and Indostan, the extent and\nvariety of inland navigations save the greater part of this labour, and\nconsequently of this money, and thereby reduce still lower both the real\nand the nominal price of the greater part of their manufactures. Upon\nall these accounts, the precious metals are a commodity which it always\nhas been, and still continues to be, extremely advantageous to carry\nfrom Europe to India. There is scarce any commodity which brings a\nbetter price there; or which, in proportion to the quantity of labour\nand commodities which it costs in Europe, will purchase or command\na greater quantity of labour and commodities in India. It is more\nadvantageous, too, to carry silver thither than gold; because in China,\nand the greater part of the other markets of India, the proportion\nbetween fine silver and fine gold is but as ten, or at most as twelve\nto one; whereas in Europe it is as fourteen or fifteen to one. In China,\nand the greater part of the other markets of India, ten, or at most\ntwelve ounces of silver, will purchase an ounce of gold; in Europe, it\nrequires from fourteen to fifteen ounces. In the cargoes, therefore,\nof the greater part of European ships which sail to India, silver\nhas generally been one of the most valuable articles. It is the most\nvaluable article in the Acapulco ships which sail to Manilla. The silver\nof the new continent seems, in this manner, to be one of the principal\ncommodities by which the commerce between the two extremities of the old\none is carried on; and it is by means of it, in a great measure, that\nthose distant parts of the world are connected with one another.\n\nIn order to supply so very widely extended a market, the quantity of\nsilver annually brought from the mines must not only be sufficient to\nsupport that continued increase, both of coin and of plate, which is\nrequired in all thriving countries; but to repair that continual waste\nand consumption of silver which takes place in all countries where that\nmetal is used.\n\nThe continual consumption of the precious metals in coin by wearing,\nand in plate both by wearing and cleaning, is very sensible; and in\ncommodities of which the use is so very widely extended, would alone\nrequire a very great annual supply. The consumption of those metals in\nsome particular manufactures, though it may not perhaps be greater\nupon the whole than this gradual consumption, is, however, much more\nsensible, as it is much more rapid. In the manufactures of Birmingham\nalone, the quantity of gold and silver annually employed in gilding and\nplating, and thereby disqualified from ever afterwards appearing in the\nshape of those metals, is said to amount to more than fifty thousand\npounds sterling. We may from thence form some notion how great must be\nthe annual consumption in all the different parts of the world, either\nin manufactures of the same kind with those of Birmingham, or in laces,\nembroideries, gold and silver stuffs, the gilding of books, furniture,\netc. A considerable quantity, too, must be annually lost in transporting\nthose metals from one place to another both by sea and by land. In the\ngreater part of the governments of Asia, besides, the almost universal\ncustom of concealing treasures in the bowels of the earth, of which the\nknowledge frequently dies with the person who makes the concealment,\nmust occasion the loss of a still greater quantity.\n\nThe quantity of gold and silver imported at both Cadiz and Lisbon\n(including not only what comes under register, but what may be supposed\nto be smuggled) amounts, according to the best accounts, to about six\nmillions sterling a-year.\n\nAccording to Mr Meggens {Postscript to the Universal Merchant p. 15 and\n16. This postscript was not printed till 1756, three years after the\npublication of the book, which has never had a second edition. The\npostscript is, therefore, to be found in few copies; it corrects several\nerrors in the book.}, the annual importation of the precious metals\ninto Spain, at an average of six years, viz. from 1748 to 1753, both\ninclusive, and into Portugal, at an average of seven years, viz. from\n1747 to 1753, both inclusive, amounted in silver to 1,101,107 pounds\nweight, and in gold to 49,940 pounds weight. The silver, at sixty two\nshillings the pound troy, amounts to £ 3,413,431:10s. sterling. The\ngold, at forty-four guineas and a half the pound troy, amounts to\n£ 2,333,446:14s. sterling. Both together amount to £ 5,746,878:4s.\nsterling. The account of what was imported under register, he assures\nus, is exact. He gives us the detail of the particular places from which\nthe gold and silver were brought, and of the particular quantity of each\nmetal, which, according to the register, each of them afforded. He makes\nan allowance, too, for the quantity of each metal which, he supposes,\nmay have been smuggled. The great experience of this judicious merchant\nrenders his opinion of considerable weight.\n\nAccording to the eloquent, and sometimes well-informed, author of\nthe Philosophical and Political History of the Establishment of the\nEuropeans in the two Indies, the annual importation of registered gold\nand silver into Spain, at an average of eleven years, viz. from 1754 to\n1764, both inclusive, amounted to 13,984,185 3/5 piastres of ten reals.\nOn account of what may have been smuggled, however, the whole annual\nimportation, he supposes, may have amounted to seventeen millions\nof piastres, which, at 4s. 6d. the piastre, is equal to £ 3,825,000\nsterling. He gives the detail, too, of the particular places from which\nthe gold and silver were brought, and of the particular quantities of\neach metal, which according to the register, each of them afforded.\nHe informs us, too, that if we were to judge of the quantity of gold\nannually imported from the Brazils to Lisbon, by the amount of the\ntax paid to the king of Portugal, which it seems, is one-fifth of the\nstandard metal, we might value it at eighteen millions of cruzadoes,\nor forty-five millions of French livres, equal to about twenty millions\nsterling. On account of what may have been smuggled, however, we may\nsafely, he says, add to this sum an eighth more, or £ 250,000 sterling,\nso that the whole will amount to £ 2,250,000 sterling. According to this\naccount, therefore, the whole annual importation of the precious metals\ninto both Spain and Portugal, mounts to about £ 6,075,000 sterling.\n\nSeveral other very well authenticated, though manuscript accounts, I\nhave been assured, agree in making this whole annual importation amount,\nat an average, to about six millions sterling; sometimes a little more,\nsometimes a little less.\n\nThe annual importation of the precious metals into Cadiz and Lisbon,\nindeed, is not equal to the whole annual produce of the mines of\nAmerica. Some part is sent annually by the Acapulco ships to Manilla;\nsome part is employed in a contraband trade, which the Spanish colonies\ncarry on with those of other European nations; and some part, no doubt,\nremains in the country. The mines of America, besides, are by no means\nthe only gold and silver mines in the world. They, are, however, by far\nthe most abundant. The produce of all the other mines which are known is\ninsignificant, it is acknowledged, in comparison with their's; and\nthe far greater part of their produce, it is likewise acknowledged,\nis annually imported into Cadiz and Lisbon. But the consumption of\nBirmingham alone, at the rate of fifty thousand pounds a-year, is equal\nto the hundred-and-twentieth part of this annual importation, at the\nrate of six millions a-year. The whole annual consumption of gold and\nsilver, therefore, in all the different countries of the world where\nthose metals are used, may, perhaps, be nearly equal to the whole annual\nproduce. The remainder may be no more than sufficient to supply the\nincreasing demand of all thriving countries. It may even have fallen so\nfar short of this demand, as somewhat to raise the price of those metals\nin the European market.\n\nThe quantity of brass and iron annually brought from the mine to the\nmarket, is out of all proportion greater than that of gold and silver.\nWe do not, however, upon this account, imagine that those coarse metals\nare likely to multiply beyond the demand, or to become gradually cheaper\nand cheaper. Why should we imagine that the precious metals are likely\nto do so? The coarse metals, indeed, though harder, are put to much\nharder uses, and, as they are of less value, less care is employed in\ntheir preservation. The precious metals, however, are not necessarily\nimmortal any more than they, but are liable, too, to be lost, wasted,\nand consumed, in a great variety of ways.\n\nThe price of all metals, though liable to slow and gradual variations,\nvaries less from year to year than that of almost any other part of the\nrude produce of land: and the price of the precious metals is even\nless liable to sudden variations than that of the coarse ones. The\ndurableness of metals is the foundation of this extraordinary steadiness\nof price. The corn which was brought to market last year will be all, or\nalmost all, consumed, long before the end of this year. But some part\nof the iron which was brought from: the mine two or three hundred years\nago, may be still in use, and, perhaps, some part of the gold which was\nbrought from it two or three thousand years ago. The different masses\nof corn, which, in different years, must supply the consumption of the\nworld, will always be nearly in proportion to the respective produce of\nthose different years. But the proportion between the different masses\nof iron which may be in use in two different years, will be very little\naffected by any accidental difference in the produce of the iron mines\nof those two years; and the proportion between the masses of gold will\nbe still less affected by any such difference in the produce of the\ngold mines. Though the produce of the greater part of metallic mines,\ntherefore, varies, perhaps, still more from year to year than that of\nthe greater part of corn fields, those variations have not the same\neffect upon the price of the one species of commodities as upon that of\nthe other.\n\nVariations in the Proportion between the respective Values of Gold and\nSilver.\n\nBefore the discovery of the mines of America, the value of fine gold to\nfine silver was regulated in the different mines of Europe, between the\nproportions of one to ten and one to twelve; that is, an ounce of fine\ngold was supposed to be worth from ten to twelve ounces of fine silver.\nAbout the middle of the last century, it came to be regulated, between\nthe proportions of one to fourteen and one to fifteen; that is, an ounce\nof fine gold came to be supposed worth between fourteen and fifteen\nounces of fine silver. Gold rose in its nominal value, or in the\nquantity of silver which was given for it. Both metals sunk in their\nreal value, or in the quantity of labour which they could purchase; but\nsilver sunk more than gold. Though both the gold and silver mines\nof America exceeded in fertility all those which had ever been\nknown before, the fertility of the silver mines had, it seems, been\nproportionally still greater than that of the gold ones.\n\nThe great quantities of silver carried annually from Europe to India,\nhave, in some of the English settlements, gradually reduced the value of\nthat metal in proportion to gold. In the mint of Calcutta, an ounce of\nfine gold is supposed to be worth fifteen ounces of fine silver, in the\nsame manner as in Europe. It is in the mint, perhaps, rated too high\nfor the value which it bears in the market of Bengal. In China, the\nproportion of gold to silver still continues as one to ten, or one to\ntwelve. In Japan, it is said to be as one to eight.\n\nThe proportion between the quantities of gold and silver annually\nimported into Europe, according to Mr Meggens' account, is as one to\ntwenty-two nearly; that is, for one ounce of gold there are imported\na little more than twenty-two ounces of silver. The great quantity\nof silver sent annually to the East Indies reduces, he supposes, the\nquantities of those metals which remain in Europe to the proportion\nof one to fourteen or fifteen, the proportion of their values. The\nproportion between their values, he seems to think, must necessarily be\nthe same as that between their quantities, and would therefore be as one\nto twenty-two, were it not for this greater exportation of silver.\n\nBut the ordinary proportion between the respective values of two\ncommodities is not necessarily the same as that between the quantities\nof them which are commonly in the market. The price of an ox, reckoned\nat ten guineas, is about three score times the price of a lamb, reckoned\nat 3s. 6d. It would be absurd, however, to infer from thence, that there\nare commonly in the market three score lambs for one ox; and it would be\njust as absurd to infer, because an ounce of gold will commonly purchase\nfrom fourteen or fifteen ounces of silver, that there are commonly in\nthe market only fourteen or fifteen ounces of silver for one ounce of\ngold.\n\nThe quantity of silver commonly in the market, it is probable, is much\ngreater in proportion to that of gold, than the value of a certain\nquantity of gold is to that of an equal quantity of silver. The whole\nquantity of a cheap commodity brought to market is commonly not only\ngreater, but of greater value, than the whole quantity of a dear one.\nThe whole quantity of bread annually brought to market, is not only\ngreater, but of greater value, than the whole quantity of butcher's\nmeat; the whole quantity of butcher's meat, than the whole quantity of\npoultry; and the whole quantity of poultry, than the whole quantity of\nwild fowl. There are so many more purchasers for the cheap than for the\ndear commodity, that, not only a greater quantity of it, but a greater\nvalue can commonly be disposed of. The whole quantity, therefore, of\nthe cheap commodity, must commonly be greater in proportion to the whole\nquantity of the dear one, than the value of a certain quantity of the\ndear one, is to the value of an equal quantity of the cheap one. When\nwe compare the precious metals with one another, silver is a cheap, and\ngold a dear commodity. We ought naturally to expect, therefore, that\nthere should always be in the market, not only a greater quantity, but\na greater value of silver than of gold. Let any man, who has a little of\nboth, compare his own silver with his gold plate, and he will probably\nfind, that not only the quantity, but the value of the former, greatly\nexceeds that of the latter. Many people, besides, have a good deal of\nsilver who have no gold plate, which, even with those who have it, is\ngenerally confined to watch-cases, snuff-boxes, and such like trinkets,\nof which the whole amount is seldom of great value. In the British coin,\nindeed, the value of the gold preponderates greatly, but it is not so in\nthat of all countries. In the coin of some countries, the value of the\ntwo metals is nearly equal. In the Scotch coin, before the union with\nEngland, the gold preponderated very little, though it did somewhat\n{See Ruddiman's Preface to Anderson's Diplomata, etc. Scotiae.}, as it\nappears by the accounts of the mint. In the coin of many countries the\nsilver preponderates. In France, the largest sums are commonly paid\nin that metal, and it is there difficult to get more gold than what is\nnecessary to carry about in your pocket. The superior value, however,\nof the silver plate above that of the gold, which takes place in all\ncountries, will much more than compensate the preponderancy of the gold\ncoin above the silver, which takes place only in some countries.\n\nThough, in one sense of the word, silver always has been, and probably\nalways will be, much cheaper than gold; yet, in another sense, gold\nmay perhaps, in the present state of the Spanish market, be said to\nbe somewhat cheaper than silver. A commodity may be said to be dear or\ncheap not only according to the absolute greatness or smallness of\nits usual price, but according as that price is more or less above\nthe lowest for which it is possible to bring it to market for any\nconsiderable time together. This lowest price is that which barely\nreplaces, with a moderate profit, the stock which must be employed in\nbringing the commodity thither. It is the price which affords nothing\nto the landlord, of which rent makes not any component part, but which\nresolves itself altogether into wages and profit. But, in the present\nstate of the Spanish market, gold is certainly somewhat nearer to this\nlowest price than silver. The tax of the king of Spain upon gold is only\none-twentieth part of the standard metal, or five per cent.; whereas his\ntax upon silver amounts to one-tenth part of it, or to ten per cent. In\nthese taxes, too, it has already been observed, consists the whole rent\nof the greater part of the gold and silver mines of Spanish America; and\nthat upon gold is still worse paid than that upon silver. The profits of\nthe undertakers of gold mines, too, as they more rarely make a fortune,\nmust, in general, be still more moderate than those of the undertakers\nof silver mines. The price of Spanish gold, therefore, as it affords\nboth less rent and less profit, must, in the Spanish market, be somewhat\nnearer to the lowest price for which it is possible to bring it thither,\nthan the price of Spanish silver. When all expenses are computed, the\nwhole quantity of the one metal, it would seem, cannot, in the Spanish\nmarket, be disposed of so advantageously as the whole quantity of the\nother. The tax, indeed, of the king of Portugal upon the gold of the\nBrazils, is the same with the ancient tax of the king of Spain upon the\nsilver of Mexico and Peru; or one-fifth part of the standard metal. It\nmay therefore be uncertain, whether, to the general market of Europe,\nthe whole mass of American gold comes at a price nearer to the lowest\nfor which it is possible to bring it thither, than the whole mass of\nAmerican silver.\n\nThe price of diamonds and other precious stones may, perhaps, be still\nnearer to the lowest price at which it is possible to bring them to\nmarket, than even the price of gold.\n\nThough it is not very probable that any part of a tax, which is not only\nimposed upon one of the most proper subjects of taxation, a mere luxury\nand superfluity, but which affords so very important a revenue as the\ntax upon silver, will ever be given up as long as it is possible to pay\nit; yet the same impossibility of paying it, which, in 1736. made it\nnecessary to reduce it from one-fifth to one-tenth, may in time make it\nnecessary to reduce it still further; in the same manner as it made it\nnecessary to reduce the tax upon gold to one-twentieth. That the silver\nmines of Spanish America, like all other mines, become gradually more\nexpensive in the working, on account of the greater depths at which\nit is necessary to carry on the works, and of the greater expense of\ndrawing out the water, and of supplying them with fresh air at those\ndepths, is acknowledged by everybody who has inquired into the state of\nthose mines.\n\nThese causes, which are equivalent to a growing scarcity of silver (for\na commodity may be said to grow scarcer when it becomes more difficult\nand expensive to collect a certain quantity of it), must, in time,\nproduce one or other of the three following events: The increase of\nthe expense must either, first, be compensated altogether by a\nproportionable increase in the price of the metal; or, secondly, it must\nbe compensated altogether by a proportionable diminution of the tax upon\nsilver; or, thirdly, it must be compensated partly by the one and partly\nby the other of those two expedients. This third event is very possible.\nAs gold rose in its price in proportion to silver, notwithstanding a\ngreat diminution of the tax upon gold, so silver might rise in its\nprice in proportion to labour and commodities, notwithstanding an equal\ndiminution of the tax upon silver.\n\nSuch successive reductions of the tax, however, though they may not\nprevent altogether, must certainly retard, more or less, the rise of\nthe value of silver in the European market. In consequence of such\nreductions, many mines may be wrought which could not be wrought before,\nbecause they could not afford to pay the old tax; and the quantity of\nsilver annually brought to market, must always be somewhat greater,\nand, therefore, the value of any given quantity somewhat less, than it\notherwise would have been. In consequence of the reduction in 1736, the\nvalue of silver in the European market, though it may not at this day be\nlower than before that reduction, is, probably, at least ten per cent.\nlower than it would have been, had the court of Spain continued to exact\nthe old tax. That, notwithstanding this reduction, the value of silver\nhas, during the course of the present century, begun to rise somewhat\nin the European market, the facts and arguments which have been\nalleged above, dispose me to believe, or more properly to suspect and\nconjecture; for the best opinion which I can form upon this subject,\nscarce, perhaps, deserves the name of belief. The rise, indeed,\nsupposing there has been any, has hitherto been so very small, that\nafter all that has been said, it may, perhaps, appear to many people\nuncertain, not only whether this event has actually taken place, but\nwhether the contrary may not have taken place, or whether the value of\nsilver may not still continue to fall in the European market.\n\nIt must be observed, however, that whatever may be the supposed annual\nimportation of gold and silver, there must be a certain period at which\nthe annual consumption of those metals will be equal to that annual\nimportation. Their consumption must increase as their mass increases,\nor rather in a much greater proportion. As their mass increases, their\nvalue diminishes. They are more used, and less cared for, and their\nconsumption consequently increases in a greater proportion than their\nmass. After a certain period, therefore, the annual consumption of those\nmetals must, in this manner, become equal to their annual importation,\nprovided that importation is not continually increasing; which, in the\npresent times, is not supposed to be the case.\n\nIf, when the annual consumption has become equal to the annual\nimportation, the annual importation should gradually diminish, the\nannual consumption may, for some time, exceed the annual importation.\nThe mass of those metals may gradually and insensibly diminish, and\ntheir value gradually and insensibly rise, till the annual importation\nbecoming again stationary, the annual consumption will gradually and\ninsensibly accommodate itself to what that annual importation can\nmaintain.\n\nGrounds of the suspicion that the Value of Silver still continues to\ndecrease.\n\nThe increase of the wealth of Europe, and the popular notion, that\nas the quantity of the precious metals naturally increases with\nthe increase of wealth, so their value diminishes as their quantity\nincreases, may, perhaps, dispose many people to believe that their value\nstill continues to fall in the European market; and the still gradually\nincreasing price of many parts of the rude produce of land may confirm\nthem still farther in this opinion.\n\nThat that increase in the quantity of the precious metals, which arises\nin any country from the increase of wealth, has no tendency to diminish\ntheir value, I have endeavoured to shew already. Gold and silver\nnaturally resort to a rich country, for the same reason that all sorts\nof luxuries and curiosities resort to it; not because they are cheaper\nthere than in poorer countries, but because they are dearer, or because\na better price is given for them. It is the superiority of price which\nattracts them; and as soon as that superiority ceases, they necessarily\ncease to go thither.\n\nIf you except corn, and such other vegetables as are raised altogether\nby human industry, that all other sorts of rude produce, cattle,\npoultry, game of all kinds, the useful fossils and minerals of the\nearth, etc. naturally grow dearer, as the society advances in wealth\nand improvement, I have endeavoured to shew already. Though such\ncommodities, therefore, come to exchange for a greater quantity of\nsilver than before, it will not from thence follow that silver has\nbecome really cheaper, or will purchase less labour than before; but\nthat such commodities have become really dearer, or will purchase more\nlabour than before. It is not their nominal price only, but their real\nprice, which rises in the progress of improvement. The rise of their\nnominal price is the effect, not of any degradation of the value of\nsilver, but of the rise in their real price.\n\nDifferent Effects of the Progress of Improvement upon three different\nsorts of rude Produce.\n\nThese different sorts of rude produce may be divided into three classes.\nThe first comprehends those which it is scarce in the power of human\nindustry to multiply at all. The second, those which it can multiply\nin proportion to the demand. The third, those in which the efficacy of\nindustry is either limited or uncertain. In the progress of wealth\nand improvement, the real price of the first may rise to any degree of\nextravagance, and seems not to be limited by any certain boundary.\nThat of the second, though it may rise greatly, has, however, a certain\nboundary, beyond which it cannot well pass for any considerable time\ntogether. That of the third, though its natural tendency is to rise in\nthe progress of improvement, yet in the same degree of improvement it\nmay sometimes happen even to fall, sometimes to continue the same, and\nsometimes to rise more or less, according as different accidents render\nthe efforts of human industry, in multiplying this sort of rude produce,\nmore or less successful.\n\nFirst Sort.--The first sort of rude produce, of which the price rises in\nthe progress of improvement, is that which it is scarce in the power\nof human industry to multiply at all. It consists in those things which\nnature produces only in certain quantities, and which being of a very\nperishable nature, it is impossible to accumulate together the produce\nof many different seasons. Such are the greater part of rare and\nsingular birds and fishes, many different sorts of game, almost all\nwild-fowl, all birds of passage in particular, as well as many other\nthings. When wealth, and the luxury which accompanies it, increase, the\ndemand for these is likely to increase with them, and no effort of human\nindustry may be able to increase the supply much beyond what it was\nbefore this increase of the demand. The quantity of such commodities,\ntherefore, remaining the same, or nearly the same, while the competition\nto purchase them is continually increasing, their price may rise to\nany degree of extravagance, and seems not to be limited by any certain\nboundary. If woodcocks should become so fashionable as to sell for\ntwenty guineas a-piece, no effort of human industry could increase the\nnumber of those brought to market, much beyond what it is at present.\nThe high price paid by the Romans, in the time of their greatest\ngrandeur, for rare birds and fishes, may in this manner easily be\naccounted for. These prices were not the effects of the low value\nof silver in those times, but of the high value of such rarities and\ncuriosities as human industry could not multiply at pleasure. The real\nvalue of silver was higher at Rome, for sometime before, and after the\nfall of the republic, than it is through the greater part of Europe at\npresent. Three sestertii equal to about sixpence sterling, was the price\nwhich the republic paid for the modius or peck of the tithe wheat of\nSicily. This price, however, was probably below the average market\nprice, the obligation to deliver their wheat at this rate being\nconsidered as a tax upon the Sicilian farmers. When the Romans,\ntherefore, had occasion to order more corn than the tithe of wheat\namounted to, they were bound by capitulation to pay for the surplus at\nthe rate of four sestertii, or eightpence sterling the peck; and this\nhad probably been reckoned the moderate and reasonable, that is, the\nordinary or average contract price of those times; it is equal to about\none-and-twenty shillings the quarter. Eight-and-twenty shillings the\nquarter was, before the late years of scarcity, the ordinary contract\nprice of English wheat, which in quality is inferior to the Sicilian,\nand generally sells for a lower price in the European market. The value\nof silver, therefore, in those ancient times, must have been to its\nvalue in the present, as three to four inversely; that is, three ounces\nof silver would then have purchased the same quantity of labour and\ncommodities which four ounces will do at present. When we read in Pliny,\ntherefore, that Seius {Lib. X, c. 29.} bought a white nightingale, as\na present for the empress Agrippina, at the price of six thousand\nsestertii, equal to about fifty pounds of our present money; and that\nAsinius Celer {Lib. IX, c. 17.} purchased a surmullet at the price\nof eight thousand sestertii, equal to about sixty-six pounds thirteen\nshillings and fourpence of our present money; the extravagance of those\nprices, how much soever it may surprise us, is apt, notwithstanding, to\nappear to us about one third less than it really was. Their real price,\nthe quantity of labour and subsistence which was given away for them,\nwas about one-third more than their nominal price is apt to express to\nus in the present times. Seius gave for the nightingale the command of\na quantity of labour and subsistence, equal to what £ 66:13: 4d. would\npurchase in the present times; and Asinius Celer gave for a surmullet\nthe command of a quantity equal to what £ 88:17: 9d. would purchase.\nWhat occasioned the extravagance of those high prices was, not so much\nthe abundance of silver, as the abundance of labour and subsistence, of\nwhich those Romans had the disposal, beyond what was necessary for their\nown use. The quantity of silver, of which they had the disposal, was a\ngood deal less than what the command of the same quantity of labour and\nsubsistence would have procured to them in the present times.\n\nSecond sort.--The second sort of rude produce, of which the price\nrises in the progress of improvement, is that which human industry can\nmultiply in proportion to the demand. It consists in those useful plants\nand animals, which, in uncultivated countries, nature produces with such\nprofuse abundance, that they are of little or no value, and which, as\ncultivation advances, are therefore forced to give place to some more\nprofitable produce. During a long period in the progress of improvement,\nthe quantity of these is continually diminishing, while, at the same\ntime, the demand for them is continually increasing. Their real value,\ntherefore, the real quantity of labour which they will purchase or\ncommand, gradually rises, till at last it gets so high as to render them\nas profitable a produce as any thing else which human industry can raise\nupon the most fertile and best cultivated land. When it has got so high,\nit cannot well go higher. If it did, more land and more industry would\nsoon be employed to increase their quantity.\n\nWhen the price of cattle, for example, rises so high, that it is as\nprofitable to cultivate land in order to raise food for them as in order\nto raise food for man, it cannot well go higher. If it did, more corn\nland would soon be turned into pasture. The extension of tillage, by\ndiminishing the quantity of wild pasture, diminishes the quantity of\nbutcher's meat, which the country naturally produces without labour\nor cultivation; and, by increasing the number of those who have either\ncorn, or, what comes to the same thing, the price of corn, to give in\nexchange for it, increases the demand. The price of butcher's meat,\ntherefore, and, consequently, of cattle, must gradually rise, till it\ngets so high, that it becomes as profitable to employ the most fertile\nand best cultivated lands in raising food for them as in raising corn.\nBut it must always be late in the progress of improvement before tillage\ncan be so far extended as to raise the price of cattle to this height;\nand, till it has got to this height, if the country is advancing at all,\ntheir price must be continually rising. There are, perhaps, some parts\nof Europe in which the price of cattle has not yet got to this height.\nIt had not got to this height in any part of Scotland before the Union.\nHad the Scotch cattle been always confined to the market of Scotland,\nin a country in which the quantity of land, which can be applied to no\nother purpose but the feeding of cattle, is so great in proportion to\nwhat can be applied to other purposes, it is scarce possible, perhaps,\nthat their price could ever have risen so high as to render it\nprofitable to cultivate land for the sake of feeding them. In England,\nthe price of cattle, it has already been observed, seems, in the\nneighbourhood of London, to have got to this height about the beginning\nof the last century; but it was much later, probably, before it got\nthrough the greater part of the remoter counties, in some of which,\nperhaps, it may scarce yet have got to it. Of all the different\nsubstances, however, which compose this second sort of rude produce,\ncattle is, perhaps, that of which the price, in the progress of\nimprovement, rises first to this height.\n\nTill the price of cattle, indeed, has got to this height, it seems\nscarce possible that the greater part, even of those lands which are\ncapable of the highest cultivation, can be completely cultivated. In all\nfarms too distant from any town to carry manure from it, that is, in the\nfar greater part of those of every extensive country, the quantity of\nwell cultivated land must be in proportion to the quantity of manure\nwhich the farm itself produces; and this, again, must be in proportion\nto the stock of cattle which are maintained upon it. The land is\nmanured, either by pasturing the cattle upon it, or by feeding them in\nthe stable, and from thence carrying out their dung to it. But unless\nthe price of the cattle be sufficient to pay both the rent and profit of\ncultivated land, the farmer cannot afford to pasture them upon it; and\nhe can still less afford to feed them in the stable. It is with the\nproduce of improved and cultivated land only that cattle can be fed\nin the stable; because, to collect the scanty and scattered produce of\nwaste and unimproved lands, would require too much labour, and be too\nexpensive. It the price of the cattle, therefore, is not sufficient\nto pay for the produce of improved and cuitivated land, when they are\nallowed to pasture it, that price will be still less sufficient to\npay for that produce, when it must be collected with a good deal\nof additional labour, and brought into the stable to them. In these\ncircumstances, therefore, no more cattle can with profit be fed in the\nstable than what are necessary for tillage. But these can never afford\nmanure enough for keeping constantly in good condition all the\nlands which they are capable of cultivating. What they afford, being\ninsufficient for the whole farm, will naturally be reserved for the\nlands to which it can be most advantageously or conveniently applied;\nthe most fertile, or those, perhaps, in the neighbourhood of the\nfarm-yard. These, therefore, will be kept constantly in good condition,\nand fit for tillage. The rest will, the greater part of them, be allowed\nto lie waste, producing scarce any thing but some miserable pasture,\njust sufficient to keep alive a few straggling, half-starved cattle; the\nfarm, though much overstocked in proportion to what would be necessary\nfor its complete cultivation, being very frequently overstocked in\nproportion to its actual produce. A portion of this waste land, however,\nafter having been pastured in this wretched manner for six or seven\nyears together, may be ploughed up, when it will yield, perhaps, a poor\ncrop or two of bad oats, or of some other coarse grain; and then, being\nentirely exhausted, it must be rested and pastured again as before,\nand another portion ploughed up, to be in the same manner exhausted and\nrested again in its turn. Such, accordingly, was the general system of\nmanagement all over the low country of Scotland before the Union. The\nlands which were kept constantly well manured and in good condition\nseldom exceeded a third or fourth part of the whole farm, and sometimes\ndid not amount to a fifth or a sixth part of it. The rest were never\nmanured, but a certain portion of them was in its turn, notwithstanding,\nregularly cultivated and exhausted. Under this system of management, it\nis evident, even that part of the lands of Scotland which is capable of\ngood cultivation, could produce but little in comparison of what it may\nbe capable of producing. But how disadvantageous soever this system may\nappear, yet, before the Union, the low price of cattle seems to have\nrendered it almost unavoidable. If, notwithstanding a great rise in the\nprice, it still continues to prevail through a considerable part of\nthe country, it is owing in many places, no doubt, to ignorance and\nattachment to old customs, but, in most places, to the unavoidable\nobstructions which the natural course of things opposes to the immediate\nor speedy establishment of a better system: first, to the poverty of the\ntenants, to their not having yet had time to acquire a stock of cattle\nsufficient to cultivate their lands more completely, the same rise of\nprice, which would render it advantageous for them to maintain a\ngreater stock, rendering it more difficult for them to acquire it;\nand, secondly, to their not having yet had time to put their lands in\ncondition to maintain this greater stock properly, supposing they were\ncapable of acquiring it. The increase of stock and the improvement of\nland are two events which must go hand in hand, and of which the one can\nnowhere much outrun the other. Without some increase of stock, there\ncan be scarce any improvement of land, but there can be no considerable\nincrease of stock, but in consequence of a considerable improvement of\nland; because otherwise the land could not maintain it. These natural\nobstructions to the establishment of a better system, cannot be removed\nbut by a long course of frugality and industry; and half a century or\na century more, perhaps, must pass away before the old system, which\nis wearing out gradually, can be completely abolished through all\nthe different parts of the country. Of all the commercial advantages,\nhowever, which Scotland has derived from the Union with England, this\nrise in the price of cattle is, perhaps, the greatest. It has not only\nraised the value of all highland estates, but it has, perhaps, been the\nprincipal cause of the improvement of the low country.\n\nIn all new colonies, the great quantity of waste land, which can for\nmany years be applied to no other purpose but the feeding of cattle,\nsoon renders them extremely abundant; and in every thing great cheapness\nis the necessary consequence of great abundance. Though all the cattle\nof the European colonies in America were originally carried from Europe,\nthey soon multiplied so much there, and became of so little value, that\neven horses were allowed to run wild in the woods, without any owner\nthinking it worth while to claim them. It must be a long time after the\nfirst establishment of such colonies, before it can become profitable\nto feed cattle upon the produce of cultivated land. The same causes,\ntherefore, the want of manure, and the disproportion between the stock\nemployed in cultivation and the land which it is destined to cultivate,\nare likely to introduce there a system of husbandry, not unlike that\nwhich still continues to take place in so many parts of Scotland. Mr\nKalm, the Swedish traveller, when he gives an account of the husbandry\nof some of the English colonies in North America, as he found it in\n1749, observes, accordingly, that he can with difficulty discover\nthere the character of the English nation, so well skilled in all the\ndifferent branches of agriculture. They make scarce any manure for their\ncorn fields, he says; but when one piece of ground has been exhausted\nby continual cropping, they clear and cultivate another piece of fresh\nland; and when that is exhausted, proceed to a third. Their cattle are\nallowed to wander through the woods and other uncultivated grounds,\nwhere they are half-starved; having long ago extirpated almost all the\nannual grasses, by cropping them too early in the spring, before they\nhad time to form their flowers, or to shed their seeds. {Kalm's Travels,\nvol 1, pp. 343, 344.} The annual grasses were, it seems, the best\nnatural grasses in that part of North America; and when the Europeans\nfirst settled there, they used to grow very thick, and to rise three\nor four feet high. A piece of ground which, when he wrote, could not\nmaintain one cow, would in former times, he was assured, have maintained\nfour, each of which would have given four times the quantity of milk\nwhich that one was capable of giving. The poorness of the pasture\nhad, in his opinion, occasioned the degradation of their cattle, which\ndegenerated sensibly from me generation to another. They were probably\nnot unlike that stunted breed which was common all over Scotland thirty\nor forty years ago, and which is now so much mended through the greater\npart of the low country, not so much by a change of the breed, though\nthat expedient has been employed in some places, as by a more plentiful\nmethod of feeding them.\n\nThough it is late, therefore, in the progress of improvement, before\ncattle can bring such a price as to render it profitable to cultivate\nland for the sake of feeding them; yet of all the different parts which\ncompose this second sort of rude produce, they are perhaps the first\nwhich bring this price; because, till they bring it, it seems impossible\nthat improvement can be brought near even to that degree of perfection\nto which it has arrived in many parts of Europe.\n\nAs cattle are among the first, so perhaps venison is among the last\nparts of this sort of rude produce which bring this price. The price of\nvenison in Great Britain, how extravagant soever it may appear, is not\nnear sufficient to compensate the expense of a deer park, as is well\nknown to all those who have had any experience in the feeding of deer.\nIf it was otherwise, the feeding of deer would soon become an article of\ncommon farming, in the same manner as the feeding of those small birds,\ncalled turdi, was among the ancient Romans. Varro and Columella assure\nus, that it was a most profitable article. The fattening of ortolans,\nbirds of passage which arrive lean in the country, is said to be so in\nsome parts of France. If venison continues in fashion, and the wealth\nand luxury of Great Britain increase as they have done for some time\npast, its price may very probably rise still higher than it is at\npresent.\n\nBetween that period in the progress of improvement, which brings to its\nheight the price of so necessary an article as cattle, and that which\nbrings to it the price of such a superfluity as venison, there is a very\nlong interval, in the course of which many other sorts of rude produce\ngradually arrive at their highest price, some sooner and some later,\naccording to different circumstances.\n\nThus, in every farm, the offals of the barn and stable will maintain\na certain number of poultry. These, as they are fed with what would\notherwise be lost, are a mere save-all; and as they cost the farmer\nscarce any thing, so he can afford to sell them for very little. Almost\nall that he gets is pure gain, and their price can scarce be so low\nas to discourage him from feeding this number. But in countries ill\ncultivated, and therefore but thinly inhabited, the poultry, which are\nthus raised without expense, are often fully sufficient to supply the\nwhole demand. In this state of things, therefore, they are often as\ncheap as butcher's meat, or any other sort of animal food. But the\nwhole quantity of poultry which the farm in this manner produces\nwithout expense, must always be much smaller than the whole quantity\nof butcher's meat which is reared upon it; and in times of wealth and\nluxury, what is rare, with only nearly equal merit, is always preferred\nto what is common. As wealth and luxury increase, therefore, in\nconsequence of improvement and cultivation, the price of poultry\ngradually rises above that of butcher's meat, till at last it gets\nso high, that it becomes profitable to cultivate land for the sake of\nfeeding them. When it has got to this height, it cannot well go higher.\nIf it did, more land would soon be turned to this purpose. In several\nprovinces of France, the feeding of poultry is considered as a very\nimportant article in rural economy, and sufficiently profitable to\nencourage the farmer to raise a considerable quantity of Indian corn and\nbuckwheat for this purpose. A middling farmer will there sometimes have\nfour hundred fowls in his yard. The feeding of poultry seems scarce yet\nto be generally considered as a matter of so much importance in England.\nThey are certainly, however, dearer in England than in France, as\nEngland receives considerable supplies from France. In the progress of\nimprovements, the period at which every particular sort of animal\nfood is dearest, must naturally be that which immediately precedes the\ngeneral practice of cultivating land for the sake of raising it. For\nsome time before this practice becomes general, the scarcity must\nnecessarily raise the price. After it has become general, new methods of\nfeeding are commonly fallen upon, which enable the farmer to raise upon\nthe same quantity of ground a much greater quantity of that particular\nsort of animal food. The plenty not only obliges him to sell cheaper,\nbut, in consequence of these improvements, he can afford to sell\ncheaper; for if he could not afford it, the plenty would not be of long\ncontinuance. It has been probably in this manner that the introduction\nof clover, turnips, carrots, cabbages, etc. has contributed to sink the\ncommon price of butcher's meat in the London market, somewhat below what\nit was about the beginning of the last century.\n\nThe hog, that finds his food among ordure, and greedily devours\nmany things rejected by every other useful animal, is, like poultry,\noriginally kept as a save-all. As long as the number of such animals,\nwhich can thus be reared at little or no expense, is fully sufficient to\nsupply the demand, this sort of butcher's meat comes to market at a much\nlower price than any other. But when the demand rises beyond what this\nquantity can supply, when it becomes necessary to raise food on purpose\nfor feeding and fattening hogs, in the same manner as for feeding\nand fattening other cattle, the price necessarily rises, and becomes\nproportionably either higher or lower than that of other butcher's\nmeat, according as the nature of the country, and the state of its\nagriculture, happen to render the feeding of hogs more or less expensive\nthan that of other cattle. In France, according to Mr Buffon, the price\nof pork is nearly equal to that of beef. In most parts of Great Britain\nit is at present somewhat higher.\n\nThe great rise in the price both of hogs and poultry, has, in Great\nBritain, been frequently imputed to the diminution of the number of\ncottagers and other small occupiers of land; an event which has in every\npart of Europe been the immediate forerunner of improvement and better\ncultivation, but which at the same time may have contributed to raise\nthe price of those articles, both somewhat sooner and somewhat faster\nthan it would otherwise have risen. As the poorest family can often\nmaintain a cat or a dog without any expense, so the poorest occupiers\nof land can commonly maintain a few poultry, or a sow and a few pigs, at\nvery little. The little offals of their own table, their whey, skimmed\nmilk, and butter milk, supply those animals with a part of their food,\nand they find the rest in the neighbouring fields, without doing any\nsensible damage to any body. By diminishing the number of those small\noccupiers, therefore, the quantity of this sort of provisions, which is\nthus produced at little or no expense, must certainly have been a good\ndeal diminished, and their price must consequently have been raised both\nsooner and faster than it would otherwise have risen. Sooner or later,\nhowever, in the progress of improvement, it must at any rate have risen\nto the utmost height to which it is capable of rising; or to the\nprice which pays the labour and expense of cultivating the land which\nfurnishes them with food, as well as these are paid upon the greater\npart of other cultivated land.\n\nThe business of the dairy, like the feeding of hogs and poultry, is\noriginally carried on as a save-all. The cattle necessarily kept upon\nthe farm produce more milk than either the rearing of their own young,\nor the consumption of the farmer's family requires; and they produce\nmost at one particular season. But of all the productions of land, milk\nis perhaps the most perishable. In the warm season, when it is most\nabundant, it will scarce keep four-and-twenty hours. The farmer, by\nmaking it into fresh butter, stores a small part of it for a week; by\nmaking it into salt butter, for a year; and by making it into cheese, he\nstores a much greater part of it for several years. Part of all these\nis reserved for the use of his own family; the rest goes to market, in\norder to find the best price which is to be had, and which can scarce\nbe so low is to discourage him from sending thither whatever is over and\nabove the use of his own family. If it is very low indeed, he will be\nlikely to manage his dairy in a very slovenly and dirty manner, and\nwill scarce, perhaps, think it worth while to have a particular room or\nbuilding on purpose for it, but will suffer the business to be carried\non amidst the smoke, filth, and nastiness of his own kitchen, as was\nthe case of almost all the farmers' dairies in Scotland thirty or forty\nyears ago, and as is the case of many of them still. The same causes\nwhich gradually raise the price of butcher's meat, the increase of\nthe demand, and, in consequence of the improvement of the country, the\ndiminution of the quantity which can be fed at little or no expense,\nraise, in the same manner, that of the produce of the dairy, of which\nthe price naturally connects with that of butcher's meat, or with the\nexpense of feeding cattle. The increase of price pays for more labour,\ncare, and cleanliness. The dairy becomes more worthy of the farmer's\nattention, and the quality of its produce gradually improves. The price\nat last gets so high, that it becomes worth while to employ some of the\nmost fertile and best cultivated lands in feeding cattle merely for the\npurpose of the dairy; and when it has got to this height, it cannot well\ngo higher. If it did, more land would soon be turned to this purpose.\nIt seems to have got to this height through the greater part of England,\nwhere much good land is commonly employed in this manner. If you except\nthe neighbourhood of a few considerable towns, it seems not yet to have\ngot to this height anywhere in Scotland, where common farmers seldom\nemploy much good land in raising food for cattle, merely for the\npurpose of the dairy. The price of the produce, though it has risen very\nconsiderably within these few years, is probably still too low to admit\nof it. The inferiority of the quality, indeed, compared with that of\nthe produce of English dairies, is fully equal to that of the price.\nBut this inferiority of quality is, perhaps, rather the effect of this\nlowness of price, than the cause of it. Though the quality was much\nbetter, the greater part of what is brought to market could not, I\napprehend, in the present circumstances of the country, be disposed of\nat a much better price; and the present price, it is probable, would not\npay the expense of the land and labour necessary for producing a much\nbetter quality. Through the greater part of England, notwithstanding\nthe superiority of price, the dairy is not reckoned a more profitable\nemployment of land than the raising of corn, or the fattening of cattle,\nthe two great objects of agriculture. Through the greater part of\nScotland, therefore, it cannot yet be even so profitable.\n\nThe lands of no country, it is evident, can ever be completely\ncultivated and improved, till once the price of every produce, which\nhuman industry is obliged to raise upon them, has got so high as to pay\nfor the expense of complete improvement and cultivation. In order to do\nthis, the price of each particular produce must be sufficient, first, to\npay the rent of good corn land, as it is that which regulates the rent\nof the greater part of other cultivated land; and, secondly, to pay the\nlabour and expense of the farmer, as well as they are commonly paid upon\ngood corn land; or, in other words, to replace with the ordinary profits\nthe stock which he employs about it. This rise in the price of each\nparticular produce; must evidently be previous to the improvement and\ncultivation of the land which is destined for raising it. Gain is the\nend of all improvement; and nothing could deserve that name, of which\nloss was to be the necessary consequence. But loss must be the necessary\nconsequence of improving land for the sake of a produce of which the\nprice could never bring back the expense. If the complete improvement\nand cultivation of the country be, as it most certainly is, the greatest\nof all public advantages, this rise in the price of all those different\nsorts of rude produce, instead of being considered as a public calamity,\nought to be regarded as the necessary forerunner and attendant of the\ngreatest of all public advantages.\n\nThis rise, too, in the nominal or money price of all those different\nsorts of rude produce, has been the effect, not of any degradation in\nthe value of silver, but of a rise in their real price. They have become\nworth, not only a greater quantity of silver, but a greater quantity of\nlabour and subsistence than before. As it costs a greater quantity\nof labour and subsistence to bring them to market, so, when they are\nbrought thither they represent, or are equivalent to a greater quantity.\n\nThird Sort.--The third and last sort of rude produce, of which the price\nnaturally rises in the progress of improvement, is that in which the\nefficacy of human industry, in augmenting the quantity, is either\nlimited or uncertain. Though the real price of this sort of rude\nproduce, therefore, naturally tends to rise in the progress of\nimprovement, yet, according as different accidents happen to render\nthe efforts of human industry more or less successful in augmenting the\nquantity, it may happen sometimes even to fall, sometimes to continue\nthe same, in very different periods of improvement, and sometimes to\nrise more or less in the same period.\n\nThere are some sorts of rude produce which nature has rendered a kind\nof appendages to other sorts; so that the quantity of the one which any\ncountry can afford, is necessarily limited by that of the other. The\nquantity of wool or of raw hides, for example, which any country can\nafford, is necessarily limited by the number of great and small cattle\nthat are kept in it. The state of its improvement, and the nature of its\nagriculture, again necessarily determine this number.\n\nThe same causes which, in the progress of improvement, gradually raise\nthe price of butcher's meat, should have the same effect, it may be\nthought, upon the prices of wool and raw hides, and raise them, too,\nnearly in the same proportion. It probably would be so, if, in the rude\nbeginnings of improvement, the market for the latter commodities was\nconfined within as narrow bounds as that for the former. But the extent\nof their respective markets is commonly extremely different.\n\nThe market for butcher's meat is almost everywhere confined to the\ncountry which produces it. Ireland, and some part of British America,\nindeed, carry on a considerable trade in salt provisions; but they are,\nI believe, the only countries in the commercial world which do so, or\nwhich export to other countries any considerable part of their butcher's\nmeat.\n\nThe market for wool and raw hides, on the contrary, is, in the rude\nbeginnings of improvement, very seldom confined to the country which\nproduces them. They can easily be transported to distant countries; wool\nwithout any preparation, and raw hides with very little; and as they are\nthe materials of many manufactures, the industry of other countries may\noccasion a demand for them, though that of the country which produces\nthem might not occasion any.\n\nIn countries ill cultivated, and therefore but thinly inhabited, the\nprice of the wool and the hide bears always a much greater proportion\nto that of the whole beast, than in countries where, improvement and\npopulation being further advanced, there is more demand for butcher's\nmeat. Mr Hume observes, that in the Saxon times, the fleece was\nestimated at two-fifths of the value of the whole sheep and that\nthis was much above the proportion of its present estimation. In some\nprovinces of Spain, I have been assured, the sheep is frequently killed\nmerely for the sake of the fleece and the tallow. The carcase is often\nleft to rot upon the ground, or to be devoured by beasts and birds\nof prey. If this sometimes happens even in Spain, it happens almost\nconstantly in Chili, at Buenos Ayres, and in many other parts of Spanish\nAmerica, where the horned cattle are almost constantly killed merely for\nthe sake of the hide and the tallow. This, too, used to happen almost\nconstantly in Hispaniola, while it was infested by the buccaneers,\nand before the settlement, improvement, and populousness of the French\nplantations ( which now extend round the coast of almost the whole\nwestern half of the island) had given some value to the cattle of the\nSpaniards, who still continue to possess, not only the eastern part of\nthe coast, but the whole inland mountainous part of the country.\n\nThough, in the progress of improvement and population, the price of the\nwhole beast necessarily rises, yet the price of the carcase is likely to\nbe much more affected by this rise than that of the wool and the hide.\nThe market for the carcase being in the rude state of society confined\nalways to the country which produces it, must necessarily be extended\nin proportion to the improvement and population of that country. But the\nmarket for the wool and the hides, even of a barbarous country, often\nextending to the whole commercial world, it can very seldom be enlarged\nin the same proportion. The state of the whole commercial world can\nseldom be much affected by the improvement of any particular country;\nand the market for such commodities may remain the same, or very nearly\nthe same, after such improvements, as before. It should, however, in the\nnatural course of things, rather, upon the whole, be somewhat extended\nin consequence of them. If the manufactures, especially, of which those\ncommodities are the materials, should ever come to flourish in the\ncountry, the market, though it might not be much enlarged, would at\nleast be brought much nearer to the place of growth than before; and the\nprice of those materials might at least be increased by what had usually\nbeen the expense of transporting them to distant countries. Though it\nmight not rise, therefore, in the same proportion as that of butcher's\nmeat, it ought naturally to rise somewhat, and it ought certainly not to\nfall.\n\nIn England, however, notwithstanding the flourishing state of its\nwoollen manufacture, the price of English wool has fallen very\nconsiderably since the time of Edward III. There are many authentic\nrecords which demonstrate that, during the reign of that prince (towards\nthe middle of the fourteenth century, or about 1339), what was reckoned\nthe moderate and reasonable price of the tod, or twenty-eight pounds\nof English wool, was not less than ten shillings of the money of those\ntimes {See Smith's Memoirs of Wool, vol. i c. 5, 6, 7. also vol. ii.},\ncontaining, at the rate of twenty-pence the ounce, six ounces of silver,\nTower weight, equal to about thirty shillings of our present money. In\nthe present times, one-and-twenty shillings the tod may be reckoned\na good price for very good English wool. The money price of wool,\ntherefore, in the time of Edward III. was to its money price in the\npresent times as ten to seven. The superiority of its real price was\nstill greater. At the rate of six shillings and eightpence the quarter,\nten shillings was in those ancient times the price of twelve bushels of\nwheat. At the rate of twenty-eight shillings the quarter, one-and-twenty\nshillings is in the present times the price of six bushels only.\nThe proportion between the real price of ancient and modern times,\ntherefore, is as twelve to six, or as two to one. In those ancient\ntimes, a tod of wool would have purchased twice the quantity of\nsubsistence which it will purchase at present, and consequently twice\nthe quantity of labour, if the real recompence of labour had been the\nsame in both periods.\n\nThis degradation, both in the real and nominal value of wool, could\nnever have happened in consequence of the natural course of things. It\nhas accordingly been the effect of violence and artifice. First, of the\nabsolute prohibition of exporting wool from England: secondly, of\nthe permission of importing it from Spain, duty free: thirdly, of the\nprohibition of exporting it from Ireland to another country but England.\nIn consequence of these regulations, the market for English wool,\ninstead of being somewhat extended, in consequence of the improvement of\nEngland, has been confined to the home market, where the wool of several\nother countries is allowed to come into competition with it, and where\nthat of Ireland is forced into competition with it. As the woollen\nmanufactures, too, of Ireland, are fully as much discouraged as is\nconsistent with justice and fair dealing, the Irish can work up but a\nsmaller part of their own wool at home, and are therefore obliged to\nsend a greater proportion of it to Great Britain, the only market they\nare allowed.\n\nI have not been able to find any such authentic records concerning the\nprice of raw hides in ancient times. Wool was commonly paid as a subsidy\nto the king, and its valuation in that subsidy ascertains, at least in\nsome degree, what was its ordinary price. But this seems not to have\nbeen the case with raw hides. Fleetwood, however, from an account in\n1425, between the prior of Burcester Oxford and one of his canons, gives\nus their price, at least as it was stated upon that particular occasion,\nviz. five ox hides at twelve shillings; five cow hides at seven\nshillings and threepence; thirtysix sheep skins of two years old at\nnine shillings; sixteen calf skins at two shillings. In 1425, twelve\nshillings contained about the same quantity of silver as four-and-twenty\nshillings of our present money. An ox hide, therefore, was in this\naccount valued at the same quantity of silver as 4s. 4/5ths of our\npresent money. Its nominal price was a good deal lower than at present.\nBut at the rate of six shillings and eightpence the quarter, twelve\nshillings would in those times have purchased fourteen bushels and\nfour-fifths of a bushel of wheat, which, at three and sixpence the\nbushel, would in the present times cost 51s. 4d. An ox hide, therefore,\nwould in those times have purchased as much corn as ten shillings and\nthreepence would purchase at present. Its real value was equal to ten\nshillings and threepence of our present money. In those ancient times,\nwhen the cattle were half starved during the greater part of the winter,\nwe cannot suppose that they were of a very large size. An ox hide\nwhich weighs four stone of sixteen pounds of avoirdupois, is not in\nthe present times reckoned a bad one; and in those ancient times would\nprobably have been reckoned a very good one. But at half-a-crown the\nstone, which at this moment (February 1773) I understand to be the\ncommon price, such a hide would at present cost only ten shillings.\nThrough its nominal price, therefore, is higher in the present than\nit was in those ancient times, its real price, the real quantity of\nsubsistence which it will purchase or command, is rather somewhat lower.\nThe price of cow hides, as stated in the above account, is nearly in\nthe common proportion to that of ox hides. That of sheep skins is a good\ndeal above it. They had probably been sold with the wool. That of calves\nskins, on the contrary, is greatly below it. In countries where the\nprice of cattle is very low, the calves, which are not intended to be\nreared in order to keep up the stock, are generally killed very young,\nas was the case in Scotland twenty or thirty years ago. It saves the\nmilk, which their price would not pay for. Their skins, therefore, are\ncommonly good for little.\n\nThe price of raw hides is a good deal lower at present than it was a few\nyears ago; owing probably to the taking off the duty upon seal skins,\nand to the allowing, for a limited time, the importation of raw hides\nfrom Ireland, and from the plantations, duty free, which was done in\n1769. Take the whole of the present century at an average, their real\nprice has probably been somewhat higher than it was in those ancient\ntimes. The nature of the commodity renders it not quite so proper\nfor being transported to distant markets as wool. It suffers more by\nkeeping. A salted hide is reckoned inferior to a fresh one, and sells\nfor a lower price. This circumstance must necessarily have some tendency\nto sink the price of raw hides produced in a country which does not\nmanufacture them, but is obliged to export them, and comparatively to\nraise that of those produced in a country which does manufacture them.\nIt must have some tendency to sink their price in a barbarous, and to\nraise it in an improved and manufacturing country. It must have had some\ntendency, therefore, to sink it in ancient, and to raise it in modern\ntimes. Our tanners, besides, have not been quite so successful as our\nclothiers, in convincing the wisdom of the nation, that the safety\nof the commonwealth depends upon the prosperity of their particular\nmanufacture. They have accordingly been much less favoured. The\nexportation of raw hides has, indeed, been prohibited, and declared\na nuisance; but their importation from foreign countries has been\nsubjected to a duty; and though this duty has been taken off from those\nof Ireland and the plantations (for the limited time of five years\nonly), yet Ireland has not been confined to the market of Great\nBritain for the sale of its surplus hides, or of those which are not\nmanufactured at home. The hides of common cattle have, but within\nthese few years, been put among the enumerated commodities which the\nplantations can send nowhere but to the mother country; neither has the\ncommerce of Ireland been in this case oppressed hitherto, in order to\nsupport the manufactures of Great Britain.\n\nWhatever regulations tend to sink the price, either of wool or of\nraw hides, below what it naturally would he, must, in an improved and\ncultivated country, have some tendency to raise the price of butcher's\nmeat. The price both of the great and small cattle, which are fed on\nimproved and cultivated land, must be sufficient to pay the rent which\nthe landlord, and the profit which the farmer, has reason to expect from\nimproved and cultivated land. If it is not, they will soon cease to feed\nthem. Whatever part of this price, therefore, is not paid by the wool\nand the hide, must be paid by the carcase. The less there is paid for\nthe one, the more must be paid for the other. In what manner this price\nis to be divided upon the different parts of the beast, is indifferent\nto the landlords and farmers, provided it is all paid to them. In an\nimproved and cultivated country, therefore, their interest as landlords\nand farmers cannot be much affected by such regulations, though their\ninterest as consumers may, by the rise in the price of provisions. It\nwould be quite otherwise, however, in an unimproved and uncultivated\ncountry, where the greater part of the lands could be applied to no\nother purpose but the feeding of cattle, and where the wool and the hide\nmade the principal part of the value of those cattle. Their interest as\nlandlords and farmers would in this case be very deeply affected by such\nregulations, and their interest as consumers very little. The fall in\nthe price of the wool and the hide would not in this case raise the\nprice of the carcase; because the greater part of the lands of the\ncountry being applicable to no other purpose but the feeding of cattle,\nthe same number would still continue to be fed. The same quantity of\nbutcher's meat would still come to market. The demand for it would be no\ngreater than before. Its price, therefore, would be the same as before.\nThe whole price of cattle would fall, and along with it both the rent\nand the profit of all those lands of which cattle was the principal\nproduce, that is, of the greater part of the lands of the country. The\nperpetual prohibition of the exportation of wool, which is commonly, but\nvery falsely, ascribed to Edward III., would, in the then circumstances\nof the country, have been the most destructive regulation which could\nwell have been thought of. It would not only have reduced the actual\nvalue of the greater part of the lands in the kingdom, but by reducing\nthe price of the most important species of small cattle, it would have\nretarded very much its subsequent improvement.\n\nThe wool of Scotland fell very considerably in its price in consequence\nof the union with England, by which it was excluded from the great\nmarket of Europe, and confined to the narrow one of Great Britain.\nThe value of the greater part of the lands in the southern counties of\nScotland, which are chiefly a sheep country, would have been very deeply\naffected by this event, had not the rise in the price of butcher's meat\nfully compensated the fall in the price of wool.\n\nAs the efficacy of human industry, in increasing the quantity either of\nwool or of raw hides, is limited, so far as it depends upon the produce\nof the country where it is exerted; so it is uncertain so far as it\ndepends upon the produce of other countries. It so far depends not so\nmuch upon the quantity which they produce, as upon that which they do\nnot manufacture; and upon the restraints which they may or may not think\nproper to impose upon the exportation of this sort of rude produce.\nThese circumstances, as they are altogether independent of domestic\nindustry, so they necessarily render the efficacy of its efforts more or\nless uncertain. In multiplying this sort of rude produce, therefore, the\nefficacy of human industry is not only limited, but uncertain.\n\nIn multiplying another very important sort of rude produce, the quantity\nof fish that is brought to market, it is likewise both limited and\nuncertain. It is limited by the local situation of the country, by the\nproximity or distance of its different provinces from the sea, by the\nnumber of its lakes and rivers, and by what may be called the fertility\nor barrenness of those seas, lakes, and rivers, as to this sort of rude\nproduce. As population increases, as the annual produce of the land and\nlabour of the country grows greater and greater, there come to be more\nbuyers of fish; and those buyers, too, have a greater quantity and\nvariety of other goods, or, what is the same thing, the price of a\ngreater quantity and variety of other goods, to buy with. But it will\ngenerally be impossible to supply the great and extended market, without\nemploying a quantity of labour greater than in proportion to what had\nbeen requisite for supplying the narrow and confined one. A market\nwhich, from requiring only one thousand, comes to require annually ten\nthousand ton of fish, can seldom be supplied, without employing more\nthan ten times the quantity of labour which had before been sufficient\nto supply it. The fish must generally be sought for at a greater\ndistance, larger vessels must be employed, and more expensive machinery\nof every kind made use of. The real price of this commodity, therefore,\nnaturally rises in the progress of improvement. It has accordingly done\nso, I believe, more or less in every country.\n\nThough the success of a particular day's fishing maybe a very uncertain\nmatter, yet the local situation of the country being supposed, the\ngeneral efficacy of industry in bringing a certain quantity of fish to\nmarket, taking the course of a year, or of several years together, it\nmay, perhaps, be thought is certain enough; and it, no doubt, is so. As\nit depends more, however, upon the local situation of the country, than\nupon the state of its wealth and industry; as upon this account it\nmay in different countries be the same in very different periods of\nimprovement, and very different in the same period; its connection\nwith the state of improvement is uncertain; and it is of this sort of\nuncertainty that I am here speaking.\n\nIn increasing the quantity of the different minerals and metals which\nare drawn from the bowels of the earth, that of the more precious ones\nparticularly, the efficacy of human industry seems not to be limited,\nbut to be altogether uncertain.\n\nThe quantity of the precious metals which is to be found in any\ncountry, is not limited by any thing in its local situation, such as the\nfertility or barrenness of its own mines. Those metals frequently abound\nin countries which possess no mines. Their quantity, in every particular\ncountry, seems to depend upon two different circumstances; first, upon\nits power of purchasing, upon the state of its industry, upon the annual\nproduce of its land and labour, in consequence of which it can afford\nto employ a greater or a smaller quantity of labour and subsistence,\nin bringing or purchasing such superfluities as gold and silver, either\nfrom its own mines, or from those of other countries; and, secondly,\nupon the fertility or barrenness of the mines which may happen at any\nparticular time to supply the commercial world with those metals. The\nquantity of those metals in the countries most remote from the mines,\nmust be more or less affected by this fertility or barrenness, on\naccount of the easy and cheap transportation of those metals, of their\nsmall bulk and great value. Their quantity in China and Indostan\nmust have been more or less affected by the abundance of the mines of\nAmerica.\n\nSo far as their quantity in any particular country depends upon the\nformer of those two circumstances (the power of purchasing), their real\nprice, like that of all other luxuries and superfluities, is likely to\nrise with the wealth and improvement of the country, and to fall with\nits poverty and depression. Countries which have a great quantity of\nlabour and subsistence to spare, can afford to purchase any particular\nquantity of those metals at the expense of a greater quantity of labour\nand subsistence, than countries which have less to spare.\n\nSo far as their quantity in any particular country depends upon the\nlatter of those two circumstances (the fertility or barrenness of the\nmines which happen to supply the commercial world), their real price,\nthe real quantity of labour and subsistence which they will purchase\nor exchange for, will, no doubt, sink more or less in proportion to the\nfertility, and rise in proportion to the barrenness of those mines.\n\nThe fertility or barrenness of the mines, however, which may happen at\nany particular time to supply the commercial world, is a circumstance\nwhich, it is evident, may have no sort of connection with the state\nof industry in a particular country. It seems even to have no very\nnecessary connection with that of the world in general. As arts and\ncommerce, indeed, gradually spread themselves over a greater and a\ngreater part of the earth, the search for new mines, being extended over\na wider surface, may have somewhat a better chance for being successful\nthan when confined within narrower bounds. The discovery of new mines,\nhowever, as the old ones come to be gradually exhausted, is a matter\nof the greatest uncertainty, and such as no human skill or industry\ncan insure. All indications, it is acknowledged, are doubtful; and\nthe actual discovery and successful working of a new mine can alone\nascertain the reality of its value, or even of its existence. In this\nsearch there seem to be no certain limits, either to the possible\nsuccess, or to the possible disappointment of human industry. In\nthe course of a century or two, it is possible that new mines may be\ndiscovered, more fertile than any that have ever yet been known; and it\nis just equally possible, that the most fertile mine then known may be\nmore barren than any that was wrought before the discovery of the mines\nof America. Whether the one or the other of those two events may happen\nto take place, is of very little importance to the real wealth and\nprosperity of the world, to the real value of the annual produce of the\nland and labour of mankind. Its nominal value, the quantity of gold and\nsilver by which this annual produce could be expressed or represented,\nwould, no doubt, be very different; but its real value, the real\nquantity of labour which it could purchase or command, would be\nprecisely the same. A shilling might, in the one case, represent no more\nlabour than a penny does at present; and a penny, in the other, might\nrepresent as much as a shilling does now. But in the one case, he who\nhad a shilling in his pocket would be no richer than he who has a penny\nat present; and in the other, he who had a penny would be just as rich\nas he who has a shilling now. The cheapness and abundance of gold and\nsilver plate would be the sole advantage which the world could derive\nfrom the one event; and the dearness and scarcity of those trifling\nsuperfluities, the only inconveniency it could suffer from the other.\n\nConclusion of the Digression concerning the Variations in the Value of\nSilver.\n\nThe greater part of the writers who have collected the money price of\nthings in ancient times, seem to have considered the low money price\nof corn, and of goods in general, or, in other words, the high value of\ngold and silver, as a proof, not only of the scarcity of those metals,\nbut of the poverty and barbarism of the country at the time when it took\nplace. This notion is connected with the system of political economy,\nwhich represents national wealth as consisting in the abundance and\nnational poverty in the scarcity, of gold and silver; a system which\nI shall endeavour to explain and examine at great length in the fourth\nbook of this Inquiry. I shall only observe at present, that the high\nvalue of the precious metals can be no proof of the poverty or barbarism\nof any particular country at the time when it took place. It is a proof\nonly of the barrenness of the mines which happened at that time to\nsupply the commercial world. A poor country, as it cannot afford to buy\nmore, so it can as little afford to pay dearer for gold and silver than\na rich one; and the value of those metals, therefore, is not likely to\nbe higher in the former than in the latter. In China, a country much\nricher than any part of Europe, the value of the precious metals is much\nhigher than in any part of Europe. As the wealth of Europe, indeed, has\nincreased greatly since the discovery of the mines of America, so the\nvalue of gold and silver has gradually diminished. This diminution of\ntheir value, however, has not been owing to the increase of the real\nwealth of Europe, of the annual produce of its land and labour, but to\nthe accidental discovery of more abundant mines than any that were known\nbefore. The increase of the quantity of gold and silver in Europe, and\nthe increase of its manufactures and agriculture, are two events which,\nthough they have happened nearly about the same time, yet have arisen\nfrom very different causes, and have scarce any natural connection with\none another. The one has arisen from a mere accident, in which neither\nprudence nor policy either had or could have any share; the other,\nfrom the fall of the feudal system, and from the establishment of a\ngovernment which afforded to industry the only encouragement which it\nrequires, some tolerable security that it shall enjoy the fruits of\nits own labour. Poland, where the feudal system still continues to\ntake place, is at this day as beggarly a country as it was before the\ndiscovery of America. The money price of corn, however, has risen; the\nreal value of the precious metals has fallen in Poland, in the same\nmanner as in other parts of Europe. Their quantity, therefore, must have\nincreased there as in other places, and nearly in the same proportion to\nthe annual produce of its land and labour. This increase of the quantity\nof those metals, however, has not, it seems, increased that annual\nproduce, has neither improved the manufactures and agriculture of the\ncountry, nor mended the circumstances of its inhabitants. Spain and\nPortugal, the countries which possess the mines, are, after Poland,\nperhaps the two most beggarly countries in Europe. The value of the\nprecious metals, however, must be lower in Spain and Portugal than in\nany other part of Europe, as they come from those countries to all other\nparts of Europe, loaded, not only with a freight and an insurance, but\nwith the expense of smuggling, their exportation being either prohibited\nor subjected to a duty. In proportion to the annual produce of the land\nand labour, therefore, their quantity must be greater in those countries\nthan in any other part of Europe; those countries, however, are poorer\nthan the greater part of Europe. Though the feudal system has been\nabolished in Spain and Portugal, it has not been succeeded by a much\nbetter.\n\nAs the low value of gold and silver, therefore, is no proof of the\nwealth and flourishing state of the country where it takes place; so\nneither is their high value, or the low money price either of goods\nin general, or of corn in particular, any proof of its poverty and\nbarbarism.\n\nBut though the low money price, either of goods in general, or of corn\nin particular, be no proof of the poverty or barbarism of the times,\nthe low money price of some particular sorts of goods, such as cattle,\npoultry, game of all kinds, etc. in proportion to that of corn, is a\nmost decisive one. It clearly demonstrates, first, their great abundance\nin proportion to that of corn, and, consequently, the great extent of\nthe land which they occupied in proportion to what was occupied by corn;\nand, secondly, the low value of this land in proportion to that of corn\nland, and, consequently, the uncultivated and unimproved state of the\nfar greater part of the lands of the country. It clearly demonstrates,\nthat the stock and population of the country did not bear the same\nproportion to the extent of its territory, which they commonly do in\ncivilized countries; and that society was at that time, and in that\ncountry, but in its infancy. From the high or low money price, either of\ngoods in general, or of corn in particular, we can infer only, that the\nmines, which at that time happened to supply the commercial world with\ngold and silver, were fertile or barren, not that the country was rich\nor poor. But from the high or low money price of some sorts of goods in\nproportion to that of others, we can infer, with a degree of probability\nthat approaches almost to certainty, that it was rich or poor, that the\ngreater part of its lands were improved or unimproved, and that it was\neither in a more or less barbarous state, or in a more or less civilized\none.\n\nAny rise in the money price of goods which proceeded altogether from\nthe degradation of the value of silver, would affect all sorts of goods\nequally, and raise their price universally, a third, or a fourth, or a\nfifth part higher, according as silver happened to lose a third, or a\nfourth, or a fifth part of its former value. But the rise in the price\nof provisions, which has been the subject of so much reasoning and\nconversation, does not affect all sorts of provisions equally. Taking\nthe course of the present century at an average, the price of corn,\nit is acknowledged, even by those who account for this rise by the\ndegradation of the value of silver, has risen much less than that of\nsome other sorts of provisions. The rise in the price of those other\nsorts of provisions, therefore, cannot be owing altogether to the\ndegradation of the value of silver. Some other causes must be taken into\nthe account; and those which have been above assigned, will, perhaps,\nwithout having recourse to the supposed degradation of the value of\nsilver, sufficiently explain this rise in those particular sorts of\nprovisions, of which the price has actually risen in proportion to that\nof corn.\n\nAs to the price of corn itself, it has, during the sixty-four first\nyears of the present century, and before the late extraordinary course\nof bad seasons, been somewhat lower than it was during the sixty-four\nlast years of the preceding century. This fact is attested, not only\nby the accounts of Windsor market, but by the public fiars of all the\ndifferent counties of Scotland, and by the accounts of several different\nmarkets in France, which have been collected with great diligence and\nfidelity by Mr Messance, and by Mr Dupré de St Maur. The evidence is\nmore complete than could well have been expected in a matter which is\nnaturally so very difficult to be ascertained.\n\nAs to the high price of corn during these last ten or twelve years,\nit can be sufficiently accounted for from the badness of the seasons,\nwithout supposing any degradation in the value of silver.\n\nThe opinion, therefore, that silver is continually sinking in its value,\nseems not to be founded upon any good observations, either upon the\nprices of corn, or upon those of other provisions.\n\nThe same quantity of silver, it may perhaps be said, will, in the\npresent times, even according to the account which has been here given,\npurchase a much smaller quantity of several sorts of provisions than it\nwould have done during some part of the last century; and to ascertain\nwhether this change be owing to a rise in the value of those goods,\nor to a fall in the value of silver, is only to establish a vain and\nuseless distinction, which can be of no sort of service to the man who\nhas only a certain quantity of silver to go to market with, or a certain\nfixed revenue in money. I certainly do not pretend that the knowledge\nof this distinction will enable him to buy cheaper. It may not, however,\nupon that account be altogether useless.\n\nIt may be of some use to the public, by affording an easy proof of the\nprosperous condition of the country. If the rise in the price of some\nsorts of provisions be owing altogether to a fall in the value of\nsilver, it is owing to a circumstance, from which nothing can be\ninferred but the fertility of the American mines. The real wealth of the\ncountry, the annual produce of its land and labour, may, notwithstanding\nthis circumstance, be either gradually declining, as in Portugal and\nPoland; or gradually advancing, as in most other parts of Europe. But if\nthis rise in the price of some sorts of provisions be owing to a rise\nin the real value of the land which produces them, to its increased\nfertility, or, in consequence of more extended improvement and good\ncultivation, to its having been rendered fit for producing corn; it is\nowing to a circumstance which indicates, in the clearest manner, the\nprosperous and advancing state of the country. The land constitutes by\nfar the greatest, the most important, and the most durable part of the\nwealth of every extensive country. It may surely be of some use, or, at\nleast, it may give some satisfaction to the public, to have so decisive\na proof of the increasing value of by far the greatest, the most\nimportant, and the most durable part of its wealth.\n\nIt may, too, be of some use to the public, in regulating the pecuniary\nreward of some of its inferior servants. If this rise in the price of\nsome sorts of provisions be owing to a fall in the value of silver,\ntheir pecuniary reward, provided it was not too large before, ought\ncertainly to be augmented in proportion to the extent of this fall. If\nit is not augmented, their real recompence will evidently be so much\ndiminished. But if this rise of price is owing to the increased value,\nin consequence of the improved fertility of the land which produces\nsuch provisions, it becomes a much nicer matter to judge, either in what\nproportion any pecuniary reward ought to be augmented, or whether\nit ought to be augmented at all. The extension of improvement and\ncultivation, as it necessarily raises more or less, in proportion to the\nprice of corn, that of every sort of animal food, so it as necessarily\nlowers that of, I believe, every sort of vegetable food. It raises the\nprice of animal food; because a great part of the land which produces\nit, being rendered fit for producing corn, must afford to the landlord\nanti farmer the rent and profit of corn land. It lowers the price of\nvegetable food; because, by increasing the fertility of the land, it\nincreases its abundance. The improvements of agriculture, too, introduce\nmany sorts of vegetable food, which requiring less land, and not more\nlabour than corn, come much cheaper to market. Such are potatoes\nand maize, or what is called Indian corn, the two most important\nimprovements which the agriculture of Europe, perhaps, which Europe\nitself, has received from the great extension of its commerce and\nnavigation. Many sorts of vegetable food, besides, which in the rude\nstate of agriculture are confined to the kitchen-garden, and raised only\nby the spade, come, in its improved state, to be introduced into common\nfields, and to be raised by the plough; such as turnips, carrots,\ncabbages, etc. If, in the progress of improvement, therefore, the real\nprice of one species of food necessarily rises, that of another as\nnecessarily falls; and it becomes a matter of more nicety to judge how\nfar the rise in the one may be compensated by the fall in the other.\nWhen the real price of butcher's meat has once got to its height (which,\nwith regard to every sort, except perhaps that of hogs flesh, it seems\nto have done through a great part of England more than a century ago),\nany rise which can afterwards happen in that of any other sort of animal\nfood, cannot much affect the circumstances of the inferior ranks of\npeople. The circumstances of the poor, through a great part of England,\ncannot surely be so much distressed by any rise in the price of poultry,\nfish, wild-fowl, or venison, as they must be relieved by the fall in\nthat of potatoes.\n\nIn the present season of scarcity, the high price of corn no doubt\ndistresses the poor. But in times of moderate plenty, when corn is at\nits ordinary or average price, the natural rise in the price of any\nother sort of rude produce cannot much affect them. They suffer more,\nperhaps, by the artificial rise which has been occasioned by taxes in\nthe price of some manufactured commodities, as of salt, soap, leather,\ncandles, malt, beer, ale, etc.\n\nEffects of the Progress of Improvement upon the real Price of\nManufactures.\n\nIt is the natural effect of improvement, however, to diminish gradually\nthe real price of almost all manufactures. That of the manufacturing\nworkmanship diminishes, perhaps, in all of them without exception. In\nconsequence of better machinery, of greater dexterity, and of a more\nproper division and distribution of work, all of which are the natural\neffects of improvement, a much smaller quantity of labour becomes\nrequisite for executing any particular piece of work; and though, in\nconsequence of the flourishing circumstances of the society, the real\nprice of labour should rise very considerably, yet the great diminution\nof the quantity will generally much more than compensate the greatest\nrise which can happen in the price.\n\nThere are, indeed, a few manufactures, in which the necessary rise in\nthe real price of the rude materials will more than compensate all the\nadvantages which improvement can introduce into the execution of the\nwork in carpenters' and joiners' work, and in the coarser sort of\ncabinet work, the necessary rise in the real price of barren timber, in\nconsequence of the improvement of land, will more than compensate\nall the advantages which can be derived from the best machinery, the\ngreatest dexterity, and the most proper division and distribution of\nwork.\n\nBut in all cases in which the real price of the rude material\neither does not rise at all, or does not rise very much, that of the\nmanufactured commodity sinks very considerably.\n\nThis diminution of price has, in the course of the present and preceding\ncentury, been most remarkable in those manufactures of which the\nmaterials are the coarser metals. A better movement of a watch, than\nabout the middle of the last century could have been bought for twenty\npounds, may now perhaps be had for twenty shillings. In the work of\ncutlers and locksmiths, in all the toys which are made of the coarser\nmetals, and in all those goods which are commonly known by the name of\nBirmingham and Sheffield ware, there has been, during the same period,\na very great reduction of price, though not altogether so great as in\nwatch-work. It has, however, been sufficient to astonish the workmen of\nevery other part of Europe, who in many cases acknowledge that they\ncan produce no work of equal goodness for double or even for triple\nthe price. There are perhaps no manufactures, in which the division of\nlabour can be carried further, or in which the machinery employed admits\nof' a greater variety of improvements, than those of which the materials\nare the coarser metals.\n\nIn the clothing manufacture there has, during the same period, been no\nsuch sensible reduction of price. The price of superfine cloth, I have\nbeen assured, on the contrary, has, within these five-and-twenty or\nthirty years, risen somewhat in proportion to its quality, owing, it\nwas said, to a considerable rise in the price of the material, which\nconsists altogether of Spanish wool. That of the Yorkshire cloth, which\nis made altogether of English wool, is said, indeed, during the course\nof the present century, to have fallen a good deal in proportion to its\nquality. Quality, however, is so very disputable a matter, that I look\nupon all information of this kind as somewhat uncertain. In the clothing\nmanufacture, the division of labour is nearly the same now as it was\na century ago, and the machinery employed is not very different. There\nmay, however, have been some small improvements in both, which may have\noccasioned some reduction of price.\n\nBut the reduction will appear much more sensible and undeniable, if we\ncompare the price of this manufacture in the present times with what it\nwas in a much remoter period, towards the end of the fifteenth century,\nwhen the labour was probably much less subdivided, and the machinery\nemployed much more imperfect, than it is at present.\n\nIn 1487, being the 4th of Henry VII., it was enacted, that \"whosoever\nshall sell by retail a broad yard of the finest scarlet grained, or of\nother grained cloth of the finest making, above sixteen shillings, shall\nforfeit forty shillings for every yard so sold.\" Sixteen shillings,\ntherefore, containing about the same quantity of silver as\nfour-and-twenty shillings of our present money, was, at that time,\nreckoned not an unreasonable price for a yard of the finest cloth; and\nas this is a sumptuary law, such cloth, it is probable, had usually been\nsold somewhat dearer. A guinea may be reckoned the highest price in the\npresent times. Even though the quality of the cloths, therefore, should\nbe supposed equal, and that of the present times is most probably much\nsuperior, yet, even upon this supposition, the money price of the finest\ncloth appears to have been considerably reduced since the end of the\nfifteenth century. But its real price has been much more reduced. Six\nshillings and eightpence was then, and long afterwards, reckoned the\naverage price of a quarter of wheat. Sixteen shillings, therefore, was\nthe price of two quarters and more than three bushels of wheat. Valuing\na quarter of wheat in the present times at eight-and-twenty shillings,\nthe real price of a yard of fine cloth must, in those times, have been\nequal to at least three pounds six shillings and sixpence of our present\nmoney. The man who bought it must have parted with the command of a\nquantity of labour and subsistence equal to what that sum would purchase\nin the present times.\n\nThe reduction in the real price of the coarse manufacture, though\nconsiderable, has not been so great as in that of the fine.\n\nIn 1463, being the 3rd of Edward IV. it was enacted, that \"no servant in\nhusbandry nor common labourer, nor servant to any artificer inhabiting\nout of a city or burgh, shall use or wear in their clothing any cloth\nabove two shillings the broad yard.\" In the 3rd of Edward IV., two\nshillings contained very nearly the same quantity of silver as four of\nour present money. But the Yorkshire cloth which is now sold at four\nshillings the yard, is probably much superior to any that was then made\nfor the wearing of the very poorest order of common servants. Even the\nmoney price of their clothing, therefore, may, in proportion to the\nquality, be somewhat cheaper in the present than it was in those ancient\ntimes. The real price is certainly a good deal cheaper. Tenpence was\nthen reckoned what is called the moderate and reasonable price of a\nbushel of wheat. Two shillings, therefore, was the price of two bushels\nand near two pecks of wheat, which in the present times, at three\nshillings and sixpence the bushel, would be worth eight shillings and\nninepence. For a yard of this cloth the poor servant must have parted\nwith the power of purchasing a quantity of subsistence equal to what\neight shillings and ninepence would purchase in the present times. This\nis a sumptuary law, too, restraining the luxury and extravagance of the\npoor. Their clothing, therefore, had commonly been much more expensive.\n\nThe same order of people are, by the same law, prohibited from wearing\nhose, of which the price should exceed fourteen-pence the pair, equal\nto about eight-and-twenty pence of our present money. But fourteen-pence\nwas in those times the price of a bushel and near two pecks of wheat;\nwhich in the present times, at three and sixpence the bushel, would cost\nfive shillings and threepence. We should in the present times consider\nthis as a very high price for a pair of stockings to a servant of the\npoorest and lowest order. He must however, in those times, have paid\nwhat was really equivalent to this price for them.\n\nIn the time of Edward IV. the art of knitting stockings was probably not\nknown in any part of Europe. Their hose were made of common cloth, which\nmay have been one of the causes of their dearness. The first person\nthat wore stockings in England is said to have been Queen Elizabeth. She\nreceived them as a present from the Spanish ambassador.\n\nBoth in the coarse and in the fine woollen manufacture, the machinery\nemployed was much more imperfect in those ancient, than it is in the\npresent times. It has since received three very capital improvements,\nbesides, probably, many smaller ones, of which it may be difficult\nto ascertain either the number or the importance. The three capital\nimprovements are, first, the exchange of the rock and spindle for the\nspinning-wheel, which, with the same quantity of labour, will perform\nmore than double the quantity of work. Secondly, the use of several very\ningenious machines, which facilitate and abridge, in a still greater\nproportion, the winding of the worsted and woollen yarn, or the proper\narrangement of the warp and woof before they are put into the loom; an\noperation which, previous to the invention of those machines, must have\nbeen extremely tedious and troublesome. Thirdly, the employment of the\nfulling-mill for thickening the cloth, instead of treading it in water.\nNeither wind nor water mills of any kind were known in England so early\nas the beginning of the sixteenth century, nor, so far as I know, in any\nother part of Europe north of the Alps. They had been introduced into\nItaly some time before.\n\nThe consideration of these circumstances may, perhaps, in some measure,\nexplain to us why the real price both of the coarse and of the fine\nmanufacture was so much higher in those ancient than it is in the\npresent times. It cost a greater quantity of labour to bring the goods\nto market. When they were brought thither, therefore, they must have\npurchased, or exchanged for the price of, a greater quantity.\n\nThe coarse manufacture probably was, in those ancient times, carried on\nin England in the same manner as it always has been in countries where\narts and manufactures are in their infancy. It was probably a household\nmanufacture, in which every different part of the work was occasionally\nperformed by all the different members of almost every private family,\nbut so as to be their work only when they had nothing else to do, and\nnot to be the principal business from which any of them derived the\ngreater part of their subsistence. The work which is performed in this\nmanner, it has already been observed, comes always much cheaper to\nmarket than that which is the principal or sole fund of the workman's\nsubsistence. The fine manufacture, on the other hand, was not, in those\ntimes, carried on in England, but in the rich and commercial country of\nFlanders; and it was probably conducted then, in the same manner as\nnow, by people who derived the whole, or the principal part of their\nsubsistence from it. It was, besides, a foreign manufacture, and must\nhave paid some duty, the ancient custom of tonnage and poundage at\nleast, to the king. This duty, indeed, would not probably be very great.\nIt was not then the policy of Europe to restrain, by high duties, the\nimportation of foreign manufactures, but rather to encourage it, in\norder that merchants might be enabled to supply, at as easy a rate as\npossible, the great men with the conveniencies and luxuries which they\nwanted, and which the industry of their own country could not afford\nthem.\n\nThe consideration of these circumstances may, perhaps, in some measure\nexplain to us why, in those ancient times, the real price of the coarse\nmanufacture was, in proportion to that of the fine, so much lower than\nin the present times.\n\nConclusion of the Chapter.\n\nI shall conclude this very long chapter with observing, that every\nimprovement in the circumstances of the society tends, either directly\nor indirectly, to raise the real rent of land to increase the real\nwealth of the landlord, his power of purchasing the labour, or the\nproduce of the labour of other people.\n\nThe extension of improvement and cultivation tends to raise it directly.\nThe landlord's share of the produce necessarily increases with the\nincrease of the produce.\n\nThat rise in the real price of those parts of the rude produce of land,\nwhich is first the effect of the extended improvement and cultivation,\nand afterwards the cause of their being still further extended, the rise\nin the price of cattle, for example, tends, too, to raise the rent of\nland directly, and in a still greater proportion. The real value of the\nlandlord's share, his real command of the labour of other people, not\nonly rises with the real value of the produce, but the proportion of his\nshare to the whole produce rises with it.\n\nThat produce, after the rise in its real price, requires no more labour\nto collect it than before. A smaller proportion of it will, therefore,\nbe sufficient to replace, with the ordinary profit, the stock which\nemploys that labour. A greater proportion of it must consequently belong\nto the landlord.\n\nAll those improvements in the productive powers of labour, which tend\ndirectly to reduce the rent price of manufactures, tend indirectly to\nraise the real rent of land. The landlord exchanges that part of his\nrude produce, which is over and above his own consumption, or, what\ncomes to the same thing, the price of that part of it, for manufactured\nproduce. Whatever reduces the real price of the latter, raises that of\nthe former. An equal quantity of the former becomes thereby equivalent\nto a greater quantity of the latter; and the landlord is enabled to\npurchase a greater quantity of the conveniencies, ornaments, or luxuries\nwhich he has occasion for.\n\nEvery increase in the real wealth of the society, every increase in the\nquantity of useful labour employed within it, tends indirectly to raise\nthe real rent of land. A certain proportion of this labour naturally\ngoes to the land. A greater number of men and cattle are employed in its\ncultivation, the produce increases with the increase of the stock which\nis thus employed in raising it, and the rent increases with the produce.\n\nThe contrary circumstances, the neglect of cultivation and improvement,\nthe fall in the real price of any part of the rude produce of land, the\nrise in the real price of manufactures from the decay of manufacturing\nart and industry, the declension of the real wealth of the society, all\ntend, on the other hand, to lower the real rent of land, to reduce the\nreal wealth of the landlord, to diminish his power of purchasing either\nthe labour, or the produce of the labour, of other people.\n\nThe whole annual produce of the land and labour of every country, or,\nwhat comes to the same thing, the whole price of that annual produce,\nnaturally divides itself, it has already been observed, into three\nparts; the rent of land, the wages of labour, and the profits of stock;\nand constitutes a revenue to three different orders of people; to those\nwho live by rent, to those who live by wages, and to those who live by\nprofit. These are the three great, original, and constituent, orders of\nevery civilized society, from whose revenue that of every other order is\nultimately derived.\n\nThe interest of the first of those three great orders, it appears from\nwhat has been just now said, is strictly and inseparably connected\nwith the general interest of the society. Whatever either promotes or\nobstructs the one, necessarily promotes or obstructs the other. When the\npublic deliberates concerning any regulation of commerce or police, the\nproprietors of land never can mislead it, with a view to promote the\ninterest of their own particular order; at least, if they have any\ntolerable knowledge of that interest. They are, indeed, too often\ndefective in this tolerable knowledge. They are the only one of the\nthree orders whose revenue costs them neither labour nor care, but comes\nto them, as it were, of its own accord, and independent of any plan or\nproject of their own. That indolence which is the natural effect of the\nease and security of their situation, renders them too often, not only\nignorant, but incapable of that application of mind, which is necessary\nin order to foresee and understand the consequence of any public\nregulation.\n\nThe interest of the second order, that of those who live by wages, is\nas strictly connected with the interest of the society as that of the\nfirst. The wages of the labourer, it has already been shewn, are never\nso high as when the demand for labour is continually rising, or when the\nquantity employed is every year increasing considerably. When this real\nwealth of the society becomes stationary, his wages are soon reduced to\nwhat is barely enough to enable him to bring up a family, or to continue\nthe race of labourers. When the society declines, they fall even below\nthis. The order of proprietors may perhaps gain more by the prosperity\nof the society than that of labourers; but there is no order that\nsuffers so cruelly from its decline. But though the interest of the\nlabourer is strictly connected with that of the society, he is incapable\neither of comprehending that interest, or of understanding its connexion\nwith his own. His condition leaves him no time to receive the necessary\ninformation, and his education and habits are commonly such as to render\nhim unfit to judge, even though he was fully informed. In the public\ndeliberations, therefore, his voice is little heard, and less regarded;\nexcept upon particular occasions, when his clamour is animated, set on,\nand supported by his employers, not for his, but their own particular\npurposes.\n\nHis employers constitute the third order, that of those who live by\nprofit. It is the stock that is employed for the sake of profit, which\nputs into motion the greater part of the useful labour of every society.\nThe plans and projects of the employers of stock regulate and direct all\nthe most important operation of labour, and profit is the end proposed\nby all those plans and projects. But the rate of profit does not, like\nrent and wages, rise with the prosperity, and fall with the declension\nof the society. On the contrary, it is naturally low in rich, and high\nin poor countries, and it is always highest in the countries which are\ngoing fastest to ruin. The interest of this third order, therefore, has\nnot the same connexion with the general interest of the society, as that\nof the other two. Merchants and master manufacturers are, in this order,\nthe two classes of people who commonly employ the largest capitals, and\nwho by their wealth draw to themselves the greatest share of the public\nconsideration. As during their whole lives they are engaged in plans and\nprojects, they have frequently more acuteness of understanding than\nthe greater part of country gentlemen. As their thoughts, however, are\ncommonly exercised rather about the interest of their own particular\nbranch of business. than about that of the society, their judgment, even\nwhen given with the greatest candour (which it has not been upon every\noccasion), is much more to be depended upon with regard to the former\nof those two objects, than with regard to the latter. Their superiority\nover the country gentleman is, not so much in their knowledge of the\npublic interest, as in their having a better knowledge of their own\ninterest than he has of his. It is by this superior knowledge of their\nown interest that they have frequently imposed upon his generosity, and\npersuaded him to give up both his own interest and that of the public,\nfrom a very simple but honest conviction, that their interest, and\nnot his, was the interest of the public. The interest of the dealers,\nhowever, in any particular branch of trade or manufactures, is always in\nsome respects different from, and even opposite to, that of the public.\nTo widen the market, and to narrow the competition, is always the\ninterest of the dealers. To widen the market may frequently be agreeable\nenough to the interest of the public; but to narrow the competition\nmust always be against it, and can only serve to enable the dealers, by\nraising their profits above what they naturally would be, to levy, for\ntheir own benefit, an absurd tax upon the rest of their fellow-citizens.\nThe proposal of any new law or regulation of commerce which comes from\nthis order, ought always to be listened to with great precaution, and\nought never to be adopted till after having been long and carefully\nexamined, not only with the most scrupulous, but with the most\nsuspicious attention. It comes from an order of men, whose interest is\nnever exactly the same with that of the public, who have generally an\ninterest to deceive and even to oppress the public, and who accordingly\nhave, upon many occasions, both deceived and oppressed it.\n\n\n\n# PRICES OF WHEAT\n\n\n  Year    Prices/Quarter  Average of different   Average prices of\n          in each year     prices in one year    each year in money\n                                                    of 1776\n\n            £   s   d         £   s   d             £   s   d\n  1202      0  12   0                               1  16   0\n  1205      0  12   0\n            0  13   4         0  13   5             2   0   3\n            0  15   0\n  1223      0  12   0                               1  16   0\n  1237      0   3   4                               0  10   0\n  1243      0   2   0                               0   6   0\n  1244      0   2   0                               0   6   0\n  1246      0  16   0                               2   8   0\n  1247      0  13   5                               2   0   0\n  1257      1   4   0                               3  12   0\n  1258      1   0   0\n            0  15   0         0  17   0             2  11   0\n            0  16   0\n  1270      4  16   0\n            6   8   0         5  12   0            16  16   0\n  1286      0   2   8\n            0  16   0         0   9   4             1   8   0\n                                          Total    35   9   3\n                                          Average   2  19   1¼\n\n  1287      0   3   4                               0  10   0\n  1288      0   0   8\n            0   1   0\n            0   1   4\n            0   1   6\n            0   1   8         0   3   0¼            0   9   1¾\n            0   2   0\n            0   3   4\n            0   9   4\n  1289      0  12   0\n            0   6   0\n            0   2   0         0  10   1½            1  10   4½\n            0  10   8\n            1   0   0\n  1290      0  16   0                               2   8   0\n  1294      0  16   0                               2   8   0\n  1302      0   4   0                               0  12   0\n  1309      0   7   2                               1   1   6\n  1315      1   0   0                               3   0   0\n  1316      1   0   0\n            1  10   0         1  10   6             4  11   6\n            1  12   0\n            2   0   0\n  1317      2   4   0\n            0  14   0\n            2  13   0         1  19   6             5  18   6\n            4   0   0\n            0   6   8\n  1336      0   2   0                               0   6   0\n  1338      0   3   4                               0  10   0\n                                          Total    23   4  11¼\n                                          Average   1  18   8\n\n  1339      0   9   0                               1   7   0\n  1349      0   2   0                               0   5   2\n  1359      1   6   8                               3   2   2\n  1361      0   2   0                               0   4   8\n  1363      0  15   0                               1  15   0\n  1369      1   0   0\n            1   4   0         1   2   0             2   9   4\n  1379      0   4   0                               0   9   4\n  1387      0   2   0                               0   4   8\n  1390      0  13   4\n            0  14   0         0  14   5             1  13   7\n            0  16   0\n  1401      0  16   0                               1  17   6\n  1407      0   4   4¾\n            0   3   4         0   3  10             0   8  10\n  1416      0  16   0                               1  12   0\n                                         Total     15   9   4\n                                         Average    1   5   9½\n\n  1423      0   8   0                                       0\n  1425      0   4   0                                       0\n  1434      1   6   8                                       4\n  1435      0   5   4                                       8\n  1439      1   0   0\n            1   6   8         1   3   4             2   6   8\n  1440      1   4   0                               2   8   0\n  1444      0   4   4         0   4   2             0   4   8\n            0   4   0\n  1445      0   4   6                               0   9   0\n  1447      0   8   0                               0  16   0\n  1448      0   6   8                               0  13   4\n  1449      0   5   0                               0  10   0\n  1451      0   8   0                               0  16   0\n                                         Total     12  15   4\n                                         Average    1   1   3¹/³\n\n  1453      0   5   4                               0  10   8\n  1455      0   1   2                               0   2   4\n  1457      0   7   8                               1  15   4\n  1459      0   5   0                               0  10   0\n  1460      0   8   0                               0  16   0\n  1463      0   2   0         0   1  10             0   3   8\n            0   1   8\n  1464      0   6   8                               0  10   0\n  1486      1   4   0                               1  17   0\n  1491      0  14   8                               1   2   0\n  1494      0   4   0                               0   6   0\n  1495      0   3   4                               0   5   0\n  1497      1   0   0                               1  11   0\n                                         Total      8   9   0\n                                         Average    0  14   1\n\n  1499      0   4   0                               0   6   0\n  1504      0   5   8                               0   8   6\n  1521      1   0   0                               1  10   0\n  1551      0   8   0                               0   8   0\n  1553      0   8   0                               0   8   0\n  1554      0   8   0                               0   8   0\n  1555      0   8   0                               0   8   0\n  1556      0   8   0                               0   8   0\n  1557      0   8   0\n            0   4   0         0  17   8½            0  17   8½\n            0   5   0\n            2  13   4\n  1558      0   8   0                               0   8   0\n  1559      0   8   0                               0   8   0\n  1560      0   8   0                               0   8   0\n                                         Total      6   0   2½\n                                         Average    0  10   0½\n\n  1561      0   8   0                               0   8   0\n  1562      0   8   0                               0   8   0\n  1574      2  16   0\n            1   4   0         2   0   0             2   0   0\n  1587      3   4   0                               3   4   0\n  1594      2  16   0                               2  16   0\n  1595      2  13   0                               2  13   0\n  1596      4   0   0                               4   0   0\n  1597      5   4   0\n            4   0   0         4  12   0             4  12   0\n  1598      2  16   8                               2  16   8\n  1599      1  19   2                               1  19   8\n  1600      1  17   8                               1  17   8\n  1601      1  14  10                               1  14  10\n                                         Total     28   9   4\n                                         Average    2   7   5½\n\n\nPRICES OF THE QUARTER OF NINE BUSHELS OF THE BEST OR HIGHEST PRICED\nWHEAT AT WINDSOR MARKET, ON LADY DAY AND MICHAELMAS, FROM 1595 TO 1764\nBOTH INCLUSIVE; THE PRICE OF EACH YEAR BEING THE MEDIUM BETWEEN THE\nHIGHEST PRICES OF THESE TWO MARKET DAYS.\n\n            £   s   d\n  1595      2   0   0\n  1596      2   8   0\n  1597      3   9   6\n  1598      2  16   8\n  1599      1  19   2\n  1600      1  17   8\n  1601      1  14  10\n  1602      1   9   4\n  1603      1  15   4\n  1604      1  10   8\n  1605      1  15  10\n  1606      1  13   0\n  1607      1  16   8\n  1608      2  16   8\n  1609      2  10   0\n  1610      1  15  10\n  1611      1  18   8\n  1612      2   2   4\n  1613      2   8   8\n  1614      2   1   8½\n  1615      1  18   8\n  1616      2   0   4\n  1617      2   8   8\n  1618      2   6   8\n  1619      1  15   4\n  1620      1  10   4\n        26)54   0   6½\n    Average 2   1   6¾\n\n  1621      1  10    4\n  1622      2  18    8\n  1623      2  12    0\n  1624      2   8    0\n  1625      2  12    0\n  1626      2   9    4\n  1627      1  16    0\n  1628      1   8    0\n  1629      2   2    0\n  1630      2  15    8\n  1631      3   8    0\n  1632      2  13    4\n  1633      2  18    0\n  1634      2  16    0\n  1635      2  16    0\n  1636      2  16    8\n        16)40   0    0\n    Average 2  10    0\n\n  1637      2  13    0\n  1638      2  17    4\n  1639      2   4   10\n  1640      2   4    8\n  1641      2   8    0\n  1646      2   8    0\n  1647      3  13    0\n  1648      4   5    0\n  1649      4   0    0\n  1650      3  16    8\n  1651      3  13    4\n  1652      2   9    6\n  1653      1  15    6\n  1654      1   6    0\n  1655      1  13    4\n  1656      2   3    0\n  1657      2   6    8\n  1658      3   5    0\n  1659      3   6    0\n  1660      2  16    6\n  1661      3  10    0\n  1662      3  14    0\n  1663      2  17    0\n  1664      2   0    6\n  1665      2   9    4\n  1666      1  16    0\n  1667      1  16    0\n  1668      2   0    0\n  1669      2   4    4\n  1670      2   1    8\n  1671      2   2    0\n  1672      2   1    0\n  1673      2   6    8\n  1674      3   8    8\n  1675      3   4    8\n  1676      1  18    0\n  1677      2   2    0\n  1678      2  19    0\n  1679      3   0    0\n  1680      2   5    0\n  1681      2   6    8\n  1682      2   4    0\n  1683      2   0    0\n  1684      2   4    0\n  1685      2   6    8\n  1686      1  14    0\n  1687      1   5    2\n  1688      2   6    0\n  1689      1  10    0\n  1690      1  14    8\n  1691      1  14    0\n  1692      2   6    8\n  1693      3   7    8\n  1694      3   4    0\n  1695      2  13    0\n  1696      3  11    0\n  1697      3   0    0\n  1698      3   8    4\n  1699      3   4    0\n  1700      2   0    0\n      60) 153   1    8\n   Average  2  11    0¹/³\n\n  1701      1  17    8\n  1702      1   9    6\n  1703      1  16    0\n  1704      2   6    6\n  1705      1  10    0\n  1706      1   6    0\n  1707      1   8    6\n  1708      2   1    6\n  1709      3  18    6\n  1710      3  18    0\n  1711      2  14    0\n  1712      2   6    4\n  1713      2  11    0\n  1714      2  10    4\n  1715      2   3    0\n  1716      2   8    0\n  1717      2   5    8\n  1718      1  18   10\n  1719      1  15    0\n  1720      1  17    0\n  1721      1  17    6\n  1722      1  16    0\n  1723      1  14    8\n  1724      1  17    0\n  1725      2   8    6\n  1726      2   6    0\n  1727      2   2    0\n  1728      2  14    6\n  1729      2   6   10\n  1730      1  16    6\n  1731      1  12   10                     1  12   10\n  1732      1   6    8                     1   6    8\n  1733      1   8    4                     1   8    4\n  1734      1  18   10                     1  18   10\n  1735      2   3    0                     2   3    0\n  1736      2   0    4                     2   0    4\n  1737      1  18    0                     1  18    0\n  1738      1  15    6                     1  15    6\n  1739      1  18    6                     1  18    6\n  1740      2  10    8                     2  10    8\n                                      10) 18  12    8\n                                           1  17    3½\n\n  1741      2   6    8                     2   6    8\n  1742      1  14    0                     1  14    0\n  1743      1   4   10                     1   4   10\n  1744      1   4   10                     1   4   10\n  1745      1   7    6                     1   7    6\n  1746      1  19    0                     1  19    0\n  1747      1  14   10                     1  14   10\n  1748      1  17    0                     1  17    0\n  1749      1  17    0                     1  17    0\n  1750      1  12    6                     1  12    6\n                                      10) 16  18    2\n                                           1  13    9¾\n\n  1751      1  18    6\n  1752      2   1   10\n  1753      2   4    8\n  1754      1  13    8\n  1755      1  14   10\n  1756      2   5    3\n  1757      3   0    0\n  1758      2  10    0\n  1759      1  19   10\n  1760      1  16    6\n  1761      1  10    3\n  1762      1  19    0\n  1763      2   0    9\n  1764      2   6    9\n      64) 129  13    6\n   Average  2   0    6¾\n\n\n\n\n\nBOOK II. OF THE NATURE, ACCUMULATION, AND EMPLOYMENT OF STOCK.\n\nINTRODUCTION.\n\nIn that rude state of society, in which there is no division of labour,\nin which exchanges are seldom made, and in which every man provides\nevery thing for himself, it is not necessary that any stock should be\naccumulated, or stored up before-hand, in order to carry on the business\nof the society. Every man endeavours to supply, by his own industry, his\nown occasional wants, as they occur. When he is hungry, he goes to the\nforest to hunt; when his coat is worn out, he clothes himself with the\nskin of the first large animal he kills: and when his hut begins to go\nto ruin, he repairs it, as well as he can, with the trees and the turf\nthat are nearest it.\n\nBut when the division of labour has once been thoroughly introduced, the\nproduce of a man's own labour can supply but a very small part of his\noccasional wants. The far greater part of them are supplied by the\nproduce of other men's labour, which he purchases with the produce, or,\nwhat is the same thing, with the price of the produce, of his own. But\nthis purchase cannot be made till such time as the produce of his\nown labour has not only been completed, but sold. A stock of goods of\ndifferent kinds, therefore, must be stored up somewhere, sufficient\nto maintain him, and to supply him with the materials and tools of his\nwork, till such time at least as both these events can be brought about.\nA weaver cannot apply himself entirely to his peculiar business, unless\nthere is before-hand stored up somewhere, either in his own possession,\nor in that of some other person, a stock sufficient to maintain him, and\nto supply him with the materials and tools of his work, till he has not\nonly completed, but sold his web. This accumulation must evidently\nbe previous to his applying his industry for so long a time to such a\npeculiar business.\n\nAs the accumulation of stock must, in the nature of things, be previous\nto the division of labour, so labour can be more and more subdivided in\nproportion only as stock is previously more and more accumulated. The\nquantity of materials which the same number of people can work up,\nincreases in a great proportion as labour comes to be more and more\nsubdivided; and as the operations of each workman are gradually reduced\nto a greater degree of simplicity, a variety of new machines come to\nbe invented for facilitating and abridging those operations. As the\ndivision of labour advances, therefore, in order to give constant\nemployment to an equal number of workmen, an equal stock of provisions,\nand a greater stock of materials and tools than what would have been\nnecessary in a ruder state of things, must be accumulated before-hand.\nBut the number of workmen in every branch of business generally\nincreases with the division of labour in that branch; or rather it is\nthe increase of their number which enables them to class and subdivide\nthemselves in this manner.\n\nAs the accumulation of stock is previously necessary for carrying on\nthis great improvement in the productive powers of labour, so that\naccumulation naturally leads to this improvement. The person who employs\nhis stock in maintaining labour, necessarily wishes to employ it in\nsuch a manner as to produce as great a quantity of work as possible. He\nendeavours, therefore, both to make among his workmen the most proper\ndistribution of employment, and to furnish them with the best machines\nwhich he can either invent or afford to purchase. His abilities, in both\nthese respects, are generally in proportion to the extent of his stock,\nor to the number of people whom it can employ. The quantity of industry,\ntherefore, not only increases in every country with the increase of the\nstock which employs it, but, in consequence of that increase, the same\nquantity of industry produces a much greater quantity of work.\n\nSuch are in general the effects of the increase of stock upon industry\nand its productive powers.\n\nIn the following book, I have endeavoured to explain the nature of\nstock, the effects of its accumulation into capital of different kinds,\nand the effects of the different employments of those capitals. This\nbook is divided into five chapters. In the first chapter, I have\nendeavoured to shew what are the different parts or branches into which\nthe stock, either of an individual, or of a great society, naturally\ndivides itself. In the second, I have endeavoured to explain the nature\nand operation of money, considered as a particular branch of the general\nstock of the society. The stock which is accumulated into a capital, may\neither be employed by the person to whom it belongs, or it may be\nlent to some other person. In the third and fourth chapters, I have\nendeavoured to examine the manner in which it operates in both these\nsituations. The fifth and last chapter treats of the different effects\nwhich the different employments of capital immediately produce upon the\nquantity, both of national industry, and of the annual produce of land\nand labour.\n\n\n\nCHAPTER I. OF THE DIVISION OF STOCK.\n\nWhen the stock which a man possesses is no more than sufficient to\nmaintain him for a few days or a few weeks, he seldom thinks of\nderiving any revenue from it. He consumes it as sparingly as he can,\nand endeavours, by his labour, to acquire something which may supply its\nplace before it be consumed altogether. His revenue is, in this case,\nderived from his labour only. This is the state of the greater part of\nthe labouring poor in all countries.\n\nBut when he possesses stock sufficient to maintain him for months or\nyears, he naturally endeavours to derive a revenue from the greater\npart of it, reserving only so much for his immediate consumption as\nmay maintain him till this revenue begins to come in. His whole stock,\ntherefore, is distinguished into two parts. That part which he expects\nis to afford him this revenue is called his capital. The other is that\nwhich supplies his immediate consumption, and which consists either,\nfirst, in that portion of his whole stock which was originally reserved\nfor this purpose; or, secondly, in his revenue, from whatever source\nderived, as it gradually comes in; or, thirdly, in such things as had\nbeen purchased by either of these in former years, and which are not yet\nentirely consumed, such as a stock of clothes, household furniture, and\nthe like. In one or other, or all of these three articles, consists the\nstock which men commonly reserve for their own immediate consumption.\n\nThere are two different ways in which a capital may be employed so as to\nyield a revenue or profit to its employer.\n\nFirst, it maybe employed in raising, manufacturing, or purchasing goods,\nand selling them again with a profit. The capital employed in this\nmanner yields no revenue or profit to its employer, while it either\nremains in his possession, or continues in the same shape. The goods\nof the merchant yield him no revenue or profit till he sells them for\nmoney, and the money yields him as little till it is again exchanged\nfor goods. His capital is continually going from him in one shape,\nand returning to him in another; and it is only by means of such\ncirculation, or successive changes, that it can yield him any profit.\nSuch capitals, therefore, may very properly be called circulating\ncapitals.\n\nSecondly, it may be employed in the improvement of land, in the purchase\nof useful machines and instruments of trade, or in such like things as\nyield a revenue or profit without changing masters, or circulating any\nfurther. Such capitals, therefore, may very properly be called fixed\ncapitals.\n\nDifferent occupations require very different proportions between the\nfixed and circulating capitals employed in them.\n\nThe capital of a merchant, for example, is altogether a circulating\ncapital. He has occasion for no machines or instruments of trade, unless\nhis shop or warehouse be considered as such.\n\nSome part of the capital of every master artificer or manufacturer must\nbe fixed in the instruments of his trade. This part, however, is very\nsmall in some, and very great in others, A master tailor requires no\nother instruments of trade but a parcel of needles. Those of the master\nshoemaker are a little, though but a very little, more expensive. Those\nof the weaver rise a good deal above those of the shoemaker. The far\ngreater part of the capital of all such master artificers, however,\nis circulated either in the wages of their workmen, or in the price of\ntheir materials, and repaid, with a profit, by the price of the work.\n\nIn other works a much greater fixed capital is required. In a great\niron-work, for example, the furnace for melting the ore, the forge, the\nslit-mill, are instruments of trade which cannot be erected without\na very great expense. In coal works, and mines of every kind, the\nmachinery necessary, both for drawing out the water, and for other\npurposes, is frequently still more expensive.\n\nThat part of the capital of the farmer which is employed in the\ninstruments of agriculture is a fixed, that which is employed in\nthe wages and maintenance of his labouring servants is a circulating\ncapital. He makes a profit of the one by keeping it in his own\npossession, and of the other by parting with it. The price or value of\nhis labouring cattle is a fixed capital, in the same manner as that\nof the instruments of husbandry; their maintenance is a circulating\ncapital, in the same manner as that of the labouring servants. The\nfarmer makes his profit by keeping the labouring cattle, and by parting\nwith their maintenance. Both the price and the maintenance of the cattle\nwhich are bought in and fattened, not for labour, but for sale, are a\ncirculating capital. The farmer makes his profit by parting with them.\nA flock of sheep or a herd of cattle, that, in a breeding country,\nis brought in neither for labour nor for sale, but in order to make a\nprofit by their wool, by their milk, and by their increase, is a fixed\ncapital. The profit is made by keeping them. Their maintenance is a\ncirculating capital. The profit is made by parting with it; and it comes\nback with both its own profit and the profit upon the whole price of the\ncattle, in the price of the wool, the milk, and the increase. The whole\nvalue of the seed, too, is properly a fixed capital. Though it goes\nbackwards and forwards between the ground and the granary, it never\nchanges masters, and therefore does not properly circulate. The farmer\nmakes his profit, not by its sale, but by its increase.\n\nThe general stock of any country or society is the same with that of\nall its inhabitants or members; and, therefore, naturally divides itself\ninto the same three portions, each of which has a distinct function or\noffice.\n\nThe first is that portion which is reserved for immediate consumption,\nand of which the characteristic is, that it affords no revenue or\nprofit. It consists in the stock of food, clothes, household furniture,\netc. which have been purchased by their proper consumers, but which are\nnot yet entirely consumed. The whole stock of mere dwelling-houses,\ntoo, subsisting at anyone time in the country, make a part of this\nfirst portion. The stock that is laid out in a house, if it is to be the\ndwelling-house of the proprietor, ceases from that moment to serve in\nthe function of a capital, or to afford any revenue to its owner. A\ndwelling-house, as such, contributes nothing to the revenue of its\ninhabitant; and though it is, no doubt, extremely useful to him, it\nis as his clothes and household furniture are useful to him, which,\nhowever, make a part of his expense, and not of his revenue. If it is\nto be let to a tenant for rent, as the house itself can produce nothing,\nthe tenant must always pay the rent out of some other revenue, which\nhe derives, either from labour, or stock, or land. Though a house,\ntherefore, may yield a revenue to its proprietor, and thereby serve in\nthe function of a capital to him, it cannot yield any to the public, nor\nserve in the function of a capital to it, and the revenue of the whole\nbody of the people can never be in the smallest degree increased by it.\nClothes and household furniture, in the same manner, sometimes yield a\nrevenue, and thereby serve in the function of a capital to particular\npersons. In countries where masquerades are common, it is a trade to\nlet out masquerade dresses for a night. Upholsterers frequently let\nfurniture by the month or by the year. Undertakers let the furniture of\nfunerals by the day and by the week. Many people let furnished houses,\nand get a rent, not only for the use of the house, but for that of the\nfurniture. The revenue, however, which is derived from such things, must\nalways be ultimately drawn from some other source of revenue. Of all\nparts of the stock, either of an individual or of a society, reserved\nfor immediate consumption, what is laid out in houses is most slowly\nconsumed. A stock of clothes may last several years; a stock of\nfurniture half a century or a century; but a stock of houses, well built\nand properly taken care of, may last many centuries. Though the period\nof their total consumption, however, is more distant, they are still as\nreally a stock reserved for immediate consumption as either clothes or\nhousehold furniture.\n\nThe second of the three portions into which the general stock of\nthe society divides itself, is the fixed capital; of which the\ncharacteristic is, that it affords a revenue or profit without\ncirculating or changing masters. It consists chiefly of the four\nfollowing articles.\n\nFirst, of all useful machines and instruments of trade, which facilitate\nand abridge labour.\n\nSecondly, of all those profitable buildings which are the means of\nprocuring a revenue, not only to the proprietor who lets them for a\nrent, but to the person who possesses them, and pays that rent for them;\nsuch as shops, warehouses, work-houses, farm-houses, with all their\nnecessary buildings, stables, granaries, etc. These are very different\nfrom mere dwelling-houses. They are a sort of instruments of trade, and\nmay be considered in the same light.\n\nThirdly, of the improvements of land, of what has been profitably laid\nout in clearing, draining, inclosing, manuring, and reducing it into the\ncondition most proper for tillage and culture. An improved farm may\nvery justly be regarded in the same light as those useful machines\nwhich facilitate and abridge labour, and by means of which an equal\ncirculating capital can afford a much greater revenue to its employer.\nAn improved farm is equally advantageous and more durable than any of\nthose machines, frequently requiring no other repairs than the most\nprofitable application of the farmer's capital employed in cultivating\nit.\n\nFourthly, of the acquired and useful abilities of all the inhabitants\nand members of the society. The acquisition of such talents, by\nthe maintenance of the acquirer during his education, study, or\napprenticeship, always costs a real expense, which is a capital fixed\nand realized, as it were, in his person. Those talents, as they make a\npart of his fortune, so do they likewise that of the society to which\nhe belongs. The improved dexterity of a workman may be considered in\nthe same light as a machine or instrument of trade which facilitates and\nabridges labour, and which, though it costs a certain expense, repays\nthat expense with a profit.\n\nThe third and last of the three portions into which the general stock\nof the society naturally divides itself, is the circulating capital,\nof which the characteristic is, that it affords a revenue only by\ncirculating or changing masters. It is composed likewise of four parts.\n\nFirst, of the money, by means of which all the other three are\ncirculated and distributed to their proper consumers.\n\nSecondly, of the stock of provisions which are in the possession of the\nbutcher, the grazier, the farmer, the corn-merchant, the brewer, etc.\nand from the sale of which they expect to derive a profit.\n\nThirdly, of the materials, whether altogether rude, or more or less\nmanufactured, of clothes, furniture, and building which are not yet made\nup into any of those three shapes, but which remain in the hands of\nthe growers, the manufacturers, the mercers, and drapers, the\ntimber-merchants, the carpenters and joiners, the brick-makers, etc.\n\nFourthly, and lastly, of the work which is made up and completed, but\nwhich is still in the hands of the merchant and manufacturer, and not\nyet disposed of or distributed to the proper consumers; such as the\nfinished work which we frequently find ready made in the shops of\nthe smith, the cabinet-maker, the goldsmith, the jeweller, the\nchina-merchant, etc. The circulating capital consists, in this manner,\nof the provisions, materials, and finished work of all kinds that are\nin the hands of their respective dealers, and of the money that is\nnecessary for circulating and distributing them to those who are finally\nto use or to consume them.\n\nOf these four parts, three--provisions, materials, and finished\nwork, are either annually or in a longer or shorter period, regularly\nwithdrawn from it, and placed either in the fixed capital, or in the\nstock reserved for immediate consumption.\n\nEvery fixed capital is both originally derived from, and requires to be\ncontinually supported by, a circulating capital. All useful machines and\ninstruments of trade are originally derived from a circulating\ncapital, which furnishes the materials of which they are made, and the\nmaintenance of the workmen who make them. They require, too, a capital\nof the same kind to keep them in constant repair.\n\nNo fixed capital can yield any revenue but by means of a circulating\ncapital. The most useful machines and instruments of trade will produce\nnothing, without the circulating capital, which affords the materials\nthey are employed upon, and the maintenance of the workmen who\nemploy them. Land, however improved, will yield no revenue without a\ncirculating capital, which maintains the labourers who cultivate and\ncollect its produce.\n\nTo maintain and augment the stock which maybe reserved for immediate\nconsumption, is the sole end and purpose both of the fixed and\ncirculating capitals. It is this stock which feeds, clothes, and lodges\nthe people. Their riches or poverty depend upon the abundant or sparing\nsupplies which those two capitals can afford to the stock reserved for\nimmediate consumption.\n\nSo great a part of the circulating capital being continually withdrawn\nfrom it, in order to be placed in the other two branches of the general\nstock of the society, it must in its turn require continual supplies\nwithout which it would soon cease to exist. These supplies are\nprincipally drawn from three sources; the produce of land, of mines,\nand of fisheries. These afford continual supplies of provisions and\nmaterials, of which part is afterwards wrought up into finished work\nand by which are replaced the provisions, materials, and finished work,\ncontinually withdrawn from the circulating capital. From mines, too, is\ndrawn what is necessary for maintaining and augmenting that part of it\nwhich consists in money. For though, in the ordinary course of business,\nthis part is not, like the other three, necessarily withdrawn from it,\nin order to be placed in the other two branches of the general stock of\nthe society, it must, however, like all other things, be wasted and\nworn out at last, and sometimes, too, be either lost or sent abroad,\nand must, therefore, require continual, though no doubt much smaller\nsupplies.\n\nLands, mines, and fisheries, require all both a fixed and circulating\ncapital to cultivate them; and their produce replaces, with a profit not\nonly those capitals, but all the others in the society. Thus the farmer\nannually replaces to the manufacturer the provisions which he had\nconsumed, and the materials which he had wrought up the year before; and\nthe manufacturer replaces to the farmer the finished work which he had\nwasted and worn out in the same time. This is the real exchange that\nis annually made between those two orders of people, though it seldom\nhappens that the rude produce of the one, and the manufactured produce\nof the other, are directly bartered for one another; because it seldom\nhappens that the farmer sells his corn and his cattle, his flax and his\nwool, to the very same person of whom he chuses to purchase the\nclothes, furniture, and instruments of trade, which he wants. He sells,\ntherefore, his rude produce for money, with which he can purchase,\nwherever it is to be had, the manufactured produce he has occasion for.\nLand even replaces, in part at least, the capitals with which fisheries\nand mines are cultivated. It is the produce of land which draws the fish\nfrom the waters; and it is the produce of the surface of the earth which\nextracts the minerals from its bowels.\n\nThe produce of land, mines, and fisheries, when their natural fertility\nis equal, is in proportion to the extent and proper application of the\ncapitals employed about them. When the capitals are equal, and equally\nwell applied, it is in proportion to their natural fertility.\n\nIn all countries where there is a tolerable security, every man of\ncommon understanding will endeavour to employ whatever stock he can\ncommand, in procuring either present enjoyment or future profit. If it\nis employed in procuring present enjoyment, it is a stock reserved for\nimmediate consumption. If it is employed in procuring future profit, it\nmust procure this profit either by staying with him, or by going from\nhim. In the one case it is a fixed, in the other it is a circulating\ncapital. A man must be perfectly crazy, who, where there is a tolerable\nsecurity, does not employ all the stock which he commands, whether it\nbe his own, or borrowed of other people, in some one or other of those\nthree ways.\n\nIn those unfortunate countries, indeed, where men are continually afraid\nof the violence of their superiors, they frequently bury or conceal a\ngreat part of their stock, in order to have it always at hand to carry\nwith them to some place of safety, in case of their being threatened\nwith any of those disasters to which they consider themselves at all\ntimes exposed. This is said to be a common practice in Turkey, in\nIndostan, and, I believe, in most other governments of Asia. It seems to\nhave been a common practice among our ancestors during the violence of\nthe feudal government. Treasure-trove was, in these times, considered\nas no contemptible part of the revenue of the greatest sovereigns in\nEurope. It consisted in such treasure as was found concealed in the\nearth, and to which no particular person could prove any right. This was\nregarded, in those times, as so important an object, that it was always\nconsidered as belonging to the sovereign, and neither to the finder nor\nto the proprietor of the land, unless the right to it had been conveyed\nto the latter by an express clause in his charter. It was put upon the\nsame footing with gold and silver mines, which, without a special clause\nin the charter, were never supposed to be comprehended in the general\ngrant of the lands, though mines of lead, copper, tin, and coal were, as\nthings of smaller consequence.\n\n\n\n\nCHAPTER II. OF MONEY, CONSIDERED AS A PARTICULAR BRANCH OF THE GENERAL\nSTOCK OF THE SOCIETY, OR OF THE EXPENSE OF MAINTAINING THE NATIONAL\nCAPITAL.\n\nIt has been shown in the First Book, that the price of the greater part\nof commodities resolves itself into three parts, of which one pays the\nwages of the labour, another the profits of the stock, and a third the\nrent of the land which had been employed in producing and bringing them\nto market: that there are, indeed, some commodities of which the price\nis made up of two of those parts only, the wages of labour, and the\nprofits of stock; and a very few in which it consists altogether in one,\nthe wages of labour; but that the price of every commodity necessarily\nresolves itself into some one or other, or all, of those three parts;\nevery part of it which goes neither to rent nor to wages, being\nnecessarily profit to some body.\n\nSince this is the case, it has been observed, with regard to every\nparticular commodity, taken separately, it must be so with regard to all\nthe commodities which compose the whole annual produce of the land\nand labour of every country, taken complexly. The whole price or\nexchangeable value of that annual produce must resolve itself into the\nsame three parts, and be parcelled out among the different inhabitants\nof the country, either as the wages of their labour, the profits of\ntheir stock, or the rent of their land.\n\nBut though the whole value of the annual produce of the land and labour\nof every country, is thus divided among, and constitutes a revenue to,\nits different inhabitants; yet, as in the rent of a private estate, we\ndistinguish between the gross rent and the neat rent, so may we likewise\nin the revenue of all the inhabitants of a great country.\n\nThe gross rent of a private estate comprehends whatever is paid by\nthe farmer; the neat rent, what remains free to the landlord, after\ndeducting the expense of management, of repairs, and all other necessary\ncharges; or what, without hurting his estate, he can afford to place\nin his stock reserved for immediate consumption, or to spend upon his\ntable, equipage, the ornaments of his house and furniture, his private\nenjoyments and amusements. His real wealth is in proportion, not to his\ngross, but to his neat rent.\n\nThe gross revenue of all the inhabitants of a great country comprehends\nthe whole annual produce of their land and labour; the neat revenue,\nwhat remains free to them, after deducting the expense of maintaining\nfirst, their fixed, and, secondly, their circulating capital, or what,\nwithout encroaching upon their capital, they can place in their stock\nreserved for immediate consumption, or spend upon their subsistence,\nconveniencies, and amusements. Their real wealth, too, is in proportion,\nnot to their gross, but to their neat revenue.\n\nThe whole expense of maintaining the fixed capital must evidently be\nexcluded from the neat revenue of the society. Neither the materials\nnecessary for supporting their useful machines and instruments of trade,\ntheir profitable buildings, etc. nor the produce of the labour necessary\nfor fashioning those materials into the proper form, can ever make any\npart of it. The price of that labour may indeed make a part of it; as\nthe workmen so employed may place the whole value of their wages in\ntheir stock reserved for immediate consumption. But in other sorts of\nlabour, both the price and the produce go to this stock; the price\nto that of the workmen, the produce to that of other people, whose\nsubsistence, conveniencies, and amusements, are augmented by the labour\nof those workmen.\n\nThe intention of the fixed capital is to increase the productive powers\nof labour, or to enable the same number of labourers to perform a much\ngreater quantity of work. In a farm where all the necessary buildings,\nfences, drains, communications, etc. are in the most perfect good order,\nthe same number of labourers and labouring cattle will raise a much\ngreater produce, than in one of equal extent and equally good ground,\nbut not furnished with equal conveniencies. In manufactures, the same\nnumber of hands, assisted with the best machinery, will work up a much\ngreater quantity of goods than with more imperfect instruments of trade.\nThe expense which is properly laid out upon a fixed capital of any kind,\nis always repaid with great profit, and increases the annual produce by\na much greater value than that of the support which such improvements\nrequire. This support, however, still requires a certain portion of that\nproduce. A certain quantity of materials, and the labour of a certain\nnumber of workmen, both of which might have been immediately employed\nto augment the food, clothing, and lodging, the subsistence and\nconveniencies of the society, are thus diverted to another employment,\nhighly advantageous indeed, but still different from this one. It is\nupon this account that all such improvements in mechanics, as enable the\nsame number of workmen to perform an equal quantity of work with cheaper\nand simpler machinery than had been usual before, are always regarded as\nadvantageous to every society. A certain quantity of materials, and the\nlabour of a certain number of workmen, which had before been employed\nin supporting a more complex and expensive machinery, can afterwards\nbe applied to augment the quantity of work which that or any other\nmachinery is useful only for performing. The undertaker of some great\nmanufactory, who employs a thousand a-year in the maintenance of his\nmachinery, if he can reduce this expense to five hundred, will naturally\nemploy the other five hundred in purchasing an additional quantity of\nmaterials, to be wrought up by an additional number of workmen. The\nquantity of that work, therefore, which his machinery was useful\nonly for performing, will naturally be augmented, and with it all the\nadvantage and conveniency which the society can derive from that work.\n\nThe expense of maintaining the fixed capital in a great country, may\nvery properly be compared to that of repairs in a private estate.\nThe expense of repairs may frequently be necessary for supporting the\nproduce of the estate, and consequently both the gross and the neat rent\nof the landlord. When by a more proper direction, however, it can be\ndiminished without occasioning any diminution of produce, the gross rent\nremains at least the same as before, and the neat rent is necessarily\naugmented.\n\nBut though the whole expense of maintaining the fixed capital is thus\nnecessarily excluded from the neat revenue of the society, it is not the\nsame case with that of maintaining the circulating capital. Of the\nfour parts of which this latter capital is composed, money, provisions,\nmaterials, and finished work, the three last, it has already been\nobserved, are regularly withdrawn from it, and placed either in the\nfixed capital of the society, or in their stock reserved for immediate\nconsumption. Whatever portion of those consumable goods is not employed\nin maintaining the former, goes all to the latter, and makes a part of\nthe neat revenue of the society. The maintenance of those three parts of\nthe circulating capital, therefore, withdraws no portion of the annual\nproduce from the neat revenue of the society, besides what is necessary\nfor maintaining the fixed capital.\n\nThe circulating capital of a society is in this respect different from\nthat of an individual. That of an individual is totally excluded from\nmaking any part of his neat revenue, which must consist altogether in\nhis profits. But though the circulating capital of every individual\nmakes a part of that of the society to which he belongs, it is not upon\nthat account totally excluded from making a part likewise of their neat\nrevenue. Though the whole goods in a merchant's shop must by no means be\nplaced in his own stock reserved for immediate consumption, they may in\nthat of other people, who, from a revenue derived from other funds, may\nregularly replace their value to him, together with its profits, without\noccasioning any diminution either of his capital or of theirs.\n\nMoney, therefore, is the only part of the circulating capital of a\nsociety, of which the maintenance can occasion any diminution in their\nneat revenue.\n\nThe fixed capital, and that part of the circulating capital which\nconsists in money, so far as they affect the revenue of the society,\nbear a very great resemblance to one another.\n\nFirst, as those machines and instruments of trade, etc. require a\ncertain expense, first to erect them, and afterwards to support\nthem, both which expenses, though they make a part of the gross, are\ndeductions from the neat revenue of the society; so the stock of money\nwhich circulates in any country must require a certain expense, first\nto collect it, and afterwards to support it; both which expenses, though\nthey make a part of the gross, are, in the same manner, deductions from\nthe neat revenue of the society. A certain quantity of very valuable\nmaterials, gold and silver, and of very curious labour, instead\nof augmenting the stock reserved for immediate consumption, the\nsubsistence, conveniencies, and amusements of individuals, is employed\nin supporting that great but expensive instrument of commerce, by\nmeans of which every individual in the society has his subsistence,\nconveniencies, and amusements, regularly distributed to him in their\nproper proportions.\n\nSecondly, as the machines and instruments of trade, etc. which compose\nthe fixed capital either of an individual or of a society, make no part\neither of the gross or of the neat revenue of either; so money, by means\nof which the whole revenue of the society is regularly distributed among\nall its different members, makes itself no part of that revenue. The\ngreat wheel of circulation is altogether different from the goods which\nare circulated by means of it. The revenue of the society consists\naltogether in those goods, and not in the wheel which circulates them.\nIn computing either the gross or the neat revenue of any society, we\nmust always, from the whole annual circulation of money and goods,\ndeduct the whole value of the money, of which not a single farthing can\never make any part of either.\n\nIt is the ambiguity of language only which can make this proposition\nappear either doubtful or paradoxical. When properly explained and\nunderstood, it is almost self-evident.\n\nWhen we talk of any particular sum of money, we sometimes mean nothing\nbut the metal pieces of which it is composed, and sometimes we include\nin our meaning some obscure reference to the goods which can be had in\nexchange for it, or to the power of purchasing which the possession of\nit conveys. Thus, when we say that the circulating money of England has\nbeen computed at eighteen millions, we mean only to express the amount\nof the metal pieces, which some writers have computed, or rather have\nsupposed, to circulate in that country. But when we say that a man is\nworth fifty or a hundred pounds a-year, we mean commonly to express, not\nonly the amount of the metal pieces which are annually paid to him, but\nthe value of the goods which he can annually purchase or consume; we\nmean commonly to ascertain what is or ought to be his way of living, or\nthe quantity and quality of the necessaries and conveniencies of life in\nwhich he can with propriety indulge himself.\n\nWhen, by any particular sum of money, we mean not only to express the\namount of the metal pieces of which it is composed, but to include in\nits signification some obscure reference to the goods which can be\nhad in exchange for them, the wealth or revenue which it in this case\ndenotes, is equal only to one of the two values which are thus intimated\nsomewhat ambiguously by the same word, and to the latter more properly\nthan to the former, to the money's worth more properly than to the\nmoney.\n\nThus, if a guinea be the weekly pension of a particular person, he\ncan in the course of the week purchase with it a certain quantity\nof subsistence, conveniencies, and amusements. In proportion as this\nquantity is great or small, so are his real riches, his real weekly\nrevenue. His weekly revenue is certainly not equal both to the guinea\nand to what can be purchased with it, but only to one or other of those\ntwo equal values, and to the latter more properly than to the former, to\nthe guinea's worth rather than to the guinea.\n\nIf the pension of such a person was paid to him, not in gold, but in\na weekly bill for a guinea, his revenue surely would not so properly\nconsist in the piece of paper, as in what he could get for it. A guinea\nmay be considered as a bill for a certain quantity of necessaries and\nconveniencies upon all the tradesmen in the neighbourhood. The revenue of\nthe person to whom it is paid, does not so properly consist in the piece\nof gold, as in what he can get for it, or in what he can exchange it\nfor. If it could be exchanged for nothing, it would, like a bill upon a\nbankrupt, be of no more value than the most useless piece of paper.\n\nThough the weekly or yearly revenue of all the different inhabitants of\nany country, in the same manner, may be, and in reality frequently is,\npaid to them in money, their real riches, however, the real weekly or\nyearly revenue of all of them taken together, must always be great or\nsmall, in proportion to the quantity of consumable goods which they can\nall of them purchase with this money. The whole revenue of all of\nthem taken together is evidently not equal to both the money and the\nconsumable goods, but only to one or other of those two values, and to\nthe latter more properly than to the former.\n\nThough we frequently, therefore, express a person's revenue by the metal\npieces which are annually paid to him, it is because the amount of those\npieces regulates the extent of his power of purchasing, or the value of\nthe goods which he can annually afford to consume. We still consider his\nrevenue as consisting in this power of purchasing or consuming, and not\nin the pieces which convey it.\n\nBut if this is sufficiently evident, even with regard to an individual,\nit is still more so with regard to a society. The amount of the metal\npieces which are annually paid to an individual, is often precisely\nequal to his revenue, and is upon that account the shortest and best\nexpression of its value. But the amount of the metal pieces which\ncirculate in a society, can never be equal to the revenue of all its\nmembers. As the same guinea which pays the weekly pension of one man\nto-day, may pay that of another to-morrow, and that of a third the day\nthereafter, the amount of the metal pieces which annually circulate\nin any country, must always be of much less value than the whole money\npensions annually paid with them. But the power of purchasing, or the\ngoods which can successively be bought with the whole of those money\npensions, as they are successively paid, must always be precisely of the\nsame value with those pensions; as must likewise be the revenue of the\ndifferent persons to whom they are paid. That revenue, therefore, cannot\nconsist in those metal pieces, of which the amount is so much inferior\nto its value, but in the power of purchasing, in the goods which can\nsuccessively be bought with them as they circulate from hand to hand.\n\nMoney, therefore, the great wheel of circulation, the great instrument\nof commerce, like all other instruments of trade, though it makes a\npart, and a very valuable part, of the capital, makes no part of the\nrevenue of the society to which it belongs; and though the metal pieces\nof which it is composed, in the course of their annual circulation,\ndistribute to every man the revenue which properly belongs to him, they\nmake themselves no part of that revenue.\n\nThirdly, and lastly, the machines and instruments of trade, etc. which\ncompose the fixed capital, bear this further resemblance to that part of\nthe circulating capital which consists in money; that as every saving\nin the expense of erecting and supporting those machines, which does\nnot diminish the introductive powers of labour, is an improvement of\nthe neat revenue of the society; so every saving in the expense of\ncollecting and supporting that part of the circulating capital which\nconsists in money is an improvement of exactly the same kind.\n\nIt is sufficiently obvious, and it has partly, too, been explained\nalready, in what manner every saving in the expense of supporting the\nfixed capital is an improvement of the neat revenue of the society. The\nwhole capital of the undertaker of every work is necessarily divided\nbetween his fixed and his circulating capital. While his whole capital\nremains the same, the smaller the one part, the greater must necessarily\nbe the other. It is the circulating capital which furnishes the\nmaterials and wages of labour, and puts industry into motion. Every\nsaving, therefore, in the expense of maintaining the fixed capital,\nwhich does not diminish the productive powers of labour, must increase\nthe fund which puts industry into motion, and consequently the annual\nproduce of land and labour, the real revenue of every society.\n\nThe substitution of paper in the room of gold and silver money, replaces\na very expensive instrument of commerce with one much less costly, and\nsometimes equally convenient. Circulation comes to be carried on by a\nnew wheel, which it costs less both to erect and to maintain than the\nold one. But in what manner this operation is performed, and in what\nmanner it tends to increase either the gross or the neat revenue of the\nsociety, is not altogether so obvious, and may therefore require some\nfurther explication.\n\nThere are several different sorts of paper money; but the circulating\nnotes of banks and bankers are the species which is best known, and\nwhich seems best adapted for this purpose.\n\nWhen the people of any particular country have such confidence in the\nfortune, probity and prudence of a particular banker, as to believe that\nhe is always ready to pay upon demand such of his promissory notes as\nare likely to be at any time presented to him, those notes come to have\nthe same currency as gold and silver money, from the confidence that\nsuch money can at any time be had for them.\n\nA particular banker lends among his customers his own promissory notes,\nto the extent, we shall suppose, of a hundred thousand pounds. As those\nnotes serve all the purposes of money, his debtors pay him the same\ninterest as if he had lent them so much money. This interest is the\nsource of his gain. Though some of those notes are continually coming\nback upon him for payment, part of them continue to circulate for months\nand years together. Though he has generally in circulation, therefore,\nnotes to the extent of a hundred thousand pounds, twenty thousand\npounds in gold and silver may, frequently, be a sufficient provision\nfor answering occasional demands. By this operation, therefore, twenty\nthousand pounds in gold and silver perform all the functions which a\nhundred thousand could otherwise have performed. The same exchanges may\nbe made, the same quantity of consumable goods may be circulated and\ndistributed to their proper consumers, by means of his promissory notes,\nto the value of a hundred thousand pounds, as by an equal value of gold\nand silver money. Eighty thousand pounds of gold and silver, therefore,\ncan in this manner be spared from the circulation of the country; and if\ndifferent operations of the the same kind should, at the same time, be\ncarried on by many different banks and bankers, the whole circulation\nmay thus be conducted with a fifth part only of the gold and silver\nwhich would otherwise have been requisite.\n\nLet us suppose, for example, that the whole circulating money of some\nparticular country amounted, at a particular time, to one million\nsterling, that sum being then sufficient for circulating the whole\nannual produce of their land and labour; let us suppose, too, that some\ntime thereafter, different banks and bankers issued promissory notes\npayable to the bearer, to the extent of one million, reserving in their\ndifferent coffers two hundred thousand pounds for answering occasional\ndemands; there would remain, therefore, in circulation, eight hundred\nthousand pounds in gold and silver, and a million of bank notes, or\neighteen hundred thousand pounds of paper and money together. But the\nannual produce of the land and labour of the country had before required\nonly one million to circulate and distribute it to its proper consumers,\nand that annual produce cannot be immediately augmented by those\noperations of banking. One million, therefore, will be sufficient to\ncirculate it after them. The goods to be bought and sold being precisely\nthe same as before, the same quantity of money will be sufficient for\nbuying and selling them. The channel of circulation, if I may be allowed\nsuch an expression, will remain precisely the same as before. One\nmillion we have supposed sufficient to fill that channel. Whatever,\ntherefore, is poured into it beyond this sum, cannot run into it, but\nmust overflow. One million eight hundred thousand pounds are poured into\nit. Eight hundred thousand pounds, therefore, must overflow, that sum\nbeing over and above what can be employed in the circulation of the\ncountry. But though this sum cannot be employed at home, it is too\nvaluable to be allowed to lie idle. It will, therefore, be sent abroad,\nin order to seek that profitable employment which it cannot find at\nhome. But the paper cannot go abroad; because at a distance from the\nbanks which issue it, and from the country in which payment of it can\nbe exacted by law, it will not be received in common payments. Gold and\nsilver, therefore, to the amount of eight hundred thousand pounds, will\nbe sent abroad, and the channel of home circulation will remain filled\nwith a million of paper instead of a million of those metals which\nfilled it before.\n\nBut though so great a quantity of gold and silver is thus sent abroad,\nwe must not imagine that it is sent abroad for nothing, or that its\nproprietors make a present of it to foreign nations. They will exchange\nit for foreign goods of some kind or another, in order to supply the\nconsumption either of some other foreign country, or of their own.\n\nIf they employ it in purchasing goods in one foreign country, in order\nto supply the consumption of another, or in what is called the carrying\ntrade, whatever profit they make will be in addition to the neat revenue\nof their own country. It is like a new fund, created for carrying on a\nnew trade; domestic business being now transacted by paper, and the gold\nand silver being converted into a fund for this new trade.\n\nIf they employ it in purchasing foreign goods for home consumption, they\nmay either, first, purchase such goods as are likely to be consumed by\nidle people, who produce nothing, such as foreign wines, foreign silks,\netc.; or, secondly, they may purchase an additional stock of materials,\ntools, and provisions, in order to maintain and employ an additional\nnumber of industrious people, who reproduce, with a profit, the value of\ntheir annual consumption.\n\nSo far as it is employed in the first way, it promotes prodigality,\nincreases expense and consumption, without increasing production, or\nestablishing any permanent fund for supporting that expense, and is in\nevery respect hurtful to the society.\n\nSo far as it is employed in the second way, it promotes industry;\nand though it increases the consumption of the society, it provides a\npermanent fund for supporting that consumption; the people who consume\nreproducing, with a profit, the whole value of their annual consumption.\nThe gross revenue of the society, the annual produce of their land\nand labour, is increased by the whole value which the labour of those\nworkmen adds to the materials upon which they are employed, and their\nneat revenue by what remains of this value, after deducting what is\nnecessary for supporting the tools and instruments of their trade.\n\nThat the greater part of the gold and silver which being forced abroad\nby those operations of banking, is employed in purchasing foreign goods\nfor home consumption, is, and must be, employed in purchasing those\nof this second kind, seems not only probable, but almost unavoidable.\nThough some particular men may sometimes increase their expense very\nconsiderably, though their revenue does not increase at all, we maybe\nassured that no class or order of men ever does so; because, though the\nprinciples of common prudence do not always govern the conduct of every\nindividual, they always influence that of the majority of every class or\norder. But the revenue of idle people, considered as a class or order,\ncannot, in the smallest degree, be increased by those operations of\nbanking. Their expense in general, therefore, cannot be much increased\nby them, though that of a few individuals among them may, and in reality\nsometimes is. The demand of idle people, therefore, for foreign goods,\nbeing the same, or very nearly the same as before, a very small part of\nthe money which, being forced abroad by those operations of banking, is\nemployed in purchasing foreign goods for home consumption, is likely to\nbe employed in purchasing those for their use. The greater part of it\nwill naturally be destined for the employment of industry, and not for\nthe maintenance of idleness.\n\nWhen we compute the quantity of industry which the circulating capital\nof any society can employ, we must always have regard to those parts of\nit only which consist in provisions, materials, and finished work; the\nother, which consists in money, and which serves only to circulate those\nthree, must always be deducted. In order to put industry into motion,\nthree things are requisite; materials to work upon, tools to work with,\nand the wages or recompence for the sake of which the work is done.\nMoney is neither a material to work upon, nor a tool to work with; and\nthough the wages of the workman are commonly paid to him in money, his\nreal revenue, like that of all other men, consists, not in the money,\nbut in the money's worth; not in the metal pieces, but in what can be\ngot for them.\n\nThe quantity of industry which any capital can employ, must evidently be\nequal to the number of workmen whom it can supply with materials, tools,\nand a maintenance suitable to the nature of the work. Money may be\nrequisite for purchasing the materials and tools of the work, as well as\nthe maintenance of the workmen; but the quantity of industry which the\nwhole capital can employ, is certainly not equal both to the money\nwhich purchases, and to the materials, tools, and maintenance, which are\npurchased with it, but only to one or other of those two values, and to\nthe latter more properly than to the former.\n\nWhen paper is substituted in the room of gold and silver money, the\nquantity of the materials, tools, and maintenance, which the whole\ncirculating capital can supply, may be increased by the whole value of\ngold and silver which used to be employed in purchasing them. The whole\nvalue of the great wheel of circulation and distribution is added to\nthe goods which are circulated and distributed by means of it. The\noperation, in some measure, resembles that of the undertaker of some\ngreat work, who, in consequence of some improvement in mechanics, takes\ndown his old machinery, and adds the difference between its price and\nthat of the new to his circulating capital, to the fund from which he\nfurnishes materials and wages to his workmen.\n\nWhat is the proportion which the circulating money of any country bears\nto the whole value of the annual produce circulated by means of it, it\nis perhaps impossible to determine. It has been computed by different\nauthors at a fifth, at a tenth, at a twentieth, and at a thirtieth, part\nof that value. But how small soever the proportion which the circulating\nmoney may bear to the whole value of the annual produce, as but a part,\nand frequently but a small part, of that produce, is ever destined for\nthe maintenance of industry, it must always bear a very considerable\nproportion to that part. When, therefore, by the substitution of paper,\nthe gold and silver necessary for circulation is reduced to, perhaps, a\nfifth part of the former quantity, if the value of only the greater part\nof the other four-fifths be added to the funds which are destined for\nthe maintenance of industry, it must make a very considerable addition\nto the quantity of that industry, and, consequently, to the value of the\nannual produce of land and labour.\n\nAn operation of this kind has, within these five-and-twenty or thirty\nyears, been performed in Scotland, by the erection of new banking\ncompanies in almost every considerable town, and even in some country\nvillages. The effects of it have been precisely those above described.\nThe business of the country is almost entirely carried on by means of\nthe paper of those different banking companies, with which purchases\nand payments of all kinds are commonly made. Silver very seldom appears,\nexcept in the change of a twenty shilling bank note, and gold still\nseldomer. But though the conduct of all those different companies\nhas not been unexceptionable, and has accordingly required an act of\nparliament to regulate it, the country, notwithstanding, has evidently\nderived great benefit from their trade. I have heard it asserted, that\nthe trade of the city of Glasgow doubled in about fifteen years after\nthe first erection of the banks there; and that the trade of Scotland\nhas more than quadrupled since the first erection of the two public\nbanks at Edinburgh; of which the one, called the Bank of Scotland, was\nestablished by act of parliament in 1695, and the other, called the\nRoyal Bank, by royal charter in 1727. Whether the trade, either of\nScotland in general, or of the city of Glasgow in particular, has really\nincreased in so great a proportion, during so short a period, I do not\npretend to know. If either of them has increased in this proportion,\nit seems to be an effect too great to be accounted for by the sole\noperation of this cause. That the trade and industry of Scotland,\nhowever, have increased very considerably during this period, and that\nthe banks have contributed a good deal to this increase, cannot be\ndoubted.\n\nThe value of the silver money which circulated in Scotland before the\nUnion in 1707, and which, immediately after it, was brought into the\nBank of Scotland, in order to be recoined, amounted to £411,117: 10: 9\nsterling. No account has been got of the gold coin; but it appears from\nthe ancient accounts of the mint of Scotland, that the value of the gold\nannually coined somewhat exceeded that of the silver. There were a\ngood many people, too, upon this occasion, who, from a diffidence of\nrepayment, did not bring their silver into the Bank of Scotland; and\nthere was, besides, some English coin, which was not called in. The\nwhole value of the gold and silver, therefore, which circulated in\nScotland before the Union, cannot be estimated at less than a million\nsterling. It seems to have constituted almost the whole circulation of\nthat country; for though the circulation of the Bank of Scotland, which\nhad then no rival, was considerable, it seems to have made but a very\nsmall part of the whole. In the present times, the whole circulation of\nScotland cannot be estimated at less than two millions, of which that\npart which consists in gold and silver, most probably, does not amount\nto half a million. But though the circulating gold and silver of\nScotland have suffered so great a diminution during this period, its\nreal riches and prosperity do not appear to have suffered any. Its\nagriculture, manufactures, and trade, on the contrary, the annual\nproduce of its land and labour, have evidently been augmented.\n\nIt is chiefly by discounting bills of exchange, that is, by advancing\nmoney upon them before they are due, that the greater part of banks and\nbankers issue their promissory notes. They deduct always, upon whatever\nsum they advance, the legal interest till the bill shall become due. The\npayment of the bill, when it becomes due, replaces to the bank the value\nof what had been advanced, together with a clear profit of the interest.\nThe banker, who advances to the merchant whose bill he discounts, not\ngold and silver, but his own promissory notes, has the advantage of\nbeing able to discount to a greater amount by the whole value of\nhis promissory notes, which he finds, by experience, are commonly in\ncirculation. He is thereby enabled to make his clear gain of interest on\nso much a larger sum.\n\nThe commerce of Scotland, which at present is not very great, was\nstill more inconsiderable when the two first banking companies were\nestablished; and those companies would have had but little trade, had\nthey confined their business to the discounting of bills of exchange.\nThey invented, therefore, another method of issuing their promissory\nnotes; by granting what they call cash accounts, that is, by giving\ncredit, to the extent of a certain sum (two or three thousand pounds for\nexample), to any individual who could procure two persons of undoubted\ncredit and good landed estate to become surety for him, that whatever\nmoney should be advanced to him, within the sum for which the credit\nhad been given, should be repaid upon demand, together with the legal\ninterest. Credits of this kind are, I believe, commonly granted by banks\nand bankers in all different parts of the world. But the easy terms upon\nwhich the Scotch banking companies accept of repayment are, so far as I\nknow, peculiar to them, and have perhaps been the principal cause,\nboth of the great trade of those companies, and of the benefit which the\ncountry has received from it.\n\nWhoever has a credit of this kind with one of those companies, and\nborrows a thousand pounds upon it, for example, may repay this\nsum piece-meal, by twenty and thirty pounds at a time, the company\ndiscounting a proportionable part of the interest of the great sum, from\nthe day on which each of those small sums is paid in, till the whole be\nin this manner repaid. All merchants, therefore, and almost all men of\nbusiness, find it convenient to keep such cash accounts with them,\nand are thereby interested to promote the trade of those companies, by\nreadily receiving their notes in all payments, and by encouraging all\nthose with whom they have any influence to do the same. The banks, when\ntheir customers apply to them for money, generally advance it to them\nin their own promissory notes. These the merchants pay away to the\nmanufacturers for goods, the manufacturers to the farmers for materials\nand provisions, the farmers to their landlords for rent; the landlords\nrepay them to the merchants for the conveniencies and luxuries with\nwhich they supply them, and the merchants again return them to the\nbanks, in order to balance their cash accounts, or to replace what they\nmy have borrowed of them; and thus almost the whole money business of\nthe country is transacted by means of them. Hence the great trade of\nthose companies.\n\nBy means of those cash accounts, every merchant can, without imprudence,\ncarry on a greater trade than he otherwise could do. If there are two\nmerchants, one in London and the other in Edinburgh, who employ equal\nstocks in the same branch of trade, the Edinburgh merchant can, without\nimprudence, carry on a greater trade, and give employment to a greater\nnumber of people, than the London merchant. The London merchant must\nalways keep by him a considerable sum of money, either in his own\ncoffers, or in those of his banker, who gives him no interest for it, in\norder to answer the demands continually coming upon him for payment of\nthe goods which he purchases upon credit. Let the ordinary amount of\nthis sum be supposed five hundred pounds; the value of the goods in his\nwarehouse must always be less, by five hundred pounds, than it would\nhave been, had he not been obliged to keep such a sum unemployed. Let us\nsuppose that he generally disposes of his whole stock upon hand, or of\ngoods to the value of his whole stock upon hand, once in the year. By\nbeing obliged to keep so great a sum unemployed, he must sell in a year\nfive hundred pounds worth less goods than he might otherwise have done.\nHis annual profits must be less by all that he could have made by the\nsale of five hundred pounds worth more goods; and the number of people\nemployed in preparing his goods for the market must be less by all those\nthat five hundred pounds more stock could have employed. The merchant\nin Edinburgh, on the other hand, keeps no money unemployed for answering\nsuch occasional demands. When they actually come upon him, he satisfies\nthem from his cash account with the bank, and gradually replaces the\nsum borrowed with the money or paper which comes in from the occasional\nsales of his goods. With the same stock, therefore, he can, without\nimprudence, have at all times in his warehouse a larger quantity of\ngoods than the London merchant; and can thereby both make a greater\nprofit himself, and give constant employment to a greater number of\nindustrious people who prepare those goods for the market. Hence the\ngreat benefit which the country has derived from this trade.\n\nThe facility of discounting bills of exchange, it may be thought,\nindeed, gives the English merchants a conveniency equivalent to the cash\naccounts of the Scotch merchants. But the Scotch merchants, it must\nbe remembered, can discount their bills of exchange as easily as the\nEnglish merchants; and have, besides, the additional conveniency of\ntheir cash accounts.\n\nThe whole paper money of every kind which can easily circulate in any\ncountry, never can exceed the value of the gold and silver, of which\nit supplies the place, or which (the commerce being supposed the same)\nwould circulate there, if there was no paper money. If twenty shilling\nnotes, for example, are the lowest paper money current in Scotland, the\nwhole of that currency which can easily circulate there, cannot exceed\nthe sum of gold and silver which would be necessary for transacting\nthe annual exchanges of twenty shillings value and upwards usually\ntransacted within that country. Should the circulating paper at any\ntime exceed that sum, as the excess could neither be sent abroad nor be\nemployed in the circulation of the country, it must immediately return\nupon the banks, to be exchanged for gold and silver. Many people would\nimmediately perceive that they had more of this paper than was necessary\nfor transacting their business at home; and as they could not send it\nabroad, they would immediately demand payment for it from the banks.\nWhen this superfluous paper was converted into gold and silver, they\ncould easily find a use for it, by sending it abroad; but they\ncould find none while it remained in the shape of paper. There would\nimmediately, therefore, be a run upon the banks to the whole extent\nof this superfluous paper, and if they showed any difficulty or\nbackwardness in payment, to a much greater extent; the alarm which this\nwould occasion necessarily increasing the run.\n\nOver and above the expenses which are common to every branch of trade,\nsuch as the expense of house-rent, the wages of servants, clerks,\naccountants, etc. the expenses peculiar to a bank consist chiefly in two\narticles: first, in the expense of keeping at all times in its coffers,\nfor answering the occasional demands of the holders of its notes, a\nlarge sum of money, of which it loses the interest; and, secondly, in\nthe expense of replenishing those coffers as fast as they are emptied by\nanswering such occasional demands.\n\nA banking company which issues more paper than can be employed in the\ncirculation of the country, and of which the excess is continually\nreturning upon them for payment, ought to increase the quantity of gold\nand silver which they keep at all times in their coffers, not only in\nproportion to this excessive increase of their circulation, but in a\nmuch greater proportion; their notes returning upon them much faster\nthan in proportion to the excess of their quantity. Such a company,\ntherefore, ought to increase the first article of their expense, not\nonly in proportion to this forced increase of their business, but in a\nmuch greater proportion.\n\nThe coffers of such a company, too, though they ought to be filled much\nfuller, yet must empty themselves much faster than if their business was\nconfined within more reasonable bounds, and must require not only a more\nviolent, but a more constant and uninterrupted exertion of expense, in\norder to replenish them, The coin, too, which is thus continually drawn\nin such large quantities from their coffers, cannot be employed in the\ncirculation of the country. It comes in place of a paper which is over\nand above what can be employed in that circulation, and is, therefore,\nover and above what can be employed in it too. But as that coin will\nnot be allowed to lie idle, it must, in one shape or another, be sent\nabroad, in order to find that profitable employment which it cannot find\nat home; and this continual exportation of gold and silver, by enhancing\nthe difficulty, must necessarily enhance still farther the expense of\nthe bank, in finding new gold and silver in order to replenish those\ncoffers, which empty themselves so very rapidly. Such a company,\ntherefore, must in proportion to this forced increase of their business,\nincrease the second article of their expense still more than the first.\n\nLet us suppose that all the paper of a particular bank, which the\ncirculation of the country can easily absorb and employ, amounts exactly\nto forty thousand pounds, and that, for answering occasional demands,\nthis bank is obliged to keep at all times in its coffers ten thousand\npounds in gold and silver. Should this bank attempt to circulate\nforty-four thousand pounds, the four thousand pounds which are over and\nabove what the circulation can easily absorb and employ, will return\nupon it almost as fast as they are issued. For answering occasional\ndemands, therefore, this bank ought to keep at all times in its coffers,\nnot eleven thousand pounds only, but fourteen thousand pounds. It will\nthus gain nothing by the interest of the four thousand pounds excessive\ncirculation; and it will lose the whole expense of continually\ncollecting four thousand pounds in gold and silver, which will be\ncontinually going out of its coffers as fast as they are brought into\nthem.\n\nHad every particular banking company always understood and attended\nto its own particular interest, the circulation never could have been\noverstocked with paper money. But every particular banking company has\nnot always understood or attended to its own particular interest, and\nthe circulation has frequently been overstocked with paper money.\n\nBy issuing too great a quantity of paper, of which the excess was\ncontinually returning, in order to be exchanged for gold and silver, the\nBank of England was for many years together obliged to coin gold to the\nextent of between eight hundred thousand pounds and a million a-year;\nor, at an average, about eight hundred and fifty thousand pounds. For\nthis great coinage, the bank (inconsequence of the worn and degraded\nstate into which the gold coin had fallen a few years ago) was\nfrequently obliged to purchase gold bullion at the high price of four\npounds an ounce, which it soon after issued in coin at £3:17:10 1/2 an\nounce, losing in this manner between two and a half and three per cent.\nupon the coinage of so very large a sum. Though the bank, therefore,\npaid no seignorage, though the government was properly at the expense of\nthis coinage, this liberality of government did not prevent altogether\nthe expense of the bank.\n\nThe Scotch banks, in consequence of an excess of the same kind, were all\nobliged to employ constantly agents at London to collect money for them,\nat an expense which was seldom below one and a half or two per cent.\nThis money was sent down by the waggon, and insured by the carriers at\nan additional expense of three quarters per cent. or fifteen shillings\non the hundred pounds. Those agents were not always able to replenish\nthe coffers of their employers so fast as they were emptied. In this\ncase, the resource of the banks was, to draw upon their correspondents\nin London bills of exchange, to the extent of the sum which they wanted.\nWhen those correspondents afterwards drew upon them for the payment\nof this sum, together with the interest and commission, some of those\nbanks, from the distress into which their excessive circulation had\nthrown them, had sometimes no other means of satisfying this draught,\nbut by drawing a second set of bills, either upon the same, or upon some\nother correspondents in London; and the same sum, or rather bills for\nthe same sum, would in this manner make sometimes more than two or three\njourneys; the debtor bank paying always the interest and commission\nupon the whole accumulated sum. Even those Scotch banks which never\ndistinguished themselves by their extreme imprudence, were sometimes\nobliged to employ this ruinous resource.\n\nThe gold coin which was paid out, either by the Bank of England or by\nthe Scotch banks, in exchange for that part of their paper which was\nover and above what could be employed in the circulation of the\ncountry, being likewise over and above what could be employed in that\ncirculation, was sometimes sent abroad in the shape of coin, sometimes\nmelted down and sent abroad in the shape of bullion, and sometimes\nmelted down and sold to the Bank of England at the high price of four\npounds an ounce. It was the newest, the heaviest, and the best pieces\nonly, which were carefully picked out of the whole coin, and either sent\nabroad or melted down. At home, and while they remained in the shape of\ncoin, those heavy pieces were of no more value than the light; but they\nwere of more value abroad, or when melted down into bullion at home. The\nBank of England, notwithstanding their great annual coinage, found, to\ntheir astonishment, that there was every year the same scarcity of coin\nas there had been the year before; and that, notwithstanding the great\nquantity of good and new coin which was every year issued from the bank,\nthe state of the coin, instead of growing better and better, became\nevery year worse and worse. Every year they found themselves under the\nnecessity of coining nearly the same quantity of gold as they had\ncoined the year before; and from the continual rise in the price of gold\nbullion, in consequence of the continual wearing and clipping of the\ncoin, the expense of this great annual coinage became, every year,\ngreater and greater. The Bank of England, it is to be observed, by\nsupplying its own coffers with coin, is indirectly obliged to supply the\nwhole kingdom, into which coin is continually flowing from those coffers\nin a great variety of ways. Whatever coin, therefore, was wanted to\nsupport this excessive circulation both of Scotch and English paper\nmoney, whatever vacuities this excessive circulation occasioned in the\nnecessary coin of the kingdom, the Bank of England was obliged to supply\nthem. The Scotch banks, no doubt, paid all of them very dearly for\ntheir own imprudence and inattention: but the Bank of England paid\nvery dearly, not only for its own imprudence, but for the much greater\nimprudence of almost all the Scotch banks.\n\nThe over-trading of some bold projectors in both parts of the united\nkingdom, was the original cause of this excessive circulation of paper\nmoney.\n\nWhat a bank can with propriety advance to a merchant or undertaker of\nany kind, is not either the whole capital with which he trades, or even\nany considerable part of that capital; but that part of it only which he\nwould otherwise be obliged to keep by him unemployed and in ready money,\nfor answering occasional demands. If the paper money which the bank\nadvances never exceeds this value, it can never exceed the value of\nthe gold and silver which would necessarily circulate in the country\nif there was no paper money; it can never exceed the quantity which the\ncirculation of the country can easily absorb and employ.\n\nWhen a bank discounts to a merchant a real bill of exchange, drawn by a\nreal creditor upon a real debtor, and which, as soon as it becomes due,\nis really paid by that debtor; it only advances to him a part of the\nvalue which he would otherwise be obliged to keep by him unemployed and\nin ready money, for answering occasional demands. The payment of the\nbill, when it becomes due, replaces to the bank the value of what it had\nadvanced, together with the interest. The coffers of the bank, so far as\nits dealings are confined to such customers, resemble a water-pond,\nfrom which, though a stream is continually running out, yet another is\ncontinually running in, fully equal to that which runs out; so that,\nwithout any further care or attention, the pond keeps always equally, or\nvery near equally full. Little or no expense can ever be necessary for\nreplenishing the coffers of such a bank.\n\nA merchant, without over-trading, may frequently have occasion for a\nsum of ready money, even when he has no bills to discount. When a\nbank, besides discounting his bills, advances him likewise, upon such\noccasions, such sums upon his cash account, and accepts of a piece-meal\nrepayment, as the money comes in from the occasional sale of his goods,\nupon the easy terms of the banking companies of Scotland; it dispenses\nhim entirely from the necessity of keeping any part of his stock by him\nunemployed and in ready money for answering occasional demands. When\nsuch demands actually come upon him, he can answer them sufficiently\nfrom his cash account. The bank, however, in dealing with such\ncustomers, ought to observe with great attention, whether, in the course\nof some short period (of four, five, six, or eight months, for example),\nthe sum of the repayments which it commonly receives from them, is, or\nis not, fully equal to that of the advances which it commonly makes\nto them. If, within the course of such short periods, the sum of the\nrepayments from certain customers is, upon most occasions, fully equal\nto that of the advances, it may safely continue to deal with such\ncustomers. Though the stream which is in this case continually running\nout from its coffers may be very large, that which is continually\nrunning into them must be at least equally large, so that, without any\nfurther care or attention, those coffers are likely to be always equally\nor very near equally full, and scarce ever to require any extraordinary\nexpense to replenish them. If, on the contrary, the sum of the\nrepayments from certain other customers, falls commonly very much\nshort of the advances which it makes to them, it cannot with any safety\ncontinue to deal with such customers, at least if they continue to deal\nwith it in this manner. The stream which is in this case continually\nrunning out from its coffers, is necessarily much larger than that which\nis continually running in; so that, unless they are replenished by\nsome great and continual effort of expense, those coffers must soon be\nexhausted altogether.\n\nThe banking companies of Scotland, accordingly, were for a long time\nvery careful to require frequent and regular repayments from all their\ncustomers, and did not care to deal with any person, whatever might be\nhis fortune or credit, who did not make, what they called, frequent and\nregular operations with them. By this attention, besides saving almost\nentirely the extraordinary expense of replenishing their coffers, they\ngained two other very considerable advantages.\n\nFirst, by this attention they were enabled to make some tolerable\njudgment concerning the thriving or declining circumstances of their\ndebtors, without being obliged to look out for any other evidence\nbesides what their own books afforded them; men being, for the most\npart, either regular or irregular in their repayments, according as\ntheir circumstances are either thriving or declining. A private man who\nlends out his money to perhaps half a dozen or a dozen of debtors, may,\neither by himself or his agents, observe and inquire both constantly and\ncarefully into the conduct and situation of each of them. But a banking\ncompany, which lends money to perhaps five hundred different people,\nand of which the attention is continually occupied by objects of a very\ndifferent kind, can have no regular information concerning the conduct\nand circumstances of the greater part of its debtors, beyond what its\nown books afford it. In requiring frequent and regular repayments from\nall their customers, the banking companies of Scotland had probably this\nadvantage in view.\n\nSecondly, by this attention they secured themselves from the possibility\nof issuing more paper money than what the circulation of the country\ncould easily absorb and employ. When they observed, that within moderate\nperiods of time, the repayments of a particular customer were, upon most\noccasions, fully equal to the advances which they had made to him, they\nmight be assured that the paper money which they had advanced to him\nhad not, at any time, exceeded the quantity of gold and silver which\nhe would otherwise have been obliged to keep by him for answering\noccasional demands; and that, consequently, the paper money, which they\nhad circulated by his means, had not at any time exceeded the quantity\nof gold and silver which would have circulated in the country, had\nthere been no paper money. The frequency, regularity, and amount of\nhis repayments, would sufficiently demonstrate that the amount of their\nadvances had at no time exceeded that part of his capital which he would\notherwise have been obliged to keep by him unemployed, and in ready\nmoney, for answering occasional demands; that is, for the purpose of\nkeeping the rest of his capital in constant employment. It is this\npart of his capital only which, within moderate periods of time, is\ncontinually returning to every dealer in the shape of money, whether\npaper or coin, and continually going from him in the same shape. If the\nadvances of the bank had commonly exceeded this part of his capital, the\nordinary amount of his repayments could not, within moderate periods\nof time, have equalled the ordinary amount of its advances. The stream\nwhich, by means of his dealings, was continually running into the\ncoffers of the bank, could not have been equal to the stream which, by\nmeans of the same dealings was continually running out. The advances of\nthe bank paper, by exceeding the quantity of gold and silver which, had\nthere been no such advances, he would have been obliged to keep by him\nfor answering occasional demands, might soon come to exceed the whole\nquantity of gold and silver which ( the commerce being supposed the same\n) would have circulated in the country, had there been no paper money;\nand, consequently, to exceed the quantity which the circulation of the\ncountry could easily absorb and employ; and the excess of this paper\nmoney would immediately have returned upon the bank, in order to be\nexchanged for gold and silver. This second advantage, though equally\nreal, was not, perhaps, so well understood by all the different banking\ncompanies in Scotland as the first.\n\nWhen, partly by the conveniency of discounting bills, and partly by that\nof cash accounts, the creditable traders of any country can be\ndispensed from the necessity of keeping any part of their stock by them\nunemployed, and in ready money, for answering occasional demands, they\ncan reasonably expect no farther assistance from hanks and bankers,\nwho, when they have gone thus far, cannot, consistently with their own\ninterest and safety, go farther. A bank cannot, consistently with its\nown interest, advance to a trader the whole, or even the greater part\nof the circulating capital with which he trades; because, though that\ncapital is continually returning to him in the shape of money, and going\nfrom him in the same shape, yet the whole of the returns is too distant\nfrom the whole of the outgoings, and the sum of his repayments could not\nequal the sum of his advances within such moderate periods of time\nas suit the conveniency of a bank. Still less could a bank afford to\nadvance him any considerable part of his fixed capital; of the capital\nwhich the undertaker of an iron forge, for example, employs in erecting\nhis forge and smelting-houses, his work-houses, and warehouses,\nthe dwelling-houses of his workmen, etc.; of the capital which the\nundertaker of a mine employs in sinking his shafts, in erecting engines\nfor drawing out the water, in making roads and waggon-ways, etc.; of\nthe capital which the person who undertakes to improve land employs\nin clearing, draining, inclosing, manuring, and ploughing waste and\nuncultivated fields; in building farmhouses, with all their necessary\nappendages of stables, granaries, etc. The returns of the fixed capital\nare, in almost all cases, much slower than those of the circulating\ncapital: and such expenses, even when laid out with the greatest\nprudence and judgment, very seldom return to the undertaker till after\na period of many years, a period by far too distant to suit the\nconveniency of a bank. Traders and other undertakers may, no doubt with\ngreat propriety, carry on a very considerable part of their projects\nwith borrowed money. In justice to their creditors, however, their own\ncapital ought in this case to be sufficient to insure, if I may say so,\nthe capital of those creditors; or to render it extremely improbable\nthat those creditors should incur any loss, even though the success\nof the project should fall very much short of the expectation of the\nprojectors. Even with this precaution, too, the money which is borrowed,\nand which it is meant should not be repaid till after a period of\nseveral years, ought not to be borrowed of a bank, but ought to be\nborrowed upon bond or mortgage, of such private people as propose\nto live upon the interest of their money, without taking the trouble\nthemselves to employ the capital, and who are, upon that account,\nwilling to lend that capital to such people of good credit as are likely\nto keep it for several years. A bank, indeed, which lends its money\nwithout the expense of stamped paper, or of attorneys' fees for drawing\nbonds and mortgages, and which accepts of repayment upon the easy\nterms of the banking companies of Scotland, would, no doubt, be a very\nconvenient creditor to such traders and undertakers. But such traders\nand undertakers would surely be most inconvenient debtors to such a\nbank.\n\nIt is now more than five and twenty years since the paper money issued\nby the different banking companies of Scotland was fully equal, or\nrather was somewhat more than fully equal, to what the circulation of\nthe country could easily absorb and employ. Those companies, therefore,\nhad so long ago given all the assistance to the traders and other\nundertakers of Scotland which it is possible for banks and bankers,\nconsistently with their own interest, to give. They had even done\nsomewhat more. They had over-traded a little, and had brought upon\nthemselves that loss, or at least that diminution of profit, which, in\nthis particular business, never fails to attend the smallest degree of\nover-trading. Those traders and other undertakers, having got so much\nassistance from banks and bankers, wished to get still more. The banks,\nthey seem to have thought, could extend their credits to whatever sum\nmight be wanted, without incurring any other expense besides that of\na few reams of paper. They complained of the contracted views and\ndastardly spirit of the directors of those banks, which did not, they\nsaid, extend their credits in proportion to the extension of the trade\nof the country; meaning, no doubt, by the extension of that trade, the\nextension of their own projects beyond what they could carry on either\nwith their own capital, or with what they had credit to borrow of\nprivate people in the usual way of bond or mortgage. The banks, they\nseem to have thought, were in honour bound to supply the deficiency, and\nto provide them with all the capital which they wanted to trade with.\nThe banks, however, were of a different opinion; and upon their refusing\nto extend their credits, some of those traders had recourse to an\nexpedient which, for a time, served their purpose, though at a much\ngreater expense, yet as effectually as the utmost extension of bank\ncredits could have done. This expedient was no other than the well known\nshift of drawing and redrawing; the shift to which unfortunate traders\nhave sometimes recourse, when they are upon the brink of bankruptcy. The\npractice of raising money in this manner had been long known in England;\nand, during the course of the late war, when the high profits of trade\nafforded a great temptation to over-trading, is said to have been\ncarried on to a very great extent. From England it was brought into\nScotland, where, in proportion to the very limited commerce, and to the\nvery moderate capital of the country, it was soon carried on to a much\ngreater extent than it ever had been in England.\n\nThe practice of drawing and redrawing is so well known to all men of\nbusiness, that it may, perhaps, be thought unnecessary to give any\naccount of it. But as this book may come into the hands of many people\nwho are not men of business, and as the effects of this practice upon\nthe banking trade are not, perhaps, generally understood, even by men of\nbusiness themselves, I shall endeavour to explain it as distinctly as I\ncan.\n\nThe customs of merchants, which were established when the barbarous laws\nof Europe did not enforce the performance of their contracts, and which,\nduring the course of the two last centuries, have been adopted into the\nlaws of all European nations, have given such extraordinary privileges\nto bills of exchange, that money is more readily advanced upon them\nthan upon any other species of obligation; especially when they are\nmade payable within so short a period as two or three months after their\ndate. If, when the bill becomes due, the acceptor does not pay it as\nsoon as it is presented, he becomes from that moment a bankrupt. The\nbill is protested, and returns upon the drawer, who, if he does not\nimmediately pay it, becomes likewise a bankrupt. If, before it came to\nthe person who presents it to the acceptor for payment, it had passed\nthrough the hands of several other persons, who had successively\nadvanced to one another the contents of it, either in money or goods,\nand who, to express that each of them had in his turn received those\ncontents, had all of them in their order indorsed, that is, written\ntheir names upon the back of the bill; each indorser becomes in his turn\nliable to the owner of the bill for those contents, and, if he fails to\npay, he becomes too, from that moment, a bankrupt. Though the drawer,\nacceptor, and indorsers of the bill, should all of them be persons\nof doubtful credit; yet, still the shortness of the date gives some\nsecurity to the owner of the bill. Though all of them may be very likely\nto become bankrupts, it is a chance if they all become so in so short\na time. The house is crazy, says a weary traveller to himself, and will\nnot stand very long; but it is a chance if it falls to-night, and I will\nventure, therefore, to sleep in it to-night.\n\nThe trader A in Edinburgh, we shall suppose, draws a bill upon B in\nLondon, payable two months after date. In reality B in London owes\nnothing to A in Edinburgh; but he agrees to accept of A 's bill, upon\ncondition, that before the term of payment he shall redraw upon A in\nEdinburgh for the same sum, together with the interest and a commission,\nanother bill, payable likewise two months after date. B accordingly,\nbefore the expiration of the first two months, redraws this bill upon A\nin Edinburgh; who, again before the expiration of the second two months,\ndraws a second bill upon B in London, payable likewise two months after\ndate; and before the expiration of the third two months, B in London\nredraws upon A in Edinburgh another bill payable also two months after\ndate. This practice has sometimes gone on, not only for several months,\nbut for several years together, the bill always returning upon A in\nEdinburgh with the accumulated interest and commission of all the former\nbills. The interest was five per cent. in the year, and the commission\nwas never less than one half per cent. on each draught. This commission\nbeing repeated more than six times in the year, whatever money A might\nraise by this expedient might necessarily have cost him something more\nthan eight per cent. in the year and sometimes a great deal more, when\neither the price of the commission happened to rise, or when he was\nobliged to pay compound interest upon the interest and commission of\nformer bills. This practice was called raising money by circulation.\n\nIn a country where the ordinary profits of stock, in the greater part of\nmercantile projects, are supposed to run between six and ten per cent.\nit must have been a very fortunate speculation, of which the returns\ncould not only repay the enormous expense at which the money was thus\nborrowed for carrying it on, but afford, besides, a good surplus profit\nto the projector. Many vast and extensive projects, however, were\nundertaken, and for several years carried on, without any other fund\nto support them besides what was raised at this enormous expense. The\nprojectors, no doubt, had in their golden dreams the most distinct\nvision of this great profit. Upon their awakening, however, either at\nthe end of their projects, or when they were no longer able to carry\nthem on, they very seldom, I believe, had the good fortune to find it.\n\n{The method described in the text was by no means either the most common\nor the most expensive one in which those adventurers sometimes raised\nmoney by circulation. It frequently happened, that A in Edinburgh would\nenable B in London to pay the first bill of exchange, by drawing, a few\ndays before it became due, a second bill at three months date upon the\nsame B in London. This bill, being payable to his own order, A sold in\nEdinburgh at par; and with its contents purchased bills upon London,\npayable at sight to the order of B, to whom he sent them by the post.\nTowards the end of the late war, the exchange between Edinburgh and\nLondon was frequently three per cent. against Edinburgh, and those bills\nat sight must frequently have cost A that premium. This transaction,\ntherefore, being repeated at least four times in the year, and being\nloaded with a commission of at least one half per cent. upon each\nrepetition, must at that period have cost A, at least, fourteen per\ncent. in the year. At other times A would enable to discharge the first\nbill of exchange, by drawing, a few days before it became due, a second\nbill at two months date, not upon B, but upon some third person, C, for\nexample, in London. This other bill was made payable to the order of\nB, who, upon its being accepted by C, discounted it with some banker in\nLondon; and A enabled C to discharge it, by drawing, a few day's before\nit became due, a third bill likewise at two months date, sometimes\nupon his first correspondent B, and sometimes upon some fourth or fifth\nperson, D or E, for example. This third bill was made payable to the\norder of C, who, as soon as it was accepted, discounted it in the same\nmanner with some banker in London. Such operations being repeated at\nleast six times in the year, and being loaded with a commission of at\nleast one half per cent. upon each repetition, together with the legal\ninterest of five per cent. this method of raising money, in the same\nmanner as that described in the text, must have cost A something more\nthan eight per cent. By saving, however, the exchange between Edinburgh\nand London, it was less expensive than that mentioned in the foregoing\npart of this note; but then it required an established credit with more\nhouses than one in London, an advantage which many of these adventurers\ncould not always find it easy to procure.}\n\nThe bills which A in Edinburgh drew upon B in London, he regularly\ndiscounted two months before they were due, with some bank or banker in\nEdinburgh; and the bills which B in London redrew upon A in Edinburgh,\nhe as regularly discounted, either with the Bank of England, or with\nsome other banker in London. Whatever was advanced upon such circulating\nbills was in Edinburgh advanced in the paper of the Scotch banks; and in\nLondon, when they were discounted at the Bank of England in the paper of\nthat bank. Though the bills upon which this paper had been advanced were\nall of them repaid in their turn as soon as they became due, yet the\nvalue which had been really advanced upon the first bill was never\nreally returned to the banks which advanced it; because, before each\nbill became due, another bill was always drawn to somewhat a greater\namount than the bill which was soon to be paid: and the discounting of\nthis other bill was essentially necessary towards the payment of that\nwhich was soon to be due. This payment, therefore, was altogether\nfictitious. The stream which, by means of those circulating bills of\nexchange, had once been made to run out from the coffers of the banks,\nwas never replaced by any stream which really ran into them.\n\nThe paper which was issued upon those circulating bills of exchange\namounted, upon many occasions, to the whole fund destined for carrying\non some vast and extensive project of agriculture, commerce, or\nmanufactures; and not merely to that part of it which, had there been\nno paper money, the projector would have been obliged to keep by him\nunemployed, and in ready money, for answering occasional demands. The\ngreater part of this paper was, consequently, over and above the value\nof the gold and silver which would have circulated in the country, had\nthere been no paper money. It was over and above, therefore, what the\ncirculation of the country could easily absorb and employ, and upon that\naccount, immediately returned upon the banks, in order to be exchanged\nfor gold and silver, which they were to find as they could. It was a\ncapital which those projectors had very artfully contrived to draw from\nthose banks, not only without their knowledge or deliberate consent, but\nfor some time, perhaps, without their having the most distant suspicion\nthat they had really advanced it.\n\nWhen two people, who are continually drawing and redrawing upon one\nanother, discount their bills always with the same banker, he must\nimmediately discover what they are about, and see clearly that they are\ntrading, not with any capital of their own, but with the capital which\nhe advances to them. But this discovery is not altogether so easy when\nthey discount their bills sometimes with one banker, and sometimes with\nanother, and when the two same persons do not constantly draw and redraw\nupon one another, but occasionally run the round of a great circle of\nprojectors, who find it for their interest to assist one another in\nthis method of raising money and to render it, upon that account, as\ndifficult as possible to distinguish between a real and a fictitious\nbill of exchange, between a bill drawn by a real creditor upon a real\ndebtor, and a bill for which there was properly no real creditor but the\nbank which discounted it, nor any real debtor but the projector who made\nuse of the money. When a banker had even made this discovery, he\nmight sometimes make it too late, and might find that he had already\ndiscounted the bills of those projectors to so great an extent, that,\nby refusing to discount any more, he would necessarily make them all\nbankrupts; and thus by ruining them, might perhaps ruin himself. For his\nown interest and safety, therefore, he might find it necessary, in this\nvery perilous situation, to go on for some time, endeavouring, however,\nto withdraw gradually, and, upon that account, making every day greater\nand greater difficulties about discounting, in order to force these\nprojectors by degrees to have recourse, either to other bankers, or to\nother methods of raising money: so as that he himself might, as soon as\npossible, get out of the circle. The difficulties, accordingly, which\nthe Bank of England, which the principal bankers in London, and which\neven the more prudent Scotch banks began, after a certain time, and when\nall of them had already gone too far, to make about discounting, not\nonly alarmed, but enraged, in the highest degree, those projectors.\nTheir own distress, of which this prudent and necessary reserve of the\nbanks was, no doubt, the immediate occasion, they called the distress of\nthe country; and this distress of the country, they said, was altogether\nowing to the ignorance, pusillanimity, and bad conduct of the\nbanks, which did not give a sufficiently liberal aid to the spirited\nundertakings of those who exerted themselves in order to beautify,\nimprove, and enrich the country. It was the duty of the banks, they\nseemed to think, to lend for as long a time, and to as great an extent,\nas they might wish to borrow. The banks, however, by refusing in this\nmanner to give more credit to those to whom they had already given a\ngreat deal too much, took the only method by which it was now possible\nto save either their own credit, or the public credit of the country.\n\nIn the midst of this clamour and distress, a new bank was established\nin Scotland, for the express purpose of relieving the distress of the\ncountry. The design was generous; but the execution was imprudent, and\nthe nature and causes of the distress which it meant to relieve, were\nnot, perhaps, well understood. This bank was more liberal than any other\nhad ever been, both in granting cash-accounts, and in discounting bills\nof exchange. With regard to the latter, it seems to have made scarce any\ndistinction between real and circulating bills, but to have discounted\nall equally. It was the avowed principle of this bank to advance upon\nany reasonable security, the whole capital which was to be employed in\nthose improvements of which the returns are the most slow and distant,\nsuch as the improvements of land. To promote such improvements was even\nsaid to be the chief of the public-spirited purposes for which it\nwas instituted. By its liberality in granting cash-accounts, and in\ndiscounting bills of exchange, it, no doubt, issued great quantities of\nits bank notes. But those bank notes being, the greater part of them,\nover and above what the circulation of the country could easily absorb\nand employ, returned upon it, in order to be exchanged for gold and\nsilver, as fast as they were issued. Its coffers were never well filled.\nThe capital which had been subscribed to this bank, at two different\nsubscriptions, amounted to one hundred and sixty thousand pounds, of\nwhich eighty per cent. only was paid up. This sum ought to have\nbeen paid in at several different instalments. A great part of the\nproprietors, when they paid in their first instalment, opened a\ncash-account with the bank; and the directors, thinking themselves\nobliged to treat their own proprietors with the same liberality with\nwhich they treated all other men, allowed many of them to borrow\nupon this cash-account what they paid in upon all their subsequent\ninstalments. Such payments, therefore, only put into one coffer what had\nthe moment before been taken out of another. But had the coffers of\nthis bank been filled ever so well, its excessive circulation must have\nemptied them faster than they could have been replenished by any other\nexpedient but the ruinous one of drawing upon London; and when the bill\nbecame due, paying it, together with interest and commission, by another\ndraught upon the same place. Its coffers having been filled so very ill,\nit is said to have been driven to this resource within a very few months\nafter it began to do business. The estates of the proprietors of this\nbank were worth several millions, and, by their subscription to the\noriginal bond or contract of the bank, were really pledged for answering\nall its engagements. By means of the great credit which so great a\npledge necessarily gave it, it was, notwithstanding its too liberal\nconduct, enabled to carry on business for more than two years. When\nit was obliged to stop, it had in the circulation about two hundred\nthousand pounds in bank notes. In order to support the circulation of\nthose notes, which were continually returning upon it as fast as they\nwere issued, it had been constantly in the practice of drawing bills\nof exchange upon London, of which the number and value were continually\nincreasing, and, when it stopt, amounted to upwards of six hundred\nthousand pounds. This bank, therefore, had, in little more than the\ncourse of two years, advanced to different people upwards of eight\nhundred thousand pounds at five per cent. Upon the two hundred thousand\npounds which it circulated in bank notes, this five per cent. might\nperhaps be considered as a clear gain, without any other deduction\nbesides the expense of management. But upon upwards of six hundred\nthousand pounds, for which it was continually drawing bills of exchange\nupon London, it was paying, in the way of interest and commission,\nupwards of eight per cent. and was consequently losing more than three\nper cent. upon more than three fourths of all its dealings.\n\nThe operations of this bank seem to have produced effects quite opposite\nto those which were intended by the particular persons who planned\nand directed it. They seem to have intended to support the spirited\nundertakings, for as such they considered them, which were at that time\ncarrying on in different parts of the country; and, at the same time,\nby drawing the whole banking business to themselves, to supplant all the\nother Scotch banks, particularly those established at Edinburgh, whose\nbackwardness in discounting bills of exchange had given some offence.\nThis bank, no doubt, gave some temporary relief to those projectors, and\nenabled them to carry on their projects for about two years longer than\nthey could otherwise have done. But it thereby only enabled them to get\nso much deeper into debt; so that, when ruin came, it fell so much the\nheavier both upon them and upon their creditors. The operations of this\nbank, therefore, instead of relieving, in reality aggravated in the\nlong-run the distress which those projectors had brought both upon\nthemselves and upon their country. It would have been much better for\nthemselves, their creditors, and their country, had the greater part of\nthem been obliged to stop two years sooner than they actually did. The\ntemporary relief, however, which this bank afforded to those projectors,\nproved a real and permanent relief to the other Scotch banks. All the\ndealers in circulating bills of exchange, which those other banks had\nbecome so backward in discounting, had recourse to this new bank, where\nthey were received with open arms. Those other banks, therefore, were\nenabled to get very easily out of that fatal circle, from which they\ncould not otherwise have disengaged themselves without incurring a\nconsiderable loss, and perhaps, too, even some degree of discredit.\n\nIn the long-run, therefore, the operations of this bank increased the\nreal distress of the country, which it meant to relieve; and effectually\nrelieved, from a very great distress, those rivals whom it meant to\nsupplant.\n\nAt the first setting out of this bank, it was the opinion of some\npeople, that how fast soever its coffers might be emptied, it might\neasily replenish them, by raising money upon the securities of those to\nwhom it had advanced its paper. Experience, I believe, soon convinced\nthem that this method of raising money was by much too slow to answer\ntheir purpose; and that coffers which originally were so ill filled, and\nwhich emptied themselves so very fast, could be replenished by no other\nexpedient but the ruinous one of drawing bills upon London, and when\nthey became due, paying them by other draughts on the same place, with\naccumulated interest and commission. But though they had been able by\nthis method to raise money as fast as they wanted it, yet, instead of\nmaking a profit, they must have suffered a loss of every such operation;\nso that in the long-run they must have ruined themselves as a mercantile\ncompany, though perhaps not so soon as by the more expensive practice\nof drawing and redrawing. They could still have made nothing by the\ninterest of the paper, which, being over and above what the circulation\nof the country could absorb and employ, returned upon them in order to\nbe exchanged for gold and silver, as fast as they issued it; and for\nthe payment of which they were themselves continually obliged to\nborrow money. On the contrary, the whole expense of this borrowing,\nof employing agents to look out for people who had money to lend,\nof negotiating with those people, and of drawing the proper bond or\nassignment, must have fallen upon them, and have been so much clear loss\nupon the balance of their accounts. The project of replenishing their\ncoffers in this manner may be compared to that of a man who had a\nwater-pond from which a stream was continually running out, and into\nwhich no stream was continually running, but who proposed to keep it\nalways equally full, by employing a number of people to go continually\nwith buckets to a well at some miles distance, in order to bring water\nto replenish it.\n\nBut though this operation had proved not only practicable, but\nprofitable to the bank, as a mercantile company; yet the country could\nhave derived no benefit front it, but, on the contrary, must have\nsuffered a very considerable loss by it. This operation could not\naugment, in the smallest degree, the quantity of money to be lent. It\ncould only have erected this bank into a sort of general loan office for\nthe whole country. Those who wanted to borrow must have applied to this\nbank, instead of applying to the private persons who had lent it their\nmoney. But a bank which lends money, perhaps to five hundred different\npeople, the greater part of whom its directors can know very little\nabout, is not likely to be more judicious in the choice of its debtors\nthan a private person who lends out his money among a few people whom\nhe knows, and in whose sober and frugal conduct he thinks he has good\nreason to confide. The debtors of such a bank as that whose conduct I\nhave been giving some account of were likely, the greater part of them,\nto be chimerical projectors, the drawers and redrawers of circulating\nbills of exchange, who would employ the money in extravagant\nundertakings, which, with all the assistance that could be given them,\nthey would probably never be able to complete, and which, if they should\nbe completed, would never repay the expense which they had really cost,\nwould never afford a fund capable of maintaining a quantity of labour\nequal to that which had been employed about them. The sober and frugal\ndebtors of private persons, on the contrary, would be more likely to\nemploy the money borrowed in sober undertakings which were proportioned\nto their capitals, and which, though they might have less of the grand\nand the marvellous, would have more of the solid and the profitable;\nwhich would repay with a large profit whatever had been laid out upon\nthem, and which would thus afford a fund capable of maintaining a much\ngreater quantity of labour than that which had been employed about them.\nThe success of this operation, therefore, without increasing in the\nsmallest degree the capital of the country, would only have transferred\na great part of it from prudent and profitable to imprudent and\nunprofitable undertakings.\n\nThat the industry of Scotland languished for want of money to employ\nit, was the opinion of the famous Mr Law. By establishing a bank of a\nparticular kind, which he seems to have imagined might issue paper\nto the amount of the whole value of all the lands in the country, he\nproposed to remedy this want of money. The parliament of Scotland, when\nhe first proposed his project, did not think proper to adopt it. It was\nafterwards adopted, with some variations, by the Duke of Orleans, at\nthat time regent of France. The idea of the possibility of multiplying\npaper money to almost any extent was the real foundation of what is\ncalled the Mississippi scheme, the most extravagant project, both\nof banking and stock-jobbing, that perhaps the world ever saw. The\ndifferent operations of this scheme are explained so fully, so clearly,\nand with so much order and distinctness, by Mr Du Verney, in his\nExamination of the Political Reflections upon commerce and finances of\nMr Du Tot, that I shall not give any account of them. The principles\nupon which it was founded are explained by Mr Law himself, in a\ndiscourse concerning money and trade, which he published in Scotland\nwhen he first proposed his project. The splendid but visionary\nideas which are set forth in that and some other works upon the same\nprinciples, still continue to make an impression upon many people, and\nhave, perhaps, in part, contributed to that excess of banking, which has\nof late been complained of, both in Scotland and in other places.\n\nThe Bank of England is the greatest bank of circulation in Europe. It\nwas incorporated, in pursuance of an act of parliament, by a charter\nunder the great seal, dated the 27th of July 1694. It at that time\nadvanced to government the sum of £1,200,000 for an annuity of £100,000,\nor for £ 96,000 a-year, interest at the rate of eight per cent. and\n£4,000 year for the expense of management. The credit of the new\ngovernment, established by the Revolution, we may believe, must have\nbeen very low, when it was obliged to borrow at so high an interest.\n\nIn 1697, the bank was allowed to enlarge its capital stock, by an\ningraftment of £1,001,171:10s. Its whole capital stock, therefore,\namounted at this time to £2,201,171: 10s. This ingraftment is said to\nhave been for the support of public credit. In 1696, tallies had been\nat forty, and fifty, and sixty, per cent. discount, and bank notes at\ntwenty per cent. {James Postlethwaite's History of the Public Revenue,\np.301.} During the great re-coinage of the silver, which was going on at\nthis time, the bank had thought proper to discontinue the payment of its\nnotes, which necessarily occasioned their discredit.\n\nIn pursuance of the 7th Anne, c. 7, the bank advanced and paid into\nthe exchequer the sum of £400,000; making in all the sum of £1,600,000,\nwhich it had advanced upon its original annuity of £96,000 interest,\nand £4,000 for expense of management. In 1708, therefore, the credit of\ngovernment was as good as that of private persons, since it could borrow\nat six per cent. interest, the common legal and market rate of those\ntimes. In pursuance of the same act, the bank cancelled exchequer bills\nto the amount of £ 1,775,027: 17s: 10½d. at six per cent. interest, and\nwas at the same time allowed to take in subscriptions for doubling\nits capital. In 1703, therefore, the capital of the bank amounted\nto £4,402,343; and it had advanced to government the sum of\n£3,375,027:17:10½d.\n\nBy a call of fifteen per cent. in 1709, there was paid in, and made\nstock, £ 656,204:1:9d.; and by another of ten per cent. in 1710,\n£501,448:12:11d. In consequence of those two calls, therefore, the bank\ncapital amounted to £ 5,559,995:14:8d.\n\nIn pursuance of the 3rd George I. c.8, the bank delivered up two\nmillions of exchequer Bills to be cancelled. It had at this time,\ntherefore, advanced to government £5,375,027:17 10d. In pursuance of the\n8th George I. c.21, the bank purchased of the South-sea company,\nstock to the amount of £4,000,000: and in 1722, in consequence of\nthe subscriptions which it had taken in for enabling it to make this\npurchase, its capital stock was increased by £ 3,400,000. At this time,\ntherefore, the bank had advanced to the public £ 9,375,027 17s. 10½d.;\nand its capital stock amounted only to £ 8,959,995:14:8d. It was upon\nthis occasion that the sum which the bank had advanced to the public,\nand for which it received interest, began first to exceed its capital\nstock, or the sum for which it paid a dividend to the proprietors of\nbank stock; or, in other words, that the bank began to have an undivided\ncapital, over and above its divided one. It has continued to have an\nundivided capital of the same kind ever since. In 1746, the bank had,\nupon different occasions, advanced to the public £11,686,800, and its\ndivided capital had been raised by different calls and subscriptions to\n£ 10,780,000. The state of those two sums has continued to be the same\never since. In pursuance of the 4th of George III. c.25, the bank agreed\nto pay to government for the renewal of its charter £110,000, without\ninterest or re-payment. This sum, therefore did not increase either of\nthose two other sums.\n\nThe dividend of the bank has varied according to the variations in the\nrate of the interest which it has, at different times, received for\nthe money it had advanced to the public, as well as according to other\ncircumstances. This rate of interest has gradually been reduced from\neight to three per cent. For some years past, the bank dividend has been\nat five and a half per cent.\n\nThe stability of the bank of England is equal to that of the British\ngovernment. All that it has advanced to the public must be lost before\nits creditors can sustain any loss. No other banking company in England\ncan be established by act of parliament, or can consist of more than six\nmembers. It acts, not only as an ordinary bank, but as a great engine of\nstate. It receives and pays the greater part of the annuities which are\ndue to the creditors of the public; it circulates exchequer bills; and\nit advances to government the annual amount of the land and malt taxes,\nwhich are frequently not paid up till some years thereafter. In these\ndifferent operations, its duty to the public may sometimes have obliged\nit, without any fault of its directors, to overstock the circulation\nwith paper money. It likewise discounts merchants' bills, and has,\nupon several different occasions, supported the credit of the principal\nhouses, not only of England, but of Hamburgh and Holland. Upon one\noccasion, in 1763, it is said to have advanced for this purpose, in\none week, about £1,600,000, a great part of it in bullion. I do not,\nhowever, pretend to warrant either the greatness of the sum, or the\nshortness of the time. Upon other occasions, this great company has been\nreduced to the necessity of paying in sixpences.\n\nIt is not by augmenting the capital of the country, but by rendering a\ngreater part of that capital active and productive than would otherwise\nbe so, that the most judicious operations of banking can increase the\nindustry of the country. That part of his capital which a dealer is\nobliged to keep by him unemployed and in ready money, for answering\noccasional demands, is so much dead stock, which, so long as it remains\nin this situation, produces nothing, either to him or to his country.\nThe judicious operations of banking enable him to convert this dead\nstock into active and productive stock; into materials to work upon;\ninto tools to work with; and into provisions and subsistence to work\nfor; into stock which produces something both to himself and to his\ncountry. The gold and silver money which circulates in any country,\nand by means of which, the produce of its land and labour is annually\ncirculated and distributed to the proper consumers, is, in the same\nmanner as the ready money of the dealer, all dead stock. It is a very\nvaluable part of the capital of the country, which produces nothing to\nthe country. The judicious operations of banking, by substituting paper\nin the room of a great part of this gold and silver, enable the country\nto convert a great part of this dead stock into active and productive\nstock; into stock which produces something to the country. The gold\nand silver money which circulates in any country may very properly be\ncompared to a highway, which, while it circulates and carries to market\nall the grass and corn of the country, produces itself not a single pile\nof either. The judicious operations of banking, by providing, if I may\nbe allowed so violent a metaphor, a sort of waggon-way through the air,\nenable the country to convert, as it were, a great part of its highways\ninto good pastures, and corn fields, and thereby to increase, very\nconsiderably, the annual produce of its land and labour. The commerce\nand industry of the country, however, it must be acknowledged, though\nthey may be somewhat augmented, cannot be altogether so secure, when\nthey are thus, as it were, suspended upon the Daedalian wings of paper\nmoney, as when they travel about upon the solid ground of gold and\nsilver. Over and above the accidents to which they are exposed from the\nunskilfulness of the conductors of this paper money, they are liable to\nseveral others, from which no prudence or skill of those conductors can\nguard them.\n\nAn unsuccessful war, for example, in which the enemy got possession\nof the capital, and consequently of that treasure which supported the\ncredit of the paper money, would occasion a much greater confusion in a\ncountry where the whole circulation was carried on by paper, than in\none where the greater part of it was carried on by gold and silver. The\nusual instrument of commerce having lost its value, no exchanges could\nbe made but either by barter or upon credit. All taxes having been\nusually paid in paper money, the prince would not have wherewithal\neither to pay his troops, or to furnish his magazines; and the state of\nthe country would be much more irretrievable than if the greater part of\nits circulation had consisted in gold and silver. A prince, anxious to\nmaintain his dominions at all times in the state in which he can most\neasily defend them, ought upon this account to guard not only against\nthat excessive multiplication of paper money which ruins the very banks\nwhich issue it, but even against that multiplication of it which enables\nthem to fill the greater part of the circulation of the country with it.\n\nThe circulation of every country may be considered as divided into two\ndifferent branches; the circulation of the dealers with one another, and\nthe circulation between the dealers and the consumers. Though the same\npieces of money, whether paper or metal, may be employed sometimes\nin the one circulation and sometimes in the other; yet as both are\nconstantly going on at the same time, each requires a certain stock of\nmoney, of one kind or another, to carry it on. The value of the goods\ncirculated between the different dealers never can exceed the value\nof those circulated between the dealers and the consumers; whatever\nis bought by the dealers being ultimately destined to be sold to the\nconsumers. The circulation between the dealers, as it is carried on by\nwholesale, requires generally a pretty large sum for every particular\ntransaction. That between the dealers and the consumers, on the\ncontrary, as it is generally carried on by retail, frequently requires\nbut very small ones, a shilling, or even a halfpenny, being often\nsufficient. But small sums circulate much faster than large ones. A\nshilling changes masters more frequently than a guinea, and a halfpenny\nmore frequently than a shilling. Though the annual purchases of all the\nconsumers, therefore, are at least equal in value to those of all the\ndealers, they can generally be transacted with a much smaller quantity\nof money; the same pieces, by a more rapid circulation, serving as the\ninstrument of many more purchases of the one kind than of the other.\n\nPaper money may be so regulated as either to confine itself very much\nto the circulation between the different dealers, or to extend itself\nlikewise to a great part of that between the dealers and the consumers.\nWhere no bank notes are circulated under £10 value, as in London, paper\nmoney confines itself very much to the circulation between the dealers.\nWhen a ten pound bank note comes into the hands of a consumer, he is\ngenerally obliged to change it at the first shop where he has occasion\nto purchase five shillings worth of goods; so that it often returns into\nthe hands of a dealer before the consumer has spent the fortieth part of\nthe money. Where bank notes are issued for so small sums as 20s. as\nin Scotland, paper money extends itself to a considerable part of the\ncirculation between dealers and consumers. Before the Act of parliament\nwhich put a stop to the circulation of ten and five shilling notes, it\nfilled a still greater part of that circulation. In the currencies\nof North America, paper was commonly issued for so small a sum as a\nshilling, and filled almost the whole of that circulation. In some paper\ncurrencies of Yorkshire, it was issued even for so small a sum as a\nsixpence.\n\nWhere the issuing of bank notes for such very small sums is allowed, and\ncommonly practised, many mean people are both enabled and encouraged to\nbecome bankers. A person whose promissory note for £5, or even for 20s.\nwould be rejected by every body, will get it to be received without\nscruple when it is issued for so small a sum as a sixpence. But the\nfrequent bankruptcies to which such beggarly bankers must be liable, may\noccasion a very considerable inconveniency, and sometimes even a very\ngreat calamity, to many poor people who had received their notes in\npayment.\n\nIt were better, perhaps, that no bank notes were issued in any part of\nthe kingdom for a smaller sum than £5. Paper money would then, probably,\nconfine itself, in every part of the kingdom, to the circulation between\nthe different dealers, as much as it does at present in London, where\nno bank notes are issued under £10 value; £5 being, in most part of the\nkingdom, a sum which, though it will purchase, perhaps, little more\nthan half the quantity of goods, is as much considered, and is as seldom\nspent all at once, as £10 are amidst the profuse expense of London.\n\nWhere paper money, it is to be observed, is pretty much confined to the\ncirculation between dealers and dealers, as at London, there is always\nplenty of gold and silver. Where it extends itself to a considerable\npart of the circulation between dealers and consumers, as in Scotland,\nand still more in North America, it banishes gold and silver almost\nentirely from the country; almost all the ordinary transactions of its\ninterior commerce being thus carried on by paper. The suppression of ten\nand five shilling bank notes, somewhat relieved the scarcity of gold and\nsilver in Scotland; and the suppression of twenty shilling notes will\nprobably relieve it still more. Those metals are said to have become\nmore abundant in America, since the suppression of some of their paper\ncurrencies. They are said, likewise, to have been more abundant before\nthe institution of those currencies.\n\nThough paper money should be pretty much confined to the circulation\nbetween dealers and dealers, yet banks and bankers might still be able\nto give nearly the same assistance to the industry and commerce of\nthe country, as they had done when paper money filled almost the whole\ncirculation. The ready money which a dealer is obliged to keep by\nhim, for answering occasional demands, is destined altogether for the\ncirculation between himself and other dealers of whom he buys goods. He\nhas no occasion to keep any by him for the circulation between himself\nand the consumers, who are his customers, and who bring ready money to\nhim, instead of taking any from him. Though no paper money, therefore,\nwas allowed to be issued, but for such sums as would confine it pretty\nmuch to the circulation between dealers and dealers; yet partly\nby discounting real bills of exchange, and partly by lending upon\ncash-accounts, banks and bankers might still be able to relieve\nthe greater part of those dealers from the necessity of keeping any\nconsiderable part of their stock by them unemployed, and in ready money,\nfor answering occasional demands. They might still be able to give the\nutmost assistance which banks and bankers can with propriety give to\ntraders of every kind.\n\nTo restrain private people, it may be said, from receiving in payment\nthe promissory notes of a banker for any sum, whether great or small,\nwhen they themselves are willing to receive them; or, to restrain a\nbanker from issuing such notes, when all his neighbours are willing to\naccept of them, is a manifest violation of that natural liberty, which\nit is the proper business of law not to infringe, but to support. Such\nregulations may, no doubt, be considered as in some respect a violation\nof natural liberty. But those exertions of the natural liberty of a few\nindividuals, which might endanger the security of the whole society,\nare, and ought to be, restrained by the laws of all governments; of the\nmost free, as well as or the most despotical. The obligation of building\nparty walls, in order to prevent the communication of fire, is a\nviolation of natural liberty, exactly of the same kind with the\nregulations of the banking trade which are here proposed.\n\nA paper money, consisting in bank notes, issued by people of undoubted\ncredit, payable upon demand, without any condition, and, in fact, always\nreadily paid as soon as presented, is, in every respect, equal in value\nto gold and silver money, since gold and silver money can at anytime\nbe had for it. Whatever is either bought or sold for such paper, must\nnecessarily be bought or sold as cheap as it could have been for gold\nand silver.\n\nThe increase of paper money, it has been said, by augmenting the\nquantity, and consequently diminishing the value, of the whole currency,\nnecessarily augments the money price of commodities. But as the quantity\nof gold and silver, which is taken from the currency, is always equal\nto the quantity of paper which is added to it, paper money does not\nnecessarily increase the quantity of the whole currency. From the\nbeginning of the last century to the present time, provisions never were\ncheaper in Scotland than in 1759, though, from the circulation of ten\nand five shilling bank notes, there was then more paper money in the\ncountry than at present. The proportion between the price of provisions\nin Scotland and that in England is the same now as before the great\nmultiplication of banking companies in Scotland. Corn is, upon most\noccasions, fully as cheap in England as in France, though there is a\ngreat deal of paper money in England, and scarce any in France. In 1751\nand 1752, when Mr Hume published his Political Discourses, and soon\nafter the great multiplication of paper money in Scotland, there was a\nvery sensible rise in the price of provisions, owing, probably, to the\nbadness of the seasons, and not to the multiplication of paper money.\n\nIt would be otherwise, indeed, with a paper money, consisting in\npromissory notes, of which the immediate payment depended, in any\nrespect, either upon the good will of those who issued them, or upon a\ncondition which the holder of the notes might not always have it in his\npower to fulfil, or of which the payment was not exigible till after a\ncertain number of years, and which, in the mean time, bore no interest.\nSuch a paper money would, no doubt, fall more or less below the value of\ngold and silver, according as the difficulty or uncertainty of obtaining\nimmediate payment was supposed to be greater or less, or according to\nthe greater or less distance of time at which payment was exigible.\n\nSome years ago the different banking companies of Scotland were in\nthe practice of inserting into their bank notes, what they called an\noptional clause; by which they promised payment to the bearer, either\nas soon as the note should be presented, or, in the option of the\ndirectors, six months after such presentment, together with the legal\ninterest for the said six months. The directors of some of those\nbanks sometimes took advantage of this optional clause, and sometimes\nthreatened those who demanded gold and silver in exchange for a\nconsiderable number of their notes, that they would take advantage of\nit, unless such demanders would content themselves with a part of\nwhat they demanded. The promissory notes of those banking companies\nconstituted, at that time, the far greater part of the currency of\nScotland, which this uncertainty of payment necessarily degraded below\nvalue of gold and silver money. During the continuance of this abuse\n(which prevailed chiefly in 1762, 1763, and 1764), while the exchange\nbetween London and Carlisle was at par, that between London and Dumfries\nwould sometimes be four per cent. against Dumfries, though this town is\nnot thirty miles distant from Carlisle. But at Carlisle, bills were paid\nin gold and silver; whereas at Dumfries they were paid in Scotch bank\nnotes; and the uncertainty of getting these bank notes exchanged for\ngold and silver coin, had thus degraded them four per cent. below the\nvalue of that coin. The same act of parliament which suppressed ten and\nfive shilling bank notes, suppressed likewise this optional clause,\nand thereby restored the exchange between England and Scotland to its\nnatural rate, or to what the course of trade and remittances might\nhappen to make it.\n\nIn the paper currencies of Yorkshire, the payment of so small a sum as\n6d. sometimes depended upon the condition, that the holder of the note\nshould bring the change of a guinea to the person who issued it; a\ncondition which the holders of such notes might frequently find it very\ndifficult to fulfil, and which must have degraded this currency below\nthe value of gold and silver money. An act of parliament, accordingly,\ndeclared all such clauses unlawful, and suppressed, in the same manner\nas in Scotland, all promissory notes, payable to the bearer, under 20s.\nvalue.\n\nThe paper currencies of North America consisted, not in bank notes\npayable to the bearer on demand, but in a government paper, of which\nthe payment was not exigible till several years after it was issued; and\nthough the colony governments paid no interest to the holders of this\npaper, they declared it to be, and in fact rendered it, a legal tender\nof payment for the full value for which it was issued. But allowing the\ncolony security to be perfectly good, £100, payable fifteen years hence,\nfor example, in a country where interest is at six per cent., is worth\nlittle more than £40 ready money. To oblige a creditor, therefore, to\naccept of this as full payment for a debt of £100, actually paid down\nin ready money, was an act of such violent injustice, as has scarce,\nperhaps, been attempted by the government of any other country which\npretended to be free. It bears the evident marks of having originally\nbeen, what the honest and downright Doctor Douglas assures us it was, a\nscheme of fraudulent debtors to cheat their creditors. The government\nof Pennsylvania, indeed, pretended, upon their first emission of paper\nmoney, in 1722, to render their paper of equal value with gold and\nsilver, by enacting penalties against all those who made any difference\nin the price of their goods when they sold them for a colony paper,\nand when they sold them for gold and silver, a regulation equally\ntyrannical, but much less, effectual, than that which it was meant\nto support. A positive law may render a shilling a legal tender for a\nguinea, because it may direct the courts of justice to discharge the\ndebtor who has made that tender; but no positive law can oblige a person\nwho sells goods, and who is at liberty to sell or not to sell as he\npleases, to accept of a shilling as equivalent to a guinea in the price\nof them. Notwithstanding any regulation of this kind, it appeared,\nby the course of exchange with Great Britain, that £100 sterling was\noccasionally considered as equivalent, in some of the colonies, to £130,\nand in others to so great a sum as £1100 currency; this difference in\nthe value arising from the difference in the quantity of paper emitted\nin the different colonies, and in the distance and probability of the\nterm of its final discharge and redemption.\n\nNo law, therefore, could be more equitable than the act of parliament,\nso unjustly complained of in the colonies, which declared, that no paper\ncurrency to be emitted there in time coming, should be a legal tender of\npayment.\n\nPennsylvania was always more moderate in its emissions of paper money\nthan any other of our colonies. Its paper currency, accordingly, is\nsaid never to have sunk below the value of the gold and silver which\nwas current in the colony before the first emission of its paper money.\nBefore that emission, the colony had raised the denomination of its\ncoin, and had, by act of assembly, ordered 5s. sterling to pass in the\ncolonies for 6s:3d., and afterwards for 6s:8d. A pound, colony currency,\ntherefore, even when that currency was gold and silver, was more than\nthirty per cent. below the value of £1 sterling; and when that currency\nwas turned into paper, it was seldom much more than thirty per cent.\nbelow that value. The pretence for raising the denomination of the\ncoin was to prevent the exportation of gold and silver, by making equal\nquantities of those metals pass for greater sums in the colony than they\ndid in the mother country. It was found, however, that the price of all\ngoods from the mother country rose exactly in proportion as they raised\nthe denomination of their coin, so that their gold and silver were\nexported as fast as ever.\n\nThe paper of each colony being received in the payment of the provincial\ntaxes, for the full value for which it had been issued, it necessarily\nderived from this use some additional value, over and above what it\nwould have had, from the real or supposed distance of the term of its\nfinal discharge and redemption. This additional value was greater or\nless, according as the quantity of paper issued was more or less above\nwhat could be employed in the payment of the taxes of the particular\ncolony which issued it. It was in all the colonies very much above what\ncould be employed in this manner.\n\nA prince, who should enact that a certain proportion of his taxes should\nbe paid in a paper money of a certain kind, might thereby give a certain\nvalue to this paper money, even though the term of its final discharge\nand redemption should depend altogether upon the will of the prince. If\nthe bank which issued this paper was careful to keep the quantity of it\nalways somewhat below what could easily be employed in this manner, the\ndemand for it might be such as to make it even bear a premium, or sell\nfor somewhat more in the market than the quantity of gold or silver\ncurrency for which it was issued. Some people account in this manner for\nwhat is called the agio of the bank of Amsterdam, or for the superiority\nof bank money over current money, though this bank money, as they\npretend, cannot be taken out of the bank at the will of the owner. The\ngreater part of foreign bills of exchange must be paid in bank money,\nthat is, by a transfer in the books of the bank; and the directors of\nthe bank, they allege, are careful to keep the whole quantity of bank\nmoney always below what this use occasions a demand for. It is upon this\naccount, they say, the bank money sells for a premium, or bears an agio\nof four or five per cent. above the same nominal sum of the gold and\nsilver currency of the country. This account of the bank of Amsterdam,\nhowever, it will appear hereafter, is in a great measure chimerical.\n\nA paper currency which falls below the value of gold and silver coin,\ndoes not thereby sink the value of those metals, or occasion equal\nquantities of them to exchange for a smaller quantity of goods of any\nother kind. The proportion between the value of gold and silver and that\nof goods of any other kind, depends in all cases, not upon the nature\nand quantity of any particular paper money, which may be current in any\nparticular country, but upon the richness or poverty of the mines,\nwhich happen at any particular time to supply the great market of the\ncommercial world with those metals. It depends upon the proportion\nbetween the quantity of labour which is necessary in order to bring\na certain quantity of gold and silver to market, and that which is\nnecessary in order to bring thither a certain quantity of any other sort\nof goods.\n\nIf bankers are restrained from issuing any circulating bank notes, or\nnotes payable to the bearer, for less than a certain sum; and if they\nare subjected to the obligation of an immediate and unconditional\npayment of such bank notes as soon as presented, their trade may, with\nsafety to the public, be rendered in all other respects perfectly free.\nThe late multiplication of banking companies in both parts of the united\nkingdom, an event by which many people have been much alarmed, instead\nof diminishing, increases the security of the public. It obliges all\nof them to be more circumspect in their conduct, and, by not extending\ntheir currency beyond its due proportion to their cash, to guard\nthemselves against those malicious runs, which the rivalship of so\nmany competitors is always ready to bring upon them. It restrains the\ncirculation of each particular company within a narrower circle, and\nreduces their circulating notes to a smaller number. By dividing the\nwhole circulation into a greater number of parts, the failure of any\none company, an accident which, in the course of things, must\nsometimes happen, becomes of less consequence to the public. This\nfree competition, too, obliges all bankers to be more liberal in their\ndealings with their customers, lest their rivals should carry them\naway. In general, if any branch of trade, or any division of labour, be\nadvantageous to the public, the freer and more general the competition,\nit will always be the more so.\n\n\n\n\nCHAPTER III. OF THE ACCUMULATION OF CAPITAL, OR OF PRODUCTIVE AND\nUNPRODUCTIVE LABOUR.\n\nThere is one sort of labour which adds to the value of the subject upon\nwhich it is bestowed; there is another which has no such effect. The\nformer as it produces a value, may be called productive, the latter,\nunproductive labour. {Some French authors of great learning and\ningenuity have used those words in a different sense. In the last\nchapter of the fourth book, I shall endeavour to shew that their sense\nis an improper one.} Thus the labour of a manufacturer adds generally\nto the value of the materials which he works upon, that of his own\nmaintenance, and of his master's profit. The labour of a menial servant,\non the contrary, adds to the value of nothing. Though the manufacturer\nhas his wages advanced to him by his master, he in reality costs him\nno expense, the value of those wages being generally restored, together\nwith a profit, in the improved value of the subject upon which his\nlabour is bestowed. But the maintenance of a menial servant never is\nrestored. A man grows rich by employing a multitude of manufacturers; he\ngrows poor by maintaining a multitude or menial servants. The labour of\nthe latter, however, has its value, and deserves its reward as well\nas that of the former. But the labour of the manufacturer fixes and\nrealizes itself in some particular subject or vendible commodity, which\nlasts for some time at least after that labour is past. It is, as\nit were, a certain quantity of labour stocked and stored up, to be\nemployed, if necessary, upon some other occasion. That subject, or,\nwhat is the same thing, the price of that subject, can afterwards, if\nnecessary, put into motion a quantity of labour equal to that which\nhad originally produced it. The labour of the menial servant, on the\ncontrary, does not fix or realize itself in any particular subject or\nvendible commodity. His services generally perish in the very instant of\ntheir performance, and seldom leave any trace of value behind them, for\nwhich an equal quantity of service could afterwards be procured.\n\nThe labour of some of the most respectable orders in the society is,\nlike that of menial servants, unproductive of any value, and does not\nfix or realize itself in any permanent subject, or vendible commodity,\nwhich endures after that labour is past, and for which an equal quantity\nof labour could afterwards be procured. The sovereign, for example, with\nall the officers both of justice and war who serve under him, the whole\narmy and navy, are unproductive labourers. They are the servants of\nthe public, and are maintained by a part of the annual produce of the\nindustry of other people. Their service, how honourable, how useful, or\nhow necessary soever, produces nothing for which an equal quantity\nof service can afterwards be procured. The protection, security, and\ndefence, of the commonwealth, the effect of their labour this year,\nwill not purchase its protection, security, and defence, for the year\nto come. In the same class must be ranked, some both of the gravest and\nmost important, and some of the most frivolous professions; churchmen,\nlawyers, physicians, men of letters of all kinds; players, buffoons,\nmusicians, opera-singers, opera-dancers, etc. The labour of the meanest\nof these has a certain value, regulated by the very same principles\nwhich regulate that of every other sort of labour; and that of the\nnoblest and most useful, produces nothing which could afterwards\npurchase or procure an equal quantity of labour. Like the declamation of\nthe actor, the harangue of the orator, or the tune of the musician, the\nwork of all of them perishes in the very instant of its production.\n\nBoth productive and unproductive labourers, and those who do not labour\nat all, are all equally maintained by the annual produce of the land\nand labour of the country. This produce, how great soever, can never\nbe infinite, but must have certain limits. According, therefore, as\na smaller or greater proportion of it is in any one year employed in\nmaintaining unproductive hands, the more in the one case, and the\nless in the other, will remain for the productive, and the next year's\nproduce will be greater or smaller accordingly; the whole annual\nproduce, if we except the spontaneous productions of the earth, being\nthe effect of productive labour.\n\nThough the whole annual produce of the land and labour of every country\nis no doubt ultimately destined for supplying the consumption of its\ninhabitants, and for procuring a revenue to them; yet when it first\ncomes either from the ground, or from the hands of the productive\nlabourers, it naturally divides itself into two parts. One of them, and\nfrequently the largest, is, in the first place, destined for replacing\na capital, or for renewing the provisions, materials, and finished work,\nwhich had been withdrawn from a capital; the other for constituting a\nrevenue either to the owner of this capital, as the profit of his stock,\nor to some other person, as the rent of his land. Thus, of the produce\nof land, one part replaces the capital of the farmer; the other pays his\nprofit and the rent of the landlord; and thus constitutes a revenue both\nto the owner of this capital, as the profits of his stock, and to\nsome other person as the rent of his land. Of the produce of a great\nmanufactory, in the same manner, one part, and that always the largest,\nreplaces the capital of the undertaker of the work; the other pays his\nprofit, and thus constitutes a revenue to the owner of this capital.\n\nThat part of the annual produce of the land and labour of any country\nwhich replaces a capital, never is immediately employed to maintain any\nbut productive hands. It pays the wages of productive labour only. That\nwhich is immediately destined for constituting a revenue, either as\nprofit or as rent, may maintain indifferently either productive or\nunproductive hands.\n\nWhatever part of his stock a man employs as a capital, he always expects\nit to be replaced to him with a profit. He employs it, therefore,\nin maintaining productive hands only; and after having served in the\nfunction of a capital to him, it constitutes a revenue to them. Whenever\nhe employs any part of it in maintaining unproductive hands of any kind,\nthat part is from that moment withdrawn from his capital, and placed in\nhis stock reserved for immediate consumption.\n\nUnproductive labourers, and those who do not labour at all, are all\nmaintained by revenue; either, first, by that part of the annual\nproduce which is originally destined for constituting a revenue to some\nparticular persons, either as the rent of land, or as the profits of\nstock; or, secondly, by that part which, though originally destined for\nreplacing a capital, and for maintaining productive labourers only, yet\nwhen it comes into their hands, whatever part of it is over and\nabove their necessary subsistence, may be employed in maintaining\nindifferently either productive or unproductive hands. Thus, not only\nthe great landlord or the rich merchant, but even the common workman,\nif his wages are considerable, may maintain a menial servant; or he may\nsometimes go to a play or a puppet-show, and so contribute his share\ntowards maintaining one set of unproductive labourers; or he may pay\nsome taxes, and thus help to maintain another set, more honourable and\nuseful, indeed, but equally unproductive. No part of the annual produce,\nhowever, which had been originally destined to replace a capital, is\never directed towards maintaining unproductive hands, till after it has\nput into motion its full complement of productive labour, or all that it\ncould put into motion in the way in which it was employed. The workman\nmust have earned his wages by work done, before he can employ any part\nof them in this manner. That part, too, is generally but a small one. It\nis his spare revenue only, of which productive labourers have seldom\na great deal. They generally have some, however; and in the payment of\ntaxes, the greatness of their number may compensate, in some measure,\nthe smallness of their contribution. The rent of land and the profits\nof stock are everywhere, therefore, the principal sources from which\nunproductive hands derive their subsistence. These are the two sorts\nof revenue of which the owners have generally most to spare. They might\nboth maintain indifferently, either productive or unproductive hands.\nThey seem, however, to have some predilection for the latter. The\nexpense of a great lord feeds generally more idle than industrious\npeople. The rich merchant, though with his capital he maintains\nindustrious people only, yet by his expense, that is, by the employment\nof his revenue, he feeds commonly the very same sort as the great lord.\n\nThe proportion, therefore, between the productive and unproductive\nhands, depends very much in every country upon the proportion between\nthat part of the annual produce, which, as soon as it comes either from\nthe ground, or from the hands of the productive labourers, is destined\nfor replacing a capital, and that which is destined for constituting a\nrevenue, either as rent or as profit. This proportion is very different\nin rich from what it is in poor countries.\n\nThus, at present, in the opulent countries of Europe, a very large,\nfrequently the largest, portion of the produce of the land, is destined\nfor replacing the capital of the rich and independent farmer; the other\nfor paying his profits, and the rent of the landlord. But anciently,\nduring the prevalency of the feudal government, a very small portion\nof the produce was sufficient to replace the capital employed in\ncultivation. It consisted commonly in a few wretched cattle, maintained\naltogether by the spontaneous produce of uncultivated land, and which\nmight, therefore, be considered as a part of that spontaneous produce.\nIt generally, too, belonged to the landlord, and was by him advanced to\nthe occupiers of the land. All the rest of the produce properly belonged\nto him too, either as rent for his land, or as profit upon this paltry\ncapital. The occupiers of land were generally bond-men, whose persons\nand effects were equally his property. Those who were not bond-men were\ntenants at will; and though the rent which they paid was often nominally\nlittle more than a quit-rent, it really amounted to the whole produce\nof the land. Their lord could at all times command their labour in\npeace and their service in war. Though they lived at a distance from his\nhouse, they were equally dependent upon him as his retainers who lived\nin it. But the whole produce of the land undoubtedly belongs to him, who\ncan dispose of the labour and service of all those whom it maintains. In\nthe present state of Europe, the share of the landlord seldom exceeds a\nthird, sometimes not a fourth part of the whole produce of the land.\nThe rent of land, however, in all the improved parts of the country, has\nbeen tripled and quadrupled since those ancient times; and this third\nor fourth part of the annual produce is, it seems, three or four times\ngreater than the whole had been before. In the progress of improvement,\nrent, though it increases in proportion to the extent, diminishes in\nproportion to the produce of the land.\n\nIn the opulent countries of Europe, great capitals are at present\nemployed in trade and manufactures. In the ancient state, the little\ntrade that was stirring, and the few homely and coarse manufactures that\nwere carried on, required but very small capitals. These, however, must\nhave yielded very large profits. The rate of interest was nowhere less\nthan ten per cent. and their profits must have been sufficient to afford\nthis great interest. At present, the rate of interest, in the improved\nparts of Europe, is nowhere higher than six per cent.; and in some of\nthe most improved, it is so low as four, three, and two per cent. Though\nthat part of the revenue of the inhabitants which is derived from the\nprofits of stock, is always much greater in rich than in poor countries,\nit is because the stock is much greater; in proportion to the stock, the\nprofits are generally much less.\n\nThat part of the annual produce, therefore, which, as soon as it comes\neither from the ground, or from the hands of the productive labourers,\nis destined for replacing a capital, is not only much greater in rich\nthan in poor countries, but bears a much greater proportion to that\nwhich is immediately destined for constituting a revenue either as\nrent or as profit. The funds destined for the maintenance of productive\nlabour are not only much greater in the former than in the latter,\nbut bear a much greater proportion to those which, though they may\nbe employed to maintain either productive or unproductive hands, have\ngenerally a predilection for the latter.\n\nThe proportion between those different funds necessarily determines in\nevery country the general character of the inhabitants as to industry or\nidleness. We are more industrious than our forefathers, because, in the\npresent times, the funds destined for the maintenance of industry are\nmuch greater in proportion to those which are likely to be employed in\nthe maintenance of idleness, than they were two or three centuries\nago. Our ancestors were idle for want of a sufficient encouragement to\nindustry. It is better, says the proverb, to play for nothing, than\nto work for nothing. In mercantile and manufacturing towns, where the\ninferior ranks of people are chiefly maintained by the employment of\ncapital, they are in general industrious, sober, and thriving; as\nin many English, and in most Dutch towns. In those towns which are\nprincipally supported by the constant or occasional residence of a\ncourt, and in which the inferior ranks of people are chiefly maintained\nby the spending of revenue, they are in general idle, dissolute, and\npoor; as at Rome, Versailles, Compeigne, and Fontainbleau. If you except\nRouen and Bourdeaux, there is little trade or industry in any of the\nparliament towns of France; and the inferior ranks of people, being\nchiefly maintained by the expense of the members of the courts of\njustice, and of those who come to plead before them, are in general idle\nand poor. The great trade of Rouen and Bourdeaux seems to be altogether\nthe effect of their situation. Rouen is necessarily the entrepot of\nalmost all the goods which are brought either from foreign countries, or\nfrom the maritime provinces of France, for the consumption of the great\ncity of Paris. Bourdeaux is, in the same manner, the entrepot of the\nwines which grow upon the banks of the Garronne, and of the rivers which\nrun into it, one of the richest wine countries in the world, and which\nseems to produce the wine fittest for exportation, or best suited to\nthe taste of foreign nations. Such advantageous situations necessarily\nattract a great capital by the great employment which they afford it;\nand the employment of this capital is the cause of the industry of those\ntwo cities. In the other parliament towns of France, very little more\ncapital seems to be employed than what is necessary for supplying their\nown consumption; that is, little more than the smallest capital which\ncan be employed in them. The same thing may be said of Paris, Madrid,\nand Vienna. Of those three cities, Paris is by far the most industrious,\nbut Paris itself is the principal market of all the manufactures\nestablished at Paris, and its own consumption is the principal object of\nall the trade which it carries on. London, Lisbon, and Copenhagen, are,\nperhaps, the only three cities in Europe, which are both the constant\nresidence of a court, and can at the same time be considered as trading\ncities, or as cities which trade not only for their own consumption, but\nfor that of other cities and countries. The situation of all the three\nis extremely advantageous, and naturally fits them to be the entrepots\nof a great part of the goods destined for the consumption of distant\nplaces. In a city where a great revenue is spent, to employ with\nadvantage a capital for any other purpose than for supplying the\nconsumption of that city, is probably more difficult than in one in\nwhich the inferior ranks of people have no other maintenance but what\nthey derive from the employment of such a capital. The idleness of the\ngreater part of the people who are maintained by the expense of\nrevenue, corrupts, it is probable, the industry of those who ought to\nbe maintained by the employment of capital, and renders it less\nadvantageous to employ a capital there than in other places. There was\nlittle trade or industry in Edinburgh before the Union. When the Scotch\nparliament was no longer to be assembled in it, when it ceased to be the\nnecessary residence of the principal nobility and gentry of Scotland, it\nbecame a city of some trade and industry. It still continues, however,\nto be the residence of the principal courts of justice in Scotland,\nof the boards of customs and excise, etc. A considerable revenue,\ntherefore, still continues to be spent in it. In trade and industry,\nit is much inferior to Glasgow, of which the inhabitants are chiefly\nmaintained by the employment of capital. The inhabitants of a large\nvillage, it has sometimes been observed, after having made considerable\nprogress in manufactures, have become idle and poor, in consequence of a\ngreat lord's having taken up his residence in their neighbourhood.\n\nThe proportion between capital and revenue, therefore, seems everywhere\nto regulate the proportion between industry and idleness Wherever\ncapital predominates, industry prevails; wherever revenue, idleness.\nEvery increase or diminution of capital, therefore, naturally tends\nto increase or diminish the real quantity of industry, the number of\nproductive hands, and consequently the exchangeable value of the annual\nproduce of the land and labour of the country, the real wealth and\nrevenue of all its inhabitants.\n\nCapitals are increased by parsimony, and diminished by prodigality and\nmisconduct.\n\nWhatever a person saves from his revenue he adds to his capital,\nand either employs it himself in maintaining an additional number of\nproductive hands, or enables some other person to do so, by lending\nit to him for an interest, that is, for a share of the profits. As the\ncapital of an individual can be increased only by what he saves from his\nannual revenue or his annual gains, so the capital of a society, which\nis the same with that of all the individuals who compose it, can be\nincreased only in the same manner.\n\nParsimony, and not industry, is the immediate cause of the increase\nof capital. Industry, indeed, provides the subject which parsimony\naccumulates; but whatever industry might acquire, if parsimony did not\nsave and store up, the capital would never be the greater.\n\nParsimony, by increasing the fund which is destined for the maintenance\nof productive hands, tends to increase the number of those hands whose\nlabour adds to the value of the subject upon winch it is bestowed.\nIt tends, therefore, to increase the exchangeable value of the annual\nproduce of the land and labour of the country. It puts into motion an\nadditional quantity of industry, which gives an additional value to the\nannual produce.\n\nWhat is annually saved, is as regularly consumed as what is annually\nspent, and nearly in the same time too: but it is consumed by a\ndifferent set of people. That portion of his revenue which a rich man\nannually spends, is, in most cases, consumed by idle guests and menial\nservants, who leave nothing behind them in return for their consumption.\nThat portion which he annually saves, as, for the sake of the profit,\nit is immediately employed as a capital, is consumed in the same manner,\nand nearly in the same time too, but by a different set of people: by\nlabourers, manufacturers, and artificers, who reproduce, with a profit,\nthe value of their annual consumption. His revenue, we shall suppose,\nis paid him in money. Had he spent the whole, the food, clothing,\nand lodging, which the whole could have purchased, would have been\ndistributed among the former set of people. By saving a part of it,\nas that part is, for the sake of the profit, immediately employed as a\ncapital, either by himself or by some other person, the food, clothing,\nand lodging, which may be purchased with it, are necessarily reserved\nfor the latter. The consumption is the same, but the consumers are\ndifferent.\n\nBy what a frugal man annually saves, he not only affords maintenance to\nan additional number of productive hands, for that of the ensuing year,\nbut like the founder of a public work-house he establishes, as it were,\na perpetual fund for the maintenance of an equal number in all times to\ncome. The perpetual allotment and destination of this fund, indeed, is\nnot always guarded by any positive law, by any trust-right or deed of\nmortmain. It is always guarded, however, by a very powerful principle,\nthe plain and evident interest of every individual to whom any share of\nit shall ever belong. No part of it can ever afterwards be employed to\nmaintain any but productive hands, without an evident loss to the person\nwho thus perverts it from its proper destination.\n\nThe prodigal perverts it in this manner: By not confining his expense\nwithin his income, he encroaches upon his capital. Like him who perverts\nthe revenues of some pious foundation to profane purposes, he pays\nthe wages of idleness with those funds which the frugality of his\nforefathers had, as it were, consecrated to the maintenance of industry.\nBy diminishing the funds destined for the employment of productive\nlabour, he necessarily diminishes, so far as it depends upon him, the\nquantity of that labour which adds a value to the subject upon which it\nis bestowed, and, consequently, the value of the annual produce of the\nland and labour of the whole country, the real wealth and revenue of\nits inhabitants. If the prodigality of some were not compensated by the\nfrugality of others, the conduct of every prodigal, by feeding the\nidle with the bread of the industrious, would tend not only to beggar\nhimself, but to impoverish his country.\n\nThough the expense of the prodigal should be altogether in home made,\nand no part of it in foreign commodities, its effect upon the productive\nfunds of the society would still be the same. Every year there would\nstill be a certain quantity of food and clothing, which ought to have\nmaintained productive, employed in maintaining unproductive hands. Every\nyear, therefore, there would still be some diminution in what would\notherwise have been the value of the annual produce of the land and\nlabour of the country.\n\nThis expense, it may be said, indeed, not being in foreign goods, and\nnot occasioning any exportation of gold and silver, the same quantity of\nmoney would remain in the country as before. But if the quantity of\nfood and clothing which were thus consumed by unproductive, had been\ndistributed among productive hands, they would have reproduced, together\nwith a profit, the full value of their consumption. The same quantity\nof money would, in this case, equally have remained in the country,\nand there would, besides, have been a reproduction of an equal value of\nconsumable goods. There would have been two values instead of one.\n\nThe same quantity of money, besides, can not long remain in any country\nin which the value of the annual produce diminishes. The sole use of\nmoney is to circulate consumable goods. By means of it, provisions,\nmaterials, and finished work, are bought and sold, and distributed to\ntheir proper consumers. The quantity of money, therefore, which can be\nannually employed in any country, must be determined by the value of\nthe consumable goods annually circulated within it. These must consist,\neither in the immediate produce of the land and labour of the country\nitself, or in something which had been purchased with some part of that\nproduce. Their value, therefore, must diminish as the value of that\nproduce diminishes, and along with it the quantity of money which can\nbe employed in circulating them. But the money which, by this annual\ndiminution of produce, is annually thrown out of domestic circulation,\nwill not be allowed to lie idle. The interest of whoever possesses it\nrequires that it should be employed; but having no employment at home,\nit will, in spite of all laws and prohibitions, be sent abroad, and\nemployed in purchasing consumable goods, which may be of some use at\nhome. Its annual exportation will, in this manner, continue for some\ntime to add something to the annual consumption of the country beyond\nthe value of its own annual produce. What in the days of its prosperity\nhad been saved from that annual produce, and employed in purchasing\ngold and silver, will contribute, for some little time, to support its\nconsumption in adversity. The exportation of gold and silver is, in this\ncase, not the cause, but the effect of its declension, and may even, for\nsome little time, alleviate the misery of that declension.\n\nThe quantity of money, on the contrary, must in every country naturally\nincrease as the value of the annual produce increases. The value of the\nconsumable goods annually circulated within the society being greater,\nwill require a greater quantity of money to circulate them. A part\nof the increased produce, therefore, will naturally be employed in\npurchasing, wherever it is to be had, the additional quantity of gold\nand silver necessary for circulating the rest. The increase of those\nmetals will, in this case, be the effect, not the cause, of the public\nprosperity. Gold and silver are purchased everywhere in the same manner.\nThe food, clothing, and lodging, the revenue and maintenance, of all\nthose whose labour or stock is employed in bringing them from the mine\nto the market, is the price paid for them in Peru as well as in England.\nThe country which has this price to pay, will never belong without the\nquantity of those metals which it has occasion for; and no country will\never long retain a quantity which it has no occasion for.\n\nWhatever, therefore, we may imagine the real wealth and revenue of a\ncountry to consist in, whether in the value of the annual produce of its\nland and labour, as plain reason seems to dictate, or in the quantity\nof the precious metals which circulate within it, as vulgar prejudices\nsuppose; in either view of the matter, every prodigal appears to be a\npublic enemy, and every frugal man a public benefactor.\n\nThe effects of misconduct are often the same as those of prodigality.\nEvery injudicious and unsuccessful project in agriculture, mines,\nfisheries, trade, or manufactures, tends in the same manner to diminish\nthe funds destined for the maintenance of productive labour. In every\nsuch project, though the capital is consumed by productive hands only,\nyet as, by the injudicious manner in which they are employed, they do\nnot reproduce the full value of their consumption, there must always be\nsome diminution in what would otherwise have been the productive funds\nof the society.\n\nIt can seldom happen, indeed, that the circumstances of a great\nnation can be much affected either by the prodigality or misconduct of\nindividuals; the profusion or imprudence of some being always more than\ncompensated by the frugality and good conduct of others.\n\nWith regard to profusion, the principle which prompts to expense is the\npassion for present enjoyment; which, though sometimes violent and very\ndifficult to be restrained, is in general only momentary and occasional.\nBut the principle which prompts to save, is the desire of bettering\nour condition; a desire which, though generally calm and dispassionate,\ncomes with us from the womb, and never leaves us till we go into the\ngrave. In the whole interval which separates those two moments, there is\nscarce, perhaps, a single instance, in which any man is so perfectly and\ncompletely satisfied with his situation, as to be without any wish of\nalteration or improvement of any kind. An augmentation of fortune is the\nmeans by which the greater part of men propose and wish to better their\ncondition. It is the means the most vulgar and the most obvious; and the\nmost likely way of augmenting their fortune, is to save and accumulate\nsome part of what they acquire, either regularly and annually, or upon\nsome extraordinary occasion. Though the principle of expense, therefore,\nprevails in almost all men upon some occasions, and in some men upon\nalmost all occasions; yet in the greater part of men, taking the whole\ncourse of their life at an average, the principle of frugality seems not\nonly to predominate, but to predominate very greatly.\n\nWith regard to misconduct, the number of prudent and successful\nundertakings is everywhere much greater than that of injudicious\nand unsuccessful ones. After all our complaints of the frequency of\nbankruptcies, the unhappy men who fall into this misfortune, make but\na very small part of the whole number engaged in trade, and all other\nsorts of business; not much more, perhaps, than one in a thousand.\nBankruptcy is, perhaps, the greatest and most humiliating calamity\nwhich can befal an innocent man. The greater part of men, therefore, are\nsufficiently careful to avoid it. Some, indeed, do not avoid it; as some\ndo not avoid the gallows.\n\nGreat nations are never impoverished by private, though they sometimes\nare by public prodigality and misconduct. The whole, or almost the\nwhole public revenue is, in most countries, employed in maintaining\nunproductive hands. Such are the people who compose a numerous and\nsplendid court, a great ecclesiastical establishment, great fleets and\narmies, who in time of peace produce nothing, and in time of war acquire\nnothing which can compensate the expense of maintaining them, even while\nthe war lasts. Such people, as they themselves produce nothing, are\nall maintained by the produce of other men's labour. When multiplied,\ntherefore, to an unnecessary number, they may in a particular year\nconsume so great a share of this produce, as not to leave a sufficiency\nfor maintaining the productive labourers, who should reproduce it next\nyear. The next year's produce, therefore, will be less than that of the\nforegoing; and if the same disorder should continue, that of the third\nyear will be still less than that of the second. Those unproductive\nhands who should be maintained by a part only of the spare revenue of\nthe people, may consume so great a share of their whole revenue, and\nthereby oblige so great a number to encroach upon their capitals, upon\nthe funds destined for the maintenance of productive labour, that\nall the frugality and good conduct of individuals may not be able to\ncompensate the waste and degradation of produce occasioned by this\nviolent and forced encroachment.\n\nThis frugality and good conduct, however, is, upon most occasions, it\nappears from experience, sufficient to compensate, not only the private\nprodigality and misconduct of individuals, but the public extravagance\nof government. The uniform, constant, and uninterrupted effort of\nevery man to better his condition, the principle from which public\nand national, as well as private opulence is originally derived, is\nfrequently powerful enough to maintain the natural progress of things\ntowards improvement, in spite both of the extravagance of government,\nand of the greatest errors of administration. Like the unknown principle\nof animal life, it frequently restores health and vigour to the\nconstitution, in spite not only of the disease, but of the absurd\nprescriptions of the doctor.\n\nThe annual produce of the land and labour of any nation can be increased\nin its value by no other means, but by increasing either the number of\nits productive labourers, or the productive powers of those labourers\nwho had before been employed. The number of its productive labourers,\nit is evident, can never be much increased, but in consequence of an\nincrease of capital, or of the funds destined for maintaining them. The\nproductive powers of the same number of labourers cannot be increased,\nbut in consequence either of some addition and improvement to those\nmachines and instruments which facilitate and abridge labour, or of\nmore proper division and distribution of employment. In either case,\nan additional capital is almost always required. It is by means of an\nadditional capital only, that the undertaker of any work can either\nprovide his workmen with better machinery, or make a more proper\ndistribution of employment among them. When the work to be done consists\nof a number of parts, to keep every man constantly employed in one way,\nrequires a much greater capital than where every man is occasionally\nemployed in every different part of the work. When we compare,\ntherefore, the state of a nation at two different periods, and find that\nthe annual produce of its land and labour is evidently greater at the\nlatter than at the former, that its lands are better cultivated, its\nmanufactures more numerous and more flourishing, and its trade more\nextensive; we may be assured that its capital must have increased during\nthe interval between those two periods, and that more must have been\nadded to it by the good conduct of some, than had been taken from\nit either by the private misconduct of others, or by the public\nextravagance of government. But we shall find this to have been the case\nof almost all nations, in all tolerably quiet and peaceable times,\neven of those who have not enjoyed the most prudent and parsimonious\ngovernments. To form a right judgment of it, indeed, we must compare the\nstate of the country at periods somewhat distant from one another.\nThe progress is frequently so gradual, that, at near periods, the\nimprovement is not only not sensible, but, from the declension either\nof certain branches of industry, or of certain districts of the country,\nthings which sometimes happen, though the country in general is in great\nprosperity, there frequently arises a suspicion, that the riches and\nindustry of the whole are decaying.\n\nThe annual produce of the land and labour of England, for example, is\ncertainly much greater than it was a little more than a century ago, at\nthe restoration of Charles II. Though at present few people, I believe,\ndoubt of this, yet during this period five years have seldom passed\naway, in which some book or pamphlet has not been published, written,\ntoo, with such abilities as to gain some authority with the public,\nand pretending to demonstrate that the wealth of the nation was fast\ndeclining; that the country was depopulated, agriculture neglected,\nmanufactures decaying, and trade undone. Nor have these publications\nbeen all party pamphlets, the wretched offspring of falsehood and\nvenality. Many of them have been written by very candid and very\nintelligent people, who wrote nothing but what they believed, and for no\nother reason but because they believed it.\n\nThe annual produce of the land and labour of England, again, was\ncertainly much greater at the Restoration than we can suppose it to have\nbeen about a hundred years before, at the accession of Elizabeth. At\nthis period, too, we have all reason to believe, the country was much\nmore advanced in improvement, than it had been about a century before,\ntowards the close of the dissensions between the houses of York and\nLancaster. Even then it was, probably, in a better condition than it had\nbeen at the Norman conquest: and at the Norman conquest, than during\nthe confusion of the Saxon heptarchy. Even at this early period, it was\ncertainly a more improved country than at the invasion of Julius Caesar,\nwhen its inhabitants were nearly in the same state with the savages in\nNorth America.\n\nIn each of those periods, however, there was not only much private and\npublic profusion, many expensive and unnecessary wars, great perversion\nof the annual produce from maintaining productive to maintain\nunproductive hands; but sometimes, in the confusion of civil discord,\nsuch absolute waste and destruction of stock, as might be supposed, not\nonly to retard, as it certainly did, the natural accumulation of riches,\nbut to have left the country, at the end of the period, poorer than at\nthe beginning. Thus, in the happiest and most fortunate period of them\nall, that which has passed since the Restoration, how many disorders\nand misfortunes have occurred, which, could they have been foreseen, not\nonly the impoverishment, but the total ruin of the country would have\nbeen expected from them? The fire and the plague of London, the two\nDutch wars, the disorders of the revolution, the war in Ireland, the\nfour expensive French wars of 1688, 1701, 1742, and 1756, together with\nthe two rebellions of 1715 and 1745. In the course of the four French\nwars, the nation has contracted more than £145,000,000 of debt, over and\nabove all the other extraordinary annual expense which they occasioned;\nso that the whole cannot be computed at less than £200,000,000. So great\na share of the annual produce of the land and labour of the country,\nhas, since the Revolution, been employed upon different occasions, in\nmaintaining an extraordinary number of unproductive hands. But had not\nthose wars given this particular direction to so large a capital, the\ngreater part of it would naturally have been employed in maintaining\nproductive hands, whose labour would have replaced, with a profit, the\nwhole value of their consumption. The value of the annual produce of the\nland and labour of the country would have been considerably increased by\nit every year, and every years increase would have augmented still more\nthat of the following year. More houses would have been built, more\nlands would have been improved, and those which had been improved before\nwould have been better cultivated; more manufactures would have been\nestablished, and those which had been established before would have been\nmore extended; and to what height the real wealth and revenue of the\ncountry might by this time have been raised, it is not perhaps very easy\neven to imagine.\n\nBut though the profusion of government must undoubtedly have retarded\nthe natural progress of England towards wealth and improvement, it has\nnot been able to stop it. The annual produce of its land and labour\nis undoubtedly much greater at present than it was either at the\nRestoration or at the Revolution. The capital, therefore, annually\nemployed in cultivating this land, and in maintaining this labour,\nmust likewise be much greater. In the midst of all the exactions of\ngovernment, this capital has been silently and gradually accumulated\nby the private frugality and good conduct of individuals, by their\nuniversal, continual, and uninterrupted effort to better their own\ncondition. It is this effort, protected by law, and allowed by liberty\nto exert itself in the manner that is most advantageous, which has\nmaintained the progress of England towards opulence and improvement in\nalmost all former times, and which, it is to be hoped, will do so in all\nfuture times. England, however, as it has never been blessed with a\nvery parsimonious government, so parsimony has at no time been the\ncharacteristic virtue of its inhabitants. It is the highest impertinence\nand presumption, therefore, in kings and ministers to pretend to watch\nover the economy of private people, and to restrain their expense,\neither by sumptuary laws, or by prohibiting the importation of foreign\nluxuries. They are themselves always, and without any exception, the\ngreatest spendthrifts in the society. Let them look well after their own\nexpense, and they may safely trust private people with theirs. If their\nown extravagance does not ruin the state, that of the subject never\nwill.\n\nAs frugality increases, and prodigality diminishes, the public capital,\nso the conduct of those whose expense just equals their revenue, without\neither accumulating or encroaching, neither increases nor diminishes it.\nSome modes of expense, however, seem to contribute more to the growth of\npublic opulence than others.\n\nThe revenue of an individual may be spent, either in things which\nare consumed immediately, and in which one day's expense can neither\nalleviate nor support that of another; or it may be spent in things mere\ndurable, which can therefore be accumulated, and in which every day's\nexpense may, as he chooses, either alleviate, or support and heighten,\nthe effect of that of the following day. A man of fortune, for example,\nmay either spend his revenue in a profuse and sumptuous table, and in\nmaintaining a great number of menial servants, and a multitude of\ndogs and horses; or, contenting himself with a frugal table, and few\nattendants, he may lay out the greater part of it in adorning his house\nor his country villa, in useful or ornamental buildings, in useful or\nornamental furniture, in collecting books, statues, pictures; or in\nthings more frivolous, jewels, baubles, ingenious trinkets of different\nkinds; or, what is most trifling of all, in amassing a great wardrobe of\nfine clothes, like the favourite and minister of a great prince who died\na few years ago. Were two men of equal fortune to spend their revenue,\nthe one chiefly in the one way, the other in the other, the magnificence\nof the person whose expense had been chiefly in durable commodities,\nwould be continually increasing, every day's expense contributing\nsomething to support and heighten the effect of that of the following\nday; that of the other, on the contrary, would be no greater at the end\nof the period than at the beginning. The former too would, at the end of\nthe period, be the richer man of the two. He would have a stock of goods\nof some kind or other, which, though it might not be worth all that\nit cost, would always be worth something. No trace or vestige of the\nexpense of the latter would remain, and the effects of ten or twenty\nyears' profusion would be as completely annihilated as if they had never\nexisted.\n\nAs the one mode of expense is more favourable than the other to the\nopulence of an individual, so is it likewise to that of a nation. The\nhouses, the furniture, the clothing of the rich, in a little time,\nbecome useful to the inferior and middling ranks of people. They are\nable to purchase them when their superiors grow weary of them; and the\ngeneral accommodation of the whole people is thus gradually improved,\nwhen this mode of expense becomes universal among men of fortune.\nIn countries which have long been rich, you will frequently find the\ninferior ranks of people in possession both of houses and furniture\nperfectly good and entire, but of which neither the one could have been\nbuilt, nor the other have been made for their use. What was formerly\na seat of the family of Seymour, is now an inn upon the Bath road. The\nmarriage-bed of James I. of Great Britain, which his queen brought\nwith her from Denmark, as a present fit for a sovereign to make to\na sovereign, was, a few years ago, the ornament of an alehouse at\nDunfermline. In some ancient cities, which either have been long\nstationary, or have gone somewhat to decay, you will sometimes scarce\nfind a single house which could have been built for its present\ninhabitants. If you go into those houses, too, you will frequently find\nmany excellent, though antiquated pieces of furniture, which are still\nvery fit for use, and which could as little have been made for them.\nNoble palaces, magnificent villas, great collections of books, statues,\npictures, and other curiosities, are frequently both an ornament and an\nhonour, not only to the neighbourhood, but to the whole country to which\nthey belong. Versailles is an ornament and an honour to France, Stowe\nand Wilton to England. Italy still continues to command some sort of\nveneration, by the number of monuments of this kind which it possesses,\nthough the wealth which produced them has decayed, and though the genius\nwhich planned them seems to be extinguished, perhaps from not having the\nsame employment.\n\nThe expense, too, which is laid out in durable commodities, is\nfavourable not only to accumulation, but to frugality. If a person\nshould at any time exceed in it, he can easily reform without exposing\nhimself to the censure of the public. To reduce very much the number\nof his servants, to reform his table from great profusion to great\nfrugality, to lay down his equipage after he has once set it up, are\nchanges which cannot escape the observation of his neighbours, and which\nare supposed to imply some acknowledgment of preceding bad conduct. Few,\ntherefore, of those who have once been so unfortunate as to launch\nout too far into this sort of expense, have afterwards the courage to\nreform, till ruin and bankruptcy oblige them. But if a person has, at\nany time, been at too great an expense in building, in furniture, in\nbooks, or pictures, no imprudence can be inferred from his changing\nhis conduct. These are things in which further expense is frequently\nrendered unnecessary by former expense; and when a person stops short,\nhe appears to do so, not because he has exceeded his fortune, but\nbecause he has satisfied his fancy.\n\nThe expense, besides, that is laid out in durable commodities, gives\nmaintenance, commonly, to a greater number of people than that which is\nemployed in the most profuse hospitality. Of two or three hundred weight\nof provisions, which may sometimes be served up at a great festival, one\nhalf, perhaps, is thrown to the dunghill, and there is always a great\ndeal wasted and abused. But if the expense of this entertainment had\nbeen employed in setting to work masons, carpenters, upholsterers,\nmechanics, etc. a quantity of provisions of equal value would have\nbeen distributed among a still greater number of people, who would\nhave bought them in pennyworths and pound weights, and not have lost\nor thrown away a single ounce of them. In the one way, besides, this\nexpense maintains productive, in the other unproductive hands. In the\none way, therefore, it increases, in the other it does not increase the\nexchangeable value of the annual produce of the land and labour of the\ncountry.\n\nI would not, however, by all this, be understood to mean, that the one\nspecies of expense always betokens a more liberal or generous spirit\nthan the other. When a man of fortune spends his revenue chiefly in\nhospitality, he shares the greater part of it with his friends\nand companions; but when he employs it in purchasing such durable\ncommodities, he often spends the whole upon his own person, and gives\nnothing to any body without an equivalent. The latter species of\nexpense, therefore, especially when directed towards frivolous objects,\nthe little ornaments of dress and furniture, jewels, trinkets, gew-gaws,\nfrequently indicates, not only a trifling, but a base and selfish\ndisposition. All that I mean is, that the one sort of expense, as it\nalways occasions some accumulation of valuable commodities, as it is\nmore favourable to private frugality, and, consequently, to the increase\nof the public capital, and as it maintains productive rather than\nunproductive hands, conduces more than the other to the growth of public\nopulence.\n\n\n\n\nCHAPTER IV. OF STOCK LENT AT INTEREST.\n\nThe stock which is lent at interest is always considered as a capital by\nthe lender. He expects that in due time it is to be restored to him, and\nthat, in the mean time, the borrower is to pay him a certain annual rent\nfor the use of it. The borrower may use it either as a capital, or as a\nstock reserved for immediate consumption. If he uses it as a capital, he\nemploys it in the maintenance of productive labourers, who reproduce the\nvalue, with a profit. He can, in this case, both restore the capital,\nand pay the interest, without alienating or encroaching upon any other\nsource of revenue. If he uses it as a stock reserved for immediate\nconsumption, he acts the part of a prodigal, and dissipates, in the\nmaintenance of the idle, what was destined for the support of the\nindustrious. He can, in this case, neither restore the capital nor pay\nthe interest, without either alienating or encroaching upon some other\nsource of revenue, such as the property or the rent of land.\n\nThe stock which is lent at interest is, no doubt, occasionally employed\nin both these ways, but in the former much more frequently than in the\nlatter. The man who borrows in order to spend will soon be ruined, and\nhe who lends to him will generally have occasion to repent of his folly.\nTo borrow or to lend for such a purpose, therefore, is, in all cases,\nwhere gross usury is out of the question, contrary to the interest of\nboth parties; and though it no doubt happens sometimes, that people do\nboth the one and the other, yet, from the regard that all men have for\ntheir own interest, we may be assured, that it cannot happen so very\nfrequently as we are sometimes apt to imagine. Ask any rich man of\ncommon prudence, to which of the two sorts of people he has lent\nthe greater part of his stock, to those who he thinks will employ it\nprofitably, or to those who will spend it idly, and he will laugh at\nyou for proposing the question. Even among borrowers, therefore, not the\npeople in the world most famous for frugality, the number of the frugal\nand industrious surpasses considerably that of the prodigal and idle.\n\nThe only people to whom stock is commonly lent, without their being\nexpected to make any very profitable use of it, are country gentlemen,\nwho borrow upon mortgage. Even they scarce ever borrow merely to spend.\nWhat they borrow, one may say, is commonly spent before they borrow it.\nThey have generally consumed so great a quantity of goods, advanced\nto them upon credit by shop-keepers and tradesmen, that they find it\nnecessary to borrow at interest, in order to pay the debt. The capital\nborrowed replaces the capitals of those shop-keepers and tradesmen which\nthe country gentlemen could not have replaced from the rents of their\nestates. It is not properly borrowed in order to be spent, but in order\nto replace a capital which had been spent before.\n\nAlmost all loans at interest are made in money, either of paper, or of\ngold and silver; but what the borrower really wants, and what the lender\nreadily supplies him with, is not the money, but the money's worth, or\nthe goods which it can purchase. If he wants it as a stock for immediate\nconsumption, it is those goods only which he can place in that stock. If\nhe wants it as a capital for employing industry, it is from those goods\nonly that the industrious can be furnished with the tools, materials,\nand maintenance necessary for carrying on their work. By means of the\nloan, the lender, as it were, assigns to the borrower his right to a\ncertain portion of the annual produce of the land and labour of the\ncountry, to be employed as the borrower pleases.\n\nThe quantity of stock, therefore, or, as it is commonly expressed, of\nmoney, which can be lent at interest in any country, is not regulated\nby the value of the money, whether paper or coin, which serves as the\ninstrument of the different loans made in that country, but by the value\nof that part of the annual produce, which, as soon as it comes either\nfrom the ground, or from the hands of the productive labourers, is\ndestined, not only for replacing a capital, but such a capital as the\nowner does not care to be at the trouble of employing himself. As such\ncapitals are commonly lent out and paid back in money, they constitute\nwhat is called the monied interest. It is distinct, not only from the\nlanded, but from the trading and manufacturing interests, as in these\nlast the owners themselves employ their own capitals. Even in the monied\ninterest, however, the money is, as it were, but the deed of assignment,\nwhich conveys from one hand to another those capitals which the owners\ndo not care to employ themselves. Those capitals may be greater, in\nalmost any proportion, than the amount of the money which serves as the\ninstrument of their conveyance; the same pieces of money successively\nserving for many different loans, as well as for many different\npurchases. A, for example, lends to W £1000, with which W immediately\npurchases of B £1000 worth of goods. B having no occasion for the money\nhimself, lends the identical pieces to X, with which X immediately\npurchases of C another £1000 worth of goods. C, in the same manner, and\nfor the same reason, lends them to Y, who again purchases goods with\nthem of D. In this manner, the same pieces, either of coin or of paper,\nmay, in the course of a few days, serve as the Instrument of three\ndifferent loans, and of three different purchases, each of which is, in\nvalue, equal to the whole amount of those pieces. What the three monied\nmen, A, B, and C, assigned to the three borrowers, W, X, and Y, is the\npower of making those purchases. In this power consist both the value\nand the use of the loans. The stock lent by the three monied men is\nequal to the value of the goods which can be purchased with it, and is\nthree times greater than that of the money with which the purchases are\nmade. Those loans, however, may be all perfectly well secured, the goods\npurchased by the different debtors being so employed as, in due time,\nto bring back, with a profit, an equal value either of coin or of paper.\nAnd as the same pieces of money can thus serve as the instrument of\ndifferent loans to three, or, for the same reason, to thirty times their\nvalue, so they may likewise successively serve as the instrument of\nrepayment.\n\nA capital lent at interest may, in this manner, be considered as an\nassignment, from the lender to the borrower, of a certain considerable\nportion of the annual produce, upon condition that the burrower in\nreturn shall, during the continuance of the loan, annually assign to the\nlender a small portion, called the interest; and, at the end of it,\na portion equally considerable with that which had originally been\nassigned to him, called the repayment. Though money, either coin or\npaper, serves generally as the deed of assignment, both to the smaller\nand to the more considerable portion, it is itself altogether different\nfrom what is assigned by it.\n\nIn proportion as that share of the annual produce which, as soon as\nit comes either from the ground, or from the hands of the productive\nlabourers, is destined for replacing a capital, increases in any\ncountry, what is called the monied interest naturally increases with it.\nThe increase of those particular capitals from which the owners wish\nto derive a revenue, without being at the trouble of employing them\nthemselves, naturally accompanies the general increase of capitals; or,\nin other words, as stock increases, the quantity of stock to be lent at\ninterest grows gradually greater and greater.\n\nAs the quantity of stock to be lent at interest increases, the interest,\nor the price which must be paid for the use of that stock, necessarily\ndiminishes, not only from those general causes which make the market\nprice of things commonly diminish as their quantity increases, but from\nother causes which are peculiar to this particular case. As capitals\nincrease in any country, the profits which can be made by employing them\nnecessarily diminish. It becomes gradually more and more difficult\nto find within the country a profitable method of employing any new\ncapital. There arises, in consequence, a competition between different\ncapitals, the owner of one endeavouring to get possession of that\nemployment which is occupied by another; but, upon most occasions, he\ncan hope to justle that other out of this employment by no other means\nbut by dealing upon more reasonable terms. He must not only sell what\nhe deals in somewhat cheaper, but, in order to get it to sell, he must\nsometimes, too, buy it dearer. The demand for productive labour, by the\nincrease of the funds which are destined for maintaining it, grows\nevery day greater and greater. Labourers easily find employment; but the\nowners of capitals find it difficult to get labourers to employ. Their\ncompetition raises the wages of labour, and sinks the profits of stock.\nBut when the profits which can be made by the use of a capital are in\nthis manner diminished, as it were, at both ends, the price which can be\npaid for the use of it, that is, the rate of interest, must necessarily\nbe diminished with them.\n\nMr Locke, Mr Lawe, and Mr Montesquieu, as well as many other writers,\nseem to have imagined that the increase of the quantity of gold and\nsilver, in consequence of the discovery of the Spanish West Indies,\nwas the real cause of the lowering of the rate of interest through the\ngreater part of Europe. Those metals, they say, having become of less\nvalue themselves, the use of any particular portion of them necessarily\nbecame of less value too, and, consequently, the price which could be\npaid for it. This notion, which at first sight seems so plausible, has\nbeen so fully exposed by Mr Hume, that it is, perhaps, unnecessary\nto say any thing more about it. The following very short and plain\nargument, however, may serve to explain more distinctly the fallacy\nwhich seems to have misled those gentlemen.\n\nBefore the discovery of the Spanish West Indies, ten per cent. seems\nto have been the common rate of interest through the greater part of\nEurope. It has since that time, in different countries, sunk to six,\nfive, four, and three per cent. Let us suppose, that in every particular\ncountry the value of silver has sunk precisely in the same proportion\nas the rate of interest; and that in those countries, for example, where\ninterest has been reduced from ten to five per cent. the same quantity\nof silver can now purchase just half the quantity of goods which it\ncould have purchased before. This supposition will not, I believe, be\nfound anywhere agreeable to the truth; but it is the most favourable\nto the opinion which we are going to examine; and, even upon this\nsupposition, it is utterly impossible that the lowering of the value of\nsilver could have the smallest tendency to lower the rate of interest.\nIf £100 are in those countries now of no more value than £50 were then,\n£10 must now be of no more value than £5 were then. Whatever were the\ncauses which lowered the value of the capital, the same must necessarily\nhave lowered that of the interest, and exactly in the same proportion.\nThe proportion between the value of the capital and that of the interest\nmust have remained the same, though the rate had never been altered.\nBy altering the rate, on the contrary, the proportion between those two\nvalues is necessarily altered. If £100 now are worth no more than\n£50 were then, £5 now can be worth no more than £2:10s. were then. By\nreducing the rate of interest, therefore, from ten to five per cent. we\ngive for the use of a capital, which is supposed to be equal to one half\nof its former value, an interest which is equal to one fourth only of\nthe value of the former interest.\n\nAn increase in the quantity of silver, while that of the commodities\ncirculated by means of it remained the same, could have no other effect\nthan to diminish the value of that metal. The nominal value of all sorts\nof goods would be greater, but their real value would be precisely the\nsame as before. They would be exchanged for a greater number of pieces\nof silver; but the quantity of labour which they could command, the\nnumber of people whom they could maintain and employ, would be precisely\nthe same. The capital of the country would be the same, though a greater\nnumber of pieces might be requisite for conveying any equal portion\nof it from one hand to another. The deeds of assignment, like the\nconveyances of a verbose attorney, would be more cumbersome; but the\nthing assigned would be precisely the same as before, and could produce\nonly the same effects. The funds for maintaining productive labour\nbeing the same, the demand for it would be the same. Its price or wages,\ntherefore, though nominally greater, would really be the same. They\nwould be paid in a greater number of pieces of silver, but they would\npurchase only the same quantity of goods. The profits of stock would be\nthe same, both nominally and really. The wages of labour are commonly\ncomputed by the quantity of silver which is paid to the labourer. When\nthat is increased, therefore, his wages appear to be increased, though\nthey may sometimes be no greater than before. But the profits of stock\nare not computed by the number of pieces of silver with which they are\npaid, but by the proportion which those pieces bear to the whole capital\nemployed. Thus, in a particular country, 5s. a-week are said to be the\ncommon wages of labour, and ten per cent. the common profits of stock;\nbut the whole capital of the country being the same as before, the\ncompetition between the different capitals of individuals into which it\nwas divided would likewise be the same. They would all trade with the\nsame advantages and disadvantages. The common proportion between capital\nand profit, therefore, would be the same, and consequently the common\ninterest of money; what can commonly be given for the use of money being\nnecessarily regulated by what can commonly be made by the use of it.\n\nAny increase in the quantity of commodities annually circulated within\nthe country, while that of the money which circulated them remained\nthe same, would, on the contrary, produce many other important effects,\nbesides that of raising the value of the money. The capital of the\ncountry, though it might nominally be the same, would really be\naugmented. It might continue to be expressed by the same quantity of\nmoney, but it would command a greater quantity of labour. The quantity\nof productive labour which it could maintain and employ would be\nincreased, and consequently the demand for that labour. Its wages would\nnaturally rise with the demand, and yet might appear to sink. They might\nbe paid with a smaller quantity of money, but that smaller quantity\nmight purchase a greater quantity of goods than a greater had done\nbefore. The profits of stock would be diminished, both really and\nin appearance. The whole capital of the country being augmented, the\ncompetition between the different capitals of which it was composed\nwould naturally be augmented along with it. The owners of those\nparticular capitals would be obliged to content themselves with a\nsmaller proportion of the produce of that labour which their respective\ncapitals employed. The interest of money, keeping pace always with the\nprofits of stock, might, in this manner, be greatly diminished, though\nthe value of money, or the quantity of goods which any particular sum\ncould purchase, was greatly augmented.\n\nIn some countries the interest of money has been prohibited by law. But\nas something can everywhere be made by the use of money, something ought\neverywhere to be paid for the use of it. This regulation, instead of\npreventing, has been found from experience to increase the evil of\nusury. The debtor being obliged to pay, not only for the use of\nthe money, but for the risk which his creditor runs by accepting a\ncompensation for that use, he is obliged, if one may say so, to insure\nhis creditor from the penalties of usury.\n\nIn countries where interest is permitted, the law in order to prevent\nthe extortion of usury, generally fixes the highest rate which can be\ntaken without incurring a penalty. This rate ought always to be somewhat\nabove the lowest market price, or the price which is commonly paid for\nthe use of money by those who can give the most undoubted security.\nIf this legal rate should be fixed below the lowest market rate, the\neffects of this fixation must be nearly the same as those of a total\nprohibition of interest. The creditor will not lend his money for less\nthan the use of it is worth, and the debtor must pay him for the risk\nwhich he runs by accepting the full value of that use. If it is fixed\nprecisely at the lowest market price, it ruins, with honest people who\nrespect the laws of their country, the credit of all those who cannot\ngive the very best security, and obliges them to have recourse to\nexorbitant usurers. In a country such as Great Britain, where money is\nlent to government at three per cent. and to private people, upon good\nsecurity, at four and four and a-half, the present legal rate, five per\ncent. is perhaps as proper as any.\n\nThe legal rate, it is to be observed, though it ought to be somewhat\nabove, ought not to be much above the lowest market rate. If the legal\nrate of interest in Great Britain, for example, was fixed so high as\neight or ten per cent. the greater part of the money which was to be\nlent, would be lent to prodigals and projectors, who alone would be\nwilling to give this high interest. Sober people, who will give for the\nuse of money no more than a part of what they are likely to make by the\nuse of it, would not venture into the competition. A great part of the\ncapital of the country would thus be kept out of the hands which were\nmost likely to make a profitable and advantageous use of it, and thrown\ninto those which were most likely to waste and destroy it. Where the\nlegal rate of interest, on the contrary, is fixed but a very little\nabove the lowest market rate, sober people are universally preferred, as\nborrowers, to prodigals and projectors. The person who lends money gets\nnearly as much interest from the former as he dares to take from the\nlatter, and his money is much safer in the hands of the one set of\npeople than in those of the other. A great part of the capital of the\ncountry is thus thrown into the hands in which it is most likely to be\nemployed with advantage.\n\nNo law can reduce the common rate of interest below the lowest ordinary\nmarket rate at the time when that law is made. Notwithstanding the\nedict of 1766, by which the French king attempted to reduce the rate\nof interest from five to four per cent. money continued to be lent in\nFrance at five per cent. the law being evaded in several different ways.\n\nThe ordinary market price of land, it is to be observed, depends\neverywhere upon the ordinary market rate of interest. The person who has\na capital from which he wishes to derive a revenue, without taking the\ntrouble to employ it himself, deliberates whether he should buy land\nwith it, or lend it out at interest. The superior security of land,\ntogether with some other advantages which almost everywhere attend upon\nthis species of property, will generally dispose him to content himself\nwith a smaller revenue from land, than what he might have by lending out\nhis money at interest. These advantages are sufficient to compensate\na certain difference of revenue; but they will compensate a certain\ndifference only; and if the rent of land should fall short of the\ninterest of money by a greater difference, nobody would buy land, which\nwould soon reduce its ordinary price. On the contrary, if the advantages\nshould much more than compensate the difference, everybody would buy\nland, which again would soon raise its ordinary price. When interest\nwas at ten per cent. land was commonly sold for ten or twelve years\npurchase. As interest sunk to six, five, and four per cent. the price\nof land rose to twenty, five-and-twenty, and thirty years purchase. The\nmarket rate of interest is higher in France than in England, and the\ncommon price of land is lower. In England it commonly sells at thirty,\nin France at twenty years purchase.\n\n\n\n\nCHAPTER V. OF THE DIFFERENT EMPLOYMENTS OF CAPITALS.\n\nThough all capitals are destined for the maintenance of productive\nlabour only, yet the quantity of that labour which equal capitals\nare capable of putting into motion, varies extremely according to the\ndiversity of their employment; as does likewise the value which that\nemployment adds to the annual produce of the land and labour of the\ncountry.\n\nA capital may be employed in four different ways; either, first, in\nprocuring the rude produce annually required for the use and consumption\nof the society; or, secondly, in manufacturing and preparing that rude\nproduce for immediate use and consumption; or, thirdly in transporting\neither the rude or manufactured produce from the places where they\nabound to those where they are wanted; or, lastly, in dividing\nparticular portions of either into such small parcels as suit the\noccasional demands of those who want them. In the first way are employed\nthe capitals of all those who undertake improvement or cultivation\nof lands, mines, or fisheries; in the second, those of all master\nmanufacturers; in the third, those of all wholesale merchants; and in\nthe fourth, those of all retailers. It is difficult to conceive that\na capital should be employed in any way which may not be classed under\nsome one or other of those four.\n\nEach of those four methods of employing a capital is essentially\nnecessary, either to the existence or extension of the other three, or\nto the general conveniency of the society.\n\nUnless a capital was employed in furnishing rude produce to a certain\ndegree of abundance, neither manufactures nor trade of any kind could\nexist.\n\nUnless a capital was employed in manufacturing that part of the rude\nproduce which requires a good deal of preparation before it can be fit\nfor use and consumption, it either would never be produced, because\nthere could be no demand for it; or if it was produced spontaneously, it\nwould be of no value in exchange, and could add nothing to the wealth of\nthe society.\n\nUnless a capital was employed in transporting either the rude or\nmanufactured produce from the places where it abounds to those where it\nis wanted, no more of either could be produced than was necessary\nfor the consumption of the neighbourhood. The capital of the merchant\nexchanges the surplus produce of one place for that of another, and thus\nencourages the industry, and increases the enjoyments of both.\n\nUnless a capital was employed in breaking and dividing certain portions\neither of the rude or manufactured produce into such small parcels as\nsuit the occasional demands of those who want them, every man would be\nobliged to purchase a greater quantity of the goods he wanted than his\nimmediate occasions required. If there was no such trade as a butcher,\nfor example, every man would be obliged to purchase a whole ox or a\nwhole sheep at a time. This would generally be inconvenient to the rich,\nand much more so to the poor. If a poor workman was obliged to purchase\na month's or six months' provisions at a time, a great part of the stock\nwhich he employs as a capital in the instruments of his trade, or in\nthe furniture of his shop, and which yields him a revenue, he would\nbe forced to place in that part of his stock which is reserved for\nimmediate consumption, and which yields him no revenue. Nothing can\nbe more convenient for such a person than to be able to purchase his\nsubsistence from day to day, or even from hour to hour, as he wants it.\nHe is thereby enabled to employ almost his whole stock as a capital. He\nis thus enabled to furnish work to a greater value; and the profit which\nhe makes by it in this way much more than compensates the additional\nprice which the profit of the retailer imposes upon the goods. The\nprejudices of some political writers against shopkeepers and tradesmen\nare altogether without foundation. So far is it from being necessary\neither to tax them, or to restrict their numbers, that they can never be\nmultiplied so as to hurt the public, though they may so as to hurt one\nanother. The quantity of grocery goods, for example, which can be sold\nin a particular town, is limited by the demand of that town and its\nneighbourhood. The capital, therefore, which can be employed in the\ngrocery trade, cannot exceed what is sufficient to purchase that\nquantity. If this capital is divided between two different grocers,\ntheir competition will tend to make both of them sell cheaper than if\nit were in the hands of one only; and if it were divided among twenty,\ntheir competition would be just so much the greater, and the chance of\ntheir combining together, in order to raise the price, just so much the\nless. Their competition might, perhaps, ruin some of themselves; but to\ntake care of this, is the business of the parties concerned, and it\nmay safely be trusted to their discretion. It can never hurt either\nthe consumer or the producer; on the contrary, it must tend to make the\nretailers both sell cheaper and buy dearer, than if the whole trade was\nmonopolized by one or two persons. Some of them, perhaps, may sometimes\ndecoy a weak customer to buy what he has no occasion for. This evil,\nhowever, is of too little importance to deserve the public attention,\nnor would it necessarily be prevented by restricting their numbers. It\nis not the multitude of alehouses, to give the must suspicious example,\nthat occasions a general disposition to drunkenness among the common\npeople; but that disposition, arising from other causes, necessarily\ngives employment to a multitude of alehouses.\n\nThe persons whose capitals are employed in any of those four ways, are\nthemselves productive labourers. Their labour, when properly directed,\nfixes and realizes itself in the subject or vendible commodity upon\nwhich it is bestowed, and generally adds to its price the value at least\nof their own maintenance and consumption. The profits of the farmer, of\nthe manufacturer, of the merchant, and retailer, are all drawn from the\nprice of the goods which the two first produce, and the two last buy and\nsell. Equal capitals, however, employed in each of those four different\nways, will immediately put into motion very different quantities of\nproductive labour; and augment, too, in very different proportions, the\nvalue of the annual produce of the land and labour of the society to\nwhich they belong.\n\nThe capital of the retailer replaces, together with its profits, that\nof the merchant of whom he purchases goods, and thereby enables him\nto continue his business. The retailer himself is the only productive\nlabourer whom it immediately employs. In his profit consists the whole\nvalue which its employment adds to the annual produce of the land and\nlabour of the society.\n\nThe capital of the wholesale merchant replaces, together with their\nprofits, the capital's of the farmers and manufacturers of whom he\npurchases the rude and manufactured produce which he deals in, and\nthereby enables them to continue their respective trades. It is by this\nservice chiefly that he contributes indirectly to support the productive\nlabour of the society, and to increase the value of its annual produce.\nHis capital employs, too, the sailors and carriers who transport his\ngoods from one place to another; and it augments the price of those\ngoods by the value, not only of his profits, but of their wages. This is\nall the productive labour which it immediately puts into motion, and all\nthe value which it immediately adds to the annual produce. Its operation\nin both these respects is a good deal superior to that of the capital of\nthe retailer.\n\nPart of the capital of the master manufacturer is employed as a fixed\ncapital in the instruments of his trade, and replaces, together with its\nprofits, that of some other artificer of whom he purchases them. Part\nof his circulating capital is employed in purchasing materials, and\nreplaces, with their profits, the capitals of the farmers and miners\nof whom he purchases them. But a great part of it is always, either\nannually, or in a much shorter period, distributed among the different\nworkmen whom he employs. It augments the value of those materials by\ntheir wages, and by their masters' profits upon the whole stock of\nwages, materials, and instruments of trade employed in the business.\nIt puts immediately into motion, therefore, a much greater quantity of\nproductive labour, and adds a much greater value to the annual produce\nof the land and labour of the society, than an equal capital in the\nhands of any wholesale merchant.\n\nNo equal capital puts into motion a greater quantity of productive\nlabour than that of the farmer. Not only his labouring servants, but his\nlabouring cattle, are productive labourers. In agriculture, too, Nature\nlabours along with man; and though her labour costs no expense, its\nproduce has its value, as well as that of the most expensive workmen.\nThe most important operations of agriculture seem intended, not so much\nto increase, though they do that too, as to direct the fertility of\nNature towards the production of the plants most profitable to man.\nA field overgrown with briars and brambles, may frequently produce as\ngreat a quantity of vegetables as the best cultivated vineyard or corn\nfield. Planting and tillage frequently regulate more than they animate\nthe active fertility of Nature; and after all their labour, a great\npart of the work always remains to be done by her. The labourers and\nlabouring cattle, therefore, employed in agriculture, not only occasion,\nlike the workmen in manufactures, the reproduction of a value equal to\ntheir own consumption, or to the capital which employs them, together\nwith its owner's profits, but of a much greater value. Over and above\nthe capital of the farmer, and all its profits, they regularly\noccasion the reproduction of the rent of the landlord. This rent may be\nconsidered as the produce of those powers of Nature, the use of which\nthe landlord lends to the farmer. It is greater or smaller, according\nto the supposed extent of those powers, or, in other words, according to\nthe supposed natural or improved fertility of the land. It is the work\nof Nature which remains, after deducting or compensating every thing\nwhich can be regarded as the work of man. It is seldom less than a\nfourth, and frequently more than a third, of the whole produce. No\nequal quantity of productive labour employed in manufactures, can ever\noccasion so great reproduction. In them Nature does nothing; man does\nall; and the reproduction must always be in proportion to the strength\nof the agents that occasion it. The capital employed in agriculture,\ntherefore, not only puts into motion a greater quantity of productive\nlabour than any equal capital employed in manufactures; but in\nproportion, too, to the quantity of productive labour which it employs,\nit adds a much greater value to the annual produce of the land\nand labour of the country, to the real wealth and revenue of its\ninhabitants. Of all the ways in which a capital can be employed, it is\nby far the most advantageous to society.\n\nThe capitals employed in the agriculture and in the retail trade of any\nsociety, must always reside within that society. Their employment is\nconfined almost to a precise spot, to the farm, and to the shop of the\nretailer. They must generally, too, though there are some exceptions to\nthis, belong to resident members of the society.\n\nThe capital of a wholesale merchant, on the contrary, seems to have no\nfixed or necessary residence anywhere, but may wander about from place\nto place, according as it can either buy cheap or sell dear.\n\nThe capital of the manufacturer must, no doubt, reside where the\nmanufacture is carried on; but where this shall be, is not always\nnecessarily determined. It may frequently be at a great distance,\nboth from the place where the materials grow, and from that where the\ncomplete manufacture is consumed. Lyons is very distant, both from the\nplaces which afford the materials of its manufactures, and from those\nwhich consume them. The people of fashion in Sicily are clothed in silks\nmade in other countries, from the materials which their own produces.\nPart of the wool of Spain is manufactured in Great Britain, and some\npart of that cloth is afterwards sent back to Spain.\n\nWhether the merchant whose capital exports the surplus produce of any\nsociety, be a native or a foreigner, is of very little importance. If he\nis a foreigner, the number of their productive labourers is necessarily\nless than if he had been a native, by one man only; and the value of\ntheir annual produce, by the profits of that one man. The sailors or\ncarriers whom he employs, may still belong indifferently either to his\ncountry, or to their country, or to some third country, in the same\nmanner as if he had been a native. The capital of a foreigner gives\na value to their surplus produce equally with that of a native, by\nexchanging it for something for which there is a demand at home. It\nas effectually replaces the capital of the person who produces that\nsurplus, and as effectually enables him to continue his business, the\nservice by which the capital of a wholesale merchant chiefly contributes\nto support the productive labour, and to augment the value of the annual\nproduce of the society to which he belongs.\n\nIt is of more consequence that the capital of the manufacturer should\nreside within the country. It necessarily puts into motion a greater\nquantity of productive labour, and adds a greater value to the annual\nproduce of the land and labour of the society. It may, however, be\nvery useful to the country, though it should not reside within it. The\ncapitals of the British manufacturers who work up the flax and hemp\nannually imported from the coasts of the Baltic, are surely very useful\nto the countries which produce them. Those materials are a part of\nthe surplus produce of those countries, which, unless it was annually\nexchanged for something which is in demand here, would be of no value,\nand would soon cease to be produced. The merchants who export it,\nreplace the capitals of the people who produce it, and thereby encourage\nthem to continue the production; and the British manufacturers replace\nthe capitals of those merchants.\n\nA particular country, in the same manner as a particular person, may\nfrequently not have capital sufficient both to improve and cultivate\nall its lands, to manufacture and prepare their whole rude produce for\nimmediate use and consumption, and to transport the surplus part either\nof the rude or manufactured produce to those distant markets, where it\ncan be exchanged for something for which there is a demand at home. The\ninhabitants of many different parts of Great Britain have not capital\nsufficient to improve and cultivate all their lands. The wool of the\nsouthern counties of Scotland is, a great part of it, after a long land\ncarriage through very bad roads, manufactured in Yorkshire, for want of\na capital to manufacture it at home. There are many little manufacturing\ntowns in Great Britain, of which the inhabitants have not capital\nsufficient to transport the produce of their own industry to those\ndistant markets where there is demand and consumption for it. If there\nare any merchants among them, they are, properly, only the agents of\nwealthier merchants who reside in some of the great commercial cities.\n\nWhen the capital of any country is not sufficient for all those\nthree purposes, in proportion as a greater share of it is employed in\nagriculture, the greater will be the quantity of productive labour which\nit puts into motion within the country; as will likewise be the value\nwhich its employment adds to the annual produce of the land and labour\nof the society. After agriculture, the capital employed in manufactures\nputs into motion the greatest quantity of productive labour, and adds\nthe greatest value to the annual produce. That which is employed in the\ntrade of exportation has the least effect of any of the three.\n\nThe country, indeed, which has not capital sufficient for all those\nthree purposes, has not arrived at that degree of opulence for which it\nseems naturally destined. To attempt, however, prematurely, and with an\ninsufficient capital, to do all the three, is certainly not the shortest\nway for a society, no more than it would be for an individual, to\nacquire a sufficient one. The capital of all the individuals of a nation\nhas its limits, in the same manner as that of a single individual, and\nis capable of executing only certain purposes. The capital of all the\nindividuals of a nation is increased in the same manner as that of a\nsingle individual, by their continually accumulating and adding to it\nwhatever they save out of their revenue. It is likely to increase the\nfastest, therefore, when it is employed in the way that affords the\ngreatest revenue to all the inhabitants or the country, as they will\nthus be enabled to make the greatest savings. But the revenue of all the\ninhabitants of the country is necessarily in proportion to the value of\nthe annual produce of their land and labour.\n\nIt has been the principal cause of the rapid progress of our American\ncolonies towards wealth and greatness, that almost their whole capitals\nhave hitherto been employed in agriculture. They have no manufactures,\nthose household and coarser manufactures excepted, which necessarily\naccompany the progress of agriculture, and which are the work of the\nwomen and children in every private family. The greater part, both of\nthe exportation and coasting trade of America, is carried on by the\ncapitals of merchants who reside in Great Britain. Even the stores and\nwarehouses from which goods are retailed in some provinces, particularly\nin Virginia and Maryland, belong many of them to merchants who reside\nin the mother country, and afford one of the few instances of the retail\ntrade of a society being carried on by the capitals of those who are not\nresident members of it. Were the Americans, either by combination, or\nby any other sort of violence, to stop the importation of European\nmanufactures, and, by thus giving a monopoly to such of their own\ncountrymen as could manufacture the like goods, divert any considerable\npart of their capital into this employment, they would retard, instead\nof accelerating, the further increase in the value of their annual\nproduce, and would obstruct, instead of promoting, the progress of their\ncountry towards real wealth and greatness. This would be still more\nthe case, were they to attempt, in the same manner, to monopolize to\nthemselves their whole exportation trade.\n\nThe course of human prosperity, indeed, seems scarce ever to have been\nof so long continuance as to unable any great country to acquire capital\nsufficient for all those three purposes; unless, perhaps, we give credit\nto the wonderful accounts of the wealth and cultivation of China, of\nthose of ancient Egypt, and of the ancient state of Indostan. Even those\nthree countries, the wealthiest, according to all accounts, that\never were in the world, are chiefly renowned for their superiority in\nagriculture and manufactures. They do not appear to have been eminent\nfor foreign trade. The ancient Egyptians had a superstitious antipathy\nto the sea; a superstition nearly of the same kind prevails among the\nIndians; and the Chinese have never excelled in foreign commerce. The\ngreater part of the surplus produce of all those three countries seems\nto have been always exported by foreigners, who gave in exchange for it\nsomething else, for which they found a demand there, frequently gold and\nsilver.\n\nIt is thus that the same capital will in any country put into motion a\ngreater or smaller quantity of productive labour, and add a greater or\nsmaller value to the annual produce of its land and labour, according\nto the different proportions in which it is employed in agriculture,\nmanufactures, and wholesale trade. The difference, too, is very great,\naccording to the different sorts of wholesale trade in which any part of\nit is employed.\n\nAll wholesale trade, all buying in order to sell again by wholesale,\nmaybe reduced to three different sorts: the home trade, the foreign\ntrade of consumption, and the carrying trade. The home trade is employed\nin purchasing in one part of the same country, and selling in another,\nthe produce of the industry of that country. It comprehends both the\ninland and the coasting trade. The foreign trade of consumption is\nemployed in purchasing foreign goods for home consumption. The carrying\ntrade is employed in transacting the commerce of foreign countries, or\nin carrying the surplus produce of one to another.\n\nThe capital which is employed in purchasing in one part of the country,\nin order to sell in another, the produce of the industry of that\ncountry, generally replaces, by every such operation, two distinct\ncapitals, that had both been employed in the agriculture or manufactures\nof that country, and thereby enables them to continue that employment.\nWhen it sends out from the residence of the merchant a certain value of\ncommodities, it generally brings hack in return at least an equal value\nof other commodities. When both are the produce of domestic industry,\nit necessarily replaces, by every such operation, two distinct capitals,\nwhich had both been employed in supporting productive labour, and\nthereby enables them to continue that support. The capital which\nsends Scotch manufactures to London, and brings back English corn\nand manufactures to Edinburgh, necessarily replaces, by every such\noperation, two British capitals, which had both been employed in the\nagriculture or manufactures of Great Britain.\n\nThe capital employed in purchasing foreign goods for home consumption,\nwhen this purchase is made with the produce of domestic industry,\nreplaces, too, by every such operation, two distinct capitals; but one\nof them only is employed in supporting domestic industry. The capital\nwhich sends British goods to Portugal, and brings back Portuguese goods\nto Great Britain, replaces, by every such operation, only one British\ncapital. The other is a Portuguese one. Though the returns, therefore,\nof the foreign trade of consumption, should be as quick as those of the\nhome trade, the capital employed in it will give but one half of the\nencouragement to the industry or productive labour of the country.\n\nBut the returns of the foreign trade of consumption are very seldom\nso quick as those of the home trade. The returns of the home trade\ngenerally come in before the end of the year, and sometimes three or\nfour times in the year. The returns of the foreign trade of consumption\nseldom come in before the end of the year, and sometimes not till after\ntwo or three years. A capital, therefore, employed in the home trade,\nwill sometimes make twelve operations, or be sent out and returned\ntwelve times, before a capital employed in the foreign trade of\nconsumption has made one. If the capitals are equal, therefore, the one\nwill give four-and-twenty times more encouragement and support to the\nindustry of the country than the other.\n\nThe foreign goods for home consumption may sometimes be purchased, not\nwith the produce of domestic industry but with some other foreign goods.\nThese last, however, must have been purchased, either immediately with\nthe produce of domestic industry, or with something else that had been\npurchased with it; for, the case of war and conquest excepted, foreign\ngoods can never be acquired, but in exchange for something that had been\nproduced at home, either immediately, or after two or more different\nexchanges. The effects, therefore, of a capital employed in such a\nround-about foreign trade of consumption, are, in every respect, the\nsame as those of one employed in the most direct trade of the same kind,\nexcept that the final returns are likely to be still more distant,\nas they must depend upon the returns of two or three distinct foreign\ntrades. If the hemp and flax of Riga are purchased with the tobacco\nof Virginia, which had been purchased with British manufactures, the\nmerchant must wait for the returns of two distinct foreign trades,\nbefore he can employ the same capital in repurchasing a like quantity of\nBritish manufactures. If the tobacco of Virginia had been purchased, not\nwith British manufactures, but with the sugar and rum of Jamaica, which\nhad been purchased with those manufactures, he must wait for the returns\nof three. If those two or three distinct foreign trades should happen\nto be carried on by two or three distinct merchants, of whom the second\nbuys the goods imported by the first, and the third buys those imported\nby the second, in order to export them again, each merchant, indeed,\nwill, in this case, receive the returns of his own capital more quickly;\nbut the final returns of the whole capital employed in the trade will be\njust as slow as ever. Whether the whole capital employed in such a round\nabout trade belong to one merchant or to three, can make no difference\nwith regard to the country, though it may with regard to the particular\nmerchants. Three times a greater capital must in both cases be employed,\nin order to exchange a certain value of British manufactures for a\ncertain quantity of flax and hemp, than would have been necessary, had\nthe manufactures and the flax and hemp been directly exchanged for one\nanother. The whole capital employed, therefore, in such a round-about\nforeign trade of consumption, will generally give less encouragement and\nsupport to the productive labour of the country, than an equal capital\nemployed in a more direct trade of the same kind.\n\nWhatever be the foreign commodity with which the foreign goods for home\nconsumption are purchased, it can occasion no essential difference,\neither in the nature of the trade, or in the encouragement and support\nwhich it can give to the productive labour of the country from which\nit is carried on. If they are purchased with the gold of Brazil, for\nexample, or with the silver of Peru, this gold and silver, like the\ntobacco of Virginia, must have been purchased with something that\neither was the produce of the industry of the country, or that had been\npurchased with something else that was so. So far, therefore, as the\nproductive labour of the country is concerned, the foreign trade of\nconsumption, which is carried on by means of gold and silver, has\nall the advantages and all the inconveniencies of any other equally\nround-about foreign trade of consumption; and will replace, just as\nfast, or just as slow, the capital which is immediately employed in\nsupporting that productive labour. It seems even to have one advantage\nover any other equally round-about foreign trade. The transportation of\nthose metals from one place to another, on account of their small bulk\nand great value, is less expensive than that of almost any other foreign\ngoods of equal value. Their freight is much less, and their insurance\nnot greater; and no goods, besides, are less liable to suffer by the\ncarriage. An equal quantity of foreign goods, therefore, may frequently\nbe purchased with a smaller quantity of the produce of domestic\nindustry, by the intervention of gold and silver, than by that of any\nother foreign goods. The demand of the country may frequently, in this\nmanner, be supplied more completely, and at a smaller expense, than\nin any other. Whether, by the continual exportation of those metals, a\ntrade of this kind is likely to impoverish the country from which it is\ncarried on in any other way, I shall have occasion to examine at great\nlength hereafter.\n\nThat part of the capital of any country which is employed in the\ncarrying trade, is altogether withdrawn from supporting the productive\nlabour of that particular country, to support that of some foreign\ncountries. Though it may replace, by every operation, two distinct\ncapitals, yet neither of them belongs to that particular country. The\ncapital of the Dutch merchant, which carries the corn of Poland to\nPortugal, and brings back the fruits and wines of Portugal to Poland,\nreplaces by every such operation two capitals, neither of which had been\nemployed in supporting the productive labour of Holland; but one of\nthem in supporting that of Poland, and the other that of Portugal.\nThe profits only return regularly to Holland, and constitute the whole\naddition which this trade necessarily makes to the annual produce of the\nland and labour of that country. When, indeed, the carrying trade of\nany particular country is carried on with the ships and sailors of that\ncountry, that part of the capital employed in it which pays the\nfreight is distributed among, and puts into motion, a certain number of\nproductive labourers of that country. Almost all nations that have had\nany considerable share of the carrying trade have, in fact, carried it\non in this manner. The trade itself has probably derived its name from\nit, the people of such countries being the carriers to other countries.\nIt does not, however, seem essential to the nature of the trade that it\nshould be so. A Dutch merchant may, for example, employ his capital in\ntransacting the commerce of Poland and Portugal, by carrying part of the\nsurplus produce of the one to the other, not in Dutch, but in British\nbottoms. It maybe presumed, that he actually does so upon some\nparticular occasions. It is upon this account, however, that the\ncarrying trade has been supposed peculiarly advantageous to such a\ncountry as Great Britain, of which the defence and security depend upon\nthe number of its sailors and shipping. But the same capital may\nemploy as many sailors and shipping, either in the foreign trade of\nconsumption, or even in the home trade, when carried on by coasting\nvessels, as it could in the carrying trade. The number of sailors and\nshipping which any particular capital can employ, does not depend upon\nthe nature of the trade, but partly upon the bulk of the goods, in\nproportion to their value, and partly upon the distance of the ports\nbetween which they are to be carried; chiefly upon the former of those\ntwo circumstances. The coal trade from Newcastle to London, for example,\nemploys more shipping than all the carrying trade of England, though the\nports are at no great distance. To force, therefore, by extraordinary\nencouragements, a larger share of the capital of any country into the\ncarrying trade, than what would naturally go to it, will not always\nnecessarily increase the shipping of that country.\n\nThe capital, therefore, employed in the home trade of any country,\nwill generally give encouragement and support to a greater quantity of\nproductive labour in that country, and increase the value of its annual\nproduce, more than an equal capital employed in the foreign trade of\nconsumption; and the capital employed in this latter trade has, in both\nthese respects, a still greater advantage over an equal capital employed\nin the carrying trade. The riches, and so far as power depends upon\nriches, the power of every country must always be in proportion to\nthe value of its annual produce, the fund from which all taxes must\nultimately be paid. But the great object of the political economy of\nevery country, is to increase the riches and power of that country. It\nought, therefore, to give no preference nor superior encouragement\nto the foreign trade of consumption above the home trade, nor to the\ncarrying trade above either of the other two. It ought neither to force\nnor to allure into either of those two channels a greater share of the\ncapital of the country, than what would naturally flow into them of its\nown accord.\n\nEach of those different branches of trade, however, is not only\nadvantageous, but necessary and unavoidable, when the course of things,\nwithout any constraint or violence, naturally introduces it.\n\nWhen the produce of any particular branch of industry exceeds what the\ndemand of the country requires, the surplus must be sent abroad, and\nexchanged for something for which there is a demand at home. Without\nsuch exportation, a part of the productive labour of the country must\ncease, and the value of its annual produce diminish. The land and labour\nof Great Britain produce generally more corn, woollens, and hardware,\nthan the demand of the home market requires. The surplus part of them,\ntherefore, must be sent abroad, and exchanged for something for which\nthere is a demand at home. It is only by means of such exportation, that\nthis surplus can acquired value sufficient to compensate the labour and\nexpense of producing it. The neighbourhood of the sea-coast, and the\nbanks of all navigable rivers, are advantageous situations for industry,\nonly because they facilitate the exportation and exchange of such\nsurplus produce for something else which is more in demand there.\n\nWhen the foreign goods which are thus purchased with the surplus produce\nof domestic industry exceed the demand of the home market, the surplus\npart of them must be sent abroad again, and exchanged for something\nmore in demand at home. About 96,000 hogsheads of tobacco are annually\npurchased in Virginia and Maryland with a part of the surplus produce\nof British industry. But the demand of Great Britain does not require,\nperhaps, more than 14,000. If the remaining 82,000, therefore, could not\nbe sent abroad, and exchanged for something more in demand at home, the\nimportation of them must cease immediately, and with it the productive\nlabour of all those inhabitants of Great Britain who are at present\nemployed in preparing the goods with which these 82,000 hogsheads are\nannually purchased. Those goods, which are part of the produce of the\nland and labour of Great Britain, having no market at home, and being\ndeprived of that which they had abroad, must cease to be produced. The\nmost round-about foreign trade of consumption, therefore, may, upon some\noccasions, be as necessary for supporting the productive labour of the\ncountry, and the value of its annual produce, as the most direct.\n\nWhen the capital stock of any country is increased to such a degree that\nit cannot be all employed in supplying the consumption, and supporting\nthe productive labour of that particular country, the surplus part of it\nnaturally disgorges itself into the carrying trade, and is employed in\nperforming the same offices to other countries. The carrying trade is\nthe natural effect and symptom of great national wealth; but it does\nnot seem to be the natural cause of it. Those statesmen who have been\ndisposed to favour it with particular encouragement, seem to have\nmistaken the effect and symptom for the cause. Holland, in proportion\nto the extent of the land and the number of it's inhabitants, by far\nthe richest country in Europe, has accordingly the greatest share of the\ncarrying trade of Europe. England, perhaps the second richest country of\nEurope, is likewise supposed to have a considerable share in it; though\nwhat commonly passes for the carrying trade of England will frequently,\nperhaps, be found to be no more than a round-about foreign trade of\nconsumption. Such are, in a great measure, the trades which carry\nthe goods of the East and West Indies and of America to the different\nEuropean markets. Those goods are generally purchased, either\nimmediately with the produce of British industry, or with something else\nwhich had been purchased with that produce, and the final returns of\nthose trades are generally used or consumed in Great Britain. The trade\nwhich is carried on in British bottoms between the different ports of\nthe Mediterranean, and some trade of the same kind carried on by British\nmerchants between the different ports of India, make, perhaps, the\nprincipal branches of what is properly the carrying trade of Great\nBritain.\n\nThe extent of the home trade, and of the capital which can be employed\nin it, is necessarily limited by the value of the surplus produce of all\nthose distant places within the country which have occasion to exchange\ntheir respective productions with one another; that of the foreign\ntrade of consumption, by the value of the surplus produce of the whole\ncountry, and of what can be purchased with it; that of the carrying\ntrade, by the value of the surplus produce of all the different\ncountries in the world. Its possible extent, therefore, is in a manner\ninfinite in comparison of that of the other two, and is capable of\nabsorbing the greatest capitals.\n\nThe consideration of his own private profit is the sole motive which\ndetermines the owner of any capital to employ it either in agriculture,\nin manufactures, or in some particular branch of the wholesale or retail\ntrade. The different quantities of productive labour which it may put\ninto motion, and the different values which it may add to the annual\nproduce of the land and labour of the society, according as it is\nemployed in one or other of those different ways, never enter into\nhis thoughts. In countries, therefore, where agriculture is the most\nprofitable of all employments, and farming and improving the most direct\nroads to a splendid fortune, the capitals of individuals will naturally\nbe employed in the manner most advantageous to the whole society. The\nprofits of agriculture, however, seem to have no superiority over those\nof other employments in any part of Europe. Projectors, indeed, in every\ncorner of it, have, within these few years, amused the public with most\nmagnificent accounts of the profits to be made by the cultivation and\nimprovement of land. Without entering into any particular discussion of\ntheir calculations, a very simple observation may satisfy us that the\nresult of them must be false. We see, every day, the most splendid\nfortunes, that have been acquired in the course of a single life, by\ntrade and manufactures, frequently from a very small capital, sometimes\nfrom no capital. A single instance of such a fortune, acquired by\nagriculture in the same time, and from such a capital, has not, perhaps,\noccurred in Europe, during the course of the present century. In all\nthe great countries of Europe, however, much good land still remains\nuncultivated; and the greater part of what is cultivated, is far from\nbeing improved to the degree of which it is capable. Agriculture,\ntherefore, is almost everywhere capable of absorbing a much greater\ncapital than has ever yet been employed in it. What circumstances in the\npolicy of Europe have given the trades which are carried on in towns so\ngreat an advantage over that which is carried on in the country, that\nprivate persons frequently find it more for their advantage to employ\ntheir capitals in the most distant carrying trades of Asia and America\nthan in the improvement and cultivation of the most fertile fields in\ntheir own neighbourhood, I shall endeavour to explain at full length in\nthe two following books.\n\n\n\n\n\nBOOK III. OF THE DIFFERENT PROGRESS OF OPULENCE IN DIFFERENT NATIONS\n\nCHAPTER I. OF THE NATURAL PROGRESS OF OPULENCE.\n\nThe great commerce of every civilized society is that carried on between\nthe inhabitants of the town and those of the country. It consists in the\nexchange of rude for manufactured produce, either immediately, or by the\nintervention of money, or of some sort of paper which represents money.\nThe country supplies the town with the means of subsistence and the\nmaterials of manufacture. The town repays this supply, by sending back a\npart of the manufactured produce to the inhabitants of the country.\nThe town, in which there neither is nor can be any reproduction of\nsubstances, may very properly be said to gain its whole wealth and\nsubsistence from the country. We must not, however, upon this account,\nimagine that the gain of the town is the loss of the country. The gains\nof both are mutual and reciprocal, and the division of labour is in\nthis, as in all other cases, advantageous to all the different persons\nemployed in the various occupations into which it is subdivided. The\ninhabitants of the country purchase of the town a greater quantity of\nmanufactured goods with the produce of a much smaller quantity of their\nown labour, than they must have employed had they attempted to prepare\nthem themselves. The town affords a market for the surplus produce\nof the country, or what is over and above the maintenance of the\ncultivators; and it is there that the inhabitants of the country\nexchange it for something else which is in demand among them. The\ngreater the number and revenue of the inhabitants of the town, the more\nextensive is the market which it affords to those of the country; and\nthe more extensive that market, it is always the more advantageous to\na great number. The corn which grows within a mile of the town, sells\nthere for the same price with that which comes from twenty miles\ndistance. But the price of the latter must, generally, not only pay the\nexpense of raising it and bringing it to market, but afford, too, the\nordinary profits of agriculture to the farmer. The proprietors and\ncultivators of the country, therefore, which lies in the neighbourhood\nof the town, over and above the ordinary profits of agriculture, gain,\nin the price of what they sell, the whole value of the carriage of the\nlike produce that is brought from more distant parts; and they save,\nbesides, the whole value of this carriage in the price of what they\nbuy. Compare the cultivation of the lands in the neighbourhood of any\nconsiderable town, with that of those which lie at some distance\nfrom it, and you will easily satisfy yourself bow much the country is\nbenefited by the commerce of the town. Among all the absurd speculations\nthat have been propagated concerning the balance of trade, it has never\nbeen pretended that either the country loses by its commerce with the\ntown, or the town by that with the country which maintains it.\n\nAs subsistence is, in the nature of things, prior to conveniency and\nluxury, so the industry which procures the former, must necessarily\nbe prior to that which ministers to the latter. The cultivation and\nimprovement of the country, therefore, which affords subsistence, must,\nnecessarily, be prior to the increase of the town, which furnishes only\nthe means of conveniency and luxury. It is the surplus produce of\nthe country only, or what is over and above the maintenance of the\ncultivators, that constitutes the subsistence of the town, which can\ntherefore increase only with the increase of the surplus produce. The\ntown, indeed, may not always derive its whole subsistence from the\ncountry in its neighbourhood, or even from the territory to which it\nbelongs, but from very distant countries; and this, though it forms no\nexception from the general rule, has occasioned considerable variations\nin the progress of opulence in different ages and nations.\n\nThat order of things which necessity imposes, in general, though not in\nevery particular country, is in every particular country promoted by the\nnatural inclinations of man. If human institutions had never thwarted\nthose natural inclinations, the towns could nowhere have increased\nbeyond what the improvement and cultivation of the territory in which\nthey were situated could support; till such time, at least, as the whole\nof that territory was completely cultivated and improved. Upon equal,\nor nearly equal profits, most men will choose to employ their capitals,\nrather in the improvement and cultivation of land, than either in\nmanufactures or in foreign trade. The man who employs his capital in\nland, has it more under his view and command; and his fortune is\nmuch less liable to accidents than that of the trader, who is obliged\nfrequently to commit it, not only to the winds and the waves, but to the\nmore uncertain elements of human folly and injustice, by giving great\ncredits, in distant countries, to men with whose character and situation\nhe can seldom be thoroughly acquainted. The capital of the landlord, on\nthe contrary, which is fixed in the improvement of his land, seems to be\nas well secured as the nature of human affairs can admit of. The\nbeauty of the country, besides, the pleasure of a country life, the\ntranquillity of mind which it promises, and, wherever the injustice\nof human laws does not disturb it, the independency which it really\naffords, have charms that, more or less, attract everybody; and as to\ncultivate the ground was the original destination of man, so, in every\nstage of his existence, he seems to retain a predilection for this\nprimitive employment.\n\nWithout the assistance of some artificers, indeed, the cultivation of\nland cannot be carried on, but with great inconveniency and continual\ninterruption. Smiths, carpenters, wheelwrights and ploughwrights, masons\nand bricklayers, tanners, shoemakers, and tailors, are people whose\nservice the farmer has frequent occasion for. Such artificers, too,\nstand occasionally in need of the assistance of one another; and as\ntheir residence is not, like that of the farmer, necessarily tied down\nto a precise spot, they naturally settle in the neighbourhood of one\nanother, and thus form a small town or village. The butcher, the brewer,\nand the baker, soon join them, together with many other artificers and\nretailers, necessary or useful for supplying their occasional wants, and\nwho contribute still further to augment the town. The inhabitants of\nthe town, and those of the country, are mutually the servants of\none another. The town is a continual fair or market, to which the\ninhabitants of the country resort, in order to exchange their rude for\nmanufactured produce. It is this commerce which supplies the inhabitants\nof the town, both with the materials of their work, and the means of\ntheir subsistence. The quantity of the finished work which they sell to\nthe inhabitants of the country, necessarily regulates the quantity of\nthe materials and provisions which they buy. Neither their employment\nnor subsistence, therefore, can augment, but in proportion to the\naugmentation of the demand from the country for finished work; and this\ndemand can augment only in proportion to the extension of improvement\nand cultivation. Had human institutions, therefore, never disturbed the\nnatural course of things, the progressive wealth and increase of the\ntowns would, in every political society, be consequential, and in\nproportion to the improvement and cultivation of the territory of\ncountry.\n\nIn our North American colonies, where uncultivated land is still to be\nhad upon easy terms, no manufactures for distant sale have ever yet\nbeen established in any of their towns. When an artificer has acquired a\nlittle more stock than is necessary for carrying on his own business\nin supplying the neighbouring country, he does not, in North America,\nattempt to establish with it a manufacture for more distant sale, but\nemploys it in the purchase and improvement of uncultivated land. From\nartificer he becomes planter; and neither the large wages nor the easy\nsubsistence which that country affords to artificers, can bribe him\nrather to work for other people than for himself. He feels that an\nartificer is the servant of his customers, from whom he derives his\nsubsistence; but that a planter who cultivates his own land, and derives\nhis necessary subsistence from the labour of his own family, is really a\nmaster, and independent of all the world.\n\nIn countries, on the contrary, where there is either no uncultivated\nland, or none that can be had upon easy terms, every artificer who has\nacquired more stock than he can employ in the occasional jobs of the\nneighbourhood, endeavours to prepare work for more distant sale. The\nsmith erects some sort of iron, the weaver some sort of linen or woollen\nmanufactory. Those different manufactures come, in process of time, to\nbe gradually subdivided, and thereby improved and refined in a great\nvariety of ways, which may easily be conceived, and which it is\ntherefore unnecessary to explain any farther.\n\nIn seeking for employment to a capital, manufactures are, upon equal or\nnearly equal profits, naturally preferred to foreign commerce, for the\nsame reason that agriculture is naturally preferred to manufactures. As\nthe capital of the landlord or farmer is more secure than that of the\nmanufacturer, so the capital of the manufacturer, being at all times\nmore within his view and command, is more secure than that of the\nforeign merchant. In every period, indeed, of every society, the surplus\npart both of the rude and manufactured produce, or that for which there\nis no demand at home, must be sent abroad, in order to be exchanged\nfor something for which there is some demand at home. But whether the\ncapital which carries this surplus produce abroad be a foreign or a\ndomestic one, is of very little importance. If the society has not\nacquired sufficient capital, both to cultivate all its lands, and to\nmanufacture in the completest manner the whole of its rude produce,\nthere is even a considerable advantage that the rude produce should\nbe exported by a foreign capital, in order that the whole stock of the\nsociety may be employed in more useful purposes. The wealth of ancient\nEgypt, that of China and Indostan, sufficiently demonstrate that a\nnation may attain a very high degree of opulence, though the greater\npart of its exportation trade be carried on by foreigners. The progress\nof our North American and West Indian colonies, would have been much\nless rapid, had no capital but what belonged to themselves been employed\nin exporting their surplus produce.\n\nAccording to the natural course of things, therefore, the greater\npart of the capital of every growing society is, first, directed to\nagriculture, afterwards to manufactures, and, last of all, to foreign\ncommerce. This order of things is so very natural, that in every society\nthat had any territory, it has always, I believe, been in some degree\nobserved. Some of their lands must have been cultivated before any\nconsiderable towns could be established, and some sort of coarse\nindustry of the manufacturing kind must have been carried on in those\ntowns, before they could well think of employing themselves in foreign\ncommerce.\n\nBut though this natural order of things must have taken place in some\ndegree in every such society, it has, in all the modern states of\nEurope, been in many respects entirely inverted. The foreign commerce\nof some of their cities has introduced all their finer manufactures, or\nsuch as were fit for distant sale; and manufactures and foreign commerce\ntogether have given birth to the principal improvements of agriculture.\nThe manners and customs which the nature of their original government\nintroduced, and which remained after that government was greatly\naltered, necessarily forced them into this unnatural and retrograde\norder.\n\n\n\n\nCHAPTER II. OF THE DISCOURAGEMENT OF AGRICULTURE IN THE ANCIENT STATE OF\nEUROPE, AFTER THE FALL OF THE ROMAN EMPIRE.\n\nWhen the German and Scythian nations overran the western provinces of\nthe Roman empire, the confusions which followed so great a revolution\nlasted for several centuries. The rapine and violence which the\nbarbarians exercised against the ancient inhabitants, interrupted the\ncommerce between the towns and the country. The towns were deserted, and\nthe country was left uncultivated; and the western provinces of Europe,\nwhich had enjoyed a considerable degree of opulence under the Roman\nempire, sunk into the lowest state of poverty and barbarism. During the\ncontinuance of those confusions, the chiefs and principal leaders of\nthose nations acquired, or usurped to themselves, the greater part of\nthe lands of those countries. A great part of them was uncultivated; but\nno part of them, whether cultivated or uncultivated, was left without\na proprietor. All of them were engrossed, and the greater part by a few\ngreat proprietors.\n\nThis original engrossing of uncultivated lands, though a great, might\nhave been but a transitory evil. They might soon have been divided\nagain, and broke into small parcels, either by succession or by\nalienation. The law of primogeniture hindered them from being divided by\nsuccession; the introduction of entails prevented their being broke into\nsmall parcels by alienation.\n\nWhen land, like moveables, is considered as the means only of\nsubsistence and enjoyment, the natural law of succession divides it,\nlike them, among all the children of the family; of all of whom the\nsubsistence and enjoyment may be supposed equally dear to the father.\nThis natural law of succession, accordingly, took place among the Romans\nwho made no more distinction between elder and younger, between male and\nfemale, in the inheritance of lands, than we do in the distribution of\nmoveables. But when land was considered as the means, not of subsistence\nmerely, but of power and protection, it was thought better that it\nshould descend undivided to one. In those disorderly times, every great\nlandlord was a sort of petty prince. His tenants were his subjects.\nHe was their judge, and in some respects their legislator in peace\nand their leader in war. He made war according to his own discretion,\nfrequently against his neighbours, and sometimes against his sovereign.\nThe security of a landed estate, therefore, the protection which\nits owner could afford to those who dwelt on it, depended upon its\ngreatness. To divide it was to ruin it, and to expose every part of it\nto be oppressed and swallowed up by the incursions of its neighbours.\nThe law of primogeniture, therefore, came to take place, not immediately\nindeed, but in process of time, in the succession of landed estates, for\nthe same reason that it has generally taken place in that of monarchies,\nthough not always at their first institution. That the power, and\nconsequently the security of the monarchy, may not be weakened by\ndivision, it must descend entire to one of the children. To which of\nthem so important a preference shall be given, must be determined\nby some general rule, founded not upon the doubtful distinctions of\npersonal merit, but upon some plain and evident difference which can\nadmit of no dispute. Among the children of the same family there can be\nno indisputable difference but that of sex, and that of age. The male\nsex is universally preferred to the female; and when all other things\nare equal, the elder everywhere takes place of the younger. Hence the\norigin of the right of primogeniture, and of what is called lineal\nsuccession.\n\nLaws frequently continue in force long after the circumstances\nwhich first gave occasion to them, and which could alone render them\nreasonable, are no more. In the present state of Europe, the proprietor\nof a single acre of land is as perfectly secure in his possession as\nthe proprietor of 100,000. The right of primogeniture, however, still\ncontinues to be respected; and as of all institutions it is the fittest\nto support the pride of family distinctions, it is still likely to\nendure for many centuries. In every other respect, nothing can be more\ncontrary to the real interest of a numerous family, than a right which,\nin order to enrich one, beggars all the rest of the children.\n\nEntails are the natural consequences of the law of primogeniture. They\nwere introduced to preserve a certain lineal succession, of which the\nlaw of primogeniture first gave the idea, and to hinder any part of the\noriginal estate from being carried out of the proposed line, either\nby gift, or device, or alienation; either by the folly, or by the\nmisfortune of any of its successive owners. They were altogether unknown\nto the Romans. Neither their substitutions, nor fidei commisses, bear\nany resemblance to entails, though some French lawyers have thought\nproper to dress the modern institution in the language and garb of those\nancient ones.\n\nWhen great landed estates were a sort of principalities, entails might\nnot be unreasonable. Like what are called the fundamental laws of some\nmonarchies, they might frequently hinder the security of thousands from\nbeing endangered by the caprice or extravagance of one man. But in the\npresent state of Europe, when small as well as great estates derive\ntheir security from the laws of their country, nothing can be more\ncompletely absurd. They are founded upon the most absurd of all\nsuppositions, the supposition that every successive generation of men\nhave not an equal right to the earth, and to all that it possesses; but\nthat the property of the present generation should be restrained and\nregulated according to the fancy of those who died, perhaps five hundred\nyears ago. Entails, however, are still respected, through the greater\npart of Europe; In those countries, particularly, in which noble birth\nis a necessary qualification for the enjoyment either of civil or\nmilitary honours. Entails are thought necessary for maintaining this\nexclusive privilege of the nobility to the great offices and honours of\ntheir country; and that order having usurped one unjust advantage over\nthe rest of their fellow-citizens, lest their poverty should render it\nridiculous, it is thought reasonable that they should have another. The\ncommon law of England, indeed, is said to abhor perpetuities, and\nthey are accordingly more restricted there than in any other European\nmonarchy; though even England is not altogether without them. In\nScotland, more than one fifth, perhaps more than one third part of the\nwhole lands in the country, are at present supposed to be under strict\nentail.\n\nGreat tracts of uncultivated land were in this manner not only engrossed\nby particular families, but the possibility of their being divided again\nwas as much as possible precluded for ever. It seldom happens, however,\nthat a great proprietor is a great improver. In the disorderly times\nwhich gave birth to those barbarous institutions, the great proprietor\nwas sufficiently employed in defending his own territories, or in\nextending his jurisdiction and authority over those of his neighbours.\nHe had no leisure to attend to the cultivation and improvement of land.\nWhen the establishment of law and order afforded him this leisure, he\noften wanted the inclination, and almost always the requisite abilities.\nIf the expense of his house and person either equalled or exceeded his\nrevenue, as it did very frequently, he had no stock to employ in this\nmanner. If he was an economist, he generally found it more profitable\nto employ his annual savings in new purchases than in the improvement of\nhis old estate. To improve land with profit, like all other commercial\nprojects, requires an exact attention to small savings and small gains,\nof which a man born to a great fortune, even though naturally frugal, is\nvery seldom capable. The situation of such a person naturally disposes\nhim to attend rather to ornament, which pleases his fancy, than to\nprofit, for which he has so little occasion. The elegance of his dress,\nof his equipage, of his house and household furniture, are objects\nwhich, from his infancy, he has been accustomed to have some anxiety\nabout. The turn of mind which this habit naturally forms, follows him\nwhen he comes to think of the improvement of land. He embellishes,\nperhaps, four or five hundred acres in the neighbourhood of his\nhouse, at ten times the expense which the land is worth after all his\nimprovements; and finds, that if he was to improve his whole estate in\nthe same manner, and he has little taste for any other, he would be\na bankrupt before he had finished the tenth part of it. There still\nremain, in both parts of the united kingdom, some great estates which\nhave continued, without interruption, in the hands of the same family\nsince the times of feudal anarchy. Compare the present condition of\nthose estates with the possessions of the small proprietors in their\nneighbourhood, and you will require no other argument to convince you\nhow unfavourable such extensive property is to improvement.\n\nIf little improvement was to be expected from such great proprietors,\nstill less was to be hoped for from those who occupied the land under\nthem. In the ancient state of Europe, the occupiers of land were all\ntenants at will. They were all, or almost all, slaves, but their slavery\nwas of a milder kind than that known among the ancient Greeks and\nRomans, or even in our West Indian colonies. They were supposed to\nbelong more directly to the land than to their master. They could,\ntherefore, be sold with it, but not separately. They could marry,\nprovided it was with the consent of their master; and he could not\nafterwards dissolve the marriage by selling the man and wife to\ndifferent persons. If he maimed or murdered any of them, he was liable\nto some penalty, though generally but to a small one. They were not,\nhowever, capable of acquiring property. Whatever they acquired was\nacquired to their master, and he could take it from them at pleasure.\nWhatever cultivation and improvement could be carried on by means of\nsuch slaves, was properly carried on by their master. It was at his\nexpense. The seed, the cattle, and the instruments of husbandry, were\nall his. It was for his benefit. Such slaves could acquire nothing\nbut their daily maintenance. It was properly the proprietor himself,\ntherefore, that in this case occupied his own lands, and cultivated them\nby his own bondmen. This species of slavery still subsists in Russia,\nPoland, Hungary, Bohemia, Moravia, and other parts of Germany. It is\nonly in the western and south-western provinces of Europe that it has\ngradually been abolished altogether.\n\nBut if great improvements are seldom to be expected from great\nproprietors, they are least of all to be expected when they employ\nslaves for their workmen. The experience of all ages and nations, I\nbelieve, demonstrates that the work done by slaves, though it appears to\ncost only their maintenance, is in the end the dearest of any. A person\nwho can acquire no property can have no other interest but to eat as\nmuch and to labour as little as possible. Whatever work he does beyond\nwhat is sufficient to purchase his own maintenance, can be squeezed out\nof him by violence only, and not by any interest of his own. In ancient\nItaly, how much the cultivation of corn degenerated, how unprofitable\nit became to the master, when it fell under the management of slaves, is\nremarked both by Pliny and Columella. In the time of Aristotle, it had\nnot been much better in ancient Greece. Speaking of the ideal republic\ndescribed in the laws of Plato, to maintain 5000 idle men (the number of\nwarriors supposed necessary for its defence), together with their women\nand servants, would require, he says, a territory of boundless extent\nand fertility, like the plains of Babylon.\n\nThe pride of man makes him love to domineer, and nothing mortifies\nhim so much as to be obliged to condescend to persuade his inferiors.\nWherever the law allows it, and the nature of the work can afford it,\ntherefore, he will generally prefer the service of slaves to that of\nfreemen. The planting of sugar and tobacco can afford the expense of\nslave cultivation. The raising of corn, it seems, in the present times,\ncannot. In the English colonies, of which the principal produce is corn,\nthe far greater part of the work is done by freemen. The late resolution\nof the Quakers in Pennsylvania, to set at liberty all their negro\nslaves, may satisfy us that their number cannot be very great. Had they\nmade any considerable part of their property, such a resolution could\nnever have been agreed to. In our sugar colonies., on the contrary, the\nwhole work is done by slaves, and in our tobacco colonies a very great\npart of it. The profits of a sugar plantation in any of our West Indian\ncolonies, are generally much greater than those of any other cultivation\nthat is known either in Europe or America; and the profits of a tobacco\nplantation, though inferior to those of sugar, are superior to those of\ncorn, as has already been observed. Both can afford the expense of\nslave cultivation but sugar can afford it still better than tobacco. The\nnumber of negroes, accordingly, is much greater, in proportion to that\nof whites, in our sugar than in our tobacco colonies.\n\nTo the slave cultivators of ancient times gradually succeeded a species\nof farmers, known at present in France by the name of metayers. They are\ncalled in Latin Coloni Partiarii. They have been so long in disuse in\nEngland, that at present I know no English name for them. The proprietor\nfurnished them with the seed, cattle, and instruments of husbandry, the\nwhole stock, in short, necessary for cultivating the farm. The produce\nwas divided equally between the proprietor and the farmer, after setting\naside what was judged necessary for keeping up the stock, which was\nrestored to the proprietor, when the farmer either quitted or was turned\nout of the farm.\n\nLand occupied by such tenants is properly cultivated at the expense of\nthe proprietors, as much as that occupied by slaves. There is, however,\none very essential difference between them. Such tenants, being freemen,\nare capable of acquiring property; and having a certain proportion\nof the produce of the land, they have a plain interest that the\nwhole produce should be as great as possible, in order that their own\nproportion may be so. A slave, on the contrary, who can acquire nothing\nbut his maintenance, consults his own ease, by making the land produce\nas little as possible over and above that maintenance. It is probable\nthat it was partly upon account of this advantage, and partly upon\naccount of the encroachments which the sovereigns, always jealous of\nthe great lords, gradually encouraged their villains to make upon their\nauthority, and which seem, at least, to have been such as rendered this\nspecies of servitude altogether inconvenient, that tenure in villanage\ngradually wore out through the greater part of Europe. The time and\nmanner, however, in which so important a revolution was brought about,\nis one of the most obscure points in modern history. The church of\nRome claims great merit in it; and it is certain, that so early as\nthe twelfth century, Alexander III. published a bull for the general\nemancipation of slaves. It seems, however, to have been rather a pious\nexhortation, than a law to which exact obedience was required from the\nfaithful. Slavery continued to take place almost universally for several\ncenturies afterwards, till it was gradually abolished by the joint\noperation of the two interests above mentioned; that of the proprietor\non the one hand, and that of the sovereign on the other. A villain,\nenfranchised, and at the same time allowed to continue in possession of\nthe land, having no stock of his own, could cultivate it only by means\nof what the landlord advanced to him, and must therefore have been what\nthe French call a metayer.\n\nIt could never, however, be the interest even of this last species of\ncultivators, to lay out, in the further improvement of the land, any\npart of the little stock which they might save from their own share of\nthe produce; because the landlord, who laid out nothing, was to get one\nhalf of whatever it produced. The tithe, which is but a tenth of the\nproduce, is found to be a very great hindrance to improvement. A tax,\ntherefore, which amounted to one half, must have been an effectual bar\nto it. It might be the interest of a metayer to make the land produce\nas much as could be brought out of it by means of the stock furnished\nby the proprietor; but it could never be his interest to mix any part\nof his own with it. In France, where five parts out of six of the whole\nkingdom are said to be still occupied by this species of cultivators,\nthe proprietors complain, that their metayers take every opportunity of\nemploying their master's cattle rather in carriage than in cultivation;\nbecause, in the one case, they get the whole profits to themselves, in\nthe other they share them with their landlord. This species of tenants\nstill subsists in some parts of Scotland. They are called steel-bow\ntenants. Those ancient English tenants, who are said by Chief-Baron\nGilbert and Dr Blackstone to have been rather bailiffs of the landlord\nthan farmers, properly so called, were probably of the same kind.\n\nTo this species of tenantry succeeded, though by very slow degrees,\nfarmers, properly so called, who cultivated the land with their own\nstock, paying a rent certain to the landlord. When such farmers have a\nlease for a term of years, they may sometimes find it for their interest\nto lay out part of their capital in the further improvement of the farm;\nbecause they may sometimes expect to recover it, with a large profit,\nbefore the expiration of the lease. The possession, even of such\nfarmers, however, was long extremely precarious, and still is so in many\nparts of Europe. They could, before the expiration of their term, be\nlegally ousted of their leases by a new purchaser; in England, even,\nby the fictitious action of a common recovery. If they were turned out\nillegally by the violence of their master, the action by which they\nobtained redress was extremely imperfect. It did not always reinstate\nthem in the possession of the land, but gave them damages, which never\namounted to a real loss. Even in England, the country, perhaps of\nEurope, where the yeomanry has always been most respected, it was not\ntill about the 14th of Henry VII. that the action of ejectment\nwas invented, by which the tenant recovers, not damages only, but\npossession, and in which his claim is not necessarily concluded by the\nuncertain decision of a single assize. This action has been found so\neffectual a remedy, that, in the modern practice, when the landlord has\noccasion to sue for the possession of the land, he seldom makes use\nof the actions which properly belong to him as a landlord, the writ of\nright or the writ of entry, but sues in the name of his tenant, by the\nwrit of ejectment. In England, therefore the security of the tenant is\nequal to that of the proprietor. In England, besides, a lease for life\nof forty shillings a-year value is a freehold, and entitles the lessee\nto a vote for a member of parliament; and as a great part of the\nyeomanry have freeholds of this kind, the whole order becomes\nrespectable to their landlords, on account of the political\nconsideration which this gives them. There is, I believe, nowhere in\nEurope, except in England, any instance of the tenant building upon\nthe land of which he had no lease, and trusting that the honour of his\nlandlord would take no advantage of so important an improvement.\nThose laws and customs, so favourable to the yeomanry, have perhaps\ncontributed more to the present grandeur of England, than all their\nboasted regulations of commerce taken together.\n\nThe law which secures the longest leases against successors of every\nkind, is, so far as I know, peculiar to Great Britain. It was introduced\ninto Scotland so early as 1449, by a law of James II. Its beneficial\ninfluence, however, has been much obstructed by entails; the heirs of\nentail being generally restrained from letting leases for any long term\nof years, frequently for more than one year. A late act of parliament\nhas, in this respect, somewhat slackened their fetters, though they are\nstill by much too strait. In Scotland, besides, as no leasehold gives a\nvote for a member of parliament, the yeomanry are upon this account less\nrespectable to their landlords than in England.\n\nIn other parts of Europe, after it was found convenient to secure\ntenants both against heirs and purchasers, the term of their security\nwas still limited to a very short period; in France, for example, to\nnine years from the commencement of the lease. It has in that country,\nindeed, been lately extended to twentyseven, a period still too short\nto encourage the tenant to make the most important improvements. The\nproprietors of land were anciently the legislators of every part of\nEurope. The laws relating to land, therefore, were all calculated\nfor what they supposed the interest of the proprietor. It was for\nhis interest, they had imagined, that no lease granted by any of his\npredecessors should hinder him from enjoying, during a long term of\nyears, the full value of his land. Avarice and injustice are always\nshort-sighted, and they did not foresee how much this regulation must\nobstruct improvement, and thereby hurt, in the long-run, the real\ninterest of the landlord.\n\nThe farmers, too, besides paying the rent, were anciently, it was\nsupposed, bound to perform a great number of services to the landlord,\nwhich were seldom either specified in the lease, or regulated by any\nprecise rule, but by the use and wont of the manor or barony. These\nservices, therefore, being almost entirely arbitrary, subjected the\ntenant to many vexations. In Scotland the abolition of all services not\nprecisely stipulated in the lease, has, in the course of a few years,\nvery much altered for the better the condition of the yeomanry of that\ncountry.\n\nThe public services to which the yeomanry were bound, were not less\narbitrary than the private ones. To make and maintain the high roads,\na servitude which still subsists, I believe, everywhere, though with\ndifferent degrees of oppression in different countries, was not the only\none. When the king's troops, when his household, or his officers of any\nkind, passed through any part of the country, the yeomanry were bound\nto provide them with horses, carriages, and provisions, at a price\nregulated by the purveyor. Great Britain is, I believe, the only\nmonarchy in Europe where the oppression of purveyance has been entirely\nabolished. It still subsists in France and Germany.\n\nThe public taxes, to which they were subject, were as irregular and\noppressive as the services. The ancient lords, though extremely unwilling\nto grant, themselves, any pecuniary aid to their sovereign, easily\nallowed him to tallage, as they called it, their tenants, and had not\nknowledge enough to foresee how much this must, in the end, affect their\nown revenue. The taille, as it still subsists in France may serve as an\nexample of those ancient tallages. It is a tax upon the supposed profits\nof the farmer, which they estimate by the stock that he has upon the\nfarm. It is his interest, therefore, to appear to have as little as\npossible, and consequently to employ as little as possible in its\ncultivation, and none in its improvement. Should any stock happen to\naccumulate in the hands of a French farmer, the taille is almost equal\nto a prohibition of its ever being employed upon the land. This tax,\nbesides, is supposed to dishonour whoever is subject to it, and to\ndegrade him below, not only the rank of a gentleman, but that of a\nburgher; and whoever rents the lands of another becomes subject to it.\nNo gentleman, nor even any burgher, who has stock, will submit to this\ndegradation. This tax, therefore, not only hinders the stock which\naccumulates upon the land from being employed in its improvement, but\ndrives away all other stock from it. The ancient tenths and fifteenths,\nso usual in England in former times, seem, so far as they affected the\nland, to have been taxes of the same nature with the taille.\n\nUnder all these discouragements, little improvement could be expected\nfrom the occupiers of land. That order of people, with all the liberty\nand security which law can give, must always improve under great\ndisadvantage. The farmer, compared with the proprietor, is as a merchant\nwho trades with burrowed money, compared with one who trades with his\nown. The stock of both may improve; but that of the one, with only equal\ngood conduct, must always improve more slowly than that of the other,\non account of the large share of the profits which is consumed by the\ninterest of the loan. The lands cultivated by the farmer must, in the\nsame manner, with only equal good conduct, be improved more slowly than\nthose cultivated by the proprietor, on account of the large share of the\nproduce which is consumed in the rent, and which, had the farmer been\nproprietor, he might have employed in the further improvement of the\nland. The station of a farmer, besides, is, from the nature of things,\ninferior to that of a proprietor. Through the greater part of Europe,\nthe yeomanry are regarded as an inferior rank of people, even to the\nbetter sort of tradesmen and mechanics, and in all parts of Europe to\nthe great merchants and master manufacturers. It can seldom happen,\ntherefore, that a man of any considerable stock should quit the\nsuperior, in order to place himself in an inferior station. Even in the\npresent state of Europe, therefore, little stock is likely to go from\nany other profession to the improvement of land in the way of farming.\nMore does, perhaps, in Great Britain than in any other country, though\neven there the great stocks which are in some places employed in\nfarming, have generally been acquired by fanning, the trade, perhaps,\nin which, of all others, stock is commonly acquired most slowly. After\nsmall proprietors, however, rich and great farmers are in every country\nthe principal improvers. There are more such, perhaps, in England\nthan in any other European monarchy. In the republican governments of\nHolland, and of Berne in Switzerland, the farmers are said to be not\ninferior to those of England.\n\nThe ancient policy of Europe was, over and above all this, unfavourable\nto the improvement and cultivation of land, whether carried on by the\nproprietor or by the farmer; first, by the general prohibition of the\nexportation of corn, without a special licence, which seems to have been\na very universal regulation; and, secondly, by the restraints which were\nlaid upon the inland commerce, not only of corn, but of almost every\nother part of the produce of the farm, by the absurd laws against\nengrossers, regraters, and forestallers, and by the privileges of fairs\nand markets. It has already been observed in what manner the prohibition\nof the exportation of corn, together with some encouragement given to\nthe importation of foreign corn, obstructed the cultivation of ancient\nItaly, naturally the most fertile country in Europe, and at that time\nthe seat of the greatest empire in the world. To what degree such\nrestraints upon the inland commerce of this commodity, joined to\nthe general prohibition of exportation, must have discouraged\nthe cultivation of countries less fertile, and less favourably\ncircumstanced, it is not, perhaps, very easy to imagine.\n\n\n\n\nCHAPTER III. OF THE RISE AND PROGRESS OF CITIES AND TOWNS, AFTER THE\nFALL OF THE ROMAN EMPIRE.\n\nThe inhabitants of cities and towns were, after the fall of the Roman\nempire, not more favoured than those of the country. They consisted,\nindeed, of a very different order of people from the first inhabitants\nof the ancient republics of Greece and Italy. These last were composed\nchiefly of the proprietors of lands, among whom the public territory was\noriginally divided, and who found it convenient to build their houses in\nthe neighbourhood of one another, and to surround them with a wall, for\nthe sake of common defence. After the fall of the Roman empire, on\nthe contrary, the proprietors of land seem generally to have lived in\nfortified castles on their own estates, and in the midst of their own\ntenants and dependants. The towns were chiefly inhabited by tradesmen\nand mechanics, who seem, in those days, to have been of servile, or very\nnearly of servile condition. The privileges which we find granted by\nancient charters to the inhabitants of some of the principal towns in\nEurope, sufficiently show what they were before those grants. The people\nto whom it is granted as a privilege, that they might give away their\nown daughters in marriage without the consent of their lord, that upon\ntheir death their own children, and not their lord, should succeed to\ntheir goods, and that they might dispose of their own effects by will,\nmust, before those grants, have been either altogether, or very nearly,\nin the same state of villanage with the occupiers of land in the\ncountry.\n\nThey seem, indeed, to have been a very poor, mean set of people, who\nseemed to travel about with their goods from place to place, and from\nfair to fair, like the hawkers and pedlars of the present times. In all\nthe different countries of Europe then, in the same manner as in several\nof the Tartar governments of Asia at present, taxes used to be levied\nupon the persons and goods of travellers, when they passed through\ncertain manors, when they went over certain bridges, when they carried\nabout their goods from place to place in a fair, when they erected in\nit a booth or stall to sell them in. These different taxes were known\nin England by the names of passage, pontage, lastage, and stallage.\nSometimes the king, sometimes a great lord, who had, it seems, upon some\noccasions, authority to do this, would grant to particular traders, to\nsuch particularly as lived in their own demesnes, a general exemption\nfrom such taxes. Such traders, though in other respects of servile, or\nvery nearly of servile condition, were upon this account called free\ntraders. They, in return, usually paid to their protector a sort of\nannual poll-tax. In those days protection was seldom granted without\na valuable consideration, and this tax might perhaps be considered as\ncompensation for what their patrons might lose by their exemption from\nother taxes. At first, both those poll-taxes and those exemptions seem\nto have been altogether personal, and to have affected only particular\nindividuals, during either their lives, or the pleasure of their\nprotectors. In the very imperfect accounts which have been published\nfrom Doomsday-book, of several of the towns of England, mention is\nfrequently made, sometimes of the tax which particular burghers paid,\neach of them, either to the king, or to some other great lord, for this\nsort of protection, and sometimes of the general amount only of all\nthose taxes. {see Brady's Historical Treatise of Cities and Boroughs, p.\n3. etc.}\n\nBut how servile soever may have been originally the condition of the\ninhabitants of the towns, it appears evidently, that they arrived at\nliberty and independency much earlier than the occupiers of land in\nthe country. That part of the king's revenue which arose from such\npoll-taxes in any particular town, used commonly to be let in farm,\nduring a term of years, for a rent certain, sometimes to the sheriff\nof the county, and sometimes to other persons. The burghers themselves\nfrequently got credit enough to be admitted to farm the revenues of\nthis sort winch arose out of their own town, they becoming jointly and\nseverally answerable for the whole rent. {See Madox, Firma Burgi, p.\n18; also History of the Exchequer, chap. 10, sect. v, p. 223, first\nedition.} To let a farm in this manner, was quite agreeable to the usual\neconomy of, I believe, the sovereigns of all the different countries of\nEurope, who used frequently to let whole manors to all the tenants of\nthose manors, they becoming jointly and severally answerable for the\nwhole rent; but in return being allowed to collect it in their own\nway, and to pay it into the king's exchequer by the hands of their\nown bailiff, and being thus altogether freed from the insolence of\nthe king's officers; a circumstance in those days regarded as of the\ngreatest importance.\n\nAt first, the farm of the town was probably let to the burghers, in the\nsame manner as it had been to other farmers, for a term of years\nonly. In process of time, however, it seems to have become the general\npractice to grant it to them in fee, that is for ever, reserving a\nrent certain, never afterwards to be augmented. The payment having thus\nbecome perpetual, the exemptions, in return, for which it was made,\nnaturally became perpetual too. Those exemptions, therefore, ceased\nto be personal, and could not afterwards be considered as belonging\nto individuals, as individuals, but as burghers of a particular burgh,\nwhich, upon this account, was called a free burgh, for the same reason\nthat they had been called free burghers or free traders.\n\nAlong with this grant, the important privileges, above mentioned,\nthat they might give away their own daughters in marriage, that their\nchildren should succeed to them, and that they might dispose of their\nown effects by will, were generally bestowed upon the burghers of the\ntown to whom it was given. Whether such privileges had before been\nusually granted, along with the freedom of trade, to particular\nburghers, as individuals, I know not. I reckon it not improbable that\nthey were, though I cannot produce any direct evidence of it. But\nhowever this may have been, the principal attributes of villanage and\nslavery being thus taken away from them, they now at least became really\nfree, in our present sense of the word freedom.\n\nNor was this all. They were generally at the same time erected into a\ncommonalty or corporation, with the privilege of having magistrates\nand a town-council of their own, of making bye-laws for their own\ngovernment, of building walls for their own defence, and of reducing all\ntheir inhabitants under a sort of military discipline, by obliging them\nto watch and ward; that is, as anciently understood, to guard and defend\nthose walls against all attacks and surprises, by night as well as by\nday. In England they were generally exempted from suit to the hundred\nand county courts: and all such pleas as should arise among them, the\npleas of the crown excepted, were left to the decision of their own\nmagistrates. In other countries, much greater and more extensive\njurisdictions were frequently granted to them. {See Madox, Firma Burgi.\nSee also Pfeffel in the Remarkable events under Frederick II. and his\nSuccessors of the House of Suabia.}\n\nIt might, probably, be necessary to grant to such towns as were admitted\nto farm their own revenues, some sort of compulsive jurisdiction to\noblige their own citizens to make payment. In those disorderly times,\nit might have been extremely inconvenient to have left them to seek this\nsort of justice from any other tribunal. But it must seem extraordinary,\nthat the sovereigns of all the different countries of Europe should have\nexchanged in this manner for a rent certain, never more to be augmented,\nthat branch of their revenue, which was, perhaps, of all others, the\nmost likely to be improved by the natural course of things, without\neither expense or attention of their own; and that they should, besides,\nhave in this manner voluntarily erected a sort of independent republics\nin the heart of their own dominions.\n\nIn order to understand this, it must be remembered, that, in those\ndays, the sovereign of perhaps no country in Europe was able to protect,\nthrough the whole extent of his dominions, the weaker part of his\nsubjects from the oppression of the great lords. Those whom the law\ncould not protect, and who were not strong enough to defend themselves,\nwere obliged either to have recourse to the protection of some great\nlord, and in order to obtain it, to become either his slaves or vassals;\nor to enter into a league of mutual defence for the common protection of\none another. The inhabitants of cities and burghs, considered as single\nindividuals, had no power to defend themselves; but by entering into\na league of mutual defence with their neighbours, they were capable of\nmaking no contemptible resistance. The lords despised the burghers,\nwhom they considered not only as a different order, but as a parcel of\nemancipated slaves, almost of a different species from themselves.\nThe wealth of the burghers never failed to provoke their envy and\nindignation, and they plundered them upon every occasion without mercy\nor remorse. The burghers naturally hated and feared the lords. The king\nhated and feared them too; but though, perhaps, he might despise, he\nhad no reason either to hate or fear the burghers. Mutual interest,\ntherefore, disposed them to support the king, and the king to support\nthem against the lords. They were the enemies of his enemies, and it was\nhis interest to render them as secure and independent of those enemies\nas he could. By granting them magistrates of their own, the privilege\nof making bye-laws for their own government, that of building walls for\ntheir own defence, and that of reducing all their inhabitants under a\nsort of military discipline, he gave them all the means of security and\nindependency of the barons which it was in his power to bestow. Without\nthe establishment of some regular government of this kind, without some\nauthority to compel their inhabitants to act according to some certain\nplan or system, no voluntary league of mutual defence could either have\nafforded them any permanent security, or have enabled them to give the\nking any considerable support. By granting them the farm of their own\ntown in fee, he took away from those whom he wished to have for his\nfriends, and, if one may say so, for his allies, all ground of jealousy\nand suspicion, that he was ever afterwards to oppress them, either by\nraising the farm-rent of their town, or by granting it to some other\nfarmer.\n\nThe princes who lived upon the worst terms with their barons, seem\naccordingly to have been the most liberal in grants of this kind to\ntheir burghs. King John of England, for example, appears to have been\na most munificent benefactor to his towns. {See Madox.} Philip I. of\nFrance lost all authority over his barons. Towards the end of his reign,\nhis son Lewis, known afterwards by the name of Lewis the Fat, consulted,\naccording to Father Daniel, with the bishops of the royal demesnes,\nconcerning the most proper means of restraining the violence of the\ngreat lords. Their advice consisted of two different proposals. One was\nto erect a new order of jurisdiction, by establishing magistrates and a\ntown-council in every considerable town of his demesnes. The other was\nto form a new militia, by making the inhabitants of those towns, under\nthe command of their own magistrates, march out upon proper occasions\nto the assistance of the king. It is from this period, according to\nthe French antiquarians, that we are to date the institution of\nthe magistrates and councils of cities in France. It was during the\nunprosperous reigns of the princes of the house of Suabia, that the\ngreater part of the free towns of Germany received the first grants\nof their privileges, and that the famous Hanseatic league first became\nformidable. {See Pfeffel.}\n\nThe militia of the cities seems, in those times, not to have been\ninferior to that of the country; and as they could be more readily\nassembled upon any sudden occasion, they frequently had the advantage in\ntheir disputes with the neighbouring lords. In countries such as Italy\nor Switzerland, in which, on account either of their distance from the\nprincipal seat of government, of the natural strength of the country\nitself, or of some other reason, the sovereign came to lose the whole\nof his authority; the cities generally became independent republics, and\nconquered all the nobility in their neighbourhood; obliging them to pull\ndown their castles in the country, and to live, like other peaceable\ninhabitants, in the city. This is the short history of the republic of\nBerne, as well as of several other cities in Switzerland. If you except\nVenice, for of that city the history is somewhat different, it is the\nhistory of all the considerable Italian republics, of which so great\na number arose and perished between the end of the twelfth and the\nbeginning of the sixteenth century.\n\nIn countries such as France and England, where the authority of the\nsovereign, though frequently very low, never was destroyed altogether,\nthe cities had no opportunity of becoming entirely independent. They\nbecame, however, so considerable, that the sovereign could impose no tax\nupon them, besides the stated farm-rent of the town, without their\nown consent. They were, therefore, called upon to send deputies to the\ngeneral assembly of the states of the kingdom, where they might join\nwith the clergy and the barons in granting, upon urgent occasions, some\nextraordinary aid to the king. Being generally, too, more favourable to\nhis power, their deputies seem sometimes to have been employed by him\nas a counterbalance in those assemblies to the authority of the\ngreat lords. Hence the origin of the representation of burghs in the\nstates-general of all great monarchies in Europe.\n\nOrder and good government, and along with them the liberty and security\nof individuals, were in this manner established in cities, at a time\nwhen the occupiers of land in the country, were exposed to every sort of\nviolence. But men in this defenceless state naturally content themselves\nwith their necessary subsistence; because, to acquire more, might only\ntempt the injustice of their oppressors. On the contrary, when they are\nsecure of enjoying the fruits of their industry, they naturally exert it\nto better their condition, and to acquire not only the necessaries,\nbut the conveniencies and elegancies of life. That industry, therefore,\nwhich aims at something more than necessary subsistence, was established\nin cities long before it was commonly practised by the occupiers of land\nin the country. If, in the hands of a poor cultivator, oppressed with\nthe servitude of villanage, some little stock should accumulate, he\nwould naturally conceal it with great care from his master, to whom it\nwould otherwise have belonged, and take the first opportunity of running\naway to a town. The law was at that time so indulgent to the inhabitants\nof towns, and so desirous of diminishing the authority of the lords over\nthose of the country, that if he could conceal himself there from the\npursuit of his lord for a year, he was free for ever. Whatever stock,\ntherefore, accumulated in the hands of the industrious part of the\ninhabitants of the country, naturally took refuge in cities, as the only\nsanctuaries in which it could be secure to the person that acquired it.\n\nThe inhabitants of a city, it is true, must always ultimately derive\ntheir subsistence, and the whole materials and means of their industry,\nfrom the country. But those of a city, situated near either the\nsea-coast or the banks of a navigable river, are not necessarily\nconfined to derive them from the country in their neighbourhood. They\nhave a much wider range, and may draw them from the most remote corners\nof the world, either in exchange for the manufactured produce of their\nown industry, or by performing the office of carriers between distant\ncountries, and exchanging the produce of one for that of another. A city\nmight, in this manner, grow up to great wealth and splendour, while not\nonly the country in its neighbourhood, but all those to which it traded,\nwere in poverty and wretchedness. Each of those countries, perhaps,\ntaken singly, could afford it but a small part, either of its\nsubsistence or of its employment; but all of them taken together, could\nafford it both a great subsistence and a great employment. There were,\nhowever, within the narrow circle of the commerce of those times, some\ncountries that were opulent and industrious. Such was the Greek empire\nas long as it subsisted, and that of the Saracens during the reigns of\nthe Abassides. Such, too, was Egypt till it was conquered by the Turks,\nsome part of the coast of Barbary, and all those provinces of Spain\nwhich were under the government of the Moors.\n\nThe cities of Italy seem to have been the first in Europe which were\nraised by commerce to any considerable degree of opulence. Italy lay in\nthe centre of what was at that time the improved and civilized part of\nthe world. The crusades, too, though, by the great waste of stock and\ndestruction of inhabitants which they occasioned, they must necessarily\nhave retarded the progress of the greater part of Europe, were extremely\nfavourable to that of some Italian cities. The great armies which\nmarched from all parts to the conquest of the Holy Land, gave\nextraordinary encouragement to the shipping of Venice, Genoa, and Pisa,\nsometimes in transporting them thither, and always in supplying them\nwith provisions. They were the commissaries, if one may say so, of those\narmies; and the most destructive frenzy that ever befel the European\nnations, was a source of opulence to those republics.\n\nThe inhabitants of trading cities, by importing the improved\nmanufactures and expensive luxuries of richer countries, afforded some\nfood to the vanity of the great proprietors, who eagerly purchased\nthem with great quantities of the rude produce of their own lands.\nThe commerce of a great part of Europe in those times, accordingly,\nconsisted chiefly in the exchange of their own rude, for the\nmanufactured produce of more civilized nations. Thus the wool of England\nused to be exchanged for the wines of France, and the fine cloths of\nFlanders, in the same manner as the corn in Poland is at this day,\nexchanged for the wines and brandies of France, and for the silks and\nvelvets of France and Italy.\n\nA taste for the finer and more improved manufactures was, in this\nmanner, introduced by foreign commerce into countries where no such\nworks were carried on. But when this taste became so general as to\noccasion a considerable demand, the merchants, in order to save\nthe expense of carriage, naturally endeavoured to establish some\nmanufactures of the same kind in their own country. Hence the origin\nof the first manufactures for distant sale, that seem to have been\nestablished in the western provinces of Europe, after the fall of the\nRoman empire.\n\nNo large country, it must be observed, ever did or could subsist without\nsome sort of manufactures being carried on in it; and when it is said\nof any such country that it has no manufactures, it must always be\nunderstood of the finer and more improved, or of such as are fit for\ndistant sale. In every large country both the clothing and household\nfurniture or the far greater part of the people, are the produce of\ntheir own industry. This is even more universally the case in those poor\ncountries which are commonly said to have no manufactures, than in\nthose rich ones that are said to abound in them. In the latter you\nwill generally find, both in the clothes and household furniture of the\nlowest rank of people, a much greater proportion of foreign productions\nthan in the former.\n\nThose manufactures which are fit for distant sale, seem to have been\nintroduced into different countries in two different ways.\n\nSometimes they have been introduced in the manner above mentioned, by\nthe violent operation, if one may say so, of the stocks of particular\nmerchants and undertakers, who established them in imitation of some\nforeign manufactures of the same kind. Such manufactures, therefore,\nare the offspring of foreign commerce; and such seem to have been the\nancient manufactures of silks, velvets, and brocades, which flourished\nin Lucca during the thirteenth century. They were banished from thence\nby the tyranny of one of Machiavel's heroes, Castruccio Castracani. In\n1310, nine hundred families were driven out of Lucca, of whom thirty-one\nretired to Venice, and offered to introduce there the silk manufacture.\n{See Sandi Istoria civile de Vinezia, part 2 vol. i, page 247 and 256.}\nTheir offer was accepted, many privileges were conferred upon them, and\nthey began the manufacture with three hundred workmen. Such, too, seem\nto have been the manufactures of fine cloths that anciently flourished\nin Flanders, and which were introduced into England in the beginning of\nthe reign of Elizabeth, and such are the present silk manufactures\nof Lyons and Spitalfields. Manufactures introduced in this manner are\ngenerally employed upon foreign materials, being imitations of foreign\nmanufactures. When the Venetian manufacture was first established, the\nmaterials were all brought from Sicily and the Levant. The more ancient\nmanufacture of Lucca was likewise carried on with foreign materials. The\ncultivation of mulberry trees, and the breeding of silk-worms, seem not\nto have been common in the northern parts of Italy before the sixteenth\ncentury. Those arts were not introduced into France till the reign of\nCharles IX. The manufactures of Flanders were carried on chiefly with\nSpanish and English wool. Spanish wool was the material, not of the\nfirst woollen manufacture of England, but of the first that was fit for\ndistant sale. More than one half the materials of the Lyons manufacture\nis at this day foreign silk; when it was first established, the whole,\nor very nearly the whole, was so. No part of the materials of the\nSpitalfields manufacture is ever likely to be the produce of England.\nThe seat of such manufactures, as they are generally introduced by the\nscheme and project of a few individuals, is sometimes established in\na maritime city, and sometimes in an inland town, according as their\ninterest, judgment, or caprice, happen to determine.\n\nAt other times, manufactures for distant sale grow up naturally, and\nas it were of their own accord, by the gradual refinement of those\nhousehold and coarser manufactures which must at all times be carried\non even in the poorest and rudest countries. Such manufactures are\ngenerally employed upon the materials which the country produces, and\nthey seem frequently to have been first refined and improved in\nsuch inland countries as were not, indeed, at a very great, but at a\nconsiderable distance from the sea-coast, and sometimes even from\nall water carriage. An inland country, naturally fertile and easily\ncultivated, produces a great surplus of provisions beyond what is\nnecessary for maintaining the cultivators; and on account of the\nexpense of land carriage, and inconveniency of river navigation, it\nmay frequently be difficult to send this surplus abroad. Abundance,\ntherefore, renders provisions cheap, and encourages a great number of\nworkmen to settle in the neighbourhood, who find that their industry\ncan there procure them more of the necessaries and conveniencies of life\nthan in other places. They work up the materials of manufacture which\nthe land produces, and exchange their finished work, or, what is the\nsame thing, the price of it, for more materials and provisions. They\ngive a new value to the surplus part of the rude produce, by saving the\nexpense of carrying it to the water-side, or to some distant market; and\nthey furnish the cultivators with something in exchange for it that is\neither useful or agreeable to them, upon easier terms than they could\nhave obtained it before. The cultivators get a better price for their\nsurplus produce, and can purchase cheaper other conveniencies which they\nhave occasion for. They are thus both encouraged and enabled to increase\nthis surplus produce by a further improvement and better cultivation\nof the land; and as the fertility of she land had given birth to the\nmanufacture, so the progress of the manufacture reacts upon the land,\nand increases still further it's fertility. The manufacturers first\nsupply the neighbourhood, and afterwards, as their work improves and\nrefines, more distant markets. For though neither the rude produce, nor\neven the coarse manufacture, could, without the greatest difficulty,\nsupport the expense of a considerable land-carriage, the refined and\nimproved manufacture easily may. In a small bulk it frequently contains\nthe price of a great quantity of rude produce. A piece of fine cloth,\nfor example which weighs only eighty pounds, contains in it the price,\nnot only of eighty pounds weight of wool, but sometimes of several\nthousand weight of corn, the maintenance of the different working\npeople, and of their immediate employers. The corn which could with\ndifficulty have been carried abroad in its own shape, is in this manner\nvirtually exported in that of the complete manufacture, and may easily\nbe sent to the remotest corners of the world. In this manner have grown\nup naturally, and, as it were, of their own accord, the manufactures\nof Leeds, Halifax, Sheffield, Birmingham, and Wolverhampton. Such\nmanufactures are the offspring of agriculture. In the modern history of\nEurope, their extension and improvement have generally been posterior\nto those which were the offspring of foreign commerce. England was noted\nfor the manufacture of fine cloths made of Spanish wool, more than\na century before any of those which now flourish in the places above\nmentioned were fit for foreign sale. The extension and improvement of\nthese last could not take place but in consequence of the extension\nand improvement of agriculture, the last and greatest effect of foreign\ncommerce, and of the manufactures immediately introduced by it, and\nwhich I shall now proceed to explain.\n\n\n\n\nCHAPTER IV. HOW THE COMMERCE OF TOWNS CONTRIBUTED TO THE IMPROVEMENT OF\nTHE COUNTRY.\n\nThe increase and riches of commercial and manufacturing towns\ncontributed to the improvement and cultivation of the countries to which\nthey belonged, in three different ways:\n\nFirst, by affording a great and ready market for the rude produce of\nthe country, they gave encouragement to its cultivation and further\nimprovement. This benefit was not even confined to the countries in\nwhich they were situated, but extended more or less to all those with\nwhich they had any dealings. To all of them they afforded a market\nfor some part either of their rude or manufactured produce, and,\nconsequently, gave some encouragement to the industry and improvement\nof all. Their own country, however, on account of its neighbourhood,\nnecessarily derived the greatest benefit from this market. Its rude\nproduce being charged with less carriage, the traders could pay the\ngrowers a better price for it, and yet afford it as cheap to the\nconsumers as that of more distant countries.\n\nSecondly, the wealth acquired by the inhabitants of cities was\nfrequently employed in purchasing such lands as were to be sold, of\nwhich a great part would frequently be uncultivated. Merchants are\ncommonly ambitious of becoming country gentlemen, and, when they do,\nthey are generally the best of all improvers. A merchant is accustomed\nto employ his money chiefly in profitable projects; whereas a mere\ncountry gentleman is accustomed to employ it chiefly in expense. The one\noften sees his money go from him, and return to him again with a profit;\nthe other, when once he parts with it, very seldom expects to see any\nmore of it. Those different habits naturally affect their temper and\ndisposition in every sort of business. The merchant is commonly a bold,\na country gentleman a timid undertaker. The one is not afraid to lay out\nat once a large capital upon the improvement of his land, when he has\na probable prospect of raising the value of it in proportion to the\nexpense; the other, if he has any capital, which is not always the case,\nseldom ventures to employ it in this manner. If he improves at all, it\nis commonly not with a capital, but with what he can save out or his\nannual revenue. Whoever has had the fortune to live in a mercantile\ntown, situated in an unimproved country, must have frequently observed\nhow much more spirited the operations of merchants were in this way,\nthan those of mere country gentlemen. The habits, besides, of order,\neconomy, and attention, to which mercantile business naturally forms a\nmerchant, render him much fitter to execute, with profit and success,\nany project of improvement.\n\nThirdly, and lastly, commerce and manufactures gradually introduced\norder and good government, and with them the liberty and security of\nindividuals, among the inhabitants of the country, who had before lived\nalmost in a continual state of war with their neighbours, and of servile\ndependency upon their superiors. This, though it has been the least\nobserved, is by far the most important of all their effects. Mr Hume is\nthe only writer who, so far as I know, has hitherto taken notice of it.\n\nIn a country which has neither foreign commerce nor any of the finer\nmanufactures, a great proprietor, having nothing for which he can\nexchange the greater part of the produce of his lands which is over and\nabove the maintenance of the cultivators, consumes the whole in rustic\nhospitality at home. If this surplus produce is sufficient to maintain a\nhundred or a thousand men, he can make use of it in no other way than by\nmaintaining a hundred or a thousand men. He is at all times, therefore,\nsurrounded with a multitude of retainers and dependants, who, having\nno equivalent to give in return for their maintenance, but being fed\nentirely by his bounty, must obey him, for the same reason that soldiers\nmust obey the prince who pays them. Before the extension of commerce and\nmanufactures in Europe, the hospitality of the rich and the great, from\nthe sovereign down to the smallest baron, exceeded every thing which, in\nthe present times, we can easily form a notion of Westminster-hall was\nthe dining-room of William Rufus, and might frequently, perhaps, not be\ntoo large for his company. It was reckoned a piece of magnificence in\nThomas Becket, that he strewed the floor of his hall with clean hay or\nrushes in the season, in order that the knights and squires, who could\nnot get seats, might not spoil their fine clothes when they sat down on\nthe floor to eat their dinner. The great Earl of Warwick is said to\nhave entertained every day, at his different manors, 30,000 people; and\nthough the number here may have been exaggerated, it must, however, have\nbeen very great to admit of such exaggeration. A hospitality nearly of\nthe same kind was exercised not many years ago in many different parts\nof the Highlands of Scotland. It seems to be common in all nations\nto whom commerce and manufactures are little known. I have seen, says\nDoctor Pocock, an Arabian chief dine in the streets of a town where\nhe had come to sell his cattle, and invite all passengers, even common\nbeggars, to sit down with him and partake of his banquet.\n\nThe occupiers of land were in every respect as dependent upon the great\nproprietor as his retainers. Even such of them as were not in a state\nof villanage, were tenants at will, who paid a rent in no respect\nequivalent to the subsistence which the land afforded them. A crown,\nhalf a crown, a sheep, a lamb, was some years ago, in the Highlands of\nScotland, a common rent for lands which maintained a family. In some\nplaces it is so at this day; nor will money at present purchase a\ngreater quantity of commodities there than in other places. In a country\nwhere the surplus produce of a large estate must be consumed upon the\nestate itself, it will frequently be more convenient for the proprietor,\nthat part of it be consumed at a distance from his own house, provided\nthey who consume it are as dependent upon him as either his retainers\nor his menial servants. He is thereby saved from the embarrassment of\neither too large a company, or too large a family. A tenant at will, who\npossesses land sufficient to maintain his family for little more than\na quit-rent, is as dependent upon the proprietor as any servant or\nretainer whatever, and must obey him with as little reserve. Such a\nproprietor, as he feeds his servants and retainers at his own house, so\nhe feeds his tenants at their houses. The subsistence of both is derived\nfrom his bounty, and its continuance depends upon his good pleasure.\n\nUpon the authority which the great proprietors necessarily had, in such\na state of things, over their tenants and retainers, was founded the\npower of the ancient barons. They necessarily became the judges in\npeace, and the leaders in war, of all who dwelt upon their estates.\nThey could maintain order, and execute the law, within their respective\ndemesnes, because each of them could there turn the whole force of all\nthe inhabitants against the injustice of anyone. No other person had\nsufficient authority to do this. The king, in particular, had not. In\nthose ancient times, he was little more than the greatest proprietor\nin his dominions, to whom, for the sake of common defence against their\ncommon enemies, the other great proprietors paid certain respects.\nTo have enforced payment of a small debt within the lands of a great\nproprietor, where all the inhabitants were armed, and accustomed to\nstand by one another, would have cost the king, had he attempted it by\nhis own authority, almost the same effort as to extinguish a civil war.\nHe was, therefore, obliged to abandon the administration of justice,\nthrough the greater part of the country, to those who were capable of\nadministering it; and, for the same reason, to leave the command of the\ncountry militia to those whom that militia would obey.\n\nIt is a mistake to imagine that those territorial jurisdictions took\ntheir origin from the feudal law. Not only the highest jurisdictions,\nboth civil and criminal, but the power of levying troops, of coining\nmoney, and even that of making bye-laws for the government of their own\npeople, were all rights possessed allodially by the great proprietors of\nland, several centuries before even the name of the feudal law was known\nin Europe. The authority and jurisdiction of the Saxon lords in England\nappear to have been as great before the Conquest as that of any of the\nNorman lords after it. But the feudal law is not supposed to have\nbecome the common law of England till after the Conquest. That the most\nextensive authority and jurisdictions were possessed by the great lords\nin France allodially, long before the feudal law was introduced\ninto that country, is a matter of fact that admits of no doubt. That\nauthority, and those jurisdictions, all necessarily flowed from the\nstate of property and manners just now described. Without remounting to\nthe remote antiquities of either the French or English monarchies, we\nmay find, in much later times, many proofs that such effects must always\nflow from such causes. It is not thirty years ago since Mr Cameron of\nLochiel, a gentleman of Lochaber in Scotland, without any legal warrant\nwhatever, not being what was then called a lord of regality, nor even a\ntenant in chief, but a vassal of the Duke of Argyll, and with out being\nso much as a justice of peace, used, notwithstanding, to exercise the\nhighest criminal jurisdictions over his own people. He is said to have\ndone so with great equity, though without any of the formalities of\njustice; and it is not improbable that the state of that part of the\ncountry at that time made it necessary for him to assume this authority,\nin order to maintain the public peace. That gentleman, whose rent never\nexceeded £500 a-year, carried, in 1745, 800 of his own people into the\nrebellion with him.\n\nThe introduction of the feudal law, so far from extending, may be\nregarded as an attempt to moderate, the authority of the great allodial\nlords. It established a regular subordination, accompanied with a\nlong train of services and duties, from the king down to the smallest\nproprietor. During the minority of the proprietor, the rent, together\nwith the management of his lands, fell into the hands of his immediate\nsuperior; and, consequently, those of all great proprietors into the\nhands of the king, who was charged with the maintenance and education of\nthe pupil, and who, from his authority as guardian, was supposed to have\na right of disposing of him in marriage, provided it was in a manner not\nunsuitable to his rank. But though this institution necessarily tended\nto strengthen the authority of the king, and to weaken that of the great\nproprietors, it could not do either sufficiently for establishing order\nand good government among the inhabitants of the country; because it\ncould not alter sufficiently that state of property and manners from\nwhich the disorders arose. The authority of government still continued\nto be, as before, too weak in the head, and too strong in the inferior\nmembers; and the excessive strength of the inferior members was the\ncause of the weakness of the head. After the institution of feudal\nsubordination, the king was as incapable of restraining the violence of\nthe great lords as before. They still continued to make war according\nto their own discretion, almost continually upon one another, and very\nfrequently upon the king; and the open country still continued to be a\nscene of violence, rapine, and disorder.\n\nBut what all the violence of the feudal institutions could never have\neffected, the silent and insensible operation of foreign commerce and\nmanufactures gradually brought about. These gradually furnished the\ngreat proprietors with something for which they could exchange the whole\nsurplus produce of their lands, and which they could consume themselves,\nwithout sharing it either with tenants or retainers. All for ourselves,\nand nothing for other people, seems, in every age of the world, to have\nbeen the vile maxim of the masters of mankind. As soon, therefore, as\nthey could find a method of consuming the whole value of their rents\nthemselves, they had no disposition to share them with any other\npersons. For a pair of diamond buckles, perhaps, or for something as\nfrivolous and useless, they exchanged the maintenance, or, what is the\nsame thing, the price of the maintenance of 1000 men for a year, and\nwith it the whole weight and authority which it could give them. The\nbuckles, however, were to be all their own, and no other human creature\nwas to have any share of them; whereas, in the more ancient method\nof expense, they must have shared with at least 1000 people. With\nthe judges that were to determine the preference, this difference\nwas perfectly decisive; and thus, for the gratification of the most\nchildish, the meanest, and the most sordid of all vanities they\ngradually bartered their whole power and authority.\n\nIn a country where there is no foreign commerce, nor any of the finer\nmanufactures, a man of £10,000 a-year cannot well employ his revenue in\nany other way than in maintaining, perhaps, 1000 families, who are all\nof them necessarily at his command. In the present state of Europe, a\nman of £10,000 a-year can spend his whole revenue, and he generally does\nso, without directly maintaining twenty people, or being able to command\nmore than ten footmen, not worth the commanding. Indirectly, perhaps,\nhe maintains as great, or even a greater number of people, than he could\nhave done by the ancient method of expense. For though the quantity of\nprecious productions for which he exchanges his whole revenue be very\nsmall, the number of workmen employed in collecting and preparing it\nmust necessarily have been very great. Its great price generally arises\nfrom the wages of their labour, and the profits of all their immediate\nemployers. By paying that price, he indirectly pays all those wages and\nprofits, and thus indirectly contributes to the maintenance of all the\nworkmen and their employers. He generally contributes, however, but a\nvery small proportion to that of each; to a very few, perhaps, not a\ntenth, to many not a hundredth, and to some not a thousandth, or even\na ten thousandth part of their whole annual maintenance. Though he\ncontributes, therefore, to the maintenance of them all, they are all\nmore or less independent of him, because generally they can all be\nmaintained without him.\n\nWhen the great proprietors of land spend their rents in maintaining\ntheir tenants and retainers, each of them maintains entirely all his\nown tenants and all his own retainers. But when they spend them in\nmaintaining tradesmen and artificers, they may, all of them taken\ntogether, perhaps maintain as great, or, on account of the waste which\nattends rustic hospitality, a greater number of people than before. Each\nof them, however, taken singly, contributes often but a very small\nshare to the maintenance of any individual of this greater number. Each\ntradesman or artificer derives his subsistence from the employment, not\nof one, but of a hundred or a thousand different customers. Though\nin some measure obliged to them all, therefore, he is not absolutely\ndependent upon any one of them.\n\nThe personal expense of the great proprietors having in this manner\ngradually increased, it was impossible that the number of their\nretainers should not as gradually diminish, till they were at last\ndismissed altogether. The same cause gradually led them to dismiss\nthe unnecessary part of their tenants. Farms were enlarged, and the\noccupiers of land, notwithstanding the complaints of depopulation,\nreduced to the number necessary for cultivating it, according to the\nimperfect state of cultivation and improvement in those times. By the\nremoval of the unnecessary mouths, and by exacting from the farmer the\nfull value of the farm, a greater surplus, or, what is the same thing,\nthe price of a greater surplus, was obtained for the proprietor, which\nthe merchants and manufacturers soon furnished him with a method of\nspending upon his own person, in the same manner as he had done the\nrest. The cause continuing to operate, he was desirous to raise his\nrents above what his lands, in the actual state of their improvement,\ncould afford. His tenants could agree to this upon one condition only,\nthat they should be secured in their possession for such a term of years\nas might give them time to recover, with profit, whatever they should\nlay not in the further improvement of the land. The expensive vanity of\nthe landlord made him willing to accept of this condition; and hence the\norigin of long leases.\n\nEven a tenant at will, who pays the full value of the land, is not\naltogether dependent upon the landlord. The pecuniary advantages which\nthey receive from one another are mutual and equal, and such a tenant\nwill expose neither his life nor his fortune in the service of the\nproprietor. But if he has a lease for along term of years, he is\naltogether independent; and his landlord must not expect from him even\nthe most trifling service, beyond what is either expressly stipulated\nin the lease, or imposed upon him by the common and known law of the\ncountry.\n\nThe tenants having in this manner become independent, and the retainers\nbeing dismissed, the great proprietors were no longer capable of\ninterrupting the regular execution of justice, or of disturbing the\npeace of the country. Having sold their birth-right, not like Esau,\nfor a mess of pottage in time of hunger and necessity, but, in the\nwantonness of plenty, for trinkets and baubles, fitter to be the\nplaythings of children than the serious pursuits of men, they became\nas insignificant as any substantial burgher or tradesmen in a city.\nA regular government was established in the country as well as in the\ncity, nobody having sufficient power to disturb its operations in the\none, any more than in the other.\n\nIt does not, perhaps, relate to the present subject, but I cannot\nhelp remarking it, that very old families, such as have possessed some\nconsiderable estate from father to son for many successive generations,\nare very rare in commercial countries. In countries which have little\ncommerce, on the contrary, such as Wales, or the Highlands of Scotland,\nthey are very common. The Arabian histories seem to be all full of\ngenealogies; and there is a history written by a Tartar Khan, which\nhas been translated into several European languages, and which contains\nscarce any thing else; a proof that ancient families are very common\namong those nations. In countries where a rich man can spend his revenue\nin no other way than by maintaining as many people as it can maintain,\nhe is apt to run out, and his benevolence, it seems, is seldom so\nviolent as to attempt to maintain more than he can afford. But where he\ncan spend the greatest revenue upon his own person, he frequently has\nno bounds to his expense, because he frequently has no bounds to his\nvanity, or to his affection for his own person. In commercial countries,\ntherefore, riches, in spite of the most violent regulations of law to\nprevent their dissipation, very seldom remain long in the same family.\nAmong simple nations, on the contrary, they frequently do, without any\nregulations of law; for among nations of shepherds, such as the Tartars\nand Arabs, the consumable nature of their property necessarily renders\nall such regulations impossible.\n\nA revolution of the greatest importance to the public happiness, was in\nthis manner brought about by two different orders of people, who had not\nthe least intention to serve the public. To gratify the most childish\nvanity was the sole motive of the great proprietors. The merchants and\nartificers, much less ridiculous, acted merely from a view to their\nown interest, and in pursuit of their own pedlar principle of turning\na penny wherever a penny was to be got. Neither of them had either\nknowledge or foresight of that great revolution which the folly of the\none, and the industry of the other, was gradually bringing about.\n\nIt was thus, that, through the greater part of Europe, the commerce and\nmanufactures of cities, instead of being the effect, have been the cause\nand occasion of the improvement and cultivation of the country.\n\nThis order, however, being contrary to the natural course of things, is\nnecessarily both slow and uncertain. Compare the slow progress of those\nEuropean countries of which the wealth depends very much upon their\ncommerce and manufactures, with the rapid advances of our North American\ncolonies, of which the wealth is founded altogether in agriculture.\nThrough the greater part of Europe, the number of inhabitants is not\nsupposed to double in less than five hundred years. In several of\nour North American colonies, it is found to double in twenty or\nfive-and-twenty years. In Europe, the law of primogeniture, and\nperpetuities of different kinds, prevent the division of great estates,\nand thereby hinder the multiplication of small proprietors. A small\nproprietor, however, who knows every part of his little territory, views\nit with all the affection which property, especially small property,\nnaturally inspires, and who upon that account takes pleasure, not only\nin cultivating, but in adorning it, is generally of all improvers the\nmost industrious, the most intelligent, and the most successful. The\nsame regulations, besides, keep so much land out of the market, that\nthere are always more capitals to buy than there is land to sell, so\nthat what is sold always sells at a monopoly price. The rent never\npays the interest of the purchase-money, and is, besides, burdened with\nrepairs and other occasional charges, to which the interest of money\nis not liable. To purchase land, is, everywhere in Europe, a most\nunprofitable employment of a small capital. For the sake of the superior\nsecurity, indeed, a man of moderate circumstances, when he retires from\nbusiness, will sometimes choose to lay out his little capital in land.\nA man of profession, too whose revenue is derived from another source\noften loves to secure his savings in the same way. But a young man,\nwho, instead of applying to trade or to some profession, should employ a\ncapital of two or three thousand pounds in the purchase and cultivation\nof a small piece of land, might indeed expect to live very happily and\nvery independently, but must bid adieu for ever to all hope of either\ngreat fortune or great illustration, which, by a different employment\nof his stock, he might have had the same chance of acquiring with\nother people. Such a person, too, though he cannot aspire at being a\nproprietor, will often disdain to be a farmer. The small quantity of\nland, therefore, which is brought to market, and the high price of\nwhat is brought thither, prevents a great number of capitals from being\nemployed in its cultivation and improvement, which would otherwise have\ntaken that direction. In North America, on the contrary, fifty or sixty\npounds is often found a sufficient stock to begin a plantation with.\nThe purchase and improvement of uncultivated land is there the most\nprofitable employment of the smallest as well as of the greatest\ncapitals, and the most direct road to all the fortune and illustration\nwhich can be required in that country. Such land, indeed, is in North\nAmerica to be had almost for nothing, or at a price much below the value\nof the natural produce; a thing impossible in Europe, or indeed in\nany country where all lands have long been private property. If landed\nestates, however, were divided equally among all the children, upon the\ndeath of any proprietor who left a numerous family, the estate would\ngenerally be sold. So much land would come to market, that it could no\nlonger sell at a monopoly price. The free rent of the land would go no\nnearer to pay the interest of the purchase-money, and a small capital\nmight be employed in purchasing land as profitable as in any other way.\n\nEngland, on account of the natural fertility of the soil, of the great\nextent of the sea-coast in proportion to that of the whole country,\nand of the many navigable rivers which run through it, and afford the\nconveniency of water carriage to some of the most inland parts of it,\nis perhaps as well fitted by nature as any large country in Europe to be\nthe seat of foreign commerce, of manufactures for distant sale, and of\nall the improvements which these can occasion. From the beginning of\nthe reign of Elizabeth, too, the English legislature has been peculiarly\nattentive to the interest of commerce and manufactures, and in reality\nthere is no country in Europe, Holland itself not excepted, of which\nthe law is, upon the whole, more favourable to this sort of industry.\nCommerce and manufactures have accordingly been continually advancing\nduring all this period. The cultivation and improvement of the country\nhas, no doubt, been gradually advancing too; but it seems to have\nfollowed slowly, and at a distance, the more rapid progress of commerce\nand manufactures. The greater part of the country must probably have\nbeen cultivated before the reign of Elizabeth; and a very great part of\nit still remains uncultivated, and the cultivation of the far greater\npart much inferior to what it might be, The law of England, however,\nfavours agriculture, not only indirectly, by the protection of commerce,\nbut by several direct encouragements. Except in times of scarcity, the\nexportation of corn is not only free, but encouraged by a bounty. In\ntimes of moderate plenty, the importation of foreign corn is loaded with\nduties that amount to a prohibition. The importation of live cattle,\nexcept from Ireland, is prohibited at all times; and it is but of\nlate that it was permitted from thence. Those who cultivate the land,\ntherefore, have a monopoly against their countrymen for the two greatest\nand most important articles of land produce, bread and butcher's meat.\nThese encouragements, although at bottom, perhaps, as I shall endeavour\nto show hereafter, altogether illusory, sufficiently demonstrate at\nleast the good intention of the legislature to favour agriculture.\nBut what is of much more importance than all of them, the yeomanry of\nEngland are rendered as secure, as independent, and as respectable,\nas law can make them. No country, therefore, which the right of\nprimogeniture takes place, which pays tithes, and where perpetuities,\nthough contrary to the spirit of the law, are admitted in some cases,\ncan give more encouragement to agriculture than England. Such, however,\nnotwithstanding, is the state of its cultivation. What would it have\nbeen, had the law given no direct encouragement to agriculture besides\nwhat arises indirectly from the progress of commerce, and had left the\nyeomanry in the same condition as in most other countries of Europe? It\nis now more than two hundred years since the beginning of the reign of\nElizabeth, a period as long as the course of human prosperity usually\nendures.\n\nFrance seems to have had a considerable share of foreign commerce, near\na century before England was distinguished as a commercial country.\nThe marine of France was considerable, according to the notions of the\ntimes, before the expedition of Charles VIII. to Naples. The cultivation\nand improvement of France, however, is, upon the whole, inferior to\nthat of England. The law of the country has never given the same direct\nencouragement to agriculture.\n\nThe foreign commerce of Spain and Portual to the other parts of Europe,\nthough chiefly carried on in foreign ships, is very considerable. That\nto their colonies is carried on in their own, and is much greater, on\naccount of the great riches and extent of those colonies. But it has\nnever introduced any considerable manufactures for distant sale into\neither of those countries, and the greater part of both still remains\nuncultivated. The foreign commerce of Portugal is of older standing than\nthat of any great country in Europe, except Italy.\n\nItaly is the only great country of Europe which seems to have been\ncultivated and improved in every part, by means of foreign commerce and\nmanufactures for distant sale. Before the invasion of Charles VIII.,\nItaly, according to Guicciardini, was cultivated not less in the most\nmountainous and barren parts of the country, than in the plainest and\nmost fertile. The advantageous situation of the country, and the\ngreat number of independent status which at that time subsisted in it,\nprobably contributed not a little to this general cultivation. It is not\nimpossible, too, notwithstanding this general expression of one of the\nmost judicious and reserved of modern historians, that Italy was not at\nthat time better cultivated than England is at present.\n\nThe capital, however, that is acquired to any country by commerce and\nmanufactures, is always a very precarious and uncertain possession, till\nsome part of it has been secured and realized in the cultivation and\nimprovement of its lands. A merchant, it has been said very properly, is\nnot necessarily the citizen of any particular country. It is in a great\nmeasure indifferent to him from what place he carries on his trade; and\na very trifling disgust will make him remove his capital, and, together\nwith it, all the industry which it supports, from one country to\nanother. No part of it can be said to belong to any particular country,\ntill it has been spread, as it were, over the face of that country,\neither in buildings, or in the lasting improvement of lands. No vestige\nnow remains of the great wealth said to have been possessed by the\ngreater part of the Hanse Towns, except in the obscure histories of the\nthirteenth and fourteenth centuries. It is even uncertain where some of\nthem were situated, or to what towns in Europe the Latin names given to\nsome of them belong. But though the misfortunes of Italy, in the end\nof the fifteenth and beginning of the sixteenth centuries, greatly\ndiminished the commerce and manufactures of the cities of Lombardy and\nTuscany, those countries still continue to be among the most populous\nand best cultivated in Europe. The civil wars of Flanders, and the\nSpanish government which succeeded them, chased away the great commerce\nof Antwerp, Ghent, and Bruges. But Flanders still continues to be one of\nthe richest, best cultivated, and most populous provinces of Europe. The\nordinary revolutions of war and government easily dry up the sources of\nthat wealth which arises from commerce only. That which arises from the\nmore solid improvements of agriculture is much more durable, and cannot\nbe destroyed but by those more violent convulsions occasioned by the\ndepredations of hostile and barbarous nations continued for a century or\ntwo together; such as those that happened for some time before and after\nthe fall of the Roman empire in the western provinces of Europe.\n\n\n\n\nBOOK IV. OF SYSTEMS OF POLITICAL ECONOMY.\n\n\n\nPolitical economy, considered as a branch of the science of a statesman\nor legislator, proposes two distinct objects; first, to provide a\nplentiful revenue or subsistence for the people, or, more properly, to\nenable them to provide such a revenue or subsistence for themselves;\nand, secondly, to supply the state or commonwealth with a revenue\nsufficient for the public services. It proposes to enrich both the\npeople and the sovereign.\n\nThe different progress of opulence in different ages and nations, has\ngiven occasion to two different systems of political economy, with\nregard to enriching the people. The one may be called the system of\ncommerce, the other that of agriculture. I shall endeavour to explain\nboth as fully and distinctly as I can, and shall begin with the system\nof commerce. It is the modern system, and is best understood in our own\ncountry and in our own times.\n\n\n\n\n\n\nCHAPTER I. OF THE PRINCIPLE OF THE COMMERCIAL OR MERCANTILE SYSTEM.\n\nThat wealth consists in money, or in gold and silver, is a popular\nnotion which naturally arises from the double function of money, as the\ninstrument of commerce, and as the measure of value. In consequence of\nits being the instrument of commerce, when we have money we can more\nreadily obtain whatever else we have occasion for, than by means of any\nother commodity. The great affair, we always find, is to get money.\nWhen that is obtained, there is no difficulty in making any subsequent\npurchase. In consequence of its being the measure of value, we estimate\nthat of all other commodities by the quantity of money which they will\nexchange for. We say of a rich man, that he is worth a great deal, and\nof a poor man, that he is worth very little money. A frugal man, or a\nman eager to be rich, is said to love money; and a careless, a generous,\nor a profuse man, is said to be indifferent about it. To grow rich is\nto get money; and wealth and money, in short, are, in common language,\nconsidered as in every respect synonymous.\n\nA rich country, in the same manner as a rich man, is supposed to be\na country abounding in money; and to heap up gold and silver in any\ncountry is supposed to be the readiest way to enrich it. For some time\nafter the discovery of America, the first inquiry of the Spaniards, when\nthey arrived upon any unknown coast, used to be, if there was any gold\nor silver to be found in the neighbourhood? By the information which\nthey received, they judged whether it was worth while to make a\nsettlement there, or if the country was worth the conquering. Plano\nCarpino, a monk sent ambassador from the king of France to one of the\nsons of the famous Gengis Khan, says, that the Tartars used frequently\nto ask him, if there was plenty of sheep and oxen in the kingdom of\nFrance? Their inquiry had the same object with that of the Spaniards.\nThey wanted to know if the country was rich enough to be worth the\nconquering. Among the Tartars, as among all other nations of shepherds,\nwho are generally ignorant of the use of money, cattle are the\ninstruments of commerce and the measures of value. Wealth, therefore,\naccording to them, consisted in cattle, as, according to the Spaniards,\nit consisted in gold and silver. Of the two, the Tartar notion, perhaps,\nwas the nearest to the truth.\n\nMr Locke remarks a distinction between money and other moveable goods.\nAll other moveable goods, he says, are of so consumable a nature, that\nthe wealth which consists in them cannot be much depended on; and a\nnation which abounds in them one year may, without any exportation, but\nmerely by their own waste and extravagance, be in great want of them the\nnext. Money, on the contrary, is a steady friend, which, though it may\ntravel about from hand to hand, yet if it can be kept from going out\nof the country, is not very liable to be wasted and consumed. Gold and\nsilver, therefore, are, according to him, the must solid and substantial\npart of the moveable wealth of a nation; and to multiply those metals\nought, he thinks, upon that account, to be the great object of its\npolitical economy.\n\nOthers admit, that if a nation could be separated from all the world,\nit would be of no consequence how much or how little money circulated in\nit. The consumable goods, which were circulated by means of this money,\nwould only be exchanged for a greater or a smaller number of pieces;\nbut the real wealth or poverty of the country, they allow, would depend\naltogether upon the abundance or scarcity of those consumable goods. But\nit is otherwise, they think, with countries which have connections with\nforeign nations, and which are obliged to carry on foreign wars, and to\nmaintain fleets and armies in distant countries. This, they say, cannot\nbe done, but by sending abroad money to pay them with; and a nation\ncannot send much money abroad, unless it has a good deal at home. Every\nsuch nation, therefore, must endeavour, in time of peace, to accumulate\ngold and silver, that when occasion requires, it may have wherewithal to\ncarry on foreign wars.\n\nIn consequence of those popular notions, all the different nations of\nEurope have studied, though to little purpose, every possible means of\naccumulating gold and silver in their respective countries. Spain and\nPortugal, the proprietors of the principal mines which supply Europe\nwith those metals, have either prohibited their exportation under the\nseverest penalties, or subjected it to a considerable duty. The like\nprohibition seems anciently to have made a part of the policy of most\nother European nations. It is even to be found, where we should least\nof all expect to find it, in some old Scotch acts of Parliament, which\nforbid, under heavy penalties, the carrying gold or silver forth of\nthe kingdom. The like policy anciently took place both in France and\nEngland.\n\nWhen those countries became commercial, the merchants found this\nprohibition, upon many occasions, extremely inconvenient. They could\nfrequently buy more advantageously with gold and silver, than with any\nother commodity, the foreign goods which they wanted, either to\nimport into their own, or to carry to some other foreign country. They\nremonstrated, therefore, against this prohibition as hurtful to trade.\n\nThey represented, first, that the exportation of gold and silver, in\norder to purchase foreign goods, did not always diminish the quantity of\nthose metals in the kingdom; that, on the contrary, it might frequently\nincrease the quantity; because, if the consumption of foreign goods was\nnot thereby increased in the country, those goods might be re-exported\nto foreign countries, and being there sold for a large profit, might\nbring back much more treasure than was originally sent out to purchase\nthem. Mr Mun compares this operation of foreign trade to the seed-time\nand harvest of agriculture. \"If we only behold,\" says he, \"the actions\nof the husbandman in the seed time, when he casteth away much good corn\ninto the ground, we shall account him rather a madman than a husbandman.\nBut when we consider his labours in the harvest, which is the end of\nhis endeavours, we shall find the worth and plentiful increase of his\nactions.\"\n\nThey represented, secondly, that this prohibition could not hinder the\nexportation of gold and silver, which, on account of the smallness\nof their bulk in proportion to their value, could easily be smuggled\nabroad. That this exportation could only be prevented by a proper\nattention to what they called the balance of trade. That when the\ncountry exported to a greater value than it imported, a balance became\ndue to it from foreign nations, which was necessarily paid to it in gold\nand silver, and thereby increased the quantity of those metals in the\nkingdom. But that when it imported to a greater value than it exported,\na contrary balance became due to foreign nations, which was necessarily\npaid to them in the same manner, and thereby diminished that quantity:\nthat in this case, to prohibit the exportation of those metals, could\nnot prevent it, but only, by making it more dangerous, render it more\nexpensive: that the exchange was thereby turned more against the country\nwhich owed the balance, than it otherwise might have been; the merchant\nwho purchased a bill upon the foreign country being obliged to pay the\nbanker who sold it, not only for the natural risk, trouble, and expense\nof sending the money thither, but for the extraordinary risk arising\nfrom the prohibition; but that the more the exchange was against any\ncountry, the more the balance of trade became necessarily against it;\nthe money of that country becoming necessarily of so much less value, in\ncomparison with that of the country to which the balance was due. That\nif the exchange between England and Holland, for example, was five per\ncent. against England, it would require 105 ounces of silver in England\nto purchase a bill for 100 ounces of silver in Holland: that 105 ounces\nof silver in England, therefore, would be worth only 100 ounces of\nsilver in Holland, and would purchase only a proportionable quantity of\nDutch goods; but that 100 ounces of silver in Holland, on the\ncontrary, would be worth 105 ounces in England, and would purchase a\nproportionable quantity of English goods; that the English goods which\nwere sold to Holland would be sold so much cheaper, and the Dutch goods\nwhich were sold to England so much dearer, by the difference of the\nexchange: that the one would draw so much less Dutch money to England,\nand the other so much more English money to Holland, as this difference\namounted to: and that the balance of trade, therefore, would necessarily\nbe so much more against England, and would require a greater balance of\ngold and silver to be exported to Holland.\n\nThose arguments were partly solid and partly sophistical. They were\nsolid, so far as they asserted that the exportation of gold and silver\nin trade might frequently be advantageous to the country. They were\nsolid, too, in asserting that no prohibition could prevent their\nexportation, when private people found any advantage in exporting them.\nBut they were sophistical, in supposing, that either to preserve or\nto augment the quantity of those metals required more the attention of\ngovernment, than to preserve or to augment the quantity of any other\nuseful commodities, which the freedom of trade, without any such\nattention, never fails to supply in the proper quantity. They were\nsophistical, too, perhaps, in asserting that the high price of exchange\nnecessarily increased what they called the unfavourable balance of\ntrade, or occasioned the exportation of a greater quantity of gold and\nsilver. That high price, indeed, was extremely disadvantageous to the\nmerchants who had any money to pay in foreign countries. They paid so\nmuch dearer for the bills which their bankers granted them upon those\ncountries. But though the risk arising from the prohibition might\noccasion some extraordinary expense to the bankers, it would not\nnecessarily carry any more money out of the country. This expense would\ngenerally be all laid out in the country, in smuggling the money out\nof it, and could seldom occasion the exportation of a single sixpence\nbeyond the precise sum drawn for. The high price of exchange, too,\nwould naturally dispose the merchants to endeavour to make their exports\nnearly balance their imports, in order that they might have this high\nexchange to pay upon as small a sum as possible. The high price of\nexchange, besides, must necessarily have operated as a tax, in raising\nthe price of foreign goods, and thereby diminishing their consumption.\nIt would tend, therefore, not to increase, but to diminish, what\nthey called the unfavourable balance of trade, and consequently the\nexportation of gold and silver.\n\nSuch as they were, however, those arguments convinced the people to whom\nthey were addressed. They were addressed by merchants to parliaments\nand to the councils of princes, to nobles, and to country gentlemen; by\nthose who were supposed to understand trade, to those who were conscious\nto them selves that they knew nothing about the matter. That foreign\ntrade enriched the country, experience demonstrated to the nobles and\ncountry gentlemen, as well as to the merchants; but how, or in what\nmanner, none of them well knew. The merchants knew perfectly in what\nmanner it enriched themselves, it was their business to know it. But\nto know in what manner it enriched the country, was no part of their\nbusiness. The subject never came into their consideration, but when\nthey had occasion to apply to their country for some change in the laws\nrelating to foreign trade. It then became necessary to say something\nabout the beneficial effects of foreign trade, and the manner in which\nthose effects were obstructed by the laws as they then stood. To the\njudges who were to decide the business, it appeared a most satisfactory\naccount of the matter, when they were told that foreign trade brought\nmoney into the country, but that the laws in question hindered it from\nbringing so much as it otherwise would do. Those arguments, therefore,\nproduced the wished-for effect. The prohibition of exporting gold\nand silver was, in France and England, confined to the coin of those\nrespective countries. The exportation of foreign coin and of bullion\nwas made free. In Holland, and in some other places, this liberty was\nextended even to the coin of the country. The attention of government\nwas turned away from guarding against the exportation of gold and\nsilver, to watch over the balance of trade, as the only cause which\ncould occasion any augmentation or diminution of those metals. From one\nfruitless care, it was turned away to another care much more intricate,\nmuch more embarrassing, and just equally fruitless. The title of Mun's\nbook, England's Treasure in Foreign Trade, became a fundamental maxim in\nthe political economy, not of England only, but of all other commercial\ncountries. The inland or home trade, the most important of all, the\ntrade in which an equal capital affords the greatest revenue, and\ncreates the greatest employment to the people of the country, was\nconsidered as subsidiary only to foreign trade. It neither brought money\ninto the country, it was said, nor carried any out of it. The country,\ntherefore, could never become either richer or poorer by means of it,\nexcept so far as its prosperity or decay might indirectly influence the\nstate of foreign trade.\n\nA country that has no mines of its own, must undoubtedly draw its gold\nand silver from foreign countries, in the same manner as one that has\nno vineyards of its own must draw its wines. It does not seem necessary,\nhowever, that the attention of government should be more turned towards\nthe one than towards the other object. A country that has wherewithal\nto buy wine, will always get the wine which it has occasion for; and a\ncountry that has wherewithal to buy gold and silver, will never be in\nwant of those metals. They are to be bought for a certain price,\nlike all other commodities; and as they are the price of all other\ncommodities, so all other commodities are the price of those metals.\nWe trust, with perfect security, that the freedom of trade, without any\nattention of government, will always supply us with the wine which we\nhave occasion for; and we may trust, with equal security, that it will\nalways supply us with all the gold and silver which we can afford to\npurchase or to employ, either in circulating our commodities or in other\nuses.\n\nThe quantity of every commodity which human industry can either purchase\nor produce, naturally regulates itself in every country according to the\neffectual demand, or according to the demand of those who are willing to\npay the whole rent, labour, and profits, which must be paid in order to\nprepare and bring it to market. But no commodities regulate themselves\nmore easily or more exactly, according to this effectual demand, than\ngold and silver; because, on account of the small bulk and great value\nof those metals, no commodities can be more easily transported from one\nplace to another; from the places where they are cheap, to those where\nthey are dear; from the places where they exceed, to those where they\nfall short of this effectual demand. If there were in England, for\nexample, an effectual demand for an additional quantity of gold, a\npacket-boat could bring from Lisbon, or from wherever else it was to\nbe had, fifty tons of gold, which could be coined into more than five\nmillions of guineas. But if there were an effectual demand for grain\nto the same value, to import it would require, at five guineas a-ton,\na million of tons of shipping, or a thousand ships of a thousand tons\neach. The navy of England would not be sufficient.\n\nWhen the quantity of gold and silver imported into any country exceeds\nthe effectual demand, no vigilance of government can prevent their\nexportation. All the sanguinary laws of Spain and Portugal are not able\nto keep their gold and silver at home. The continual importations from\nPeru and Brazil exceed the effectual demand of those countries, and\nsink the price of those metals there below that in the neighbouring\ncountries. If, on the contrary, in any particular country, their\nquantity fell short of the effectual demand, so as to raise their price\nabove that of the neighbouring countries, the government would have no\noccasion to take any pains to import them. If it were even to take pains\nto prevent their importation, it would not be able to effectuate it.\nThose metals, when the Spartans had got wherewithal to purchase them,\nbroke through all the barriers which the laws of Lycurgus opposed to\ntheir entrance into Lacedaemon. All the sanguinary laws of the customs\nare not able to prevent the importation of the teas of the Dutch and\nGottenburg East India companies; because somewhat cheaper than those of\nthe British company. A pound of tea, however, is about a hundred times\nthe bulk of one of the highest prices, sixteen shillings, that is\ncommonly paid for it in silver, and more than two thousand times the\nbulk of the same price in gold, and, consequently, just so many times\nmore difficult to smuggle.\n\nIt is partly owing to the easy transportation of gold and silver, from\nthe places where they abound to those where they are wanted, that the\nprice of those metals does not fluctuate continually, like that of the\ngreater part of other commodities, which are hindered by their bulk from\nshifting their situation, when the market happens to be either over\nor under-stocked with them. The price of those metals, indeed, is not\naltogether exempted from variation; but the changes to which it is\nliable are generally slow, gradual, and uniform. In Europe, for example,\nit is supposed, without much foundation, perhaps, that during the course\nof the present and preceding century, they have been constantly,\nbut gradually, sinking in their value, on account of the continual\nimportations from the Spanish West Indies. But to make any sudden\nchange in the price of gold and silver, so as to raise or lower at\nonce, sensibly and remarkably, the money price of all other commodities,\nrequires such a revolution in commerce as that occasioned by the\ndiscovery of America.\n\nIf, not withstanding all this, gold and silver should at any time fall\nshort in a country which has wherewithal to purchase them, there are\nmore expedients for supplying their place, than that of almost any other\ncommodity. If the materials of manufacture are wanted, industry must\nstop. If provisions are wanted, the people must starve. But if money\nis wanted, barter will supply its place, though with a good deal of\ninconveniency. Buying and selling upon credit, and the different dealers\ncompensating their credits with one another, once a-month, or once\na-year, will supply it with less inconveniency. A well-regulated\npaper-money will supply it not only without any inconveniency, but, in\nsome cases, with some advantages. Upon every account, therefore, the\nattention of government never was so unnecessarily employed, as when\ndirected to watch over the preservation or increase of the quantity of\nmoney in any country.\n\nNo complaint, however, is more common than that of a scarcity of money.\nMoney, like wine, must always be scarce with those who have neither\nwherewithal to buy it, nor credit to borrow it. Those who have either,\nwill seldom be in want either of the money, or of the wine which they\nhave occasion for. This complaint, however, of the scarcity of money, is\nnot always confined to improvident spendthrifts. It is sometimes general\nthrough a whole mercantile town and the country in its neighbourhood.\nOver-trading is the common cause of it. Sober men, whose projects have\nbeen disproportioned to their capitals, are as likely to have neither\nwherewithal to buy money, nor credit to borrow it, as prodigals, whose\nexpense has been disproportioned to their revenue. Before their projects\ncan be brought to bear, their stock is gone, and their credit with it.\nThey run about everywhere to borrow money, and everybody tells them that\nthey have none to lend. Even such general complaints of the scarcity\nof money do not always prove that the usual number of gold and silver\npieces are not circulating in the country, but that many people want\nthose pieces who have nothing to give for them. When the profits of\ntrade happen to be greater than ordinary over-trading becomes a general\nerror, both among great and small dealers. They do not always send more\nmoney abroad than usual, but they buy upon credit, both at home and\nabroad, an unusual quantity of goods, which they send to some distant\nmarket, in hopes that the returns will come in before the demand for\npayment. The demand comes before the returns, and they have nothing at\nhand with which they can either purchase money or give solid security\nfor borrowing. It is not any scarcity of gold and silver, but the\ndifficulty which such people find in borrowing, and which their creditor\nfind in getting payment, that occasions the general complaint of the\nscarcity of money.\n\nIt would be too ridiculous to go about seriously to prove, that wealth\ndoes not consist in money, or in gold and silver; but in what money\npurchases, and is valuable only for purchasing. Money, no doubt, makes\nalways a part of the national capital; but it has already been\nshown that it generally makes but a small part, and always the most\nunprofitable part of it.\n\nIt is not because wealth consists more essentially in money than in\ngoods, that the merchant finds it generally more easy to buy goods with\nmoney, than to buy money with goods; but because money is the known and\nestablished instrument of commerce, for which every thing is readily\ngiven in exchange, but which is not always with equal readiness to be\ngot in exchange for every thing. The greater part of goods, besides, are\nmore perishable than money, and he may frequently sustain a much greater\nloss by keeping them. When his goods are upon hand, too, he is more\nliable to such demands for money as he may not be able to answer, than\nwhen he has got their price in his coffers. Over and above all this, his\nprofit arises more directly from selling than from buying; and he is,\nupon all these accounts, generally much more anxious to exchange his\ngoods for money than his money for goods. But though a particular\nmerchant, with abundance of goods in his warehouse, may sometimes be\nruined by not being able to sell them in time, a nation or country\nis not liable to the same accident, The whole capital of a merchant\nfrequently consists in perishable goods destined for purchasing money.\nBut it is but a very small part of the annual produce of the land and\nlabour of a country, which can ever be destined for purchasing gold and\nsilver from their neighbours. The far greater part is circulated and\nconsumed among themselves; and even of the surplus which is sent abroad,\nthe greater part is generally destined for the purchase of other foreign\ngoods. Though gold and silver, therefore, could not be had in exchange\nfor the goods destined to purchase them, the nation would not be ruined.\nIt might, indeed, suffer some loss and inconveniency, and be forced upon\nsome of those expedients which are necessary for supplying the place of\nmoney. The annual produce of its land and labour, however, would be the\nsame, or very nearly the same as usual; because the same, or very nearly\nthe same consumable capital would be employed in maintaining it. And\nthough goods do not always draw money so readily as money draws goods,\nin the long-run they draw it more necessarily than even it draws them.\nGoods can serve many other purposes besides purchasing money, but money\ncan serve no other purpose besides purchasing goods. Money, therefore,\nnecessarily runs after goods, but goods do not always or necessarily run\nafter money. The man who buys, does not always mean to sell again, but\nfrequently to use or to consume; whereas he who sells always means to\nbuy again. The one may frequently have done the whole, but the other can\nnever have done more than the one half of his business. It is not for\nits own sake that men desire money, but for the sake of what they can\npurchase with it.\n\nConsumable commodities, it is said, are soon destroyed; whereas gold and\nsilver are of a more durable nature, and were it not for this continual\nexportation, might be accumulated for ages together, to the incredible\naugmentation of the real wealth of the country. Nothing, therefore, it\nis pretended, can be more disadvantageous to any country, than the\ntrade which consists in the exchange of such lasting for such perishable\ncommodities. We do not, however, reckon that trade disadvantageous,\nwhich consists in the exchange of the hardware of England for the wines\nof France, and yet hardware is a very durable commodity, and were it\nnot for this continual exportation, might too be accumulated for ages\ntogether, to the incredible augmentation of the pots and pans of the\ncountry. But it readily occurs, that the number of such utensils is in\nevery country necessarily limited by the use which there is for them;\nthat it would be absurd to have more pots and pans than were necessary\nfor cooking the victuals usually consumed there; and that, if the\nquantity of victuals were to increase, the number of pots and pans would\nreadily increase along with it; a part of the increased quantity\nof victuals being employed in purchasing them, or in maintaining an\nadditional number of workmen whose business it was to make them. It\nshould as readily occur, that the quantity of gold and silver is, in\nevery country, limited by the use which there is for those metals; that\ntheir use consists in circulating commodities, as coin, and in affording\na species of household furniture, as plate; that the quantity of coin in\nevery country is regulated by the value of the commodities which are to\nbe circulated by it; increase that value, and immediately a part of\nit will be sent abroad to purchase, wherever it is to be had, the\nadditional quantity of coin requisite for circulating them: that the\nquantity of plate is regulated by the number and wealth of those private\nfamilies who choose to indulge themselves in that sort of magnificence;\nincrease the number and wealth of such families, and a part of this\nincreased wealth will most probably be employed in purchasing, wherever\nit is to be found, an additional quantity of plate; that to attempt\nto increase the wealth of any country, either by introducing or by\ndetaining in it an unnecessary quantity of gold and silver, is as\nabsurd as it would be to attempt to increase the good cheer of private\nfamilies, by obliging them to keep an unnecessary number of kitchen\nutensils. As the expense of purchasing those unnecessary utensils would\ndiminish, instead of increasing, either the quantity or goodness of the\nfamily provisions; so the expense of purchasing an unnecessary quantity\nof gold and silver must, in every country, as necessarily diminish the\nwealth which feeds, clothes, and lodges, which maintains and employs the\npeople. Gold and silver, whether in the shape of coin or of plate,\nare utensils, it must be remembered, as much as the furniture of the\nkitchen. Increase the use of them, increase the consumable commodities\nwhich are to be circulated, managed, and prepared by means of them,\nand you will infallibly increase the quantity; but if you attempt by\nextraordinary means to increase the quantity, you will as infallibly\ndiminish the use, and even the quantity too, which in those metals\ncan never be greater than what the use requires. Were they ever to be\naccumulated beyond this quantity, their transportation is so easy, and\nthe loss which attends their lying idle and unemployed so great, that no\nlaw could prevent their being immediately sent out of the country.\n\nIt is not always necessary to accumulate gold and silver, in order to\nenable a country to carry on foreign wars, and to maintain fleets and\narmies in distant countries. Fleets and armies are maintained, not with\ngold and silver, but with consumable goods. The nation which, from the\nannual produce of its domestic industry, from the annual revenue arising\nout of its lands, and labour, and consumable stock, has wherewithal\nto purchase those consumable goods in distant countries, can maintain\nforeign wars there.\n\nA nation may purchase the pay and provisions of an army in a distant\ncountry three different ways; by sending abroad either, first, some\npart of its accumulated gold and silver; or, secondly, some part of the\nannual produce of its manufactures; or, last of all, some part of its\nannual rude produce.\n\nThe gold and silver which can properly be considered as accumulated, or\nstored up in any country, may be distinguished into three parts; first,\nthe circulating money; secondly, the plate of private families; and,\nlast of all, the money which may have been collected by many years\nparsimony, and laid up in the treasury of the prince.\n\nIt can seldom happen that much can be spared from the circulating money\nof the country; because in that there can seldom be much redundancy.\nThe value of goods annually bought and sold in any country requires\na certain quantity of money to circulate and distribute them to their\nproper consumers, and can give employment to no more. The channel of\ncirculation necessarily draws to itself a sum sufficient to fill it, and\nnever admits any more. Something, however, is generally withdrawn from\nthis channel in the case of foreign war. By the great number of people\nwho are maintained abroad, fewer are maintained at home. Fewer goods are\ncirculated there, and less money becomes necessary to circulate them. An\nextraordinary quantity of paper money of some sort or other, too, such\nas exchequer notes, navy bills, and bank bills, in England, is generally\nissued upon such occasions, and, by supplying the place of circulating\ngold and silver, gives an opportunity of sending a greater quantity\nof it abroad. All this, however, could afford but a poor resource for\nmaintaining a foreign war, of great expense, and several years duration.\n\nThe melting down of the plate of private families has, upon every\noccasion, been found a still more insignificant one. The French, in the\nbeginning of the last war, did not derive so much advantage from this\nexpedient as to compensate the loss of the fashion.\n\nThe accumulated treasures of the prince have in former times afforded\na much greater and more lasting resource. In the present times, if you\nexcept the king of Prussia, to accumulate treasure seems to be no part\nof the policy of European princes.\n\nThe funds which maintained the foreign wars of the present century, the\nmost expensive perhaps which history records, seem to have had little\ndependency upon the exportation either of the circulating money, or of\nthe plate of private families, or of the treasure of the prince. The\nlast French war cost Great Britain upwards of £90,000,000, including not\nonly the £75,000,000 of new debt that was contracted, but the additional\n2s. in the pound land-tax, and what was annually borrowed of the sinking\nfund. More than two-thirds of this expense were laid out in distant\ncountries; in Germany, Portugal, America, in the ports of the\nMediterranean, in the East and West Indies. The kings of England had no\naccumulated treasure. We never heard of any extraordinary quantity of\nplate being melted down. The circulating gold and silver of the country\nhad not been supposed to exceed £18,000,000. Since the late recoinage of\nthe gold, however, it is believed to have been a good deal under-rated.\nLet us suppose, therefore, according to the most exaggerated computation\nwhich I remember to have either seen or heard of, that, gold and silver\ntogether, it amounted to £30,000,000. Had the war been carried on\nby means of our money, the whole of it must, even according to this\ncomputation, have been sent out and returned again, at least twice in a\nperiod of between six and seven years. Should this be supposed, it would\nafford the most decisive argument, to demonstrate how unnecessary it is\nfor government to watch over the preservation of money, since, upon this\nsupposition, the whole money of the country must have gone from it, and\nreturned to it again, two different times in so short a period, without\nany body's knowing any thing of the matter. The channel of circulation,\nhowever, never appeared more empty than usual during any part of this\nperiod. Few people wanted money who had wherewithal to pay for it. The\nprofits of foreign trade, indeed, were greater than usual during the\nwhole war, but especially towards the end of it. This occasioned, what\nit always occasions, a general over-trading in all the ports of Great\nBritain; and this again occasioned the usual complaint of the scarcity\nof money, which always follows over-trading. Many people wanted it, who\nhad neither wherewithal to buy it, nor credit to borrow it; and because\nthe debtors found it difficult to borrow, the creditors found it\ndifficult to get payment. Gold and silver, however, were generally to be\nhad for their value, by those who had that value to give for them.\n\nThe enormous expense of the late war, therefore, must have been chiefly\ndefrayed, not by the exportation of gold and silver, but by that of\nBritish commodities of some kind or other. When the government, or those\nwho acted under them, contracted with a merchant for a remittance to\nsome foreign country, he would naturally endeavour to pay his foreign\ncorrespondent, upon whom he granted a bill, by sending abroad rather\ncommodities than gold and silver. If the commodities of Great Britain\nwere not in demand in that country, he would endeavour to send them to\nsome other country in which he could purchase a bill upon that country.\nThe transportation of commodities, when properly suited to the market,\nis always attended with a considerable profit; whereas that of gold\nand silver is scarce ever attended with any. When those metals are sent\nabroad in order to purchase foreign commodities, the merchant's profit\narises, not from the purchase, but from the sale of the returns. But\nwhen they are sent abroad merely to pay a debt, he gets no returns, and\nconsequently no profit. He naturally, therefore, exerts his invention to\nfind out a way of paying his foreign debts, rather by the exportation\nof commodities, than by that of gold and silver. The great quantity\nof British goods, exported during the course of the late war, without\nbringing back any returns, is accordingly remarked by the author of the\nPresent State of the Nation.\n\nBesides the three sorts of gold and silver above mentioned, there is\nin all great commercial countries a good deal of bullion alternately\nimported and exported, for the purposes of foreign trade. This bullion,\nas it circulates among different commercial countries, in the same\nmanner as the national coin circulates in every country, may be\nconsidered as the money of the great mercantile republic. The national\ncoin receives its movement and direction from the commodities circulated\nwithin the precincts of each particular country; the money in the\nmercantile republic, from those circulated between different countries.\nBoth are employed in facilitating exchanges, the one between different\nindividuals of the same, the other between those of different nations.\nPart of this money of the great mercantile republic may have been, and\nprobably was, employed in carrying on the late war. In time of a general\nwar, it is natural to suppose that a movement and direction should be\nimpressed upon it, different from what it usually follows in profound\npeace, that it should circulate more about the seat of the war, and be\nmore employed in purchasing there, and in the neighbouring countries,\nthe pay and provisions of the different armies. But whatever part of\nthis money of the mercantile republic Great Britain may have annually\nemployed in this manner, it must have been annually purchased, either\nwith British commodities, or with something else that had been purchased\nwith them; which still brings us back to commodities, to the annual\nproduce of the land and labour of the country, as the ultimate resources\nwhich enabled us to carry on the war. It is natural, indeed, to suppose,\nthat so great an annual expense must have been defrayed from a great\nannual produce. The expense of 1761, for example, amounted to more than\n£19,000,000. No accumulation could have supported so great an annual\nprofusion. There is no annual produce, even of gold and silver, which\ncould have supported it. The whole gold and silver annually imported\ninto both Spain and Portugal, according to the best accounts, does not\ncommonly much exceed £6,000,000 sterling, which, in some years, would\nscarce have paid four months expense of the late war.\n\nThe commodities most proper for being transported to distant countries,\nin order to purchase there either the pay and provisions of an army,\nor some part of the money of the mercantile republic to be employed in\npurchasing them, seem to be the finer and more improved manufactures;\nsuch as contain a great value in a small bulk, and can therefore be\nexported to a great distance at little expense. A country whose industry\nproduces a great annual surplus of such manufactures, which are usually\nexported to foreign countries, may carry on for many years a very\nexpensive foreign war, without either exporting any considerable\nquantity of gold and silver, or even having any such quantity to export.\nA considerable part of the annual surplus of its manufactures must,\nindeed, in this case, be exported without bringing back any returns to\nthe country, though it does to the merchant; the government purchasing\nof the merchant his bills upon foreign countries, in order to purchase\nthere the pay and provisions of an army. Some part of this surplus,\nhowever, may still continue to bring back a return. The manufacturers\nduring; the war will have a double demand upon them, and be called upon\nfirst to work up goods to be sent abroad, for paying the bills drawn\nupon foreign countries for the pay and provisions of the army: and,\nsecondly, to work up such as are necessary for purchasing the common\nreturns that had usually been consumed in the country. In the midst\nof the most destructive foreign war, therefore, the greater part of\nmanufactures may frequently flourish greatly; and, on the contrary, they\nmay decline on the return of peace. They may flourish amidst the ruin of\ntheir country, and begin to decay upon the return of its prosperity. The\ndifferent state of many different branches of the British manufactures\nduring the late war, and for some time after the peace, may serve as an\nillustration of what has been just now said.\n\nNo foreign war, of great expense or duration, could conveniently be\ncarried on by the exportation of the rude produce of the soil. The\nexpense of sending such a quantity of it into a foreign country as\nmight purchase the pay and provisions of an army would be too great. Few\ncountries, too, produce much more rude produce than what is sufficient\nfor the subsistence of their own inhabitants. To send abroad any\ngreat quantity of it, therefore, would be to send abroad a part of\nthe necessary subsistence of the people. It is otherwise with the\nexportation of manufactures. The maintenance of the people employed\nin them is kept at home, and only the surplus part of their work is\nexported. Mr Hume frequently takes notice of the inability of the\nancient kings of England to carry on, without interruption, any foreign\nwar of long duration. The English in those days had nothing wherewithal\nto purchase the pay and provisions of their armies in foreign countries,\nbut either the rude produce of the soil, of which no considerable part\ncould be spared from the home consumption, or a few manufactures of\nthe coarsest kind, of which, as well as of the rude produce, the\ntransportation was too expensive. This inability did not arise from the\nwant of money, but of the finer and more improved manufactures. Buying\nand selling was transacted by means of money in England then as well\nas now. The quantity of circulating money must have borne the same\nproportion, to the number and value of purchases and sales usually\ntransacted at that time, which it does to those transacted at present;\nor, rather, it must have borne a greater proportion, because there was\nthen no paper, which now occupies a great part of the employment of gold\nand silver. Among nations to whom commerce and manufactures are little\nknown, the sovereign, upon extraordinary occasions, can seldom draw any\nconsiderable aid from his subjects, for reasons which shall be explained\nhereafter. It is in such countries, therefore, that he generally\nendeavours to accumulate a treasure, as the only resource against such\nemergencies. Independent of this necessity, he is, in such a situation,\nnaturally disposed to the parsimony requisite for accumulation. In that\nsimple state, the expense even of a sovereign is not directed by the\nvanity which delights in the gaudy finery of a court, but is employed in\nbounty to his tenants, and hospitality to his retainers. But bounty\nand hospitality very seldom lead to extravagance; though vanity almost\nalways does. Every Tartar chief, accordingly, has a treasure. The\ntreasures of Mazepa, chief of the Cossacks in the Ukraine, the famous\nally of Charles XII., are said to have been very great. The French\nkings of the Merovingian race had all treasures. When they divided their\nkingdom among their different children, they divided their treasures\ntoo. The Saxon princes, and the first kings after the Conquest, seem\nlikewise to have accumulated treasures. The first exploit of every new\nreign was commonly to seize the treasure of the preceding king, as the\nmost essential measure for securing the succession. The sovereigns of\nimproved and commercial countries are not under the same necessity\nof accumulating treasures, because they can generally draw from their\nsubjects extraordinary aids upon extraordinary occasions. They are\nlikewise less disposed to do so. They naturally, perhaps necessarily,\nfollow the mode of the times; and their expense comes to be regulated\nby the same extravagant vanity which directs that of all the other great\nproprietors in their dominions. The insignificant pageantry of their\ncourt becomes every day more brilliant; and the expense of it not only\nprevents accumulation, but frequently encroaches upon the funds destined\nfor more necessary expenses. What Dercyllidas said of the court of\nPersia, may be applied to that of several European princes, that he saw\nthere much splendour, but little strength, and many servants, but few\nsoldiers.\n\nThe importation of gold and silver is not the principal, much less the\nsole benefit, which a nation derives from its foreign trade. Between\nwhatever places foreign trade is carried on, they all of them derive\ntwo distinct benefits from it. It carries out that surplus part of the\nproduce of their land and labour for which there is no demand among\nthem, and brings back in return for it something else for which there\nis a demand. It gives a value to their superfluities, by exchanging them\nfor something else, which may satisfy a part of their wants and increase\ntheir enjoyments. By means of it, the narrowness of the home market does\nnot hinder the division of labour in any particular branch of art or\nmanufacture from being carried to the highest perfection. By opening a\nmore extensive market for whatever part of the produce of their labour\nmay exceed the home consumption, it encourages them to improve its\nproductive power, and to augment its annual produce to the utmost, and\nthereby to increase the real revenue and wealth of the society. These\ngreat and important services foreign trade is continually occupied in\nperforming to all the different countries between which it is carried\non. They all derive great benefit from it, though that in which the\nmerchant resides generally derives the greatest, as he is generally more\nemployed in supplying the wants, and carrying out the superfluities of\nhis own, than of any other particular country. To import the gold and\nsilver which may be wanted into the countries which have no mines, is,\nno doubt a part of the business of foreign commerce. It is, however, a\nmost insignificant part of it. A country which carried on foreign trade\nmerely upon this account, could scarce have occasion to freight a ship\nin a century.\n\nIt is not by the importation of gold and silver that the discovery of\nAmerica has enriched Europe. By the abundance of the American mines,\nthose metals have become cheaper. A service of plate can now be\npurchased for about a third part of the corn, or a third part of the\nlabour, which it would have cost in the fifteenth century. With the same\nannual expense of labour and commodities, Europe can annually purchase\nabout three times the quantity of plate which it could have purchased\nat that time. But when a commodity comes to be sold for a third part of\nwhat bad been its usual price, not only those who purchased it before\ncan purchase three times their former quantity, but it is brought down\nto the level of a much greater number of purchasers, perhaps to more\nthan ten, perhaps to more than twenty times the former number. So that\nthere may be in Europe at present, not only more than three times, but\nmore than twenty or thirty times the quantity of plate which would have\nbeen in it, even in its present state of improvement, had the discovery\nof the American mines never been made. So far Europe has, no doubt,\ngained a real conveniency, though surely a very trifling one. The\ncheapness of gold and silver renders those metals rather less fit for\nthe purposes of money than they were before. In order to make the same\npurchases, we must load ourselves with a greater quantity of them, and\ncarry about a shilling in our pocket, where a groat would have\ndone before. It is difficult to say which is most trifling, this\ninconveniency, or the opposite conveniency. Neither the one nor the\nother could have made any very essential change in the state of Europe.\nThe discovery of America, however, certainly made a most essential one.\nBy opening a new and inexhaustible market to all the commodities of\nEurope, it gave occasion to new divisions of labour and improvements of\nart, which in the narrow circle of the ancient commerce could never have\ntaken place, for want of a market to take off the greater part of their\nproduce. The productive powers of labour were improved, and its produce\nincreased in all the different countries of Europe, and together with\nit the real revenue and wealth of the inhabitants. The commodities of\nEurope were almost all new to America, and many of those of America were\nnew to Europe. A new set of exchanges, therefore, began to take place,\nwhich had never been thought of before, and which should naturally\nhave proved as advantageous to the new, as it certainly did to the old\ncontinent. The savage injustice of the Europeans rendered an event,\nwhich ought to have been beneficial to all, ruinous and destructive to\nseveral of those unfortunate countries.\n\nThe discovery of a passage to the East Indies by the Cape of Good Hope,\nwhich happened much about the same time, opened perhaps a still\nmore extensive range to foreign commerce, than even that of America,\nnotwithstanding the greater distance. There were but two nations\nin America, in any respect, superior to the savages, and these were\ndestroyed almost as soon as discovered. The rest were mere savages. But\nthe empires of China, Indostan, Japan, as well as several others in the\nEast Indies, without having richer mines of gold or silver, were, in\nevery other respect, much richer, better cultivated, and more advanced\nin all arts and manufactures, than either Mexico or Peru, even though we\nshould credit, what plainly deserves no credit, the exaggerated accounts\nof the Spanish writers concerning the ancient state of those empires.\nBut rich and civilized nations can always exchange to a much greater\nvalue with one another, than with savages and barbarians. Europe,\nhowever, has hitherto derived much less advantage from its commerce with\nthe East Indies, than from that with America. The Portuguese monopolized\nthe East India trade to themselves for about a century; and it was only\nindirectly, and through them, that the other nations of Europe could\neither send out or receive any goods from that country. When the Dutch,\nin the beginning of the last century, began to encroach upon them, they\nvested their whole East India commerce in an exclusive company. The\nEnglish, French, Swedes, and Danes, have all followed their example; so\nthat no great nation of Europe has ever yet had the benefit of a free\ncommerce to the East Indies. No other reason need be assigned why it\nhas never been so advantageous as the trade to America, which, between\nalmost every nation of Europe and its own colonies, is free to all its\nsubjects. The exclusive privileges of those East India companies, their\ngreat riches, the great favour and protection which these have procured\nthem from their respective governments, have excited much envy against\nthem. This envy has frequently represented their trade as altogether\npernicious, on account of the great quantities of silver which it every\nyear exports from the countries from which it is carried on. The parties\nconcerned have replied, that their trade by this continual exportation\nof silver, might indeed tend to impoverish Europe in general, but not\nthe particular country from which it was carried on; because, by the\nexportation of a part of the returns to other European countries, it\nannually brought home a much greater quantity of that metal than it\ncarried out. Both the objection and the reply are founded in the popular\nnotion which I have been just now examining. It is therefore unnecessary\nto say any thing further about either. By the annual exportation of\nsilver to the East Indies, plate is probably somewhat dearer in Europe\nthan it otherwise might have been; and coined silver probably purchases\na larger quantity both of labour and commodities. The former of these\ntwo effects is a very small loss, the latter a very small advantage;\nboth too insignificant to deserve any part of the public attention.\nThe trade to the East Indies, by opening a market to the commodities of\nEurope, or, what comes nearly to the same thing, to the gold and silver\nwhich is purchased with those commodities, must necessarily tend to\nincrease the annual production of European commodities, and consequently\nthe real wealth and revenue of Europe. That it has hitherto increased\nthem so little, is probably owing to the restraints which it everywhere\nlabours under.\n\nI thought it necessary, though at the hazard of being tedious, to\nexamine at full length this popular notion, that wealth consists in\nmoney or in gold and silver. Money, in common language, as I have\nalready observed, frequently signifies wealth; and this ambiguity of\nexpression has rendered this popular notion so familiar to us, that even\nthey who are convinced of its absurdity, are very apt to forget their\nown principles, and, in the course of their reasonings, to take it for\ngranted as a certain and undeniable truth. Some of the best English\nwriters upon commerce set out with observing, that the wealth of a\ncountry consists, not in its gold and silver only, but in its lands,\nhouses, and consumable goods of all different kinds. In the course of\ntheir reasonings, however, the lands, houses, and consumable goods, seem\nto slip out of their memory; and the strain of their argument frequently\nsupposes that all wealth consists in gold and silver, and that to\nmultiply those metals is the great object of national industry and\ncommerce.\n\nThe two principles being established, however, that wealth consisted in\ngold and silver, and that those metals could be brought into a country\nwhich had no mines, only by the balance of trade, or by exporting to a\ngreater value than it imported; it necessarily became the great object\nof political economy to diminish as much as possible the importation of\nforeign goods for home consumption, and to increase as much as possible\nthe exportation of the produce of domestic industry. Its two great\nengines for enriching the country, therefore, were restraints upon\nimportation, and encouragement to exportation.\n\nThe restraints upon importation were of two kinds.\n\nFirst, restraints upon the importation of such foreign goods for home\nconsumption as could be produced at home, from whatever country they\nwere imported.\n\nSecondly, restraints upon the importation of goods of almost all kinds,\nfrom those particular countries with which the balance of trade was\nsupposed to be disadvantageous.\n\nThose different restraints consisted sometimes in high duties, and\nsometimes in absolute prohibitions.\n\nExportation was encouraged sometimes by drawbacks, sometimes by\nbounties, sometimes by advantageous treaties of commerce with foreign\nstates, and sometimes by the establishment of colonies in distant\ncountries.\n\nDrawbacks were given upon two different occasions. When the home\nmanufactures were subject to any duty or excise, either the whole or a\npart of it was frequently drawn back upon their exportation; and when\nforeign goods liable to a duty were imported, in order to be exported\nagain, either the whole or a part of this duty was sometimes given back\nupon such exportation.\n\nBounties were given for the encouragement, either of some beginning\nmanufactures, or of such sorts of industry of other kinds as were\nsupposed to deserve particular favour.\n\nBy advantageous treaties of commerce, particular privileges were\nprocured in some foreign state for the goods and merchants of the\ncountry, beyond what were granted to those of other countries.\n\nBy the establishment of colonies in distant countries, not only\nparticular privileges, but a monopoly was frequently procured for the\ngoods and merchants of the country which established them.\n\nThe two sorts of restraints upon importation above mentioned, together\nwith these four encouragements to exportation, constitute the six\nprincipal means by which the commercial system proposes to increase the\nquantity of gold and silver in any country, by turning the balance\nof trade in its favour. I shall consider each of them in a particular\nchapter, and, without taking much farther notice of their supposed\ntendency to bring money into the country, I shall examine chiefly what\nare likely to be the effects of each of them upon the annual produce of\nits industry. According as they tend either to increase or diminish\nthe value of this annual produce, they must evidently tend either to\nincrease or diminish the real wealth and revenue of the country.\n\n\n\nCHAPTER II. OF RESTRAINTS UPON IMPORTATION FROM FOREIGN COUNTRIES OF\nSUCH GOODS AS CAN BE PRODUCED AT HOME.\n\nBy restraining, either by high duties, or by absolute prohibitions, the\nimportation of such goods from foreign countries as can be produced at\nhome, the monopoly of the home market is more or less secured to the\ndomestic industry employed in producing them. Thus the prohibition of\nimporting either live cattle or salt provisions from foreign countries,\nsecures to the graziers of Great Britain the monopoly of the home market\nfor butcher's meat. The high duties upon the importation of corn,\nwhich, in times of moderate plenty, amount to a prohibition, give a\nlike advantage to the growers of that commodity. The prohibition of\nthe importation of foreign woollen is equally favourable to the woollen\nmanufacturers. The silk manufacture, though altogether employed upon\nforeign materials, has lately obtained the same advantage. The linen\nmanufacture has not yet obtained it, but is making great strides towards\nit. Many other sorts of manufactures have, in the same manner obtained\nin Great Britain, either altogether, or very nearly, a monopoly against\ntheir countrymen. The variety of goods, of which the importation\ninto Great Britain is prohibited, either absolutely, or under certain\ncircumstances, greatly exceeds what can easily be suspected by those who\nare not well acquainted with the laws of the customs.\n\nThat this monopoly of the home market frequently gives great\nencouragement to that particular species of industry which enjoys it,\nand frequently turns towards that employment a greater share of both the\nlabour and stock of the society than would otherwise have gone to it,\ncannot be doubted. But whether it tends either to increase the general\nindustry of the society, or to give it the most advantageous direction,\nis not, perhaps, altogether so evident.\n\nThe general industry of the society can never exceed what the capital\nof the society can employ. As the number of workmen that can be kept in\nemployment by any particular person must bear a certain proportion to\nhis capital, so the number of those that can be continually employed by\nall the members of a great society must bear a certain proportion to the\nwhole capital of the society, and never can exceed that proportion.\nNo regulation of commerce can increase the quantity of industry in any\nsociety beyond what its capital can maintain. It can only divert a part\nof it into a direction into which it might not otherwise have gone; and\nit is by no means certain that this artificial direction is likely to\nbe more advantageous to the society, than that into which it would have\ngone of its own accord.\n\nEvery individual is continually exerting himself to find out the most\nadvantageous employment for whatever capital he can command. It is his\nown advantage, indeed, and not that of the society, which he has\nin view. But the study of his own advantage naturally, or rather\nnecessarily, leads him to prefer that employment which is most\nadvantageous to the society.\n\nFirst, every individual endeavours to employ his capital as near home\nas he can, and consequently as much as he can in the support of domestic\nindustry, provided always that he can thereby obtain the ordinary, or\nnot a great deal less than the ordinary profits of stock.\n\nThus, upon equal, or nearly equal profits, every wholesale merchant\nnaturally prefers the home trade to the foreign trade of consumption,\nand the foreign trade of consumption to the carrying trade. In the home\ntrade, his capital is never so long out of his sight as it frequently\nis in the foreign trade of consumption. He can know better the character\nand situation of the persons whom he trusts; and if he should happen to\nbe deceived, he knows better the laws of the country from which he must\nseek redress. In the carrying trade, the capital of the merchant is,\nas it were, divided between two foreign countries, and no part of it is\never necessarily brought home, or placed under his own immediate view\nand command. The capital which an Amsterdam merchant employs in carrying\ncorn from Koningsberg to Lisbon, and fruit and wine from Lisbon to\nKoningsberg, must generally be the one half of it at Koningsberg, and\nthe other half at Lisbon. No part of it need ever come to Amsterdam. The\nnatural residence of such a merchant should either be at Koningsberg or\nLisbon; and it can only be some very particular circumstances which can\nmake him prefer the residence of Amsterdam. The uneasiness, however,\nwhich he feels at being separated so far from his capital, generally\ndetermines him to bring part both of the Koningsberg goods which he\ndestines for the market of Lisbon, and of the Lisbon goods which\nhe destines for that of Koningsberg, to Amsterdam; and though this\nnecessarily subjects him to a double charge of loading and unloading as\nwell as to the payment of some duties and customs, yet, for the sake of\nhaving some part of his capital always under his own view and command,\nhe willingly submits to this extraordinary charge; and it is in this\nmanner that every country which has any considerable share of the\ncarrying trade, becomes always the emporium, or general market, for\nthe goods of all the different countries whose trade it carries on. The\nmerchant, in order to save a second loading and unloading, endeavours\nalways to sell in the home market, as much of the goods of all those\ndifferent countries as he can; and thus, so far as he can, to convert\nhis carrying trade into a foreign trade of consumption. A merchant, in\nthe same manner, who is engaged in the foreign trade of consumption,\nwhen he collects goods for foreign markets, will always be glad, upon\nequal or nearly equal profits, to sell as great a part of them at home\nas he can. He saves himself the risk and trouble of exportation, when,\nso far as he can, he thus converts his foreign trade of consumption into\na home trade. Home is in this manner the centre, if I may say so, round\nwhich the capitals of the inhabitants of every country are continually\ncirculating, and towards which they are always tending, though, by\nparticular causes, they may sometimes be driven off and repelled from\nit towards more distant employments. But a capital employed in the home\ntrade, it has already been shown, necessarily puts into motion a greater\nquantity of domestic industry, and gives revenue and employment to a\ngreater number of the inhabitants of the country, than an equal capital\nemployed in the foreign trade of consumption; and one employed in\nthe foreign trade of consumption has the same advantage over an equal\ncapital employed in the carrying trade. Upon equal, or only nearly equal\nprofits, therefore, every individual naturally inclines to employ his\ncapital in the manner in which it is likely to afford the greatest\nsupport to domestic industry, and to give revenue and employment to the\ngreatest number of people of his own country.\n\nSecondly, every individual who employs his capital in the support of\ndomestic industry, necessarily endeavours so to direct that industry,\nthat its produce may be of the greatest possible value.\n\nThe produce of industry is what it adds to the subject or materials\nupon which it is employed. In proportion as the value of this produce is\ngreat or small, so will likewise be the profits of the employer. But\nit is only for the sake of profit that any man employs a capital in the\nsupport of industry; and he will always, therefore, endeavour to employ\nit in the support of that industry of which the produce is likely to be\nof the greatest value, or to exchange for the greatest quantity either\nof money or of other goods.\n\nBut the annual revenue of every society is always precisely equal to\nthe exchangeable value of the whole annual produce of its industry,\nor rather is precisely the same thing with that exchangeable value.\nAs every individual, therefore, endeavours as much as he can, both to\nemploy his capital in the support of domestic industry, and so to\ndirect that industry that its produce maybe of the greatest value;\nevery individual necessarily labours to render the annual revenue of\nthe society as great as he can. He generally, indeed, neither intends to\npromote the public interest, nor knows how much he is promoting it.\nBy preferring the support of domestic to that of foreign industry, he\nintends only his own security; and by directing that industry in such a\nmanner as its produce may be of the greatest value, he intends only his\nown gain; and he is in this, as in many other cases, led by an invisible\nhand to promote an end which was no part of his intention. Nor is it\nalways the worse for the society that it was no part of it. By pursuing\nhis own interest, he frequently promotes that of the society more\neffectually than when he really intends to promote it. I have never\nknown much good done by those who affected to trade for the public good.\nIt is an affectation, indeed, not very common among merchants, and very\nfew words need be employed in dissuading them from it.\n\nWhat is the species of domestic industry which his capital can employ,\nand of which the produce is likely to be of the greatest value, every\nindividual, it is evident, can in his local situation judge much better\nthan any statesman or lawgiver can do for him. The statesman, who should\nattempt to direct private people in what manner they ought to employ\ntheir capitals, would not only load himself with a most unnecessary\nattention, but assume an authority which could safely be trusted, not\nonly to no single person, but to no council or senate whatever, and\nwhich would nowhere be so dangerous as in the hands of a man who had\nfolly and presumption enough to fancy himself fit to exercise it.\n\nTo give the monopoly of the home market to the produce of domestic\nindustry, in any particular art or manufacture, is in some measure\nto direct private people in what manner they ought to employ their\ncapitals, and must in almost all cases be either a useless or a hurtful\nregulation. If the produce of domestic can be brought there as cheap\nas that of foreign industry, the regulation is evidently useless. If it\ncannot, it must generally be hurtful. It is the maxim of every prudent\nmaster of a family, never to attempt to make at home what it will cost\nhim more to make than to buy. The tailor does not attempt to make\nhis own shoes, but buys them of the shoemaker. The shoemaker does\nnot attempt to make his own clothes, but employs a tailor. The farmer\nattempts to make neither the one nor the other, but employs those\ndifferent artificers. All of them find it for their interest to employ\ntheir whole industry in a way in which they have some advantage over\ntheir neighbours, and to purchase with a part of its produce, or, what\nis the same thing, with the price of a part of it, whatever else they\nhave occasion for.\n\nWhat is prudence in the conduct of every private family, can scarce be\nfolly in that of a great kingdom. If a foreign country can supply us\nwith a commodity cheaper than we ourselves can make it, better buy it\nof them with some part of the produce of our own industry, employed in a\nway in which we have some advantage. The general industry of the country\nbeing always in proportion to the capital which employs it, will\nnot thereby be diminished, no more than that of the abovementioned\nartificers; but only left to find out the way in which it can be\nemployed with the greatest advantage. It is certainly not employed to\nthe greatest advantage, when it is thus directed towards an object which\nit can buy cheaper than it can make. The value of its annual produce\nis certainly more or less diminished, when it is thus turned away from\nproducing commodities evidently of more value than the commodity which\nit is directed to produce. According to the supposition, that commodity\ncould be purchased from foreign countries cheaper than it can be made\nat home; it could therefore have been purchased with a part only of the\ncommodities, or, what is the same thing, with a part only of the price\nof the commodities, which the industry employed by an equal capital\nwould have produced at home, had it been left to follow its natural\ncourse. The industry of the country, therefore, is thus turned away from\na more to a less advantageous employment; and the exchangeable value\nof its annual produce, instead of being increased, according to the\nintention of the lawgiver, must necessarily be diminished by every such\nregulation.\n\nBy means of such regulations, indeed, a particular manufacture may\nsometimes be acquired sooner than it could have been otherwise, and\nafter a certain time may be made at home as cheap, or cheaper, than in\nthe foreign country. But though the industry of the society may be thus\ncarried with advantage into a particular channel sooner than it could\nhave been otherwise, it will by no means follow that the sum-total,\neither of its industry, or of its revenue, can ever be augmented by\nany such regulation. The industry of the society can augment only in\nproportion as its capital augments, and its capital can augment only in\nproportion to what can be gradually saved out of its revenue. But the\nimmediate effect of every such regulation is to diminish its revenue;\nand what diminishes its revenue is certainly not very likely to augment\nits capital faster than it would have augmented of its own accord,\nhad both capital and industry been left to find out their natural\nemployments.\n\nThough, for want of such regulations, the society should never acquire\nthe proposed manufacture, it would not upon that account necessarily\nbe the poorer in anyone period of its duration. In every period of its\nduration its whole capital and industry might still have been employed,\nthough upon different objects, in the manner that was most advantageous\nat the time. In every period its revenue might have been the greatest\nwhich its capital could afford, and both capital and revenue might have\nbeen augmented with the greatest possible rapidity.\n\nThe natural advantages which one country has over another, in producing\nparticular commodities, are sometimes so great, that it is acknowledged\nby all the world to be in vain to struggle with them. By means of\nglasses, hot-beds, and hot-walls, very good grapes can be raised in\nScotland, and very good wine, too, can be made of them, at about thirty\ntimes the expense for which at least equally good can be brought\nfrom foreign countries. Would it be a reasonable law to prohibit the\nimportation of all foreign wines, merely to encourage the making of\nclaret and Burgundy in Scotland? But if there would be a manifest\nabsurdity in turning towards any employment thirty times more of the\ncapital and industry of the country than would be necessary to purchase\nfrom foreign countries an equal quantity of the commodities wanted,\nthere must be an absurdity, though not altogether so glaring, yet\nexactly of the same kind, in turning towards any such employment a\nthirtieth, or even a three hundredth part more of either. Whether the\nadvantages which one country has over another be natural or acquired, is\nin this respect of no consequence. As long as the one country has\nthose advantages, and the other wants them, it will always be more\nadvantageous for the latter rather to buy of the former than to make.\nIt is an acquired advantage only, which one artificer has over his\nneighbour, who exercises another trade; and yet they both find it more\nadvantageous to buy of one another, than to make what does not belong to\ntheir particular trades.\n\nMerchants and manufacturers are the people who derive the greatest\nadvantage from this monopoly of the home market. The prohibition of the\nimportation of foreign cattle and of salt provisions, together with the\nhigh duties upon foreign corn, which in times of moderate plenty amount\nto a prohibition, are not near so advantageous to the graziers and\nfarmers of Great Britain, as other regulations of the same kind are to\nits merchants and manufacturers. Manufactures, those of the finer kind\nespecially, are more easily transported from one country to another\nthan corn or cattle. It is in the fetching and carrying manufactures,\naccordingly, that foreign trade is chiefly employed. In manufactures,\na very small advantage will enable foreigners to undersell our own\nworkmen, even in the home market. It will require a very great one\nto enable them to do so in the rude produce of the soil. If the free\nimportation of foreign manufactures were permitted, several of the home\nmanufactures would probably suffer, and some of them perhaps go to ruin\naltogether, and a considerable part of the stock and industry at present\nemployed in them, would be forced to find out some other employment.\nBut the freest importation of the rude produce of the soil could have no\nsuch effect upon the agriculture of the country.\n\nIf the importation of foreign cattle, for example, were made ever so\nfree, so few could be imported, that the grazing trade of Great Britain\ncould be little affected by it. Live cattle are, perhaps, the only\ncommodity of which the transportation is more expensive by sea than\nby land. By land they carry themselves to market. By sea, not only the\ncattle, but their food and their water too, must be carried at no small\nexpense and inconveniency. The short sea between Ireland and Great\nBritain, indeed, renders the importation of Irish cattle more easy. But\nthough the free importation of them, which was lately permitted only for\na limited time, were rendered perpetual, it could have no considerable\neffect upon the interest of the graziers of Great Britain. Those\nparts of Great Britain which border upon the Irish sea are all grazing\ncountries. Irish cattle could never be imported for their use, but must\nbe drove through those very extensive countries, at no small expense\nand inconveniency, before they could arrive at their proper market. Fat\ncattle could not be drove so far. Lean cattle, therefore, could only be\nimported; and such importation could interfere not with the interest of\nthe feeding or fattening countries, to which, by reducing the price\nof lean cattle it would rather be advantageous, but with that of the\nbreeding countries only. The small number of Irish cattle imported since\ntheir importation was permitted, together with the good price at which\nlean cattle still continue to sell, seem to demonstrate, that even the\nbreeding countries of Great Britain are never likely to be much affected\nby the free importation of Irish cattle. The common people of Ireland,\nindeed, are said to have sometimes opposed with violence the exportation\nof their cattle. But if the exporters had found any great advantage in\ncontinuing the trade, they could easily, when the law was on their side,\nhave conquered this mobbish opposition.\n\nFeeding and fattening countries, besides, must always be highly\nimproved, whereas breeding countries are generally uncultivated. The\nhigh price of lean cattle, by augmenting the value of uncultivated land,\nis like a bounty against improvement. To any country which was highly\nimproved throughout, it would be more advantageous to import its lean\ncattle than to breed them. The province of Holland, accordingly, is said\nto follow this maxim at present. The mountains of Scotland, Wales, and\nNorthumberland, indeed, are countries not capable of much improvement,\nand seem destined by nature to be the breeding countries of Great\nBritain. The freest importation of foreign cattle could have no other\neffect than to hinder those breeding countries from taking advantage of\nthe increasing population and improvement of the rest of the kingdom,\nfrom raising their price to an exorbitant height, and from laying a real\ntax upon all the more improved and cultivated parts of the country.\n\nThe freest importation of salt provisions, in the same manner, could\nhave as little effect upon the interest of the graziers of Great Britain\nas that of live cattle. Salt provisions are not only a very bulky\ncommodity, but when compared with fresh meat they are a commodity both\nof worse quality, and, as they cost more labour and expense, of higher\nprice. They could never, therefore, come into competition with the fresh\nmeat, though they might with the salt provisions of the country. They\nmight be used for victualling ships for distant voyages, and such like\nuses, but could never make any considerable part of the food of the\npeople. The small quantity of salt provisions imported from Ireland\nsince their importation was rendered free, is an experimental proof that\nour graziers have nothing to apprehend from it. It does not appear that\nthe price of butcher's meat has ever been sensibly affected by it.\n\nEven the free importation of foreign corn could very little affect the\ninterest of the farmers of Great Britain. Corn is a much more bulky\ncommodity than butcher's meat. A pound of wheat at a penny is as dear\nas a pound of butcher's meat at fourpence. The small quantity of foreign\ncorn imported even in times of the greatest scarcity, may satisfy our\nfarmers that they can have nothing to fear from the freest importation.\nThe average quantity imported, one year with another, amounts only,\naccording to the very well informed author of the Tracts upon the Corn\nTrade, to 23,728 quarters of all sorts of grain, and does not exceed the\nfive hundredth and seventy-one part of the annual consumption. But as\nthe bounty upon corn occasions a greater exportation in years of plenty,\nso it must, of consequence, occasion a greater importation in years\nof scarcity, than in the actual state of tillage would otherwise take\nplace. By means of it, the plenty of one year does not compensate the\nscarcity of another; and as the average quantity exported is necessarily\naugmented by it, so must likewise, in the actual state of tillage, the\naverage quantity imported. If there were no bounty, as less corn would\nbe exported, suit is probable that, one year with another, less would be\nimported than at present. The corn-merchants, the fetchers and carriers\nof corn between Great Britain and foreign countries, would have\nmuch less employment, and might suffer considerably; but the\ncountry gentlemen and farmers could suffer very little. It is in the\ncorn-merchants, accordingly, rather than the country gentlemen and\nfarmers, that I have observed the greatest anxiety for the renewal and\ncontinuation of the bounty.\n\nCountry gentlemen and farmers are, to their great honour, of all people,\nthe least subject to the wretched spirit of monopoly. The undertaker\nof a great manufactory is sometimes alarmed if another work of the same\nkind is established within twenty miles of him; the Dutch undertaker\nof the woollen manufacture at Abbeville, stipulated that no work of\nthe same kind should be established within thirty leagues of that city.\nFarmers and country gentlemen, on the contrary, are generally disposed\nrather to promote, than to obstruct, the cultivation and improvement of\ntheir neighbours farms and estates. They have no secrets, such as those\nof the greater part of manufacturers, but are generally rather fond of\ncommunicating to their neighbours, and of extending as far as possible\nany new practice which they may have found to be advantageous. \"Pius\nquaestus\", says old Cato, \"stabilissimusque, minimeque invidiosus;\nminimeque male cogitantes sunt, qui in eo studio occupati sunt.\" Country\ngentlemen and farmers, dispersed in different parts of the country,\ncannot so easily combine as merchants and manufacturers, who being\ncollected into towns, and accustomed to that exclusive corporation\nspirit which prevails in them, naturally endeavour to obtain, against\nall their countrymen, the same exclusive privilege which they generally\npossess against the inhabitants of their respective towns. They\naccordingly seem to have been the original inventors of those restraints\nupon the importation of foreign goods, which secure to them the monopoly\nof the home market. It was probably in imitation of them, and to put\nthemselves upon a level with those who, they found, were disposed to\noppress them, that the country gentlemen and farmers of Great Britain\nso far forgot the generosity which is natural to their station, as to\ndemand the exclusive privilege of supplying their countrymen with corn\nand butcher's meat. They did not, perhaps, take time to consider how\nmuch less their interest could be affected by the freedom of trade, than\nthat of the people whose example they followed.\n\nTo prohibit, by a perpetual law, the importation of foreign corn and\ncattle, is in reality to enact, that the population and industry of the\ncountry shall, at no time, exceed what the rude produce of its own soil\ncan maintain.\n\nThere seem, however, to be two cases, in which it will generally be\nadvantageous to lay some burden upon foreign, for the encouragement of\ndomestic industry.\n\nThe first is, when some particular sort of industry is necessary for\nthe defence of the country. The defence of Great Britain, for example,\ndepends very much upon the number of its sailors and shipping. The act\nof navigation, therefore, very properly endeavours to give the sailors\nand shipping of Great Britain the monopoly of the trade of their own\ncountry, in some cases, by absolute prohibitions, and in others, by\nheavy burdens upon the shipping of foreign countries. The following are\nthe principal dispositions of this act.\n\nFirst, All ships, of which the owners, masters, and three-fourths of\nthe mariners, are not British subjects, are prohibited, upon pain of\nforfeiting ship and cargo, from trading to the British settlements\nand plantations, or from being employed in the coasting trade of Great\nBritain.\n\nSecondly, A great variety of the most bulky articles of importation can\nbe brought into Great Britain only, either in such ships as are above\ndescribed, or in ships of the country where those goods are produced,\nand of which the owners, masters, and three-fourths of the mariners,\nare of that particular country; and when imported even in ships of this\nlatter kind, they are subject to double aliens duty. If imported in\nships of any other country, the penalty is forfeiture of ship and goods.\nWhen this act was made, the Dutch were, what they still are, the great\ncarriers of Europe; and by this regulation they were entirely excluded\nfrom being the carriers to Great Britain, or from importing to us the\ngoods of any other European country.\n\nThirdly, A great variety of the most bulky articles of importation are\nprohibited from being imported, even in British ships, from any country\nbut that in which they are produced, under pain of forfeiting ship and\ncargo. This regulation, too, was probably intended against the Dutch.\nHolland was then, as now, the great emporium for all European goods; and\nby this regulation, British ships were hindered from loading in Holland\nthe goods of any other European country.\n\nFourthly, Salt fish of all kinds, whale fins, whalebone, oil, and\nblubber, not caught by and cured on board British vessels, when imported\ninto Great Britain, are subject to double aliens duty. The Dutch, as\nthey are still the principal, were then the only fishers in Europe that\nattempted to supply foreign nations with fish. By this regulation, a\nvery heavy burden was laid upon their supplying Great Britain.\n\nWhen the act of navigation was made, though England and Holland were not\nactually at war, the most violent animosity subsisted between the two\nnations. It had begun during the government of the long parliament,\nwhich first framed this act, and it broke out soon after in the\nDutch wars, during that of the Protector and of Charles II. It is not\nimpossible, therefore, that some of the regulations of this famous act\nmay have proceeded from national animosity. They are as wise, however,\nas if they had all been dictated by the most deliberate wisdom. National\nanimosity, at that particular time, aimed at the very same object which\nthe most deliberate wisdom would have recommended, the diminution of the\nnaval power of Holland, the only naval power which could endanger the\nsecurity of England.\n\nThe act of navigation is not favourable to foreign commerce, or to\nthe growth of that opulence which can arise from it. The interest of a\nnation, in its commercial relations to foreign nations, is, like that\nof a merchant with regard to the different people with whom he deals,\nto buy as cheap, and to sell as dear as possible. But it will be most\nlikely to buy cheap, when, by the most perfect freedom of trade, it\nencourages all nations to bring to it the goods which it has occasion to\npurchase; and, for the same reason, it will be most likely to sell dear,\nwhen its markets are thus filled with the greatest number of buyers. The\nact of navigation, it is true, lays no burden upon foreign ships that\ncome to export the produce of British industry. Even the ancient\naliens duty, which used to be paid upon all goods, exported as well\nas imported, has, by several subsequent acts, been taken off from the\ngreater part of the articles of exportation. But if foreigners, either\nby prohibitions or high duties, are hindered from coming to sell, they\ncannot always afford to come to buy; because, coming without a cargo,\nthey must lose the freight from their own country to Great Britain. By\ndiminishing the number of sellers, therefore, we necessarily diminish\nthat of buyers, and are thus likely not only to buy foreign goods\ndearer, but to sell our own cheaper, than if there was a more perfect\nfreedom of trade. As defence, however, is of much more importance than\nopulence, the act of navigation is, perhaps, the wisest of all the\ncommercial regulations of England.\n\nThe second case, in which it will generally be advantageous to lay some\nburden upon foreign for the encouragement of domestic industry, is when\nsome tax is imposed at home upon the produce of the latter. In this\ncase, it seems reasonable that an equal tax should be imposed upon the\nlike produce of the former. This would not give the monopoly of the\nborne market to domestic industry, nor turn towards a particular\nemployment a greater share of the stock and labour of the country, than\nwhat would naturally go to it. It would only hinder any part of what\nwould naturally go to it from being turned away by the tax into a less\nnatural direction, and would leave the competition between foreign and\ndomestic industry, after the tax, as nearly as possible upon the same\nfooting as before it. In Great Britain, when any such tax is laid upon\nthe produce of domestic industry, it is usual, at the same time,\nin order to stop the clamorous complaints of our merchants and\nmanufacturers, that they will be undersold at home, to lay a much\nheavier duty upon the importation of all foreign goods of the same kind.\n\nThis second limitation of the freedom of trade, according to some\npeople, should, upon most occasions, be extended much farther than to\nthe precise foreign commodities which could come into competition with\nthose which had been taxed at home. When the necessaries of life have\nbeen taxed in any country, it becomes proper, they pretend, to tax not\nonly the like necessaries of life imported from other countries, but all\nsorts of foreign goods which can come into competition with any thing\nthat is the produce of domestic industry. Subsistence, they say, becomes\nnecessarily dearer in consequence of such taxes; and the price of labour\nmust always rise with the price of the labourer's subsistence. Every\ncommodity, therefore, which is the produce of domestic industry, though\nnot immediately taxed itself, becomes dearer in consequence of such\ntaxes, because the labour which produces it becomes so. Such taxes,\ntherefore, are really equivalent, they say, to a tax upon every\nparticular commodity produced at home. In order to put domestic upon\nthe same footing with foreign industry, therefore, it becomes necessary,\nthey think, to lay some duty upon every foreign commodity, equal to this\nenhancement of the price of the home commodities with which it can come\ninto competition.\n\nWhether taxes upon the necessaries of life, such as those in Great\nBritain upon soap, salt, leather, candles, etc. necessarily raise the\nprice of labour, and consequently that of all other commodities, I shall\nconsider hereafter, when I come to treat of taxes. Supposing, however,\nin the mean time, that they have this effect, and they have it\nundoubtedly, this general enhancement of the price of all commodities,\nin consequence of that labour, is a case which differs in the two\nfollowing respects from that of a particular commodity, of which the\nprice was enhanced by a particular tax immediately imposed upon it.\n\nFirst, It might always be known with great exactness, how far the price\nof such a commodity could be enhanced by such a tax; but how far the\ngeneral enhancement of the price of labour might affect that of every\ndifferent commodity about which labour was employed, could never be\nknown with any tolerable exactness. It would be impossible, therefore,\nto proportion, with any tolerable exactness, the tax of every foreign,\nto the enhancement of the price of every home commodity.\n\nSecondly, Taxes upon the necessaries of life have nearly the same effect\nupon the circumstances of the people as a poor soil and a bad climate.\nProvisions are thereby rendered dearer, in the same manner as if it\nrequired extraordinary labour and expense to raise them. As, in the\nnatural scarcity arising from soil and climate, it would be absurd to\ndirect the people in what manner they ought to employ their capitals and\nindustry, so is it likewise in the artificial scarcity arising from such\ntaxes. To be left to accommodate, as well as they could, their industry\nto their situation, and to find out those employments in which,\nnotwithstanding their unfavourable circumstances, they might have some\nadvantage either in the home or in the foreign market, is what, in both\ncases, would evidently be most for their advantage. To lay a new-tax\nupon them, because they are already overburdened with taxes, and because\nthey already pay too dear for the necessaries of life, to make them\nlikewise pay too dear for the greater part of other commodities, is\ncertainly a most absurd way of making amends.\n\nSuch taxes, when they have grown up to a certain height, are a curse\nequal to the barrenness of the earth, and the inclemency of the heavens,\nand yet it is in the richest and most industrious countries that they\nhave been most generally imposed. No other countries could support so\ngreat a disorder. As the strongest bodies only can live and enjoy health\nunder an unwholesome regimen, so the nations only, that in every sort of\nindustry have the greatest natural and acquired advantages, can subsist\nand prosper under such taxes. Holland is the country in Europe in which\nthey abound most, and which, from peculiar circumstances, continues to\nprosper, not by means of them, as has been most absurdly supposed, but\nin spite of them.\n\nAs there are two cases in which it will generally be advantageous to lay\nsome burden upon foreign for the encouragement of domestic industry,\nso there are two others in which it may sometimes be a matter of\ndeliberation, in the one, how far it is proper to continue the free\nimportation of certain foreign goods; and, in the other, how far, or in\nwhat manner, it may be proper to restore that free importation, after it\nhas been for some time interrupted.\n\nThe case in which it may sometimes be a matter of deliberation how far\nit is proper to continue the free importation of certain foreign goods,\nis when some foreign nation restrains, by high duties or prohibitions,\nthe importation of some of our manufactures into their country. Revenge,\nin this case, naturally dictates retaliation, and that we should impose\nthe like duties and prohibitions upon the importation of some or all\nof their manufactures into ours. Nations, accordingly, seldom fail to\nretaliate in this manner. The French have been particularly forward to\nfavour their own manufactures, by restraining the importation of\nsuch foreign goods as could come into competition with them. In this\nconsisted a great part of the policy of Mr Colbert, who, notwithstanding\nhis great abilities, seems in this case to have been imposed upon by\nthe sophistry of merchants and manufacturers, who are always demanding\na monopoly against their countrymen. It is at present the opinion of the\nmost intelligent men in France, that his operations of this kind have\nnot been beneficial to his country. That minister, by the tariff\nof 1667, imposed very high duties upon a great number of foreign\nmanufactures. Upon his refusing to moderate them in favour of the Dutch,\nthey, in 1671, prohibited the importation of the wines, brandies, and\nmanufactures of France. The war of 1672 seems to have been in part\noccasioned by this commercial dispute. The peace of Nimeguen put an\nend to it in 1678, by moderating some of those duties in favour of the\nDutch, who in consequence took off their prohibition. It was about the\nsame time that the French and English began mutually to oppress each\nother's industry, by the like duties and prohibitions, of which the\nFrench, however, seem to have set the first example, The spirit of\nhostility which has subsisted between the two nations ever since, has\nhitherto hindered them from being moderated on either side. In 1697,\nthe Ehglish prohibited the importation of bone lace, the manufacture\nof Flanders. The government of that country, at that time under the\ndominion of Spain, prohibited, in return, the importation of English\nwoollens. In 1700, the prohibition of importing bone lace into England\nwas taken oft; upon condition that the importation of English woollens\ninto Flanders should be put on the same footing as before.\n\nThere may be good policy in retaliations of this kind, when there is\na probability that they will procure the repeal of the high duties or\nprohibitions complained of. The recovery of a great foreign market will\ngenerally more than compensate the transitory inconveniency of paying\ndearer during a short time for some sorts of goods. To judge whether\nsuch retaliations are likely to produce such an effect, does not,\nperhaps, belong so much to the science of a legislator, whose\ndeliberations ought to be governed by general principles, which are\nalways the same, as to the skill of that insidious and crafty animal\nvulgarly called a statesman or politician, whose councils are directed\nby the momentary fluctuations of affairs. When there is no probability\nthat any such repeal can be procured, it seems a bad method of\ncompensating the injury done to certain classes of our people, to do\nanother injury ourselves, not only to those classes, but to almost all\nthe other classes of them. When our neighbours prohibit some manufacture\nof ours, we generally prohibit, not only the same, for that alone would\nseldom affect them considerably, but some other manufacture of theirs.\nThis may, no doubt, give encouragement to some particular class of\nworkmen among ourselves, and, by excluding some of their rivals, may\nenable them to raise their price in the home market. Those workmen\nhowever, who suffered by our neighbours prohibition, will not be\nbenefited by ours. On the contrary, they, and almost all the other\nclasses of our citizens, will thereby be obliged to pay dearer than\nbefore for certain goods. Every such law, therefore, imposes a real\ntax upon the whole country, not in favour of that particular class of\nworkmen who were injured by our neighbours prohibitions, but of some\nother class.\n\nThe case in which it may sometimes be a matter of deliberation, how\nfar, or in what manner, it is proper to restore the free importation\nof foreign goods, after it has been for some time interrupted, is when\nparticular manufactures, by means of high duties or prohibitions upon\nall foreign goods which can come into competition with them, have been\nso far extended as to employ a great multitude of hands. Humanity may in\nthis case require that the freedom of trade should be restored only by\nslow gradations, and with a good deal of reserve and circumspection.\nWere those high duties and prohibitions taken away all at once, cheaper\nforeign goods of the same kind might be poured so fast into the home\nmarket, as to deprive all at once many thousands of our people of their\nordinary employment and means of subsistence. The disorder which this\nwould occasion might no doubt be very considerable. It would in all\nprobability, however, be much less than is commonly imagined, for the\ntwo following reasons.\n\nFirst, All those manufactures of which any part is commonly exported to\nother European countries without a bounty, could be very little affected\nby the freest importation of foreign goods. Such manufactures must be\nsold as cheap abroad as any other foreign goods of the same quality and\nkind, and consequently must be sold cheaper at home. They would still,\ntherefore, keep possession of the home market; and though a capricious\nman of fashion might sometimes prefer foreign wares, merely because they\nwere foreign, to cheaper and better goods of the same kind that were\nmade at home, this folly could, from the nature of things, extend to\nso few, that it could make no sensible impression upon the general\nemployment of the people. But a great part of all the different branches\nof our woollen manufacture, of our tanned leather, and of our hardware,\nare annually exported to other European countries without any bounty,\nand these are the manufactures which employ the greatest number of\nhands. The silk, perhaps, is the manufacture which would suffer the most\nby this freedom of trade, and after it the linen, though the latter much\nless than the former.\n\nSecondly, Though a great number of people should, by thus restoring the\nfreedom of trade, be thrown all at once out of their ordinary employment\nand common method of subsistence, it would by no means follow that they\nwould thereby be deprived either of employment or subsistence. By the\nreduction of the army and navy at the end of the late war, more than\n100,000 soldiers and seamen, a number equal to what is employed in the\ngreatest manufactures, were all at once thrown out of their ordinary\nemployment: but though they no doubt suffered some inconveniency, they\nwere not thereby deprived of all employment and subsistence. The greater\npart of the seamen, it is probable, gradually betook themselves to the\nmerchant service as they could find occasion, and in the mean time both\nthey and the soldiers were absorbed in the great mass of the people,\nand employed in a great variety of occupations. Not only no great\nconvulsion, but no sensible disorder, arose from so great a change in\nthe situation of more than 100,000 men, all accustomed to the use of\narms, and many of them to rapine and plunder. The number of vagrants was\nscarce anywhere sensibly increased by it; even the wages of labour\nwere not reduced by it in any occupation, so far as I have been able\nto learn, except in that of seamen in the merchant service. But if\nwe compare together the habits of a soldier and of any sort of\nmanufacturer, we shall find that those of the latter do not tend so much\nto disqualify him from being employed in a new trade, as those of the\nformer from being employed in any. The manufacturer has always been\naccustomed to look for his subsistence from his labour only; the soldier\nto expect it from his pay. Application and industry have been familiar\nto the one; idleness and dissipation to the other. But it is surely much\neasier to change the direction of industry from one sort of labour to\nanother, than to turn idleness and dissipation to any. To the greater\npart of manufactures, besides, it has already been observed, there are\nother collateral manufactures of so similar a nature, that a workman can\neasily transfer his industry from one of them to another. The greater\npart of such workmen, too, are occasionally employed in country labour.\nThe stock which employed them in a particular manufacture before, will\nstill remain in the country, to employ an equal number of people in some\nother way. The capital of the country remaining the same, the demand for\nlabour will likewise be the same, or very nearly the same, though it may\nbe exerted in different places, and for different occupations. Soldiers\nand seamen, indeed, when discharged from the king's service, are at\nliberty to exercise any trade within any town or place of Great Britain\nor Ireland. Let the same natural liberty of exercising what species of\nindustry they please, be restored to all his Majesty's subjects, in the\nsame manner as to soldiers and seamen; that is, break down the exclusive\nprivileges of corporations, and repeal the statute of apprenticeship,\nboth which are really encroachments upon natural Liberty, and add to\nthose the repeal of the law of settlements, so that a poor workman, when\nthrown out of employment, either in one trade or in one place, may seek\nfor it in another trade or in another place, without the fear either\nof a prosecution or of a removal; and neither the public nor the\nindividuals will suffer much more from the occasional disbanding some\nparticular classes of manufacturers, than from that of the soldiers.\nOur manufacturers have no doubt great merit with their country, but they\ncannot have more than those who defend it with their blood, nor deserve\nto be treated with more delicacy.\n\nTo expect, indeed, that the freedom of trade should ever be entirely\nrestored in Great Britain, is as absurd as to expect that an Oceana or\nUtopia should ever be established in it. Not only the prejudices of the\npublic, but, what is much more unconquerable, the private interests of\nmany individuals, irresistibly oppose it. Were the officers of the army\nto oppose, with the same zeal and unanimity, any reduction in the number\nof forces, with which master manufacturers set themselves against every\nlaw that is likely to increase the number of their rivals in the home\nmarket; were the former to animate their soldiers. In the same manner\nas the latter inflame their workmen, to attack with violence and outrage\nthe proposers of any such regulation; to attempt to reduce the army\nwould be as dangerous as it has now become to attempt to diminish, in\nany respect, the monopoly which our manufacturers have obtained against\nus. This monopoly has so much increased the number of some particular\ntribes of them, that, like an overgrown standing army, they have become\nformidable to the government, and, upon many occasions, intimidate the\nlegislature. The member of parliament who supports every proposal for\nstrengthening this monopoly, is sure to acquire not only the reputation\nof understanding trade, but great popularity and influence with an order\nof men whose numbers and wealth render them of great importance. If\nhe opposes them, on the contrary, and still more, if he has authority\nenough to be able to thwart them, neither the most acknowledged probity,\nnor the highest rank, nor the greatest public services, can protect him\nfrom the most infamous abuse and detraction, from personal insults, nor\nsometimes from real danger, arising from the insolent outrage of furious\nand disappointed monopolists.\n\nThe undertaker of a great manufacture, who, by the home markets being\nsuddenly laid open to the competition of foreigners, should be obliged\nto abandon his trade, would no doubt suffer very considerably. That part\nof his capital which had usually been employed in purchasing materials,\nand in paying his workmen, might, without much difficulty, perhaps, find\nanother employment; but that part of it which was fixed in workhouses,\nand in the instruments of trade, could scarce be disposed of without\nconsiderable loss. The equitable regard, therefore, to his interest,\nrequires that changes of this kind should never be introduced suddenly,\nbut slowly, gradually, and after a very long warning. The legislature,\nwere it possible that its deliberations could be always directed, not by\nthe clamorous importunity of partial interests, but by an extensive\nview of the general good, ought, upon this very account, perhaps, to be\nparticularly careful, neither to establish any new monopolies of this\nkind, nor to extend further those which are already established.\nEvery such regulation introduces some degree of real disorder into the\nconstitution of the state, which it will be difficult afterwards to cure\nwithout occasioning another disorder.\n\nHow far it may be proper to impose taxes upon the importation of foreign\ngoods, in order not to prevent their importation, but to raise a revenue\nfor government, I shall consider hereafter when I come to treat of\ntaxes. Taxes imposed with a view to prevent, or even to diminish\nimportation, are evidently as destructive of the revenue of the customs\nas of the freedom of trade.\n\n\nCHAPTER III. OF THE EXTRAORDINARY RESTRAINTS UPON THE IMPORTATION OF\nGOODS OF ALMOST ALL KINDS, FROM THOSE COUNTRIES WITH WHICH THE BALANCE\nIS SUPPOSED TO BE DISADVANTAGEOUS.\n\nPart I--Of the Unreasonableness of those Restraints, even upon the\nPrinciples of the Commercial System.\n\nTo lay extraordinary restraints upon the importation of goods of almost\nall kinds, from those particular countries with which the balance of\ntrade is supposed to be disadvantageous, is the second expedient by\nwhich the commercial system proposes to increase the quantity of gold\nand silver. Thus, in Great Britain, Silesia lawns may be imported for\nhome consumption, upon paying certain duties; but French cambrics and\nlawns are prohibited to be imported, except into the port of London,\nthere to be warehoused for exportation. Higher duties are imposed upon\nthe wines of France than upon those of Portugal, or indeed of any other\ncountry. By what is called the impost 1692, a duty of five and-twenty\nper cent. of the rate or value, was laid upon all French goods; while\nthe goods of other nations were, the greater part of them, subjected to\nmuch lighter duties, seldom exceeding five per cent. The wine, brandy,\nsalt, and vinegar of France, were indeed excepted; these commodities\nbeing subjected to other heavy duties, either by other laws, or\nby particular clauses of the same law. In 1696, a second duty of\ntwenty-five per cent. the first not having been thought a sufficient\ndiscouragement, was imposed upon all French goods, except brandy;\ntogether with a new duty of five-and-twenty pounds upon the ton of\nFrench wine, and another of fifteen pounds upon the ton of French\nvinegar. French goods have never been omitted in any of those general\nsubsidies or duties of five per cent. which have been imposed upon all,\nor the greater part, of the goods enumerated in the book of rates. If we\ncount the one-third and two-third subsidies as making a complete subsidy\nbetween them, there have been five of these general subsidies; so that,\nbefore the commencement of the present war, seventy-five per cent. may\nbe considered as the lowest duty to which the greater part of the goods\nof the growth, produce, or manufacture of France, were liable. But upon\nthe greater part of goods, those duties are equivalent to a prohibition.\nThe French, in their turn, have, I believe, treated our goods and\nmanufactures just as hardly; though I am not so well acquainted with\nthe particular hardships which they have imposed upon them. Those mutual\nrestraints have put an end to almost all fair commerce between the\ntwo nations; and smugglers are now the principal importers, either of\nBritish goods into France, or of French goods into Great Britain. The\nprinciples which I have been examining, in the foregoing chapter, took\ntheir origin from private interest and the spirit of monopoly; those\nwhich I am going te examine in this, from national prejudice and\nanimosity. They are, accordingly, as might well be expected, still more\nunreasonable. They are so, even upon the principles of the commercial\nsystem.\n\nFirst, Though it were certain that in the case of a free trade between\nFrance and England, for example, the balance would be in favour\nof France, it would by no means follow that such a trade would be\ndisadvantageous to England, or that the general balance of its whole\ntrade would thereby be turned more against it. If the wines of France\nare better and cheaper than those of Portugal, or its linens than those\nof Germany, it would be more advantageous for Great Britain to purchase\nboth the wine and the foreign linen which it had occasion for of\nFrance, than of Portugal and Germany. Though the value of the annual\nimportations from France would thereby be greatly augmented, the value\nof the whole annual importations would be diminished, in proportion\nas the French goods of the same quality were cheaper than those of the\nother two countries. This would be the case, even upon the supposition\nthat the whole French goods imported were to be consumed in Great\nBritain.\n\nBut, Secondly, A great part of them might be re-exported to other\ncountries, where, being sold with profit, they might bring back a\nreturn, equal in value, perhaps, to the prime cost of the whole French\ngoods imported. What has frequently been said of the East India trade,\nmight possibly be true of the French; that though the greater part of\nEast India goods were bought with gold and silver, the re-exportation of\na part of them to other countries brought back more gold and silver\nto that which carried on the trade, than the prime cost of the whole\namounted to. One of the most important branches of the Dutch trade at\npresent, consists in the carriage of French goods to other European\ncountries. Some part even of the French wine drank in Great Britain, is\nclandestinely imported from Holland and Zealand. If there was either\na free trade between France and England, or if French goods could be\nimported upon paying only the same duties as those of other European\nnations, to be drawn back upon exportation, England might have some\nshare of a trade which is found so advantageous to Holland.\n\nThirdly, and lastly, There is no certain criterion by which we can\ndetermine on which side what is called the balance between any two\ncountries lies, or which of them exports to the greatest value. National\nprejudice and animosity, prompted always by the private interest of\nparticular traders, are the principles which generally direct our\njudgment upon all questions concerning it. There are two criterions,\nhowever, which have frequently been appealed to upon such occasions, the\ncustom-house books and the course of exchange. The custom-house books, I\nthink, it is now generally acknowledged, are a very uncertain criterion,\non account of the inaccuracy of the valuation at which the greater part\nof goods are rated in them. The course of exchange is, perhaps, almost\nequally so.\n\nWhen the exchange between two places, such as London and Paris, is at\npar, it is said to be a sign that the debts due from London to Paris are\ncompensated by those due from Paris to London. On the contrary, when a\npremium is paid at London for a bill upon Paris, it is said to be a sign\nthat the debts due from London to Paris are not compensated by those due\nfrom Paris to London, but that a balance in money must be sent out\nfrom the latter place; for the risk, trouble, and expense, of exporting\nwhich, the premium is both demanded and given. But the ordinary state of\ndebt and credit between those two cities must necessarily be regulated,\nit is said, by the ordinary course of their dealings with one another.\nWhen neither of them imports from from other to a greater amount than it\nexports to that other, the debts and credits of each may compensate one\nanother. But when one of them imports from the other to a greater value\nthan it exports to that other, the former necessarily becomes indebted\nto the latter in a greater sum than the latter becomes indebted to it:\nthe debts and credits of each do not compensate one another, and money\nmust be sent out from that place of which the debts overbalance the\ncredits. The ordinary course of exchange, therefore, being an indication\nof the ordinary state of debt and credit between two places, must\nlikewise be an indication of the ordinary course of their exports and\nimports, as these necessarily regulate that state.\n\nBut though the ordinary course of exchange shall be allowed to be a\nsufficient indication of the ordinary state of debt and credit between\nany two places, it would not from thence follow, that the balance of\ntrade was in favour of that place which had the ordinary state of debt\nand credit in its favour. The ordinary state of debt and credit between\nany two places is not always entirely regulated by the ordinary course\nof their dealings with one another, but is often influenced by that\nof the dealings of either with many other places. If it is usual, for\nexample, for the merchants of England to pay for the goods which they\nbuy of Hamburg, Dantzic, Riga, etc. by bills upon Holland, the ordinary\nstate of debt and credit between England and Holland will not be\nregulated entirely by the ordinary course of the dealings of those\ntwo countries with one another, but will be influenced by that of the\ndealings in England with those other places. England may be obliged to\nsend out every year money to Holland, though its annual exports to\nthat country may exceed very much the annual value of its imports from\nthence, and though what is called the balance of trade may be very much\nin favour of England.\n\nIn the way, besides, in which the par of exchange has hitherto been\ncomputed, the ordinary course of exchange can afford no sufficient\nindication that the ordinary state of debt and credit is in favour of\nthat country which seems to have, or which is supposed to have, the\nordinary course of exchange in its favour; or, in other words, the\nreal exchange may be, and in fact often is, so very different from the\ncomputed one, that, from the course of the latter, no certain conclusion\ncan, upon many occasions, be drawn concerning that of the former.\n\nWhen for a sum or money paid in England, containing, according to the\nstandard of the English mint, a certain number of ounces of pure silver,\nyou receive a bill for a sum of money to be paid in France, containing,\naccording to the standard of the French mint, an equal number of ounces\nof pure silver, exchange is said to be at par between England and\nFrance. When you pay more, you are supposed to give a premium, and\nexchange is said to be against England, and in favour of France. When\nyou pay less, you are supposed to get a premium, and exchange is said to\nbe against France, and in favour of England.\n\nBut, first, We cannot always judge of the value of the current money of\ndifferent countries by the standard of their respective mints. In some\nit is more, in others it is less worn, clipt, and otherwise degenerated\nfrom that standard. But the value of the current coin of every country,\ncompared with that of any other country, is in proportion, not to the\nquantity of pure silver which it ought to contain, but to that which it\nactually does contain. Before the reformation of the silver coin in King\nWilliam's time, exchange between England and Holland, computed in the\nusual manner, according to the standard of their respective mints, was\nfive-and twenty per cent. against England. But the value of the current\ncoin of England, as we learn from Mr Lowndes, was at that time rather\nmore than five-and-twenty per cent. below its standard value. The\nreal exchange, therefore, may even at that time have been in favour of\nEngland, notwithstanding the computed exchange was so much against it;\na smaller number or ounces of pure silver, actually paid in England, may\nhave purchased a bill for a greater number of ounces of pure silver to\nbe paid in Holland, and the man who was supposed to give, may in reality\nhave got the premium. The French coin was, before the late reformation\nof the English gold coin, much less wore than the English, and was\nperhaps two or three per cent. nearer its standard. If the computed\nexchange with France, therefore, was not more than two or three per\ncent. against England, the real exchange might have been in its favour.\nSince the reformation of the gold coin, the exchange has been constantly\nin favour of England, and against France.\n\nSecondly, In some countries the expense of coinage is defrayed by the\ngovernment; in others, it is defrayed by the private people, who carry\ntheir bullion to the mint, and the government even derives some revenue\nfrom the coinage. In England it is defrayed by the government; and if\nyou carry a pound weight of standard silver to the mint, you get back\nsixty-two shillings, containing a pound weight of the like standard\nsilver. In France a duty of eight per cent. is deducted for the coinage,\nwhich not only defrays the expense of it, but affords a small revenue\nto the government. In England, as the coinage costs nothing, the current\ncoin can never be much more valuable than the quantity of bullion which\nit actually contains. In France, the workmanship, as you pay for it,\nadds to the value, in the same manner as to that of wrought plate. A sum\nof French money, therefore, containing an equal weight of pure silver,\nis more valuable than a sum of English money containing an equal weight\nof pure silver, and must require more bullion, or other commodities, to\npurchase it. Though the current coin of the two countries, therefore,\nwere equally near the standards of their respective mints, a sum of\nEnglish money could not well purchase a sum of French money containing\nan equal number of ounces of pure silver, nor, consequently, a bill upon\nFrance for such a sum. If, for such a bill, no more additional money was\npaid than what was sufficient to compensate the expense of the French\ncoinage, the real exchange might be at par between the two countries;\ntheir debts and credits might mutually compensate one another, while\nthe computed exchange was considerably in favour of France. If less than\nthis was paid, the real exchange might be in favour of England, while\nthe computed was in favour of France.\n\nThirdly, and lastly, In some places, as at Amsterdam, Hamburg, Venice,\netc. foreign bills of exchange are paid in what they call bank money;\nwhile in others, as at London, Lisbon, Antwerp, Leghorn, etc. they are\npaid in the common currency of the country. What is called bank money,\nis always of more value than the same nominal sum of common currency.\nA thousand guilders in the bank of Amsterdam, for example, are of more\nvalue than a thousand guilders of Amsterdam currency. The difference\nbetween them is called the agio of the bank, which at Amsterdam is\ngenerally about five per cent. Supposing the current money of the two\ncountries equally near to the standard of their respective mints, and\nthat the one pays foreign bills in this common currency, while the other\npays them in bank money, it is evident that the computed exchange may\nbe in favour of that which pays in bank money, though the real exchange\nshould be in favour of that which pays in current money; for the same\nreason that the computed exchange may be in favour of that which pays\nin better money, or in money nearer to its own standard, though the real\nexchange should be in favour of that which pays in worse. The computed\nexchange, before the late reformation of the gold coin, was generally\nagainst London with Amsterdam, Hamburg, Venice, and, I believe, with all\nother places which pay in what is called bank money. It will by no\nmeans follow, however, that the real exchange was against it. Since the\nreformation of the gold coin, it has been in favour of London, even\nwith those places. The computed exchange has generally been in favour\nof London with Lisbon, Antwerp, Leghorn, and, if you except France, I\nbelieve with most other parts of Europe that pay in common currency; and\nit is not improbable that the real exchange was so too.\n\nDigression concerning Banks of Deposit, particularly concerning that of\nAmsterdam.\n\nThe currency of a great state, such as France or England, generally\nconsists almost entirely of its own coin. Should this currency,\ntherefore, be at any time worn, clipt, or otherwise degraded below its\nstandard value, the state, by a reformation of its coin, can effectually\nre-establish its currency. But the currency of a small state, such as\nGenoa or Hamburg, can seldom consist altogether in its own coin,\nbut must be made up, in a great measure, of the coins of all the\nneighbouring states with which its inhabitants have a continual\nintercourse. Such a state, therefore, by reforming its coin, will not\nalways be able to reform its currency. If foreign bills of exchange are\npaid in this currency, the uncertain value of any sum, of what is in\nits own nature so uncertain, must render the exchange always very\nmuch against such a state, its currency being in all foreign states\nnecessarily valued even below what it is worth.\n\nIn order to remedy the inconvenience to which this disadvantageous\nexchange must have subjected their merchants, such small states, when\nthey began to attend to the interest of trade, have frequently enacted\nthat foreign bills of exchange of a certain value should be paid, not in\ncommon currency, but by an order upon, or by a transfer in the books of\na certain bank, established upon the credit, and under the protection\nof the state, this bank being always obliged to pay, in good and true\nmoney, exactly according to the standard of the state. The banks of\nVenice, Genoa, Amsterdam, Hamburg, and Nuremberg, seem to have been\nall originally established with this view, though some of them may have\nafterwards been made subservient to other purposes. The money of such\nbanks, being better than the common currency of the country, necessarily\nbore an agio, which was greater or smaller, according as the currency\nwas supposed to be more or less degraded below the standard of the\nstate. The agio of the bank of Hamburg, for example, which is said to be\ncommonly about fourteen per cent. is the supposed difference between the\ngood standard money of the state, and the clipt, worn, and diminished\ncurrency, poured into it from all the neighbouring states.\n\nBefore 1609, the great quantity of clipt and worn foreign coin which the\nextensive trade of Amsterdam brought from all parts of Europe, reduced\nthe value of its currency about nine per cent. below that of good money\nfresh from the mint. Such money no sooner appeared, than it was melted\ndown or carried away, as it always is in such circumstances. The\nmerchants, with plenty of currency, could not always find a sufficient\nquantity of good money to pay their bills of exchange; and the value of\nthose bills, in spite of several regulations which were made to prevent\nit, became in a great measure uncertain.\n\nIn order to remedy these inconveniencies, a bank was established in\n1609, under the guarantee of the city. This bank received both foreign\ncoin, and the light and worn coin of the country, at its real intrinsic\nvalue in the good standard money of the country, deducting only so much\nas was necessary for defraying the expense of coinage and the other\nnecessary expense of management. For the value which remained after this\nsmall deduction was made, it gave a credit in its books. This credit was\ncalled bank money, which, as it represented money exactly according\nto the standard of the mint, was always of the same real value, and\nintrinsically worth more than current money. It was at the same time\nenacted, that all bills drawn upon or negotiated at Amsterdam, of the\nvalue of 600 guilders and upwards, should be paid in bank money, which\nat once took away all uncertainty in the value of those bills. Every\nmerchant, in consequence of this regulation, was obliged to keep an\naccount with the bank, in order to pay his foreign bills of exchange,\nwhich necessarily occasioned a certain demand for bank money.\n\nBank money, over and above both its intrinsic superiority to currency,\nand the additional value which this demand necessarily gives it, has\nlikewise some other advantages, It is secure from fire, robbery, and\nother accidents; the city of Amsterdam is bound for it; it can be paid\naway by a simple transfer, without the trouble of counting, or the risk\nof transporting it from one place to another. In consequence of those\ndifferent advantages, it seems from the beginning to have borne an agio;\nand it is generally believed that all the money originally deposited in\nthe bank, was allowed to remain there, nobody caring to demand payment\nof a debt which he could sell for a premium in the market. By demanding\npayment of the bank, the owner of a bank credit would lose this premium.\nAs a shilling fresh from the mint will buy no more goods in the market\nthan one of our common worn shillings, so the good and true money which\nmight be brought from the coffers of the bank into those of a private\nperson, being mixed and confounded with the common currency of the\ncountry, would be of no more value than that currency, from which it\ncould no longer be readily distinguished. While it remained in the\ncoffers of the bank, its superiority was known and ascertained. When it\nhad come into those of a private person, its superiority could not well\nbe ascertained without more trouble than perhaps the difference was\nworth. By being brought from the coffers of the bank, besides, it lost\nall the other advantages of bank money; its security, its easy and safe\ntransferability, its use in paying foreign bills of exchange. Over and\nabove all this, it could not be brought from those coffers, as will\nappear by and by, without previously paying for the keeping.\n\nThose deposits of coin, or those deposits which the bank was bound to\nrestore in coin, constituted the original capital of the bank, or the\nwhole value of what was represented by what is called bank money. At\npresent they are supposed to constitute but a very small part of it. In\norder to facilitate the trade in bullion, the bank has been for these\nmany years in the practice of giving credit in its books, upon deposits\nof gold and silver bullion. This credit is generally about five per\ncent. below the mint price of such bullion. The bank grants at the same\ntime what is called a recipice or receipt, entitling the person who\nmakes the deposit, or the bearer, to take out the bullion again at any\ntime within six months, upon transferring to the bank a quantity of bank\nmoney equal to that for which credit had been given in its books when\nthe deposit was made, and upon paying one-fourth per cent. for the\nkeeping, if the deposit was in silver; and one-half per cent. if it\nwas in gold; but at the same time declaring, that in default of such\npayment, and upon the expiration of this term, the deposit should belong\nto the bank, at the price at which it had been received, or for which\ncredit had been given in the transfer books. What is thus paid for the\nkeeping of the deposit may be considered as a sort of warehouse rent;\nand why this warehouse rent should be so much dearer for gold than for\nsilver, several different reasons have been assigned. The fineness of\ngold, it has been said, is more difficult to be ascertained than that of\nsilver. Frauds are more easily practised, and occasion a greater loss in\nthe most precious metal. Silver, besides, being the standard metal, the\nstate, it has been said, wishes to encourage more the making of deposits\nof silver than those of gold.\n\nDeposits of bullion are most commonly made when the price is somewhat\nlower than ordinary, and they are taken out again when it happens to\nrise. In Holland the market price of bullion is generally above the mint\nprice, for the same reason that it was so in England before the late\nreformation of the gold coin. The difference is said to be commonly from\nabout six to sixteen stivers upon the mark, or eight ounces of silver,\nof eleven parts of fine and one part alloy. The bank price, or the\ncredit which the bank gives for the deposits of such silver (when made\nin foreign coin, of which the fineness is well known and ascertained,\nsuch as Mexico dollars), is twenty-two guilders the mark: the mint\nprice is about twenty-three guilders, and the market price is from\ntwenty-three guilders six, to twenty-three guilders sixteen stivers, or\nfrom two to three per cent. above the mint price.\n\nThe following are the prices at which the bank of Amsterdam at present\n{September 1775} receives bullion and coin of different kinds:\n\n                              SILVER\n     Mexico dollars .................  22  Guilders / mark\n     French crowns ..................  22\n     English silver coin.............  22\n     Mexico dollars, new coin........  21  10\n     Ducatoons.......................   3   0\n     Rix-dollars.....................   2   8\n\nBar silver, containing 11-12ths fine silver, 21 Guilders / mark, and in\nthis proportion down to 1-4th fine, on which 5 guilders are given. Fine\nbars,................. 28 Guilders / mark.\n\n                              GOLD\n     Portugal coin.................  310  Guilders / mark\n     Guineas.......................  310\n     Louis d'ors, new..............  310\n     Ditto        old..............  300\n     New ducats....................    4  19  8  per ducat\n\nBar or ingot gold is received in proportion to its fineness, compared\nwith the above foreign gold coin. Upon fine bars the bank gives 340 per\nmark. In general, however, something more is given upon coin of a known\nfineness, than upon gold and silver bars, of which the fineness cannot\nbe ascertained but by a process of melting and assaying.\n\nThe proportions between the bank price, the mint price, and the market\nprice of gold bullion, are nearly the same. A person can generally sell\nhis receipt for the difference between the mint price of bullion and the\nmarket price. A receipt for bullion is almost always worth something,\nand it very seldom happens, therefore, that anybody suffers his receipts\nto expire, or allows his bullion to fall to the bank at the price at\nwhich it had been received, either by not taking it out before the end\nof the six months, or by neglecting to pay one fourth or one half per\ncent. in order to obtain a new receipt for another six months. This,\nhowever, though it happens seldom, is said to happen sometimes, and more\nfrequently with regard to gold than with regard to silver, on account\nof the higher warehouse rent which is paid for the keeping of the more\nprecious metal.\n\nThe person who, by making a deposit of bullion, obtains both a bank\ncredit and a receipt, pays his bills of exchange as they become due,\nwith his bank credit; and either sells or keeps his receipt, according\nas he judges that the price of bullion is likely to rise or to fall. The\nreceipt and the bank credit seldom keep long together, and there is no\noccasion that they should. The person who has a receipt, and who wants\nto take out bullion, finds always plenty of bank credits, or bank money,\nto buy at the ordinary price, and the person who has bank money, and\nwants to take out bullion, finds receipts always in equal abundance.\n\nThe owners of bank credits, and the holders of receipts, constitute two\ndifferent sorts of creditors against the bank. The holder of a\nreceipt cannot draw out the bullion for which it is granted, without\nre-assigning to the bank a sum of bank money equal to the price at which\nthe bullion had been received. If he has no bank money of his own, he\nmust purchase it of those who have it. The owner of bank money cannot\ndraw out bullion, without producing to the bank receipts for the\nquantity which he wants. If he has none of his own, he must buy them\nof those who have them. The holder of a receipt, when he purchases bank\nmoney, purchases the power of taking out a quantity of bullion, of which\nthe mint price is five per cent. above the bank price. The agio of five\nper cent. therefore, which he commonly pays for it, is paid, not for\nan imaginary, but for a real value. The owner of bank money, when he\npurchases a receipt, purchases the power of taking out a quantity of\nbullion, of which the market price is commonly from two to three per\ncent. above the mint price. The price which he pays for it, therefore,\nis paid likewise for a real value. The price of the receipt, and the\nprice of the bank money, compound or make up between them the full value\nor price of the bullion.\n\nUpon deposits of the coin current in the country, the bank grant\nreceipts likewise, as well as bank credits; but those receipts are\nfrequently of no value and will bring no price in the market. Upon\nducatoons, for example, which in the currency pass for three guilders\nthree stivers each, the bank gives a credit of three guilders only, or\nfive per cent. below their current value. It grants a receipt likewise,\nentitling the bearer to take out the number of ducatoons deposited at\nany time within six months, upon paying one fourth per cent. for the\nkeeping. This receipt will frequently bring no price in the market.\nThree guilders, bank money, generally sell in the market for three\nguilders three stivers, the full value of the ducatoons, if they were\ntaken out of the bank; and before they can be taken out, one-fourth\nper cent. must be paid for the keeping, which would be mere loss to the\nholder of the receipt. If the agio of the bank, however, should at any\ntime fall to three per cent. such receipts might bring some price in the\nmarket, and might sell for one and three-fourths per cent. But the agio\nof the bank being now generally about five per cent. such receipts are\nfrequently allowed to expire, or, as they express it, to fall to the\nbank. The receipts which are given for deposits of gold ducats fall to\nit yet more frequently, because a higher warehouse rent, or one half per\ncent. must be paid for the keeping of them, before they can be taken out\nagain. The five per cent. which the bank gains, when deposits either\nof coin or bullion are allowed to fall to it, maybe considered as the\nwarehouse rent for the perpetual keeping of such deposits.\n\nThe sum of bank money, for which the receipts are expired, must be very\nconsiderable. It must comprehend the whole original capital of the bank,\nwhich, it is generally supposed, has been allowed to remain there from\nthe time it was first deposited, nobody caring either to renew his\nreceipt, or to take out his deposit, as, for the reasons already\nassigned, neither the one nor the other could be done without loss. But\nwhatever may be the amount of this sum, the proportion which it bears to\nthe whole mass of bank money is supposed to be very small. The bank of\nAmsterdam has, for these many years past, been the great warehouse of\nEurope for bullion, for which the receipts are very seldom allowed to\nexpire, or, as they express it, to fall to the bank. The far greater\npart of the bank money, or of the credits upon the books of the bank,\nis supposed to have been created, for these many years past, by such\ndeposits, which the dealers in bullion are continually both making and\nwithdrawing.\n\nNo demand can be made upon the bank, but by means of a recipice or\nreceipt. The smaller mass of bank money, for which the receipts are\nexpired, is mixed and confounded with the much greater mass for which\nthey are still in force; so that, though there may be a considerable sum\nof bank money, for which there are no receipts, there is no specific sum\nor portion of it which may not at any time be demanded by one. The bank\ncannot be debtor to two persons for the same thing; and the owner of\nbank money who has no receipt, cannot demand payment of the bank till\nhe buys one. In ordinary and quiet times, he can find no difficulty in\ngetting one to buy at the market price, which generally corresponds with\nthe price at which he can sell the coin or bullion it entitles him to\ntake out of the bank.\n\nIt might be otherwise during a public calamity; an invasion, for\nexample, such as that of the French in 1672. The owners of bank money\nbeing then all eager to draw it out of the bank, in order to have it in\ntheir own keeping, the demand for receipts might raise their price to\nan exorbitant height. The holders of them might form extravagant\nexpectations, and, instead of two or three per cent. demand half the\nbank money for which credit had been given upon the deposits that the\nreceipts had respectively been granted for. The enemy, informed of the\nconstitution of the bank, might even buy them up, in order to prevent\nthe carrying away of the treasure. In such emergencies, the bank, it is\nsupposed, would break through its ordinary rule of making payment only\nto the holders of receipts. The holders of receipts, who had no bank\nmoney, must have received within two or three per cent. of the value of\nthe deposit for which their respective receipts had been granted. The\nbank, therefore, it is said, would in this case make no scruple of\npaying, either with money or bullion, the full value of what the owners\nof bank money, who could get no receipts, were credited for in its\nbooks; paying, at the same time, two or three per cent. to such holders\nof receipts as had no bank money, that being the whole value which, in\nthis state of things, could justly be supposed due to them.\n\nEven in ordinary and quiet times, it is the interest of the holders of\nreceipts to depress the agio, in order either to buy bank money (and\nconsequently the bullion which their receipts would then enable them\nto take out of the bank ) so much cheaper, or to sell their receipts\nto those who have bank money, and who want to take out bullion, so much\ndearer; the price of a receipt being generally equal to the difference\nbetween the market price of bank money and that of the coin or bullion\nfor which the receipt had been granted. It is the interest of the owners\nof bank money, on the contrary, to raise the agio, in order either\nto sell their bank money so much dearer, or to buy a receipt so much\ncheaper. To prevent the stock-jobbing tricks which those opposite\ninterests might sometimes occasion, the bank has of late years come to\nthe resolution, to sell at all times bank money for currency at five\nper cent. agio, and to buy it in again at four per cent. agio. In\nconsequence of this resolution, the agio can never either rise above\nfive, or sink below four per cent.; and the proportion between the\nmarket price of bank and that of current money is kept at all times\nvery near the proportion between their intrinsic values. Before this\nresolution was taken, the market price of bank money used sometimes to\nrise so high as nine per cent. agio, and sometimes to sink so low as\npar, according as opposite interests happened to influence the market.\n\nThe bank of Amsterdam professes to lend out no part of what is deposited\nwith it, but for every guilder for which it gives credit in its books,\nto keep in its repositories the value of a guilder either in money or\nbullion. That it keeps in its repositories all the money or bullion for\nwhich there are receipts in force for which it is at all times liable to\nbe called upon, and which in reality is continually going from it, and\nreturning to it again, cannot well be doubted. But whether it does so\nlikewise with regard to that part of its capital for which the receipts\nare long ago expired, for which, in ordinary and quiet times, it cannot\nbe called upon, and which, in reality, is very likely to remain with it\nfor ever, or as long as the states of the United Provinces subsist, may\nperhaps appear more uncertain. At Amsterdam, however, no point of faith\nis better established than that, for every guilder circulated as bank\nmoney, there is a correspondent guilder in gold or silver to be found in\nthe treasures of the bank. The city is guarantee that it should be so.\nThe bank is under the direction of the four reigning burgomasters\nwho are changed every year. Each new set of burgomasters visits the\ntreasure, compares it with the books, receives it upon oath, and\ndelivers it over, with the same awful solemnity to the set which\nsucceeds; and in that sober and religious country, oaths are not yet\ndisregarded. A rotation of this kind seems alone a sufficient security\nagainst any practices which cannot be avowed. Amidst all the revolutions\nwhich faction has ever occasioned in the government of Amsterdam, the\nprevailing party has at no time accused their predecessors of infidelity\nin the administration of the bank. No accusation could have affected\nmore deeply the reputation and fortune of the disgraced party; and if\nsuch an accusation could have been supported, we may be assured that it\nwould have been brought. In 1672, when the French king was at Utrecht,\nthe bank of Amsterdam paid so readily, as left no doubt of the fidelity\nwith which it had observed its engagements. Some of the pieces which\nwere then brought from its repositories, appeared to have been scorched\nwith the fire which happened in the town-house soon after the bank was\nestablished. Those pieces, therefore, must have lain there from that\ntime.\n\nWhat may be the amount of the treasure in the bank, is a question\nwhich has long employed the speculations of the curious. Nothing but\nconjecture can be offered concerning it. It is generally reckoned,\nthat there are about 2000 people who keep accounts with the bank; and\nallowing them to have, one with another, the value of £1500 sterling\nlying upon their respective accounts (a very large allowance), the whole\nquantity of bank money, and consequently of treasure in the bank, will\namount to about £3,000,000 sterling, or, at eleven guilders the pound\nsterling, 33,000,000 of guilders; a great sum, and sufficient to carry\non a very extensive circulation, but vastly below the extravagant ideas\nwhich some people have formed of this treasure.\n\nThe city of Amsterdam derives a considerable revenue from the bank.\nBesides what may be called the warehouse rent above mentioned, each\nperson, upon first opening an account with the bank, pays a fee of ten\nguilders; and for every new account, three guilder's three stivers; for\nevery transfer, two stivers; and if the transfer is for less than 300\nguilders, six stivers, in order to discourage the multiplicity of small\ntransactions. The person who neglects to balance his account twice\nin the year, forfeits twenty-five guilders. The person who orders a\ntransfer for more than is upon his account, is obliged to pay three\nper cent. for the sum overdrawn, and his order is set aside into the\nbargain. The bank is supposed, too, to make a considerable profit by the\nsale of the foreign coin or bullion which sometimes falls to it by the\nexpiring of receipts, and which is always kept till it can be sold with\nadvantage. It makes a profit, likewise, by selling bank money at five\nper cent. agio, and buying it in at four. These different emoluments\namount to a good deal more than what is necessary for paying the\nsalaries of officers, and defraying the expense of management. What\nis paid for the keeping of bullion upon receipts, is alone supposed to\namount to a neat annual revenue of between 150,000 and 200,000 guilders.\nPublic utility, however, and not revenue, was the original object of\nthis institution. Its object was to relieve the merchants from the\ninconvenience of a disadvantageous exchange. The revenue which has\narisen from it was unforeseen, and may be considered as accidental. But\nit is now time to return from this long digression, into which I have\nbeen insensibly led, in endeavouring to explain the reasons why the\nexchange between the countries which pay in what is called bank money,\nand those which pay in common currency, should generally appear to be\nin favour of the former, and against the latter. The former pay in a\nspecies of money, of which the intrinsic value is always the same, and\nexactly agreeable to the standard of their respective mints; the latter\nis a species of money, of which the intrinsic value is continually\nvarying, and is almost always more or less below that standard.\n\n\nPART II.--Of the Unreasonableness of those extraordinary Restraints,\nupon other Principles.\n\nIn the foregoing part of this chapter, I have endeavoured to show, even\nupon the principles of the commercial system, how unnecessary it is to\nlay extraordinary restraints upon the importation of goods from\nthose countries with which the balance of trade is supposed to be\ndisadvantageous.\n\nNothing, however, can be more absurd than this whole doctrine of the\nbalance of trade, upon which, not only these restraints, but almost all\nthe other regulations of commerce, are founded. When two places trade\nwith one another, this doctrine supposes that, if the balance be even,\nneither of them either loses or gains; but if it leans in any degree to\none side, that one of them loses, and the other gains, in proportion to\nits declension from the exact equilibrium. Both suppositions are false.\nA trade, which is forced by means of bounties and monopolies, may be,\nand commonly is, disadvantageous to the country in whose favour it is\nmeant to be established, as I shall endeavour to show hereafter.\nBut that trade which, without force or constraint, is naturally and\nregularly carried on between any two places, is always advantageous,\nthough not always equally so, to both.\n\nBy advantage or gain, I understand, not the increase of the quantity\nof gold and silver, but that of the exchangeable value of the annual\nproduce of the land and labour of the country, or the increase of the\nannual revenue of its inhabitants.\n\nIf the balance be even, and if the trade between the two places consist\naltogether in the exchange of their native commodities, they will, upon\nmost occasions, not only both gain, but they will gain equally, or very\nnearly equally; each will, in this case, afford a market for a part of\nthe surplus produce of the other; each will replace a capital which had\nbeen employed in raising and preparing for the market this part of the\nsurplus produce of the other, and which had been distributed among, and\ngiven revenue and maintenance to, a certain number of its inhabitants.\nSome part of the inhabitants of each, therefore, will directly derive\ntheir revenue and maintenance from the other. As the commodities\nexchanged, too, are supposed to be of equal value, so the two capitals\nemployed in the trade will, upon most occasions, be equal, or very\nnearly equal; and both being employed in raising the native commodities\nof the two countries, the revenue and maintenance which their\ndistribution will afford to the inhabitants of each will be equal, or\nvery nearly equal. This revenue and maintenance, thus mutually afforded,\nwill be greater or smaller, in proportion to the extent of their\ndealings. If these should annually amount to £100,000, for example, or\nto £1,000,000, on each side, each of them will afford an annual revenue,\nin the one case, of £100,000, and, in the other, of £1,000,000, to the\ninhabitants of the other.\n\nIf their trade should be of such a nature, that one of them exported\nto the other nothing but native commodities, while the returns of that\nother consisted altogether in foreign goods; the balance, in this\ncase, would still be supposed even, commodities being paid for with\ncommodities. They would, in this case too, both gain, but they would not\ngain equally; and the inhabitants of the country which exported nothing\nbut native commodities, would derive the greatest revenue from the\ntrade. If England, for example, should import from France nothing but\nthe native commodities of that country, and not having such commodities\nof its own as were in demand there, should annually repay them by\nsending thither a large quantity of foreign goods, tobacco, we shall\nsuppose, and East India goods; this trade, though it would give some\nrevenue to the inhabitants of both countries, would give more to those\nof France than to those of England. The whole French capital annually\nemployed in it would annually be distributed among the people of\nFrance; but that part of the English capital only, which was employed\nin producing the English commodities with which those foreign goods were\npurchased, would be annually distributed among the people of England.\nThe greater part of it would replace the capitals which had been\nemployed in Virginia, Indostan, and China, and which had given revenue\nand maintenance to the inhabitants of those distant countries. If the\ncapitals were equal, or nearly equal, therefore, this employment of\nthe French capital would augment much more the revenue of the people of\nFrance, than that of the English capital would the revenue of the people\nof England. France would, in this case, carry on a direct foreign\ntrade of consumption with England; whereas England would carry on a\nround-about trade of the same kind with France. The different effects of\na capital employed in the direct, and of one employed in the round-about\nforeign trade of consumption, have already been fully explained.\n\nThere is not, probably, between any two countries, a trade which\nconsists altogether in the exchange, either of native commodities on\nboth sides, or of native commodities on one side, and of foreign goods\non the other. Almost all countries exchange with one another, partly\nnative and partly foreign goods. That country, however, in whose cargoes\nthere is the greatest proportion of native, and the least of foreign\ngoods, will always be the principal gainer.\n\nIf it was not with tobacco and East India goods, but with gold and\nsilver, that England paid for the commodities annually imported from\nFrance, the balance, in this case, would be supposed uneven, commodities\nnot being paid for with commodities, but with gold and silver. The\ntrade, however, would in this case, as in the foregoing, give some\nrevenue to the inhabitants of both countries, but more to those of\nFrance than to those of England. It would give some revenue to those of\nEngland. The capital which had been employed in producing the English\ngoods that purchased this gold and silver, the capital which had been\ndistributed among, and given revenue to, certain inhabitants of England,\nwould thereby be replaced, and enabled to continue that employment. The\nwhole capital of England would no more be diminished by this exportation\nof gold and silver, than by the exportation of an equal value of any\nother goods. On the contrary, it would, in most cases, be augmented. No\ngoods are sent abroad but those for which the demand is supposed to be\ngreater abroad than at home, and of which the returns, consequently,\nit is expected, will be of more value at home than the commodities\nexported. If the tobacco which in England is worth only £100,000, when\nsent to France, will purchase wine which is in England worth £110,000,\nthe exchange will augment the capital of England by £10,000. If £100,000\nof English gold, in the same manner, purchase French wine, which in\nEngland is worth £110,000, this exchange will equally augment the\ncapital of England by £10,000. As a merchant, who has £110,000 worth of\nwine in his cellar, is a richer man than he who has only £100,000 worth\nof tobacco in his warehouse, so is he likewise a richer man than he who\nhas only £100,000 worth of gold in his coffers. He can put into motion\na greater quantity of industry, and give revenue, maintenance, and\nemployment, to a greater number of people, than either of the other\ntwo. But the capital of the country is equal to the capital of all\nits different inhabitants; and the quantity of industry which can be\nannually maintained in it is equal to what all those different capitals\ncan maintain. Both the capital of the country, therefore, and the\nquantity of industry which can be annually maintained in it, must\ngenerally be augmented by this exchange. It would, indeed, be more\nadvantageous for England that it could purchase the wines of France\nwith its own hardware and broad cloth, than with either the tobacco of\nVirginia, or the gold and silver of Brazil and Peru. A direct foreign\ntrade of consumption is always more advantageous than a round-about one.\nBut a round-about foreign trade of consumption, which is carried on with\ngold and silver, does not seem to be less advantageous than any other\nequally round-about one. Neither is a country which has no mines, more\nlikely to be exhausted of gold and silver by this annual exportation of\nthose metals, than one which does not grow tobacco by the like annual\nexportation of that plant. As a country which has wherewithal to buy\ntobacco will never be long in want of it, so neither will one be long in\nwant of gold and silver which has wherewithal to purchase those metals.\n\nIt is a losing trade, it is said, which a workman carries on with the\nalehouse; and the trade which a manufacturing nation would naturally\ncarry on with a wine country, may be considered as a trade of the same\nnature. I answer, that the trade with the alehouse is not necessarily a\nlosing trade. In its own nature it is just as advantageous as any other,\nthough, perhaps, somewhat more liable to be abused. The employment of\na brewer, and even that of a retailer of fermented liquors, are as\nnecessary division's of labour as any other. It will generally be more\nadvantageous for a workman to buy of the brewer the quantity he has\noccasion for, than to brew it himself; and if he is a poor workman,\nit will generally be more advantageous for him to buy it by little and\nlittle of the retailer, than a large quantity of the brewer. He may\nno doubt buy too much of either, as he may of any other dealers in his\nneighbourhood; of the butcher, if he is a glutton; or of the draper, if\nhe affects to be a beau among his companions. It is advantageous to the\ngreat body of workmen, notwithstanding, that all these trades should\nbe free, though this freedom may be abused in all of them, and is more\nlikely to be so, perhaps, in some than in others. Though individuals,\nbesides, may sometimes ruin their fortunes by an excessive consumption\nof fermented liquors, there seems to be no risk that a nation should do\nso. Though in every country there are many people who spend upon such\nliquors more than they can afford, there are always many more who spend\nless. It deserves to be remarked, too, that if we consult experience,\nthe cheapness of wine seems to be a cause, not of drunkenness, but\nof sobriety. The inhabitants of the wine countries are in general the\nsoberest people of Europe; witness the Spaniards, the Italians, and\nthe inhabitants of the southern provinces of France. People are seldom\nguilty of excess in what is their daily fare. Nobody affects the\ncharacter of liberality and good fellowship, by being profuse of\na liquor which is as cheap as small beer. On the contrary, in the\ncountries which, either from excessive heat or cold, produce no grapes,\nand where wine consequently is dear and a rarity, drunkenness is a\ncommon vice, as among the northern nations, and all those who live\nbetween the tropics, the negroes, for example on the coast of Guinea.\nWhen a French regiment comes from some of the northern provinces of\nFrance, where wine is somewhat dear, to be quartered in the southern,\nwhere it is very cheap, the soldiers, I have frequently heard it\nobserved, are at first debauched by the cheapness and novelty of good\nwine; but after a few months residence, the greater part of them become\nas sober as the rest of the inhabitants. Were the duties upon foreign\nwines, and the excises upon malt, beer, and ale, to be taken away all at\nonce, it might, in the same manner, occasion in Great Britain a pretty\ngeneral and temporary drunkenness among the middling and inferior ranks\nof people, which would probably be soon followed by a permanent and\nalmost universal sobriety. At present, drunkenness is by no means the\nvice of people of fashion, or of those who can easily afford the most\nexpensive liquors. A gentleman drunk with ale has scarce ever been seen\namong us. The restraints upon the wine trade in Great Britain, besides,\ndo not so much seem calculated to hinder the people from going, if I may\nsay so, to the alehouse, as from going where they can buy the best and\ncheapest liquor. They favour the wine trade of Portugal, and discourage\nthat of France. The Portuguese, it is said, indeed, are better customers\nfor our manufactures than the French, and should therefore be encouraged\nin preference to them. As they give us their custom, it is pretended we\nshould give them ours. The sneaking arts of underling tradesmen are thus\nerected into political maxims for the conduct of a great empire; for\nit is the most underling tradesmen only who make it a rule to employ\nchiefly their own customers. A great trader purchases his goods always\nwhere they are cheapest and best, without regard to any little interest\nof this kind.\n\nBy such maxims as these, however, nations have been taught that their\ninterest consisted in beggaring all their neighbours. Each nation has\nbeen made to look with an invidious eye upon the prosperity of all the\nnations with which it trades, and to consider their gain as its own\nloss. Commerce, which ought naturally to be, among nations as among\nindividuals, a bond of union and friendship, has become the most fertile\nsource of discord and animosity. The capricious ambition of kings and\nministers has not, during the present and the preceding century, been\nmore fatal to the repose of Europe, than the impertinent jealousy of\nmerchants and manufacturers. The violence and injustice of the rulers of\nmankind is an ancient evil, for which, I am afraid, the nature of\nhuman affairs can scarce admit of a remedy: but the mean rapacity, the\nmonopolizing spirit, of merchants and manufacturers, who neither are,\nnor ought to be, the rulers of mankind, though it cannot, perhaps, be\ncorrected, may very easily be prevented from disturbing the tranquillity\nof anybody but themselves.\n\nThat it was the spirit of monopoly which originally both invented and\npropagated this doctrine, cannot be doubted and they who first taught\nit, were by no means such fools as they who believed it. In every\ncountry it always is, and must be, the interest of the great body of\nthe people, to buy whatever they want of those who sell it cheapest. The\nproposition is so very manifest, that it seems ridiculous to take any\npains to prove it; nor could it ever have been called in question, had\nnot the interested sophistry of merchants and manufacturers confounded\nthe common sense of mankind. Their interest is, in this respect,\ndirectly opposite to that of the great body of the people. As it is\nthe interest of the freemen of a corporation to hinder the rest of the\ninhabitants from employing any workmen but themselves; so it is the\ninterest of the merchants and manufacturers of every country to secure\nto themselves the monopoly of the home market. Hence, in Great Britain,\nand in most other European countries, the extraordinary duties upon\nalmost all goods imported by alien merchants. Hence the high duties and\nprohibitions upon all those foreign manufactures which can come into\ncompetition with our own. Hence, too, the extraordinary restraints upon\nthe importation of almost all sorts of goods from those countries with\nwhich the balance of trade is supposed to be disadvantageous; that is,\nfrom those against whom national animosity happens ta be most violently\ninflamed.\n\nThe wealth of neighbouring nations, however, though dangerous in war and\npolitics, is certainly advantageous in trade. In a state of hostility,\nit may enable our enemies to maintain fleets and armies superior to our\nown; but in a state of peace and commerce it must likewise enable them\nto exchange with us to a greater value, and to afford a better market,\neither for the immediate produce of our own industry, or for whatever\nis purchased with that produce. As a rich man is likely to be a better\ncustomer to the industrious people in his neighbourhood, than a poor,\nso is likewise a rich nation. A rich man, indeed, who is himself a\nmanufacturer, is a very dangerous neighbour to all those who deal in\nthe same way. All the rest of the neighbourhood, however, by far the\ngreatest number, profit by the good market which his expense affords\nthem. They even profit by his underselling the poorer workmen who deal\nin the same way with him. The manufacturers of a rich nation, in the\nsame manner, may no doubt be very dangerous rivals to those of their\nneighbours. This very competition, however, is advantageous to the great\nbody of the people, who profit greatly, besides, by the good market\nwhich the great expense of such a nation affords them in every other\nway. Private people, who want to make a fortune, never think of retiring\nto the remote and poor provinces of the country, but resort either to\nthe capital, or to some of the great commercial towns. They know, that\nwhere little wealth circulates, there is little to be got; but that\nwhere a great deal is in motion, some share of it may fall to them. The\nsame maxim which would in this manner direct the common sense of one, or\nten, or twenty individuals, should regulate the judgment of one, or ten,\nor twenty millions, and should make a whole nation regard the riches of\nits neighbours, as a probable cause and occasion for itself to acquire\nriches. A nation that would enrich itself by foreign trade, is certainly\nmost likely to do so, when its neighbours are all rich, industrious and\ncommercial nations. A great nation, surrounded on all sides by wandering\nsavages and poor barbarians, might, no doubt, acquire riches by the\ncultivation of its own lands, and by its own interior commerce, but not\nby foreign trade. It seems to have been in this manner that the ancient\nEgyptians and the modern Chinese acquired their great wealth. The\nancient Egyptians, it is said, neglected foreign commerce, and the\nmodern Chinese, it is known, hold it in the utmost contempt, and scarce\ndeign to afford it the decent protection of the laws. The modern\nmaxims of foreign commerce, by aiming at the impoverishment of all\nour neighbours, so far as they are capable of producing their\nintended effect, tend to render that very commerce insignificant and\ncontemptible.\n\nIt is in consequence of these maxims, that the commerce between\nFrance and England has, in both countries, been subjected to so many\ndiscouragements and restraints. If those two countries, however, were\nto consider their real interest, without either mercantile jealousy or\nnational animosity, the commerce of France might be more advantageous to\nGreat Britain than that of any other country, and, for the same reason,\nthat of Great Britain to France. France is the nearest neighbour to\nGreat Britain. In the trade between the southern coast of England and\nthe northern and north-western coast of France, the returns might be\nexpected, in the same manner as in the inland trade, four, five, or six\ntimes in the year. The capital, therefore, employed in this trade could,\nin each of the two countries, keep in motion four, five, or six times\nthe quantity of industry, and afford employment and subsistence to four,\nfive, or six times the number of people, which all equal capital could\ndo in the greater part of the other branches of foreign trade. Between\nthe parts of France and Great Britain most remote from one another, the\nreturns might be expected, at least, once in the year; and even this\ntrade would so far be at least equally advantageous, as the greater part\nof the other branches of our foreign European trade. It would be, at\nleast, three times more advantageous than the boasted trade with our\nNorth American colonies, in which the returns were seldom made in\nless than three years, frequently not in less than four or five years.\nFrance, besides, is supposed to contain 24,000,000 of inhabitants.\nOur North American colonies were never supposed to contain more than\n3,000,000; and France is a much richer country than North America;\nthough, on account of the more unequal distribution of riches, there\nis much more poverty and beggary in the one country than in the other.\nFrance, therefore, could afford a market at least eight times more\nextensive, and, on account of the superior frequency of the returns,\nfour-and-twenty times more advantageous than that which our North\nAmerican colonies ever afforded. The trade of Great Britain would\nbe just as advantageous to France, and, in proportion to the wealth,\npopulation, and proximity of the respective countries, would have\nthe same superiority over that which France carries on with her own\ncolonies. Such is the very great difference between that trade which the\nwisdom of both nations has thought proper to discourage, and that which\nit has favoured the most.\n\nBut the very same circumstances which would have rendered an open and\nfree commerce between the two countries so advantageous to both,\nhave occasioned the principal obstructions to that commerce. Being\nneighbours, they are necessarily enemies, and the wealth and power of\neach becomes, upon that account, more formidable to the other; and what\nwould increase the advantage of national friendship, serves only to\ninflame the violence of national animosity. They are both rich and\nindustrious nations; and the merchants and manufacturers of each\ndread the competition of the skill and activity of those of the other.\nMercantile jealousy is excited, and both inflames, and is itself\ninflamed, by the violence of national animosity, and the traders of\nboth countries have announced, with all the passionate confidence of\ninterested falsehood, the certain ruin of each, in consequence of\nthat unfavourable balance of trade, which, they pretend, would be the\ninfallible effect of an unrestrained commerce with the other.\n\nThere is no commercial country in Europe, of which the approaching\nruin has not frequently been foretold by the pretended doctors of this\nsystem, from all unfavourably balance of trade. After all the anxiety,\nhowever, which they have excited about this, after all the vain attempts\nof almost all trading nations to turn that balance in their own favour,\nand against their neighbours, it does not appear that any one nation in\nEurope has been, in any respect, impoverished by this cause. Every town\nand country, on the contrary, in proportion as they have opened their\nports to all nations, instead of being ruined by this free trade, as the\nprinciples of the commercial system would lead us to expect, have been\nenriched by it. Though there are in Europe indeed, a few towns which, in\nsame respects, deserve the name of free ports, there is no country which\ndoes so. Holland, perhaps, approaches the nearest to this character of\nany, though still very remote from it; and Holland, it is acknowledged,\nnot only derives its whole wealth, but a great part of its necessary\nsubsistence, from foreign trade.\n\nThere is another balance, indeed, which has already been explained, very\ndifferent from the balance of trade, and which, according as it happens\nto be either favourable or unfavourable, necessarily occasions the\nprosperity or decay of every nation. This is the balance of the annual\nproduce and consumption. If the exchangeable value of the annual\nproduce, it has already been observed, exceeds that of the annual\nconsumption, the capital of the society must annually increase in\nproportion to this excess. The society in this case lives within its\nrevenue; and what is annually saved out of its revenue, is naturally\nadded to its capital, and employed so as to increase still further the\nannual produce. If the exchangeable value of the annual produce, on\nthe contrary, fall short of the annual consumption, the capital of\nthe society must annually decay in proportion to this deficiency.\nThe expense of the society, in this case, exceeds its revenue, and\nnecessarily encroaches upon its capital. Its capital, therefore, must\nnecessarily decay, and, together with it, the exchangeable value of the\nannual produce of its industry.\n\nThis balance of produce and consumption is entirely different from what\nis called the balance of trade. It might take place in a nation which\nhad no foreign trade, but which was entirely separated from all the\nworld. It may take place in the whole globe of the earth, of which the\nwealth, population, and improvement, may be either gradually increasing\nor gradually decaying.\n\nThe balance of produce and consumption may be constantly in favour of a\nnation, though what is called the balance of trade be generally against\nit. A nation may import to a greater value than it exports for half\na century, perhaps, together; the gold and silver which comes into\nit during all this time, may be all immediately sent out of it; its\ncirculating coin may gradually decay, different sorts of paper money\nbeing substituted in its place, and even the debts, too, which it\ncontracts in the principal nations with whom it deals, may be gradually\nincreasing; and yet its real wealth, the exchangeable value of the\nannual produce of its lands and labour, may, during the same period,\nhave been increasing in a much greater proportion. The state of our\nNorth American colonies, and of the trade which they carried on with\nGreat Britain, before the commencement of the present disturbances,\n{This paragraph was written in the year 1775.} may serve as a proof that\nthis is by no means an impossible supposition.\n\n\n\n\nCHAPTER IV. OF DRAWBACKS.\n\nMerchants and manufacturers are not contented with the monopoly of the\nhome market, but desire likewise the most extensive foreign sale for\ntheir goods. Their country has no jurisdiction in foreign nations, and\ntherefore can seldom procure them any monopoly there. They are generally\nobliged, therefore, to content themselves with petitioning for certain\nencouragements to exportation.\n\nOf these encouragements, what are called drawbacks seem to be the most\nreasonable. To allow the merchant to draw back upon exportation, either\nthe whole, or a part of whatever excise or inland duty is imposed upon\ndomestic industry, can never occasion the exportation of a greater\nquantity of goods than what would have been exported had no duty been\nimposed. Such encouragements do not tend to turn towards any particular\nemployment a greater share of the capital of the country, than what\nwould go to that employment of its own accord, but only to hinder the\nduty from driving away any part of that share to other employments. They\ntend not to overturn that balance which naturally establishes itself\namong all the various employments of the society, but to hinder it from\nbeing overturned by the duty. They tend not to destroy, but to preserve,\nwhat it is in most cases advantageous to preserve, the natural division\nand distribution of labour in the society.\n\nThe same thing may be said of the drawbacks upon the re-exportation of\nforeign goods imported, which, in Great Britain, generally amount to by\nmuch the largest part of the duty upon importation. By the second of\nthe rules, annexed to the act of parliament, which imposed what is now\ncalled the old subsidy, every merchant, whether English or alien.\nwas allowed to draw back half that duty upon exportation; the English\nmerchant, provided the exportation took place within twelve months; the\nalien, provided it took place within nine months. Wines, currants, and\nwrought silks, were the only goods which did not fall within this rule,\nhaving other and more advantageous allowances. The duties imposed by\nthis act of parliament were, at that time, the only duties upon the\nimportation of foreign goods. The term within which this, and all other\ndrawbacks could be claimed, was afterwards (by 7 Geo. I. chap. 21. sect.\n10.) extended to three years.\n\nThe duties which have been imposed since the old subsidy, are, the\ngreater part of them, wholly drawn back upon exportation. This general\nrule, however, is liable to a great number of exceptions; and the\ndoctrine of drawbacks has become a much less simple matter than it was\nat their first institution.\n\nUpon the exportation of some foreign goods, of which it was expected\nthat the importation would greatly exceed what was necessary for the\nhome consumption, the whole duties are drawn back, without retaining\neven half the old subsidy. Before the revolt of our North American\ncolonies, we had the monopoly of the tobacco of Maryland and Virginia.\nWe imported about ninety-six thousand hogsheads, and the home\nconsumption was not supposed to exceed fourteen thousand. To facilitate\nthe great exportation which was necessary, in order to rid us of the\nrest, the whole duties were drawn back, provided the exportation took\nplace within three years.\n\nWe still have, though not altogether, yet very nearly, the monopoly of\nthe sugars of our West Indian islands. If sugars are exported within a\nyear, therefore, all the duties upon importation are drawn back; and\nif exported within three years, all the duties, except half the old\nsubsidy, which still continues to be retained upon the exportation of\nthe greater part of goods. Though the importation of sugar exceeds a\ngood deal what is necessary for the home consumption, the excess is\ninconsiderable, in comparison of what it used to be in tobacco.\n\nSome goods, the particular objects of the jealousy of our own\nmanufacturers, are prohibited to be imported for home consumption. They\nmay, however, upon paying certain duties, be imported and warehoused for\nexportation. But upon such exportation no part of these duties is\ndrawn back. Our manufacturers are unwilling, it seems, that even this\nrestricted importation should be encouraged, and are afraid lest some\npart of these goods should be stolen out of the warehouse, and thus come\ninto competition with their own. It is under these regulations only\nthat we can import wrought silks, French cambrics and lawns, calicoes,\npainted, printed, stained, or dyed, etc.\n\nWe are unwilling even to be the carriers of French goods, and choose\nrather to forego a profit to ourselves than to suffer those whom we\nconsider as our enemies to make any profit by our means. Not only half\nthe old subsidy, but the second twenty-five per cent. is retained upon\nthe exportation of all French goods.\n\nBy the fourth of the rules annexed to the old subsidy, the drawback\nallowed upon the exportation of all wines amounted to a great deal\nmore than half the duties which were at that time paid upon their\nimportation; and it seems at that time to have been the object of the\nlegislature to give somewhat more than ordinary encouragement to the\ncarrying trade in wine. Several of the other duties, too which were\nimposed either at the same time or subsequent to the old subsidy,\nwhat is called the additional duty, the new subsidy, the one-third and\ntwo-thirds subsidies, the impost 1692, the tonnage on wine, were allowed\nto be wholly drawn back upon exportation. All those duties, however,\nexcept the additional duty and impost 1692, being paid down in ready\nmoney upon importation, the interest of so large a sum occasioned an\nexpense, which made it unreasonable to expect any profitable carrying\ntrade in this article. Only a part, therefore of the duty called the\nimpost on wine, and no part of the twenty-five pounds the ton upon\nFrench wines, or of the duties imposed in 1745, in 1763, and in 1778,\nwere allowed to be drawn back upon exportation. The two imposts of\nfive per cent. imposed in 1779 and 1781, upon all the former duties of\ncustoms, being allowed to be wholly drawn back upon the exportation of\nall other goods, were likewise allowed to be drawn back upon that of\nwine. The last duty that has been particularly imposed upon wine, that\nof 1780, is allowed to be wholly drawn back; an indulgence which, when\nso many heavy duties are retained, most probably could never occasion\nthe exportation of a single ton of wine. These rules took place with\nregard to all places of lawful exportation, except the British colonies\nin America.\n\nThe 15th Charles II, chap. 7, called an act for the encouragement of\ntrade, had given Great Britain the monopoly of supplying the colonies\nwith all the commodities of the growth or manufacture of Europe, and\nconsequently with wines. In a country of so extensive a coast as our\nNorth American and West Indian colonies, where our authority was always\nso very slender, and where the inhabitants were allowed to carry out in\ntheir own ships their non-enumerated commodities, at first to all\nparts of Europe, and afterwards to all parts of Europe south of Cape\nFinisterre, it is not very probable that this monopoly could ever be\nmuch respected; and they probably at all times found means of bringing\nback some cargo from the countries to which they were allowed to carry\nout one. They seem, however, to have found some difficulty in importing\nEuropean wines from the places of their growth; and they could not well\nimport them from Great Britain, where they were loaded with many\nheavy duties, of which a considerable part was not drawn back upon\nexportation. Madeira wine, not being an European commodity, could be\nimported directly into America and the West Indies, countries which, in\nall their non-enumerated commodities, enjoyed a free trade to the island\nof Madeira. These circumstances had probably introduced that general\ntaste for Madeira wine, which our officers found established in all our\ncolonies at the commencement of the war which began in 1755, and which\nthey brought back with them to the mother country, where that wine had\nnot been much in fashion before. Upon the conclusion of that war, in\n1763 (by the 4th Geo. III, chap. 15, sect. 12), all the duties except\n£3, 10s. were allowed to be drawn back upon the exportation to the\ncolonies of all wines, except French wines, to the commerce and\nconsumption of which national prejudice would allow no sort of\nencouragement. The period between the granting of this indulgence and\nthe revolt of our North American colonies, was probably too short to\nadmit of any considerable change in the customs of those countries.\n\nThe same act which, in the drawbacks upon all wines, except French\nwines, thus favoured the colonies so much more than other countries,\nin those upon the greater part of other commodities, favoured them much\nless. Upon the exportation of the greater part of commodities to other\ncountries, half the old subsidy was drawn back. But this law enacted,\nthat no part of that duty should be drawn back upon the exportation to\nthe colonies of any commodities of the growth or manufacture either of\nEurope or the East Indies, except wines, white calicoes, and muslins.\n\nDrawbacks were, perhaps, originally granted for the encouragement of the\ncarrying trade, which, as the freight of the ship is frequently paid by\nforeigners in money, was supposed to be peculiarly fitted for bringing\ngold and silver into the country. But though the carrying trade\ncertainly deserves no peculiar encouragement, though the motive of the\ninstitution was, perhaps, abundantly foolish, the institution itself\nseems reasonable enough. Such drawbacks cannot force into this trade a\ngreater share of the capital of the country than what would have gone\nto it of its own accord, had there been no duties upon importation; they\nonly prevent its being excluded altogether by those duties. The carrying\ntrade, though it deserves no preference, ought not to be precluded, but\nto be left free, like all other trades. It is a necessary resource to\nthose capitals which cannot find employment, either in the agriculture\nor in the manufactures of the country, either in its home trade, or in\nits foreign trade of consumption.\n\nThe revenue of the customs, instead of suffering, profits from such\ndrawbacks, by that part of the duty which is retained. If the whole\nduties had been retained, the foreign goods upon which they are paid\ncould seldom have been exported, nor consequently imported, for want\nof a market. The duties, therefore, of which a part is retained, would\nnever have been paid.\n\nThese reasons seem sufficiently to justify drawbacks, and would justify\nthem, though the whole duties, whether upon the produce of domestic\nindustry or upon foreign goods, were always drawn back upon exportation.\nThe revenue of excise would, in this case indeed, suffer a little,\nand that of the customs a good deal more; but the natural balance of\nindustry, the natural division and distribution of labour, which is\nalways more or less disturbed by such duties, would be more nearly\nre-established by such a regulation.\n\nThese reasons, however, will justify drawbacks only upon exporting goods\nto those countries which are altogether foreign and independent, not\nto those in which our merchants and manufacturers enjoy a monopoly. A\ndrawback, for example, upon the exportation of European goods to our\nAmerican colonies, will not always occasion a greater exportation than\nwhat would have taken place without it. By means of the monopoly which\nour merchants and manufacturers enjoy there, the same quantity might\nfrequently, perhaps, be sent thither, though the whole duties were\nretained. The drawback, therefore, may frequently be pure loss to the\nrevenue of excise and customs, without altering the state of the trade,\nor rendering it in any respect more extensive. How far such drawbacks\ncan be justified as a proper encouragement to the industry of our\ncolonies, or how far it is advantageous to the mother country that they\nshould be exempted from taxes which are paid by all the rest of\ntheir fellow-subjects, will appear hereafter, when I come to treat of\ncolonies.\n\nDrawbacks, however, it must always be understood, are useful only in\nthose cases in which the goods, for the exportation of which they\nare given, are really exported to some foreign country, and not\nclandestinely re-imported into our own. That some drawbacks,\nparticularly those upon tobacco, have frequently been abused in this\nmanner, and have given occasion to many frauds, equally hurtful both to\nthe revenue and to the fair trader, is well known.\n\n\n\n\nCHAPTER V. OF BOUNTIES.\n\nBounties upon exportation are, in Great Britain, frequently petitioned\nfor, and sometimes granted, to the produce of particular branches of\ndomestic industry. By means of them, our merchants and manufacturers,\nit is pretended, will be enabled to sell their goods as cheap or cheaper\nthan their rivals in the foreign market. A greater quantity, it is said,\nwill thus be exported, and the balance of trade consequently turned more\nin favour of our own country. We cannot give our workmen a monopoly\nin the foreign, as we have done in the home market. We cannot force\nforeigners to buy their goods, as we have done our own countrymen. The\nnext best expedient, it has been thought, therefore, is to pay them\nfor buying. It is in this manner that the mercantile system proposes\nto enrich the whole country, and to put money into all our pockets, by\nmeans of the balance of trade.\n\nBounties, it is allowed, ought to be given to those branches of trade\nonly which cannot be carried on without them. But every branch of trade\nin which the merchant can sell his goods for a price which replaces to\nhim, with the ordinary profits of stock, the whole capital employed\nin preparing and sending them to market, can be carried on without a\nbounty. Every such branch is evidently upon a level with all the other\nbranches of trade which are carried on without bounties, and cannot,\ntherefore, require one more than they. Those trades only require\nbounties, in which the merchant is obliged to sell his goods for a price\nwhich does not replace to him his capital, together with the ordinary\nprofit, or in which he is obliged to sell them for less than it really\ncost him to send them to market. The bounty is given in order to make\nup this loss, and to encourage him to continue, or, perhaps, to begin a\ntrade, of which the expense is supposed to be greater than the returns,\nof which every operation eats up a part of the capital employed in it,\nand which is of such a nature, that if all other trades resembled it,\nthere would soon be no capital left in the country.\n\nThe trades, it is to be observed, which are carried on by means of\nbounties, are the only ones which can be carried on between two nations\nfor any considerable time together, in such a manner as that one of them\nshall alway's and regularly lose, or sell its goods for less than it\nreally cost to send them to market. But if the bounty did not repay to\nthe merchant what he would otherwise lose upon the price of his goods,\nhis own interest would soon oblige him to employ his stock in another\nway, or to find out a trade in which the price of the goods would\nreplace to him, with the ordinary profit, the capital employed in\nsending them to market. The effect of bounties, like that of all the\nother expedients of the mercantile system, can only be to force the\ntrade of a country into a channel much less advantageous than that in\nwhich it would naturally run of its own accord.\n\nThe ingenious and well-informed author of the Tracts upon the Corn Trade\nhas shown very clearly, that since the bounty upon the exportation\nof corn was first established, the price of the corn exported, valued\nmoderately enough, has exceeded that of the corn imported, valued very\nhigh, by a much greater sum than the amount of the whole bounties which\nhave been paid during that period. This, he imagines, upon the true\nprinciples of the mercantile system, is a clear proof that this forced\ncorn trade is beneficial to the nation, the value of the exportation\nexceeding that of the importation by a much greater sum than the whole\nextraordinary expense which the public has been at in order to get it\nexported. He does not consider that this extraordinary expense, or the\nbounty, is the smallest part of the expense which the exportation of\ncorn really costs the society. The capital which the farmer employed in\nraising it must likewise be taken into the account. Unless the price\nof the corn, when sold in the foreign markets, replaces not only the\nbounty, but this capital, together with the ordinary profits of stock,\nthe society is a loser by the difference, or the national stock is\nso much diminished. But the very reason for which it has been thought\nnecessary to grant a bounty, is the supposed insufficiency of the price\nto do this.\n\nThe average price of corn, it has been said, has fallen considerably\nsince the establishment of the bounty. That the average price of corn\nbegan to fall somewhat towards the end of the last century, and has\ncontinued to do so during the course of the sixty-four first years\nof the present, I have already endeavoured to show. But this event,\nsupposing it to be real, as I believe it to be, must have happened in\nspite of the bounty, and cannot possibly have happened in consequence of\nit. It has happened in France, as well as in England, though in France\nthere was not only no bounty, but, till 1764, the exportation of corn\nwas subjected to a general prohibition. This gradual fall in the average\nprice of grain, it is probable, therefore, is ultimately owing neither\nto the one regulation nor to the other, but to that gradual and\ninsensible rise in the real value of silver, which, in the first book\nof this discourse, I have endeavoured to show, has taken place in the\ngeneral market of Europe during the course of the present century. It\nseems to be altogether impossible that the bounty could ever contribute\nto lower the price of grain.\n\nIn years of plenty, it has already been observed, the bounty, by\noccasioning an extraordinary exportation, necessarily keeps up the price\nof corn in the home market above what it would naturally fall to. To\ndo so was the avowed purpose of the institution. In years of scarcity,\nthough the bounty is frequently suspended, yet the great exportation\nwhich it occasions in years of plenty, must frequently hinder, more or\nless, the plenty of one year from relieving the scarcity of another.\nBoth in years of plenty and in years of scarcity, therefore, the bounty\nnecessarily tends to raise the money price of corn somewhat higher than\nit otherwise would be in the home market.\n\nThat in the actual state of tillage the bounty must necessarily have\nthis tendency, will not, I apprehend, be disputed by any reasonable\nperson. But it has been thought by many people, that it tends to\nencourage tillage, and that in two different ways; first, by opening a\nmore extensive foreign market to the corn of the farmer, it tends, they\nimagine, to increase the demand for, and consequently the production of,\nthat commodity; and, secondly by securing to him a better price than he\ncould otherwise expect in the actual state of tillage, it tends, they\nsuppose, to encourage tillage. This double encouragement must they\nimagine, in a long period of years, occasion such an increase in the\nproduction of corn, as may lower its price in the home market, much more\nthan the bounty can raise it in the actual state which tillage may, at\nthe end of that period, happen to be in.\n\nI answer, that whatever extension of the foreign market can be\noccasioned by the bounty must, in every particular year, be altogether\nat the expense of the home market; as every bushel of corn, which is\nexported by means of the bounty, and which would not have been exported\nwithout the bounty, would have remained in the home market to increase\nthe consumption, and to lower the price of that commodity. The corn\nbounty, it is to be observed, as well as every other bounty upon\nexportation, imposes two different taxes upon the people; first, the tax\nwhich they are obliged to contribute, in order to pay the bounty; and,\nsecondly, the tax which arises from the advanced price of the commodity\nin the home market, and which, as the whole body of the people are\npurchasers of corn, must, in this particular commodity, be paid by the\nwhole body of the people. In this particular commodity, therefore, this\nsecond tax is by much the heaviest of the two. Let us suppose that,\ntaking one year with another, the bounty of 5s. upon the exportation\nof the quarter of wheat raises the price of that commodity in the home\nmarket only 6d. the bushel, or 4s. the quarter higher than it otherwise\nwould have been in the actual state of the crop. Even upon this very\nmoderate supposition, the great body of the people, over and above\ncontributing the tax which pays the bounty of 5s. upon every quarter of\nwheat exported, must pay another of 4s. upon every quarter which they\nthemselves consume. But according to the very well informed author\nof the Tracts upon the Corn Trade, the average proportion of the corn\nexported to that consumed at home, is not more than that of one to\nthirty-one. For every 5s. therefore, which they contribute to the\npayment of the first tax, they must contribute £6:4s. to the payment of\nthe second. So very heavy a tax upon the first necessary of life-must\neither reduce the subsistence of the labouring poor, or it must occasion\nsome augmentation in their pecuniary wages, proportionable to that in\nthe pecuniary price of their subsistence. So far as it operates in the\none way, it must reduce the ability of the labouring poor to educate\nand bring up their children, and must, so far, tend to restrain the\npopulation of the country. So far as it operate's in the other, it must\nreduce the ability of the employers of the poor, to employ so great a\nnumber as they otherwise might do, and must so far tend to restrain\nthe industry of the country. The extraordinary exportation of corn,\ntherefore occasioned by the bounty, not only in every particular year\ndiminishes the home, just as much as it extends the foreign market and\nconsumption, but, by restraining the population and industry of the\ncountry, its final tendency is to stint and restrain the gradual\nextension of the home market; and thereby, in the long-run, rather to\ndiminish than to augment the whole market and consumption of corn.\n\nThis enhancement of the money price of corn, however, it has been\nthought, by rendering that commodity more profitable to the farmer, must\nnecessarily encourage its production.\n\nI answer, that this might be the case, if the effect of the bounty was\nto raise the real price of corn, or to enable the farmer, with an equal\nquantity of it, to maintain a greater number of labourers in the same\nmanner, whether liberal, moderate, or scanty, than other labourers are\ncommonly maintained in his neighbourhood. But neither the bounty, it is\nevident, nor any other human institution, can have any such effect.\nIt is not the real, but the nominal price of corn, which can in any\nconsiderable degree be affected by the bounty. And though the tax, which\nthat institution imposes upon the whole body of the people, may be very\nburdensome to those who pay it, it is of very little advantage to those\nwho receive it.\n\nThe real effect of the bounty is not so much to raise the real value\nof corn, as to degrade the real value of silver; or to make an equal\nquantity of it exchange for a smaller quantity, not only of corn, but of\nall other home made commodities; for the money price of corn regulates\nthat of all other home made commodities.\n\nIt regulates the money price of labour, which must always be such as\nto enable the labourer to purchase a quantity of corn sufficient to\nmaintain him and his family, either in the liberal, moderate, or scanty\nmanner, in which the advancing, stationary, or declining, circumstances\nof the society, oblige his employers to maintain him.\n\nIt regulates the money price of all the other parts of the rude produce\nof land, which, in every period of improvement, must bear a certain\nproportion to that of corn, though this proportion is different in\ndifferent periods. It regulates, for example, the money price of grass\nand hay, of butcher's meat, of horses, and the maintenance of horses,\nof land carriage consequently, or of the greater part of the inland\ncommerce of the country.\n\nBy regulating the money price of all the other parts of the rude produce\nof land, it regulates that of the materials of almost all manufactures;\nby regulating the money price of labour, it regulates that of\nmanufacturing art and industry; and by regulating both, it regulates\nthat of the complete manufacture. The money price of labour, and\nof every thing that is the produce, either of land or labour, must\nnecessarily either rise or fall in proportion to the money price of\ncorn.\n\nThough in consequence of the bounty, therefore, the farmer should be\nenabled to sell his corn for 4s. the bushel, instead of 3s:6d. and to\npay his landlord a money rent proportionable to this rise in the money\nprice of his produce; yet if, in consequence of this rise in the price\nof corn, 4s. will purchase no more home made goods of any other kind\nthan 3s. 6d. would have done before, neither the circumstances of the\nfarmer, nor those of the landlord, will be much mended by this change.\nThe farmer will not be able to cultivate much better; the landlord will\nnot be able to live much better. In the purchase of foreign commodities,\nthis enhancement in the price of corn may give them some little\nadvantage. In that of home made commodities, it can give them none at\nall. And almost the whole expense of the farmer, and the far greater\npart even of that of the landlord, is in home made commodities.\n\nThat degradation in the value of silver, which is the effect of the\nfertility of the mines, and which operates equally, or very nearly\nequally, through the greater part of the commercial world, is a matter\nof very little consequence to any particular country. The consequent\nrise of all money prices, though it does not make those who receive\nthem really richer, does not make them really poorer. A service of plate\nbecomes really cheaper, and every thing else remains precisely of the\nsame real value as before.\n\nBut that degradation in the value of silver, which, being the effect\neither of the peculiar situation or of the political institutions of\na particular country, takes place only in that country, is a matter of\nvery great consequence, which, far from tending to make anybody really\nricher, tends to make every body really poorer. The rise in the money\nprice of all commodities, which is in this case peculiar to that\ncountry, tends to discourage more or less every sort of industry which\nis carried on within it, and to enable foreign nations, by furnishing\nalmost all sorts of goods for a smaller quantity of silver than its own\nworkmen can afford to do, to undersell them, not only in the foreign,\nbut even in the home market.\n\nIt is the peculiar situation of Spain and Portugal, as proprietors of\nthe mines, to be the distributers of gold and silver to all the other\ncountries of Europe. Those metals ought naturally, therefore, to be\nsomewhat cheaper in Spain and Portugal than in any other part of Europe.\nThe difference, however, should be no more than the amount of the\nfreight and insurance; and, on account of the great value and small bulk\nof those metals, their freight is no great matter, and their insurance\nis the same as that of any other goods of equal value. Spain and\nPortugal, therefore, could suffer very little from their peculiar\nsituation, if they did not aggravate its disadvantages by their\npolitical institutions.\n\nSpain by taxing, and Portugal by prohibiting, the exportation of gold\nand silver, load that exportation with the expense of smuggling, and\nraise the value of those metals in other countries so much more above\nwhat it is in their own, by the whole amount of this expense. When you\ndam up a stream of water, as soon as the dam is full, as much water must\nrun over the dam-head as if there was no dam at all. The prohibition of\nexportation cannot detain a greater quantity of gold and silver in Spain\nand Portugal, than what they can afford to employ, than what the annual\nproduce of their land and labour will allow them to employ, in coin,\nplate, gilding, and other ornaments of gold and silver. When they have\ngot this quantity, the dam is full, and the whole stream which flows in\nafterwards must run over. The annual exportation of gold and silver from\nSpain and Portugal, accordingly, is, by all accounts, notwithstanding\nthese restraints, very near equal to the whole annual importation.\nAs the water, however, must always be deeper behind the dam-head than\nbefore it, so the quantity of gold and silver which these restraints\ndetain in Spain and Portugal, must, in proportion to the annual produce\nof their land and labour, be greater than what is to be found in other\ncountries. The higher and stronger the dam-head, the greater must be the\ndifference in the depth of water behind and before it. The higher the\ntax, the higher the penalties with which the prohibition is guarded, the\nmore vigilant and severe the police which looks after the execution of\nthe law, the greater must be the difference in the proportion of gold\nand silver to the annual produce of the land and labour of Spain and\nPortugal, and to that of other countries. It is said, accordingly, to\nbe very considerable, and that you frequently find there a profusion\nof plate in houses, where there is nothing else which would in\nother countries be thought suitable or correspondent to this sort of\nmagnificence. The cheapness of gold and silver, or, what is the same\nthing, the dearness of all commodities, which is the necessary effect of\nthis redundancy of the precious metals, discourages both the agriculture\nand manufactures of Spain and Portugal, and enables foreign nations\nto supply them with many sorts of rude, and with almost all sorts of\nmanufactured produce, for a smaller quantity of gold and silver than\nwhat they themselves can either raise or make them for at home. The tax\nand prohibition operate in two different ways. They not only lower very\nmuch the value of the precious metals in Spain and Portugal, but by\ndetaining there a certain quantity of those metals which would otherwise\nflow over other countries, they keep up their value in those other\ncountries somewhat above what it otherwise would be, and thereby give\nthose countries a double advantage in their commerce with Spain and\nPortugal. Open the flood-gates, and there will presently be less water\nabove, and more below the dam-head, and it will soon come to a level in\nboth places. Remove the tax and the prohibition, and as the quantity of\ngold and silver will diminish considerably in Spain and Portugal, so\nit will increase somewhat in other countries; and the value of those\nmetals, their proportion to the annual produce of land and labour, will\nsoon come to a level, or very near to a level, in all. The loss which\nSpain and Portugal could sustain by this exportation of their gold and\nsilver, would be altogether nominal and imaginary. The nominal value of\ntheir goods, and of the annual produce of their land and labour, would\nfall, and would be expressed or represented by a smaller quantity of\nsilver than before; but their real value would be the same as before,\nand would be sufficient to maintain, command, and employ the same\nquantity of labour. As the nominal value of their goods would fall, the\nreal value of what remained of their gold and silver would rise, and a\nsmaller quantity of those metals would answer all the same purposes of\ncommerce and circulation which had employed a greater quantity before.\nThe gold and silver which would go abroad would not go abroad for\nnothing, but would bring back an equal value of goods of some kind or\nother. Those goods, too, would not be all matters of mere luxury and\nexpense, to be consumed by idle people, who produce nothing in return\nfor their consumption. As the real wealth and revenue of idle people\nwould not be augmented by this extraordinary exportation of gold and\nsilver, so neither would their consumption be much augmented by it.\nThose goods would probably, the greater part of them, and certainly\nsome part of them, consist in materials, tools, and provisions, for the\nemployment and maintenance of industrious people, who would reproduce,\nwith a profit, the full value of their consumption. A part of the dead\nstock of the society would thus be turned into active stock, and would\nput into motion a greater quantity of industry than had been employed\nbefore. The annual produce of their land and labour would immediately\nbe augmented a little, and in a few years would probably be augmented\na great deal; their industry being thus relieved from one of the most\noppressive burdens which it at present labours under.\n\nThe bounty upon the exportation of corn necessarily operates exactly in\nthe same way as this absurd policy of Spain and Portugal. Whatever be\nthe actual state of tillage, it renders our corn somewhat dearer in\nthe home market than it otherwise would be in that state, and somewhat\ncheaper in the foreign; and as the average money price of corn\nregulates, more or less, that of all other commodities, it lowers the\nvalue of silver considerably in the one, and tends to raise it a little\nin the other. It enables foreigners, the Dutch in particular, not only\nto eat our corn cheaper than they otherwise could do, but sometimes to\neat it cheaper than even our own people can do upon the same occasions;\nas we are assured by an excellent authority, that of Sir Matthew Decker.\nIt hinders our own workmen from furnishing their goods for so small a\nquantity of silver as they otherwise might do, and enables the Dutch\nto furnish theirs for a smaller. It tends to render our manufactures\nsomewhat dearer in every market, and theirs somewhat cheaper, than they\notherwise would be, and consequently to give their industry a double\nadvantage over our own.\n\nThe bounty, as it raises in the home market, not so much the real,\nas the nominal price of our corn; as it augments, not the quantity of\nlabour which a certain quantity of corn can maintain and employ, but\nonly the quantity of silver which it will exchange for; it discourages\nour manufactures, without rendering any considerable service, either to\nour farmers or country gentlemen. It puts, indeed, a little more money\ninto the pockets of both, and it will perhaps be somewhat difficult to\npersuade the greater part of them that this is not rendering them a\nvery considerable service. But if this money sinks in its value, in\nthe quantity of labour, provisions, and home-made commodities of all\ndifferent kinds which it is capable of purchasing, as much as it rises\nin its quantity, the service will be little more than nominal and\nimaginary.\n\nThere is, perhaps, but one set of men in the whole commonwealth to whom\nthe bounty either was or could be essentially serviceable. These were\nthe corn merchants, the exporters and importers of corn. In years of\nplenty, the bounty necessarily occasioned a greater exportation than\nwould otherwise have taken place; and by hindering the plenty of the one\nyear from relieving the scarcity of another, it occasioned in years of\nscarcity a greater importation than would otherwise have been necessary.\nIt increased the business of the corn merchant in both; and in the years\nof scarcity, it not only enabled him to import a greater quantity, but\nto sell it for a better price, and consequently with a greater profit,\nthan he could otherwise have made, if the plenty of one year had not\nbeen more or less hindered from relieving the scarcity of another. It is\nin this set of men, accordingly, that I have observed the greatest zeal\nfor the continuance or renewal of the bounty.\n\nOur country gentlemen, when they imposed the high duties upon the\nexportation of foreign corn, which in times of moderate plenty amount\nto a prohibition, and when they established the bounty, seem to have\nimitated the conduct of our manufacturers. By the one institution, they\nsecured to themselves the monopoly of the home market, and by the other\nthey endeavoured to prevent that market from ever being overstocked with\ntheir commodity. By both they endeavoured to raise its real value, in\nthe same manner as our manufacturers had, by the like institutions,\nraised the real value of many different sorts of manufactured goods.\nThey did not, perhaps, attend to the great and essential difference\nwhich nature has established between corn and almost every other sort of\ngoods. When, either by the monopoly of the home market, or by a bounty\nupon exportation, you enable our woollen or linen manufacturers to sell\ntheir goods for somewhat a better price than they otherwise could get\nfor them, you raise, not only the nominal, but the real price of those\ngoods; you render them equivalent to a greater quantity of labour and\nsubsistence; you increase not only the nominal, but the real profit,\nthe real wealth and revenue of those manufacturers; and you enable them,\neither to live better themselves, or to employ a greater quantity of\nlabour in those particular manufactures. You really encourage those\nmanufactures, and direct towards them a greater quantity of the industry\nof the country than what would properly go to them of its own accord.\nBut when, by the like institutions, you raise the nominal or money price\nof corn, you do not raise its real value; you do not increase the real\nwealth, the real revenue, either of our farmers or country gentlemen;\nyou do not encourage the growth of corn, because you do not enable\nthem to maintain and employ more labourers in raising it. The nature of\nthings has stamped upon corn a real value, which cannot be altered by\nmerely altering its money price. No bounty upon exportation, no monopoly\nof the home market, can raise that value. The freest competition cannot\nlower it, Through the world in general, that value is equal to the\nquantity of labour which it can maintain, and in every particular place\nit is equal to the quantity of labour which it can maintain in the\nway, whether liberal, moderate, or scanty, in which labour is commonly\nmaintained in that place. Woollen or linen cloth are not the regulating\ncommodities by which the real value of all other commodities must be\nfinally measured and determined; corn is. The real value of every other\ncommodity is finally measured and determined by the proportion which its\naverage money price bears to the average money price of corn. The real\nvalue of corn does not vary with those variations in its average money\nprice, which sometimes occur from one century to another; it is the real\nvalue of silver which varies with them.\n\nBounties upon the exportation of any homemade commodity are liable,\nfirst, to that general objection which may be made to all the different\nexpedients of the mercantile system; the objection of forcing some part\nof the industry of the country into a channel less advantageous than\nthat in which it would run of its own accord; and, secondly, to the\nparticular objection of forcing it not only into a channel that is less\nadvantageous, but into one that is actually disadvantageous; the trade\nwhich cannot be carried on but by means of a bounty being necessarily a\nlosing trade. The bounty upon the exportation of corn is liable to this\nfurther objection, that it can in no respect promote the raising of that\nparticular commodity of which it was meant to encourage the production.\nWhen our country gentlemen, therefore, demanded the establishment of\nthe bounty, though they acted in imitation of our merchants and\nmanufacturers, they did not act with that complete comprehension of\ntheir own interest, which commonly directs the conduct of those two\nother orders of people. They loaded the public revenue with a very\nconsiderable expense: they imposed a very heavy tax upon the whole body\nof the people; but they did not, in any sensible degree, increase the\nreal value of their own commodity; and by lowering somewhat the real\nvalue of silver, they discouraged, in some degree, the general industry\nof the country, and, instead of advancing, retarded more or less the\nimprovement of their own lands, which necessarily depend upon the\ngeneral industry of the country.\n\nTo encourage the production of any commodity, a bounty upon production,\none should imagine, would have a more direct operation than one upon\nexportation. It would, besides, impose only one tax upon the people,\nthat which they must contribute in order to pay the bounty. Instead of\nraising, it would tend to lower the price of the commodity in the home\nmarket; and thereby, instead of imposing a second tax upon the people,\nit might, at least in part, repay them for what they had contributed\nto the first. Bounties upon production, however, have been very rarely\ngranted. The prejudices established by the commercial system have\ntaught us to believe, that national wealth arises more immediately\nfrom exportation than from production. It has been more favoured,\naccordingly, as the more immediate means of bringing money into the\ncountry. Bounties upon production, it has been said too, have been found\nby experience more liable to frauds than those upon exportation. How\nfar this is true, I know not. That bounties upon exportation have been\nabused, to many fraudulent purposes, is very well known. But it is not\nthe interest of merchants and manufacturers, the great inventors of all\nthese expedients, that the home market should be overstocked with their\ngoods; an event which a bounty upon production might sometimes occasion.\nA bounty upon exportation, by enabling them to send abroad their surplus\npart, and to keep up the price of what remains in the home market,\neffectually prevents this. Of all the expedients of the mercantile\nsystem, accordingly, it is the one of which they are the fondest. I have\nknown the different undertakers of some particular works agree privately\namong themselves to give a bounty out of their own pockets upon the\nexportation of a certain proportion of the goods which they dealt in.\nThis expedient succeeded so well, that it more than doubled the price\nof their goods in the home market, notwithstanding a very considerable\nincrease in the produce. The operation of the bounty upon corn must have\nbeen wonderfully different, if it has lowered the money price of that\ncommodity.\n\nSomething like a bounty upon production, however, has been granted\nupon some particular occasions. The tonnage bounties given to the white\nherring and whale fisheries may, perhaps, be considered as somewhat of\nthis nature. They tend directly, it may be supposed, to render the\ngoods cheaper in the home market than they otherwise would be. In other\nrespects, their effects, it must be acknowledged, are the same as those\nof bounties upon exportation. By means of them, a part of the capital of\nthe country is employed in bringing goods to market, of which the price\ndoes not repay the cost, together with the ordinary profits of stock.\n\nBut though the tonnage bounties to those fisheries do not contribute\nto the opulence of the nation, it may, perhaps, be thought that they\ncontribute to its defence, by augmenting the number of its sailors and\nshipping. This, it may be alleged, may sometimes be done by means of\nsuch bounties, at a much smaller expense than by keeping up a great\nstanding navy, if I may use such an expression, in the same way as a\nstanding army.\n\nNotwithstanding these favourable allegations, however, the following\nconsiderations dispose me to believe, that in granting at least one of\nthese bounties, the legislature has been very grossly imposed upon:\n\nFirst, The herring-buss bounty seems too large.\n\nFrom the commencement of the winter fishing 1771, to the end of the\nwinter fishing 1781, the tonnage bounty upon the herring-buss fishery\nhas been at thirty shillings the ton. During these eleven years, the\nwhole number of barrels caught by the herring-buss fishery of Scotland\namounted to 378,347. The herrings caught and cured at sea are called\nsea-sticks. In order to render them what are called merchantable\nherrings, it is necessary to repack them with an additional quantity of\nsalt; and in this case, it is reckoned, that three barrels of sea-sticks\nare usually repacked into two barrels of merchantable herrings. The\nnumber of barrels of merchantable herrings, therefore, caught during\nthese eleven years, will amount only, according to this account, to\n252,231¼. During these eleven years, the tonnage bounties paid amounted\nto £155,463:11s. or 8s:2¼d. upon every barrel of sea-sticks, and to\n12s:3¾d. upon every barrel of merchantable herrings.\n\nThe salt with which these herrings are cured is sometimes Scotch, and\nsometimes foreign salt; both which are delivered, free of all excise\nduty, to the fish-curers. The excise duty upon Scotch salt is at present\n1s:6d., that upon foreign salt 10s. the bushel. A barrel of herrings is\nsupposed to require about one bushel and one-fourth of a bushel foreign\nsalt. Two bushels are the supposed average of Scotch salt. If the\nherrings are entered for exportation, no part of this duty is paid up;\nif entered for home consumption, whether the herrings were cured with\nforeign or with Scotch salt, only one shilling the barrel is paid up. It\nwas the old Scotch duty upon a bushel of salt, the quantity which, at\na low estimation, had been supposed necessary for curing a barrel of\nherrings. In Scotland, foreign salt is very little used for any other\npurpose but the curing of fish. But from the 5th April 1771 to the 5th\nApril 1782, the quantity of foreign salt imported amounted to 936,974\nbushels, at eighty-four pounds the bushel; the quantity of Scotch salt\ndelivered from the works to the fish-curers, to no more than 168,226, at\nfifty-six pounds the bushel only. It would appear, therefore, that it\nis principally foreign salt that is used in the fisheries. Upon every\nbarrel of herrings exported, there is, besides, a bounty of 2s:8d. and\nmore than two-thirds of the buss-caught herrings are exported. Put\nall these things together, and you will find that, during these eleven\nyears, every barrel of buss-caught herrings, cured with Scotch salt,\nwhen exported, has cost government 17s:11¾d.; and, when entered for home\nconsumption, 14s:3¾d.; and that every barrel cured with foreign salt,\nwhen exported, has cost government £1:7:5¾d.; and, when entered for\nhome consumption, £1:3:9¾d. The price of a barrel of good merchantable\nherrings runs from seventeen and eighteen to four and five-and-twenty\nshillings; about a guinea at an average. {See the accounts at the end of\nthis Book.}\n\nSecondly, The bounty to the white-herring fishery is a tonnage bounty,\nand is proportioned to the burden of the ship, not to her diligence or\nsuccess in the fishery; and it has, I am afraid, been too common for the\nvessels to fit out for the sole purpose of catching, not the fish but\nthe bounty. In the year 1759, when the bounty was at fifty shillings the\nton, the whole buss fishery of Scotland brought in only four barrels of\nsea-sticks. In that year, each barrel of sea-sticks cost government,\nin bounties alone, £113:15s.; each barrel of merchantable herrings\n£159:7:6.\n\nThirdly, The mode of fishing, for which this tonnage bounty in the white\nherring fishery has been given (by busses or decked vessels from twenty\nto eighty tons burden ), seems not so well adapted to the situation of\nScotland, as to that of Holland, from the practice of which country it\nappears to have been borrowed. Holland lies at a great distance from\nthe seas to which herrings are known principally to resort, and can,\ntherefore, carry on that fishery only in decked vessels, which can carry\nwater and provisions sufficient for a voyage to a distant sea; but the\nHebrides, or Western Islands, the islands of Shetland, and the\nnorthern and north-western coasts of Scotland, the countries in whose\nneighbourhood the herring fishery is principally carried on, are\neverywhere intersected by arms of the sea, which run up a considerable\nway into the land, and which, in the language of the country, are called\nsea-lochs. It is to these sea-lochs that the herrings principally resort\nduring the seasons in which they visit these seas; for the visits of\nthis, and, I am assured, of many other sorts of fish, are not quite\nregular and constant. A boat-fishery, therefore, seems to be the mode of\nfishing best adapted to the peculiar situation of Scotland, the fishers\ncarrying the herrings on shore as fast as they are taken, to be either\ncured or consumed fresh. But the great encouragement which a bounty of\n30s. the ton gives to the buss-fishery, is necessarily a discouragement\nto the boat-fishery, which, having no such bounty, cannot bring its\ncured fish to market upon the same terms as the buss-fishery. The\nboat-fishery; accordingly, which, before the establishment of the\nbuss-bounty, was very considerable, and is said to have employed a\nnumber of seamen, not inferior to what the buss-fishery employs at\npresent, is now gone almost entirely to decay. Of the former extent,\nhowever, of this now ruined and abandoned fishery, I must acknowledge\nthat I cannot pretend to speak with much precision. As no bounty\nwas-paid upon the outfit of the boat-fishery, no account was taken of it\nby the officers of the customs or salt duties.\n\nFourthly, In many parts of Scotland, during certain seasons of the year,\nherrings make no inconsiderable part of the food of the common people.\nA bounty which tended to lower their price in the home market,\nmight contribute a good deal to the relief of a great number of our\nfellow-subjects, whose circumstances are by no means affluent. But the\nherring-bus bounty contributes to no such good purpose. It has ruined\nthe boat fishery, which is by far the best adapted for the supply of\nthe home market; and the additional bounty of 2s:8d. the barrel upon\nexportation, carries the greater part, more than two-thirds, of the\nproduce of the buss-fishery abroad. Between thirty and forty years ago,\nbefore the establishment of the buss-bounty, 16s. the barrel, I have\nbeen assured, was the common price of white herrings. Between ten and\nfifteen years ago, before the boat-fishery was entirely ruined, the\nprice was said to have run from seventeen to twenty shillings the\nbarrel. For these last five years, it has, at an average, been at\ntwenty-five shillings the barrel. This high price, however, may have\nbeen owing to the real scarcity of the herrings upon the coast of\nScotland. I must observe, too, that the cask or barrel, which is usually\nsold with the herrings, and of which the price is included in all the\nforegoing prices, has, since the commencement of the American war, risen\nto about double its former price, or from about 3s. to about 6s. I must\nlikewise observe, that the accounts I have received of the prices of\nformer times, have been by no means quite uniform and consistent, and an\nold man of great accuracy and experience has assured me, that, more\nthan fifty years ago, a guinea was the usual price of a barrel of good\nmerchantable herrings; and this, I imagine, may still be looked upon as\nthe average price. All accounts, however, I think, agree that the\nprice has not been lowered in the home market in consequence of the\nbuss-bounty.\n\nWhen the undertakers of fisheries, after such liberal bounties have been\nbestowed upon them, continue to sell their commodity at the same, or\neven at a higher price than they were accustomed to do before, it might\nbe expected that their profits should be very great; and it is not\nimprobable that those of some individuals may have been so. In general,\nhowever, I have every reason to believe they have been quite otherwise.\nThe usual effect of such bounties is, to encourage rash undertakers to\nadventure in a business which they do not understand; and what they lose\nby their own negligence and ignorance, more than compensates all that\nthey can gain by the utmost liberality of government. In 1750, by\nthe same act which first gave the bounty of 30s. the ton for the\nencouragement of the white herring fishery (the 23d Geo. II. chap. 24),\na joint stock company was erected, with a capital of £500,000, to which\nthe subscribers (over and above all other encouragements, the tonnage\nbounty just now mentioned, the exportation bounty of 2s:8d. the barrel,\nthe delivery of both British and foreign salt duty free) were, during\nthe space of fourteen years, for every hundred pounds which they\nsubscribed and paid into the stock of the society, entitled to three\npounds a-year, to be paid by the receiver-general of the customs in\nequal half-yearly payments. Besides this great company, the residence of\nwhose governor and directors was to be in London, it was declared lawful\nto erect different fishing chambers in all the different out-ports of\nthe kingdom, provided a sum not less than £10,000 was subscribed into\nthe capital of each, to be managed at its own risk, and for its own\nprofit and loss. The same annuity, and the same encouragements of all\nkinds, were given to the trade of those inferior chambers as to that of\nthe great company. The subscription of the great company was soon filled\nup, and several different fishing chambers were erected in the different\nout-ports of the kingdom. In spite of all these encouragements, almost\nall those different companies, both great and small, lost either the\nwhole or the greater part of their capitals; scarce a vestige now\nremains of any of them, and the white-herring fishery is now entirely,\nor almost entirely, carried on by private adventurers.\n\nIf any particular manufacture was necessary, indeed, for the defence\nof the society, it might not always be prudent to depend upon our\nneighbours for the supply; and if such manufacture could not otherwise\nbe supported at home, it might not be unreasonable that all the other\nbranches of industry should be taxed in order to support it. The\nbounties upon the exportation of British made sail-cloth, and British\nmade gunpowder, may, perhaps, both be vindicated upon this principle.\n\nBut though it can very seldom be reasonable to tax the industry of the\ngreat body of the people, in order to support that of some particular\nclass of manufacturers; yet, in the wantonness of great prosperity, when\nthe public enjoys a greater revenue than it knows well what to do with,\nto give such bounties to favourite manufactures, may, perhaps, be as\nnatural as to incur any other idle expense. In public, as well as in\nprivate expenses, great wealth, may, perhaps, frequently be admitted as\nan apology for great folly. But there must surely be something more\nthan ordinary absurdity in continuing such profusion in times of general\ndifficulty and distress.\n\nWhat is called a bounty, is sometimes no more than a drawback, and,\nconsequently, is not liable to the same objections as what is properly\na bounty. The bounty, for example, upon refined sugar exported, may\nbe considered as a drawback of the duties upon the brown and Muscovado\nsugars, from which it is made; the bounty upon wrought silk exported,\na drawback of the duties upon raw and thrown silk imported; the bounty\nupon gunpowder exported, a drawback of the duties upon brimstone and\nsaltpetre imported. In the language of the customs, those allowances\nonly are called drawbacks which are given upon goods exported in the\nsame form in which they are imported. When that form has been so altered\nby manufacture of any kind as to come under a new denomination, they are\ncalled bounties.\n\nPremiums given by the public to artists and manufacturers, who excel in\ntheir particular occupations, are not liable to the same objections as\nbounties. By encouraging extraordinary dexterity and ingenuity, they\nserve to keep up the emulation of the workmen actually employed in those\nrespective occupations, and are not considerable enough to turn towards\nany one of them a greater share of the capital of the country than what\nwould go to it of its own accord. Their tendency is not to overturn the\nnatural balance of employments, but to render the work which is done\nin each as perfect and complete as possible. The expense of premiums,\nbesides, is very trifling, that of bounties very great. The bounty\nupon corn alone has sometimes cost the public, in one year, more than\n£300,000.\n\nBounties are sometimes called premiums, as drawbacks are sometimes\ncalled bounties. But we must, in all cases, attend to the nature of the\nthing, without paying any regard to the word.\n\n\nDigression concerning the Corn Trade and Corn Laws.\n\n\nI cannot conclude this chapter concerning bounties, without observing,\nthat the praises which have been bestowed upon the law which establishes\nthe bounty upon the exportation of corn, and upon that system of\nregulations which is connected with it, are altogether unmerited. A\nparticular examination of the nature of the corn trade, and of the\nprincipal British laws which relate to it, will sufficiently demonstrate\nthe truth of this assertion. The great importance of this subject must\njustify the length of the digression.\n\nThe trade of the corn merchant is composed of four different branches,\nwhich, though they may sometimes be all carried on by the same person,\nare, in their own nature, four separate and distinct trades. These\nare, first, the trade of the inland dealer; secondly, that of\nthe merchant-importer for home consumption; thirdly, that of the\nmerchant-exporter of home produce for foreign consumption; and,\nfourthly, that of the merchant-carrier, or of the importer of corn, in\norder to export it again.\n\nI. The interest of the inland dealer, and that of the great body of the\npeople, how opposite soever they may at first appear, are, even in years\nof the greatest scarcity, exactly the same. It is his interest to\nraise the price of his corn as high as the real scarcity of the season\nrequires, and it can never be his interest to raise it higher. By\nraising the price, he discourages the consumption, and puts every body\nmore or less, but particularly the inferior ranks of people, upon thrift\nand good management If, by raising it too high, he discourages the\nconsumption so much that the supply of the season is likely to go beyond\nthe consumption of the season, and to last for some time after the\nnext crop begins to come in, he runs the hazard, not only of losing a\nconsiderable part of his corn by natural causes, but of being obliged to\nsell what remains of it for much less than what he might have had for\nit several months before. If, by not raising the price high enough, he\ndiscourages the consumption so little, that the supply of the season is\nlikely to fall short of the consumption of the season, he not only loses\na part of the profit which he might otherwise have made, but he exposes\nthe people to suffer before the end of the season, instead of the\nhardships of a dearth, the dreadful horrors of a famine. It is the\ninterest of the people that their daily, weekly, and monthly consumption\nshould be proportioned as exactly as possible to the supply of the\nseason. The interest of the inland corn dealer is the same. By supplying\nthem, as nearly as he can judge, in this proportion, he is likely to\nsell all his corn for the highest price, and with the greatest profit;\nand his knowledge of the state of the crop, and of his daily, weekly,\nand monthly sales, enables him to judge, with more or less accuracy,\nhow far they really are supplied in this manner. Without intending the\ninterest of the people, he is necessarily led, by a regard to his own\ninterest, to treat them, even in years of scarcity, pretty much in the\nsame manner as the prudent master of a vessel is sometimes obliged\nto treat his crew. When he foresees that provisions are likely to run\nshort, he puts them upon short allowance. Though from excess of caution\nhe should sometimes do this without any real necessity, yet all the\ninconveniencies which his crew can thereby suffer are inconsiderable,\nin comparison of the danger, misery, and ruin, to which they might\nsometimes be exposed by a less provident conduct. Though, from excess of\navarice, in the same manner, the inland corn merchant should sometimes\nraise the price of his corn somewhat higher than the scarcity of the\nseason requires, yet all the inconveniencies which the people can suffer\nfrom this conduct, which effectually secures them from a famine in the\nend of the season, are inconsiderable, in comparison of what they might\nhave been exposed to by a more liberal way of dealing in the beginning\nof it the corn merchant himself is likely to suffer the most by this\nexcess of avarice; not only from the indignation which it generally\nexcites against him, but, though he should escape the effects of this\nindignation, from the quantity of corn which it necessarily leaves\nupon his hands in the end of the season, and which, if the next season\nhappens to prove favourable, he must always sell for a much lower price\nthan he might otherwise have had.\n\nWere it possible, indeed, for one great company of merchants to possess\nthemselves of the whole crop of an extensive country, it might perhaps\nbe their interest to deal with it, as the Dutch are said to do with the\nspiceries of the Moluccas, to destroy or throw away a considerable\npart of it, in order to keep up the price of the rest. But it is scarce\npossible, even by the violence of law, to establish such an extensive\nmonopoly with regard to corn; and wherever the law leaves the trade\nfree, it is of all commodities the least liable to be engrossed or\nmonopolized by the forced a few large capitals, which buy up the greater\npart of it. Not only its value far exceeds what the capitals of a few\nprivate men are capable of purchasing; but, supposing they were capable\nof purchasing it, the manner in which it is produced renders this\npurchase altogether impracticable. As, in every civilized country, it\nis the commodity of which the annual consumption is the greatest; so a\ngreater quantity of industry is annually employed in producing corn than\nin producing any other commodity. When it first comes from the ground,\ntoo, it is necessarily divided among a greater number of owners than any\nother commodity; and these owners can never be collected into one\nplace, like a number of independent manufacturers, but are necessarily\nscattered through all the different corners of the country. These\nfirst owners either immediately supply the consumers in their own\nneighbourhood, or they supply other inland dealers, who supply those\nconsumers. The inland dealers in corn, therefore, including both the\nfarmer and the baker, are necessarily more numerous than the dealers in\nany other commodity; and their dispersed situation renders it altogether\nimpossible for them to enter into any general combination. If, in a year\nof scarcity, therefore, any of them should find that he had a good deal\nmore corn upon hand than, at the current price, he could hope to dispose\nof before the end of the season, he would never think of keeping up\nthis price to his own loss, and to the sole benefit of his rivals and\ncompetitors, but would immediately lower it, in order to get rid of his\ncorn before the new crop began to come in. The same motives, the same\ninterests, which would thus regulate the conduct of any one dealer,\nwould regulate that of every other, and oblige them all in general\nto sell their corn at the price which, according to the best of their\njudgment, was most suitable to the scarcity or plenty of the season.\n\nWhoever examines, with attention, the history of the dearths and famines\nwhich have afflicted any part of Europe during either the course of the\npresent or that of the two preceding centuries, of several of which we\nhave pretty exact accounts, will find, I believe, that a dearth never\nhas arisen from any combination among the inland dealers in corn, nor\nfrom any other cause but a real scarcity, occasioned sometimes, perhaps,\nand in some particular places, by the waste of war, but in by far the\ngreatest number of cases by the fault of the seasons; and that a famine\nhas never arisen from any other cause but the violence of government\nattempting, by improper means, to remedy the inconveniencies of a\ndearth.\n\nIn an extensive corn country, between all the different parts of which\nthere is a free commerce and communication, the scarcity occasioned\nby the most unfavourable seasons can never be so great as to produce a\nfamine; and the scantiest crop, if managed with frugality and economy,\nwill maintain, through the year, the same number of people that are\ncommonly fed in a more affluent manner by one of moderate plenty. The\nseasons most unfavourable to the crop are those of excessive drought or\nexcessive rain. But as corn grows equally upon high and low lands,\nupon grounds that are disposed to be too wet, and upon those that are\ndisposed to be too dry, either the drought or the rain, which is hurtful\nto one part of the country, is favourable to another; and though, both\nin the wet and in the dry season, the crop is a good deal less than in\none more properly tempered; yet, in both, what is lost in one part of\nthe country is in some measure compensated by what is gained in the\nother. In rice countries, where the crop not only requires a very moist\nsoil, but where, in a certain period of its growing, it must be laid\nunder water, the effects of a drought are much more dismal. Even in such\ncountries, however, the drought is, perhaps, scarce ever so universal as\nnecessarily to occasion a famine, if the government would allow a free\ntrade. The drought in Bengal, a few years ago, might probably have\noccasioned a very great dearth. Some improper regulations, some\ninjudicious restraints, imposed by the servants of the East India\nCompany upon the rice trade, contributed, perhaps, to turn that dearth\ninto a famine.\n\nWhen the government, in order to remedy the inconveniencies of a\ndearth, orders all the dealers to sell their corn at what it supposes\na reasonable price, it either hinders them from bringing it to market,\nwhich may sometimes produce a famine even in the beginning of the\nseason; or, if they bring it thither, it enables the people, and thereby\nencourages them to consume it so fast as must necessarily produce a\nfamine before the end of the season. The unlimited, unrestrained\nfreedom of the corn trade, as it is the only effectual preventive of\nthe miseries of a famine, so it is the best palliative of the\ninconveniencies of a dearth; for the inconveniencies of a real scarcity\ncannot be remedied; they can only be palliated. No trade deserves\nmore the full protection of the law, and no trade requires it so much;\nbecause no trade is so much exposed to popular odium.\n\nIn years of scarcity, the inferior ranks of people impute their distress\nto the avarice of the corn merchant, who becomes the object of their\nhatred and indignation. Instead of making profit upon such occasions,\ntherefore, he is often in danger of being utterly ruined, and of having\nhis magazines plundered and destroyed by their violence. It is in years\nof scarcity, however, when prices are high, that the corn merchant\nexpects to make his principal profit. He is generally in contract with\nsome farmers to furnish him, for a certain number of years, with a\ncertain quantity of corn, at a certain price. This contract price is\nsettled according to what is supposed to be the moderate and reasonable,\nthat is, the ordinary or average price, which, before the late years of\nscarcity, was commonly about 28s. for the quarter of wheat, and for that\nof other grain in proportion. In years of scarcity, therefore, the corn\nmerchant buys a great part of his corn for the ordinary price, and sells\nit for a much higher. That this extraordinary profit, however, is no\nmore than sufficient to put his trade upon a fair level with other\ntrades, and to compensate the many losses which he sustains upon other\noccasions, both from the perishable nature of the commodity itself,\nand from the frequent and unforeseen fluctuations of its price, seems\nevident enough, from this single circumstance, that great fortunes\nare as seldom made in this as in any other trade. The popular odium,\nhowever, which attends it in years of scarcity, the only years in which\nit can be very profitable, renders people of character and fortune\naverse to enter into it. It is abandoned to an inferior set of dealers;\nand millers, bakers, meal-men, and meal-factors, together with a number\nof wretched hucksters, are almost the only middle people that, in the\nhome market, come between the grower and the consumer.\n\nThe ancient policy of Europe, instead of discountenancing this popular\nodium against a trade so beneficial to the public, seems, on the\ncontrary, to have authorised and encouraged it.\n\nBy the 5th and 6th of Edward VI cap. 14, it was enacted, that whoever\nshould buy any corn or grain, with intent to sell it again, should be\nreputed an unlawful engrosser, and should, for the first fault, suffer\ntwo months imprisonment, and forfeit the value of the corn; for the\nsecond, suffer six months imprisonment, and forfeit double the value;\nand, for the third, be set in the pillory, suffer imprisonment during\nthe king's pleasure, and forfeit all his goods and chattels. The ancient\npolicy of most other parts of Europe was no better than that of England.\n\nOur ancestors seem to have imagined, that the people would buy their\ncorn cheaper of the farmer than of the corn merchant, who, they were\nafraid, would require, over and above the price which he paid to the\nfarmer, an exorbitant profit to himself. They endeavoured, therefore,\nto annihilate his trade altogether. They even endeavoured to hinder, as\nmuch as possible, any middle man of any kind from coming in between the\ngrower and the consumer; and this was the meaning of the many restraints\nwhich they imposed upon the trade of those whom they called kidders, or\ncarriers of corn; a trade which nobody was allowed to exercise without\na licence, ascertaining his qualifications as a man of probity and\nfair dealing. The authority of three justices of the peace was, by the\nstatute of Edward VI. necessary in order to grant this licence. But even\nthis restraint was afterwards thought insufficient, and, by a statute\nof Elizabeth, the privilege of granting it was confined to the\nquarter-sessions.\n\nThe ancient policy of Europe endeavoured, in this manner, to regulate\nagriculture, the great trade of the country, by maxims quite different\nfrom those which it established with regard to manufactures, the great\ntrade of the towns. By leaving a farmer no other customers but either\nthe consumers or their immediate factors, the kidders and carriers of\ncorn, it endeavoured to force him to exercise the trade, not only of a\nfarmer, but of a corn merchant, or corn retailer. On the contrary, it,\nin many cases, prohibited the manufacturer from exercising the trade of\na shopkeeper, or from selling his own goods by retail. It meant, by the\none law, to promote the general interest of the country, or to render\ncorn cheap, without, perhaps, its being well understood how this was to\nbe done. By the other, it meant to promote that of a particular order\nof men, the shopkeepers, who would be so much undersold by the\nmanufacturer, it was supposed, that their trade would be ruined, if he\nwas allowed to retail at all.\n\nThe manufacturer, however, though he had been allowed to keep a shop,\nand to sell his own goods by retail, could not have undersold the common\nshopkeeper. Whatever part of his capital he might have placed in his\nshop, he must have withdrawn it from his manufacture. In order to carry\non his business on a level with that of other people, as he must have\nhad the profit of a manufacturer on the one part, so he must have had\nthat of a shopkeeper upon the other. Let us suppose, for example, that\nin the particular town where he lived, ten per cent. was the ordinary\nprofit both of manufacturing and shopkeeping stock; he must in this case\nhave charged upon every piece of his own goods, which he sold in\nhis shop, a profit of twenty per cent. When he carried them from his\nworkhouse to his shop, he must have valued them at the price for which\nhe could have sold them to a dealer or shopkeeper, who would have bought\nthem by wholesale. If he valued them lower, he lost a part of the profit\nof his manufacturing capital. When, again, he sold them from his shop,\nunless he got the same price at which a shopkeeper would have sold them,\nhe lost a part of the profit of his shop-keeping capital. Though he\nmight appear, therefore, to make a double profit upon the same piece\nof goods, yet, as these goods made successively a part of two distinct\ncapitals, he made but a single profit upon the whole capital employed\nabout them; and if he made less than his profit, he was a loser, and did\nnot employ his whole capital with the same advantage as the greater part\nof his neighbours.\n\nWhat the manufacturer was prohibited to do, the farmer was in some\nmeasure enjoined to do; to divide his capital between two different\nemployments; to keep one part of it in his granaries and stack-yard, for\nsupplying the occasional demands of the market, and to employ the other\nin the cultivation of his land. But as he could not afford to employ the\nlatter for less than the ordinary profits of farming stock, so he could\nas little afford to employ the former for less than the ordinary profits\nof mercantile stock. Whether the stock which really carried on the\nbusiness of a corn merchant belonged to the person who was called a\nfarmer, or to the person who was called a corn merchant, an equal\nprofit was in both cases requisite, in order to indemnify its owner for\nemploying it in this manner, in order to put his business on a level\nwith other trades, and in order to hinder him from having an interest to\nchange it as soon as possible for some other. The farmer, therefore,\nwho was thus forced to exercise the trade of a corn merchant, could not\nafford to sell his corn cheaper than any other corn merchant would have\nbeen obliged to do in the case of a free competition.\n\nThe dealer who can employ his whole stock in one single branch of\nbusiness, has an advantage of the same kind with the workman who can\nemploy his whole labour in one single operation. As the latter acquires\na dexterity which enables him, with the same two hands, to perform a\nmuch greater quantity of work, so the former acquires so easy and ready\na method of transacting his business, of buying and disposing of\nhis goods, that with the same capital he can transact a much greater\nquantity of business. As the one can commonly afford his work a good\ndeal cheaper, so the other can commonly afford his goods somewhat\ncheaper, than if his stock and attention were both employed about a\ngreater variety of objects. The greater part of manufacturers could\nnot afford to retail their own goods so cheap as a vigilant and active\nshopkeeper, whose sole business it was to buy them by wholesale and to\nretail them again. The greater part of farmers could still less afford\nto retail their own corn, to supply the inhabitants of a town, at\nperhaps four or five miles distance from the greater part of them, so\ncheap as a vigilant and active corn merchant, whose sole business it was\nto purchase corn by wholesale, to collect it into a great magazine, and\nto retail it again.\n\nThe law which prohibited the manufacturer from exercising the trade of\na shopkeeper, endeavoured to force this division in the employment of\nstock to go on faster than it might otherwise have done. The law which\nobliged the farmer to exercise the trade of a corn merchant, endeavoured\nto hinder it from going on so fast. Both laws were evident violations\nof natural liberty, and therefore unjust; and they were both, too, as\nimpolitic as they were unjust. It is the interest of every society, that\nthings of this kind should never either he forced or obstructed. The man\nwho employs either his labour or his stock in a greater variety of ways\nthan his situation renders necessary, can never hurt his neighbour\nby underselling him. He may hurt himself, and he generally does so.\nJack-of-all-trades will never be rich, says the proverb. But the law\nought always to trust people with the care of their own interest, as in\ntheir local situations they must generally be able to judge better of it\nthan the legislature can do. The law, however, which obliged the farmer\nto exercise the trade of a corn merchant was by far the most pernicious\nof the two.\n\nIt obstructed not only that division in the employment of stock which\nis so advantageous to every society, but it obstructed likewise the\nimprovement and cultivation of the land. By obliging the farmer to carry\non two trades instead of one, it forced him to divide his capital into\ntwo parts, of which one only could be employed in cultivation. But if he\nhad been at liberty to sell his whole crop to a corn merchant as fast\nas he could thresh it out, his whole capital might have returned\nimmediately to the land, and have been employed in buying more cattle,\nand hiring more servants, in order to improve and cultivate it better.\nBut by being obliged to sell his corn by retail, he was obliged to keep\na great part of his capital in his granaries and stack-yard through the\nyear, and could not therefore cultivate so well as with the same\ncapital he might otherwise have done. This law, therefore, necessarily\nobstructed the improvement of the land, and, instead of tending\nto render corn cheaper, must have tended to render it scarcer, and\ntherefore dearer, than it would otherwise have been.\n\nAfter the business of the farmer, that of the corn merchant is in\nreality the trade which, if properly protected and encouraged, would\ncontribute the most to the raising of corn. It would support the trade\nof the farmer, in the same manner as the trade of the wholesale dealer\nsupports that of the manufacturer.\n\nThe wholesale dealer, by affording a ready market to the manufacturer,\nby taking his goods off his hand as fast as he can make them, and by\nsometimes even advancing their price to him before he has made them,\nenables him to keep his whole capital, and sometimes even more than his\nwhole capital, constantly employed in manufacturing, and consequently to\nmanufacture a much greater quantity of goods than if he was obliged\nto dispose of them himself to the immediate consumers, or even to the\nretailers. As the capital of the wholesale merchant, too, is generally\nsufficient to replace that of many manufacturers, this intercourse\nbetween him and them interests the owner of a large capital to support\nthe owners of a great number of small ones, and to assist them in those\nlosses and misfortunes which might otherwise prove ruinous to them.\n\nAn intercourse of the same kind universally established between the\nfarmers and the corn merchants, would be attended with effects equally\nbeneficial to the farmers. They would be enabled to keep their whole\ncapitals, and even more than their whole capitals constantly employed in\ncultivation. In case of any of those accidents to which no trade is\nmore liable than theirs, they would find in their ordinary customer,\nthe wealthy corn merchant, a person who had both an interest to support\nthem, and the ability to do it; and they would not, as at present, be\nentirely dependent upon the forbearance of their landlord, or the mercy\nof his steward. Were it possible, as perhaps it is not, to establish\nthis intercourse universally, and all at once; were it possible to\nturn all at once the whole farming stock of the kingdom to its proper\nbusiness, the cultivation of land, withdrawing it from every other\nemployment into which any part of it may be at present diverted; and\nwere it possible, in order to support and assist, upon occasion, the\noperations of this great stock, to provide all at once another stock\nalmost equally great; it is not, perhaps, very easy to imagine how\ngreat, how extensive, and how sudden, would be the improvement which\nthis change of circumstances would alone produce upon the whole face of\nthe country.\n\nThe statute of Edward VI. therefore, by prohibiting as much as possible\nany middle man from coming in between the grower and the consumer,\nendeavoured to annihilate a trade, of which the free exercise is not\nonly the best palliative of the inconveniencies of a dearth, but the\nbest preventive of that calamity; after the trade of the farmer, no\ntrade contributing so much to the growing of corn as that of the corn\nmerchant.\n\nThe rigour of this law was afterwards softened by several subsequent\nstatutes, which successively permitted the engrossing of corn when\nthe price of wheat should not exceed 20s. and 24s. 32s. and 40s. the\nquarter. At last, by the 15th of Charles II. c.7, the engrossing or\nbuying of corn, in order to sell it again, as long as the price of wheat\ndid not exceed 48s. the quarter, and that of other grain in proportion,\nwas declared lawful to all persons not being forestallers, that is, not\nselling again in the same market within three months. All the freedom\nwhich the trade of the inland corn dealer has ever yet enjoyed was\nbestowed upon it by this statute. The statute of the twelfth of the\npresent king, which repeals almost all the other ancient laws against\nengrossers and forestallers, does not repeal the restrictions of this\nparticular statute, which therefore still continue in force.\n\nThis statute, however, authorises in some measure two very absurd\npopular prejudices.\n\nFirst, It supposes, that when the price of wheat has risen so high as\n48s. the quarter, and that of other grain in proportion, corn is likely\nto be so engrossed as to hurt the people. But, from what has been\nalready said, it seems evident enough, that corn can at no price be\nso engrossed by the inland dealers as to hurt the people; and 48s. the\nquarter, besides, though it may be considered as a very high price,\nyet, in years of scarcity, it is a price which frequently takes place\nimmediately after harvest, when scarce any part of the new crop can be\nsold off, and when it is impossible even for ignorance to suppose that\nany part of it can be so engrossed as to hurt the people.\n\nSecondly, It supposes that there is a certain price at which corn is\nlikely to be forestalled, that is, bought up in order to be sold again\nsoon after in the same market, so as to hurt the people. But if a\nmerchant ever buys up corn, either going to a particular market, or in\na particular market, in order to sell it again soon after in the same\nmarket, it must be because he judges that the market cannot be so\nliberally supplied through the whole season as upon that particular\noccasion, and that the price, therefore, must soon rise. If he judges\nwrong in this, and if the price does not rise, he not only loses the\nwhole profit of the stock which he employs in this manner, but a part of\nthe stock itself, by the expense and loss which necessarily attend the\nstoring and keeping of corn. He hurts himself, therefore, much more\nessentially than he can hurt even the particular people whom he may\nhinder from supplying themselves upon that particular market day,\nbecause they may afterwards supply themselves just as cheap upon any\nother market day. If he judges right, instead of hurting the great body\nof the people, he renders them a most important service. By making\nthem feel the inconveniencies of a dearth somewhat earlier than they\notherwise might do, he prevents their feeling them afterwards so\nseverely as they certainly would do, if the cheapness of price\nencouraged them to consume faster than suited the real scarcity of the\nseason. When the scarcity is real, the best thing that can be done for\nthe people is, to divide the inconvenience of it as equally as possible,\nthrough all the different months and weeks and days of the year. The\ninterest of the corn merchant makes him study to do this as exactly as\nhe can; and as no other person can have either the same interest, or the\nsame knowledge, or the same abilities, to do it so exactly as he, this\nmost important operation of commerce ought to be trusted entirely to\nhim; or, in other words, the corn trade, so far at least as concerns the\nsupply of the home market, ought to be left perfectly free.\n\nThe popular fear of engrossing and forestalling may be compared to the\npopular terrors and suspicions of witchcraft. The unfortunate wretches\naccused of this latter crime were not more innocent of the misfortunes\nimputed to them, than those who have been accused of the former. The law\nwhich put an end to all prosecutions against witchcraft, which put\nit out of any man's power to gratify his own malice by accusing his\nneighbour of that imaginary crime, seems effectually to have put an\nend to those fears and suspicions, by taking away the great cause\nwhich encouraged and supported them. The law which would restore entire\nfreedom to the inland trade of corn, would probably prove as effectual\nto put an end to the popular fears of engrossing and forestalling.\n\nThe 15th of Charles II. c. 7, however, with all its imperfections, has,\nperhaps, contributed more, both to the plentiful supply of the home\nmarket, and to the increase of tillage, than any other law in the\nstatute book. It is from this law that the inland corn trade has derived\nall the liberty and protection which it has ever yet enjoyed; and both\nthe supply of the home market and the interest of tillage are much more\neffectually promoted by the inland, than either by the importation or\nexportation trade.\n\nThe proportion of the average quantity of all sorts of grain imported\ninto Great Britain to that of all sorts of grain consumed, it has been\ncomputed by the author of the Tracts upon the Corn Trade, does not\nexceed that of one to five hundred and seventy. For supplying the home\nmarket, therefore, the importance of the inland trade must be to that of\nthe importation trade as five hundred and seventy to one.\n\nThe average quantity of all sorts of grain exported from Great Britain\ndoes not, according to the same author, exceed the one-and-thirtieth\npart of the annual produce. For the encouragement of tillage, therefore,\nby providing a market for the home produce, the importance of the inland\ntrade must be to that of the exportation trade as thirty to one.\n\nI have no great faith in political arithmetic, and I mean not to warrant\nthe exactness of either of these computations. I mention them only in\norder to show of how much less consequence, in the opinion of the most\njudicious and experienced persons, the foreign trade of corn is than\nthe home trade. The great cheapness of corn in the years immediately\npreceding the establishment of the bounty may, perhaps with reason, he\nascribed in some measure to the operation of this statute of Charles\nII. which had been enacted about five-and-twenty years before, and which\nhad, therefore, full time to produce its effect.\n\nA very few words will sufficiently explain all that I have to say\nconcerning the other three branches of the corn trade.\n\nII. The trade of the merchant-importer of foreign corn for home\nconsumption, evidently contributes to the immediate supply of the home\nmarket, and must so far be immediately beneficial to the great body of\nthe people. It tends, indeed, to lower somewhat the average money price\nof corn, but not to diminish its real value, or the quantity of labour\nwhich it is capable of maintaining. If importation was at all times\nfree, our farmers and country gentlemen would probably, one year with\nanother, get less money for their corn than they do at present, when\nimportation is at most times in effect prohibited; but the money which\nthey got would be of more value, would buy more goods of all other\nkinds, and would employ more labour. Their real wealth, their real\nrevenue, therefore, would be the same as at present, though it might\nbe expressed by a smaller quantity of silver, and they would neither\nbe disabled nor discouraged from cultivating corn as much as they do at\npresent. On the contrary, as the rise in the real value of silver, in\nconsequence of lowering the money price of corn, lowers somewhat the\nmoney price of all other commodities, it gives the industry of the\ncountry where it takes place some advantage in all foreign markets and\nthereby tends to encourage and increase that industry. But the extent of\nthe home market for corn must be in proportion to the general industry\nof the country where it grows, or to the number of those who produce\nsomething else, and therefore, have something else, or, what comes to\nthe same thing, the price of something else, to give in exchange for\ncorn. But in every country, the home market, as it is the nearest and\nmost convenient, so is it likewise the greatest and most important\nmarket for corn. That rise in the real value of silver, therefore, which\nis the effect of lowering the average money price of corn, tends to\nenlarge the greatest and most important market for corn, and thereby to\nencourage, instead of discouraging its growth.\n\nBy the 22d of Charles II. c. 13, the importation of wheat, whenever\nthe price in the home market did not exceed 53s:4d. the quarter, was\nsubjected to a duty of 16s. the quarter; and to a duty of 8s. whenever\nthe price did not exceed £4. The former of these two prices has, for\nmore than a century past, taken place only in times of very great\nscarcity; and the latter has, so far as I know, not taken place at\nall. Yet, till wheat has risen above this latter price, it was, by this\nstatute, subjected to a very high duty; and, till it had risen above the\nformer, to a duty which amounted to a prohibition. The importation\nof other sorts of grain was restrained at rates and by duties, in\nproportion to the value of the grain, almost equally high. Before the\n13th of the present king, the following were the duties payable upon the\nimportation of the different sorts of grain:\n\n     Grain.                     Duties.          Duties       Duties.\n Beans to 28s. per qr.  19s:10d. after till 40s. 16s:8d. then 12d.\n Barley to 28s.   -     19s:10d.         -  32s. 16s.     -   12d.\n Malt is prohibited by the annual malt-tax bill.\n Oats   to 16s.   -      5s:10d. after   -                    9½d.\n Pease   to 40s.  -     16s: 0d. after   -                    9¾d.\n Rye     to 36s.  -     19s:10d. till 40s.       16s:8d   -   12d.\n Wheat to 44s.    -     21s: 9d. till 53s:4d.    17s.     -    8s.\n                          till £4, and after that about       1s:4d.\n Buck-wheat to 32s. per qr.     to pay 16s.\n\nThese different duties were imposed, partly by the 22d of Charles II.\nin place of the old subsidy, partly by the new subsidy, by the one-third\nand two-thirds subsidy, and by the subsidy 1747. Subsequent laws still\nfurther increased those duties.\n\nThe distress which, in years of scarcity, the strict execution of those\nlaws might have brought upon the people, would probably have been very\ngreat; but, upon such occasions, its execution was generally suspended\nby temporary statutes, which permitted, for a limited time, the\nimportation of foreign corn. The necessity of these temporary statutes\nsufficiently demonstrates the impropriety of this general one.\n\nThese restraints upon importation, though prior to the establishment of\nthe bounty, were dictated by the same spirit, by the same principles,\nwhich afterwards enacted that regulation. How hurtful soever in\nthemselves, these, or some other restraints upon importation, became\nnecessary in consequence of that regulation. If, when wheat was either\nbelow 48s. the quarter, or not much above it, foreign corn could have\nbeen imported, either duty free, or upon paying only a small duty, it\nmight have been exported again, with the benefit of the bounty, to the\ngreat loss of the public revenue, and to the entire perversion of the\ninstitution, of which the object was to extend the market for the home\ngrowth, not that for the growth of foreign countries.\n\nIII. The trade of the merchant-exporter of corn for foreign consumption,\ncertainly does not contribute directly to the plentiful supply of the\nhome market. It does so, however, indirectly. From whatever source this\nsupply maybe usually drawn, whether from home growth, or from foreign\nimportation, unless more corn is either usually grown, or usually\nimported into the country, than what is usually consumed in it, the\nsupply of the home market can never be very plentiful. But unless the\nsurplus can, in all ordinary cases, be exported, the growers will be\ncareful never to grow more, and the importers never to import more, than\nwhat the bare consumption of the home market requires. That market will\nvery seldom be overstocked; but it will generally be understocked; the\npeople, whose business it is to supply it, being generally afraid\nlest their goods should be left upon their hands. The prohibition of\nexportation limits the improvement and cultivation of the country\nto what the supply of its own inhabitants require. The freedom of\nexportation enables it to extend cultivation for the supply of foreign\nnations.\n\nBy the 12th of Charles II. c.4, the exportation of corn was permitted\nwhenever the price of wheat did not exceed 40s. the quarter, and that of\nother grain in proportion. By the 15th of the same prince, this liberty\nwas extended till the price of wheat exceeded 48s. the quarter; and by\nthe 22d, to all higher prices. A poundage, indeed, was to be paid to the\nking upon such exportation; but all grain was rated so low in the book\nof rates, that this poundage amounted only, upon wheat to 1s., upon\noats to 4d., and upon all other grain to 6d. the quarter. By the 1st of\nWilliam and Mary, the act which established this bounty, this small duty\nwas virtually taken off whenever the price of wheat did not exceed 48s.\nthe quarter; and by the 11th and 12th of William III. c. 20, it was\nexpressly taken off at all higher prices.\n\nThe trade of the merchant-exporter was, in this manner, not only\nencouraged by a bounty, but rendered much more free than that of the\ninland dealer. By the last of these statutes, corn could be engrossed\nat any price for exportation; but it could not be engrossed for inland\nsale, except when the price did not exceed 48s. the quarter. The\ninterest of the inland dealer, however, it has already been shown, can\nnever be opposite to that of the great body of the people. That of\nthe merchant-exporter may, and in fact sometimes is. If, while his\nown country labours under a dearth, a neighbouring country should be\nafflicted with a famine, it might be his interest to carry corn to the\nlatter country, in such quantities as might very much aggravate the\ncalamities of the dearth. The plentiful supply of the home market was\nnot the direct object of those statutes; but, under the pretence of\nencouraging agriculture, to raise the money price of corn as high as\npossible, and thereby to occasion, as much as possible, a constant\ndearth in the home market. By the discouragement of importation, the\nsupply of that market; even in times of great scarcity, was confined to\nthe home growth; and by the encouragement of exportation, when the price\nwas so high as 48s. the quarter, that market was not, even in times of\nconsiderable scarcity, allowed to enjoy the whole of that growth. The\ntemporary laws, prohibiting, for a limited time, the exportation\nof corn, and taking off, for a limited time, the duties upon its\nimportation, expedients to which Great Britain has been obliged so\nfrequently to have recourse, sufficiently demonstrate the impropriety\nof her general system. Had that system been good, she would not so\nfrequently have been reduced to the necessity of departing from it.\n\nWere all nations to follow the liberal system of free exportation and\nfree importation, the different states into which a great continent\nwas divided, would so far resemble the different provinces of a great\nempire. As among the different provinces of a great empire, the freedom\nof the inland trade appears, both from reason and experience, not only\nthe best palliative of a dearth, but the most effectual preventive of a\nfamine; so would the freedom of the exportation and importation trade be\namong the different states into which a great continent was divided.\nThe larger the continent, the easier the communication through all the\ndifferent parts of it, both by land and by water, the less would any one\nparticular part of it ever be exposed to either of these calamities,\nthe scarcity of any one country being more likely to be relieved by the\nplenty of some other. But very few countries have entirely adopted this\nliberal system. The freedom of the corn trade is almost everywhere more\nor less restrained, and in many countries is confined by such absurd\nregulations, as frequently aggravate the unavoidable misfortune of\na dearth into the dreadful calamity of a famine. The demand of such\ncountries for corn may frequently become so great and so urgent, that a\nsmall state in their neighbourhood, which happened at the same time to\nbe labouring under some degree of dearth, could not venture to supply\nthem without exposing itself to the like dreadful calamity. The very bad\npolicy of one country may thus render it, in some measure, dangerous\nand imprudent to establish what would otherwise be the best policy in\nanother. The unlimited freedom of exportation, however, would be much\nless dangerous in great states, in which the growth being much greater,\nthe supply could seldom be much affected by any quantity or corn that\nwas likely to be exported. In a Swiss canton, or in some of the little\nstates in Italy, it may, perhaps, sometimes be necessary to restrain the\nexportation of corn. In such great countries as France or England, it\nscarce ever can. To hinder, besides, the farmer from sending his goods\nat all times to the best market, is evidently to sacrifice the ordinary\nlaws of justice to an idea of public utility, to a sort of reasons of\nstate; an act or legislative authority which ought to be exercised only,\nwhich can be pardoned only, in cases of the most urgent necessity. The\nprice at which exportation of corn is prohibited, if it is ever to be\nprohibited, ought always to be a very high price.\n\nThe laws concerning corn may everywhere be compared to the laws\nconcerning religion. The people feel themselves so much interested\nin what relates either to their subsistence in this life, or to their\nhappiness in a life to come, that government must yield to their\nprejudices, and, in order to preserve the public tranquillity, establish\nthat system which they approve of. It is upon this account, perhaps,\nthat we so seldom find a reasonable system established with regard to\neither of those two capital objects.\n\nIV. The trade of the merchant-carrier, or of the importer of foreign\ncorn, in order to export it again, contributes to the plentiful supply\nof the home market. It is not, indeed, the direct purpose of his trade\nto sell his corn there; but he will generally be willing to do so,\nand even for a good deal less money than he might expect in a foreign\nmarket; because he saves in this manner the expense of loading and\nunloading, of freight and insurance. The inhabitants of the country\nwhich, by means of the carrying trade, becomes the magazine and\nstorehouse for the supply of other countries, can very seldom be in want\nthemselves. Though the carrying trade must thus contribute to reduce\nthe average money price of corn in the home market, it would not thereby\nlower its real value; it would only raise somewhat the real value of\nsilver.\n\nThe carrying trade was in effect prohibited in Great Britain, upon all\nordinary occasions, by the high duties upon the importation of foreign\ncorn, of the greater part of which there was no drawback; and upon\nextraordinary occasions, when a scarcity made it necessary to suspend\nthose duties by temporary statutes, exportation was always prohibited.\nBy this system of laws, therefore, the carrying trade was in effect\nprohibited.\n\nThat system of laws, therefore, which is connected with the\nestablishment of the bounty, seems to deserve no part of the praise\nwhich has been bestowed upon it. The improvement and prosperity of Great\nBritain, which has been so often ascribed to those laws, may very easily\nbe accounted for by other causes. That security which the laws in Great\nBritain give to every man, that he shall enjoy the fruits of his\nown labour, is alone sufficient to make any country flourish,\nnotwithstanding these and twenty other absurd regulations of commerce;\nand this security was perfected by the Revolution, much about the\nsame time that the bounty was established. The natural effort of every\nindividual to better his own condition, when suffered to exert itself\nwith freedom and security, is so powerful a principle, that it is alone,\nand without any assistance, not only capable of carrying on the society\nto wealth and prosperity, but of surmounting a hundred impertinent\nobstructions, with which the folly of human laws too often encumbers its\noperations: though the effect of those obstructions is always, more or\nless, either to encroach upon its freedom, or to diminish its security.\nIn Great Britain industry is perfectly secure; and though it is far from\nbeing perfectly free, it is as free or freer than in any other part of\nEurope.\n\nThough the period of the greatest prosperity and improvement of Great\nBritain has been posterior to that system of laws which is connected\nwith the bounty, we must not upon that account, impute it to those laws.\nIt has been posterior likewise to the national debt; but the national\ndebt has most assuredly not been the cause of it.\n\nThough the system of laws which is connected with the bounty, has\nexactly the same tendency with the practice of Spain and Portugal, to\nlower somewhat the value of the precious metals in the country where it\ntakes place; yet Great Britain is certainly one of the richest countries\nin Europe, while Spain and Portugal are perhaps amongst the most\nbeggarly. This difference of situation, however, may easily be accounted\nfor from two different causes. First, the tax in Spain, the prohibition\nin Portugal of exporting gold and silver, and the vigilant police\nwhich watches over the execution of those laws, must, in two very poor\ncountries, which between them import annually upwards of six millions\nsterling, operate not only more directly, but much more forcibly, in\nreducing the value of those metals there, than the corn laws can do in\nGreat Britain. And, secondly, this bad policy is not in those countries\ncounterbalanced by the general liberty and security of the people.\nIndustry is there neither free nor secure; and the civil and\necclesiastical governments of both Spain and Portugal are such as would\nalone be sufficient to perpetuate their present state of poverty, even\nthough their regulations of commerce were as wise as the greatest part\nof them are absurd and foolish.\n\nThe 13th of the present king, c. 43, seems to have established a new\nsystem with regard to the corn laws, in many respects better than the\nancient one, but in one or two respects perhaps not quite so good.\n\nBy this statute, the high duties upon importation for home consumption\nare taken off, so soon as the price of middling wheat rises to 48s. the\nquarter; that of middling rye, pease, or beans, to 32s.; that of barley\nto 24s.; and that of oats to 16s.; and instead of them, a small duty\nis imposed of only 6d upon the quarter of wheat, and upon that or other\ngrain in proportion. With regard to all those different sorts of grain,\nbut particularly with regard to wheat, the home market is thus opened to\nforeign supplies, at prices considerably lower than before.\n\nBy the same statute, the old bounty of 5s. upon the exportation of\nwheat, ceases so soon as the price rises to 44s. the quarter, instead\nof 48s. the price at which it ceased before; that of 2s:6d. upon the\nexportation of barley, ceases so soon as the price rises to 22s. instead\nof 24s. the price at which it ceased before; that of 2s:6d. upon the\nexportation of oatmeal, ceases so soon as the price rises to 14s.\ninstead of 15s. the price at which it ceased before. The bounty upon rye\nis reduced from 3s:6d. to 3s. and it ceases so soon as the price rises\nto 28s. instead of 32s. the price at which it ceased before. If bounties\nare as improper as I have endeavoured to prove them to be, the sooner\nthey cease, and the lower they are, so much the better.\n\nThe same statute permits, at the lowest prices, the importation of corn\nin order to be exported again, duty free, provided it is in the mean\ntime lodged in a warehouse under the joint locks of the king and the\nimporter. This liberty, indeed, extends to no more than twenty-five of\nthe different ports of Great Britain. They are, however, the principal\nones; and there may not, perhaps, be warehouses proper for this purpose\nin the greater part of the others.\n\nSo far this law seems evidently an improvement upon the ancient system.\n\nBut by the same law, a bounty of 2s. the quarter is given for the\nexportation of oats, whenever the price does not exceed fourteen\nshillings. No bounty had ever been given before for the exportation of\nthis grain, no more than for that of pease or beans.\n\nBy the same law, too, the exportation of wheat is prohibited so soon as\nthe price rises to forty-four shillings the quarter; that of rye so\nsoon as it rises to twenty-eight shillings; that of barley so soon as it\nrises to twenty-two shillings; and that of oats so soon as they rise to\nfourteen shillings. Those several prices seem all of them a good deal\ntoo low; and there seems to be an impropriety, besides, in prohibiting\nexportation altogether at those precise prices at which that bounty,\nwhich was given in order to force it, is withdrawn. The bounty ought\ncertainly either to have been withdrawn at a much lower price, or\nexportation ought to have been allowed at a much higher.\n\nSo far, therefore, this law seems to be inferior to the ancient system.\nWith all its imperfections, however, we may perhaps say of it what was\nsaid of the laws of Solon, that though not the best in itself, it is\nthe best which the interest, prejudices, and temper of the times, would\nadmit of. It may perhaps in due time prepare the way for a better.\n\n\n\n\nCHAPTER VI. OF TREATIES OF COMMERCE.\n\nWhen a nation binds itself by treaty, either to permit the entry of\ncertain goods from one foreign country which it prohibits from all\nothers, or to exempt the goods of one country from duties to which it\nsubjects those of all others, the country, or at least the merchants\nand manufacturers of the country, whose commerce is so favoured, must\nnecessarily derive great advantage from the treaty. Those merchants\nand manufacturers enjoy a sort of monopoly in the country which is so\nindulgent to them. That country becomes a market, both more extensive\nand more advantageous for their goods: more extensive, because the goods\nof other nations being either excluded or subjected to heavier duties,\nit takes off a greater quantity of theirs; more advantageous, because\nthe merchants of the favoured country, enjoying a sort of monopoly\nthere, will often sell their goods for a better price than if exposed to\nthe free competition of all other nations.\n\nSuch treaties, however, though they may be advantageous to the merchants\nand manufacturers of the favoured, are necessarily disadvantageous to\nthose of the favouring country. A monopoly is thus granted against them\nto a foreign nation; and they must frequently buy the foreign goods they\nhave occasion for, dearer than if the free competition of other nations\nwas admitted. That part of its own produce with which such a nation\npurchases foreign goods, must consequently be sold cheaper; because,\nwhen two things are exchanged for one another, the cheapness of the\none is a necessary consequence, or rather is the same thing, with the\ndearness of the other. The exchangeable value of its annual produce,\ntherefore, is likely to be diminished by every such treaty. This\ndiminution, however, can scarce amount to any positive loss, but only to\na lessening of the gain which it might otherwise make. Though it sells\nits goods cheaper than it otherwise might do, it will not probably sell\nthem for less than they cost; nor, as in the case of bounties, for a\nprice which will not replace the capital employed in bringing them to\nmarket, together with the ordinary profits of stock. The trade could not\ngo on long if it did. Even the favouring country, therefore, may still\ngain by the trade, though less than if there was a free competition.\n\nSome treaties of commerce, however, have been supposed advantageous,\nupon principles very different from these; and a commercial country has\nsometimes granted a monopoly of this kind, against itself, to certain\ngoods of a foreign nation, because it expected, that in the whole\ncommerce between them, it would annually sell more than it would buy,\nand that a balance in gold and silver would be annually returned to it.\nIt is upon this principle that the treaty of commerce between England\nand Portugal, concluded in 1703 by Mr Methuen, has been so much\ncommended. The following is a literal translation of that treaty, which\nconsists of three articles only.\n\nART. I. His sacred royal majesty of Portugal promises, both in his\nown name and that of his successors, to admit for ever hereafter, into\nPortugal, the woollen cloths, and the rest of the woollen manufactures\nof the British, as was accustomed, till they were prohibited by the law;\nnevertheless upon this condition:\n\nART. II. That is to say, that her sacred royal majesty of Great Britain\nshall, in her own name, and that of her successors, be obliged, for ever\nhereafter, to admit the wines of the growth of Portugal into Britain;\nso that at no time, whether there shall be peace or war between the\nkingdoms of Britain and France, any thing more shall be demanded for\nthese wines by the name of custom or duty, or by whatsoever other\ntitle, directly or indirectly, whether they shall be imported into\nGreat Britain in pipes or hogsheads, or other casks, than what shall be\ndemanded for the like quantity or measure of French wine, deducting or\nabating a third part of the custom or duty. But if, at any time, this\ndeduction or abatement of customs, which is to be made as aforesaid,\nshall in any manner be attempted and prejudiced, it shall be just and\nlawful for his sacred royal majesty of Portugal, again to prohibit the\nwoollen cloths, and the rest of the British woollen manufactures.\n\nART. III. The most excellent lords the plenipotentiaries promise and\ntake upon themselves, that their above named masters shall ratify this\ntreaty; and within the space of two months the ratification shall be\nexchanged.\n\nBy this treaty, the crown of Portugal becomes bound to admit the English\nwoollens upon the same footing as before the prohibition; that is, not\nto raise the duties which had been paid before that time. But it does\nnot become bound to admit them upon any better terms than those of any\nother nation, of France or Holland, for example. The crown of Great\nBritain, on the contrary, becomes bound to admit the wines of Portugal,\nupon paying only two-thirds of the duty which is paid for those of\nFrance, the wines most likely to come into competition with them. So\nfar this treaty, therefore, is evidently advantageous to Portugal, and\ndisadvantageous to Great Britain.\n\nIt has been celebrated, however, as a masterpiece of the commercial\npolicy of England. Portugal receives annually from the Brazils a greater\nquantity of gold than can be employed in its domestic commerce, whether\nin the shape of coin or of plate. The surplus is too valuable to be\nallowed to lie idle and locked up in coffers; and as it can find no\nadvantageous market at home, it must, notwithstanding; any prohibition,\nbe sent abroad, and exchanged for something for which there is a more\nadvantageous market at home. A large share of it comes annually to\nEngland, in return either for English goods, or for those of other\nEuropean nations that receive their returns through England. Mr Barretti\nwas informed, that the weekly packet-boat from Lisbon brings, one week\nwith another, more than £50,000 in gold to England. The sum had probably\nbeen exaggerated. It would amount to more than £2,600,000 a year, which\nis more than the Brazils are supposed to afford.\n\nOur merchants were, some years ago, out of humour with the crown of\nPortugal. Some privileges which had been granted them, not by treaty,\nbut by the free grace of that crown, at the solicitation, indeed, it is\nprobable, and in return for much greater favours, defence and protection\nfrom the crown of Great Britain, had been either infringed or revoked.\nThe people, therefore, usually most interested in celebrating the\nPortugal trade, were then rather disposed to represent it as less\nadvantageous than it had commonly been imagined. The far greater part,\nalmost the whole, they pretended, of this annual importation of gold,\nwas not on account of Great Britain, but of other European nations; the\nfruits and wines of Portugal annually imported into Great Britain nearly\ncompensating the value of the British goods sent thither.\n\nLet us suppose, however, that the whole was on account of Great Britain,\nand that it amounted to a still greater sum than Mr Barretti seems to\nimagine; this trade would not, upon that account, be more advantageous\nthan any other, in which, for the same value sent out, we received an\nequal value of consumable goods in return.\n\nIt is but a very small part of this importation which, it can be\nsupposed, is employed as an annual addition, either to the plate or to\nthe coin of the kingdom. The rest must all be sent abroad, and exchanged\nfor consumable goods of some kind or other. But if those consumable\ngoods were purchased directly with the produce of English industry, it\nwould be more for the advantage of England, than first to purchase with\nthat produce the gold of Portugal, and afterwards to purchase with that\ngold those consumable goods. A direct foreign trade of consumption is\nalways more advantageous than a round-about one; and to bring the\nsame value of foreign goods to the home market requires a much smaller\ncapital in the one way than in the ether. If a smaller share of its\nindustry, therefore, had been employed in producing goods fit for the\nPortugal market, and a greater in producing those lit for the other\nmarkets, where those consumable goods for which there is a demand in\nGreat Britain are to be had, it would have been more for the advantage\nof England. To procure both the gold which it wants for its own use, and\nthe consumable goods, would, in this way, employ a much smaller capital\nthan at present. There would be a spare capital, therefore, to be\nemployed for other purposes, in exciting an additional quantity of\nindustry, and in raising a greater annual produce.\n\nThough Britain were entirely excluded from the Portugal trade, it could\nfind very little difficulty in procuring all the annual supplies of\ngold which it wants, either for the purposes of plate, or of coin, or of\nforeign trade. Gold, like every other commodity, is always somewhere or\nanother to be got for its value by those who have that value to give for\nit. The annual surplus of gold in Portugal, besides, would still be sent\nabroad, and though not carried away by Great Britain, would be carried\naway by some other nation, which would be glad to sell it again for its\nprice, in the same manner as Great Britain does at present. In buying\ngold of Portugal, indeed, we buy it at the first hand; whereas, in\nbuying it of any other nation, except Spain, we should buy it at the\nsecond, and might pay somewhat dearer. This difference, however, would\nsurely be too insignificant to deserve the public attention.\n\nAlmost all our gold, it is said, comes from Portugal. With other\nnations, the balance of trade is either against as, or not much in our\nfavour. But we should remember, that the more gold we import from\none country, the less we must necessarily import from all others. The\neffectual demand for gold, like that for every other commodity, is in\nevery country limited to a certain quantity. If nine-tenths of this\nquantity are imported from one country, there remains a tenth only to\nbe imported from all others. The more gold, besides, that is annually\nimported from some particular countries, over and above what is\nrequisite for plate and for coin, the more must necessarily be exported\nto some others: and the more that most insignificant object of modern\npolicy, the balance of trade, appears to be in our favour with some\nparticular countries, the more it must necessarily appear to be against\nus with many others.\n\nIt was upon this silly notion, however, that England could not subsist\nwithout the Portugal trade, that, towards the end of the late war,\nFrance and Spain, without pretending either offence or provocation,\nrequired the king of Portugal to exclude all British ships from his\nports, and, for the security of this exclusion, to receive into them\nFrench or Spanish garrisons. Had the king of Portugal submitted to those\nignominious terms which his brother-in-law the king of Spain proposed\nto him, Britain would have been freed from a much greater inconveniency\nthan the loss of the Portugal trade, the burden of supporting a very\nweak ally, so unprovided of every thing for his own defence, that the\nwhole power of England, had it been directed to that single purpose,\ncould scarce, perhaps, have defended him for another campaign. The loss\nof the Portugal trade would, no doubt, have occasioned a considerable\nembarrassment to the merchants at that time engaged in it, who might\nnot, perhaps, have found out, for a year or two, any other equally\nadvantageous method of employing their capitals; and in this would\nprobably have consisted all the inconveniency which England could have\nsuffered from this notable piece of commercial policy.\n\nThe great annual importation of gold and silver is neither for the\npurpose of plate nor of coin, but of foreign trade. A round-about\nforeign trade of consumption can be carried on more advantageously by\nmeans of these metals than of almost any other goods. As they are the\nuniversal instruments of commerce, they are more readily received in\nreturn for all commodities than any other goods; and, on account of\ntheir small bulk and great value, it costs less to transport them\nbackward and forward from one place to another than almost any other\nsort of merchandize, and they lose less of their value by being so\ntransported. Of all the commodities, therefore, which are bought in one\nforeign country, for no other purpose but to be sold or exchanged again\nfor some other goods in another, there are none so convenient as gold\nand silver. In facilitating all the different round-about foreign trades\nof consumption which are carried on in Great Britain, consists the\nprincipal advantage of the Portugal trade; and though it is not a\ncapital advantage, it is, no doubt, a considerable one.\n\nThat any annual addition which, it can reasonably be supposed, is made\neither to the plate or to the coin of the kingdom, could require but a\nvery small annual importation of gold and silver, seems evident enough;\nand though we had no direct trade with Portugal, this small quantity\ncould always, somewhere or another, be very easily got.\n\nThough the goldsmiths trade be very considerable in Great Britain, the\nfar greater part of the new plate which they annually sell, is made from\nother old plate melted down; so that the addition annually made to the\nwhole plate of the kingdom cannot be very great, and could require but a\nvery small annual importation.\n\nIt is the same case with the coin. Nobody imagines, I believe, that\neven the greater part of the annual coinage, amounting, for ten years\ntogether, before the late reformation of the gold coin, to upwards of\n£800,000 a-year in gold, was an annual addition to the money before\ncurrent in the kingdom. In a country where the expense of the coinage is\ndefrayed by the government, the value of the coin, even when it contains\nits full standard weight of gold and silver, can never be much greater\nthan that of an equal quantity of those metals uncoined, because it\nrequires only the trouble of going to the mint, and the delay, perhaps,\nof a few weeks, to procure for any quantity of uncoined gold and silver\nan equal quantity of those metals in coin; but in every country the\ngreater part of the current coin is almost always more or less worn, or\notherwise degenerated from its standard. In Great Britain it was, before\nthe late reformation, a good deal so, the gold being more than two\nper cent., and the silver more than eight per cent. below its standard\nweight. But if forty-four guineas and a-half, containing their full\nstandard weight, a pound weight of gold, could purchase very little more\nthan a pound weight of uncoined gold; forty-four guineas and a-half,\nwanting a part of their weight, could not purchase a pound weight,\nand something was to be added, in order to make up the deficiency. The\ncurrent price of gold bullion at market, therefore, instead of being\nthe same with the mint price, or £46:14:6, was then about £47:14s., and\nsometimes about £48. When the greater part of the coin, however, was in\nthis degenerate condition, forty four guineas and a-half, fresh from the\nmint, would purchase no more goods in the market than any other ordinary\nguineas; because, when they came into the coffers of the merchant, being\nconfounded with other money, they could not afterwards be distinguished\nwithout more trouble than the difference was worth. Like other guineas,\nthey were worth no more than £46:14:6. If thrown into the melting pot,\nhowever, they produced, without any sensible loss, a pound weight of\nstandard gold, which could be sold at any time for between £47:14s. and\n£48, either in gold or silver, as fit for all the purposes of coin as\nthat which had been melted down. There was an evident profit, therefore,\nin melting down new-coined money; and it was done so instantaneously,\nthat no precaution of government could prevent it. The operations of\nthe mint were, upon this account, somewhat like the web of Penelope;\nthe work that was done in the day was undone in the night. The mint\nwas employed, not so much in making daily additions to the coin, as in\nreplacing the very best part of it, which was daily melted down.\n\nWere the private people who carry their gold and silver to the mint\nto pay themselves for the coinage, it would add to the value of those\nmetals, in the same manner as the fashion does to that of plate. Coined\ngold and silver would be more valuable than uncoined. The seignorage, if\nit was not exorbitant, would add to the bullion the whole value of the\nduty; because, the government having everywhere the exclusive privilege\nof coining, no coin can come to market cheaper than they think proper to\nafford it. If the duty was exorbitant, indeed, that is, if it was\nvery much above the real value of the labour and expense requisite for\ncoinage, false coiners, both at home and abroad, might be encouraged, by\nthe great difference between the value of bullion and that of coin, to\npour in so great a quantity of counterfeit money as might reduce the\nvalue of the government money. In France, however, though the seignorage\nis eight per cent., no sensible inconveniency of this kind is found\nto arise from it. The dangers to which a false coiner is everywhere\nexposed, if he lives in the country of which he counterfeits the coin,\nand to which his agents or correspondents are exposed, if he lives in a\nforeign country, are by far too great to be incurred for the sake of a\nprofit of six or seven per cent.\n\nThe seignorage in France raises the value of the coin higher than in\nproportion to the quantity of pure gold which it contains. Thus, by the\nedict of January 1726, the mint price of fine gold of twenty-four carats\nwas fixed at seven hundred and forty livres nine sous and one denier\none-eleventh the mark of eight Paris ounces. {See Dictionnaire des\nMonnoies, tom. ii. article Seigneurage, p. 439, par 81. Abbot de\nBazinghen, Conseiller-Commissaire en la Cour des Monnoies à Paris.} The\ngold coin of France, making an allowance for the remedy of the mint,\ncontains twenty-one carats and three-fourths of fine gold, and two\ncarats one-fourth of alloy. The mark of standard gold, therefore, is\nworth no more than about six hundred and seventy-one livres ten deniers.\nBut in France this mark of standard gold is coined into thirty louis\nd'ors of twenty-four livres each, or into seven hundred and twenty\nlivres. The coinage, therefore, increases the value of a mark of\nstandard gold bullion, by the difference between six hundred and\nseventy-one livres ten deniers and seven hundred and twenty livres, or\nby forty-eight livres nineteen sous and two deniers.\n\nA seignorage will, in many cases, take away altogether, and will in all\ncases diminish, the profit of melting down the new coin. This profit\nalways arises from the difference between the quantity of bullion which\nthe common currency ought to contain and that which it actually does\ncontain. If this difference is less than the seignorage, there will be\nloss instead of profit. If it is equal to the seignorage, there will\nbe neither profit nor loss. If it is greater than the seignorage, there\nwill, indeed, be some profit, but less than if there was no seignorage.\nIf, before the late reformation of the gold coin, for example, there had\nbeen a seignorage of five per cent. upon the coinage, there would have\nbeen a loss of three per cent. upon the melting down of the gold coin.\nIf the seignorage had been two per cent., there would have been neither\nprofit nor loss. If the seignorage had been one per cent., there would\nhave been a profit but of one per cent. only, instead of two per cent.\nWherever money is received by tale, therefore, and not by weight, a\nseignorage is the most effectual preventive of the melting down of the\ncoin, and, for the same reason, of its exportation. It is the best\nand heaviest pieces that are commonly either melted down or exported,\nbecause it is upon such that the largest profits are made.\n\nThe law for the encouragement of the coinage, by rendering it duty-free,\nwas first enacted during the reign of Charles II. for a limited time,\nand afterwards continued, by different prolongations, till 1769, when it\nwas rendered perpetual. The bank of England, in order to replenish their\ncoffers with money, are frequently obliged to carry bullion to the mint;\nand it was more for their interest, they probably imagined, that the\ncoinage should be at the expense of the government than at their own.\nIt was probably out of complaisance to this great company, that the\ngovernment agreed to render this law perpetual. Should the custom of\nweighing gold, however, come to be disused, as it is very likely to be\non account of its inconveniency; should the gold coin of England come\nto be received by tale, as it was before the late recoinage this great\ncompany may, perhaps, find that they have, upon this, as upon some other\noccasions, mistaken their own interest not a little.\n\nBefore the late recoinage, when the gold currency of England was two per\ncent. below its standard weight, as there was no seignorage, it was\ntwo per cent. below the value of that quantity of standard gold bullion\nwhich it ought to have contained. When this great company, therefore,\nbought gold bullion in order to have it coined, they were obliged to pay\nfor it two per cent. more than it was worth after the coinage. But\nif there had been a seignorage of two per cent. upon the coinage, the\ncommon gold currency, though two per cent. below its standard weight,\nwould, notwithstanding, have been equal in value to the quantity of\nstandard gold which it ought to have contained; the value of the fashion\ncompensating in this case the diminution of the weight. They would,\nindeed, have had the seignorage to pay, which being two per cent., their\nloss upon the whole transaction would have been two per cent., exactly\nthe same, but no greater than it actually was.\n\nIf the seignorage had been five per cent. and the gold currency only two\nper cent. below its standard weight, the bank would, in this case, have\ngained three per cent. upon the price of the bullion; but as they would\nhave had a seignorage of five per cent. to pay upon the coinage, their\nloss upon the whole transaction would, in the same manner, have been\nexactly two per cent.\n\nIf the seignorage had been only one per cent., and the gold currency two\nper cent. below its standard weight, the bank would, in this case, have\nlost only one per cent. upon the price of the bullion; but as they would\nlikewise have had a seignorage of one per cent. to pay, their loss upon\nthe whole transaction would have been exactly two per cent., in the same\nmanner as in all other cases.\n\nIf there was a reasonable seignorage, while at the same time the coin\ncontained its full standard weight, as it has done very nearly since\nthe late recoinage, whatever the bank might lose by the seignorage, they\nwould gain upon the price of the bullion; and whatever they might gain\nupon the price of the bullion, they would lose by the seignorage. They\nwould neither lose nor gain, therefore, upon the whole transaction, and\nthey would in this, as in all the foregoing cases, be exactly in the\nsame situation as if there was no seignorage.\n\nWhen the tax upon a commodity is so moderate as not to encourage\nsmuggling, the merchant who deals in it, though he advances, does not\nproperly pay the tax, as he gets it back in the price of the commodity.\nThe tax is finally paid by the last purchaser or consumer. But money is\na commodity, with regard to which every man is a merchant. Nobody buys\nit but in order to sell it again; and with regard to it there is,\nin ordinary cases, no last purchaser or consumer. When the tax upon\ncoinage, therefore, is so moderate as not to encourage false coining,\nthough every body advances the tax, nobody finally pays it; because\nevery body gets it back in the advanced value of the coin.\n\nA moderate seignorage, therefore, would not, in any case, augment the\nexpense of the bank, or of any other private persons who carry their\nbullion to the mint in order to be coined; and the want of a moderate\nseignorage does not in any case diminish it. Whether there is or is not\na seignorage, if the currency contains its full standard weight, the\ncoinage costs nothing to anybody; and if it is short of that weight, the\ncoinage must always cost the difference between the quantity of bullion\nwhich ought to be contained in it, and that which actually is contained\nin it.\n\nThe government, therefore, when it defrays the expense of coinage, not\nonly incurs some small expense, but loses some small revenue which it\nmight get by a proper duty; and neither the bank, nor any other private\npersons, are in the smallest degree benefited by this useless piece of\npublic generosity.\n\nThe directors of the bank, however, would probably be unwilling to agree\nto the imposition of a seignorage upon the authority of a speculation\nwhich promises them no gain, but only pretends to insure them from any\nloss. In the present state of the gold coin, and as long as it continues\nto be received by weight, they certainly would gain nothing by such a\nchange. But if the custom of weighing the gold coin should ever go into\ndisuse, as it is very likely to do, and if the gold coin should ever\nfall into the same state of degradation in which it was before the\nlate recoinage, the gain, or more properly the savings, of the bank,\ninconsequence of the imposition of a seignorage, would probably be very\nconsiderable. The bank of England is the only company which sends any\nconsiderable quantity of bullion to the mint, and the burden of the\nannual coinage falls entirely, or almost entirely, upon it. If this\nannual coinage had nothing to do but to repair the unavoidable losses\nand necessary wear and tear of the coin, it could seldom exceed fifty\nthousand, or at most a hundred thousand pounds. But when the coin is\ndegraded below its standard weight, the annual coinage must, besides\nthis, fill up the large vacuities which exportation and the melting pot\nare continually making in the current coin. It was upon this account,\nthat during the ten or twelve years immediately preceding the late\nreformation of the gold coin, the annual coinage amounted, at an\naverage, to more than £850,000. But if there had been a seignorage of\nfour or five per cent. upon the gold coin, it would probably, even in\nthe state in which things then were, have put an effectual stop to the\nbusiness both of exportation and of the melting pot. The bank, instead\nof losing every year about two and a half per cent. upon the bullion\nwhich was to be coined into more than eight hundred and fifty thousand\npounds, or incurring an annual loss of more than £21,250 pounds, would\nnot probably have incurred the tenth part of that loss.\n\nThe revenue allotted by parliament for defraying the expense of the\ncoinage is but fourteen thousand pounds a-year; and the real expense\nwhich it costs the government, or the fees of the officers of the mint,\ndo not, upon ordinary occasions, I am assured, exceed the half of that\nsum. The saving of so very small a sum, or even the gaining of another,\nwhich could not well be much larger, are objects too inconsiderable, it\nmay be thought, to deserve the serious attention of government. But the\nsaving of eighteen or twenty thousand pounds a-year, in case of an event\nwhich is not improbable, which has frequently happened before, and which\nis very likely to happen again, is surely an object which well deserves\nthe serious attention, even of so great a company as the bank of\nEngland.\n\nSome of the foregoing reasonings and observations might, perhaps, have\nbeen more properly placed in those chapters of the first book which\ntreat of the origin and use of money, and of the difference between\nthe real and the nominal price of commodities. But as the law for the\nencouragement of coinage derives its origin from those vulgar prejudices\nwhich have been introduced by the mercantile system, I judged it more\nproper to reserve them for this chapter. Nothing could be more agreeable\nto the spirit of that system than a sort of bounty upon the production\nof money, the very thing which, it supposes, constitutes the wealth of\nevery nation. It is one of its many admirable expedients for enriching\nthe country.\n\n\n\n\n\nCHAPTER VII. OF COLONIES.\n\nPART I. Of the Motives for Establishing New Colonies.\n\nThe interest which occasioned the first settlement of the different\nEuropean colonies in America and the West Indies, was not altogether so\nplain and distinct as that which directed the establishment of those of\nancient Greece and Rome.\n\nAll the different states of ancient Greece possessed, each of them, but\na very small territory; and when the people in anyone of them multiplied\nbeyond what that territory could easily maintain, a part of them were\nsent in quest of a new habitation, in some remote and distant part of\nthe world; the warlike neighbours who surrounded them on all sides,\nrendering it difficult for any of them to enlarge very much its\nterritory at home. The colonies of the Dorians resorted chiefly to Italy\nand Sicily, which, in the times preceding the foundation of Rome, were\ninhabited by barbarous and uncivilized nations; those of the Ionians and\nAeolians, the two other great tribes of the Greeks, to Asia Minor and\nthe islands of the Aegean sea, of which the inhabitants sewn at that\ntime to have been pretty much in the same state as those of Sicily and\nItaly. The mother city, though she considered the colony as a child, at\nall times entitled to great favour and assistance, and owing in return\nmuch gratitude and respect, yet considered it as an emancipated child,\nover whom she pretended to claim no direct authority or jurisdiction.\nThe colony settled its own form of government, enacted its own laws,\nelected its own magistrates, and made peace or war with its neighbours,\nas an independent state, which had no occasion to wait for the\napprobation or consent of the mother city. Nothing can be more plain and\ndistinct than the interest which directed every such establishment.\n\nRome, like most of the other ancient republics, was originally founded\nupon an agrarian law, which divided the public territory, in a certain\nproportion, among the different citizens who composed the state. The\ncourse of human affairs, by marriage, by succession, and by alienation,\nnecessarily deranged this original division, and frequently threw the\nlands which had been allotted for the maintenance of many different\nfamilies, into the possession of a single person. To remedy this\ndisorder, for such it was supposed to be, a law was made, restricting\nthe quantity of land which any citizen could possess to five hundred\njugera; about 350 English acres. This law, however, though we read of\nits having been executed upon one or two occasions, was either\nneglected or evaded, and the inequality of fortunes went on continually\nincreasing. The greater part of the citizens had no land; and without\nit the manners and customs of those times rendered it difficult for a\nfreeman to maintain his independency. In the present times, though a\npoor man has no land of his own, if he has a little stock, he may either\nfarm the lands of another, or he may carry on some little retail trade;\nand if he has no stock, he may find employment either as a country\nlabourer, or as an artificer. But among the ancient Romans, the lands of\nthe rich were all cultivated by slaves, who wrought under an overseer,\nwho was likewise a slave; so that a poor freeman had little chance\nof being employed either as a farmer or as a labourer. All trades and\nmanufactures, too, even the retail trade, were carried on by the slaves\nof the rich for the benefit of their masters, whose wealth, authority,\nand protection, made it difficult for a poor freeman to maintain the\ncompetition against them. The citizens, therefore, who had no land, had\nscarce any other means of subsistence but the bounties of the candidates\nat the annual elections. The tribunes, when they had a mind to animate\nthe people against the rich and the great, put them in mind of the\nancient divisions of lands, and represented that law which restricted\nthis sort of private property as the fundamental law of the republic.\nThe people became clamorous to get land, and the rich and the great,\nwe may believe, were perfectly determined not to give them any part\nof theirs. To satisfy them in some measure, therefore, they frequently\nproposed to send out a new colony. But conquering Rome was, even upon\nsuch occasions, under no necessity of turning out her citizens to seek\ntheir fortune, if one may so, through the wide world, without knowing\nwhere they were to settle. She assigned them lands generally in the\nconquered provinces of Italy, where, being within the dominions of the\nrepublic, they could never form any independent state, but were at best\nbut a sort of corporation, which, though it had the power of enacting\nbye-laws for its own government, was at all times subject to the\ncorrection, jurisdiction, and legislative authority of the mother city.\nThe sending out a colony of this kind not only gave some satisfaction\nto the people, but often established a sort of garrison, too, in a newly\nconquered province, of which the obedience might otherwise have been\ndoubtful. A Roman colony, therefore, whether we consider the nature of\nthe establishment itself, or the motives for making it, was altogether\ndifferent from a Greek one. The words, accordingly, which in the\noriginal languages denote those different establishments, have very\ndifferent meanings. The Latin word (colonia) signifies simply a\nplantation. The Greek word (apoixia), on the contrary, signifies a\nseparation of dwelling, a departure from home, a going out of the house.\nBut though the Roman colonies were, in many respects, different from the\nGreek ones, the interest which prompted to establish them was equally\nplain and distinct. Both institutions derived their origin, either from\nirresistible necessity, or from clear and evident utility.\n\nThe establishment of the European colonies in America and the West\nIndies arose from no necessity; and though the utility which has\nresulted from them has been very great, it is not altogether so clear\nand evident. It was not understood at their first establishment, and\nwas not the motive, either of that establishment, or of the discoveries\nwhich gave occasion to it; and the nature, extent, and limits of that\nutility, are not, perhaps, well understood at this day.\n\nThe Venetians, during the fourteenth and fifteenth centuries, carried\non a very advantageous commerce in spiceries and other East India goods,\nwhich they distributed among the other nations of Europe. They purchased\nthem chiefly in Egypt, at that time under the dominion of the Mamelukes,\nthe enemies of the Turks, of whom the Venetians were the enemies; and\nthis union of interest, assisted by the money of Venice, formed such a\nconnexion as gave the Venetians almost a monopoly of the trade.\n\nThe great profits of the Venetians tempted the avidity of the\nPortuguese. They had been endeavouring, during the course of the\nfifteenth century, to find out by sea a way to the countries from which\nthe Moors brought them ivory and gold dust across the desert. They\ndiscovered the Madeiras, the Canaries, the Azores, the Cape de Verd\nislands, the coast of Guinea, that of Loango, Congo, Angola, and\nBenguela, and, finally, the Cape of Good Hope. They had long wished\nto share in the profitable traffic of the Venetians, and this last\ndiscovery opened to them a probable prospect of doing so. In 1497, Vasco\nde Gamo sailed from the port of Lisbon with a fleet of four ships, and,\nafter a navigation of eleven months, arrived upon the coast of Indostan;\nand thus completed a course of discoveries which had been pursued with\ngreat steadiness, and with very little interruption, for near a century\ntogether.\n\nSome years before this, while the expectations of Europe were in\nsuspense about the projects of the Portuguese, of which the success\nappeared yet to be doubtful, a Genoese pilot formed the yet more daring\nproject of sailing to the East Indies by the west. The situation of\nthose countries was at that time very imperfectly known in Europe. The\nfew European travellers who had been there, had magnified the distance,\nperhaps through simplicity and ignorance; what was really very great,\nappearing almost infinite to those who could not measure it; or,\nperhaps, in order to increase somewhat more the marvellous of their\nown adventures in visiting regions so immensely remote from Europe.\nThe longer the way was by the east, Columbus very justly concluded, the\nshorter it would be by the west. He proposed, therefore, to take that\nway, as both the shortest and the surest, and he had the good fortune\nto convince Isabella of Castile of the probability of his project. He\nsailed from the port of Palos in August 1492, near five years before the\nexpedition of Vasco de Gamo set out from Portugal; and, after a voyage\nof between two and three months, discovered first some of the small\nBahama or Lucyan islands, and afterwards the great island of St.\nDomingo.\n\nBut the countries which Columbus discovered, either in this or in any of\nhis subsequent voyages, had no resemblance to those which he had gone in\nquest of. Instead of the wealth, cultivation, and populousness of China\nand Indostan, he found, in St. Domingo, and in all the other parts of\nthe new world which he ever visited, nothing but a country quite covered\nwith wood, uncultivated, and inhabited only by some tribes of naked and\nmiserable savages. He was not very willing, however, to believe that\nthey were not the same with some of the countries described by Marco\nPolo, the first European who had visited, or at least had left behind\nhim any description of China or the East Indies; and a very slight\nresemblance, such as that which he found between the name of Cibao, a\nmountain in St. Domingo, and that of Cipange, mentioned by Marco\nPolo, was frequently sufficient to make him return to this favourite\nprepossession, though contrary to the clearest evidence. In his\nletters to Ferdinand and Isabella, he called the countries which he had\ndiscovered the Indies. He entertained no doubt but that they were the\nextremity of those which had been described by Marco Polo, and that they\nwere not very distant from the Ganges, or from the countries which had\nbeen conquered by Alexander. Even when at last convinced that they were\ndifferent, he still flattered himself that those rich countries were\nat no great distance; and in a subsequent voyage, accordingly, went in\nquest of them along the coast of Terra Firma, and towards the Isthmus of\nDarien.\n\nIn consequence of this mistake of Columbus, the name of the Indies has\nstuck to those unfortunate countries ever since; and when it was at last\nclearly discovered that the new were altogether different from the old\nIndies, the former were called the West, in contradistinction to the\nlatter, which were called the East Indies.\n\nIt was of importance to Columbus, however, that the countries which he\nhad discovered, whatever they were, should be represented to the court\nof Spain as of very great consequence; and, in what constitutes the real\nriches of every country, the animal and vegetable productions of the\nsoil, there was at that time nothing which could well justify such a\nrepresentation of them.\n\nThe cori, something between a rat and a rabbit, and supposed by Mr\nBuffon to be the same with the aperea of Brazil, was the largest\nviviparous quadruped in St. Domingo. This species seems never to have\nbeen very numerous; and the dogs and cats of the Spaniards are said\nto have long ago almost entirely extirpated it, as well as some other\ntribes of a still smaller size. These, however, together with a pretty\nlarge lizard, called the ivana or iguana, constituted the principal part\nof the animal food which the land afforded.\n\nThe vegetable food of the inhabitants, though, from their want of\nindustry, not very abundant, was not altogether so scanty. It consisted\nin Indian corn, yams, potatoes, bananas, etc., plants which were then\naltogether unknown in Europe, and which have never since been very much\nesteemed in it, or supposed to yield a sustenance equal to what is drawn\nfrom the common sorts of grain and pulse, which have been cultivated in\nthis part of the world time out of mind.\n\nThe cotton plant, indeed, afforded the material of a very important\nmanufacture, and was at that time, to Europeans, undoubtedly the most\nvaluable of all the vegetable productions of those islands. But though,\nin the end of the fifteenth century, the muslins and other cotton goods\nof the East Indies were much esteemed in every part of Europe, the\ncotton manufacture itself was not cultivated in any part of it. Even\nthis production, therefore, could not at that time appear in the eyes of\nEuropeans to be of very great consequence.\n\nFinding nothing, either in the animals or vegetables of the newly\ndiscovered countries which could justify a very advantageous\nrepresentation of them, Columbus turned his view towards their minerals;\nand in the richness of their productions of this third kingdom,\nhe flattered himself he had found a full compensation for the\ninsignificancy of those of the other two. The little bits of gold\nwith which the inhabitants ornamented their dress, and which, he was\ninformed, they frequently found in the rivulets and torrents which fell\nfrom the mountains, were sufficient to satisfy him that those mountains\nabounded with the richest gold mines. St. Domingo, therefore, was\nrepresented as a country abounding with gold, and upon that account\n(according to the prejudices not only of the present times, but of those\ntimes), an inexhaustible source of real wealth to the crown and kingdom\nof Spain. When Columbus, upon his return from his first voyage, was\nintroduced with a sort of triumphal honours to the sovereigns of Castile\nand Arragon, the principal productions of the countries which he had\ndiscovered were carried in solemn procession before him. The only\nvaluable part of them consisted in some little fillets, bracelets, and\nother ornaments of gold, and in some bales of cotton. The rest were mere\nobjects of vulgar wonder and curiosity; some reeds of an extraordinary\nsize, some birds of a very beautiful plumage, and some stuffed skins\nof the huge alligator and manati; all of which were preceded by six\nor seven of the wretched natives, whose singular colour and appearance\nadded greatly to the novelty of the show.\n\nIn consequence of the representations of Columbus, the council of\nCastile determined to take possession of the countries of which the\ninhabitants were plainly incapable of defending themselves. The pious\npurpose of converting them to Christianity sanctified the injustice of\nthe project. But the hope of finding treasures of gold there was the\nsole motive which prompted to undertake it; and to give this motive the\ngreater weight, it was proposed by Columbus, that the half of all the\ngold and silver that should be found there, should belong to the crown.\nThis proposal was approved of by the council.\n\nAs long as the whole, or the greater part of the gold which the first\nadventurers imported into Europe was got by so very easy a method as the\nplundering of the defenceless natives, it was not perhaps very difficult\nto pay even this heavy tax; but when the natives were once fairly\nstript of all that they had, which, in St. Domingo, and in all the other\ncountries discovered by Columbus, was done completely in six or eight\nyears, and when, in order to find more, it had become necessary to dig\nfor it in the mines, there was no longer any possibility of paying this\ntax. The rigorous exaction of it, accordingly, first occasioned, it is\nsaid, the total abandoning of the mines of St. Domingo, which have never\nbeen wrought since. It was soon reduced, therefore, to a third; then to\na fifth; afterwards to a tenth; and at last to a twentieth part of the\ngross produce of the gold mines. The tax upon silver continued for a\nlong time to be a fifth of the gross produce. It was reduced to a tenth\nonly in the course of the present century. But the first adventurers\ndo not appear to have been much interested about silver. Nothing less\nprecious than gold seemed worthy of their attention.\n\nAll the other enterprizes of the Spaniards in the New World, subsequent\nto those of Columbus, seem to have been prompted by the same motive. It\nwas the sacred thirst of gold that carried Ovieda, Nicuessa, and Vasco\nNugnes de Balboa, to the Isthmus of Darien; that carried Cortes to\nMexico, Almagro and Pizarro to Chili and Peru. When those adventurers\narrived upon any unknown coast, their first inquiry was always if there\nwas any gold to be found there; and according to the information which\nthey received concerning this particular, they determined either to quit\nthe country or to settle in it.\n\nOf all those expensive and uncertain projects, however, which bring\nbankruptcy upon the greater part of the people who engage in them,\nthere is none, perhaps, more perfectly ruinous than the search after new\nsilver and gold mines. It is, perhaps, the most disadvantageous lottery\nin the world, or the one in which the gain of those who draw the prizes\nbears the least proportion to the loss of those who draw the blanks; for\nthough the prizes are few, and the blanks many, the common price of\na ticket is the whole fortune of a very rich man. Projects of mining,\ninstead of replacing the capital employed in them, together with the\nordinary profits of stock, commonly absorb both capital and profit.\nThey are the projects, therefore, to which, of all others, a prudent\nlawgiver, who desired to increase the capital of his nation, would least\nchoose to give any extraordinary encouragement, or to turn towards them\na greater share of that capital than what would go to them of its own\naccord. Such, in reality, is the absurd confidence which almost all\nmen have in their own good fortune, that wherever there is the least\nprobability of success, too great a share of it is apt to go to them of\nits own accord.\n\nBut though the judgment of sober reason and experience concerning such\nprojects has always been extremely unfavourable, that of human avidity\nhas commonly been quite otherwise. The same passion which has suggested\nto so many people the absurd idea of the philosopher's stone, has\nsuggested to others the equally absurd one of immense rich mines of gold\nand silver. They did not consider that the value of those metals has, in\nall ages and nations, arisen chiefly from their scarcity, and that their\nscarcity has arisen from the very small quantities of them which nature\nhas anywhere deposited in one place, from the hard and intractable\nsubstances with which she has almost everywhere surrounded those small\nquantities, and consequently from the labour and expense which are\neverywhere necessary in order to penetrate, and get at them. They\nflattered themselves that veins of those metals might in many places\nbe found, as large and as abundant as those which are commonly found\nof lead, or copper, or tin, or iron. The dream of Sir Waiter Raleigh,\nconcerning the golden city and country of El Dorado, may satisfy us,\nthat even wise men are not always exempt from such strange delusions.\nMore than a hundred years after the death of that great man, the Jesuit\nGumila was still convinced of the reality of that wonderful country, and\nexpressed, with great warmth, and, I dare say, with great sincerity,\nhow happy he should be to carry the light of the gospel to a people who\ncould so well reward the pious labours of their missionary.\n\nIn the countries first discovered by the Spaniards, no gold and silver\nmines are at present known which are supposed to be worth the working.\nThe quantities of those metals which the first adventurers are said to\nhave found there, had probably been very much magnified, as well as the\nfertility of the mines which were wrought immediately after the first\ndiscovery. What those adventurers were reported to have found, however,\nwas sufficient to inflame the avidity of all their countrymen. Every\nSpaniard who sailed to America expected to find an El Dorado. Fortune,\ntoo, did upon this what she has done upon very few other occasions. She\nrealized in some measure the extravagant hopes of her votaries; and in\nthe discovery and conquest of Mexico and Peru (of which the one\nhappened about thirty, and the other about forty, years after the first\nexpedition of Columbus), she presented them with something not very\nunlike that profusion of the precious metals which they sought for.\n\nA project of commerce to the East Indies, therefore, gave occasion to\nthe first discovery of the West. A project of conquest gave occasion\nto all the establishments of the Spaniards in those newly discovered\ncountries. The motive which excited them to this conquest was a project\nof gold and silver mines; and a course of accidents which no human\nwisdom could foresee, rendered this project much more successful than\nthe undertakers had any reasonable grounds for expecting.\n\nThe first adventurers of all the other nations of Europe who attempted\nto make settlements in America, were animated by the like chimerical\nviews; but they were not equally successful. It was more than a hundred\nyears after the first settlement of the Brazils, before any silver,\ngold, or diamond mines, were discovered there. In the English, French,\nDutch, and Danish colonies, none have ever yet been discovered, at least\nnone that are at present supposed to be worth the working. The first\nEnglish settlers in North America, however, offered a fifth of all the\ngold and silver which should be found there to the king, as a motive for\ngranting them their patents. In the patents of Sir Waiter Raleigh, to\nthe London and Plymouth companies, to the council of Plymouth, etc.\nthis fifth was accordingly reserved to the crown. To the expectation of\nfinding gold and silver mines, those first settlers, too, joined that of\ndiscovering a north-west passage to the East Indies. They have hitherto\nbeen disappointed in both.\n\n\nPART II. Causes of the Prosperity of New Colonies.\n\nThe colony of a civilized nation which takes possession either of a\nwaste country, or of one so thinly inhabited that the natives easily\ngive place to the new settlers, advances more rapidly to wealth and\ngreatness than any other human society.\n\nThe colonies carry out with them a knowledge of agriculture and of other\nuseful arts, superior to what can grow up of its own accord, in the\ncourse of many centuries, among savage and barbarous nations. They\ncarry out with them, too, the habit of subordination, some notion of the\nregular government which takes place in their own country, of the system\nof laws which support it, and of a regular administration of justice;\nand they naturally establish something of the same kind in the new\nsettlement. But among savage and barbarous nations, the natural progress\nof law and government is still slower than the natural progress of arts,\nafter law and government have been so far established as is necessary\nfor their protection. Every colonist gets more land than he can possibly\ncultivate. He has no rent, and scarce any taxes, to pay. No landlord\nshares with him in its produce, and, the share of the sovereign is\ncommonly but a trifle. He has every motive to render as great as\npossible a produce which is thus to be almost entirely his own. But his\nland is commonly so extensive, that, with all his own industry, and\nwith all the industry of other people whom he can get to employ, he\ncan seldom make it produce the tenth part of what it is capable of\nproducing. He is eager, therefore, to collect labourers from all\nquarters, and to reward them with the most liberal wages. But those\nliberal wages, joined to the plenty and cheapness of land, soon make\nthose labourers leave him, in order to become landlords themselves, and\nto reward with equal liberality other labourers, who soon leave them for\nthe same reason that they left their first master. The liberal reward\nof labour encourages marriage. The children, during the tender years\nof infancy, are well fed and properly taken care of; and when they are\ngrown up, the value of their labour greatly overpays their maintenance.\nWhen arrived at maturity, the high price of labour, and the low price\nof land, enable them to establish themselves in the same manner as their\nfathers did before them.\n\nIn other countries, rent and profit eat up wages, and the two superior\norders of people oppress the inferior one; but in new colonies, the\ninterest of the two superior orders obliges them to treat the inferior\none with more generosity and humanity, at least where that inferior\none is not in a state of slavery. Waste lands, of the greatest natural\nfertility, are to be had for a trifle. The increase of revenue which\nthe proprietor, who is always the undertaker, expects from their\nimprovement, constitutes his profit, which, in these circumstances,\nis commonly very great; but this great profit cannot be made, without\nemploying the labour of other people in clearing and cultivating the\nland; and the disproportion between the great extent of the land and the\nsmall number of the people, which commonly takes place in new colonies,\nmakes it difficult for him to get this labour. He does not, therefore,\ndispute about wages, but is willing to employ labour at any price. The\nhigh wages of labour encourage population. The cheapness and plenty of\ngood land encourage improvement, and enable the proprietor to pay those\nhigh wages. In those wages consists almost the whole price of the land;\nand though they are high, considered as the wages of labour, they\nare low, considered as the price of what is so very valuable. What\nencourages the progress of population and improvement, encourages that\nof real wealth and greatness.\n\nThe progress of many of the ancient Greek colonies towards wealth and\ngreatness seems accordingly to have been very rapid. In the course of\na century or two, several of them appear to have rivalled, and even to\nhave surpassed, their mother cities. Syracuse and Agrigentum in Sicily,\nTarentum and Locri in Italy, Ephesus and Miletus in Lesser Asia, appear,\nby all accounts, to have been at least equal to any of the cities of\nancient Greece. Though posterior in their establishment, yet all the\narts of refinement, philosophy, poetry, and eloquence, seem to have been\ncultivated as early, and to have been improved as highly in them as\nin any part of the mother country. The schools of the two oldest Greek\nphilosophers, those of Thales and Pythagoras, were established, it is\nremarkable, not in ancient Greece, but the one in an Asiatic, the other\nin an Italian colony. All those colonies had established themselves in\ncountries inhabited by savage and barbarous nations, who easily gave\nplace to the new settlers. They had plenty of good land; and as they\nwere altogether independent of the mother city, they were at liberty to\nmanage their own affairs in the way that they judged was most suitable\nto their own interest.\n\nThe history of the Roman colonies is by no means so brilliant. Some of\nthem, indeed, such as Florence, have, in the course of many ages, and\nafter the fall of the mother city, grown up to be considerable states.\nBut the progress of no one of them seems ever to have been very rapid.\nThey were all established in conquered provinces, which in most cases\nhad been fully inhabited before. The quantity of land assigned to\neach colonist was seldom very considerable, and, as the colony was not\nindependent, they were not always at liberty to manage their own affairs\nin the way that they judged was most suitable to their own interest.\n\nIn the plenty of good land, the European colonies established in America\nand the West Indies resemble, and even greatly surpass, those of ancient\nGreece. In their dependency upon the mother state, they resemble those\nof ancient Rome; but their great distance from Europe has in all of them\nalleviated more or less the effects of this dependency. Their situation\nhas placed them less in the view, and less in the power of their mother\ncountry. In pursuing their interest their own way, their conduct has\nupon many occasions been overlooked, either because not known or\nnot understood in Europe; and upon some occasions it has been fairly\nsuffered and submitted to, because their distance rendered it difficult\nto restrain it. Even the violent and arbitrary government of Spain has,\nupon many occasions, been obliged to recall or soften the orders which\nhad been given for the government of her colonies, for fear of a general\ninsurrection. The progress of all the European colonies in wealth,\npopulation, and improvement, has accordingly been very great.\n\nThe crown of Spain, by its share of the gold and silver, derived some\nrevenue from its colonies from the moment of their first establishment.\nIt was a revenue, too, of a nature to excite in human avidity the most\nextravagant expectation of still greater riches. The Spanish colonies,\ntherefore, from the moment of their first establishment, attracted very\nmuch the attention of their mother country; while those of the other\nEuropean nations were for a long time in a great measure neglected.\nThe former did not, perhaps, thrive the better in consequence of this\nattention, nor the latter the worse in consequence of this neglect.\nIn proportion to the extent of the country which they in some measure\npossess, the Spanish colonies are considered as less populous and\nthriving than those of almost any other European nation. The progress\neven of the Spanish colonies, however, in population and improvement,\nhas certainly been very rapid and very great. The city of Lima, founded\nsince the conquest, is represented by Ulloa as containing fifty thousand\ninhabitants near thirty years ago. Quito, which had been but a miserable\nhamlet of Indians, is represented by the same author as in his time\nequally populous. Gemel i Carreri, a pretended traveller, it is said,\nindeed, but who seems everywhere to have written upon extreme good\ninformation, represents the city of Mexico as containing a hundred\nthousand inhabitants; a number which, in spite of all the exaggerations\nof the Spanish writers, is probably more than five times greater than\nwhat it contained in the time of Montezuma. These numbers exceed greatly\nthose of Boston, New York, and Philadelphia, the three greatest cities\nof the English colonies. Before the conquest of the Spaniards, there\nwere no cattle fit for draught, either in Mexico or Peru. The lama was\ntheir only beast of burden, and its strength seems to have been a good\ndeal inferior to that of a common ass. The plough was unknown among\nthem. They were ignorant of the use of iron. They had no coined money,\nnor any established instrument of commerce of any kind. Their commerce\nwas carried on by barter. A sort of wooden spade was their principal\ninstrument of agriculture. Sharp stones served them for knives and\nhatchets to cut with; fish bones, and the hard sinews of certain\nanimals, served them with needles to sew with; and these seem to have\nbeen their principal instruments of trade. In this state of things, it\nseems impossible that either of those empires could have been so much\nimproved or so well cultivated as at present, when they are plentifully\nfurnished with all sorts of European cattle, and when the use of iron,\nof the plough, and of many of the arts of Europe, have been introduced\namong them. But the populousness of every country must be in proportion\nto the degree of its improvement and cultivation. In spite of the cruel\ndestruction of the natives which followed the conquest, these two great\nempires are probably more populous now than they ever were before;\nand the people are surely very different; for we must acknowledge, I\napprehend, that the Spanish creoles are in many respects superior to the\nancient Indians.\n\nAfter the settlements of the Spaniards, that of the Portuguese in Brazil\nis the oldest of any European nation in America. But as for a long time\nafter the first discovery neither gold nor silver mines were found in\nit, and as it afforded upon that account little or no revenue to the\ncrown, it was for a long time in a great measure neglected; and during\nthis state of neglect, it grew up to be a great and powerful colony.\nWhile Portugal was under the dominion of Spain, Brazil was attacked by\nthe Dutch, who got possession of seven of the fourteen provinces into\nwhich it is divided. They expected soon to conquer the other seven, when\nPortugal recovered its independency by the elevation of the family of\nBraganza to the throne. The Dutch, then, as enemies to the Spaniards,\nbecame friends to the Portuguese, who were likewise the enemies of the\nSpaniards. They agreed, therefore, to leave that part of Brazil which\nthey had not conquered to the king of Portugal, who agreed to leave that\npart which they had conquered to them, as a matter not worth disputing\nabout, with such good allies. But the Dutch government soon began to\noppress the Portuguese colonists, who, instead of amusing themselves\nwith complaints, took arms against their new masters, and by their own\nvalour and resolution, with the connivance, indeed, but without any\navowed assistance from the mother country, drove them out of Brazil. The\nDutch, therefore, finding it impossible to keep any part of the country\nto themselves, were contented that it should be entirely restored to\nthe crown of Portugal. In this colony there are said to be more than six\nhundred thousand people, either Portuguese or descended from Portuguese,\ncreoles, mulattoes, and a mixed race between Portuguese and Brazilians.\nNo one colony in America is supposed to contain so great a number of\npeople of European extraction.\n\nTowards the end of the fifteenth, and during the greater part of the\nsixteenth century, Spain and Portugal were the two great naval powers\nupon the ocean; for though the commerce of Venice extended to every part\nof Europe, its fleet had scarce ever sailed beyond the Mediterranean.\nThe Spaniards, in virtue of the first discovery, claimed all America as\ntheir own; and though they could not hinder so great a naval power as\nthat of Portugal from settling in Brazil, such was at that time the\nterror of their name, that the greater part of the other nations of\nEurope were afraid to establish themselves in any other part of that\ngreat continent. The French, who attempted to settle in Florida, were\nall murdered by the Spaniards. But the declension of the naval power of\nthis latter nation, in consequence of the defeat or miscarriage of what\nthey called their invincible armada, which happened towards the end of\nthe sixteenth century, put it out of their power to obstruct any longer\nthe settlements of the other European nations. In the course of the\nseventeenth century, therefore, the English, French, Dutch, Danes,\nand Swedes, all the great nations who had any ports upon the ocean,\nattempted to make some settlements in the new world.\n\nThe Swedes established themselves in New Jersey; and the number of\nSwedish families still to be found there sufficiently demonstrates, that\nthis colony was very likely to prosper, had it been protected by the\nmother country. But being neglected by Sweden, it was soon swallowed up\nby the Dutch colony of New York, which again, in 1674, fell under the\ndominion of the English.\n\nThe small islands of St. Thomas and Santa Cruz, are the only countries\nin the new world that have ever been possessed by the Danes. These\nlittle settlements, too, were under the government of an exclusive\ncompany, which had the sole right, both of purchasing the surplus\nproduce of the colonies, and of supplying them with such goods of other\ncountries as they wanted, and which, therefore, both in its purchases\nand sales, had not only the power of oppressing them, but the greatest\ntemptation to do so. The government of an exclusive company of merchants\nis, perhaps, the worst of all governments for any country whatever.\nIt was not, however, able to stop altogether the progress of these\ncolonies, though it rendered it more slow and languid. The late king of\nDenmark dissolved this company, and since that time the prosperity of\nthese colonies has been very great.\n\nThe Dutch settlements in the West, as well as those in the East Indies,\nwere originally put under the government of an exclusive company. The\nprogress of some of them, therefore, though it has been considerable in\ncomparison with that of almost any country that has been long peopled\nand established, has been languid and slow in comparison with that of\nthe greater part of new colonies. The colony of Surinam, though very\nconsiderable, is still inferior to the greater part of the sugar\ncolonies of the other European nations. The colony of Nova Belgia,\nnow divided into the two provinces of New York and New Jersey, would\nprobably have soon become considerable too, even though it had remained\nunder the government of the Dutch. The plenty and cheapness of good land\nare such powerful causes of prosperity, that the very worst government\nis scarce capable of checking altogether the efficacy of their\noperation. The great distance, too, from the mother country, would\nenable the colonists to evade more or less, by smuggling, the monopoly\nwhich the company enjoyed against them. At present, the company allows\nall Dutch ships to trade to Surinam, upon paying two and a-half per\ncent. upon the value of their cargo for a license; and only reserves\nto itself exclusively, the direct trade from Africa to America, which\nconsists almost entirely in the slave trade. This relaxation in the\nexclusive privileges of the company, is probably the principal cause of\nthat degree of prosperity which that colony at present enjoys. Curacoa\nand Eustatia, the two principal islands belonging to the Dutch, are free\nports, open to the ships of all nations; and this freedom, in the midst\nof better colonies, whose ports are open to those of one nation only,\nhas been the great cause of the prosperity of those two barren islands.\n\nThe French colony of Canada was, during the greater part of the last\ncentury, and some part of the present, under the government of an\nexclusive company. Under so unfavourable an administration, its\nprogress was necessarily very slow, in comparison with that of other new\ncolonies; but it became much more rapid when this company was dissolved,\nafter the fall of what is called the Mississippi scheme. When the\nEnglish got possession of this country, they found in it near double the\nnumber of inhabitants which father Charlevoix had assigned to it between\ntwenty and thirty years before. That jesuit had travelled over the whole\ncountry, and had no inclination to represent it as less inconsiderable\nthan it really was.\n\nThe French colony of St. Domingo was established by pirates and\nfreebooters, who, for a long time, neither required the protection, nor\nacknowledged the authority of France; and when that race of banditti\nbecame so far citizens as to acknowledge this authority, it was for a\nlong time necessary to exercise it with very great gentleness. During\nthis period, the population and improvement of this colony increased\nvery fast. Even the oppression of the exclusive company, to which it was\nfor some time subjected with all the other colonies of France, though\nit no doubt retarded, had not been able to stop its progress altogether.\nThe course of its prosperity returned as soon as it was relieved from\nthat oppression. It is now the most important of the sugar colonies of\nthe West Indies, and its produce is said to be greater than that of all\nthe English sugar colonies put together. The other sugar colonies of\nFrance are in general all very thriving.\n\nBut there are no colonies of which the progress has been more rapid than\nthat of the English in North America.\n\nPlenty of good land, and liberty to manage their own affairs their\nown way, seem to be the two great causes of the prosperity of all new\ncolonies.\n\nIn the plenty of good land, the English colonies of North America,\nthough no doubt very abundantly provided, are, however, inferior to\nthose of the Spaniards and Portuguese, and not superior to some of\nthose possessed by the French before the late war. But the political\ninstitutions of the English colonies have been more favourable to the\nimprovement and cultivation of this land, than those of the other three\nnations.\n\nFirst, The engrossing of uncultivated land, though it has by no means\nbeen prevented altogether, has been more restrained in the English\ncolonies than in any other. The colony law, which imposes upon every\nproprietor the obligation of improving and cultivating, within a limited\ntime, a certain proportion of his lands, and which, in case of failure,\ndeclares those neglected lands grantable to any other person; though\nit has not perhaps been very strictly executed, has, however, had some\neffect.\n\nSecondly, In Pennsylvania there is no right of primogeniture, and\nlands, like moveables, are divided equally among all the children of the\nfamily. In three of the provinces of New England, the oldest has only\na double share, as in the Mosaical law. Though in those provinces,\ntherefore, too great a quantity of land should sometimes be engrossed by\na particular individual, it is likely, in the course of a generation or\ntwo, to be sufficiently divided again. In the other English colonies,\nindeed, the right of primogeniture takes place, as in the law of\nEngland: But in all the English colonies, the tenure of the lands, which\nare all held by free soccage, facilitates alienation; and the grantee\nof an extensive tract of land generally finds it for his interest to\nalienate, as fast as he can, the greater part of it, reserving only a\nsmall quit-rent. In the Spanish and Portuguese colonies, what is called\nthe right of majorazzo takes place in the succession of all those great\nestates to which any title of honour is annexed. Such estates go all\nto one person, and are in effect entailed and unalienable. The French\ncolonies, indeed, are subject to the custom of Paris, which, in the\ninheritance of land, is much more favourable to the younger children\nthan the law of England. But, in the French colonies, if any part of an\nestate, held by the noble tenure of chivalry and homage, is alienated,\nit is, for a limited time, subject to the right of redemption, either\nby the heir of the superior, or by the heir of the family; and all the\nlargest estates of the country are held by such noble tenures, which\nnecessarily embarrass alienation. But, in a new colony, a great\nuncultivated estate is likely to be much more speedily divided by\nalienation than by succession. The plenty and cheapness of good land,\nit has already been observed, are the principal causes of the rapid\nprosperity of new colonies. The engrossing of land, in effect, destroys\nthis plenty and cheapness. The engrossing of uncultivated land, besides,\nis the greatest obstruction to its improvement; but the labour that is\nemployed in the improvement and cultivation of land affords the greatest\nand most valuable produce to the society. The produce of labour, in\nthis case, pays not only its own wages and the profit of the stock which\nemploys it, but the rent of the land too upon which it is employed. The\nlabour of the English colonies, therefore, being more employed in the\nimprovement and cultivation of land, is likely to afford a greater\nand more valuable produce than that of any of the other three nations,\nwhich, by the engrossing of land, is more or less diverted towards other\nemployments.\n\nThirdly, The labour of the English colonists is not only likely to\nafford a greater and more valuable produce, but, in consequence of the\nmoderation of their taxes, a greater proportion of this produce belongs\nto themselves, which they may store up and employ in putting into motion\na still greater quantity of labour. The English colonists have never\nyet contributed any thing towards the defence of the mother country,\nor towards the support of its civil government. They themselves, on the\ncontrary, have hitherto been defended almost entirely at the expense of\nthe mother country; but the expense of fleets and armies is out of all\nproportion greater than the necessary expense of civil government. The\nexpense of their own civil government has always been very moderate. It\nhas generally been confined to what was necessary for paying competent\nsalaries to the governor, to the judges, and to some other officers of\npolice, and for maintaining a few of the most useful public works. The\nexpense of the civil establishment of Massachusetts Bay, before the\ncommencement of the present disturbances, used to be but about £18;000\na-year; that of New Hampshire and Rhode Island, £3500 each; that of\nConnecticut, £4000; that of New York and Pennsylvania, £4500 each; that\nof New Jersey, £1200; that of Virginia and South Carolina, £8000 each.\nThe civil establishments of Nova Scotia and Georgia are partly supported\nby an annual grant of parliament; but Nova Scotia pays, besides, about\n£7000 a-year towards the public expenses of the colony, and Georgia\nabout £2500 a-year. All the different civil establishments in North\nAmerica, in short, exclusive of those of Maryland and North Carolina, of\nwhich no exact account has been got, did not, before the commencement of\nthe present disturbances, cost the inhabitants about £64,700 a-year; an\never memorable example, at how small an expense three millions of people\nmay not only be governed but well governed. The most important part of\nthe expense of government, indeed, that of defence and protection, has\nconstantly fallen upon the mother country. The ceremonial, too, of the\ncivil government in the colonies, upon the reception of a new governor,\nupon the opening of a new assembly, etc. though sufficiently decent, is\nnot accompanied with any expensive pomp or parade. Their ecclesiastical\ngovernment is conducted upon a plan equally frugal. Tithes are unknown\namong them; and their clergy, who are far from being numerous,\nare maintained either by moderate stipends, or by the voluntary\ncontributions of the people. The power of Spain and Portugal, on\nthe contrary, derives some support from the taxes levied upon their\ncolonies. France, indeed, has never drawn any considerable revenue from\nits colonies, the taxes which it levies upon them being generally spent\namong them. But the colony government of all these three nations is\nconducted upon a much more extensive plan, and is accompanied with a\nmuch more expensive ceremonial. The sums spent upon the reception of a\nnew viceroy of Peru, for example, have frequently been enormous. Such\nceremonials are not only real taxes paid by the rich colonists upon\nthose particular occasions, but they serve to introduce among them the\nhabit of vanity and expense upon all other occasions. They are not\nonly very grievous occasional taxes, but they contribute to establish\nperpetual taxes, of the same kind, still more grievous; the ruinous\ntaxes of private luxury and extravagance. In the colonies of all\nthose three nations, too, the ecclesiastical government is extremely\noppressive. Tithes take place in all of them, and are levied with the\nutmost rigour in those of Spain and Portugal. All of them, besides, are\noppressed with a numerous race of mendicant friars, whose beggary being\nnot only licensed but consecrated by religion, is a most grievous tax\nupon the poor people, who are most carefully taught that it is a duty to\ngive, and a very great sin to refuse them their charity. Over and above\nall this, the clergy are, in all of them, the greatest engrossers of\nland.\n\nFourthly, In the disposal of their surplus produce, or of what is over\nand above their own consumption, the English colonies have been more\nfavoured, and have been allowed a more extensive market, than those of\nany other European nation. Every European nation has endeavoured, more\nor less, to monopolize to itself the commerce of its colonies, and, upon\nthat account, has prohibited the ships of foreign nations from trading\nto them, and has prohibited them from importing European goods from any\nforeign nation. But the manner in which this monopoly has been exercised\nin different nations, has been very different.\n\nSome nations have given up the whole commerce of their colonies to an\nexclusive company, of whom the colonists were obliged to buy all such\nEuropean goods as they wanted, and to whom they were obliged to sell\nthe whole of their surplus produce. It was the interest of the company,\ntherefore, not only to sell the former as dear, and to buy the latter\nas cheap as possible, but to buy no more of the latter, even at this low\nprice, than what they could dispose of for a very high price in Europe.\nIt was their interest not only to degrade in all cases the value of the\nsurplus produce of the colony, but in many cases to discourage and keep\ndown the natural increase of its quantity. Of all the expedients that\ncan well be contrived to stunt the natural growth of a new colony,\nthat of an exclusive company is undoubtedly the most effectual. This,\nhowever, has been the policy of Holland, though their company, in\nthe course of the present century, has given up in many respects the\nexertion of their exclusive privilege. This, too, was the policy of\nDenmark, till the reign of the late king. It has occasionally been the\npolicy of France; and of late, since 1755, after it had been abandoned\nby all other nations on account of its absurdity, it has become the\npolicy of Portugal, with regard at least to two of the principal\nprovinces of Brazil, Pernambucco, and Marannon.\n\nOther nations, without establishing an exclusive company, have confined\nthe whole commerce of their colonies to a particular port of the mother\ncountry, from whence no ship was allowed to sail, but either in a\nfleet and at a particular season, or, if single, in consequence of a\nparticular license, which in most cases was very well paid for. This\npolicy opened, indeed, the trade of the colonies to all the natives of\nthe mother country, provided they traded from the proper port, at the\nproper season, and in the proper vessels. But as all the different\nmerchants, who joined their stocks in order to fit out those licensed\nvessels, would find it for their interest to act in concert, the trade\nwhich was carried on in this manner would necessarily be conducted very\nnearly upon the same principles as that of an exclusive company.\nThe profit of those merchants would be almost equally exorbitant and\noppressive. The colonies would be ill supplied, and would be obliged\nboth to buy very dear, and to sell very cheap. This, however, till\nwithin these few years, had always been the policy of Spain; and the\nprice of all European goods, accordingly, is said to have been enormous\nin the Spanish West Indies. At Quito, we are told by Ulloa, a pound\nof iron sold for about 4s:6d., and a pound of steel for about 6s:9d.\nsterling. But it is chiefly in order to purchase European goods that the\ncolonies part with their own produce. The more, therefore, they pay for\nthe one, the less they really get for the other, and the dearness of\nthe one is the same thing with the cheapness of the other. The policy of\nPortugal is, in this respect, the same as the ancient policy of Spain,\nwith regard to all its colonies, except Pernambucco and Marannon; and\nwith regard to these it has lately adopted a still worse.\n\nOther nations leave the trade of their colonies free to all their\nsubjects, who may carry it on from all the different ports of the mother\ncountry, and who have occasion for no other license than the common\ndespatches of the custom-house. In this case the number and dispersed\nsituation of the different traders renders it impossible for them to\nenter into any general combination, and their competition is sufficient\nto hinder them from making very exorbitant profits. Under so liberal a\npolicy, the colonies are enabled both to sell their own produce, and to\nbuy the goods of Europe at a reasonable price; but since the dissolution\nof the Plymouth company, when our colonies were but in their infancy,\nthis has always been the policy of England. It has generally, too, been\nthat of France, and has been uniformly so since the dissolution of what\nin England is commonly called their Mississippi company. The profits\nof the trade, therefore, which France and England carry on with their\ncolonies, though no doubt somewhat higher than if the competition were\nfree to all other nations, are, however, by no means exorbitant; and the\nprice of European goods, accordingly, is not extravagantly high in the\ngreater past of the colonies of either of those nations.\n\nIn the exportation of their own surplus produce, too, it is only with\nregard to certain commodities that the colonies of Great Britain are\nconfined to the market of the mother country. These commodities having\nbeen enumerated in the act of navigation, and in some other subsequent\nacts, have upon that account been called enumerated commodities. The\nrest are called non-enumerated, and may be exported directly to other\ncountries, provided it is in British or plantation ships, of which the\nowners and three fourths of the mariners are British subjects.\n\nAmong the non-enumerated commodities are some of the most important\nproductions of America and the West Indies, grain of all sorts, lumber,\nsalt provisions, fish, sugar, and rum.\n\nGrain is naturally the first and principal object of the culture of all\nnew colonies. By allowing them a very extensive market for it, the law\nencourages them to extend this culture much beyond the consumption of\na thinly inhabited country, and thus to provide beforehand an ample\nsubsistence for a continually increasing population.\n\nIn a country quite covered with wood, where timber consequently is of\nlittle or no value, the expense of clearing the ground is the principal\nobstacle to improvement. By allowing the colonies a very extensive\nmarket for their lumber, the law endeavours to facilitate improvement\nby raising the price of a commodity which would otherwise be of little\nvalue, and thereby enabling them to make some profit of what would\notherwise be mere expense.\n\nIn a country neither half peopled nor half cultivated, cattle naturally\nmultiply beyond the consumption of the inhabitants, and are often, upon\nthat account, of little or no value. But it is necessary, it has already\nbeen shown, that the price of cattle should bear a certain proportion to\nthat of corn, before the greater part of the lands of any country can be\nimproved. By allowing to American cattle, in all shapes, dead and alive,\na very extensive market, the law endeavours to raise the value of a\ncommodity, of which the high price is so very essential to improvement.\nThe good effects of this liberty, however, must be somewhat diminished\nby the 4th of Geo. III. c. 15, which puts hides and skins among the\nenumerated commodities, and thereby tends to reduce the value of\nAmerican cattle.\n\nTo increase the shipping and naval power of Great Britain by the\nextension of the fisheries of our colonies, is an object which\nthe legislature seems to have had almost constantly in view. Those\nfisheries, upon this account, have had all the encouragement which\nfreedom can give them, and they have flourished accordingly. The New\nEngland fishery, in particular, was, before the late disturbances, one\nof the most important, perhaps, in the world. The whale fishery which,\nnotwithstanding an extravagant bounty, is in Great Britain carried on to\nso little purpose, that in the opinion of many people ( which I do not,\nhowever, pretend to warrant), the whole produce does not much exceed the\nvalue of the bounties which are annually paid for it, is in New England\ncarried on, without any bounty, to a very great extent. Fish is one of\nthe principal articles with which the North Americans trade to Spain,\nPortugal, and the Mediterranean.\n\nSugar was originally an enumerated commodity, which could only be\nexported to Great Britain; but in 1751, upon a representation of the\nsugar-planters, its exportation was permitted to all parts of the world.\nThe restrictions, however, with which this liberty was granted, joined\nto the high price of sugar in Great Britain, have rendered it in a great\nmeasure ineffectual. Great Britain and her colonies still continue to\nbe almost the sole market for all sugar produced in the British\nplantations. Their consumption increases so fast, that, though in\nconsequence of the increasing improvement of Jamaica, as well as of\nthe ceded islands, the importation of sugar has increased very greatly\nwithin these twenty years, the exportation to foreign countries is said\nto be not much greater than before.\n\nRum is a very important article in the trade which the Americans carry\non to the coast of Africa, from which they bring back negro slaves in\nreturn.\n\nIf the whole surplus produce of America, in grain of all sorts, in salt\nprovisions, and in fish, had been put into the enumeration, and thereby\nforced into the market of Great Britain, it would have interfered too\nmuch with the produce of the industry of our own people. It was probably\nnot so much from any regard to the interest of America, as from a\njealousy of this interference, that those important commodities have\nnot only been kept out of the enumeration, but that the importation into\nGreat Britain of all grain, except rice, and of all salt provisions,\nhas, in the ordinary state of the law, been prohibited.\n\nThe non-enumerated commodities could originally be exported to all parts\nof the world. Lumber and rice having been once put into the enumeration,\nwhen they were afterwards taken out of it, were confined, as to the\nEuropean market, to the countries that lie south of Cape Finisterre.\nBy the 6th of George III. c. 52, all non-enumerated commodities were\nsubjected to the like restriction. The parts of Europe which lie south\nof Cape Finisterre are not manufacturing countries, and we are less\njealous of the colony ships carrying home from them any manufactures\nwhich could interfere with our own.\n\nThe enumerated commodities are of two sorts; first, such as are either\nthe peculiar produce of America, or as cannot be produced, or at least\nare not produced in the mother country. Of this kind are molasses,\ncoffee, cocoa-nuts, tobacco, pimento, ginger, whalefins, raw silk,\ncotton, wool, beaver, and other peltry of America, indigo, fustick, and\nother dyeing woods; secondly, such as are not the peculiar produce\nof America, but which are, and may be produced in the mother country,\nthough not in such quantities as to supply the greater part of her\ndemand, which is principally supplied from foreign countries. Of this\nkind are all naval stores, masts, yards, and bowsprits, tar, pitch, and\nturpentine, pig and bar iron, copper ore, hides and skins, pot and pearl\nashes. The largest importation of commodities of the first kind could\nnot discourage the growth, or interfere with the sale, of any part of\nthe produce of the mother country. By confining them to the home market,\nour merchants, it was expected, would not only be enabled to buy them\ncheaper in the plantations, and consequently to sell them with a better\nprofit at home, but to establish between the plantations and foreign\ncountries an advantageous carrying trade, of which Great Britain was\nnecessarily to be the centre or emporium, as the European country into\nwhich those commodities were first to be imported. The importation of\ncommodities of the second kind might be so managed too, it was supposed,\nas to interfere, not with the sale of those of the same kind which\nwere produced at home, but with that of those which were imported from\nforeign countries; because, by means of proper duties, they might be\nrendered always somewhat dearer than the former, and yet a good deal\ncheaper than the latter. By confining such commodities to the home\nmarket, therefore, it was proposed to discourage the produce, not of\nGreat Britain, but of some foreign countries with which the balance of\ntrade was believed to be unfavourable to Great Britain.\n\nThe prohibition of exporting from the colonies to any other country but\nGreat Britain, masts, yards, and bowsprits, tar, pitch, and turpentine,\nnaturally tended to lower the price of timber in the colonies, and\nconsequently to increase the expense of clearing their lands, the\nprincipal obstacle to their improvement. But about the beginning of\nthe present century, in 1703, the pitch and tar company of Sweden\nendeavoured to raise the price of their commodities to Great Britain, by\nprohibiting their exportation, except in their own ships, at their\nown price, and in such quantities as they thought proper. In order\nto counteract this notable piece of mercantile policy, and to render\nherself as much as possible independent, not only of Sweden, but of\nall the other northern powers, Great Britain gave a bounty upon the\nimportation of naval stores from America; and the effect of this\nbounty was to raise the price of timber in America much more than the\nconfinement to the home market could lower it; and as both regulations\nwere enacted at the same time, their joint effect was rather to\nencourage than to discourage the clearing of land in America.\n\nThough pig and bar iron, too, have been put among the enumerated\ncommodities, yet as, when imported from America, they are exempted from\nconsiderable duties to which they are subject when imported front\nany other country, the one part of the regulation contributes more\nto encourage the erection of furnaces in America than the other to\ndiscourage it. There is no manufacture which occasions so great a\nconsumption of wood as a furnace, or which can contribute so much to the\nclearing of a country overgrown with it.\n\nThe tendency of some of these regulations to raise the value of timber\nin America, and thereby to facilitate the clearing of the land, was\nneither, perhaps, intended nor understood by the legislature. Though\ntheir beneficial effects, however, have been in this respect accidental,\nthey have not upon that account been less real.\n\nThe most perfect freedom of trade is permitted between the British\ncolonies of America and the West Indies, both in the enumerated and in\nthe non-enumerated commodities Those colonies are now become so populous\nand thriving, that each of them finds in some of the others a great\nand extensive market for every part of its produce. All of them taken\ntogether, they make a great internal market for the produce of one\nanother.\n\nThe liberality of England, however, towards the trade of her colonies,\nhas been confined chiefly to what concerns the market for their produce,\neither in its rude state, or in what may be called the very first stage\nof manufacture. The more advanced or more refined manufactures, even\nof the colony produce, the merchants and manufacturers of Great Britain\nchuse to reserve to themselves, and have prevailed upon the legislature\nto prevent their establishment in the colonies, sometimes by high\nduties, and sometimes by absolute prohibitions.\n\nWhile, for example, Muscovado sugars from the British plantations pay,\nupon importation, only 6s:4d. the hundred weight, white sugars pay\n£1:1:1; and refined, either double or single, in loaves, £4:2:5 8/20ths.\nWhen those high duties were imposed, Great Britain was the sole, and she\nstill continues to be, the principal market, to which the sugars of\nthe British colonies could be exported. They amounted, therefore, to\na prohibition, at first of claying or refining sugar for any foreign\nmarket, and at present of claying or refining it for the market which\ntakes off, perhaps, more than nine-tenths of the whole produce. The\nmanufacture of claying or refining sugar, accordingly, though it\nhas flourished in all the sugar colonies of France, has been little\ncultivated in any of those of England, except for the market of the\ncolonies themselves. While Grenada was in the hands of the French,\nthere was a refinery of sugar, by claying, at least upon almost every\nplantation. Since it fell into those of the English, almost all works of\nthis kind have been given up; and there are at present (October 1773), I\nam assured, not above two or three remaining in the island. At present,\nhowever, by an indulgence of the custom-house, clayed or refined sugar,\nif reduced from loaves into powder, is commonly imported as Muscovado.\n\nWhile Great Britain encourages in America the manufacturing of pig and\nbar iron, by exempting them from duties to which the like commodities\nare subject when imported from any other country, she imposes an\nabsolute prohibition upon the erection of steel furnaces and slit-mills\nin any of her American plantations. She will not suffer her colonies to\nwork in those more refined manufactures, even for their own consumption;\nbut insists upon their purchasing of her merchants and manufacturers all\ngoods of this kind which they have occasion for.\n\nShe prohibits the exportation from one province to another by water,\nand even the carriage by land upon horseback, or in a cart, of hats, of\nwools, and woollen goods, of the produce of America; a regulation\nwhich effectually prevents the establishment of any manufacture of such\ncommodities for distant sale, and confines the industry of her colonists\nin this way to such coarse and household manufactures as a private\nfamily commonly makes for its own use, or for that of some of its\nneighbours in the same province.\n\nTo prohibit a great people, however, from making all that they can\nof every part of their own produce, or from employing their stock and\nindustry in the way that they judge most advantageous to themselves,\nis a manifest violation of the most sacred rights of mankind. Unjust,\nhowever, as such prohibitions may be, they have not hitherto been very\nhurtful to the colonies. Land is still so cheap, and, consequently,\nlabour so dear among them, that they can import from the mother country\nalmost all the more refined or more advanced manufactures cheaper than\nthey could make them for themselves. Though they had not, therefore,\nbeen prohibited from establishing such manufactures, yet, in their\npresent state of improvement, a regard to their own interest would\nprobably have prevented them from doing so. In their present state\nof improvement, those prohibitions, perhaps, without cramping their\nindustry, or restraining it from any employment to which it would have\ngone of its own accord, are only impertinent badges of slavery imposed\nupon them, without any sufficient reason, by the groundless jealousy\nof the merchants and manufacturers of the mother country. In a more\nadvanced state, they might be really oppressive and insupportable.\n\nGreat Britain, too, as she confines to her own market some of the most\nimportant productions of the colonies, so, in compensation, she gives to\nsome of them an advantage in that market, sometimes by imposing higher\nduties upon the like productions when imported from other countries, and\nsometimes by giving bounties upon their importation from the colonies.\nIn the first way, she gives an advantage in the home market to the\nsugar, tobacco, and iron of her own colonies; and, in the second, to\ntheir raw silk, to their hemp and flax, to their indigo, to their naval\nstores, and to their building timber. This second way of encouraging the\ncolony produce, by bounties upon importation, is, so far as I have been\nable to learn, peculiar to Great Britain: the first is not. Portugal\ndoes not content herself with imposing higher duties upon the\nimportation of tobacco from any other country, but prohibits it under\nthe severest penalties.\n\nWith regard to the importation of goods from Europe, England has\nlikewise dealt more liberally with her colonies than any other nation.\n\nGreat Britain allows a part, almost always the half, generally a larger\nportion, and sometimes the whole, of the duty which is paid upon the\nimportation of foreign goods, to be drawn back upon their exportation\nto any foreign country. No independent foreign country, it was easy to\nforesee, would receive them, if they came to it loaded with the\nheavy duties to which almost all foreign goods are subjected on their\nimportation into Great Britain. Unless, therefore, some part of those\nduties was drawn back upon exportation, there was an end of the carrying\ntrade; a trade so much favoured by the mercantile system.\n\nOur colonies, however, are by no means independent foreign countries;\nand Great Britain having assumed to herself the exclusive right of\nsupplying them with all goods from Europe, might have forced them (in\nthe same manner as other countries have done their colonies) to receive\nsuch goods loaded with all the same duties which they paid in the mother\ncountry. But, on the contrary, till 1763, the same drawbacks were\npaid upon the exportation of the greater part of foreign goods to our\ncolonies, as to any independent foreign country. In 1763, indeed, by the\n4th of Geo. III. c. 15, this indulgence was a good deal abated, and it\nwas enacted, \"That no part of the duty called the old subsidy should be\ndrawn back for any goods of the growth, production, or manufacture of\nEurope or the East Indies, which should be exported from this kingdom to\nany British colony or plantation in America; wines, white calicoes, and\nmuslins, excepted.\" Before this law, many different sorts of foreign\ngoods might have been bought cheaper in the plantations than in the\nmother country, and some may still.\n\nOf the greater part of the regulations concerning the colony trade, the\nmerchants who carry it on, it must be observed, have been the principal\nadvisers. We must not wonder, therefore, if, in a great part of them,\ntheir interest has been more considered than either that of the colonies\nor that of the mother country. In their exclusive privilege of supplying\nthe colonies with all the goods which they wanted from Europe, and\nof purchasing all such parts of their surplus produce as could not\ninterfere with any of the trades which they themselves carried on at\nhome, the interest of the colonies was sacrificed to the interest of\nthose merchants. In allowing the same drawbacks upon the re-exportation\nof the greater part of European and East India goods to the colonies,\nas upon their re-exportation to any independent country, the interest\nof the mother country was sacrificed to it, even according to the\nmercantile ideas of that interest. It was for the interest of the\nmerchants to pay as little as possible for the foreign goods which they\nsent to the colonies, and, consequently, to get back as much as possible\nof the duties which they advanced upon their importation into Great\nBritain. They might thereby be enabled to sell in the colonies, either\nthe same quantity of goods with a greater profit, or a greater quantity\nwith the same profit, and, consequently, to gain something either in the\none way or the other. It was likewise for the interest of the colonies\nto get all such goods as cheap, and in as great abundance as possible.\nBut this might not always be for the interest of the mother country.\nShe might frequently suffer, both in her revenue, by giving back a great\npart of the duties which had been paid upon the importation of such\ngoods; and in her manufactures, by being undersold in the colony market,\nin consequence of the easy terms upon which foreign manufactures could\nbe carried thither by means of those drawbacks. The progress of the\nlinen manufacture of Great Britain, it is commonly said, has been a good\ndeal retarded by the drawbacks upon the re-exportation of German linen\nto the American colonies.\n\nBut though the policy of Great Britain, with regard to the trade of her\ncolonies, has been dictated by the same mercantile spirit as that of\nother nations, it has, however, upon the whole, been less illiberal and\noppressive than that of any of them.\n\nIn every thing except their foreign trade, the liberty of the English\ncolonists to manage their own affairs their own way, is complete. It is\nin every respect equal to that of their fellow-citizens at home, and is\nsecured in the same manner, by an assembly of the representatives of the\npeople, who claim the sole right of imposing taxes for the support\nof the colony government. The authority of this assembly overawes\nthe executive power; and neither the meanest nor the most obnoxious\ncolonist, as long as he obeys the law, has any thing to fear from the\nresentment, either of the governor, or of any other civil or military\nofficer in the province. The colony assemblies, though, like the house\nof commons in England, they are not always a very equal representation\nof the people, yet they approach more nearly to that character; and as\nthe executive power either has not the means to corrupt them, or, on\naccount of the support which it receives from the mother country, is\nnot under the necessity of doing so, they are, perhaps, in general more\ninfluenced by the inclinations of their constituents. The councils,\nwhich, in the colony legislatures, correspond to the house of lords in\nGreat Britain, are not composed of a hereditary nobility. In some of the\ncolonies, as in three of the governments of New England, those councils\nare not appointed by the king, but chosen by the representatives of\nthe people. In none of the English colonies is there any hereditary\nnobility. In all of them, indeed, as in all other free countries, the\ndescendant of an old colony family is more respected than an upstart of\nequal merit and fortune; but he is only more respected, and he has no\nprivileges by which he can be troublesome to his neighbours. Before the\ncommencement of the present disturbances, the colony assemblies had not\nonly the legislative, but a part of the executive power. In Connecticut\nand Rhode Island, they elected the governor. In the other colonies, they\nappointed the revenue officers, who collected the taxes imposed by\nthose respective assemblies, to whom those officers were immediately\nresponsible. There is more equality, therefore, among the English\ncolonists than among the inhabitants of the mother country. Their\nmanners are more re publican; and their governments, those of three\nof the provinces of New England in particular, have hitherto been more\nrepublican too.\n\nThe absolute governments of Spain, Portugal, and France, on the\ncontrary, take place in their colonies; and the discretionary powers\nwhich such governments commonly delegate to all their inferior officers\nare, on account of the great distance, naturally exercised there with\nmore than ordinary violence. Under all absolute governments, there is\nmore liberty in the capital than in any other part of the country.\nThe sovereign himself can never have either interest or inclination\nto pervert the order of justice, or to oppress the great body of the\npeople. In the capital, his presence overawes, more or less, all his\ninferior officers, who, in the remoter provinces, from whence the\ncomplaints of the people are less likely to reach him, can exercise\ntheir tyranny with much more safety. But the European colonies in\nAmerica are more remote than the most distant provinces of the greatest\nempires which had ever been known before. The government of the English\ncolonies is, perhaps, the only one which, since the world began, could\ngive perfect security to the inhabitants of so very distant a province.\nThe administration of the French colonies, however, has always been\nconducted with much more gentleness and moderation than that of the\nSpanish and Portuguese. This superiority of conduct is suitable both to\nthe character of the French nation, and to what forms the character of\nevery nation, the nature of their government, which, though arbitrary\nand violent in comparison with that of Great Britain, is legal and free\nin comparison with those of Spain and Portugal.\n\nIt is in the progress of the North American colonies, however, that the\nsuperiority of the English policy chiefly appears. The progress of the\nsugar colonies of France has been at least equal, perhaps superior, to\nthat of the greater part of those of England; and yet the sugar colonies\nof England enjoy a free government, nearly of the same kind with that\nwhich takes place in her colonies of North America. But the sugar\ncolonies of France are not discouraged, like those of England, from\nrefining their own sugar; and what is still of greater importance, the\ngenius of their government naturally introduces a better management of\ntheir negro slaves.\n\nIn all European colonies, the culture of the sugar-cane is carried on\nby negro slaves. The constitution of those who have been born in the\ntemperate climate of Europe could not, it is supposed, support the\nlabour of digging the ground under the burning sun of the West Indies;\nand the culture of the sugar-cane, as it is managed at present, is all\nhand labour; though, in the opinion of many, the drill plough might be\nintroduced into it with great advantage. But, as the profit and success\nof the cultivation which is carried on by means of cattle, depend very\nmuch upon the good management of those cattle; so the profit and success\nof that which is carried on by slaves must depend equally upon the good\nmanagement of those slaves; and in the good management of their slaves\nthe French planters, I think it is generally allowed, are superior to\nthe English. The law, so far as it gives some weak protection to\nthe slave against the violence of his master, is likely to be better\nexecuted in a colony where the government is in a great measure\narbitrary, than in one where it is altogether free. In ever country\nwhere the unfortunate law of slavery is established, the magistrate,\nwhen he protects the slave, intermeddles in some measure in the\nmanagement of the private property of the master; and, in a free\ncountry, where the master is, perhaps, either a member of the colony\nassembly, or an elector of such a member, he dares not do this but with\nthe greatest caution and circumspection. The respect which he is obliged\nto pay to the master, renders it more difficult for him to protect\nthe slave. But in a country where the government is in a great measure\narbitrary, where it is usual for the magistrate to intermeddle even in\nthe management of the private property of individuals, and to send them,\nperhaps, a lettre de cachet, if they do not manage it according to his\nliking, it is much easier for him to give some protection to the slave;\nand common humanity naturally disposes him to do so. The protection of\nthe magistrate renders the slave less contemptible in the eyes of his\nmaster, who is thereby induced to consider him with more regard, and to\ntreat him with more gentleness. Gentle usage renders the slave not\nonly more faithful, but more intelligent, and, therefore, upon a double\naccount, more useful. He approaches more to the condition of a free\nservant, and may possess some degree of integrity and attachment to his\nmaster's interest; virtues which frequently belong to free servants, but\nwhich never can belong to a slave, who is treated as slaves commonly are\nin countries where the master is perfectly free and secure.\n\nThat the condition of a slave is better under an arbitrary than under a\nfree government, is, I believe, supported by the history of all ages and\nnations. In the Roman history, the first time we read of the magistrate\ninterposing to protect the slave from the violence of his master, is\nunder the emperors. When Vidius Pollio, in the presence of Augustus,\nordered one of his slaves, who had committed a slight fault, to be cut\ninto pieces and thrown into his fish-pond, in order to feed his fishes,\nthe emperor commanded him, with indignation, to emancipate immediately,\nnot only that slave, but all the others that belonged to him. Under the\nrepublic no magistrate could have had authority enough to protect the\nslave, much less to punish the master.\n\nThe stock, it is to be observed, which has improved the sugar colonies\nof France, particularly the great colony of St Domingo, has been raised\nalmost entirely from the gradual improvement and cultivation of those\ncolonies. It has been almost altogether the produce of the soil and of\nthe industry of the colonists, or, what comes to the same thing, the\nprice of that produce, gradually accumulated by good management, and\nemployed in raising a still greater produce. But the stock which has\nimproved and cultivated the sugar colonies of England, has, a great part\nof it, been sent out from England, and has by no means been altogether\nthe produce of the soil and industry of the colonists. The prosperity\nof the English sugar colonies has been in a great measure owing to the\ngreat riches of England, of which a part has overflowed, if one may say\nso, upon these colonies. But the prosperity of the sugar colonies of\nFrance has been entirely owing to the good conduct of the colonists,\nwhich must therefore have had some superiority over that of the English;\nand this superiority has been remarked in nothing so much as in the good\nmanagement of their slaves.\n\nSuch have been the general outlines of the policy of the different\nEuropean nations with regard to their colonies.\n\nThe policy of Europe, therefore, has very little to boast of, either\nin the original establishment, or, so far as concerns their internal\ngovernment, in the subsequent prosperity of the colonies of America.\n\nFolly and injustice seem to have been the principles which presided over\nand directed the first project of establishing those colonies; the folly\nof hunting after gold and silver mines, and the injustice of coveting\nthe possession of a country whose harmless natives, far from having ever\ninjured the people of Europe, had received the first adventurers with\nevery mark of kindness and hospitality.\n\nThe adventurers, indeed, who formed some of the latter establishments,\njoined to the chimerical project of finding gold and silver mines, other\nmotives more reasonable and more laudable; but even these motives do\nvery little honour to the policy of Europe.\n\nThe English puritans, restrained at home, fled for freedom to America,\nand established there the four governments of New England. The English\ncatholics, treated with much greater injustice, established that of\nMaryland; the quakers, that of Pennsylvania. The Portuguese Jews,\npersecuted by the inquisition, stript of their fortunes, and banished\nto Brazil, introduced, by their example, some sort of order and industry\namong the transported felons and strumpets by whom that colony was\noriginally peopled, and taught them the culture of the sugar-cane. Upon\nall these different occasions, it was not the wisdom and policy, but the\ndisorder and injustice of the European governments, which peopled and\ncultivated America.\n\nIn effectuation some of the most important of these establishments, the\ndifferent governments of Europe had as little merit as in projecting\nthem. The conquest of Mexico was the project, not of the council of\nSpain, but of a governor of Cuba; and it was effectuated by the spirit\nof the bold adventurer to whom it was entrusted, in spite of every thing\nwhich that governor, who soon repented of having trusted such a person,\ncould do to thwart it. The conquerors of Chili and Peru, and of almost\nall the other Spanish settlements upon the continent of America, carried\nout with them no other public encouragement, but a general permission to\nmake settlements and conquests in the name of the king of Spain. Those\nadventures were all at the private risk and expense of the adventurers.\nThe government of Spain contributed scarce any thing to any of\nthem. That of England contributed as little towards effectuating the\nestablishment of some of its most important colonies in North America.\n\nWhen those establishments were effectuated, and had become so\nconsiderable as to attract the attention of the mother country, the\nfirst regulations which she made with regard to them, had always in view\nto secure to herself the monopoly of their commerce; to confine their\nmarket, and to enlarge her own at their expense, and, consequently,\nrather to damp and discourage, than to quicken and forward the course of\ntheir prosperity. In the different ways in which this monopoly has been\nexercised, consists one of the most essential differences in the policy\nof the different European nations with regard to their colonies. The\nbest of them all, that of England, is only somewhat less illiberal and\noppressive than that of any of the rest.\n\nIn what way, therefore, has the policy of Europe contributed either to\nthe first establishment, or to the present grandeur of the colonies\nof America? In one way, and in one way only, it has contributed a good\ndeal. Magna virum mater! It bred and formed the men who were capable of\nachieving such great actions, and of laying the foundation of so great\nan empire; and there is no other quarter of the world; of which the\npolicy is capable of forming, or has ever actually, and in fact, formed\nsuch men. The colonies owe to the policy of Europe the education and\ngreat views of their active and enterprizing founders; and some of the\ngreatest and most important of them, so far as concerns their internal\ngovernment, owe to it scarce anything else.\n\n\nPART III. Of the Advantages which Europe has derived From the Discovery\nof America, and from that of a Passage to the East Indies by the Cape of\nGood Hope.\n\nSuch are the advantages which the colonies of America have derived from\nthe policy of Europe.\n\nWhat are those which Europe has derived from the discovery and\ncolonization of America?\n\nThose advantages may be divided, first, into the general advantages\nwhich Europe, considered as one great country, has derived from those\ngreat events; and, secondly, into the particular advantages which each\ncolonizing country has derived from the colonies which particularly\nbelong to it, in consequence of the authority or dominion which it\nexercises over them.\n\nThe general advantages which Europe, considered as one great country,\nhas derived from the discovery and colonization of America, consist,\nfirst, in the increase of its enjoyments; and, secondly, in the\naugmentation of its industry.\n\nThe surplus produce of America imported into Europe, furnishes the\ninhabitants of this great continent with a variety of commodities which\nthey could not otherwise have possessed; some for conveniency and use,\nsome for pleasure, and some for ornament; and thereby contributes to\nincrease their enjoyments.\n\nThe discovery and colonization of America, it will readily be allowed,\nhave contributed to augment the industry, first, of all the countries\nwhich trade to it directly, such as Spain, Portugal, France, and\nEngland; and, secondly, of all those which, without trading to it\ndirectly, send, through the medium of other countries, goods to it of\ntheir own produce, such as Austrian Flanders, and some provinces of\nGermany, which, through the medium of the countries before mentioned,\nsend to it a considerable quantity of linen and other goods. All such\ncountries have evidently gained a more extensive market for their\nsurplus produce, and must consequently have been encouraged to increase\nits quantity.\n\nBut that those great events should likewise have contributed to\nencourage the industry of countries such as Hungary and Poland, which\nmay never, perhaps, have sent a single commodity of their own produce to\nAmerica, is not, perhaps, altogether so evident. That those events have\ndone so, however, cannot be doubted. Some part of the produce of America\nis consumed in Hungary and Poland, and there is some demand there for\nthe sugar, chocolate, and tobacco, of that new quarter of the world. But\nthose commodities must be purchased with something which is either the\nproduce of the industry of Hungary and Poland, or with something which\nhad been purchased with some part of that produce. Those commodities\nof America are new values, new equivalents, introduced into Hungary\nand Poland, to be exchanged there for the surplus produce of these\ncountries. By being carried thither, they create a new and more\nextensive market for that surplus produce. They raise its value, and\nthereby contribute to encourage its increase. Though no part of it may\never be carried to America, it may be carried to other countries,\nwhich purchase it with a part of their share of the surplus produce of\nAmerica, and it may find a market by means of the circulation of that\ntrade which was originally put into motion by the surplus produce of\nAmerica.\n\nThose great events may even have contributed to increase the enjoyments,\nand to augment the industry, of countries which not only never sent\nany commodities to America, but never received any from it. Even such\ncountries may have received a greater abundance of other commodities\nfrom countries, of which the surplus produce had been augmented by means\nof the American trade. This greater abundance, as it must necessarily\nhave increased their enjoyments, so it must likewise have augmented\ntheir industry. A greater number of new equivalents, of some kind or\nother, must have been presented to them to be exchanged for the surplus\nproduce of that industry. A more extensive market must have been\ncreated for that surplus produce, so as to raise its value, and thereby\nencourage its increase. The mass of commodities annually thrown into\nthe great circle of European commerce, and by its various revolutions\nannually distributed among all the different nations comprehended within\nit, must have been augmented by the whole surplus produce of America. A\ngreater share of this greater mass, therefore, is likely to have fallen\nto each of those nations, to have increased their enjoyments, and\naugmented their industry.\n\nThe exclusive trade of the mother countries tends to diminish, or at\nleast to keep down below what they would otherwise rise to, both the\nenjoyments and industry of all those nations in general, and of the\nAmerican colonies in particular. It is a dead weight upon the action\nof one of the great springs which puts into motion a great part of the\nbusiness of mankind. By rendering the colony produce dearer in all other\ncountries, it lessens its consumption, and thereby cramps the industry\nof the colonies, and both the enjoyments and the industry of all other\ncountries, which both enjoy less when they pay more for what they enjoy,\nand produce less when they get less for what they produce. By rendering\nthe produce of all other countries dearer in the colonies, it cramps\nin the same manner the industry of all other colonies, and both the\nenjoyments and the industry of the colonies. It is a clog which, for the\nsupposed benefit of some particular countries, embarrasses the pleasures\nand encumbers the industry of all other countries, but of the colonies\nmore than of any other. It not only excludes as much as possible all\nother countries from one particular market, but it confines as much as\npossible the colonies to one particular market; and the difference is\nvery great between being excluded from one particular market when all\nothers are open, and being confined to one particular market when all\nothers are shut up. The surplus produce of the colonies, however, is the\noriginal source of all that increase of enjoyments and industry which\nEurope derives from the discovery and colonization of America, and the\nexclusive trade of the mother countries tends to render this source much\nless abundant than it otherwise would be.\n\nThe particular advantages which each colonizing country derives from the\ncolonies which particularly belong to it, are of two different kinds;\nfirst, those common advantages which every empire derives from the\nprovinces subject to its dominion; and, secondly, those peculiar\nadvantages which are supposed to result from provinces of so very\npeculiar a nature as the European colonies of America.\n\nThe common advantages which every empire derives from the provinces\nsubject to its dominion consist, first, in the military force which\nthey furnish for its defence; and, secondly, in the revenue which they\nfurnish for the support of its civil government. The Roman colonies\nfurnished occasionally both the one and the other. The Greek colonies\nsometimes furnished a military force, but seldom any revenue. They\nseldom acknowledged themselves subject to the dominion of the mother\ncity. They were generally her allies in war, but very seldom her\nsubjects in peace.\n\nThe European colonies of America have never yet furnished any military\nforce for the defence of the mother country. The military force has\nnever yet been sufficient for their own defence; and in the different\nwars in which the mother countries have been engaged, the defence of\ntheir colonies has generally occasioned a very considerable distraction\nof the military force of those countries. In this respect, therefore,\nall the European colonies have, without exception, been a cause rather\nof weakness than of strength to their respective mother countries.\n\nThe colonies of Spain and Portugal only have contributed any revenue\ntowards the defence of the mother country, or the support of her\ncivil government. The taxes which have been levied upon those of other\nEuropean nations, upon those of England in particular, have seldom been\nequal to the expense laid out upon them in time of peace, and never\nsufficient to defray that which they occasioned in time of war. Such\ncolonies, therefore, have been a source of expense, and not of revenue,\nto their respective mother countries.\n\nThe advantages of such colonies to their respective mother countries,\nconsist altogether in those peculiar advantages which are supposed\nto result from provinces of so very peculiar a nature as the European\ncolonies of America; and the exclusive trade, it is acknowledged, is the\nsole source of all those peculiar advantages.\n\nIn consequence of this exclusive trade, all that part of the surplus\nproduce of the English colonies, for example, which consists in what\nare called enumerated commodities, can be sent to no other country\nbut England. Other countries must afterwards buy it of her. It must be\ncheaper, therefore, in England than it can be in any other country, and\nmust contribute more to increase the enjoyments of England than those\nof any other country. It must likewise contribute more to encourage her\nindustry. For all those parts of her own surplus produce which England\nexchanges for those enumerated commodities, she must get a better price\nthan any other countries can get for the like parts of theirs, when they\nexchange them for the same commodities. The manufactures of England, for\nexample, will purchase a greater quantity of the sugar and tobacco\nof her own colonies than the like manufactures of other countries\ncan purchase of that sugar and tobacco. So far, therefore, as the\nmanufactures of England and those of other countries are both to be\nexchanged for the sugar and tobacco of the English colonies, this\nsuperiority of price gives an encouragement to the former beyond what\nthe latter can, in these circumstances, enjoy. The exclusive trade of\nthe colonies, therefore, as it diminishes, or at least keeps down below\nwhat they would otherwise rise to, both the enjoyments and the industry\nof the countries which do not possess it, so it gives an evident\nadvantage to the countries which do possess it over those other\ncountries.\n\nThis advantage, however, will, perhaps, be found to be rather what\nmay be called a relative than an absolute advantage, and to give a\nsuperiority to the country which enjoys it, rather by depressing the\nindustry and produce of other countries, than by raising those of that\nparticular country above what they would naturally rise to in the case\nof a free trade.\n\nThe tobacco of Maryland and Virginia, for example, by means of the\nmonopoly which England enjoys of it, certainly comes cheaper to England\nthan it can do to France to whom England commonly sells a considerable\npart of it. But had France and all other European countries been at\nall times allowed a free trade to Maryland and Virginia, the tobacco\nof those colonies might by this time have come cheaper than it actually\ndoes, not only to all those other countries, but likewise to England.\nThe produce of tobacco, in consequence of a market so much more\nextensive than any which it has hitherto enjoyed, might, and probably\nwould, by this time have been so much increased as to reduce the profits\nof a tobacco plantation to their natural level with those of a corn\nplantation, which it is supposed they are still somewhat above. The\nprice of tobacco might, and probably would, by this time have fallen\nsomewhat lower than it is at present. An equal quantity of the\ncommodities, either of England or of those other countries, might have\npurchased in Maryland and Virginia a greater quantity of tobacco than it\ncan do at present, and consequently have been sold there for so much a\nbetter price. So far as that weed, therefore, can, by its cheapness and\nabundance, increase the enjoyments, or augment the industry, either of\nEngland or of any other country, it would probably, in the case of\na free trade, have produced both these effects in somewhat a greater\ndegree than it can do at present. England, indeed, would not, in this\ncase, have had any advantage over other countries. She might have bought\nthe tobacco of her colonies somewhat cheaper, and consequently have sold\nsome of her own commodities somewhat dearer, than she actually does;\nbut she could neither have bought the one cheaper, nor sold the other\ndearer, than any other country might have done. She might, perhaps,\nhave gained an absolute, but she would certainly have lost a relative\nadvantage.\n\nIn order, however, to obtain this relative advantage in the colony\ntrade, in order to execute the invidious and malignant project of\nexcluding, as much as possible, other nations from any share in it,\nEngland, there are very probable reasons for believing, has not only\nsacrificed a part of the absolute advantage which she, as well as every\nother nation, might have derived from that trade, but has subjected\nherself both to an absolute and to a relative disadvantage in almost\nevery other branch of trade.\n\nWhen, by the act of navigation, England assumed to herself the monopoly\nof the colony trade, the foreign capitals which had before been employed\nin it, were necessarily withdrawn from it. The English capital, which\nhad before carried on but a part of it, was now to carry on the whole.\nThe capital which had before supplied the colonies with but a part of\nthe goods which they wanted from Europe, was now all that was employed\nto supply them with the whole. But it could not supply them with the\nwhole; and the goods with which it did supply them were necessarily sold\nvery dear. The capital which had before bought but a part of the surplus\nproduce of the colonies, was now all that was employed to buy the whole.\nBut it could not buy the whole at any thing near the old price; and\ntherefore, whatever it did buy, it necessarily bought very cheap. But\nin an employment of capital, in which the merchant sold very dear, and\nbought very cheap, the profit must have been very great, and much\nabove the ordinary level of profit in other branches of trade. This\nsuperiority of profit in the colony trade could not fail to draw from\nother branches of trade a part of the capital which had before been\nemployed in them. But this revulsion of capital, as it must have\ngradually increased the competition of capitals in the colony trade, so\nit must have gradually diminished that competition in all those other\nbranches of trade; as it must have gradually lowered the profits of\nthe one, so it must have gradually raised those of the other, till the\nprofits of all came to a new level, different from, and somewhat higher,\nthan that at which they had been before.\n\nThis double effect of drawing capital from all other trades, and of\nraising the rate of profit somewhat higher than it otherwise would have\nbeen in all trades, was not only produced by this monopoly upon its\nfirst establishment, but has continued to be produced by it ever since.\n\nFirst, This monopoly has been continually drawing capital from all other\ntrades, to be employed in that of the colonies.\n\nThough the wealth of Great Britain has increased very much since the\nestablishment of the act of navigation, it certainly has not increased\nin the same proportion as that or the colonies. But the foreign trade\nof every country naturally increases in proportion to its wealth, its\nsurplus produce in proportion to its whole produce; and Great Britain\nhaving engrossed to herself almost the whole of what may be called the\nforeign trade of the colonies, and her capital not having increased in\nthe same proportion as the extent of that trade, she could not carry\nit on without continually withdrawing from other branches of trade some\npart of the capital which had before been employed in them, as well as\nwithholding from them a great deal more which would otherwise have gone\nto them. Since the establishment of the act of navigation, accordingly,\nthe colony trade has been continually increasing, while many other\nbranches of foreign trade, particularly of that to other parts of\nEurope, have been continually decaying. Our manufactures for foreign\nsale, instead of being suited, as before the act of navigation, to\nthe neighbouring market of Europe, or to the more distant one of the\ncountries which lie round the Mediterranean sea, have the greater\npart of them, been accommodated to the still more distant one of the\ncolonies; to the market in which they have the monopoly, rather than to\nthat in which they have many competitors. The causes of decay in other\nbranches of foreign trade, which, by Sir Matthew Decker and other\nwriters, have been sought for in the excess and improper mode of\ntaxation, in the high price of labour, in the increase of luxury, etc.\nmay all be found in the overgrowth of the colony trade. The mercantile\ncapital of Great Britain, though very great, yet not being infinite,\nand though greatly increased since the act of navigation, yet not being\nincreased in the same proportion as the colony trade, that trade could\nnot possibly be carried on without withdrawing some part of that capital\nfrom other branches of trade, nor consequently without some decay of\nthose other branches.\n\nEngland, it must be observed, was a great trading country, her\nmercantile capital was very great, and likely to become still greater\nand greater every day, not only before the act of navigation had\nestablished the monopoly of the corn trade, but before that trade was\nvery considerable. In the Dutch war, during the government of Cromwell,\nher navy was superior to that of Holland; and in that which broke out\nin the beginning of the reign of Charles II., it was at least equal,\nperhaps superior to the united navies of France and Holland. Its\nsuperiority, perhaps, would scarce appear greater in the present times,\nat least if the Dutch navy were to bear the same proportion to the Dutch\ncommerce now which it did then. But this great naval power could not,\nin either of those wars, be owing to the act of navigation. During\nthe first of them, the plan of that act had been but just formed; and\nthough, before the breaking out of the second, it had been fully enacted\nby legal authority, yet no part of it could have had time to produce any\nconsiderable effect, and least of all that part which established the\nexclusive trade to the colonies. Both the colonies and their trade were\ninconsiderable then, in comparison of what they are how. The island\nof Jamaica was an unwholesome desert, little inhabited, and less\ncultivated. New York and New Jersey were in the possession of the Dutch,\nthe half of St. Christopher's in that of the French. The island of\nAntigua, the two Carolinas, Pennsylvania, Georgia, and Nova Scotia,\nwere not planted. Virginia, Maryland, and New England were planted; and\nthough they were very thriving colonies, yet there was not perhaps at\nthat time, either in Europe or America, a single person who foresaw, or\neven suspected, the rapid progress which they have since made in wealth,\npopulation, and improvement. The island of Barbadoes, in short, was the\nonly British colony of any consequence, of which the condition at that\ntime bore any resemblance to what it is at present. The trade of\nthe colonies, of which England, even for some time after the act of\nnavigation, enjoyed but a part (for the act of navigation was not very\nstrictly executed till several years after it was enacted), could not at\nthat time be the cause of the great trade of England, nor of the great\nnaval power which was supported by that trade. The trade which at that\ntime supported that great naval power was the trade of Europe, and of\nthe countries which lie round the Mediterranean sea. But the share which\nGreat Britain at present enjoys of that trade could not support any such\ngreat naval power. Had the growing trade of the colonies been left free\nto all nations, whatever share of it might have fallen to Great Britain,\nand a very considerable share would probably have fallen to her, must\nhave been all an addition to this great trade of which she was before in\npossession. In consequence of the monopoly, the increase of the colony\ntrade has not so much occasioned an addition to the trade which Great\nBritain had before, as a total change in its direction.\n\nSecondly, This monopoly has necessarily contributed to keep up the rate\nof profit, in all the different branches of British trade, higher than\nit naturally would have been, had all nations been allowed a free trade\nto the British colonies.\n\nThe monopoly of the colony trade, as it necessarily drew towards that\ntrade a greater proportion of the capital of Great Britain than what\nwould have gone to it of its own accord, so, by the expulsion of all\nforeign capitals, it necessarily reduced the whole quantity of capital\nemployed in that trade below what it naturally would have been in the\ncase of a free trade. But, by lessening the competition of capitals in\nthat branch of trade, it necessarily raised the rate of profit in that\nbranch. By lessening, too, the competition of British capitals in all\nother branches of trade, it necessarily raised the rate of British\nprofit in all those other branches. Whatever may have been, at any\nparticular period since the establishment of the act of navigation, the\nstate or extent of the mercantile capital of Great Britain, the monopoly\nof the colony trade must, during the continuance of that state, have\nraised the ordinary rate of British profit higher than it otherwise\nwould have been, both in that and in all the other branches of British\ntrade. If, since the establishment of the act of navigation, the\nordinary rate of British profit has fallen considerably, as it certainly\nhas, it must have fallen still lower, had not the monopoly established\nby that act contributed to keep it up.\n\nBut whatever raises, in any country, the ordinary rate of profit higher\nthan it otherwise would be, necessarily subjects that country both to\nan absolute, and to a relative disadvantage in every branch of trade of\nwhich she has not the monopoly.\n\nIt subjects her to an absolute disadvantage; because, in such branches\nof trade, her merchants cannot get this greater profit without selling\ndearer than they otherwise would do, both the goods of foreign countries\nwhich they import into their own, and the goods of their own country\nwhich they export to foreign countries. Their own country must both buy\ndearer and sell dearer; must both buy less, and sell less; must both\nenjoy less and produce less, than she otherwise would do.\n\nIt subjects her to a relative disadvantage; because, in such branches\nof trade, it sets other countries, which are not subject to the same\nabsolute disadvantage, either more above her or less below her, than\nthey otherwise would be. It enables them both to enjoy more and to\nproduce more, in proportion to what she enjoys and produces. It renders\ntheir superiority greater, or their inferiority less, than it otherwise\nwould be. By raising the price of her produce above what it otherwise\nwould be, it enables the merchants of other countries to undersell her\nin foreign markets, and thereby to justle her out of almost all those\nbranches of trade, of which she has not the monopoly.\n\nOur merchants frequently complain of the high wages of British labour,\nas the cause of their manufactures being undersold in foreign markets;\nbut they are silent about the high profits of stock. They complain of\nthe extravagant gain of other people; but they say nothing of their\nown. The high profits of British stock, however, may contribute towards\nraising the price of British manufactures, in many cases, as much, and\nin some perhaps more, than the high wages of British labour.\n\nIt is in this manner that the capital of Great Britain, one may justly\nsay, has partly been drawn and partly been driven from the greater part\nof the different branches of trade of which she has not the monopoly;\nfrom the trade of Europe, in particular, and from that of the countries\nwhich lie round the Mediterranean sea.\n\nIt has partly been drawn from those branches of trade, by the attraction\nof superior profit in the colony trade, in consequence of the continual\nincrease of that trade, and of the continual insufficiency of the\ncapital which had carried it on one year to carry it on the next.\n\nIt has partly been driven from them, by the advantage which the high\nrate of profit established in Great Britain gives to other countries, in\nall the different branches of trade of which Great Britain has not the\nmonopoly.\n\nAs the monopoly of the colony trade has drawn from those other branches\na part of the British capital, which would otherwise have been employed\nin them, so it has forced into them many foreign capitals which would\nnever have gone to them, had they not been expelled from the colony\ntrade. In those other branches of trade, it has diminished the\ncompetition of British capitals, and thereby raised the rate of British\nprofit higher than it otherwise would have been. On the contrary, it has\nincreased the competition of foreign capitals, and thereby sunk the rate\nof foreign profit lower than it otherwise would have been. Both in the\none way and in the other, it must evidently have subjected Great Britain\nto a relative disadvantage in all those other branches of trade.\n\nThe colony trade, however, it may perhaps be said, is more advantageous\nto Great Britain than any other; and the monopoly, by forcing into that\ntrade a greater proportion of the capital of Great Britain than what\nwould otherwise have gone to it, has turned that capital into an\nemployment, more advantageous to the country than any other which it\ncould have found.\n\nThe most advantageous employment of any capital to the country to which\nit belongs, is that which maintains there the greatest quantity of\nproductive labour, and increases the most the annual produce of the land\nand labour of that country. But the quantity of productive labour which\nany capital employed in the foreign trade of consumption can maintain,\nis exactly in proportion, it has been shown in the second book, to the\nfrequency of its returns. A capital of a thousand pounds, for example,\nemployed in a foreign trade of consumption, of which the returns are\nmade regularly once in the year, can keep in constant employment, in the\ncountry to which it belongs, a quantity of productive labour, equal to\nwhat a thousand pounds can maintain there for a year. If the returns are\nmade twice or thrice in the year, it can keep in constant employment\na quantity of productive labour, equal to what two or three thousand\npounds can maintain there for a year. A foreign trade of consumption\ncarried on with a neighbouring, is, upon that account, in general, more\nadvantageous than one carried on with a distant country; and, for the\nsame reason, a direct foreign trade of consumption, as it has likewise\nbeen shown in the second book, is in general more advantageous than a\nround-about one.\n\nBut the monopoly of the colony trade, so far as it has operated upon the\nemployment of the capital of Great Britain, has, in all cases, forced\nsome part of it from a foreign trade of consumption carried on with a\nneighbouring, to one carried on with a more distant country, and in many\ncases from a direct foreign trade of consumption to a round-about one.\n\nFirst, The monopoly of the colony trade has, in all cases, forced some\npart of the capital of Great Britain from a foreign trade of consumption\ncarried on with a neighbouring, to one carried on with a more distant\ncountry.\n\nIt has, in all cases, forced some part of that capital from the trade\nwith Europe, and with the countries which lie round the Mediterranean\nsea, to that with the more distant regions of America and the West\nIndies; from which the returns are necessarily less frequent, not only\non account of the greater distance, but on account of the peculiar\ncircumstances of those countries. New colonies, it has already been\nobserved, are always understocked. Their capital is always much less\nthan what they could employ with great profit and advantage in the\nimprovement and cultivation of their land. They have a constant demand,\ntherefore, for more capital than they have of their own; and, in order\nto supply the deficiency of their own, they endeavour to borrow as much\nas they can of the mother country, to whom they are, therefore, always\nin debt. The most common way in which the colonies contract this debt,\nis not by borrowing upon bond of the rich people of the mother country,\nthough they sometimes do this too, but by running as much in arrear to\ntheir correspondents, who supply them with goods from Europe, as those\ncorrespondents will allow them. Their annual returns frequently do not\namount to more than a third, and sometimes not to so great a\nproportion of what they owe. The whole capital, therefore, which their\ncorrespondents advance to them, is seldom returned to Britain in less\nthan three, and sometimes not in less than four or five years. But a\nBritish capital of a thousand pounds, for example, which is returned to\nGreat Britain only once in five years, can keep in constant employment\nonly one-fifth part of the British industry which it could maintain, if\nthe whole was returned once in the year; and, instead of the quantity of\nindustry which a thousand pounds could maintain for a year, can keep\nin constant employment the quantity only which two hundred pounds can\nmaintain for a year. The planter, no doubt, by the high price which he\npays for the goods from Europe, by the interest upon the bills which he\ngrants at distant dates, and by the commission upon the renewal of those\nwhich he grants at near dates, makes up, and probably more than makes\nup, all the loss which his correspondent can sustain by this delay. But,\nthough he make up the loss of his correspondent, he cannot make up that\nof Great Britain. In a trade of which the returns are very distant, the\nprofit of the merchant may be as great or greater than in one in which\nthey are very frequent and near; but the advantage of the country\nin which he resides, the quantity of productive labour constantly\nmaintained there, the annual produce of the land and labour, must always\nbe much less. That the returns of the trade to America, and still\nmore those of that to the West Indies, are, in general, not only more\ndistant, but more irregular and more uncertain, too, than those of the\ntrade to any part of Europe, or even of the countries which lie round\nthe Mediterranean sea, will readily be allowed, I imagine, by everybody\nwho has any experience of those different branches of trade.\n\nSecondly, The monopoly of the colony trade, has, in many cases, forced\nsome part of the capital of Great Britain from a direct foreign trade of\nconsumption, into a round-about one.\n\nAmong the enumerated commodities which can be sent to no other market\nbut Great Britain, there are several of which the quantity exceeds very\nmuch the consumption of Great Britain, and of which, a part, therefore,\nmust be exported to other countries. But this cannot be done without\nforcing some part of the capital of Great Britain into a round-about\nforeign trade of consumption. Maryland, and Virginia, for example, send\nannually to Great Britain upwards of ninety-six thousand hogsheads of\ntobacco, and the consumption of Great Britain is said not to exceed\nfourteen thousand. Upwards of eighty-two thousand hogsheads, therefore,\nmust be exported to other countries, to France, to Holland, and, to the\ncountries which lie round the Baltic and Mediterranean seas. But that\npart of the capital of Great Britain which brings those eighty-two\nthousand hogsheads to Great Britain, which re-exports them from thence\nto those other countries, and which brings back from those other\ncountries to Great Britain either goods or money in return, is employed\nin a round-about foreign trade of consumption; and is necessarily forced\ninto this employment, in order to dispose of this great surplus. If we\nwould compute in how many years the whole of this capital is likely to\ncome back to Great Britain, we must add to the distance of the American\nreturns that of the returns from those other countries. If, in the\ndirect foreign trade of consumption which we carry on with America, the\nwhole capital employed frequently does not come back in less than three\nor four years, the whole capital employed in this round-about one is not\nlikely to come back in less than four or five. If the one can keep\nin constant employment but a third or a fourth part of the domestic\nindustry which could be maintained by a capital returned once in the\nyear, the other can keep in constant employment but a fourth or a fifth\npart of that industry. At some of the outports a credit is commonly\ngiven to those foreign correspondents to whom they export them tobacco.\nAt the port of London, indeed, it is commonly sold for ready money:\nthe rule is Weigh and pay. At the port of London, therefore, the final\nreturns of the whole round-about trade are more distant than the returns\nfrom America, by the time only which the goods may lie unsold in the\nwarehouse; where, however, they may sometimes lie long enough. But, had\nnot the colonies been confined to the market of Great Britain for the\nsale of their tobacco, very little more of it would probably have come\nto us than what was necessary for the home consumption. The goods which\nGreat Britain purchases at present for her own consumption with the\ngreat surplus of tobacco which she exports to other countries, she\nwould, in this case, probably have purchased with the immediate produce\nof her own industry, or with some part of her own manufactures. That\nproduce, those manufactures, instead of being almost entirely suited to\none great market, as at present, would probably have been fitted to\na great number of smaller markets. Instead of one great round-about\nforeign trade of consumption, Great Britain would probably have carried\non a great number of small direct foreign trades of the same kind. On\naccount of the frequency of the returns, a part, and probably but a\nsmall part, perhaps not above a third or a fourth of the capital which\nat present carries on this great round-about trade, might have been\nsufficient to carry on all those small direct ones; might have kept\ninconstant employment an equal quantity of British industry; and have\nequally supported the annual produce of the land and labour of Great\nBritain. All the purposes of this trade being, in this manner, answered\nby a much smaller capital, there would have been a large spare capital\nto apply to other purposes; to improve the lands, to increase the\nmanufactures, and to extend the commerce of Great Britain; to come into\ncompetition at least with the other British capitals employed in all\nthose different ways, to reduce the rate of profit in them all, and\nthereby to give to Great Britain, in all of them, a superiority over\nother countries, still greater than what she at present enjoys.\n\nThe monopoly of the colony trade, too, has forced some part of the\ncapital of Great Britain from all foreign trade of consumption to a\ncarrying trade; and, consequently from supporting more or less the\nindustry of Great Britain, to be employed altogether in supporting\npartly that of the colonies, and partly that of some other countries.\n\nThe goods, for example, which are annually purchased with the great\nsurplus of eighty-two thousand hogsheads of tobacco annually re-exported\nfrom Great Britain, are not all consumed in Great Britain. Part of them,\nlinen from Germany and Holland, for example, is returned to the colonies\nfor their particular consumption. But that part of the capital of Great\nBritain which buys the tobacco with which this linen is afterwards\nbought, is necessarily withdrawn from supporting the industry of Great\nBritain, to be employed altogether in supporting, partly that of the\ncolonies, and partly that of the particular countries who pay for this\ntobacco with the produce of their own industry.\n\n\nThe monopoly of the colony trade, besides, by forcing towards it a\nmuch greater proportion of the capital of Great Britain than what would\nnaturally have gone to it, seems to have broken altogether that natural\nbalance which would otherwise have taken place among all the different\nbranches of British industry. The industry of Great Britain, instead\nof being accommodated to a great number of small markets, has been\nprincipally suited to one great market. Her commerce, instead of running\nin a great number of small channels, has been taught to run principally\nin one great channel. But the whole system of her industry and commerce\nhas thereby been rendered less secure; the whole state of her body\npolitic less healthful than it otherwise would have been. In her present\ncondition, Great Britain resembles one of those unwholesome bodies\nin which some of the vital parts are overgrown, and which, upon that\naccount, are liable to many dangerous disorders, scarce incident to\nthose in which all the parts are more properly proportioned. A small\nstop in that great blood-vessel, which has been artificially swelled\nbeyond its natural dimensions, and through which an unnatural proportion\nof the industry and commerce of the country has been forced to\ncirculate, is very likely to bring on the most dangerous disorders upon\nthe whole body politic. The expectation of a rupture with the colonies,\naccordingly, has struck the people of Great Britain with more terror\nthan they ever felt for a Spanish armada, or a French invasion. It was\nthis terror, whether well or ill grounded, which rendered the repeal of\nthe stamp act, among the merchants at least, a popular measure. In the\ntotal exclusion from the colony market, was it to last only for a few\nyears, the greater part of our merchants used to fancy that they\nforesaw an entire stop to their trade; the greater part of our master\nmanufacturers, the entire ruin of their business; and the greater part\nof our workmen, an end of their employment. A rupture with any of our\nneighbours upon the continent, though likely, too, to occasion some stop\nor interruption in the employments of some of all these different orders\nof people, is foreseen, however, without any such general emotion. The\nblood, of which the circulation is stopt in some of the smaller vessels,\neasily disgorges itself into the greater, without occasioning any\ndangerous disorder; but, when it is stopt in any of the greater vessels,\nconvulsions, apoplexy, or death, are the immediate and unavoidable\nconsequences. If but one of those overgrown manufactures, which, by\nmeans either of bounties or of the monopoly of the home and colony\nmarkets, have been artificially raised up to any unnatural height,\nfinds some small stop or interruption in its employment, it frequently\noccasions a mutiny and disorder alarming to government, and embarrassing\neven to the deliberations of the legislature. How great, therefore,\nwould be the disorder and confusion, it was thought, which must\nnecessarily be occasioned by a sudden and entire stop in the employment\nof so great a proportion of our principal manufacturers?\n\nSome moderate and gradual relaxation of the laws which give to Great\nBritain the exclusive trade to the colonies, till it is rendered in a\ngreat measure free, seems to be the only expedient which can, in all\nfuture times, deliver her from this danger; which can enable her, or\neven force her, to withdraw some part of her capital from this overgrown\nemployment, and to turn it, though with less profit, towards other\nemployments; and which, by gradually diminishing one branch of her\nindustry, and gradually increasing all the rest, can, by degrees,\nrestore all the different branches of it to that natural, healthful, and\nproper proportion, which perfect liberty necessarily establishes, and\nwhich perfect liberty can alone preserve. To open the colony trade\nall at once to all nations, might not only occasion some transitory\ninconveniency, but a great permanent loss, to the greater part of those\nwhose industry or capital is at present engaged in it. The sudden\nloss of the employment, even of the ships which import the eighty-two\nthousand hogsheads of tobacco, which are over and above the consumption\nof Great Britain, might alone be felt very sensibly. Such are the\nunfortunate effects of all the regulations of the mercantile system.\nThey not only introduce very dangerous disorders into the state of\nthe body politic, but disorders which it is often difficult to remedy,\nwithout occasioning, for a time at least, still greater disorders. In\nwhat manner, therefore, the colony trade ought gradually to be opened;\nwhat are the restraints which ought first, and what are those which\nought last, to be taken away; or in what manner the natural system of\nperfect liberty and justice ought gradually to be restored, we must\nleave to the wisdom of future statesmen and legislators to determine.\n\nFive different events, unforeseen and unthought of, have very\nfortunately concurred to hinder Great Britain from feeling, so sensibly\nas it was generally expected she would, the total exclusion which has\nnow taken place for more than a year (from the first of December 1774)\nfrom a very important branch of the colony trade, that of the twelve\nassociated provinces of North America. First, those colonies, in\npreparing themselves for their non-importation agreement, drained Great\nBritain completely of all the commodities which were fit for their\nmarket; secondly, the extra ordinary demand of the Spanish flota has,\nthis year, drained Germany and the north of many commodities, linen in\nparticular, which used to come into competition, even in the British\nmarket, with the manufactures of Great Britain; thirdly, the peace\nbetween Russia and Turkey has occasioned an extraordinary demand from\nthe Turkey market, which, during the distress of the country, and while\na Russian fleet was cruizing in the Archipelago, had been very\npoorly supplied; fourthly, the demand of the north of Europe for the\nmanufactures of Great Britain has been increasing from year to year,\nfor some time past; and, fifthly, the late partition, and consequential\npacification of Poland, by opening the market of that great country,\nhave, this year, added an extraordinary demand from thence to the\nincreasing demand of the north. These events are all, except the fourth,\nin their nature transitory and accidental; and the exclusion from so\nimportant a branch of the colony trade, if unfortunately it should\ncontinue much longer, may still occasion some degree of distress. This\ndistress, however, as it will come on gradually, will be felt much less\nseverely than if it had come on all at once; and, in the mean time,\nthe industry and capital of the country may find a new employment\nand direction, so as to prevent this distress from ever rising to any\nconsiderable height.\n\nThe monopoly of the colony trade, therefore, so far as it has turned\ntowards that trade a greater proportion of the capital of Great Britain\nthan what would otherwise have gone to it, has in all cases turned it,\nfrom a foreign trade of consumption with a neighbouring, into one with\na more distant country; in many cases from a direct foreign trade of\nconsumption into a round-about one; and, in some cases, from all foreign\ntrade of consumption into a carrying trade. It has, in all cases,\ntherefore, turned it from a direction in which it would have maintained\na greater quantity of productive labour, into one in which it can\nmaintain a much smaller quantity. By suiting, besides, to one particular\nmarket only, so great a part of the industry and commerce of Great\nBritain, it has rendered the whole state of that industry and commerce\nmore precarious and less secure, than if their produce had been\naccommodated to a greater variety of markets.\n\nWe must carefully distinguish between the effects of the colony trade\nand those of the monopoly of that trade. The former are always and\nnecessarily beneficial; the latter always and necessarily hurtful. But\nthe former are so beneficial, that the colony trade, though subject to a\nmonopoly, and, notwithstanding the hurtful effects of that monopoly, is\nstill, upon the whole, beneficial, and greatly beneficial, though a good\ndeal less so than it otherwise would be.\n\nThe effect of the colony trade, in its natural and free state, is to\nopen a great though distant market, for such parts of the produce of\nBritish industry as may exceed the demand of the markets nearer home, of\nthose of Europe, and of the countries which lie round the Mediterranean\nsea. In its natural and free state, the colony trade, without drawing\nfrom those markets any part of the produce which had ever been sent to\nthem, encourages Great Britain to increase the surplus continually, by\ncontinually presenting new equivalents to be exchanged for it. In its\nnatural and free state, the colony trade tends to increase the quantity\nof productive labour in Great Britain, but without altering in any\nrespect the direction of that which had been employed there before. In\nthe natural and free state of the colony trade, the competition of all\nother nations would hinder the rate of profit from rising above the\ncommon level, either in the new market, or in the new employment. The\nnew market, without drawing any thing from the old one, would create, if\none may say so, a new produce for its own supply; and that new produce\nwould constitute a new capital for carrying on the new employment,\nwhich, in the same manner, would draw nothing from the old one.\n\nThe monopoly of the colony trade, on the contrary, by excluding the\ncompetition of other nations, and thereby raising the rate of profit,\nboth in the new market and in the new employment, draws produce from the\nold market, and capital from the old employment. To augment our share\nof the colony trade beyond what it otherwise would be, is the avowed\npurpose of the monopoly. If our share of that trade were to be no\ngreater with, than it would have been without the monopoly, there could\nhave been no reason for establishing the monopoly. But whatever forces\ninto a branch of trade, of which the returns are slower and more distant\nthan those of the greater part of other trades, a greater proportion of\nthe capital of any country, than what of its own accord would go to\nthat branch, necessarily renders the whole quantity of productive labour\nannually maintained there, the whole annual produce of the land and\nlabour of that country, less than they otherwise would be. It keeps\ndown the revenue of the inhabitants of that country below what it would\nnaturally rise to, and thereby diminishes their power of accumulation.\nIt not only hinders, at all times, their capital from maintaining so\ngreat a quantity of productive labour as it would otherwise maintain,\nbut it hinders it from increasing so fast as it would otherwise\nincrease, and, consequently, from maintaining a still greater quantity\nof productive labour.\n\nThe natural good effects of the colony trade, however, more than\ncounterbalance to Great Britain the bad effects of the monopoly; so\nthat, monopoly and altogether, that trade, even as it is carried on at\npresent, is not only advantageous, but greatly advantageous. The new\nmarket and the new employment which are opened by the colony trade, are\nof much greater extent than that portion of the old market and of the\nold employment which is lost by the monopoly. The new produce and the\nnew capital which has been created, if one may say so, by the colony\ntrade, maintain in Great Britain a greater quantity of productive labour\nthan what can have been thrown out of employment by the revulsion of\ncapital from other trades of which the returns are more frequent. If\nthe colony trade, however, even as it is carried on at present, is\nadvantageous to Great Britain, it is not by means of the monopoly, but\nin spite of the monopoly.\n\nIt is rather for the manufactured than for the rude produce of Europe,\nthat the colony trade opens a new market. Agriculture is the proper\nbusiness of all new colonies; a business which the cheapness of land\nrenders more advantageous than any other. They abound, therefore, in the\nrude produce of land; and instead of importing it from other countries,\nthey have generally a large surplus to export. In new colonies,\nagriculture either draws hands from all other employments, or keeps them\nfrom going to any other employment. There are few hands to spare for the\nnecessary, and none for the ornamental manufactures. The greater part of\nthe manufactures of both kinds they find it cheaper to purchase of other\ncountries than to make for themselves. It is chiefly by encouraging the\nmanufactures of Europe, that the colony trade indirectly encourages\nits agriculture. The manufacturers of Europe, to whom that trade gives\nemployment, constitute a new market for the produce of the land, and\nthe most advantageous of all markets; the home market for the corn and\ncattle, for the bread and butcher's meat of Europe, is thus greatly\nextended by means of the trade to America.\n\nBut that the monopoly of the trade of populous and thriving colonies is\nnot alone sufficient to establish, or even to maintain, manufactures\nin any country, the examples of Spain and Portugal sufficiently\ndemonstrate. Spain and Portugal were manufacturing countries before\nthey had any considerable colonies. Since they had the richest and most\nfertile in the world, they have both ceased to be so.\n\nIn Spain and Portugal, the bad effects of the monopoly, aggravated\nby other causes, have, perhaps, nearly overbalanced the natural good\neffects of the colony trade. These causes seem to be other monopolies of\ndifferent kinds: the degradation of the value of gold and silver below\nwhat it is in most other countries; the exclusion from foreign markets\nby improper taxes upon exportation, and the narrowing of the home\nmarket, by still more improper taxes upon the transportation of goods\nfrom one part of the country to another; but above all, that irregular\nand partial administration of justice which often protects the rich\nand powerful debtor from the pursuit of his injured creditor, and which\nmakes the industrious part of the nation afraid to prepare goods for the\nconsumption of those haughty and great men, to whom they dare not refuse\nto sell upon credit, and from whom they are altogether uncertain of\nrepayment.\n\nIn England, on the contrary, the natural good effects of the colony\ntrade, assisted by other causes, have in a great measure conquered\nthe bad effects of the monopoly. These causes seem to be, the general\nliberty of trade, which, notwithstanding some restraints, is at least\nequal, perhaps superior, to what it is in any other country; the liberty\nof exporting, duty free, almost all sorts of goods which are the produce\nof domestic industry, to almost any foreign country; and what, perhaps,\nis of still greater importance, the unbounded liberty of transporting\nthem from one part of our own country to any other, without being\nobliged to give any account to any public office, without being liable\nto question or examination of any kind; but, above all, that equal and\nimpartial administration of justice, which renders the rights of the\nmeanest British subject respectable to the greatest, and which, by\nsecuring to every man the fruits of his own industry, gives the greatest\nand most effectual encouragement to every sort of industry.\n\nIf the manufactures of Great Britain, however, have been advanced, as\nthey certainly have, by the colony trade, it has not been by means of\nthe monopoly of that trade, but in spite of the monopoly. The effect\nof the monopoly has been, not to augment the quantity, but to alter the\nquality and shape of a part of the manufactures of Great Britain, and\nto accommodate to a market, from which the returns are slow and distant,\nwhat would otherwise have been accommodated to one from which the\nreturns are frequent and near. Its effect has consequently been, to turn\na part of the capital of Great Britain from an employment in which it\nwould have maintained a greater quantity of manufacturing industry,\nto one in which it maintains a much smaller, and thereby to diminish,\ninstead of increasing, the whole quantity of manufacturing industry\nmaintained in Great Britain.\n\nThe monopoly of the colony trade, therefore, like all the other mean and\nmalignant expedients of the mercantile system, depresses the industry\nof all other countries, but chiefly that of the colonies, without in the\nleast increasing, but on the contrary diminishing, that of the country\nin whose favour it is established.\n\nThe monopoly hinders the capital of that country, whatever may, at any\nparticular time, be the extent of that capital, from maintaining so\ngreat a quantity of productive labour as it would otherwise maintain,\nand from affording so great a revenue to the industrious inhabitants\nas it would otherwise afford. But as capital can be increased only by\nsavings from revenue, the monopoly, by hindering it from affording so\ngreat a revenue as it would otherwise afford, necessarily hinders it\nfrom increasing so fast as it would otherwise increase, and consequently\nfrom maintaining a still greater quantity of productive labour, and\naffording a still greater revenue to the industrious inhabitants of that\ncountry. One great original source of revenue, therefore, the wages of\nlabour, the monopoly must necessarily have rendered, at all times, less\nabundant than it otherwise would have been.\n\nBy raising the rate of mercantile profit, the monopoly discourages\nthe improvement of land. The profit of improvement depends upon the\ndifference between what the land actually produces, and what, by the\napplication of a certain capital, it can be made to produce. If this\ndifference affords a greater profit than what can be drawn from an equal\ncapital in any mercantile employment, the improvement of land will\ndraw capital from all mercantile employments. If the profit is less,\nmercantile employments will draw capital from the improvement of land.\nWhatever, therefore, raises the rate of mercantile profit, either\nlessens the superiority, or increases the inferiority of the profit\nof improvement: and, in the one case, hinders capital from going to\nimprovement, and in the other draws capital from it; but by discouraging\nimprovement, the monopoly necessarily retards the natural increase of\nanother great original source of revenue, the rent of land. By raising\nthe rate of profit, too, the monopoly necessarily keeps up the market\nrate of interest higher than it otherwise would be. But the price of\nland, in proportion to the rent which it affords, the number of years\npurchase which is commonly paid for it, necessarily falls as the rate of\ninterest rises, and rises as the rate of interest falls. The monopoly,\ntherefore, hurts the interest of the landlord two different ways, by\nretarding the natural increase, first, of his rent, and, secondly, of\nthe price which he would get for his land, in proportion to the rent\nwhich it affords.\n\nThe monopoly, indeed, raises the rate of mercantile profit and thereby\naugments somewhat the gain of our merchants. But as it obstructs\nthe natural increase of capital, it tends rather to diminish than to\nincrease the sum total of the revenue which the inhabitants of the\ncountry derive from the profits of stock; a small profit upon a great\ncapital generally affording a greater revenue than a great profit upon\na small one. The monopoly raises the rate of profit, but it hinders the\nsum of profit from rising so high as it otherwise would do.\n\nAll the original sources of revenue, the wages of labour, the rent of\nland, and the profits of stock, the monopoly renders much less abundant\nthan they otherwise would be. To promote the little interest of one\nlittle order of men in one country, it hurts the interest of all\nother orders of men in that country, and of all the men in all other\ncountries.\n\nIt is solely by raising the ordinary rate of profit, that the monopoly\neither has proved, or could prove, advantageous to any one particular\norder of men. But besides all the bad effects to the country in general,\nwhich have already been mentioned as necessarily resulting from a higher\nrate of profit, there is one more fatal, perhaps, than all these put\ntogether, but which, if we may judge from experience, is inseparably\nconnected with it. The high rate of profit seems everywhere to destroy\nthat parsimony which, in other circumstances, is natural to the\ncharacter of the merchant. When profits are high, that sober virtue\nseems to be superfluous, and expensive luxury to suit better the\naffluence of his situation. But the owners of the great mercantile\ncapitals are necessarily the leaders and conductors of the whole\nindustry of every nation; and their example has a much greater influence\nupon the manners of the whole industrious part of it than that of any\nother order of men. If his employer is attentive and parsimonious, the\nworkman is very likely to be so too; but if the master is dissolute and\ndisorderly, the servant, who shapes his work according to the pattern\nwhich his master prescribes to him, will shape his life, too, according\nto the example which he sets him. Accumulation is thus prevented in the\nhands of all those who are naturally the most disposed to accumulate;\nand the funds destined for the maintenance of productive labour, receive\nno augmentation from the revenue of those who ought naturally to augment\nthem the most. The capital of the country, instead of increasing,\ngradually dwindles away, and the quantity of productive labour\nmaintained in it grows every day less and less. Have the exorbitant\nprofits of the merchants of Cadiz and Lisbon augmented the capital of\nSpain and Portugal? Have they alleviated the poverty, have they promoted\nthe industry, of those two beggarly countries? Such has been the tone\nof mercantile expense in those two trading cities, that those exorbitant\nprofits, far from augmenting the general capital of the country, seem\nscarce to have been sufficient to keep up the capitals upon which they\nwere made. Foreign capitals are every day intruding themselves, if I may\nsay so, more and more into the trade of Cadiz and Lisbon. It is to expel\nthose foreign capitals from a trade which their own grows every day more\nand more insufficient for carrying on, that the Spaniards and Portuguese\nendeavour every day to straiten more and more the galling bands of their\nabsurd monopoly. Compare the mercantile manners of Cadiz and Lisbon with\nthose of Amsterdam, and you will be sensible how differently the conduct\nand character of merchants are affected by the high and by the low\nprofits of stock. The merchants of London, indeed, have not yet\ngenerally become such magnificent lords as those of Cadiz and Lisbon;\nbut neither are they in general such attetitive and parsimonious\nburghers as those of Amsterdam. They are supposed, however, many of\nthem, to be a good deal richer than the greater part of the former, and\nnot quire so rich as many of the latter: but the rate of their profit is\ncommonly much lower than that of the former, and a good deal higher\nthan that of the latter. Light come, light go, says the proverb; and the\nordinary tone of expense seems everywhere to be regulated, not so much\naccording to the real ability of spending, as to the supposed facility\nof getting money to spend.\n\nIt is thus that the single advantage which the monopoly procures to a\nsingle order of men, is in many different ways hurtful to the general\ninterest of the country.\n\nTo found a great empire for the sole purpose of raising up a people of\ncustomers, may at first sight, appear a project fit only for a nation of\nshopkeepers. It is, however, a project altogether unfit for a nation\nof shopkeepers, but extremely fit for a nation whose government is\ninfluenced by shopkeepers. Such statesmen, and such statesmen only, are\ncapable of fancying that they will find some advantage in employing the\nblood and treasure of their fellow-citizens, to found and maintain such\nan empire. Say to a shopkeeper, Buy me a good estate, and I shall always\nbuy my clothes at your shop, even though I should pay somewhat dearer\nthan what I can have them for at other shops; and you will not find him\nvery forward to embrace your proposal. But should any other person\nbuy you such an estate, the shopkeeper will be much obliged to your\nbenefactor if he would enjoin you to buy all your clothes at his shop.\nEngland purchased for some of her subjects, who found themselves uneasy\nat home, a great estate in a distant country. The price, indeed, was\nvery small, and instead of thirty years purchase, the ordinary price of\nland in the present times, it amounted to little more than the\nexpense of the different equipments which made the first discovery,\nreconnoitered the coast, and took a fictitious possession of the\ncountry. The land was good, and of great extent; and the cultivators\nhaving plenty of good ground to work upon, and being for some time at\nliberty to sell their produce where they pleased, became, in the course\nof little more than thirty or forty years (between 1620 and 1660), so\nnumerous and thriving a people, that the shopkeepers and other traders\nof England wished to secure to themselves the monopoly of their custom.\nWithout pretending, therefore, that they had paid any part, either\nof the original purchase money, or of the subsequent expense of\nimprovement, they petitioned the parliament, that the cultivators of\nAmerica might for the future be confined to their shop; first, for\nbuying all the goods which they wanted from Europe; and, secondly, for\nselling all such parts of their own produce as those traders might find\nit convenient to buy. For they did not find it convenient to buy\nevery part of it. Some parts of it imported into England, might have\ninterfered with some of the trades which they themselves carried on at\nhome. Those particular parts of it, therefore, they were willing that\nthe colonists should sell where they could; the farther off the better;\nand upon that account proposed that their market should be confined to\nthe countries south of Cape Finisterre. A clause in the famous act of\nnavigation established this truly shopkeeper proposal into a law.\n\nThe maintenance of this monopoly has hitherto been the principal, or\nmore properly, perhaps, the sole end and purpose of the dominion which\nGreat Britain assumes over her colonies. In the exclusive trade, it is\nsupposed, consists the great advantage of provinces, which have never\nyet afforded either revenue or military force for the support of the\ncivil government, or the defence of the mother country. The monopoly is\nthe principal badge of their dependency, and it is the sole fruit which\nhas hitherto been gathered from that dependency. Whatever expense Great\nBritain has hitherto laid out in maintaining this dependency, has really\nbeen laid out in order to support this monopoly. The expense of the\nordinary peace establishment of the colonies amounted, before the\ncommencement of the present disturbances to the pay of twenty regiments\nof foot; to the expense of the artillery, stores, and extraordinary\nprovisions, with which it was necessary to supply them; and to the\nexpense of a very considerable naval force, which was constantly kept\nup, in order to guard from the smuggling vessels of other nations, the\nimmense coast of North America, and that of our West Indian islands. The\nwhole expense of this peace establishment was a charge upon the revenue\nof Great Britain, and was, at the same time, the smallest part of what\nthe dominion of the colonies has cost the mother country. If we would\nknow the amount of the whole, we must add to the annual expense of this\npeace establishment, the interest of the sums which, in consequence of\ntheir considering her colonies as provinces subject to her dominion,\nGreat Britain has, upon different occasions, laid out upon their\ndefence. We must add to it, in particular, the whole expense of the late\nwar, and a great part of that of the war which preceded it. The late\nwar was altogether a colony quarrel; and the whole expense of it, in\nwhatever part of the world it might have been laid out, whether in\nGermany or the East Indies, ought justly to be stated to the account\nof the colonies. It amounted to more than ninety millions sterling,\nincluding not only the new debt which was contracted, but the two\nshillings in the pound additional land tax, and the sums which were\nevery year borrowed from the sinking fund. The Spanish war which began\nin 1739 was principally a colony quarrel. Its principal object was to\nprevent the search of the colony ships, which carried on a contraband\ntrade with the Spanish Main. This whole expense is, in reality, a bounty\nwhich has been given in order to support a monopoly. The pretended\npurpose of it was to encourage the manufactures, and to increase the\ncommerce of Great Britain. But its real effect has been to raise the\nrate of mercantile profit, and to enable our merchants to turn into a\nbranch of trade, of which the returns are more slow and distant than\nthose of the greater part of other trades, a greater proportion of their\ncapital than they otherwise would have done; two events which, if a\nbounty could have prevented, it might perhaps have been very well worth\nwhile to give such a bounty.\n\nUnder the present system of management, therefore, Great Britain derives\nnothing but loss from the dominion which she assumes over her colonies.\n\nTo propose that Great Britain should voluntarily give up all authority\nover her colonies, and leave them to elect their own magistrates, to\nenact their own laws, and to make peace and war, as they might think\nproper, would be to propose such a measure as never was, and never will\nbe, adopted by any nation in the world. No nation ever voluntarily gave\nup the dominion of any province, how troublesome soever it might be to\ngovern it, and how small soever the revenue which it afforded might\nbe in proportion to the expense which it occasioned. Such sacrifices,\nthough they might frequently be agreeable to the interest, are always\nmortifying to the pride of every nation; and, what is perhaps of still\ngreater consequence, they are always contrary to the private interest of\nthe governing part of it, who would thereby be deprived of the disposal\nof many places of trust and profit, of many opportunities of acquiring\nwealth and distinction, which the possession of the most turbulent, and,\nto the great body of the people, the most unprofitable province, seldom\nfails to afford. The most visionary enthusiasts would scarce be capable\nof proposing such a measure, with any serious hopes at least of its ever\nbeing adopted. If it was adopted, however, Great Britain would not\nonly be immediately freed from the whole annual expense of the peace\nestablishment of the colonies, but might settle with them such a treaty\nof commerce as would effectually secure to her a free trade, more\nadvantageous to the great body of the people, though less so to the\nmerchants, than the monopoly which she at present enjoys. By thus\nparting good friends, the natural affection of the colonies to the\nmother country, which, perhaps, our late dissensions have well nigh\nextinguished, would quickly revive. It might dispose them not only to\nrespect, for whole centuries together, that treaty of commerce which\nthey had concluded with us at parting, but to favour us in war as well\nas in trade, and instead of turbulent and factious subjects, to become\nour most faithful, affectionate, and generous allies; and the same sort\nof parental affection on the one side, and filial respect on the other,\nmight revive between Great Britain and her colonies, which used to\nsubsist between those of ancient Greece and the mother city from which\nthey descended.\n\nIn order to render any province advantageous to the empire to which it\nbelongs, it ought to afford, in time of peace, a revenue to the public,\nsufficient not only for defraying the whole expense of its own peace\nestablishment, but for contributing its proportion to the support of\nthe general government of the empire. Every province necessarily\ncontributes, more or less, to increase the expense of that general\ngovernment. If any particular province, therefore, does not contribute\nits share towards defraying this expense, an unequal burden must be\nthrown upon some other part of the empire. The extraordinary revenue,\ntoo, which every province affords to the public in time of war, ought,\nfrom parity of reason, to bear the same proportion to the extraordinary\nrevenue of the whole empire, which its ordinary revenue does in time of\npeace. That neither the ordinary nor extraordinary revenue which Great\nBritain derives from her colonies, bears this proportion to the whole\nrevenue of the British empire, will readily be allowed. The monopoly,\nit has been supposed, indeed, by increasing the private revenue of the\npeople of Great Britain, and thereby enabling them to pay greater taxes,\ncompensates the deficiency of the public revenue of the colonies. But\nthis monopoly, I have endeavoured to show, though a very grievous\ntax upon the colonies, and though it may increase the revenue of\na particular order of men in Great Britain, diminishes, instead of\nincreasing, that of the great body of the people, and consequently\ndiminishes, instead of increasing, the ability of the great body of the\npeople to pay taxes. The men, too, whose revenue the monopoly increases,\nconstitute a particular order, which it is both absolutely impossible to\ntax beyond the proportion of other orders, and extremely impolitic even\nto attempt to tax beyond that proportion, as I shall endeavour to show\nin the following book. No particular resource, therefore, can be drawn\nfrom this particular order.\n\nThe colonies may be taxed either by their own assemblies, or by the\nparliament of Great Britain.\n\nThat the colony assemblies can never be so managed as to levy upon their\nconstituents a public revenue, sufficient, not only to maintain at\nall times their own civil and military establishment, but to pay their\nproper proportion of the expense of the general government of the\nBritish empire, seems not very probable. It was a long time before even\nthe parliament of England, though placed immediately under the eye of\nthe sovereign, could be brought under such a system of management, or\ncould be rendered sufficiently liberal in their grants for supporting\nthe civil and military establishments even of their own country. It was\nonly by distributing among the particular members of parliament a great\npart either of the offices, or of the disposal of the offices arising\nfrom this civil and military establishment, that such a system of\nmanagement could be established, even with regard to the parliament of\nEngland. But the distance of the colony assemblies from the eye of the\nsovereign, their number, their dispersed situation, and their various\nconstitutions, would render it very difficult to manage them in the same\nmanner, even though the sovereign had the same means of doing it; and\nthose means are wanting. It would be absolutely impossible to distribute\namong all the leading members of all the colony assemblies such a share,\neither of the offices, or of the disposal of the offices, arising from\nthe general government of the British empire, as to dispose them to\ngive up their popularity at home, and to tax their constituents for the\nsupport of that general government, of which almost the whole emoluments\nwere to be divided among people who were strangers to them. The\nunavoidable ignorance of administration, besides, concerning the\nrelative importance of the different members of those different\nassemblies, the offences which must frequently be given, the blunders\nwhich must constantly be committed, in attempting to manage them in\nthis manner, seems to render such a system of management altogether\nimpracticable with regard to them.\n\nThe colony assemblies, besides, cannot be supposed the proper judges of\nwhat is necessary for the defence and support of the whole empire. The\ncare of that defence and support is not entrusted to them. It is not\ntheir business, and they have no regular means of information concerning\nit. The assembly of a province, like the vestry of a parish, may judge\nvery properly concerning the affairs of its own particular district,\nbut can have no proper means of judging concerning those of the whole\nempire. It cannot even judge properly concerning the proportion which\nits own province bears to the whole empire, or concerning the relative\ndegree of its wealth and importance, compared with the other provinces;\nbecause those other provinces are not under the inspection and\nsuperintendency of the assembly of a particular province. What is\nnecessary for the defence and support of the whole empire, and in what\nproportion each part ought to contribute, can be judged of only by\nthat assembly which inspects and super-intends the affairs of the whole\nempire.\n\nIt has been proposed, accordingly, that the colonies should be taxed by\nrequisition, the parliament of Great Britain determining the sum which\neach colony ought to pay, and the provincial assembly assessing\nand levying it in the way that suited best the circumstances of\nthe province. What concerned the whole empire would in this way be\ndetermined by the assembly which inspects and superintends the affairs\nof the whole empire; and the provincial affairs of each colony might\nstill be regulated by its own assembly. Though the colonies should, in\nthis case, have no representatives in the British parliament, yet, if we\nmay judge by experience, there is no probability that the parliamentary\nrequisition would be unreasonable. The parliament of England has not,\nupon any occasion, shewn the smallest disposition to overburden those\nparts of the empire which are not represented in parliament. The islands\nof Guernsey and Jersey, without any means of resisting the authority\nof parliament, are more lightly taxed than any part of Great Britain.\nParliament, in attempting to exercise its supposed right, whether well\nor ill grounded, of taxing the colonies, has never hitherto demanded\nof them anything which even approached to a just proportion to what\nwas paid by their fellow subjects at home. If the contribution of the\ncolonies, besides, was to rise or fall in proportion to the rise or fall\nof the land-tax, parliament could not tax them without taxing, at the\nsame time, its own constituents, and the colonies might, in this case,\nbe considered as virtually represented in parliament.\n\nExamples are not wanting of empires in which all the different provinces\nare not taxed, if I may be allowed the expression, in one mass; but in\nwhich the sovereign regulates the sum which each province ought to pay,\nand in some provinces assesses and levies it as he thinks proper; while\nin others he leaves it to be assessed and levied as the respective\nstates of each province shall determine. In some provinces of France,\nthe king not only imposes what taxes he thinks proper, but assesses\nand levies them in the way he thinks proper. From others he demands a\ncertain sum, but leaves it to the states of each province to assess and\nlevy that sum as they think proper. According to the scheme of taxing by\nrequisition, the parliament of Great Britain would stand nearly in the\nsame situation towards the colony assemblies, as the king of France does\ntowards the states of those provinces which still enjoy the privilege of\nhaving states of their own, the provinces of France which are supposed\nto be the best governed.\n\nBut though, according to this scheme, the colonies could have no just\nreason to fear that their share of the public burdens should ever exceed\nthe proper proportion to that of their fellow-citizens at home, Great\nBritain might have just reason to fear that it never would amount to\nthat proper proportion. The parliament of Great Britain has not, for\nsome time past, had the same established authority in the colonies,\nwhich the French king has in those provinces of France which still enjoy\nthe privilege of having states of their own. The colony assemblies,\nif they were not very favourably disposed (and unless more skilfully\nmanaged than they ever have been hitherto, they are not very likely to\nbe so), might still find many pretences for evading or rejecting the\nmost reasonable requisitions of parliament. A French war breaks out,\nwe shall suppose; ten millions must immediately be raised, in order to\ndefend the seat of the empire. This sum must be borrowed upon the credit\nof some parliamentary fund mortgaged for paying the interest. Part of\nthis fund parliament proposes to raise by a tax to be levied in Great\nBritain; and part of it by a requisition to all the different colony\nassemblies of America and the West Indies. Would people readily advance\ntheir money upon the credit of a fund which partly depended upon the\ngood humour of all those assemblies, far distant from the seat of the\nwar, and sometimes, perhaps, thinking themselves not much concerned\nin the event of it? Upon such a fund, no more money would probably\nbe advanced than what the tax to be levied in Great Britain might be\nsupposed to answer for. The whole burden of the debt contracted on\naccount of the war would in this manner fall, as it always has done\nhitherto, upon Great Britain; upon a part of the empire, and not upon\nthe whole empire. Great Britain is, perhaps, since the world began, the\nonly state which, as it has extended its empire, has only increased\nits expense, without once augmenting its resources. Other states have\ngenerally disburdened themselves, upon their subject and subordinate\nprovinces, of the most considerable part of the expense of defending the\nempire. Great Britain has hitherto suffered her subject and subordinate\nprovinces to disburden themselves upon her of almost this whole expense.\nIn order to put Great Britain upon a footing of equality with her\nown colonies, which the law has hitherto supposed to be subject and\nsubordinate, it seems necessary, upon the scheme of taxing them by\nparliamentary requisition, that parliament should have some means of\nrendering its requisitions immediately effectual, in case the colony\nassemblies should attempt to evade or reject them; and what those means\nare, it is not very easy to conceive, and it has not yet been explained.\n\nShould the parliament of Great Britain, at the same time, be ever fully\nestablished in the right of taxing the colonies, even independent of\nthe consent of their own assemblies, the importance of those assemblies\nwould, from that moment, be at an end, and with it, that of all the\nleading men of British America. Men desire to have some share in the\nmanagement of public affairs, chiefly on account of the importance which\nit gives them. Upon the power which the greater part of the leading\nmen, the natural aristocracy of every country, have of preserving\nor defending their respective importance, depends the stability and\nduration of every system of free government. In the attacks which those\nleading men are continually making upon the importance of one another,\nand in the defence of their own, consists the whole play of domestic\nfaction and ambition. The leading men of America, like those of all\nother countries, desire to preserve their own importance. They feel,\nor imagine, that if their assemblies, which they are fond of calling\nparliaments, and of considering as equal in authority to the parliament\nof Great Britain, should be so far degraded as to become the humble\nministers and executive officers of that parliament, the greater part of\ntheir own importance would be at an end. They have rejected, therefore,\nthe proposal of being taxed by parliamentary requisition, and, like\nother ambitious and high-spirited men, have rather chosen to draw the\nsword in defence of their own importance.\n\nTowards the declension of the Roman republic, the allies of Rome, who\nhad borne the principal burden of defending the state and extending the\nempire, demanded to be admitted to all the privileges of Roman citizens.\nUpon being refused, the social war broke out. During the course of that\nwar, Rome granted those privileges to the greater part of them, one\nby one, and in proportion as they detached themselves from the general\nconfederacy. The parliament of Great Britain insists upon taxing the\ncolonies; and they refuse to be taxed by a parliament in which they are\nnot represented. If to each colony which should detach itself from\nthe general confederacy, Great Britain should allow such a number of\nrepresentatives as suited the proportion of what it contributed to the\npublic revenue of the empire, in consequence of its being subjected\nto the same taxes, and in compensation admitted to the same freedom\nof trade with its fellow-subjects at home; the number of its\nrepresentatives to be augmented as the proportion of its contribution\nmight afterwards augment; a new method of acquiring importance, a new\nand more dazzling object of ambition, would be presented to the leading\nmen of each colony. Instead of piddling for the little prizes which are\nto be found in what may be called the paltry raffle of colony faction,\nthey might then hope, from the presumption which men naturally have in\ntheir own ability and good fortune, to draw some of the great prizes\nwhich sometimes come from the wheel of the great state lottery of\nBritish politics. Unless this or some other method is fallen upon,\nand there seems to be none more obvious than this, of preserving the\nimportance and of gratifying the ambition of the leading men of America,\nit is not very probable that they will ever voluntarily submit to us;\nand we ought to consider, that the blood which must be shed in forcing\nthem to do so, is, every drop of it, the blood either of those who are,\nor of those whom we wish to have for our fellow citizens. They are very\nweak who flatter themselves that, in the state to which things have\ncome, our colonies will be easily conquered by force alone. The persons\nwho now govern the resolutions of what they call their continental\ncongress, feel in themselves at this moment a degree of importance\nwhich, perhaps, the greatest subjects in Europe scarce feel. From\nshopkeepers, trades men, and attorneys, they are become statesmen and\nlegislators, and are employed in contriving a new form of government for\nan extensive empire, which, they flatter themselves, will become, and\nwhich, indeed, seems very likely to become, one of the greatest and most\nformidable that ever was in the world. Five hundred different people,\nperhaps, who, in different ways, act immediately under the continental\ncongress, and five hundred thousand, perhaps, who act under those five\nhundred, all feel, in the same manner, a proportionable rise in their\nown importance. Almost every individual of the governing party in\nAmerica fills, at present, in his own fancy, a station superior, not\nonly to what he had ever filled before, but to what he had ever expected\nto fill; and unless some new object of ambition is presented either to\nhim or to his leaders, if he has the ordinary spirit of a man, he will\ndie in defence of that station.\n\nIt is a remark of the President Heynaut, that we now read with pleasure\nthe account of many little transactions of the Ligue, which, when they\nhappened, were not, perhaps, considered as very important pieces of\nnews. But everyman then, says he, fancied himself of some importance;\nand the innumerable memoirs which have come down to us from those times,\nwere the greater part of them written by people who took pleasure in\nrecording and magnifying events, in which they flattered themselves they\nhad been considerable actors. How obstinately the city of Paris, upon\nthat occasion, defended itself, what a dreadful famine it supported,\nrather than submit to the best, and afterwards the most beloved of all\nthe French kings, is well known. The greater part of the citizens, or\nthose who governed the greater part of them, fought in defence of their\nown importance, which, they foresaw, was to be at an end whenever the\nancient government should be re-established. Our colonies, unless\nthey can be induced to consent to a union, are very likely to defend\nthemselves, against the best of all mother countries, as obstinately as\nthe city of Paris did against one of the best of kings.\n\nThe idea of representation was unknown in ancient times. When the people\nof one state were admitted to the right of citizenship in another, they\nhad no other means of exercising that right, but by coming in a body to\nvote and deliberate with the people of that other state. The admission\nof the greater part of the inhabitants of Italy to the privileges of\nRoman citizens, completely ruined the Roman republic. It was no longer\npossible to distinguish between who was, and who was not, a Roman\ncitizen. No tribe could know its own members. A rabble of any kind could\nbe introduced into the assemblies of the people, could drive out the\nreal citizens, and decide upon the affairs of the republic, as if they\nthemselves had been such. But though America were to send fifty or\nsixty new representatives to parliament, the door-keeper of the house\nof commons could not find any great difficulty in distinguishing\nbetween who was and who was not a member. Though the Roman constitution,\ntherefore, was necessarily ruined by the union of Rome with the allied\nstates of Italy, there is not the least probability that the British\nconstitution would be hurt by the union of Great Britain with her\ncolonies. That constitution, on the contrary, would be completed by it,\nand seems to be imperfect without it. The assembly which deliberates and\ndecides concerning the affairs of every part of the empire, in order to\nbe properly informed, ought certainly to have representatives from every\npart of it. That this union, however, could be easily effectuated,\nor that difficulties, and great difficulties, might not occur in the\nexecution, I do not pretend. I have yet heard of none, however, which\nappear insurmountable. The principal, perhaps, arise, not from the\nnature of things, but from the prejudices and opinions of the people,\nboth on this and on the other side of the Atlantic.\n\nWe on this side the water are afraid lest the multitude of American\nrepresentatives should overturn the balance of the constitution, and\nincrease too much either the influence of the crown on the one hand, or\nthe force of the democracy on the other. But if the number of American\nrepresentatives were to be in proportion to the produce of American\ntaxation, the number of people to be managed would increase exactly in\nproportion to the means of managing them, and the means of managing to\nthe number of people to be managed. The monarchical and democratical\nparts of the constitution would, after the union, stand exactly in the\nsame degree of relative force with regard to one another as they had\ndone before.\n\nThe people on the other side of the water are afraid lest their distance\nfrom the seat of government might expose them to many oppressions; but\ntheir representatives in parliament, of which the number ought from the\nfirst to be considerable, would easily be able to protect them from all\noppression. The distance could not much weaken the dependency of the\nrepresentative upon the constituent, and the former would still feel\nthat he owed his seat in parliament, and all the consequence which\nhe derived from it, to the good-will of the latter. It would be the\ninterest of the former, therefore, to cultivate that good-will, by\ncomplaining, with all the authority of a member of the legislature, of\nevery outrage which any civil or military officer might be guilty of in\nthose remote parts of the empire. The distance of America from the\nseat of government, besides, the natives of that country might flatter\nthemselves, with some appearance of reason too, would not be of very\nlong continuance. Such has hitherto been the rapid progress of that\ncountry in wealth, population, and improvement, that in the course of\nlittle more than a century, perhaps, the produce of the American might\nexceed that of the British taxation. The seat of the empire would then\nnaturally remove itself to that part of the empire which contributed\nmost to the general defence and support of the whole.\n\nThe discovery of America, and that of a passage to the East Indies by\nthe Cape of Good Hope, are the two greatest and most important events\nrecorded in the history of mankind. Their consequences have already been\ngreat; but, in the short period of between two and three centuries which\nhas elapsed since these discoveries were made, it is impossible that the\nwhole extent of their consequences can have been seen. What benefits\nor what misfortunes to mankind may hereafter result from those great\nevents, no human wisdom can foresee. By uniting in some measure the most\ndistant parts of the world, by enabling them to relieve one another's\nwants, to increase one another's enjoyments, and to encourage one\nanother's industry, their general tendency would seem to be beneficial.\nTo the natives, however, both of the East and West Indies, all the\ncommercial benefits which can have resulted from those events have been\nsunk and lost in the dreadful misfortunes which they have occasioned.\nThese misfortunes, however, seem to have arisen rather from accident\nthan from any thing in the nature of those events themselves. At the\nparticular time when these discoveries were made, the superiority of\nforce happened to be so great on the side of the Europeans, that they\nwere enabled to commit with impunity every sort of injustice in those\nremote countries. Hereafter, perhaps, the natives of those countries may\ngrow stronger, or those of Europe may grow weaker; and the inhabitants\nof all the different quarters of the world may arrive at that equality\nof courage and force which, by inspiring mutual fear, can alone overawe\nthe injustice of independent nations into some sort of respect for the\nrights of one another. But nothing seems more likely to establish this\nequality of force, than that mutual communication of knowledge, and\nof all sorts of improvements, which an extensive commerce from all\ncountries to all countries naturally, or rather necessarily, carries\nalong with it.\n\nIn the mean time, one of the principal effects of those discoveries has\nbeen, to raise the mercantile system to a degree of splendour and glory\nwhich it could never otherwise have attained to. It is the object of\nthat system to enrich a great nation, rather by trade and manufactures\nthan by the improvement and cultivation of land, rather by the industry\nof the towns than by that of the country. But in consequence of those\ndiscoveries, the commercial towns of Europe, instead of being the\nmanufacturers and carriers for but a very small part of the world (that\npart of Europe which is washed by the Atlantic ocean, and the countries\nwhich lie round the Baltic and Mediterranean seas), have now become the\nmanufacturers for the numerous and thriving cultivators of America, and\nthe carriers, and in some respects the manufacturers too, for almost all\nthe different nations of Asia, Africa, and America. Two new worlds\nhave been opened to their industry, each of them much greater and more\nextensive than the old one, and the market of one of them growing still\ngreater and greater every day.\n\nThe countries which possess the colonies of America, and which trade\ndirectly to the East Indies, enjoy indeed the whole show and splendour\nof this great commerce. Other countries, however, notwithstanding\nall the invidious restraints by which it is meant to exclude them,\nfrequently enjoy a greater share of the real benefit of it. The colonies\nof Spain and Portugal, for example, give more real encouragement to the\nindustry of other countries than to that of Spain and Portugal. In\nthe single article of linen alone, the consumption of those colonies\namounts, it is said (but I do not pretend to warrant the quantity ), to\nmore than three millions sterling a-year. But this great consumption\nis almost entirely supplied by France, Flanders, Holland, and Germany.\nSpain and Portugal furnish but a small part of it. The capital which\nsupplies the colonies with this great quantity of linen, is annually\ndistributed among, and furnishes a revenue to, the inhabitants of those\nother countries. The profits of it only are spent in Spain and Portugal,\nwhere they help to support the sumptuous profusion of the merchants of\nCadiz and Lisbon.\n\nEven the regulations by which each nation endeavours to secure to itself\nthe exclusive trade of its own colonies, are frequently more hurtful\nto the countries in favour of which they are established, than to\nthose against which they are established. The unjust oppression of the\nindustry of other countries falls back, if I may say so, upon the heads\nof the oppressors, and crushes their industry more than it does that of\nthose other countries. By those regulations, for example, the merchant\nof Hamburg must send the linen which he destines for the American market\nto London, and he must bring back from thence the tobacco which he\ndestines for the German market; because he can neither send the one\ndirectly to America, nor bring the other directly from thence. By this\nrestraint he is probably obliged to sell the one somewhat cheaper, and\nto buy the other somewhat dearer, than he otherwise might have done;\nand his profits are probably somewhat abridged by means of it. In this\ntrade, however, between Hamburg and London, he certainly receives the\nreturns of his capital much more quickly than he could possibly have\ndone in the direct trade to America, even though we should suppose, what\nis by no means the case, that the payments of America were as punctual\nas those of London. In the trade, therefore, to which those regulations\nconfine the merchant of Hamburg, his capital can keep in constant\nemployment a much greater quantity of German industry than he possibly\ncould have done in the trade from which he is excluded. Though the one\nemployment, therefore, may to him perhaps be less profitable than\nthe other, it cannot be less advantageous to his country. It is\nquite otherwise with the employment into which the monopoly naturally\nattracts, if I may say so, the capital of the London merchant. That\nemployment may, perhaps, be more profitable to him than the greater part\nof other employments; but on account of the slowness of the returns, it\ncannot be more advantageous to his country.\n\nAfter all the unjust attempts, therefore, of every country in Europe to\nengross to itself the whole advantage of the trade of its own colonies,\nno country has yet been able to engross to itself any thing but the\nexpense of supporting in time of peace, and of defending in time of war,\nthe oppressive authority which it assumes over them. The inconveniencies\nresulting from the possession of its colonies, every country has\nengrossed to itself completely. The advantages resulting from their\ntrade, it has been obliged to share with many other countries.\n\nAt first sight, no doubt, the monopoly of the great commerce of America\nnaturally seems to be an acquisition of the highest value. To the\nundiscerning eye of giddy ambition it naturally presents itself, amidst\nthe confused scramble of politics and war, as a very dazzling object to\nfight for. The dazzling splendour of the object, however, the immense\ngreatness of the commerce, is the very quality which renders the\nmonopoly of it hurtful, or which makes one employment, in its own nature\nnecessarily less advantageous to the country than the greater part of\nother employments, absorb a much greater proportion of the capital of\nthe country than what would otherwise have gone to it.\n\nThe mercantile stock of every country, it has been shown in the\nsecond book, naturally seeks, if one may say so, the employment most\nadvantageous to that country. If it is employed in the carrying trade,\nthe country to which it belongs becomes the emporium of the goods of all\nthe countries whose trade that stock carries on. But the owner of that\nstock necessarily wishes to dispose of as great a part of those goods as\nhe can at home. He thereby saves himself the trouble, risk, and expense\nof exportation; and he will upon that account be glad to sell them at\nhome, not only for a much smaller price, but with somewhat a smaller\nprofit, than he might expect to make by sending them abroad. He\nnaturally, therefore, endeavours as much as he can to turn his carrying\ntrade into a foreign trade of consumption, If his stock, again, is\nemployed in a foreign trade of consumption, he will, for the same\nreason, be glad to dispose of, at home, as great a part as he can of the\nhome goods which he collects in order to export to some foreign market,\nand he will thus endeavour, as much as he can, to turn his foreign trade\nof consumption into a home trade. The mercantile stock of every\ncountry naturally courts in this manner the near, and shuns the distant\nemployment: naturally courts the employment in which the returns are\nfrequent, and shuns that in which they are distant and slow; naturally\ncourts the employment in which it can maintain the greatest quantity of\nproductive labour in the country to which it belongs, or in which\nits owner resides, and shuns that in which it can maintain there the\nsmallest quantity. It naturally courts the employment which in ordinary\ncases is most advantageous, and shuns that which in ordinary cases is\nleast advantageous to that country.\n\nBut if, in any one of those distant employments, which in ordinary cases\nare less advantageous to the country, the profit should happen to\nrise somewhat higher than what is sufficient to balance the natural\npreference which is given to nearer employments, this superiority of\nprofit will draw stock from those nearer employments, till the profits\nof all return to their proper level. This superiority of profit,\nhowever, is a proof that, in the actual circumstances of the society,\nthose distant employments are somewhat understocked in proportion to\nother employments, and that the stock of the society is not distributed\nin the properest manner among all the different employments carried on\nin it. It is a proof that something is either bought cheaper or sold\ndearer than it ought to be, and that some particular class of citizens\nis more or less oppressed, either by paying more, or by getting less\nthan what is suitable to that equality which ought to take place, and\nwhich naturally does take place, among all the different classes of\nthem. Though the same capital never will maintain the same quantity of\nproductive labour in a distant as in a near employment, yet a distant\nemployment maybe as necessary for the welfare of the society as a near\none; the goods which the distant employment deals in being necessary,\nperhaps, for carrying on many of the nearer employments. But if the\nprofits of those who deal in such goods are above their proper level,\nthose goods will be sold dearer than they ought to be, or somewhat above\ntheir natural price, and all those engaged in the nearer employments\nwill be more or less oppressed by this high price. Their interest,\ntherefore, in this case, requires, that some stock should be withdrawn\nfrom those nearer employments, and turned towards that distant one, in\norder to reduce its profits to their proper level, and the price of the\ngoods which it deals in to their natural price. In this extraordinary\ncase, the public interest requires that some stock should be withdrawn\nfrom those employments which, in ordinary cases, are more advantageous,\nand turned towards one which, in ordinary cases, is less advantageous to\nthe public; and, in this extraordinary case, the natural interests and\ninclinations of men coincide as exactly with the public interests as in\nall other ordinary cases, and lead them to withdraw stock from the near,\nand to turn it towards the distant employments.\n\nIt is thus that the private interests and passions of individuals\nnaturally dispose them to turn their stock towards the employments which\nin ordinary cases, are most advantageous to the society. But if from\nthis natural preference they should turn too much of it towards those\nemployments, the fall of profit in them, and the rise of it in all\nothers, immediately dispose them to alter this faulty distribution.\nWithout any intervention of law, therefore, the private interests and\npassions of men naturally lead them to divide and distribute the stock\nof every society among all the different employments carried on in it;\nas nearly as possible in the proportion which is most agreeable to the\ninterest of the whole society.\n\nAll the different regulations of the mercantile system necessarily\nderange more or less this natural and most advantageous distribution of\nstock. But those which concern the trade to America and the East Indies\nderange it, perhaps, more than any other; because the trade to those two\ngreat continents absorbs a greater quantity of stock than any two other\nbranches of trade. The regulations, however, by which this derangement\nis effected in those two different branches of trade, are not altogether\nthe same. Monopoly is the great engine of both; but it is a different\nsort of monopoly. Monopoly of one kind or another, indeed, seems to be\nthe sole engine of the mercantile system.\n\nIn the trade to America, every nation endeavours to engross as much as\npossible the whole market of its own colonies, by fairly excluding all\nother nations from any direct trade to them. During the greater part of\nthe sixteenth century, the Portuguese endeavoured to manage the trade\nto the East Indies in the same manner, by claiming the sole right of\nsailing in the Indian seas, on account of the merit of having first\nfound out the road to them. The Dutch still continue to exclude all\nother European nations from any direct trade to their spice islands.\nMonopolies of this kind are evidently established against all other\nEuropean nations, who are thereby not only excluded from a trade to\nwhich it might be convenient for them to turn some part of their stock,\nbut are obliged to buy the goods which that trade deals in, somewhat\ndearer than if they could import them themselves directly from the\ncountries which produced them.\n\nBut since the fall of the power of Portugal, no European nation has\nclaimed the exclusive right of sailing in the Indian seas, of which\nthe principal ports are now open to the ships of all European nations.\nExcept in Portugal, however, and within these few years in France, the\ntrade to the East Indies has, in every European country, been\nsubjected to an exclusive company. Monopolies of this kind are properly\nestablished against the very nation which erects them. The greater part\nof that nation are thereby not only excluded from a trade to which it\nmight be convenient for them to turn some part of their stock, but are\nobliged to buy the goods which that trade deals in somewhat dearer than\nif it was open and free to all their countrymen. Since the establishment\nof the English East India company, for example, the other inhabitants of\nEngland, over and above being excluded from the trade, must have paid,\nin the price of the East India goods which they have consumed, not only\nfor all the extraordinary profits which the company may have made\nupon those goods in consequence of their monopoly, but for all the\nextraordinary waste which the fraud and abuse inseparable from the\nmanagement of the affairs of so great a company must necessarily have\noccasioned. The absurdity of this second kind of monopoly, therefore, is\nmuch more manifest than that of the first.\n\nBoth these kinds of monopolies derange more or less the natural\ndistribution of the stock of the society; but they do not always derange\nit in the same way.\n\nMonopolies of the first kind always attract to the particular trade\nin which they are established a greater proportion of the stock of the\nsociety than what would go to that trade of its own accord.\n\nMonopolies of the second kind may sometimes attract stock towards the\nparticular trade in which they are established, and sometimes repel\nit from that trade, according to different circumstances. In poor\ncountries, they naturally attract towards that trade more stock than\nwould otherwise go to it. In rich countries, they naturally repel from\nit a good deal of stock which would otherwise go to it.\n\nSuch poor countries as Sweden and Denmark, for example, would probably\nhave never sent a single ship to the East Indies, had not the trade been\nsubjected to an exclusive company. The establishment of such a company\nnecessarily encourages adventurers. Their monopoly secures them against\nall competitors in the home market, and they have the same chance for\nforeign markets with the traders of other nations. Their monopoly shows\nthem the certainty of a great profit upon a considerable quantity of\ngoods, and the chance of a considerable profit upon a great quantity.\nWithout such extraordinary encouragement, the poor traders of such poor\ncountries would probably never have thought of hazarding their small\ncapitals in so very distant and uncertain an adventure as the trade to\nthe East Indies must naturally have appeared to them.\n\nSuch a rich country as Holland, on the contrary, would probably, in the\ncase of a free trade, send many more ships to the East Indies than\nit actually does. The limited stock of the Dutch East India company\nprobably repels from that trade many great mercantile capitals which\nwould otherwise go to it. The mercantile capital of Holland is so great,\nthat it is, as it were, continually overflowing, sometimes into the\npublic funds of foreign countries, sometimes into loans to private\ntraders and adventurers of foreign countries, sometimes into the most\nround-about foreign trades of consumption, and sometimes into the\ncarrying trade. All near employments being completely filled up, all\nthe capital which can be placed in them with any tolerable profit being\nalready placed in them, the capital of Holland necessarily flows towards\nthe most distant employments. The trade to the East Indies, if it\nwere altogether free, would probably absorb the greater part of\nthis redundant capital. The East Indies offer a market both for the\nmanufactures of Europe, and for the gold and silver, as well as for the\nseveral other productions of America, greater and more extensive than\nboth Europe and America put together.\n\nEvery derangement of the natural distribution of stock is necessarily\nhurtful to the society in which it takes place; whether it be by\nrepelling from a particular trade the stock which would otherwise go\nto it, or by attracting towards a particular trade that which would not\notherwise come to it. If, without any exclusive company, the trade of\nHolland to the East Indies would be greater than it actually is, that\ncountry must suffer a considerable loss, by part of its capital being\nexcluded from the employment most convenient for that port. And, in the\nsame manner, if, without an exclusive company, the trade of Sweden and\nDenmark to the East Indies would be less than it actually is, or, what\nperhaps is more probable, would not exist at all, those two countries\nmust likewise suffer a considerable loss, by part of their capital being\ndrawn into an employment which must be more or less unsuitable to\ntheir present circumstances. Better for them, perhaps, in the present\ncircumstances, to buy East India goods of other nations, even though\nthey should pay somewhat dearer, than to turn so great a part of their\nsmall capital to so very distant a trade, in which the returns are so\nvery slow, in which that capital can maintain so small a quantity of\nproductive labour at home, where productive labour is so much wanted,\nwhere so little is done, and where so much is to do.\n\nThough without an exclusive company, therefore, a particular country\nshould not be able to carry on any direct trade to the East Indies, it\nwill not from thence follow, that such a company ought to be established\nthere, but only that such a country ought not, in these circumstances,\nto trade directly to the East Indies. That such companies are not in\ngeneral necessary for carrying on the East India trade, is sufficiently\ndemonstrated by the experience of the Portuguese, who enjoyed almost\nthe whole of it for more than a century together, without any exclusive\ncompany.\n\nNo private merchant, it has been said, could well have capital\nsufficient to maintain factors and agents in the different ports of\nthe East Indies, in order to provide goods for the ships which he might\noccasionally send thither; and yet, unless he was able to do this, the\ndifficulty of finding a cargo might frequently make his ships lose the\nseason for returning; and the expense of so long a delay would not only\neat up the whole profit of the adventure, but frequently occasion a very\nconsiderable loss. This argument, however, if it proved any thing at\nall, would prove that no one great branch of trade could be carried on\nwithout an exclusive company, which is contrary to the experience of all\nnations. There is no great branch of trade, in which the capital of any\none private merchant is sufficient for carrying on all the subordinate\nbranches which must be carried on, in order to carry on the principal\none. But when a nation is ripe for any great branch of trade, some\nmerchants naturally turn their capitals towards the principal, and some\ntowards the subordinate branches of it; and though all the different\nbranches of it are in this manner carried on, yet it very seldom happens\nthat they are all carried on by the capital of one private merchant. If\na nation, therefore, is ripe for the East India trade, a certain portion\nof its capital will naturally divide itself among all the different\nbranches of that trade. Some of its merchants will find it for their\ninterest to reside in the East Indies, and to employ their capitals\nthere in providing goods for the ships which are to be sent out by other\nmerchants who reside in Europe. The settlements which different European\nnations have obtained in the East Indies, if they were taken from the\nexclusive companies to which they at present belong, and put under the\nimmediate protection of the sovereign, would render this residence both\nsafe and easy, at least to the merchants of the particular nations to\nwhom those settlements belong. If, at any particular time, that part of\nthe capital of any country which of its own accord tended and inclined,\nif I may say so, towards the East India trade, was not sufficient for\ncarrying on all those different branches of it, it would be a proof\nthat, at that particular time, that country was not ripe for that trade,\nand that it would do better to buy for some time, even at a higher\nprice, from other European nations, the East India goods it had occasion\nfor, than to import them itself directly from the East Indies. What it\nmight lose by the high price of those goods, could seldom be equal to\nthe loss which it would sustain by the distraction of a large portion\nof its capital from other employments more necessary, or more useful, or\nmore suitable to its circumstances and situation, than a direct trade to\nthe East Indies.\n\nThough the Europeans possess many considerable settlements both upon the\ncoast of Africa and in the East Indies, they have not yet established,\nin either of those countries, such numerous and thriving colonies as\nthose in the islands and continent of America. Africa, however, as well\nas several of the countries comprehended under the general name of the\nEast Indies, is inhabited by barbarous nations. But those nations\nwere by no means so weak and defenceless as the miserable and helpless\nAmericans; and in proportion to the natural fertility of the countries\nwhich they inhabited, they were, besides, much more populous. The\nmost barbarous nations either of Africa or of the East Indies, were\nshepherds; even the Hottentots were so. But the natives of every part of\nAmerica, except Mexico and Peru, were only hunters and the difference is\nvery great between the number of shepherds and that of hunters whom the\nsame extent of equally fertile territory can maintain. In Africa and the\nEast Indies, therefore, it was more difficult to displace the natives,\nand to extend the European plantations over the greater part of the\nlands of the original inhabitants. The genius of exclusive companies,\nbesides, is unfavourable, it has already been observed, to the growth\nof new colonies, and has probably been the principal cause of the little\nprogress which they have made in the East Indies. The Portuguese carried\non the trade both to Africa and the East Indies, without any exclusive\ncompanies; and their settlements at Congo, Angola, and Benguela, on the\ncoast of Africa, and at Goa in the East Indies though much depressed by\nsuperstition and every sort of bad government, yet bear some resemblance\nto the colonies of America, and are partly inhabited by Portuguese\nwho have been established there for several generations. The Dutch\nsettlements at the Cape of Good Hope and at Batavia, are at present the\nmost considerable colonies which the Europeans have established,\neither in Africa or in the East Indies; and both those settlements\nan peculiarly fortunate in their situation. The Cape of Good Hope\nwas inhabited by a race of people almost as barbarous, and quite as\nincapable of defending themselves, as the natives of America. It is,\nbesides, the half-way house, if one may say so, between Europe and the\nEast Indies, at which almost every European ship makes some stay, both\nin going and returning. The supplying of those ships with every sort of\nfresh provisions, with fruit, and sometimes with wine, affords alone a\nvery extensive market for the surplus produce of the colonies. What the\nCape of Good Hope is between Europe and every part of the East Indies,\nBatavia is between the principal countries of the East Indies. It lies\nupon the most frequented road from Indostan to China and Japan, and is\nnearly about mid-way upon that road. Almost all the ships too, that sail\nbetween Europe and China, touch at Batavia; and it is, over and above\nall this, the centre and principal mart of what is called the country\ntrade of the East Indies; not only of that part of it which is carried\non by Europeans, but of that which is carried on by the native Indians;\nand vessels navigated by the inhabitants of China and Japan, of Tonquin,\nMalacca, Cochin-China, and the island of Celebes, are frequently to be\nseen in its port. Such advantageous situations have enabled those two\ncolonies to surmount all the obstacles which the oppressive genius of\nan exclusive company may have occasionally opposed to their growth. They\nhave enabled Batavia to surmount the additional disadvantage of perhaps\nthe most unwholesome climate in the world.\n\nThe English and Dutch companies, though they have established no\nconsiderable colonies, except the two above mentioned, have both made\nconsiderable conquests in the East Indies. But in the manner in which\nthey both govern their new subjects, the natural genius of an exclusive\ncompany has shewn itself most distinctly. In the spice islands,\nthe Dutch are said to burn all the spiceries which a fertile season\nproduces, beyond what they expect to dispose of in Europe with such\na profit as they think sufficient. In the islands where they have no\nsettlements, they give a premium to those who collect the young blossoms\nand green leaves of the clove and nutmeg trees, which naturally\ngrow there, but which this savage policy has now, it is said, almost\ncompletely extirpated. Even in the islands where they have settlements,\nthey have very much reduced, it is said, the number of those trees. If\nthe produce even of their own islands was much greater than what suited\ntheir market, the natives, they suspect, might find means to convey some\npart of it to other nations; and the best way, they imagine, to secure\ntheir own monopoly, is to take care that no more shall grow than what\nthey themselves carry to market. By different arts of oppression, they\nhave reduced the population of several of the Moluccas nearly to the\nnumber which is sufficient to supply with fresh provisions, and other\nnecessaries of life, their own insignificant garrisons, and such of\ntheir ships as occasionally come there for a cargo of spices. Under the\ngovernment even of the Portuguese, however, those islands are said to\nhave been tolerably well inhabited. The English company have not yet had\ntime to establish in Bengal so perfectly destructive a system. The plan\nof their government, however, has had exactly the same tendency. It has\nnot been uncommon, I am well assured, for the chief, that is, the first\nclerk or a factory, to order a peasant to plough up a rich field of\npoppies, and sow it with rice, or some other grain. The pretence was, to\nprevent a scarcity of provisions; but the real reason, to give the chief\nan opportunity of selling at a better price a large quantity of opium\nwhich he happened then to have upon hand. Upon other occasions, the\norder has been reversed; and a rich field of rice or other grain has\nbeen ploughed up, in order to make room for a plantation of poppies,\nwhen the chief foresaw that extraordinary profit was likely to be made\nby opium. The servants of the company have, upon several occasions,\nattempted to establish in their own favour the monopoly of some of the\nmost important branches, not only of the foreign, but of the inland\ntrade of the country. Had they been allowed to go on, it is impossible\nthat they should not, at some time or another, have attempted to\nrestrain the production of the particular articles of which they\nhad thus usurped the monopoly, not only to the quantity which they\nthemselves could purchase, but to that which they could expect to sell\nwith such a profit as they might think sufficient. In the course of a\ncentury or two, the policy of the English company would, in this manner,\nhave probably proved as completely destructive as that of the Dutch.\n\nNothing, however, can be more directly contrary to the real interest\nof those companies, considered as the sovereigns of the countries\nwhich they have conquered, than this destructive plan. In almost all\ncountries, the revenue of the sovereign is drawn from that of the\npeople. The greater the revenue of the people, therefore, the greater\nthe annual produce of their land and labour, the more they can afford\nto the sovereign. It is his interest, therefore, to increase as much\nas possible that annual produce. But if this is the interest of every\nsovereign, it is peculiarly so of one whose revenue, like that of the\nsovereign of Bengal, arises chiefly from a land-rent. That rent must\nnecessarily be in proportion to the quantity and value of the produce;\nand both the one and the other must depend upon the extent of the\nmarket. The quantity will always be suited, with more or less exactness,\nto the consumption of those who can afford to pay for it; and the price\nwhich they will pay will always be in proportion to the eagerness of\ntheir competition. It is the interest of such a sovereign, therefore, to\nopen the most extensive market for the produce of his country, to allow\nthe most perfect freedom of commerce, in order to increase as much as\npossible the number and competition of buyers; and upon this account\nto abolish, not only all monopolies, but all restraints upon the\ntransportation of the home produce from one part of the country\nto mother, upon its exportation to foreign countries, or upon the\nimportation of goods of' any kind for which it can be exchanged. He is\nin this manner most likely to increase both the quantity and value of\nthat produce, and consequently of his own share of it, or of his own\nrevenue.\n\nBut a company of merchants, are, it seems, incapable of considering\nthemselves as sovereigns, even after they have become such. Trade, or\nbuying in order to sell again, they still consider as their principal\nbusiness, and by a strange absurdity, regard the character of the\nsovereign as but an appendix to that of the merchant; as something which\nought to be made subservient to it, or by means of which they may be\nenabled to buy cheaper in India, and thereby to sell with a better\nprofit in Europe. They endeavour, for this purpose, to keep out as much\nas possible all competitors from the market of the countries which are\nsubject to their government, and consequently to reduce, at least,\nsome part of the surplus produce of those countries to what is barely\nsufficient for supplying their own demand, or to what they can expect to\nsell in Europe, with such a profit as they may think reasonable. Their\nmercantile habits draw them in this manner, almost necessarily, though\nperhaps insensibly, to prefer, upon all ordinary occasions, the little\nand transitory profit of the monopolist to the great and permanent\nrevenue of the sovereign; and would gradually lead them to treat the\ncountries subject to their government nearly as the Dutch treat the\nMoluccas. It is the interest of the East India company, considered as\nsovereigns, that the European goods which are carried to their Indian\ndominions should be sold there as cheap as possible; and that the Indian\ngoods which are brought from thence should bring there as good a price,\nor should be sold there as dear as possible. But the reverse of this is\ntheir interest as merchants. As sovereigns, their interest is exactly\nthe same with that of the country which they govern. As merchants, their\ninterest is directly opposite to that interest.\n\nBut if the genius of such a government, even as to what concerns\nits direction in Europe, is in this manner essentially, and perhaps\nincurably faulty, that of its administration in India is still more so.\nThat administration is necessarily composed of a council of merchants,\na profession no doubt extremely respectable, but which in no country in\nthe world carries along with it that sort of authority which naturally\noverawes the people, and without force commands their willing obedience.\nSuch a council can command obedience only by the military force\nwith which they are accompanied; and their government is, therefore,\nnecessarily military and despotical. Their proper business, however,\nis that of merchants. It is to sell, upon their master's account, the\nEuropean goods consigned to them, and to buy, in return, Indian goods\nfor the European market. It is to sell the one as dear, and to buy the\nother as cheap as possible, and consequently to exclude, as much as\npossible, all rivals from the particular market where they keep their\nshop. The genius of the administration, therefore, so far as concerns\nthe trade of the company, is the same as that of the direction. It\ntends to make government subservient to the interest of monopoly, and\nconsequently to stunt the natural growth of some parts, at least, of\nthe surplus produce of the country, to what is barely sufficient for\nanswering the demand of the company.\n\nAll the members of the administration besides, trade more or less upon\ntheir own account; and it is in vain to prohibit them from doing so.\nNothing can be more completely foolish than to expect that the clerk of\na great counting-house, at ten thousand miles distance, and consequently\nalmost quite out of sight, should, upon a simple order from their\nmaster, give up at once doing any sort of business upon their own\naccount abandon for ever all hopes of making a fortune, of which they\nhave the means in their hands; and content themselves with the moderate\nsalaries which those masters allow them, and which, moderate as they\nare, can seldom be augmented, being commonly as large as the real\nprofits of the company trade can afford. In such circumstances, to\nprohibit the servants of the company from trading upon their own\naccount, can have scarce any other effect than to enable its superior\nservants, under pretence of executing their master's order, to oppress\nsuch of the inferior ones as have had the misfortune to fall under their\ndispleasure. The servants naturally endeavour to establish the same\nmonopoly in favour of their own private trade as of the public trade of\nthe company. If they are suffered to act as they could wish, they will\nestablish this monopoly openly and directly, by fairly prohibiting all\nother people from trading in the articles in which they choose to deal;\nand this, perhaps, is the best and least oppressive way of establishing\nit. But if, by an order from Europe, they are prohibited from doing\nthis, they will, notwithstanding, endeavour to establish a monopoly\nof the same kind secretly and indirectly, in a way that is much more\ndestructive to the country. They will employ the whole authority of\ngovernment, and pervert the administration of Justice, in order to\nharass and ruin those who interfere with them in any branch of commerce,\nwhich by means of agents, either concealed, or at least not publicly\navowed, they may choose to carry on. But the private trade of the\nservants will naturally extend to a much greater variety of articles\nthan the public trade of the company. The public trade of the company\nextends no further than the trade with Europe, and comprehends a part\nonly of the foreign trade of the country. But the private trade of the\nservants may extend to all the different branches both of its inland and\nforeign trade. The monopoly of the company can tend only to stunt the\nnatural growth of that part of the surplus produce which, in the case of\na free trade, would be exported to Europe. That of the servants tends\nto stunt the natural growth of every part of the produce in which they\nchoose to deal; of what is destined for home consumption, as well as\nof what is destined for exportation; and consequently to degrade the\ncultivation of the whole country, and to reduce the number of its\ninhabitants. It tends to reduce the quantity of every sort of produce,\neven that of the necessaries of life, whenever the servants of the\ncountry choose to deal in them, to what those servants can both afford\nto buy and expect to sell with such a profit as pleases them.\n\nFrom the nature of their situation, too, the servants must be more\ndisposed to support with rigourous severity their own interest, against\nthat of the country which they govern, than their masters can be to\nsupport theirs. The country belongs to their masters, who cannot avoid\nhaving some regard for the interest of what belongs to them; but it does\nnot belong to the servants. The real interest of their masters, if they\nwere capable of understanding it, is the same with that of the country;\n{The interest of every proprietor of India stock, however, is by no\nmeans the same with that of the country in the government of which his\nvote gives him some influence.--See book v, chap. 1, part ii.}and it is\nfrom ignorance chiefly, and the meanness of mercantile prejudice, that\nthey ever oppress it. But the real interest of the servants is by\nno means the same with that of the country, and the most perfect\ninformation would not necessarily put an end to their oppressions. The\nregulations, accordingly, which have been sent out from Europe, though\nthey have been frequently weak, have upon most occasions been well\nmeaning. More intelligence, and perhaps less good meaning, has sometimes\nappeared in those established by the servants in India. It is a very\nsingular government in which every member of the administration wishes\nto get out of the country, and consequently to have done with the\ngovernment, as soon as he can, and to whose interest, the day after he\nhas left it, and carried his whole fortune with him, it is perfectly\nindifferent though the whole country was swallowed up by an earthquake.\n\nI mean not, however, by any thing which I have here said, to throw any\nodious imputation upon the general character of the servants of the East\nIndia company, and touch less upon that of any particular persons. It is\nthe system of government, the situation in which they are placed, that\nI mean to censure, not the character of those who have acted in it. They\nacted as their situation naturally directed, and they who have\nclamoured the loudest against them would probably not have acted better\nthemselves. In war and negotiation, the councils of Madras and Calcutta,\nhave upon several occasions, conducted themselves with a resolution and\ndecisive wisdom, which would have done honour to the senate of Rome in\nthe best days of that republic. The members of those councils, however,\nhad been bred to professions very different from war and politics. But\ntheir situation alone, without education, experience, or even example,\nseems to have formed in them all at once the great qualities which it\nrequired, and to have inspired them both with abilities and virtues\nwhich they themselves could not well know that they possessed. If\nupon some occasions, therefore, it has animated them to actions of\nmagnanimity which could not well have been expected from them, we should\nnot wonder if, upon others, it has prompted them to exploits of somewhat\na different nature.\n\nSuch exclusive companies, therefore, are nuisances in every respect;\nalways more or less inconvenient to the countries in which they are\nestablished, and destructive to those which have the misfortune to fall\nunder their government.\n\n\n\n\n\nCHAPTER VIII. CONCLUSION OF THE MERCANTILE SYSTEM.\n\nThough the encouragement of exportation, and the discouragement of\nimportation, are the two great engines by which the mercantile system\nproposes to enrich every country, yet, with regard to some particular\ncommodities, it seems to follow an opposite plan: to discourage\nexportation, and to encourage importation. Its ultimate object,\nhowever, it pretends, is always the same, to enrich the country by an\nadvantageous balance of trade. It discourages the exportation of the\nmaterials of manufacture, and of the instruments of trade, in order to\ngive our own workmen an advantage, and to enable them to undersell those\nof other nations in all foreign markets; and by restraining, in this\nmanner, the exportation of a few commodities, of no great price, it\nproposes to occasion a much greater and more valuable exportation of\nothers. It encourages the importation of the materials of manufacture,\nin order that our own people may be enabled to work them up more\ncheaply, and thereby prevent a greater and more valuable importation of\nthe manufactured commodities. I do not observe, at least in our statute\nbook, any encouragement given to the importation of the instruments of\ntrade. When manufactures have advanced to a certain pitch of greatness,\nthe fabrication of the instruments of trade becomes itself the object\nof a great number of very important manufactures. To give any particular\nencouragement to the importation of such instruments, would interfere\ntoo much with the interest of those manufactures. Such importation,\ntherefore, instead of being encouraged, has frequently been prohibited.\nThus the importation of wool cards, except from Ireland, or when brought\nin as wreck or prize goods, was prohibited by the 3rd of Edward IV.;\nwhich prohibition was renewed by the 39th of Elizabeth, and has been\ncontinued and rendered perpetual by subsequent laws.\n\nThe importation of the materials of manufacture has sometimes been\nencouraged by an exemption from the duties to which other goods are\nsubject, and sometimes by bounties.\n\nThe importation of sheep's wool from several different countries, of\ncotton wool from all countries, of undressed flax, of the greater part\nof dyeing drugs, of the greater part of undressed hides from Ireland, or\nthe British colonies, of seal skins from the British Greenland fishery,\nof pig and bar iron from the British colonies, as well as of several\nother materials of manufacture, has been encouraged by an exemption\nfrom all duties, if properly entered at the custom-house. The private\ninterest of our merchants and manufacturers may, perhaps, have extorted\nfrom the legislature these exemptions, as well as the greater part of\nour other commercial regulations. They are, however, perfectly just and\nreasonable; and if, consistently with the necessities of the state, they\ncould be extended to all the other materials of manufacture, the public\nwould certainly be a gainer.\n\nThe avidity of our great manufacturers, however, has in some cases\nextended these exemptions a good deal beyond what can justly be\nconsidered as the rude materials of their work. By the 24th Geo. II.\nchap. 46, a small duty of only 1d. the pound was imposed upon the\nimportation of foreign brown linen yarn, instead of much higher duties,\nto which it had been subjected before, viz. of 6d. the pound upon sail\nyarn, of 1s. the pound upon all French and Dutch yarn, and of £2:13:4\nupon the hundred weight of all spruce or Muscovia yarn. But our\nmanufacturers were not long satisfied with this reduction: by the 29th\nof the same king, chap. 15, the same law which gave a bounty upon the\nexportation of British and Irish linen, of which the price did not\nexceed 18d. the yard, even this small duty upon the importation of brown\nlinen yarn was taken away. In the different operations, however, which\nare necessary for the preparation of linen yarn, a good deal more\nindustry is employed, than in the subsequent operation of preparing\nlinen cloth from linen yarn. To say nothing of the industry of the\nflax-growers and flaxdressers, three or four spinners at least are\nnecessary in order to keep one weaver in constant employment; and more\nthan four-fifths of the whole quantity of labour necessary for the\npreparation of linen cloth, is employed in that of linen yarn; but\nour spinners are poor people; women commonly scattered about in all\ndifferent parts of the country, without support or protection. It is\nnot by the sale of their work, but by that of the complete work of the\nweavers, that our great master manufacturers make their profits. As it\nis their interest to sell the complete manufacture as dear, so it is\nto buy the materials as cheap as possible. By extorting from the\nlegislature bounties upon the exportation of their own linen,\nhigh duties upon the importation of all foreign linen, and a total\nprohibition of the home consumption of some sorts of French linen, they\nendeavour to sell their own goods as dear as possible. By encouraging\nthe importation of foreign linen yarn, and thereby bringing it into\ncompetition with that which is made by our own people, they endeavour\nto buy the work of the poor spinners as cheap as possible. They are as\nintent to keep down the wages of their own weavers, as the earnings of\nthe poor spinners; and it is by no means for the benefit of the workmen\nthat they endeavour either to raise the price of the complete work, or\nto lower that of the rude materials. It is the industry which is carried\non for the benefit of the rich and the powerful, that is principally\nencouraged by our mercantile system. That which is carried on for the\nbenefit of the poor and the indigent is too often either neglected or\noppressed.\n\nBoth the bounty upon the exportation of linen, and the exemption from\nthe duty upon the importation of foreign yarn, which were granted only\nfor fifteen years, but continued by two different prolongations, expire\nwith the end of the session of parliament which shall immediately follow\nthe 24th of June 1786.\n\nThe encouragement given to the importation of the materials of\nmanufacture by bounties, has been principally confined to such as were\nimported from our American plantations.\n\nThe first bounties of this kind were those granted about the beginning\nof the present century, upon the importation of naval stores from\nAmerica. Under this denomination were comprehended timber fit for masts,\nyards, and bowsprits; hemp, tar, pitch, and turpentine. The bounty,\nhowever, of £1 the ton upon masting-timber, and that of £6 the ton upon\nhemp, were extended to such as should be imported into England from\nScotland. Both these bounties continued, without any variation, at the\nsame rate, till they were severally allowed to expire; that upon hemp on\nthe 1st of January 1741, and that upon masting-timber at the end of the\nsession of parliament immediately following the 24th June 1781.\n\nThe bounties upon the importation of tar, pitch, and turpentine,\nunderwent, during their continuance, several alterations. Originally,\nthat upon tar was £4 the ton; that upon pitch the same; and that upon\nturpentine £3 the ton. The bounty of £4 the ton upon tar was afterwards\nconfined to such as had been prepared in a particular manner; that upon\nother good, clean, and merchantable tar was reduced to £2:4s. the\nton. The bounty upon pitch was likewise reduced to £1, and that upon\nturpentine to £1:10s. the ton.\n\nThe second bounty upon the importation of any of the materials of\nmanufacture, according to the order of time, was that granted by the\n21st Geo. II. chap.30, upon the importation of indigo from the British\nplantations. When the plantation indigo was worth three-fourths of the\nprice of the best French indigo, it was, by this act, entitled to a\nbounty of 6d. the pound. This bounty, which, like most others, was\ngranted only for a limited time, was continued by several prolongations,\nbut was reduced to 4d. the pound. It was allowed to expire with the end\nof the session of parliament which followed the 25th March 1781.\n\nThe third bounty of this kind was that granted (much about the time that\nwe were beginning sometimes to court, and sometimes to quarrel with our\nAmerican colonies), by the 4th. Geo. III. chap. 26, upon the importation\nof hemp, or undressed flax, from the British plantations. This bounty\nwas granted for twenty-one years, from the 24th June 1764 to the 24th\nJune 1785. For the first seven years, it was to be at the rate of £8 the\nton; for the second at £6; and for the third at £4. It was not extended\nto Scotland, of which the climate (although hemp is sometimes raised\nthere in small quantities, and of an inferior quality) is not very fit\nfor that produce. Such a bounty upon the importation of Scotch flax in\nEngland would have been too great a discouragement to the native produce\nof the southern part of the united kingdom.\n\nThe fourth bounty of this kind was that granted by the 5th Geo. III.\nchap. 45, upon the importation of wood from America. It was granted for\nnine years from the 1st January 1766 to the 1st January 1775. During the\nfirst three years, it was to be for every hundred-and-twenty good deals,\nat the rate of £1, and for every load containing fifty cubic feet of\nother square timber, at the rate of 12s. For the second three years, it\nwas for deals, to be at the rate of 15s., and for other squared timber\nat the rate of 8s.; and for the third three years, it was for deals, to\nbe at the rate of 10s.; and for every other squared timber at the rate\nof 5s.\n\nThe fifth bounty of this kind was that granted by the 9th Geo. III.\nchap. 38, upon the importation of raw silk from the British plantations.\nIt was granted for twenty-one years, from the 1st January 1770, to the\n1st January 1791. For the first seven years, it was to be at the rate of\n£25 for every hundred pounds value; for the second, at £20; and for the\nthird, at £15. The management of the silk-worm, and the preparation\nof silk, requires so much hand-labour, and labour is so very dear in\nAmerica, that even this great bounty, I have been informed, was not\nlikely to produce any considerable effect.\n\nThe sixth Bounty of this kind was that granted by 11th Geo. III. chap.\n50, for the importation of pipe, hogshead, and barrelstaves and leading\nfrom the British plantations. It was granted for nine years, from 1st\nJanuary 1772 to the 1st January 1781. For the first three years, it was,\nfor a certain quantity of each, to be at the rate of £6; for the second\nthree years at £4; and for the third three years at £2.\n\nThe seventh and last bounty of this kind was that granted by the 19th\nGeo. III chap. 37, upon the importation of hemp from Ireland. It was\ngranted in the same manner as that for the importation of hemp and\nundressed flax from America, for twenty-one years, from the 24th June\n1779 to the 24th June 1800. The term is divided likewise into three\nperiods, of seven years each; and in each of those periods, the rate\nof the Irish bounty is the same with that of the American. It does\nnot, however, like the American bounty, extend to the importation of\nundressed flax. It would have been too great a discouragement to the\ncultivation of that plant in Great Britain. When this last bounty was\ngranted, the British and Irish legislatures were not in much better\nhumour with one another, than the British and American had been before.\nBut this boon to Ireland, it is to be hoped, has been granted under more\nfortunate auspices than all those to America. The same commodities, upon\nwhich we thus gave bounties, when imported from America, were subjected\nto considerable duties when imported from any other country. The\ninterest of our American colonies was regarded as the same with that of\nthe mother country. Their wealth was considered as our wealth. Whatever\nmoney was sent out to them, it was said, came all back to us by the\nbalance of trade, and we could never become a farthing the poorer by\nany expense which we could lay out upon them. They were our own in every\nrespect, and it was an expense laid out upon the improvement of our own\nproperty, and for the profitable employment of our own people. It is\nunnecessary, I apprehend, at present to say anything further, in\norder to expose the folly of a system which fatal experience has now\nsufficiently exposed. Had our American colonies really been a part of\nGreat Britain, those bounties might have been considered as bounties\nupon production, and would still have been liable to all the objections\nto which such bounties are liable, but to no other.\n\nThe exportation of the materials of manufacture is sometimes discouraged\nby absolute prohibitions, and sometimes by high duties.\n\nOur woollen manufacturers have been more successful than any other class\nof workmen, in persuading the legislature that the prosperity of the\nnation depended upon the success and extension of their particular\nbusiness. They have not only obtained a monopoly against the consumers,\nby an absolute prohibition of importing woollen cloths from any foreign\ncountry; but they have likewise obtained another monopoly against the\nsheep farmers and growers of wool, by a similar prohibition of the\nexportation of live sheep and wool. The severity of many of the laws\nwhich have been enacted for the security of the revenue is very\njustly complained of, as imposing heavy penalties upon actions which,\nantecedent to the statutes that declared them to be crimes, had always\nbeen understood to be innocent. But the cruellest of our revenue laws,\nI will venture to affirm, are mild and gentle, in comparison to some of\nthose which the clamour of our merchants and manufacturers has extorted\nfrom the legislature, for the support of their own absurd and oppressive\nmonopolies. Like the laws of Draco, these laws may be said to be all\nwritten in blood.\n\nBy the 8th of Elizabeth, chap. 3, the exporter of sheep, lambs, or rams,\nwas for the first offence, to forfeit all his goods for ever, to suffer\na year's imprisonment, and then to have his left hand cut off in a\nmarket town, upon a market day, to be there nailed up; and for the\nsecond offence, to be adjudged a felon, and to suffer death accordingly.\nTo prevent the breed of our sheep from being propagated in foreign\ncountries, seems to have been the object of this law. By the 13th and\n14th of Charles II. chap. 18, the exportation of wool was made felony,\nand the exporter subjected to the same penalties and forfeitures as a\nfelon.\n\nFor the honour of the national humanity, it is to be hoped that neither\nof these statutes was ever executed. The first of them, however, so far\nas I know, has never been directly repealed, and serjeant Hawkins seems\nto consider it as still in force. It may, however, perhaps be considered\nas virtually repealed by the 12th of Charles II. chap. 32, sect. 3,\nwhich, without expressly taking away the penalties imposed by former\nstatutes, imposes a new penalty, viz. that of 20s. for every sheep\nexported, or attempted to be exported, together with the forfeiture of\nthe sheep, and of the owner's share of the sheep. The second of them was\nexpressly repealed by the 7th and 8th of William III. chap. 28, sect. 4,\nby which it is declared that \"Whereas the statute of the 13th and 14th\nof king Charles II. made against the exportation of wool, among other\nthings in the said act mentioned, doth enact the same to be deemed\nfelony, by the severity of which penalty the prosecution of offenders\nhath not been so effectually put in execution; be it therefore enacted,\nby the authority aforesaid, that so much of the said act, which relates\nto the making the said offence felony, be repealed and made void.\"\n\nThe penalties, however, which are either imposed by this milder statute,\nor which, though imposed by former statutes, are not repealed by this\none, are still sufficiently severe. Besides the forfeiture of the goods,\nthe exporter incurs the penalty of 3s. for every pound weight of wool,\neither exported or attempted to be exported, that is, about four or\nfive times the value. Any merchant, or other person convicted of this\noffence, is disabled from requiring any debt or account belonging to\nhim from any factor or other person. Let his fortune be what it will,\nwhether he is or is not able to pay those heavy penalties, the law means\nto ruin him completely. But, as the morals of the great body of the\npeople are not yet so corrupt as those of the contrivers of this\nstatute, I have not heard that any advantage has ever been taken of this\nclause. If the person convicted of this offence is not able to pay the\npenalties within three months after judgment, he is to be transported\nfor seven years; and if he returns before the expiration of that term,\nhe is liable to the pains of felony, without benefit of clergy. The\nowner of the ship, knowing this offence, forfeits all his interest in\nthe ship and furniture. The master and mariners, knowing this\noffence, forfeit all their goods and chattels, and suffer three months\nimprisonment. By a subsequent statute, the master suffers six months\nimprisonment.\n\nIn order to prevent exportation, the whole inland commerce of wool is\nlaid under very burdensome and oppressive restrictions. It cannot be\npacked in any box, barrel, cask, case, chest, or any other package, but\nonly in packs of leather or pack-cloth, on which must be marked on the\noutside the words WOOL or YARN, in large letters, not less than three\ninches long, on pain of forfeiting the same and the package, and 8s.\nfor every pound weight, to be paid by the owner or packer. It cannot be\nloaden on any horse or cart, or carried by land within five miles of the\ncoast, but between sun-rising, and sun-setting, on pain of forfeiting\nthe same, the horses and carriages. The hundred next adjoining to the\nsea coast, out of, or through which the wool is carried or exported,\nforfeits £20, if the wool is under the value of £10; and if of greater\nvalue, then treble that value, together with treble costs, to be\nsued for within the year. The execution to be against any two of the\ninhabitants, whom the sessions must reimburse, by an assessment on\nthe other inhabitants, as in the cases of robbery. And if any person\ncompounds with the hundred for less than this penalty, he is to be\nimprisoned for five years; and any other person may prosecute. These\nregulations take place through the whole kingdom.\n\nBut in the particular counties of Kent and Sussex, the restrictions are\nstill more troublesome. Every owner of wool within ten miles of the sea\ncoast must give an account in writing, three days after shearing, to the\nnext officer of the customs, of the number of his fleeces, and of the\nplaces where they are lodged. And before he removes any part of them, he\nmust give the like notice of the number and weight of the fleeces, and\nof the name and abode of the person to whom they are sold, and of the\nplace to which it is intended they should be carried. No person within\nfifteen miles of the sea, in the said counties, can buy any wool, before\nhe enters into bond to the king, that no part of the wool which he shall\nso buy shall be sold by him to any other person within fifteen miles of\nthe sea. If any wool is found carrying towards the sea side in the said\ncounties, unless it has been entered and security given as aforesaid, it\nis forfeited, and the offender also forfeits 3s. for every pound weight,\nif any person lay any wool, not entered as aforesaid, within fifteen\nmiles of the sea, it must be seized and forfeited; and if, after such\nseizure, any person shall claim the same, he must give security to the\nexchequer, that if he is cast upon trial he shall pay treble costs,\nbesides all other penalties.\n\nWhen such restrictions are imposed upon the inland trade, the coasting\ntrade, we may believe, cannot be left very free. Every owner of wool,\nwho carrieth, or causeth to be carried, any wool to any port or place\non the sea coast, in order to be from thence transported by sea to any\nother place or port on the coast, must first cause an entry thereof\nto be made at the port from whence it is intended to be conveyed,\ncontaining the weight, marks, and number, of the packages, before he\nbrings the same within five miles of that port, on pain of forfeiting\nthe same, and also the horses, carts, and other carriages; and also\nof suffering and forfeiting, as by the other laws in force against the\nexportation of wool. This law, however (1st of William III. chap. 32),\nis so very indulgent as to declare, that this shall not hinder any\nperson from carrying his wool home from the place of shearing, though\nit be within five miles of the sea, provided that in ten days after\nshearing, and before he remove the wool, he do under his hand certify to\nthe next officer of the customs the true number of fleeces, and where\nit is housed; and do not remove the same, without certifying to such\nofficer, under his hand, his intention so to do, three days before. Bond\nmust be given that the wool to be carried coast-ways is to be landed at\nthe particular port for which it is entered outwards; and if my part of\nit is landed without the presence of an officer, not only the forfeiture\nof the wool is incurred, as in other goods, but the usual additional\npenalty of 3s. for every pound weight is likewise incurred.\n\nOur woollen manufacturers, in order to justify their demand of such\nextraordinary restrictions and regulations, confidently asserted, that\nEnglish wool was of a peculiar quality, superior to that of any other\ncountry; that the wool of other countries could not, without some\nmixture of it, be wrought up into any tolerable manufacture; that fine\ncloth could not be made without it; that England, therefore, if the\nexportation of it could be totally prevented, could monopolize to\nherself almost the whole woollen trade of the world; and thus, having\nno rivals, could sell at what price she pleased, and in a short time\nacquire the most incredible degree of wealth by the most advantageous\nbalance of trade. This doctrine, like most other doctrines which are\nconfidently asserted by any considerable number of people, was, and\nstill continues to be, most implicitly believed by a much greater\nnumber: by almost all those who are either unacquainted with the woollen\ntrade, or who have not made particular inquiries. It is, however, so\nperfectly false, that English wool is in any respect necessary for the\nmaking of fine cloth, that it is altogether unfit for it. Fine cloth is\nmade altogether of Spanish wool. English wool, cannot be even so mixed\nwith Spanish wool, as to enter into the composition without spoiling and\ndegrading, in some degree, the fabric of the cloth.\n\nIt has been shown in the foregoing part of this work, that the effect\nof these regulations has been to depress the price of English wool, not\nonly below what it naturally would be in the present times, but very\nmuch below what it actually was in the time of Edward III. The price of\nScotch wool, when, in consequence of the Union, it became subject to the\nsame regulations, is said to have fallen about one half. It is observed\nby the very accurate and intelligent author of the Memoirs of Wool,\nthe Reverend Mr. John Smith, that the price of the best English wool\nin England, is generally below what wool of a very inferior quality\ncommonly sells for in the market of Amsterdam. To depress the price of\nthis commodity below what may be called its natural and proper price,\nwas the avowed purpose of those regulations; and there seems to be no\ndoubt of their having produced the effect that was expected from them.\n\nThis reduction of price, it may perhaps be thought, by discouraging the\ngrowing of wool, must have reduced very much the annual produce of that\ncommodity, though not below what it formerly was, yet below what, in\nthe present state of things, it would probably have been, had it, in\nconsequence of an open and free market, been allowed to rise to the\nnatural and proper price. I am, however, disposed to believe, that the\nquantity of the annual produce cannot have been much, though it may,\nperhaps, have been a little affected by these regulations. The growing\nof wool is not the chief purpose for which the sheep farmer employs his\nindustry and stock. He expects his profit, not so much from the price\nof the fleece, as from that of the carcase; and the average or ordinary\nprice of the latter must even, in many cases, make up to him whatever\ndeficiency there may be in the average or ordinary price of the former.\nIt has been observed, in the foregoing part of this work, that 'whatever\nregulations tend to sink the price, either of wool or of raw hides,\nbelow what it naturally would be, must, in an improved and cultivated\ncountry, have some tendency to raise the price of butcher's meat. The\nprice, both of the great and small cattle which are fed on improved and\ncultivated land, must be sufficient to pay the rent which the landlord,\nand the profit which the farmer, has reason to expect from improved\nand cultivated land. If it is not, they will soon cease to feed them.\nWhatever part of this price, therefore, is not paid by the wool and the\nhide, must be paid by the carcase. The less there is paid for the one,\nthe more must be paid for the other. In what manner this price is to\nbe divided upon the different parts of the beast, is indifferent to the\nlandlords and farmers, provided it is all paid to them. In an improved\nand cultivated country, therefore, their interest as landlords and\nfarmers cannot be much affected by such regulations, though their\ninterest as consumers may, by the rise in the price of provisions.'\nAccording to this reasoning, therefore, this degradation in the price of\nwool is not likely, in an improved and cultivated country, to occasion\nany diminution in the annual produce of that commodity; except so far\nas, by raising the price of mutton, it may somewhat diminish the demand\nfor, and consequently the production of, that particular species of\nbutcher's meat, Its effect, however, even in this way, it is probable,\nis not very considerable.\n\nBut though its effect upon the quantity of the annual produce may not\nhave been very considerable, its effect upon the quality, it may perhaps\nbe thought, must necessarily have been very great. The degradation in\nthe quality of English wool, if not below what it was in former times,\nyet below what it naturally would have been in the present state of\nimprovement and cultivation, must have been, it may perhaps be supposed,\nvery nearly in proportion to the degradation of price. As the quality\ndepends upon the breed, upon the pasture, and upon the management and\ncleanliness of the sheep, during the whole progress of the growth of the\nfleece, the attention to these circumstances, it may naturally enough\nbe imagined, can never be greater than in proportion to the recompence\nwhich the price of the fleece is likely to make for the labour and\nexpense which that attention requires. It happens, however, that the\ngoodness of the fleece depends, in a great measure, upon the health,\ngrowth, and bulk of the animal: the same attention which is necessary\nfor the improvement of the carcase is, in some respect, sufficient for\nthat of the fleece. Notwithstanding the degradation of price, English\nwool is said to have been improved considerably during the course even\nof the present century. The improvement, might, perhaps, have been\ngreater if the price had been better; but the lowness of price, though\nit may have obstructed, yet certainly it has not altogether prevented\nthat improvement.\n\nThe violence of these regulations, therefore, seems to have affected\nneither the quantity nor the quality of the annual produce of wool, so\nmuch as it might have been expected to do (though I think it probable\nthat it may have affected the latter a good deal more than the former);\nand the interest of the growers of wool, though it must have been hurt\nin some degree, seems upon the whole, to have been much less hurt than\ncould well have been imagined.\n\nThese considerations, however, will not justify the absolute prohibition\nof the exportation of wool; but they will fully justify the imposition\nof a considerable tax upon that exportation.\n\nTo hurt, in any degree, the interest of any one order of citizens,\nfor no other purpose but to promote that of some other, is evidently\ncontrary to that justice and equality of treatment which the sovereign\nowes to all the different orders of his subjects. But the prohibition\ncertainly hurts, in some degree, the interest of the growers of wool,\nfor no other purpose but to promote that of the manufacturers.\n\nEvery different order of citizens is bound to contribute to the\nsupport of the sovereign or commonwealth. A tax of five, or even of ten\nshillings, upon the exportation of every tod of wool, would produce a\nvery considerable revenue to the sovereign. It would hurt the interest\nof the growers somewhat less than the prohibition, because it would\nnot probably lower the price of wool quite so much. It would afford a\nsufficient advantage to the manufacturer, because, though he might not\nbuy his wool altogether so cheap as under the prohibition, he would\nstill buy it at least five or ten shillings cheaper than any foreign\nmanufacturer could buy it, besides saving the freight and insurance\nwhich the other would be obliged to pay. It is scarce possible to devise\na tax which could produce any considerable revenue to the sovereign, and\nat the same time occasion so little inconveniency to anybody.\n\n\nThe prohibition, notwithstanding all the penalties which guard it, does\nnot prevent the exportation of wool. It is exported, it is well known,\nin great quantities. The great difference between the price in the home\nand that in the foreign market, presents such a temptation to smuggling,\nthat all the rigour of the law cannot prevent it. This illegal\nexportation is advantageous to nobody but the smuggler. A legal\nexportation, subject to a tax, by affording a revenue to the sovereign,\nand thereby saving the imposition of some other, perhaps more burdensome\nand inconvenient taxes, might prove advantageous to all the different\nsubjects of the state.\n\nThe exportation of fuller's earth, or fuller's clay, supposed to be\nnecessary for preparing and cleansing the woollen manufactures, has been\nsubjected to nearly the same penalties as the exportation of wool. Even\ntobacco-pipe clay, though acknowledged to be different from fuller's\nclay, yet, on account of their resemblance, and because fuller's clay\nmight sometimes be exported as tobacco-pipe clay, has been laid under\nthe same prohibitions and penalties.\n\nBy the 13th and 14th of Charles II. chap, 7, the exportation, not only\nof raw hides, but of tanned leather, except in the shape of boots,\nshoes, or slippers, was prohibited; and the law gave a monopoly to our\nboot-makers and shoe-makers, not only against our graziers, but against\nour tanners. By subsequent statutes, our tanners have got themselves\nexempted from this monopoly, upon paying a small tax of only one\nshilling on the hundred weight of tanned leather, weighing one\nhundred and twelve pounds. They have obtained likewise the drawback of\ntwo-thirds of the excise duties imposed upon their commodity, even when\nexported without further manufacture. All manufactures of leather may be\nexported duty free; and the exporter is besides entitled to the drawback\nof the whole duties of excise. Our graziers still continue subject to\nthe old monopoly. Graziers, separated from one another, and dispersed\nthrough all the different corners of the country, cannot, without\ngreat difficulty, combine together for the purpose either of imposing\nmonopolies upon their fellow-citizens, or of exempting themselves from\nsuch as may have been imposed upon them by other people. Manufacturers\nof all kinds, collected together in numerous bodies in all great cities,\neasily can. Even the horns of cattle are prohibited to be exported; and\nthe two insignificant trades of the horner and comb-maker enjoy, in this\nrespect, a monopoly against the graziers.\n\nRestraints, either by prohibitions, or by taxes, upon the exportation\nof goods which are partially, but not completely manufactured, are not\npeculiar to the manufacture of leather. As long as anything remains\nto be done, in order to fit any commodity for immediate use and\nconsumption, our manufacturers think that they themselves ought to have\nthe doing of it. Woollen yarn and worsted are prohibited to be exported,\nunder the same penalties as wool even white cloths we subject to a duty\nupon exportation; and our dyers have so far obtained a monopoly against\nour clothiers. Our clothiers would probably have been able to defend\nthemselves against it; but it happens that the greater part of our\nprincipal clothiers are themselves likewise dyers. Watch-cases,\nclock-cases, and dial-plates for clocks and watches, have been\nprohibited to be exported. Our clock-makers and watch-makers are, it\nseems, unwilling that the price of this sort of workmanship should be\nraised upon them by the competition of foreigners.\n\nBy some old statutes of Edward III, Henry VIII. and Edward VI. the\nexportation of all metals was prohibited. Lead and tin were alone\nexcepted, probably on account of the great abundance of those metals; in\nthe exportation of which a considerable part of the trade of the kingdom\nin those days consisted. For the encouragement of the mining trade, the\n5th of William and Mary, chap.17, exempted from this prohibition iron,\ncopper, and mundic metal made from British ore. The exportation of\nall sorts of copper bars, foreign as well as British, was afterwards\npermitted by the 9th and 10th of William III. chap 26. The exportation\nof unmanufactured brass, of what is called gun-metal, bell-metal, and\nshroff metal, still continues to be prohibited. Brass manufactures of\nall sorts may be exported duty free.\n\nThe exportation of the materials of manufacture, where it is not\naltogether prohibited, is, in many cases, subjected to considerable\nduties.\n\nBy the 8th Geo. I. chap.15, the exportation of all goods, the produce of\nmanufacture of Great Britain, upon which any duties had been imposed by\nformer statutes, was rendered duty free. The following goods, however,\nwere excepted: alum, lead, lead-ore, tin, tanned leather, copperas,\ncoals, wool, cards, white woollen cloths, lapis calaminaris, skins of\nall sorts, glue, coney hair or wool, hares wool, hair of all sorts,\nhorses, and litharge of lead. If you except horses, all these are either\nmaterials of manufacture, or incomplete manufactures (which may be\nconsidered as materials for still further manufacture), or instruments\nof trade. This statute leaves them subject to all the old duties which\nhad ever been imposed upon them, the old subsidy, and one per cent.\noutwards.\n\nBy the same statute, a great number of foreign drugs for dyers use are\nexempted from all duties upon importation. Each of them, however, is\nafterwards subjected to a certain duty, not indeed a very heavy one,\nupon exportation. Our dyers, it seems, while they thought it for their\ninterest to encourage the importation of those drugs, by an exemption\nfrom all duties, thought it likewise for their own interest to throw\nsome small discouragement upon their exportation. The avidity, however,\nwhich suggested this notable piece of mercantile ingenuity, most\nprobably disappointed itself of its object. It necessarily taught the\nimporters to be more careful than they might otherwise have been, that\ntheir importation should not exceed what was necessary for the supply\nof the home market. The home market was at all times likely to be\nmore scantily supplied; the commodities were at all times likely to be\nsomewhat dearer there than they would have been, had the exportation\nbeen rendered as free as the importation.\n\nBy the above-mentioned statute, gum senega, or gum arabic, being among\nthe enumerated dyeing drugs, might be imported duty free. They\nwere subjected, indeed, to a small poundage duty, amounting only to\nthreepence in the hundred weight, upon their re-exportation. France\nenjoyed, at that time, an exclusive trade to the country most productive\nof those drugs, that which lies in the neighbourhood of the Senegal;\nand the British market could not be easily supplied by the immediate\nimportation of them from the place of growth. By the 25th Geo. II.\ntherefore, gum senega was allowed to be imported (contrary to the\ngeneral dispositions of the act of navigation) from any part of Europe.\nAs the law, however, did not mean to encourage this species of trade, so\ncontrary to the general principles of the mercantile policy of England,\nit imposed a duty of ten shillings the hundred weight upon such\nimportation, and no part of this duty was to be afterwards drawn back\nupon its exportation. The successful war which began in 1755 gave Great\nBritain the same exclusive trade to those countries which France\nhad enjoyed before. Our manufactures, as soon as the peace was made,\nendeavoured to avail themselves of this advantage, and to establish a\nmonopoly in their own favour both against the growers and against the\nimporters of this commodity. By the 5th of Geo. III. therefore, chap.\n37, the exportation of gum senega, from his majesty's dominions in\nAfrica, was confined to Great Britain, and was subjected to all the same\nrestrictions, regulations, forfeitures, and penalties, as that of the\nenumerated commodities of the British colonies in America and the\nWest Indies. Its importation, indeed, was subjected to a small duty of\nsixpence the hundred weight; but its re-exportation was subjected to the\nenormous duty of one pound ten shillings the hundred weight. It was\nthe intention of our manufacturers, that the whole produce of those\ncountries should be imported into Great Britain; and in order that they\nthemselves might be enabled to buy it at their own price, that no\npart of it should be exported again, but at such an expense as would\nsufficiently discourage that exportation. Their avidity, however, upon\nthis, as well as upon many other occasions, disappointed itself of its\nobject. This enormous duty presented such a temptation to smuggling,\nthat great quantities of this commodity were clandestinely exported,\nprobably to all the manufacturing countries of Europe, but particularly\nto Holland, not only from Great Britain, but from Africa. Upon this\naccount, by the 14th Geo. III. chap.10, this duty upon exportation was\nreduced to five shillings the hundred weight.\n\nIn the book of rates, according to which the old subsidy was levied,\nbeaver skins were estimated at six shillings and eight pence a piece;\nand the different subsidies and imposts which, before the year 1722,\nhad been laid upon their importation, amounted to one-fifth part of the\nrate, or to sixteen pence upon each skin; all of which, except half\nthe old subsidy, amounting only to twopence, was drawn back upon\nexportation. This duty, upon the importation of so important a material\nof manufacture, had been thought too high; and, in the year 1722, the\nrate was reduced to two shillings and sixpence, which reduced the duty\nupon importation to sixpence, and of this only one-half was to be drawn\nback upon exportation. The same successful war put the country most\nproductive of beaver under the dominion of Great Britain; and beaver\nskins being among the enumerated commodities, the exportation from\nAmerica was consequently confined to the market of Great Britain. Our\nmanufacturers soon bethought themselves of the advantage which they\nmight make of this circumstance; and in the year 1764, the duty upon the\nimportation of beaver skin was reduced to one penny, but the duty upon\nexportation was raised to sevenpence each skin, without any drawback of\nthe duty upon importation. By the same law, a duty of eighteen pence the\npound was imposed upon the exportation of beaver wool or woumbs,\nwithout making any alteration in the duty upon the importation of that\ncommodity, which, when imported by British, and in British shipping,\namounted at that time to between fourpence and fivepence the piece.\n\nCoals may be considered both as a material of manufacture, and as an\ninstrument of trade. Heavy duties, accordingly, have been imposed\nupon their exportation, amounting at present (1783) to more than\nfive shillings the ton, or more than fifteen shillings the chaldron,\nNewcastle measure; which is, in most cases, more than the original\nvalue of the commodity at the coal-pit, or even at the shipping port for\nexportation.\n\nThe exportation, however, of the instruments of trade, properly so\ncalled, is commonly restrained, not by high duties, but by absolute\nprohibitions. Thus, by the 7th and 8th of William III chap.20, sect.8,\nthe exportation of frames or engines for knitting gloves or stockings,\nis prohibited, under the penalty, not only of the forfeiture of such\nframes or engines, so exported, or attempted to be exported, but of\nforty pounds, one half to the king, the other to the person who shall\ninform or sue for the same. In the same manner, by the 14th Geo. III.\nchap. 71, the exportation to foreign parts, of any utensils made use\nof in the cotton, linen, woollen, and silk manufactures, is prohibited\nunder the penalty, not only of the forfeiture of such utensils, but of\ntwo hundred pounds, to be paid by the person who shall offend in this\nmanner; and likewise of two hundred pounds, to be paid by the master of\nthe ship, who shall knowingly suffer such utensils to be loaded on board\nhis ship.\n\nWhen such heavy penalties were imposed upon the exportation of the dead\ninstruments of trade, it could not well be expected that the living\ninstrument, the artificer, should be allowed to go free. Accordingly, by\nthe 5th Geo. I. chap. 27, the person who shall be convicted of enticing\nany artificer, of or in any of the manufactures of Great Britain, to\ngo into any foreign parts, in order to practise or teach his trade, is\nliable, for the first offence, to be fined in any sum not exceeding one\nhundred pounds, and to three months imprisonment, and until the fine\nshall be paid; and for the second offence, to be fined in any sum, at\nthe discretion of the court, and to imprisonment for twelve months, and\nuntil the fine shall be paid. By the 23d Geo. II. chap. 13, this penalty\nis increased, for the first offence, to five hundred pounds for every\nartificer so enticed, and to twelve months imprisonment, and until the\nfine shall be paid; and for the second offence, to one thousand pounds,\nand to two years imprisonment, and until the fine shall be paid.\n\nBy the former of these two statutes, upon proof that any person has been\nenticing any artificer, or that any artificer has promised or contracted\nto go into foreign parts, for the purposes aforesaid, such artificer\nmay be obliged to give security, at the discretion of the court, that\nhe shall not go beyond the seas, and may be committed to prison until he\ngive such security.\n\nIf any artificer has gone beyond the seas, and is exercising or teaching\nhis trade in any foreign country, upon warning being given to him by any\nof his majesty's ministers or consuls abroad, or by one of his majesty's\nsecretaries of state, for the time being, if he does not, within six\nmonths after such warning, return into this realm, and from henceforth\nabide and inhabit continually within the same, he is from thenceforth\ndeclared incapable of taking any legacy devised to him within this\nkingdom, or of being executor or administrator to any person, or of\ntaking any lands within this kingdom, by descent, devise, or purchase.\nHe likewise forfeits to the king all his lands, goods, and chattels;\nis declared an alien in every respect; and is put out of the king's\nprotection.\n\nIt is unnecessary, I imagine, to observe how contrary such regulations\nare to the boasted liberty of the subject, of which we affect to be so\nvery jealous; but which, in this case, is so plainly sacrificed to the\nfutile interests of our merchants and manufacturers.\n\nThe laudable motive of all these regulations, is to extend our own\nmanufactures, not by their own improvement, but by the depression of\nthose of all our neighbours, and by putting an end, as much as possible,\nto the troublesome competition of such odious and disagreeable rivals.\nOur master manufacturers think it reasonable that they themselves should\nhave the monopoly of the ingenuity of all their countrymen. Though by\nrestraining, in some trades, the number of apprentices which can\nbe employed at one time, and by imposing the necessity of a long\napprenticeship in all trades, they endeavour, all of them, to confine\nthe knowledge of their respective employments to as small a number\nas possible; they are unwilling, however, that any part of this small\nnumber should go abroad to instruct foreigners.\n\nConsumption is the sole end and purpose of all production; and the\ninterest of the producer ought to be attended to, only so far as it may\nbe necessary for promoting that of the consumer.\n\nThe maxim is so perfectly self-evident, that it would be absurd to\nattempt to prove it. But in the mercantile system, the interest of the\nconsumer is almost constantly sacrificed to that of the producer; and it\nseems to consider production, and not consumption, as the ultimate end\nand object of all industry and commerce.\n\nIn the restraints upon the importation of all foreign commodities which\ncan come into competition with those of our own growth or manufacture,\nthe interest of the home consumer is evidently sacrificed to that of\nthe producer. It is altogether for the benefit of the latter, that the\nformer is obliged to pay that enhancement of price which this monopoly\nalmost always occasions.\n\nIt is altogether for the benefit of the producer, that bounties are\ngranted upon the exportation of some of his productions. The home\nconsumer is obliged to pay, first the tax which is necessary for paying\nthe bounty; and, secondly, the still greater tax which necessarily\narises from the enhancement of the price of the commodity in the home\nmarket.\n\nBy the famous treaty of commerce with Portugal, the consumer is\nprevented by duties from purchasing of a neighbouring country, a\ncommodity which our own climate does not produce; but is obliged to\npurchase it of a distant country, though it is acknowledged, that the\ncommodity of the distant country is of a worse quality than that of the\nnear one. The home consumer is obliged to submit to this inconvenience,\nin order that the producer may import into the distant country some of\nhis productions, upon more advantageous terms than he otherwise would\nhave been allowed to do. The consumer, too, is obliged to pay whatever\nenhancement in the price of those very productions this forced\nexportation may occasion in the home market.\n\nBut in the system of laws which has been established for the management\nof our American and West Indian colonies, the interest of the home\nconsumer has been sacrificed to that of the producer, with a more\nextravagant profusion than in all our other commercial regulations. A\ngreat empire has been established for the sole purpose of raising up a\nnation of customers, who should be obliged to buy, from the shops of our\ndifferent producers, all the goods with which these could supply them.\nFor the sake of that little enhancement of price which this monopoly\nmight afford our producers, the home consumers have been burdened with\nthe whole expense of maintaining and defending that empire. For this\npurpose, and for this purpose only, in the two last wars, more than two\nhundred millions have been spent, and a new debt of more than a hundred\nand seventy millions has been contracted, over and above all that had\nbeen expended for the same purpose in former wars. The interest of\nthis debt alone is not only greater than the whole extraordinary profit\nwhich, it never could be pretended, was made by the monopoly of the\ncolony trade, but than the whole value of that trade, or than the whole\nvalue of the goods which, at an average, have been annually exported to\nthe colonies.\n\nIt cannot be very difficult to determine who have been the contrivers of\nthis whole mercantile system; not the consumers, we may believe, whose\ninterest has been entirely neglected; but the producers, whose interest\nhas been so carefully attended to; and among this latter class, our\nmerchants and manufacturers have been by far the principal architects.\nIn the mercantile regulations which have been taken notice of in this\nchapter, the interest of our manufacturers has been most peculiarly\nattended to; and the interest, not so much of the consumers, as that of\nsome other sets of producers, has been sacrificed to it.\n\n\n\n\n\nCHAPTER IX. OF THE AGRICULTURAL SYSTEMS, OR OF THOSE SYSTEMS OF\nPOLITICAL ECONOMY WHICH REPRESENT THE PRODUCE OF LAND, AS EITHER THE\nSOLE OR THE PRINCIPAL SOURCE OF THE REVENUE AND WEALTH OF EVERY COUNTRY.\n\nThe agricultural systems of political economy will not require so long\nan explanation as that which I have thought it necessary to bestow upon\nthe mercantile or commercial system.\n\nThat system which represents the produce of land as the sole source of\nthe revenue and wealth of every country, has so far as I know, never\nbeen adopted by any nation, and it at present exists only in the\nspeculations of a few men of great learning and ingenuity in France. It\nwould not, surely, be worth while to examine at great length the errors\nof a system which never has done, and probably never will do, any harm\nin any part of the world. I shall endeavour to explain, however, as\ndistinctly as I can, the great outlines of this very ingenious system.\n\nMr. Colbert, the famous minister of Lewis XIV. was a man of probity,\nof great industry, and knowledge of detail; of great experience and\nacuteness in the examination of public accounts; and of abilities, in\nshort, every way fitted for introducing method and good order into the\ncollection and expenditure of the public revenue. That minister had\nunfortunately embraced all the prejudices of the mercantile system, in\nits nature and essence a system of restraint and regulation, and such\nas could scarce fail to be agreeable to a laborious and plodding man of\nbusiness, who had been accustomed to regulate the different departments\nof public offices, and to establish the necessary checks and controls\nfor confining each to its proper sphere. The industry and commerce of\na great country, he endeavoured to regulate upon the same model as the\ndepartments of a public office; and instead of allowing every man to\npursue his own interest his own way, upon the liberal plan of equality,\nliberty, and justice, he bestowed upon certain branches of industry\nextraordinary privileges, while he laid others under as extraordinary\nrestraints. He was not only disposed, like other European ministers, to\nencourage more the industry of the towns than that of the country; but,\nin order to support the industry of the towns, he was willing even to\ndepress and keep down that of the country. In order to render provisions\ncheap to the inhabitants of the towns, and thereby to encourage\nmanufactures and foreign commerce, he prohibited altogether the\nexportation of corn, and thus excluded the inhabitants of the country\nfrom every foreign market, for by far the most important part of the\nproduce of their industry. This prohibition, joined to the restraints\nimposed by the ancient provincial laws of France upon the transportation\nof corn from one province to another, and to the arbitrary and degrading\ntaxes which are levied upon the cultivators in almost all the provinces,\ndiscouraged and kept down the agriculture of that country very much\nbelow the state to which it would naturally have risen in so\nvery fertile a soil, and so very happy a climate. This state of\ndiscouragement and depression was felt more or less in every different\npart of the country, and many different inquiries were set on foot\nconcerning the causes of it. One of those causes appeared to be the\npreference given, by the institutions of Mr. Colbert, to the industry of\nthe towns above that of the country.\n\nIf the rod be bent too much one way, says the proverb, in order to\nmake it straight, you must bend it as much the other. The French\nphilosophers, who have proposed the system which represents agriculture\nas the sole source of the revenue and wealth of every country, seem to\nhave adopted this proverbial maxim; and, as in the plan of Mr. Colbert,\nthe industry of the towns was certainly overvalued in comparison with\nthat of the country, so in their system it seems to be as certainly\nunder-valued.\n\nThe different orders of people, who have ever been supposed to\ncontribute in any respect towards the annual produce of the land and\nlabour of the country, they divide into three classes. The first is\nthe class of the proprietors of land. The second is the class of the\ncultivators, of farmers and country labourers, whom they honour with the\npeculiar appellation of the productive class. The third is the class of\nartificers, manufacturers, and merchants, whom they endeavour to degrade\nby the humiliating appellation of the barren or unproductive class.\n\nThe class of proprietors contributes to the annual produce, by the\nexpense which they may occasionally lay out upon the improvement of the\nland, upon the buildings, drains, inclosures, and other ameliorations,\nwhich they may either make or maintain upon it, and by means of which\nthe cultivators are enabled, with the same capital, to raise a greater\nproduce, and consequently to pay a greater rent. This advanced rent may\nbe considered as the interest or profit due to the proprietor, upon the\nexpense or capital which he thus employs in the improvement of his\nland. Such expenses are in this system called ground expenses (depenses\nfoncieres).\n\nThe cultivators or farmers contribute to the annual produce, by what\nare in this system called the original and annual expenses (depenses\nprimitives, et depenses annuelles), which they lay out upon the\ncultivation of the land. The original expenses consist in the\ninstruments of husbandry, in the stock of cattle, in the seed, and in\nthe maintenance of the farmer's family, servants, and cattle, during at\nleast a great part of the first year of his occupancy, or till he can\nreceive some return from the land. The annual expenses consist in the\nseed, in the wear and tear of instruments of husbandry, and in the\nannual maintenance of the farmer's servants and cattle, and of his\nfamily too, so far as any part of them can be considered as servants\nemployed in cultivation. That part of the produce of the land which\nremains to him after paying the rent, ought to be sufficient, first, to\nreplace to him, within a reasonable time, at least during the term of\nhis occupancy, the whole of his original expenses, together with the\nordinary profits of stock; and, secondly, to replace to him annually\nthe whole of his annual expenses, together likewise with the ordinary\nprofits of stock. Those two sorts of expenses are two capitals which the\nfarmer employs in cultivation; and unless they are regularly restored\nto him, together with a reasonable profit, he cannot carry on his\nemployment upon a level with other employments; but, from a regard to\nhis own interest, must desert it as soon as possible, and seek some\nother. That part of the produce of the land which is thus necessary for\nenabling the farmer to continue his business, ought to be considered\nas a fund sacred to cultivation, which, if the landlord violates, he\nnecessarily reduces the produce of his own land, and, in a few years,\nnot only disables the farmer from paying this racked rent, but from\npaying the reasonable rent which he might otherwise have got for his\nland. The rent which properly belongs to the landlord, is no more than\nthe neat produce which remains after paying, in the completest manner,\nall the necessary expenses which must be previously laid out, in order\nto raise the gross or the whole produce. It is because the labour of\nthe cultivators, over and above paying completely all those necessary\nexpenses, affords a neat produce of this kind, that this class of\npeople are in this system peculiarly distinguished by the honourable\nappellation of the productive class. Their original and annual expenses\nare for the same reason called, In this system, productive expenses,\nbecause, over and above replacing their own value, they occasion the\nannual reproduction of this neat produce.\n\nThe ground expenses, as they are called, or what the landlord lays out\nupon the improvement of his land, are, in this system, too, honoured\nwith the appellation of productive expenses. Till the whole of those\nexpenses, together with the ordinary profits of stock, have been\ncompletely repaid to him by the advanced rent which he gets from his\nland, that advanced rent ought to be regarded as sacred and inviolable,\nboth by the church and by the king; ought to be subject neither to tithe\nnor to taxation. If it is otherwise, by discouraging the improvement of\nland, the church discourages the future increase of her own tithes,\nand the king the future increase of his own taxes. As in a well ordered\nstate of things, therefore, those ground expenses, over and above\nreproducing in the completest manner their own value, occasion likewise,\nafter a certain time, a reproduction of a neat produce, they are in this\nsystem considered as productive expenses.\n\nThe ground expenses of the landlord, however, together with the original\nand the annual expenses of the farmer, are the only three sorts of\nexpenses which in this system are considered as productive. All other\nexpenses, and all other orders of people, even those who, in the common\napprehensions of men, are regarded as the most productive, are, in this\naccount of things, represented as altogether barren and unproductive.\n\nArtificers and manufacturers, in particular, whose industry, in the\ncommon apprehensions of men, increases so much the value of the rude\nproduce of land, are in this system represented as a class of people\naltogether barren and unproductive. Their labour, it is said, replaces\nonly the stock which employs them, together with its ordinary profits.\nThat stock consists in the materials, tools, and wages, advanced to them\nby their employer; and is the fund destined for their employment and\nmaintenance. Its profits are the fund destined for the maintenance of\ntheir employer. Their employer, as he advances to them the stock of\nmaterials, tools, and wages, necessary for their employment, so he\nadvances to himself what is necessary for his own maintenance; and this\nmaintenance he generally proportions to the profit which he expects\nto make by the price of their work. Unless its price repays to him the\nmaintenance which he advances to himself, as well as the materials,\ntools, and wages, which he advances to his workmen, it evidently does\nnot repay to him the whole expense which he lays out upon it. The\nprofits of manufacturing stock, therefore, are not, like the rent of\nland, a neat produce which remains after completely repaying the whole\nexpense which must be laid out in order to obtain them. The stock of the\nfarmer yields him a profit, as well as that of the master manufacturer;\nand it yields a rent likewise to another person, which that of the\nmaster manufacturer does not. The expense, therefore, laid out in\nemploying and maintaining artificers and manufacturers, does no more\nthan continue, if one may say so, the existence of its own value, and\ndoes not produce any new value. It is, therefore, altogether a barren\nand unproductive expense. The expense, on the contrary, laid out in\nemploying farmers and country labourers, over and above continuing\nthe existence of its own value, produces a new value the rent of the\nlandlord. It is, therefore, a productive expense.\n\nMercantile stock is equally barren and unproductive with manufacturing\nstock. It only continues the existence of its own value, without\nproducing any new value. Its profits are only the repayment of the\nmaintenance which its employer advances to himself during the time that\nhe employs it, or till he receives the returns of it. They are only the\nrepayment of a part of the expense which must be laid out in employing\nit.\n\nThe labour of artificers and manufacturers never adds any thing to the\nvalue of the whole annual amount of the rude produce of the land. It\nadds, indeed, greatly to the value of some particular parts of it. But\nthe consumption which, in the mean time, it occasions of other parts, is\nprecisely equal to the value which it adds to those parts; so that the\nvalue of the whole amount is not, at any one moment of time, in the\nleast augmented by it. The person who works the lace of a pair of fine\nruffles for example, will sometimes raise the value of, perhaps, a\npennyworth of flax to £30 sterling. But though, at first sight, he\nappears thereby to multiply the value of a part of the rude produce\nabout seven thousand and two hundred times, he in reality adds nothing\nto the value of the whole annual amount of the rude produce. The working\nof that lace costs him, perhaps, two years labour. The £30 which he\ngets for it when it is finished, is no more than the repayment of the\nsubsistence which he advances to himself during the two years that he is\nemployed about it. The value which, by every day's, month's, or year's\nlabour, he adds to the flax, does no more than replace the value of his\nown consumption during that day, month, or year. At no moment of time,\ntherefore, does he add any thing to the value of the whole annual amount\nof the rude produce of the land: the portion of that produce which he\nis continually consuming, being always equal to the value which he is\ncontinually producing. The extreme poverty of the greater part of the\npersons employed in this expensive, though trifling manufacture, may\nsatisfy us that the price of their work does not, in ordinary cases,\nexceed the value of their subsistence. It is otherwise with the work\nof farmers and country labourers. The rent of the landlord is a value\nwhich, in ordinary cases, it is continually producing over and above\nreplacing, in the most complete manner, the whole consumption, the whole\nexpense laid out upon the employment and maintenance both of the workmen\nand of their employer.\n\nArtificers, manufacturers, and merchants, can augment the revenue and\nwealth of their society by parsimony only; or, as it is expressed in\nthis system, by privation, that is, by depriving themselves of a part\nof the funds destined for their own subsistence. They annually reproduce\nnothing but those funds. Unless, therefore, they annually save some part\nof them, unless they annually deprive themselves of the enjoyment of\nsome part of them, the revenue and wealth of their society can never be,\nin the smallest degree, augmented by means of their industry. Farmers\nand country labourers, on the contrary, may enjoy completely the whole\nfunds destined for their own subsistence, and yet augment, at the same\ntime, the revenue and wealth of their society. Over and above what is\ndestined for their own subsistence, their industry annually affords a\nneat produce, of which the augmentation necessarily augments the revenue\nand wealth of their society. Nations, therefore, which, like France or\nEngland, consist in a great measure, of proprietors and cultivators, can\nbe enriched by industry and enjoyment. Nations, on the contrary,\nwhich, like Holland and Hamburgh, are composed chiefly of merchants,\nartificers, and manufacturers, can grow rich only through parsimony and\nprivation. As the interest of nations so differently circumstanced is\nvery different, so is likewise the common character of the people. In\nthose of the former kind, liberality, frankness, and good fellowship,\nnaturally make a part of their common character; in the latter,\nnarrowness, meanness, and a selfish disposition, averse to all social\npleasure and enjoyment.\n\nThe unproductive class, that of merchants, artificers, and\nmanufacturers, is maintained and employed altogether at the expense\nof the two other classes, of that of proprietors, and of that of\ncultivators. They furnish it both with the materials of its work, and\nwith the fund of its subsistence, with the corn and cattle which it\nconsumes while it is employed about that work. The proprietors and\ncultivators finally pay both the wages of all the workmen of the\nunproductive class, and the profits of all their employers. Those\nworkmen and their employers are properly the servants of the proprietors\nand cultivators. They are only servants who work without doors, as\nmenial servants work within. Both the one and the other, however, are\nequally maintained at the expense of the same masters. The labour of\nboth is equally unproductive. It adds nothing to the value of the sum\ntotal of the rude produce of the land. Instead of increasing the value\nof that sum total, it is a charge and expense which must be paid out of\nit.\n\nThe unproductive class, however, is not only useful, but greatly\nuseful, to the other two classes. By means of the industry of merchants,\nartificers, and manufacturers, the proprietors and cultivators can\npurchase both the foreign goods and the manufactured produce of their\nown country, which they have occasion for, with the produce of a much\nsmaller quantity of their own labour, than what they would be obliged\nto employ, if they were to attempt, in an awkward and unskilful manner,\neither to import the one, or to make the other, for their own use. By\nmeans of the unproductive class, the cultivators are delivered from\nmany cares, which would otherwise distract their attention from the\ncultivation of land. The superiority of produce, which in consequence of\nthis undivided attention, they are enabled to raise, is fully sufficient\nto pay the whole expense which the maintenance and employment of the\nunproductive class costs either the proprietors or themselves. The\nindustry of merchants, artificers, and manufacturers, though in its\nown nature altogether unproductive, yet contributes in this manner\nindirectly to increase the produce of the land. It increases the\nproductive powers of productive labour, by leaving it at liberty to\nconfine itself to its proper employment, the cultivation of land; and\nthe plough goes frequently the easier and the better, by means of the\nlabour of the man whose business is most remote from the plough.\n\nIt can never be the interest of the proprietors and cultivators, to\nrestrain or to discourage, in any respect, the industry of merchants,\nartificers, and manufacturers. The greater the liberty which this\nunproductive class enjoys, the greater will be the competition in all\nthe different trades which compose it, and the cheaper will the\nother two classes be supplied, both with foreign goods and with the\nmanufactured produce of their own country.\n\nIt can never be the interest of the unproductive class to oppress\nthe other two classes. It is the surplus produce of the land, or what\nremains after deducting the maintenance, first of the cultivators,\nand afterwards of the proprietors, that maintains and employs the\nunproductive class. The greater this surplus, the greater must likewise\nbe the maintenance and employment of that class. The establishment of\nperfect justice, of perfect liberty, and of perfect equality, is the\nvery simple secret which most effectually secures the highest degree of\nprosperity to all the three classes.\n\nThe merchants, artificers, and manufacturers of those mercantile states,\nwhich, like Holland and Hamburgh, consist chiefly of this unproductive\nclass, are in the same manner maintained and employed altogether at the\nexpense of the proprietors and cultivators of land. The only difference\nis, that those proprietors and cultivators are, the greater part\nof them, placed at a most inconvenient distance from the merchants,\nartificers, and manufacturers, whom they supply with the materials of\ntheir work and the fund of their subsistence; are the inhabitants of\nother countries, and the subjects of other governments.\n\nSuch mercantile states, however, are not only useful, but greatly\nuseful, to the inhabitants of those other countries. They fill up,\nin some measure, a very important void; and supply the place of the\nmerchants, artificers, and manufacturers, whom the inhabitants of those\ncountries ought to find at home, but whom, from some defect in their\npolicy, they do not find at home.\n\nIt can never be the interest of those landed nations, if I may call them\nso, to discourage or distress the industry of such mercantile states,\nby imposing high duties upon their trade, or upon the commodities which\nthey furnish. Such duties, by rendering those commodities dearer, could\nserve only to sink the real value of the surplus produce of their own\nland, with which, or, what comes to the same thing, with the price of\nwhich those commodities are purchased. Such duties could only serve to\ndiscourage the increase of that surplus produce, and consequently\nthe improvement and cultivation of their own land. The most effectual\nexpedient, on the contrary, for raising the value of that surplus\nproduce, for encouraging its increase, and consequently the improvement\nand cultivation of their own land, would be to allow the most perfect\nfreedom to the trade of all such mercantile nations.\n\nThis perfect freedom of trade would even be the most effectual expedient\nfor supplying them, in due time, with all the artificers, manufacturers,\nand merchants, whom they wanted at home; and for filling up, in the\nproperest and most advantageous manner, that very important void which\nthey felt there.\n\nThe continual increase of the surplus produce of their land would, in\ndue time, create a greater capital than what would be employed with the\nordinary rate of profit in the improvement and cultivation of land; and\nthe surplus part of it would naturally turn itself to the employment\nof artificers and manufacturers, at home. But these artificers and\nmanufacturers, finding at home both the materials of their work and the\nfund of their subsistence, might immediately, even with much less\nart and skill be able to work as cheap as the little artificers and\nmanufacturers of such mercantile states, who had both to bring from a\ngreater distance. Even though, from want of art and skill, they might\nnot for some time be able to work as cheap, yet, finding a market at\nhome, they might be able to sell their work there as cheap as that of\nthe artificers and manufacturers of such mercantile states, which could\nnot be brought to that market but from so great a distance; and as their\nart and skill improved, they would soon be able to sell it cheaper. The\nartificers and manufacturers of such mercantile states, therefore, would\nimmediately be rivalled in the market of those landed nations, and soon\nafter undersold and justled out of it altogether. The cheapness of the\nmanufactures of those landed nations, in consequence of the gradual\nimprovements of art and skill, would, in due time, extend their sale\nbeyond the home market, and carry them to many foreign markets, from\nwhich they would, in the same manner, gradually justle out many of the\nmanufacturers of such mercantile nations.\n\nThis continual increase, both of the rude and manufactured produce of\nthose landed nations, would, in due time, create a greater capital\nthan could, with the ordinary rate of profit, be employed either in\nagriculture or in manufactures. The surplus of this capital would\nnaturally turn itself to foreign trade and be employed in exporting, to\nforeign countries, such parts of the rude and manufactured produce\nof its own country, as exceeded the demand of the home market. In the\nexportation of the produce of their own country, the merchants of a\nlanded nation would have an advantage of the same kind over those of\nmercantile nations, which its artificers and manufacturers had over the\nartificers and manufacturers of such nations; the advantage of finding\nat home that cargo, and those stores and provisions, which the others\nwere obliged to seek for at a distance. With inferior art and skill in\nnavigation, therefore, they would be able to sell that cargo as cheap\nin foreign markets as the merchants of such mercantile nations; and with\nequal art and skill they would be able to sell it cheaper. They would\nsoon, therefore, rival those mercantile nations in this branch of\nforeign trade, and, in due time, would justle them out of it altogether.\n\nAccording to this liberal and generous system, therefore, the most\nadvantageous method in which a landed nation can raise up artificers,\nmanufacturers, and merchants of its own, is to grant the most perfect\nfreedom of trade to the artificers, manufacturers, and merchants of all\nother nations. It thereby raises the value of the surplus produce of its\nown land, of which the continual increase gradually establishes a\nfund, which, in due time, necessarily raises up all the artificers,\nmanufacturers, and merchants, whom it has occasion for.\n\nWhen a landed nation on the contrary, oppresses, either by high duties\nor by prohibitions, the trade of foreign nations, it necessarily hurts\nits own interest in two different ways. First, by raising the price\nof all foreign goods, and of all sorts of manufactures, it necessarily\nsinks the real value of the surplus produce of its own land, with which,\nor, what comes to the same thing, with the price of which, it purchases\nthose foreign goods and manufactures. Secondly, by giving a sort of\nmonopoly of the home market to its own merchants, artificers, and\nmanufacturers, it raises the rate of mercantile and manufacturing\nprofit, in proportion to that of agricultural profit; and, consequently,\neither draws from agriculture a part of the capital which had before\nbeen employed in it, or hinders from going to it a part of what\nwould otherwise have gone to it. This policy, therefore, discourages\nagriculture in two different ways; first, by sinking the real value\nof its produce, and thereby lowering the rate of its profits; and,\nsecondly, by raising the rate of profit in all other employments.\nAgriculture is rendered less advantageous, and trade and manufactures\nmore advantageous, than they otherwise would be; and every man is\ntempted by his own interest to turn, as much as he can, both his capital\nand his industry from the former to the latter employments.\n\nThough, by this oppressive policy, a landed nation should be able to\nraise up artificers, manufacturers, and merchants of its own, somewhat\nsooner than it could do by the freedom of trade; a matter, however,\nwhich is not a little doubtful; yet it would raise them up, if one\nmay say so, prematurely, and before it was perfectly ripe for them. By\nraising up too hastily one species of industry, it would depress another\nmore valuable species of industry. By raising up too hastily a species\nof industry which duly replaces the stock which employs it, together\nwith the ordinary profit, it would depress a species of industry which,\nover and above replacing that stock, with its profit, affords likewise\na neat produce, a free rent to the landlord. It would depress productive\nlabour, by encouraging too hastily that labour which is altogether\nbarren and unproductive.\n\nIn what manner, according to this system, the sum total of the annual\nproduce of the land is distributed among the three classes above\nmentioned, and in what manner the labour of the unproductive class\ndoes no more than replace the value of its own consumption, without\nincreasing in any respect the value of that sum total, is represented\nby Mr Quesnai, the very ingenious and profound author of this system, in\nsome arithmetical formularies. The first of these formularies, which,\nby way of eminence, he peculiarly distinguishes by the name of the\nEconomical Table, represents the manner in which he supposes this\ndistribution takes place, in a state of the most perfect liberty,\nand, therefore, of the highest prosperity; in a state where the annual\nproduce is such as to afford the greatest possible neat produce, and\nwhere each class enjoys its proper share of the whole annual produce.\nSome subsequent formularies represent the manner in which he supposes\nthis distribution is made in different states of restraint and\nregulation; in which, either the class of proprietors, or the barren and\nunproductive class, is more favoured than the class of cultivators; and\nin which either the one or the other encroaches, more or less, upon the\nshare which ought properly to belong to this productive class. Every\nsuch encroachment, every violation of that natural distribution, which\nthe most perfect liberty would establish, must, according to this\nsystem, necessarily degrade, more or less, from one year to another, the\nvalue and sum total of the annual produce, and must necessarily occasion\na gradual declension in the real wealth and revenue of the society; a\ndeclension, of which the progress must be quicker or slower, according\nto the degree of this encroachment, according as that natural\ndistribution, which the most perfect liberty would establish, is more\nor less violated. Those subsequent formularies represent the different\ndegrees of declension which, according to this system, correspond to\nthe different degrees in which this natural distribution of things is\nviolated.\n\nSome speculative physicians seem to have imagined that the health of the\nhuman body could be preserved only by a certain precise regimen of\ndiet and exercise, of which every, the smallest violation, necessarily\noccasioned some degree of disease or disorder proportionate to the\ndegree of the violation. Experience, however, would seem to shew, that\nthe human body frequently preserves, to all appearance at least, the\nmost perfect state of health under a vast variety of different regimens;\neven under some which are generally believed to be very far from being\nperfectly wholesome. But the healthful state of the human body, it would\nseem, contains in itself some unknown principle of preservation, capable\neither of preventing or of correcting, in many respects, the bad effects\neven of a very faulty regimen. Mr Quesnai, who was himself a physician,\nand a very speculative physician, seems to have entertained a notion of\nthe same kind concerning the political body, and to have imagined that\nit would thrive and prosper only under a certain precise regimen, the\nexact regimen of perfect liberty and perfect justice. He seems not to\nhave considered, that in the political body, the natural effort which\nevery man is continually making to better his own condition, is a\nprinciple of preservation capable of preventing and correcting, in many\nrespects, the bad effects of a political economy, in some degree both\npartial and oppressive. Such a political economy, though it no doubt\nretards more or less, is not always capable of stopping altogether, the\nnatural progress of a nation towards wealth and prosperity, and still\nless of making it go backwards. If a nation could not prosper without\nthe enjoyment of perfect liberty and perfect justice, there is not in\nthe world a nation which could ever have prospered. In the political\nbody, however, the wisdom of nature has fortunately made ample provision\nfor remedying many of the bad effects of the folly and injustice of man;\nit the same manner as it has done in the natural body, for remedying\nthose of his sloth and intemperance.\n\nThe capital error of this system, however, seems to lie in its\nrepresenting the class of artificers, manufacturers, and merchants, as\naltogether barren and unproductive. The following observations may serve\nto shew the impropriety of this representation:--\n\nFirst, this class, it is acknowledged, reproduces annually the value of\nits own annual consmnption, and continues, at least, the existence of\nthe stock or capital which maintains and employs it. But, upon this\naccount alone, the denomination of barren or unproductive should seem to\nbe very improperly applied to it. We should not call a marriage barren\nor unproductive, though it produced only a son and a daughter, to\nreplace the father and mother, and though it did not increase the number\nof the human species, but only continued it as it was before. Farmers\nand country labourers, indeed, over and above the stock which maintains\nand employs them, reproduce annually a neat produce, a free rent to the\nlandlord. As a marriage which affords three children is certainly more\nproductive than one which affords only two, so the labour of farmers and\ncountry labourers is certainly more productive than that of merchants,\nartificers, and manufacturers. The superior produce of the one class,\nhowever, does not, render the other barren or unproductive.\n\nSecondly, it seems, on this account, altogether improper to consider\nartificers, manufacturers, and merchants, in the same light as menial\nservants. The labour of menial servants does not continue the existence\nof the fund which maintains and employs them. Their maintenance and\nemployment is altogether at the expense of their masters, and the work\nwhich they perform is not of a nature to repay that expense. That work\nconsists in services which perish generally in the very instant of\ntheir performance, and does not fix or realize itself in any vendible\ncommodity, which can replace the value of their wages and maintenance.\nThe labour, on the contrary, of artificers, manufacturers, and\nmerchants, naturally does fix and realize itself in some such vendible\ncommodity. It is upon this account that, in the chapter in which I\ntreat of productive and unproductive labour, I have classed artificers,\nmanufacturers, and merchants among the productive labourers, and menial\nservants among the barren or unproductive.\n\nThirdly, it seems, upon every supposition, improper to say, that the\nlabour of artificers, manufacturers, and merchants, does not increase\nthe real revenue of the society. Though we should suppose, for example,\nas it seems to be supposed in this system, that the value of the daily,\nmonthly, and yearly consumption of this class was exactly equal to that\nof its daily, monthly, and yearly production; yet it would not from\nthence follow, that its labour added nothing to the real revenue, to the\nreal value of the annual produce of the land and labour of the society.\nAn artificer, for example, who, in the first six months after harvest,\nexecutes ten pounds worth of work, though he should, in the same time,\nconsume ten pounds worth of corn and other necessaries, yet really adds\nthe value of ten pounds to the annual produce of the land and labour of\nthe society. While he has been consuming a half-yearly revenue of ten\npounds worth of corn and other necessaries, he has produced an equal\nvalue of work, capable of purchasing, either to himself, or to some\nother person, an equal half-yearly revenue. The value, therefore, of\nwhat has been consumed and produced during these six months, is equal,\nnot to ten, but to twenty pounds. It is possible, indeed, that no more\nthan ten pounds worth of this value may ever have existed at any\none moment of time. But if the ten pounds worth of corn and other\nnecessaries which were consumed by the artificer, had been consumed by\na soldier, or by a menial servant, the value of that part of the annual\nproduce which existed at the end of the six months, would have been\nten pounds less than it actually is in consequence of the labour of the\nartificer. Though the value of what the artificer produces, therefore,\nshould not, at any one moment of time, be supposed greater than the\nvalue he consumes, yet, at every moment of time, the actually existing\nvalue of goods in the market is, in consequence of what he produces,\ngreater than it otherwise would be.\n\nWhen the patrons of this system assert, that the consumption of\nartificers, manufacturer's, and merchants, is equal to the value of what\nthey produce, they probably mean no more than that their revenue, or\nthe fund destined for their consumption, is equal to it. But if they\nhad expressed themselves more accurately, and only asserted, that the\nrevenue of this class was equal to the value of what they produced, it\nmight readily have occurred to the reader, that what would naturally be\nsaved out of this revenue, must necessarily increase more or less the\nreal wealth of the society. In order, therefore, to make out something\nlike an argument, it was necessary that they should express themselves\nas they have done; and this argument, even supposing things actually\nwere as it seems to presume them to be, turns out to be a very\ninconclusive one.\n\nFourthly, farmers and country labourers can no more augment, without\nparsimony, the real revenue, the annual produce of the land and labour\nof their society, than artificers, manufacturers, and merchants. The\nannual produce of the land and labour of any society can be augmented\nonly in two ways; either, first, by some improvement in the productive\npowers of the useful labour actually maintained within it; or, secondly,\nby some increase in the quantity of that labour.\n\nThe improvement in the productive powers of useful labour depends,\nfirst, upon the improvement in the ability of the workman; and,\nsecondly, upon that of the machinery with which he works. But the\nlabour of artificers and manufacturers, as it is capable of being\nmore subdivided, and the labour of each workman reduced to a greater\nsimplicity of operation, than that of farmers and country labourers;\nso it is likewise capable of both these sorts of improvement in a much\nhigher degree {See book i chap. 1.} In this respect, therefore,\nthe class of cultivators can have no sort of advantage over that of\nartificers and manufacturers.\n\nThe increase in the quantity of useful labour actually employed within\nany society must depend altogether upon the increase of the capital\nwhich employs it; and the increase of that capital, again, must be\nexactly equal to the amount of the savings from the revenue, either\nof the particular persons who manage and direct the employment of that\ncapital, or of some other persons, who lend it to them. If merchants,\nartificers, and manufacturers are, as this system seems to suppose,\nnaturally more inclined to parsimony and saving than proprietors and\ncultivators, they are, so far, more likely to augment the quantity\nof useful labour employed within their society, and consequently to\nincrease its real revenue, the annual produce of its land and labour.\n\nFifthly and lastly, though the revenue of the inhabitants of every\ncountry was supposed to consist altogether, as this system seems to\nsuppose, in the quantity of subsistence which their industry could\nprocure to them; yet, even upon this supposition, the revenue of a\ntrading and manufacturing country must, other things being equal, always\nbe much greater than that of one without trade or manufactures. By means\nof trade and manufactures, a greater quantity of subsistence can be\nannually imported into a particular country, than what its own lands, in\nthe actual state of their cultivation, could afford. The inhabitants of\na town, though they frequently possess no lands of their own, yet draw\nto themselves, by their industry, such a quantity of the rude produce of\nthe lands of other people, as supplies them, not only with the materials\nof their work, but with the fund of their subsistence. What a town\nalways is with regard to the country in its neighbourhood, one\nindependent state or country may frequently be with regard to other\nindependent states or countries. It is thus that Holland draws a great\npart of its subsistence from other countries; live cattle from Holstein\nand Jutland, and corn from almost all the different countries of Europe.\nA small quantity of manufactured produce, purchases a great quantity of\nrude produce. A trading and manufacturing country, therefore, naturally\npurchases, with a small part of its manufactured produce, a great\npart of the rude produce of other countries; while, on the contrary, a\ncountry without trade and manufactures is generally obliged to purchase,\nat the expense of a great part of its rude produce, a very small part\nof the manufactured produce of other countries. The one exports what can\nsubsist and accommodate but a very few, and imports the subsistence and\naccommodation of a great number. The other exports the accommodation and\nsubsistence of a great number, and imports that of a very few only.\nThe inhabitants of the one must always enjoy a much greater quantity\nof subsistence than what their own lands, in the actual state of their\ncultivation, could afford. The inhabitants of the other must always\nenjoy a much smaller quantity.\n\nThis system, however, with all its imperfections, is perhaps the nearest\napproximation to the truth that has yet been published upon the\nsubject of political economy; and is upon that account, well worth the\nconsideration of every man who wishes to examine with attention the\nprinciples of that very important science. Though in representing the\nlabour which is employed upon land as the only productive labour, the\nnotions which it inculcates are, perhaps, too narrow and confined;\nyet in representing the wealth of nations as consisting, not in the\nunconsumable riches of money, but in the consumable goods annually\nreproduced by the labour of the society, and in representing perfect\nliberty as the only effectual expedient for rendering this annual\nreproduction the greatest possible, its doctrine seems to be in every\nrespect as just as it is generous and liberal. Its followers are\nvery numerous; and as men are fond of paradoxes, and of appearing to\nunderstand what surpasses the comprehensions of ordinary people, the\nparadox which it maintains, concerning the unproductive nature of\nmanufacturing labour, has not, perhaps, contributed a little to increase\nthe number of its admirers. They have for some years past made a pretty\nconsiderable sect, distinguished in the French republic of letters by\nthe name of the Economists. Their works have certainly been of some\nservice to their country; not only by bringing into general discussion,\nmany subjects which had never been well examined before, but by\ninfluencing, in some measure, the public administration in favour\nof agriculture. It has been in consequence of their representations,\naccordingly, that the agriculture of France has been delivered from\nseveral of the oppressions which it before laboured under. The term,\nduring which such a lease can be granted, as will be valid against every\nfuture purchaser or proprietor of the land, has been prolonged from\nnine to twenty-seven years. The ancient provincial restraints upon the\ntransportation of corn from one province of the kingdom to another, have\nbeen entirely taken away; and the liberty of exporting it to all foreign\ncountries, has been established as the common law of the kingdom in all\nordinary cases. This sect, in their works, which are very numerous, and\nwhich treat not only of what is properly called Political Economy, or\nof the nature and causes or the wealth of nations, but of every other\nbranch of the system of civil government, all follow implicitly, and\nwithout any sensible variation, the doctrine of Mr. Qttesnai. There is,\nupon this account, little variety in the greater part of their works.\nThe most distinct and best connected account of this doctrine is to be\nfound in a little book written by Mr. Mercier de la Riviere, some time\nintendant of Martinico, entitled, The natural and essential Order of\nPolitical Societies. The admiration of this whole sect for their master,\nwho was himself a man of the greatest modesty and simplicity, is not\ninferior to that of any of the ancient philosophers for the founders of\ntheir respective systems. 'There have been since the world began,' says\na very diligent and respectable author, the Marquis de Mirabeau, 'three\ngreat inventions which have principally given stability to political\nsocieties, independent of many other inventions which have enriched and\nadorned them. The first is the invention of writing, which alone gives\nhuman nature the power of transmitting, without alteration, its laws,\nits contracts, its annals, and its discoveries. The second is the\ninvention of money, which binds together all the relations between\ncivilized societies. The third is the economical table, the result of\nthe other two, which completes them both by perfecting their object;\nthe great discovery of our age, but of which our posterity will reap the\nbenefit.'\n\nAs the political economy of the nations of modern Europe has been more\nfavourable to manufactures and foreign trade, the industry of the towns,\nthan to agriculture, the industry of the country; so that of other\nnations has followed a different plan, and has been more favourable to\nagriculture than to manufactures and foreign trade.\n\nThe policy of China favours agriculture more than all other employments.\nIn China, the condition of a labourer is said to be as much superior to\nthat of an artificer, as in most parts of Europe that of an artificer is\nto that of a labourer. In China, the great ambition of every man is to\nget possession of a little bit of land, either in property or in lease;\nand leases are there said to be granted upon very moderate terms, and to\nbe sufficiently secured to the lessees. The Chinese have little respect\nfor foreign trade. Your beggarly commerce! was the language in which\nthe mandarins of Pekin used to talk to Mr. De Lange, the Russian envoy,\nconcerning it {See the Journal of Mr. De Lange, in Bell's Travels,\nvol. ii. p. 258, 276, 293.}. Except with Japan, the Chinese carry on,\nthemselves, and in their own bottoms, little or no foreign trade; and it\nis only into one or two ports of their kingdom that they even admit the\nships of foreign nations. Foreign trade, therefore, is, in China, every\nway confined within a much narrower circle than that to which it would\nnaturally extend itself, if more freedom was allowed to it, either in\ntheir own ships, or in those of foreign nations.\n\nManufactures, as in a small bulk they frequently contain a great value,\nand can upon that account be transported at less expense from one\ncountry to another than most parts of rude produce, are, in almost\nall countries, the principal support of foreign trade. In countries,\nbesides, less extensive, and less favourably circumstanced for inferior\ncommerce than China, they generally require the support of foreign\ntrade. Without an extensive foreign market, they could not well\nflourish, either in countries so moderately extensive as to afford but a\nnarrow home market, or in countries where the communication between one\nprovince and another was so difficult, as to render it impossible for\nthe goods of any particular place to enjoy the whole of that home\nmarket which the country could afford. The perfection of manufacturing\nindustry, it must be remembered, depends altogether upon the division of\nlabour; and the degree to which the division of labour can be introduced\ninto any manufacture, is necessarily regulated, it has already been\nshewn, by the extent of the market. But the great extent of the empire\nof China, the vast multitude of its inhabitants, the variety of climate,\nand consequently of productions in its different provinces, and the easy\ncommunication by means of water-carriage between the greater part of\nthem, render the home market of that country of so great extent, as to\nbe alone sufficient to support very great manufactures, and to admit of\nvery considerable subdivisions of labour. The home market of China is,\nperhaps, in extent, not much inferior to the market of all the different\ncountries of Europe put together. A more extensive foreign trade,\nhowever, which to this great home market added the foreign market of all\nthe rest of the world, especially if any considerable part of this trade\nwas carried on in Chinese ships, could scarce fail to increase very\nmuch the manufactures of China, and to improve very much the productive\npowers of its manufacturing industry. By a more extensive navigation,\nthe Chinese would naturally learn the art of using and constructing,\nthemselves, all the different machines made use of in other countries,\nas well as the other improvements of art and industry which are\npractised in all the different parts of the world. Upon their present\nplan, they have little opportunity of improving themselves by the\nexample of any other nation, except that of the Japanese.\n\nThe policy of ancient Egypt, too, and that of the Gentoo government\nof Indostan, seem to have favoured agriculture more than all other\nemployments.\n\nBoth in ancient Egypt and Indostan, the whole body of the people was\ndivided into different casts or tribes each of which was confined, from\nfather to son, to a particular employment, or class of employments.\nThe son of a priest was necessarily a priest; the son of a soldier,\na soldier; the son of a labourer, a labourer; the son of a weaver, a\nweaver; the son of a tailor, a tailor, etc. In both countries, the cast\nof the priests holds the highest rank, and that of the soldiers the\nnext; and in both countries the cast of the farmers and labourers was\nsuperior to the casts of merchants and manufacturers.\n\nThe government of both countries was particularly attentive to the\ninterest of agriculture. The works constructed by the ancient sovereigns\nof Egypt, for the proper distribution of the waters of the Nile, were\nfamous in antiquity, and the ruined remains of some of them are\nstill the admiration of travellers. Those of the same kind which were\nconstructed by the ancient sovereigns of Indostan, for the proper\ndistribution of the waters of the Ganges, as well as of many other\nrivers, though they have been less celebrated, seem to have been equally\ngreat. Both countries, accordingly, though subject occasionally to\ndearths, have been famous for their great fertility. Though both were\nextremely populous, yet, in years of moderate plenty, they were both\nable to export great quantities of grain to their neighbours.\n\nThe ancient Egyptians had a superstitious aversion to the sea; and as\nthe Gentoo religion does not permit its followers to light a fire,\nnor consequently to dress any victuals, upon the water, it, in effect,\nprohibits them from all distant sea voyages. Both the Egyptians and\nIndians must have depended almost altogether upon the navigation of\nother nations for the exportation of their surplus produce; and this\ndependency, as it must have confined the market, so it must have\ndiscouraged the increase of this surplus produce. It must have\ndiscouraged, too, the increase of the manufactured produce, more than\nthat of the rude produce. Manufactures require a much more extensive\nmarket than the most important parts of the rude produce of the land. A\nsingle shoemaker will make more than 300 pairs of shoes in the year; and\nhis own family will not, perhaps, wear out six pairs. Unless, therefore,\nhe has the custom of, at least, 50 such families as his own, he cannot\ndispose of the whole product of his own labour. The most numerous class\nof artificers will seldom, in a large country, make more than one in 50,\nor one in a 100, of the whole number of families contained in it. But\nin such large countries, as France and England, the number of people\nemployed in agriculture has, by some authors been computed at a half, by\nothers at a third and by no author that I know of, at less that a fifth\nof the whole inhabitants of the country. But as the produce of the\nagriculture of both France and England is, the far greater part of it,\nconsumed at home, each person employed in it must, according to these\ncomputations, require little more than the custom of one, two, or, at\nmost, of four such families as his own, in order to dispose of the whole\nproduce of his own labour. Agriculture, therefore, can support\nitself under the discouragement of a confined market much better\nthan manufactures. In both ancient Egypt and Indostan, indeed, the\nconfinement of the foreign market was in some measure compensated by\nthe conveniency of many inland navigations, which opened, in the most\nadvantageous manner, the whole extent of the home market to every part\nof the produce of every different district of those countries. The great\nextent of Indostan, too, rendered the home market of that country very\ngreat, and sufficient to support a great variety of manufactures. But\nthe small extent of ancient Egypt, which was never equal to England,\nmust at all times, have rendered the home market of that country\ntoo narrow for supporting any great variety of manufactures. Bengal\naccordingly, the province of Indostan which commonly exports the\ngreatest quantity of rice, has always been more remarkable for the\nexportation of a great variety of manufactures, than for that of\nits grain. Ancient Egypt, on the contrary, though it exported some\nmanufactures, fine linen in particular, as well as some other goods,\nwas always most distinguished for its great exportation of grain. It was\nlong the granary of the Roman empire.\n\nThe sovereigns of China, of ancient Egypt, and of the different kingdoms\ninto which Indostan has, at different times, been divided, have always\nderived the whole, or by far the most considerable part, of their\nrevenue, from some sort of land tax or land rent. This land tax, or land\nrent, like the tithe in Europe, consisted in a certain proportion,\na fifth, it is said, of the produce of the land, which was either\ndelivered in kind, or paid in money, according to a certain valuation,\nand which, therefore, varied from year to year, according to all\nthe variations of the produce. It was natural, therefore, that the\nsovereigns of those countries should be particularly attentive to the\ninterests of agriculture, upon the prosperity or declension of which\nimmediately depended the yearly increase or diminution of their own\nrevenue.\n\nThe policy of the ancient republics of Greece, and that of Rome, though\nit honoured agriculture more than manufactures or foreign trade, yet\nseems rather to have discouraged the latter employments, than to have\ngiven any direct or intentional encouragement to the former. In\nseveral of the ancient states of Greece, foreign trade was prohibited\naltogether; and in several others, the employments of artificers and\nmanufacturers were considered as hurtful to the strength and agility of\nthe human body, as rendering it incapable of those habits which their\nmilitary and gymnastic exercises endeavoured to form in it, and as\nthereby disqualifying it, more or less, for undergoing the fatigues and\nencountering the dangers of war. Such occupations were considered as\nfit only for slaves, and the free citizens of the states were prohibited\nfrom exercising them. Even in those states where no such prohibition\ntook place, as in Rome and Athens, the great body of the people were in\neffect excluded from all the trades which are now commonly exercised by\nthe lower sort of the inhabitants of towns. Such trades were, at Athens\nand Rome, all occupied by the slaves of the rich, who exercised them for\nthe benefit of their masters, whose wealth, power, and protection, made\nit almost impossible for a poor freeman to find a market for his work,\nwhen it came into competition with that of the slaves of the rich.\nSlaves, however, are very seldom inventive; and all the most\nimportant improvements, either in machinery, or in the arrangement and\ndistribution of work, which facilitate and abridge labour have been the\ndiscoveries of freemen. Should a slave propose any improvement of this\nkind, his master would be very apt to consider the proposal as the\nsuggestion of laziness, and of a desire to save his own labour at the\nmaster's expense. The poor slave, instead of reward would probably\nmeet with much abuse, perhaps with some punishment. In the manufactures\ncarried on by slaves, therefore, more labour must generally have been\nemployed to execute the same quantity of work, than in those carried on\nby freemen. The work of the farmer must, upon that account, generally\nhave been dearer than that of the latter. The Hungarian mines, it is\nremarked by Mr. Montesquieu, though not richer, have always been wrought\nwith less expense, and therefore with more profit, than the Turkish\nmines in their neighbourhood. The Turkish mines are wrought by slaves;\nand the arms of those slaves are the only machines which the Turks have\never thought of employing. The Hungarian mines are wrought by freemen,\nwho employ a great deal of machinery, by which they facilitate and\nabridge their own labour. From the very little that is known about the\nprice of manufactures in the times of the Greeks and Romans, it would\nappear that those of the finer sort were excessively dear. Silk sold\nfor its weight in gold. It was not, indeed, in those times an European\nmanufacture; and as it was all brought from the East Indies, the\ndistance of the carriage may in some measure account for the greatness\nof the price. The price, however, which a lady, it is said, would\nsometimes pay for a piece of very fine linen, seems to have been equally\nextravagant; and as linen was always either an European, or at farthest,\nan Egyptian manufacture, this high price can be accounted for only by\nthe great expense of the labour which must have been employed about It,\nand the expense of this labour again could arise from nothing but the\nawkwardness of the machinery which is made use of. The price of fine\nwoollens, too, though not quite so extravagant, seems, however, to have\nbeen much above that of the present times. Some cloths, we are told by\nPliny {Plin. 1. ix.c.39.}, dyed in a particular manner, cost a hundred\ndenarii, or £3:6s:8d. the pound weight. Others, dyed in another manner,\ncost a thousand denarii the pound weight, or £33:6s:8d. The Roman pound,\nit must be remembered, contained only twelve of our avoirdupois ounces.\nThis high price, indeed, seems to have been principally owing to the\ndye. But had not the cloths themselves been much dearer than any\nwhich are made in the present times, so very expensive a dye would not\nprobably have been bestowed upon them. The disproportion would have been\ntoo great between the value of the accessory and that of the principal.\nThe price mentioned by the same author {Plin. 1. viii.c.48.}, of some\ntriclinaria, a sort of woollen pillows or cushions made use of to\nlean upon as they reclined upon their couches at table, passes all\ncredibility; some of them being said to have cost more than £30,000,\nothers more than £300,000. This high price, too, is not said to have\narisen from the dye. In the dress of the people of fashion of both\nsexes, there seems to have been much less variety, it is observed by Dr.\nArbuthnot, in ancient than in modern times; and the very little variety\nwhich we find in that of the ancient statues, confirms his observation.\nHe infers from this, that their dress must, upon the whole, have been\ncheaper than ours; but the conclusion does not seem to follow. When the\nexpense of fashionable dress is very great, the variety must be very\nsmall. But when, by the improvements in the productive powers of\nmanufacturing art and industry, the expense of any one dress comes to be\nvery moderate, the variety will naturally be very great. The rich, not\nbeing able to distinguish themselves by the expense of any one dress,\nwill naturally endeavour to do so by the multitude and variety of their\ndresses.\n\nThe greatest and most important branch of the commerce of every nation,\nit has already been observed, is that which is carried on between the\ninhabitants of the town and those of the country. The inhabitants of the\ntown draw from the country the rude produce, which constitutes both the\nmaterials of their work and the fund of their subsistence; and they pay\nfor this rude produce, by sending back to the country a certain portion\nof it manufactured and prepared for immediate use. The trade which\nis carried on between these two different sets of people, consists\nultimately in a certain quantity of rude produce exchanged for a certain\nquantity of manufactured produce. The dearer the latter, therefore, the\ncheaper the former; and whatever tends in any country to raise the price\nof manufactured produce, tends to lower that of the rude produce of the\nland, and thereby to discourage agriculture. The smaller the quantity of\nmanufactured produce, which any given quantity of rude produce, or, what\ncomes to the same thing, which the price of any given quantity of rude\nproduce, is capable of purchasing, the smaller the exchangeable value of\nthat given quantity of rude produce; the smaller the encouragement which\neither the landlord has to increase its quantity by improving, or the\nfarmer by cultivating the land. Whatever, besides, tends to diminish\nin any country the number of artificers and manufacturers, tends to\ndiminish the home market, the most important of all markets, for the\nrude produce of the land, and thereby still further to discourage\nagriculture.\n\nThose systems, therefore, which preferring agriculture to all other\nemployments, in order to promote it, impose restraints upon manufactures\nand foreign trade, act contrary to the very end which they propose, and\nindirectly discourage that very species of industry which they mean\nto promote. They are so far, perhaps, more inconsistent than even the\nmercantile system. That system, by encouraging manufactures and foreign\ntrade more than agriculture, turns a certain portion of the capital\nof the society, from supporting a more advantageous, to support a less\nadvantageous species of industry. But still it really, and in the end,\nencourages that species of industry which it means to promote.\nThose agricultural systems, on the contrary, really, and in the end,\ndiscourage their own favourite species of industry.\n\nIt is thus that every system which endeavours, either, by extraordinary\nencouragements to draw towards a particular species of industry a\ngreater share of the capital of the society than what would naturally\ngo to it, or, by extraordinary restraints, to force from a particular\nspecies of industry some share of the capital which would otherwise be\nemployed in it, is, in reality, subversive of the great purpose which\nit means to promote. It retards, instead of accelerating the progress of\nthe society towards real wealth and greatness; and diminishes, instead\nof increasing, the real value of the annual produce of its land and\nlabour.\n\nAll systems, either of preference or of restraint, therefore, being thus\ncompletely taken away, the obvious and simple system of natural liberty\nestablishes itself of its own accord. Every man, as long as he does not\nviolate the laws of justice, is left perfectly free to pursue his own\ninterest his own way, and to bring both his industry and capital into\ncompetition with those of any other man, or order of men. The sovereign\nis completely discharged from a duty, in the attempting to perform which\nhe must always be exposed to innumerable delusions, and for the proper\nperformance of which, no human wisdom or knowledge could ever be\nsufficient; the duty of superintending the industry of private people,\nand of directing it towards the employments most suitable to the\ninterests of the society. According to the system of natural liberty,\nthe sovereign has only three duties to attend to; three duties of great\nimportance, indeed, but plain and intelligible to common understandings:\nfirst, the duty of protecting the society from the violence and invasion\nof other independent societies; secondly, the duty of protecting, as\nfar as possible, every member of the society from the injustice or\noppression of every other member of it, or the duty of establishing an\nexact administration of justice; and, thirdly, the duty of erecting and\nmaintaining certain public works, and certain public institutions, which\nit can never be for the interest of any individual, or small number of\nindividuals to erect and maintain; because the profit could never repay\nthe expense to any individual, or small number of individuals, though it\nmay frequently do much more than repay it to a great society.\n\nThe proper performance of those several duties of the sovereign\nnecessarily supposes a certain expense; and this expense again\nnecessarily requires a certain revenue to support it. In the following\nbook, therefore, I shall endeavour to explain, first, what are the\nnecessary expenses of the sovereign or commonwealth; and which of those\nexpenses ought to be defrayed by the general contribution of the whole\nsociety; and which of them, by that of some particular part only, or of\nsome particular members of the society: secondly, what are the different\nmethods in which the whole society may be made to contribute towards\ndefraying the expenses incumbent on the whole society; and what are the\nprincipal advantages and inconveniencies of each of those methods: and\nthirdly, what are the reasons and causes which have induced almost all\nmodern governments to mortgage some part of this revenue, or to contract\ndebts; and what have been the effects of those debts upon the real\nwealth, the annual produce of the land and labour of the society.\nThe following book, therefore, will naturally be divided into three\nchapters.\n\n\n\n\nAPPENDIX TO BOOK IV\n\nThe two following accounts are subjoined, in order to illustrate and\nconfirm what is said in the fifth chapter of the fourth book, concerning\nthe Tonnage Bounty to the Whit-herring Fishery. The reader, I believe,\nmay depend upon the accuracy of both accounts.\n\n\nAn account of Busses fitted out in Scotland for eleven Years, with\nthe Number of empty Barrels carried out, and the Number of Barrels\nof Herrings caught; also the Bounty, at a Medium, on each Barrel of\nSea-sricks, and on each Barrel when fully packed.\n\n  Years   Number of  Empty Barrels  Barrels of Her-  Bounty paid on\n           Busses     carried out    rings caught      the Busses\n                                                          £.  s.  d.\n  1771          29        5,948        2,832          2,885   0   0\n  1772         168       41,316       22,237         11,055   7   6\n  1773         190       42,333       42,055         12,510   8   6\n  1774         240       59,303       56,365         26,932   2   6\n  1775         275       69,144       52,879         19,315  15   0\n  1776         294       76,329       51,863         21,290   7   6\n  1777         240       62,679       43,313         17,592   2   6\n  1778         220       56,390       40,958         16,316   2   6\n  1779         206       55,194       29,367         15,287   0   0\n  1780         181       48,315       19,885         13,445  12   6\n  1781         135       33,992       16,593          9,613  15   6\n\n      Totals 2,186      550,943      378,347       £165,463  14   0\n\n  Sea-sticks     378,347  Bounty, at a medium, for each\n                          barrel of sea-sticks,         £ 0   8   2¼\n                          But a barrel of sea-sticks\n                          being only reckoned two thirds\n                          of a barrel fully packed, one\n                          third to be deducted, which\n  ¹/³deducted    126,115  brings the bounty to          £ 0  12   3¾\n  Barrels fully\n  packed         252,231\n\n  And if the herrings are exported, there is besides a\n                                           premium of   £ 0   2   8\n  So the bounty paid by government in money for each\n                                           barrel is    £ 0  14  11¾\n\n  But if to this, the duty of the salt usually taken\n  credit for as expended in curing each barrel, which\n  at a medium, is, of foreign, one bushel and one-\n  fourth of a bushel, at 10s. a-bushel, be added, viz     0  12   6\n  the bounty on each barrel would amount to             £ 1   7   5¾\n\n  If the herrings are cured with British salt, it will\n  stand thus, viz.\n  Bounty as before                                      £ 0  14  11¾\n  But if to this bounty, the duty on two bushels of\n  Scotch salt, at 1s.6d. per bushel, supposed to be\n  the quantity, at a medium, used in curing each\n  barrel is added, viz.                                   0   3   0\n  The bounty on each barrel will amount to              £ 0  17  11¾\n\n  And when buss herrings are entered for home\n  consumption in Scotland, and pay the shilling a\n  barrel of duty, the bounty stands thus, to wit,\n                                           as before    £ 0  12   3¾\n  From which the shilling a barrel is to be deducted      0   1   0\n                                                        £ 0  11   3¾\n\n  But to that there is to be added again, the duty of\n  the foreign salt used curing a barrel of herring viz    0  12   6\n  So that the premium allowed for each barrel of her-\n  rings entered for home consumption is                 £ 1   3   9¾\n\n\n  If the herrings are cured in British salt, it will\n  stand as follows viz.\n  Bounty on each barrel brought in by the busses, as\n  above                                                 £ 0  12   3¾\n  From which deduct 1s. a-barrel, paid at the time\n  they are entered for home consumption                   0   1   0\n                                                        £ 0  11   3¾\n\n  But if to the bounty, the the duty on two bushel\n  of Scotch salt, at 1s.6d. per bushel supposed to\n  be the quantity, at a medium, used in curing each\n  barrel, is added, viz                                   0   3   0\n  the premium for each barrel entered for home\n  consumption will be                                   £ 1  14   3¾\n\nThough the loss of duties upon herrings exported cannot, perhaps,\nproperly be considered as bounty, that upon herrings entered for home\nconsumption certainly may.\n\n\n\n\nAn account of the Quantity of Foreign Salt imported into Scotland,\nand of Scotch Salt delivered Duty-free from the Works there, for the\nFishery, from the 5th. of April 1771 to the 5th. of April 1782 with the\nMedium of both for one Year.\n\n\n                                Foreign Salt      Scotch Salt delivered\n           PERIOD                 imported        from the Works\n                                  Bushels              Bushels\n\n  From 5th. April 1771 to\n      5th. April 1782             936,974              168,226\n  Medium for one year              85,159½              15,293¼\n\nIt is to be observed, that the bushel of foreign salt weighs 48lbs.,\nthat of British weighs 56lbs. only.\n\n\n\n\n\nBOOK V.\n\nOF THE REVENUE OF THE SOVEREIGN OR COMMONWEALTH\n\n\n\nCHAPTER I. OF THE EXPENSES OF THE SOVEREIGN OR COMMONWEALTH.\n\n\nPART I. Of the Expense of Defence.\n\nThe first duty of the sovereign, that of protecting the society from the\nviolence and invasion of other independent societies, can be performed\nonly by means of a military force. But the expense both of preparing\nthis military force in time of peace, and of employing it in time\nof war, is very different in the different states of society, in the\ndifferent periods of improvement.\n\nAmong nations of hunters, the lowest and rudest state of society, such\nas we find it among the native tribes of North America, every man is a\nwarrior, as well as a hunter. When he goes to war, either to defend his\nsociety, or to revenge the injuries which have been done to it by other\nsocieties, he maintains himself by his own labour, in the same manner as\nwhen he lives at home. His society (for in this state of things there is\nproperly neither sovereign nor commonwealth) is at no sort of expense,\neither to prepare him for the field, or to maintain him while he is in\nit.\n\nAmong nations of shepherds, a more advanced state of society, such as we\nfind it among the Tartars and Arabs, every man is, in the same manner, a\nwarrior. Such nations have commonly no fixed habitation, but live either\nin tents, or in a sort of covered waggons, which are easily transported\nfrom place to place. The whole tribe, or nation, changes its situation\naccording to the different seasons of the year, as well as according to\nother accidents. When its herds and flocks have consumed the forage\nof one part of the country, it removes to another, and from that to a\nthird. In the dry season, it comes down to the banks of the rivers; in\nthe wet season, it retires to the upper country. When such a nation goes\nto war, the warriors will not trust their herds and flocks to the feeble\ndefence of their old men, their women and children; and their old men,\ntheir women and children, will not be left behind without defence, and\nwithout subsistence. The whole nation, besides, being accustomed to a\nwandering life, even in time of peace, easily takes the field in time\nof war. Whether it marches as an army, or moves about as a company of\nherdsmen, the way of life is nearly the same, though the object proposed\nby it be very different. They all go to war together, therefore, and\neveryone does as well as he can. Among the Tartars, even the women have\nbeen frequently known to engage in battle. If they conquer, whatever\nbelongs to the hostile tribe is the recompence of the victory; but if\nthey are vanquished, all is lost; and not only their herds and flocks,\nbut their women and children become the booty of the conqueror. Even the\ngreater part of those who survive the action are obliged to submit\nto him for the sake of immediate subsistence. The rest are commonly\ndissipated and dispersed in the desert.\n\nThe ordinary life, the ordinary exercise of a Tartar or Arab, prepares\nhim sufficiently for war. Running, wrestling, cudgel-playing, throwing\nthe javelin, drawing the bow, etc. are the common pastimes of those\nwho live in the open air, and are all of them the images of war. When a\nTartar or Arab actually goes to war, he is maintained by his own herds\nand flocks, which he carries with him, in the same manner as in peace.\nHis chief or sovereign (for those nations have all chiefs or sovereigns)\nis at no sort of expense in preparing him for the field; and when he is\nin it, the chance of plunder is the only pay which he either expects or\nrequires.\n\nAn army of hunters can seldom exceed two or three hundred men. The\nprecarious subsistence which the chace affords, could seldom allow a\ngreater number to keep together for any considerable time. An army of\nshepherds, on the contrary, may sometimes amount to two or three hundred\nthousand. As long as nothing stops their progress, as long as they can\ngo on from one district, of which they have consumed the forage, to\nanother, which is yet entire; there seems to be scarce any limit to\nthe number who can march on together. A nation of hunters can never be\nformidable to the civilized nations in their neighbourhood; a nation of\nshepherds may. Nothing can be more contemptible than an Indian war in\nNorth America; nothing, on the contrary, can be more dreadful than a\nTartar invasion has frequently been in Asia. The judgment of Thucydides,\nthat both Europe and Asia could not resist the Scythians united, has\nbeen verified by the experience of all ages. The inhabitants of the\nextensive, but defenceless plains of Scythia or Tartary, have been\nfrequently united under the dominion of the chief of some conquering\nhorde or clan; and the havock and devastation of Asia have always\nsignalized their union. The inhabitants of the inhospitable deserts of\nArabia, the other great nation of shepherds, have never been united but\nonce, under Mahomet and his immediate successors. Their union, which was\nmore the effect of religious enthusiasm than of conquest, was signalized\nin the same manner. If the hunting nations of America should ever become\nshepherds, their neighbourhood would be much more dangerous to the\nEuropean colonies than it is at present.\n\nIn a yet more advanced state of society, among those nations of\nhusbandmen who have little foreign commerce, and no other manufactures\nbut those coarse and household ones, which almost every private family\nprepares for its own use, every man, in the same manner, either is a\nwarrior, or easily becomes such. Those who live by agriculture generally\npass the whole day in the open air, exposed to all the inclemencies of\nthe seasons. The hardiness of their ordinary life prepares them for the\nfatigues of war, to some of which their necessary occupations bear a\ngreat analogy. The necessary occupation of a ditcher prepares him to\nwork in the trenches, and to fortify a camp, as well as to inclose a\nfield. The ordinary pastimes of such husbandmen are the same as those\nof shepherds, and are in the same manner the images of war. But as\nhusbandmen have less leisure than shepherds, they are not so frequently\nemployed in those pastimes. They are soldiers but soldiers not quite\nso much masters of their exercise. Such as they are, however, it seldom\ncosts the sovereign or commonwealth any expense to prepare them for the\nfield.\n\nAgriculture, even in its rudest and lowest state, supposes a settlement,\nsome sort of fixed habitation, which cannot be abandoned without great\nloss. When a nation of mere husbandmen, therefore, goes to war, the\nwhole people cannot take the field together. The old men, the women and\nchildren, at least, must remain at home, to take care of the habitation.\nAll the men of the military age, however, may take the field, and in\nsmall nations of this kind, have frequently done so. In every nation,\nthe men of the military age are supposed to amount to about a fourth\nor a fifth part of the whole body of the people. If the campaign, too,\nshould begin after seedtime, and end before harvest, both the husbandman\nand his principal labourers can be spared from the farm without much\nloss. He trusts that the work which must be done in the mean time, can\nbe well enough executed by the old men, the women, and the children.\nHe is not unwilling, therefore, to serve without pay during a short\ncampaign; and it frequently costs the sovereign or commonwealth as\nlittle to maintain him in the field as to prepare him for it. The\ncitizens of all the different states of ancient Greece seem to have\nserved in this manner till after the second Persian war; and the people\nof Peloponnesus till after the Peloponnesian war. The Peloponnesians,\nThucydides observes, generally left the field in the summer, and\nreturned home to reap the harvest. The Roman people, under their kings,\nand during the first ages of the republic, served in the same manner.\nIt was not till the seige of Veii, that they who staid at home began to\ncontribute something towards maintaining those who went to war. In the\nEuropean monarchies, which were founded upon the ruins of the Roman\nempire, both before, and for some time after, the establishment of\nwhat is properly called the feudal law, the great lords, with all their\nimmediate dependents, used to serve the crown at their own expense. In\nthe field, in the same manner as at home, they maintained themselves\nby their own revenue, and not by any stipend or pay which they received\nfrom the king upon that particular occasion.\n\nIn a more advanced state of society, two different causes contribute\nto render it altogether impossible that they who take the field should\nmaintain themselves at their own expense. Those two causes are, the\nprogress of manufactures, and the improvement in the art of war.\n\nThough a husbandman should be employed in an expedition, provided it\nbegins after seedtime, and ends before harvest, the interruption of his\nbusiness will not always occasion any considerable diminution of his\nrevenue. Without the intervention of his labour, Nature does herself the\ngreater part of the work which remains to be done. But the moment that\nan artificer, a smith, a carpenter, or a weaver, for example, quits his\nworkhouse, the sole source of his revenue is completely dried up. Nature\ndoes nothing for him; he does all for himself. When he takes the field,\ntherefore, in defence of the public, as he has no revenue to maintain\nhimself, he must necessarily be maintained by the public. But in a\ncountry, of which a great part of the inhabitants are artificers and\nmanufacturers, a great part of the people who go to war must be drawn\nfrom those classes, and must, therefore, be maintained by the public as\nlong as they are employed in its service.\n\nWhen the art of war, too, has gradually grown up to be a very intricate\nand complicated science; when the event of war ceases to be determined,\nas in the first ages of society, by a single irregular skirmish or\nbattle; but when the contest is generally spun out through several\ndifferent campaigns, each of which lasts during the greater part of the\nyear; it becomes universally necessary that the public should maintain\nthose who serve the public in war, at least while they are employed\nin that service. Whatever, in time of peace, might be the ordinary\noccupation of those who go to war, so very tedious and expensive a\nservice would otherwise be by far too heavy a burden upon them. After\nthe second Persian war, accordingly, the armies of Athens seem to have\nbeen generally composed of mercenary troops, consisting, indeed, partly\nof citizens, but partly, too, of foreigners; and all of them equally\nhired and paid at the expense of the state. From the time of the siege\nof Veii, the armies of Rome received pay for their service during the\ntime which they remained in the field. Under the feudal governments,\nthe military service, both of the great lords, and of their immediate\ndependents, was, after a certain period, universally exchanged for a\npayment in money, which was employed to maintain those who served in\ntheir stead.\n\nThe number of those who can go to war, in proportion to the whole number\nof the people, is necessarily much smaller in a civilized than in a rude\nstate of society. In a civilized society, as the soldiers are maintained\naltogether by the labour of those who are not soldiers, the number of\nthe former can never exceed what the latter can maintain, over and above\nmaintaining, in a manner suitable to their respective stations, both\nthemselves and the other officers of government and law, whom they are\nobliged to maintain. In the little agrarian states of ancient Greece,\na fourth or a fifth part of the whole body of the people considered the\nthemselves as soldiers, and would sometimes, it is said, take the field.\nAmong the civilized nations of modern Europe, it is commonly computed,\nthat not more than the one hundredth part of the inhabitants of any\ncountry can be employed as soldiers, without ruin to the country which\npays the expense of their service.\n\nThe expense of preparing the army for the field seems not to have become\nconsiderable in any nation, till long after that of maintaining it in\nthe field had devolved entirely upon the sovereign or commonwealth. In\nall the different republics of ancient Greece, to learn his military\nexercises, was a necessary part of education imposed by the state upon\nevery free citizen. In every city there seems to have been a public\nfield, in which, under the protection of the public magistrate, the\nyoung people were taught their different exercises by different masters.\nIn this very simple institution consisted the whole expense which any\nGrecian state seems ever to have been at, in preparing its citizens for\nwar. In ancient Rome, the exercises of the Campus Martius answered the\nsame purpose with those of the Gymnasium in ancient Greece. Under the\nfeudal governments, the many public ordinances, that the citizens\nof every district should practise archery, as well as several other\nmilitary exercises, were intended for promoting the same purpose, but\ndo not seem to have promoted it so well. Either from want of interest in\nthe officers entrusted with the execution of those ordinances, or from\nsome other cause, they appear to have been universally neglected; and in\nthe progress of all those governments, military exercises seem to have\ngone gradually into disuse among the great body of the people.\n\nIn the republics of ancient Greece and Rome, during the whole period of\ntheir existence, and under the feudal governments, for a considerable\ntime after their first establishment, the trade of a soldier was not\na separate, distinct trade, which constituted the sole or principal\noccupation of a particular class of citizens; every subject of the\nstate, whatever might be the ordinary trade or occupation by which he\ngained his livelihood, considered himself, upon all ordinary occasions,\nas fit likewise to exercise the trade of a soldier, and, upon many\nextraordinary occasions, as bound to exercise it.\n\nThe art of war, however, as it is certainly the noblest of all arts, so,\nin the progress of improvement, it necessarily becomes one of the most\ncomplicated among them. The state of the mechanical, as well as some\nother arts, with which it is necessarily connected, determines the\ndegree of perfection to which it is capable of being carried at any\nparticular time. But in order to carry it to this degree of perfection,\nit is necessary that it should become the sole or principal occupation\nof a particular class of citizens; and the division of labour is as\nnecessary for the improvement of this, as of every other art. Into other\narts, the division of labour is naturally introduced by the prudence of\nindividuals, who find that they promote their private interest better by\nconfining themselves to a particular trade, than by exercising a great\nnumber. But it is the wisdom of the state only, which can render the\ntrade of a soldier a particular trade, separate and distinct from all\nothers. A private citizen, who, in time of profound peace, and without\nany particular encouragement from the public, should spend the greater\npart of his time in military exercises, might, no doubt, both improve\nhimself very much in them, and amuse himself very well; but he certainly\nwould not promote his own interest. It is the wisdom of the state only,\nwhich can render it for his interest to give up the greater part of his\ntime to this peculiar occupation; and states have not always had\nthis wisdom, even when their circumstances had become such, that the\npreservation of their existence required that they should have it.\n\nA shepherd has a great deal of leisure; a husbandman, in the rude state\nof husbandry, has some; an artificer or manufacturer has none at all.\nThe first may, without any loss, employ a great deal of his time in\nmartial exercises; the second may employ some part of it; but the last\ncannot employ a single hour in them without some loss, and his attention\nto his own interest naturally leads him to neglect them altogether.\nThose improvements in husbandry, too, which the progress of arts and\nmanufactures necessarily introduces, leave the husbandman as little\nleisure as the artificer. Military exercises come to be as much\nneglected by the inhabitants of the country as by those of the town, and\nthe great body of the people becomes altogether unwarlike. That wealth,\nat the same time, which always follows the improvements of agriculture\nand manufactures, and which, in reality, is no more than the accumulated\nproduce of those improvements, provokes the invasion of all their\nneighbours. An industrious, and, upon that account, a wealthy nation,\nis of all nations the most likely to be attacked; and unless the state\ntakes some new measure for the public defence, the natural habits of the\npeople render them altogether incapable of defending themselves.\n\nIn these circumstances, there seem to be but two methods by which the\nstate can make any tolerable provision for the public defence.\n\nIt may either, first, by means of a very rigorous police, and in spite\nof the whole bent of the interest, genius, and inclinations of the\npeople, enforce the practice of military exercises, and oblige either\nall the citizens of the military age, or a certain number of them, to\njoin in some measure the trade of a soldier to whatever other trade or\nprofession they may happen to carry on.\n\nOr, secondly, by maintaining and employing a certain number of citizens\nin the constant practice of military exercises, it may render the trade\nof a soldier a particular trade, separate and distinct from all others.\n\nIf the state has recourse to the first of those two expedients, its\nmilitary force is said to consist in a militia; if to the second, it is\nsaid to consist in a standing army. The practice of military exercises\nis the sole or principal occupation of the soldiers of a standing army,\nand the maintenance or pay which the state affords them is the principal\nand ordinary fund of their subsistence. The practice of military\nexercises is only the occasional occupation of the soldiers of a\nmilitia, and they derive the principal and ordinary fund of their\nsubsistence from some other occupation. In a militia, the character of\nthe labourer, artificer, or tradesman, predominates over that of the\nsoldier; in a standing army, that of the soldier predominates over every\nother character; and in this distinction seems to consist the essential\ndifference between those two different species of military force.\n\nMilitias have been of several different kinds. In some countries, the\ncitizens destined for defending the state seem to have been exercised\nonly, without being, if I may say so, regimented; that is, without\nbeing divided into separate and distinct bodies of troops, each of which\nperformed its exercises under its own proper and permanent officers. In\nthe republics of ancient Greece and Rome, each citizen, as long as\nhe remained at home, seems to have practised his exercises, either\nseparately and independently, or with such of his equals as he liked\nbest; and not to have been attached to any particular body of troops,\ntill he was actually called upon to take the field. In other countries,\nthe militia has not only been exercised, but regimented. In England, in\nSwitzerland, and, I believe, in every other country of modern Europe,\nwhere any imperfect military force of this kind has been established,\nevery militiaman is, even in time of peace, attached to a particular\nbody of troops, which performs its exercises under its own proper and\npermanent officers.\n\nBefore the invention of fire-arms, that army was superior in which the\nsoldiers had, each individually, the greatest skill and dexterity in\nthe use of their arms. Strength and agility of body were of the highest\nconsequence, and commonly determined the fate of battles. But this skill\nand dexterity in the use of their arms could be acquired only, in\nthe same manner as fencing is at present, by practising, not in great\nbodies, but each man separately, in a particular school, under a\nparticular master, or with his own particular equals and companions.\nSince the invention of fire-arms, strength and agility of body, or even\nextraordinary dexterity and skill in the use of arms, though they are\nfar from being of no consequence, are, however, of less consequence.\nThe nature of the weapon, though it by no means puts the awkward upon a\nlevel with the skilful, puts him more nearly so than he ever was before.\nAll the dexterity and skill, it is supposed, which are necessary for\nusing it, can be well enough acquired by practising in great bodies.\n\nRegularity, order, and prompt obedience to command, are qualities which,\nin modern armies, are of more importance towards determining the fate\nof battles, than the dexterity and skill of the soldiers in the use of\ntheir arms. But the noise of fire-arms, the smoke, and the invisible\ndeath to which every man feels himself every moment exposed, as soon\nas he comes within cannon-shot, and frequently a long time before the\nbattle can be well said to be engaged, must render it very difficult to\nmaintain any considerable degree of this regularity, order, and prompt\nobedience, even in the beginning of a modern battle. In an ancient\nbattle, there was no noise but what arose from the human voice; there\nwas no smoke, there was no invisible cause of wounds or death. Every\nman, till some mortal weapon actually did approach him, saw clearly that\nno such weapon was near him. In these circumstances, and among troops\nwho had some confidence in their own skill and dexterity in the use of\ntheir arms, it must have been a good deal less difficult to preserve\nsome degree of regularity and order, not only in the beginning, but\nthrough the whole progress of an ancient battle, and till one of the\ntwo armies was fairly defeated. But the habits of regularity, order, and\nprompt obedience to command, can be acquired only by troops which are\nexercised in great bodies.\n\nA militia, however, in whatever manner it may be either disciplined or\nexercised, must always be much inferior to a well disciplined and well\nexercised standing army.\n\nThe soldiers who are exercised only once a week, or once a-month, can\nnever be so expert in the use of their arms, as those who are exercised\nevery day, or every other day; and though this circumstance may not be\nof so much consequence in modern, as it was in ancient times, yet the\nacknowledged superiority of the Prussian troops, owing, it is said, very\nmuch to their superior expertness in their exercise, may satisfy us that\nit is, even at this day, of very considerable consequence.\n\nThe soldiers, who are bound to obey their officer only once a-week, or\nonce a-month, and who are at all other times at liberty to manage their\nown affairs their own way, without being, in any respect, accountable to\nhim, can never be under the same awe in his presence, can never have\nthe same disposition to ready obedience, with those whose whole life and\nconduct are every day directed by him, and who every day even rise\nand go to bed, or at least retire to their quarters, according to\nhis orders. In what is called discipline, or in the habit of ready\nobedience, a militia must always be still more inferior to a standing\narmy, than it may sometimes be in what is called the manual exercise, or\nin the management and use of its arms. But, in modern war, the habit\nof ready and instant obedience is of much greater consequence than a\nconsiderable superiority in the management of arms.\n\nThose militias which, like the Tartar or Arab militia, go to war under\nthe same chieftains whom they are accustomed to obey in peace, are\nby far the best. In respect for their officers, in the habit of ready\nobedience, they approach nearest to standing armies. The Highland\nmilitia, when it served under its own chieftains, had some advantage\nof the same kind. As the Highlanders, however, were not wandering, but\nstationary shepherds, as they had all a fixed habitation, and were not,\nin peaceable times, accustomed to follow their chieftain from place to\nplace; so, in time of war, they were less willing to follow him to any\nconsiderable distance, or to continue for any long time in the field.\nWhen they had acquired any booty, they were eager to return home,\nand his authority was seldom sufficient to detain them. In point of\nobedience, they were always much inferior to what is reported of the\nTartars and Arabs. As the Highlanders, too, from their stationary\nlife, spend less of their time in the open air, they were always less\naccustomed to military exercises, and were less expert in the use of\ntheir arms than the Tartars and Arabs are said to be.\n\nA militia of any kind, it must be observed, however, which has served\nfor several successive campaigns in the field, becomes in every respect\na standing army. The soldiers are every day exercised in the use of\ntheir arms, and, being constantly under the command of their officers,\nare habituated to the same prompt obedience which takes place in\nstanding armies. What they were before they took the field, is of little\nimportance. They necessarily become in every respect a standing army,\nafter they have passed a few campaigns in it. Should the war in America\ndrag out through another campaign, the American militia may become,\nin every respect, a match for that standing army, of which the valour\nappeared, in the last war at least, not inferior to that of the hardiest\nveterans of France and Spain.\n\nThis distinction being well understood, the history of all ages, it will\nbe found, hears testimony to the irresistible superiority which a well\nregulated standing army has over a militia.\n\nOne of the first standing armies, of which we have any distinct account\nin any well authenticated history, is that of Philip of Macedon. His\nfrequent wars with the Thracians, Illyrians, Thessalians, and some of\nthe Greek cities in the neighbourhood of Macedon, gradually formed\nhis troops, which in the beginning were probably militia, to the exact\ndiscipline of a standing army. When he was at peace, which he was very\nseldom, and never for any long time together, he was careful not to\ndisband that army. It vanquished and subdued, after a long and violent\nstruggle, indeed, the gallant and well exercised militias of the\nprincipal republics of ancient Greece; and afterwards, with very little\nstruggle, the effeminate and ill exercised militia of the great Persian\nempire. The fall of the Greek republics, and of the Persian empire was\nthe effect of the irresistible superiority which a standing arm has over\nevery other sort of militia. It is the first great revolution in the\naffairs of mankind of which history has preserved any distinct and\ncircumstantial account.\n\nThe fall of Carthage, and the consequent elevation of Rome, is the\nsecond. All the varieties in the fortune of those two famous republics\nmay very well be accounted for from the same cause.\n\nFrom the end of the first to the beginning of the second Carthaginian\nwar, the armies of Carthage were continually in the field, and employed\nunder three great generals, who succeeded one another in the command;\nAmilcar, his son-in-law Asdrubal, and his son Annibal: first in\nchastising their own rebellious slaves, afterwards in subduing the\nrevolted nations of Africa; and lastly, in conquering the great\nkingdom of Spain. The army which Annibal led from Spain into Italy must\nnecessarily, in those different wars, have been gradually formed to the\nexact discipline of a standing army. The Romans, in the meantime, though\nthey had not been altogether at peace, yet they had not, during this\nperiod, been engaged in any war of very great consequence; and their\nmilitary discipline, it is generally said, was a good deal relaxed.\nThe Roman armies which Annibal encountered at Trebi, Thrasymenus, and\nCannae, were militia opposed to a standing army. This circumstance, it\nis probable, contributed more than any other to determine the fate of\nthose battles.\n\nThe standing army which Annibal left behind him in Spain had the like\nsuperiority over the militia which the Romans sent to oppose it; and,\nin a few years, under the command of his brother, the younger Asdrubal,\nexpelled them almost entirely from that country.\n\nAnnibal was ill supplied from home. The Roman militia, being continually\nin the field, became, in the progress of the war, a well disciplined and\nwell exercised standing army; and the superiority of Annibal grew every\nday less and less. Asdrubal judged it necessary to lead the whole, or\nalmost the whole, of the standing army which he commanded in Spain, to\nthe assistance of his brother in Italy. In this march, he is said to\nhave been misled by his guides; and in a country which he did not know,\nwas surprised and attacked, by another standing army, in every respect\nequal or superior to his own, and was entirely defeated.\n\nWhen Asdrubal had left Spain, the great Scipio found nothing to oppose\nhim but a militia inferior to his own. He conquered and subdued that\nmilitia, and, in the course of the war, his own militia necessarily\nbecame a well disciplined and well exercised standing army. That\nstanding army was afterwards carried to Africa, where it found nothing\nbut a militia to oppose it. In order to defend Carthage, it became\nnecessary to recal the standing army of Annibal. The disheartened and\nfrequently defeated African militia joined it, and, at the battle of\nZama, composed the greater part of the troops of Annibal. The event of\nthat day determined the fate of the two rival republics.\n\nFrom the end of the second Carthaginian war till the fall of the Roman\nrepublic, the armies of Rome were in every respect standing armies.\nThe standing army of Macedon made some resistance to their arms. In the\nheight of their grandeur, it cost them two great wars, and three great\nbattles, to subdue that little kingdom, of which the conquest would\nprobably have been still more difficult, had it not been for the\ncowardice of its last king. The militias of all the civilized nations of\nthe ancient world, of Greece, of Syria, and of Egypt, made but a\nfeeble resistance to the standing armies of Rome. The militias of some\nbarbarous nations defended themselves much better. The Scythian or\nTartar militia, which Mithridates drew from the countries north of\nthe Euxine and Caspian seas, were the most formidable enemies whom the\nRomans had to encounter after the second Carthaginian war. The Parthian\nand German militias, too, were always respectable, and upon several\noccasions, gained very considerable advantages over the Roman armies.\nIn general, however, and when the Roman armies were well commanded, they\nappear to have been very much superior; and if the Romans did not pursue\nthe final conquest either of Parthia or Germany, it was probably because\nthey judged that it was not worth while to add those two barbarous\ncountries to an empire which was already too large. The ancient\nParthians appear to have been a nation of Scythian or Tartar extraction,\nand to have always retained a good deal of the manners of their\nancestors. The ancient Germans were, like the Scythians or Tartars, a\nnation of wandering shepherds, who went to war under the same chiefs\nwhom they were accustomed to follow in peace. 'Their militia was exactly\nof the same kind with that of the Scythians or Tartars, from whom, too,\nthey were probably descended.\n\nMany different causes contributed to relax the discipline of the Roman\narmies. Its extreme severity was, perhaps, one of those causes. In the\ndays of their grandeur, when no enemy appeared capable of opposing them,\ntheir heavy armour was laid aside as unnecessarily burdensome, their\nlaborious exercises were neglected, as unnecessarily toilsome. Under the\nRoman emperors, besides, the standing armies of Rome, those particularly\nwhich guarded the German and Pannonian frontiers, became dangerous to\ntheir masters, against whom they used frequently to set up their own\ngenerals. In order to render them less formidable, according to some\nauthors, Dioclesian, according to others, Constantine, first withdrew\nthem from the frontier, where they had always before been encamped in\ngreat bodies, generally of two or three legions each, and dispersed them\nin small bodies through the different provincial towns, from whence\nthey were scarce ever removed, but when it became necessary to repel\nan invasion. Small bodies of soldiers, quartered in trading and\nmanufacturing towns, and seldom removed from those quarters, became\nthemselves trades men, artificers, and manufacturers. The civil came to\npredominate over the military character; and the standing armies of\nRome gradually degenerated into a corrupt, neglected, and undisciplined\nmilitia, incapable of resisting the attack of the German and Scythian\nmilitias, which soon afterwards invaded the western empire. It was only\nby hiring the militia of some of those nations to oppose to that of\nothers, that the emperors were for some time able to defend themselves.\nThe fall of the western empire is the third great revolution in the\naffairs of mankind, of which ancient history has preserved any distinct\nor circumstantial account. It was brought about by the irresistible\nsuperiority which the militia of a barbarous has over that of a\ncivilized nation; which the militia of a nation of shepherds has over\nthat of a nation of husbandmen, artificers, and manufacturers. The\nvictories which have been gained by militias have generally been,\nnot over standing armies, but over other militias, in exercise and\ndiscipline inferior to themselves. Such were the victories which the\nGreek militia gained over that of the Persian empire; and such, too,\nwere those which, in later times, the Swiss militia gained over that of\nthe Austrians and Burgundians.\n\nThe military force of the German and Scythian nations, who established\nthemselves upon ruins of the western empire, continued for some time to\nbe of the same kind in their new settlements, as it had been in their\noriginal country. It was a militia of shepherds and husbandmen, which,\nin time of war, took the field under the command of the same chieftains\nwhom it was accustomed to obey in peace. It was, therefore, tolerably\nwell exercised, and tolerably well disciplined. As arts and industry\nadvanced, however, the authority of the chieftains gradually decayed,\nand the great body of the people had less time to spare for military\nexercises. Both the discipline and the exercise of the feudal militia,\ntherefore, went gradually to ruin, and standing armies were gradually\nintroduced to supply the place of it. When the expedient of a standing\narmy, besides, had once been adopted by one civilized nation, it became\nnecessary that all its neighbours should follow the example. They soon\nfound that their safety depended upon their doing so, and that their\nown militia was altogether incapable of resisting the attack of such an\narmy.\n\nThe soldiers of a standing army, though they may never have seen an\nenemy, yet have frequently appeared to possess all the courage of\nveteran troops, and, the very moment that they took the field, to have\nbeen fit to face the hardiest and most experienced veterans. In 1756,\nwhen the Russian army marched into Poland, the valour of the Russian\nsoldiers did not appear inferior to that of the Prussians, at that time\nsupposed to be the hardiest and most experienced veterans in Europe. The\nRussian empire, however, had enjoyed a profound peace for near twenty\nyears before, and could at that time have very few soldiers who had\never seen an enemy. When the Spanish war broke out in 1739, England had\nenjoyed a profound peace for about eight-and-twenty years. The valour of\nher soldiers, however, far from being corrupted by that long peace, was\nnever more distinguished than in the attempt upon Carthagena, the\nfirst unfortunate exploit of that unfortunate war. In a long peace, the\ngenerals, perhaps, may sometimes forget their skill; but where a well\nregulated standing army has been kept up, the soldiers seem never to\nforget their valour.\n\nWhen a civilized nation depends for its defence upon a militia, it is at\nall times exposed to be conquered by any barbarous nation which happens\nto be in its neighbourhood. The frequent conquests of all the civilized\ncountries in Asia by the Tartars, sufficiently demonstrates the\nnatural superiority which the militia of a barbarous has over that of\na civilized nation. A well regulated standing army is superior to every\nmilitia. Such an army, as it can best be maintained by an opulent and\ncivilized nation, so it can alone defend such a nation against the\ninvasion of a poor and barbarous neighbour. It is only by means of a\nstanding army, therefore, that the civilization of any country can be\nperpetuated, or even preserved, for any considerable time.\n\nAs it is only by means of a well regulated standing army, that a\ncivilized country can be defended, so it is only by means of it that a\nbarbarous country can be suddenly and tolerably civilized. A standing\narmy establishes, with an irresistible force, the law of the sovereign\nthrough the remotest provinces of the empire, and maintains some degree\nof regular government in countries which could not otherwise admit of\nany. Whoever examines with attention, the improvements which Peter the\nGreat introduced into the Russian empire, will find that they almost all\nresolve themselves into the establishment of a well regulated standing\narmy. It is the instrument which executes and maintains all his other\nregulations. That degree of order and internal peace, which that empire\nhas ever since enjoyed, is altogether owing to the influence of that\narmy.\n\nMen of republican principles have been jealous of a standing army, as\ndangerous to liberty. It certainly is so, wherever the interest of\nthe general, and that of the principal officers, are not necessarily\nconnected with the support of the constitution of the state. The\nstanding army of Caesar destroyed the Roman republic. The standing\narmy of Cromwell turned the long parliament out of doors. But where the\nsovereign is himself the general, and the principal nobility and gentry\nof the country the chief officers of the army; where the military force\nis placed under the command of those who have the greatest interest in\nthe support of the civil authority, because they have themselves the\ngreatest share of that authority, a standing army can never be dangerous\nto liberty. On the contrary, it may, in some cases, be favourable\nto liberty. The security which it gives to the sovereign renders\nunnecessary that troublesome jealousy, which, in some modern republics,\nseems to watch over the minutest actions, and to be at all times\nready to disturb the peace of every citizen. Where the security of the\nmagistrate, though supported by the principal people of the country, is\nendangered by every popular discontent; where a small tumult is capable\nof bringing about in a few hours a great revolution, the whole authority\nof government must be employed to suppress and punish every murmur and\ncomplaint against it. To a sovereign, on the contrary, who feels himself\nsupported, not only by the natural aristocracy of the country, but by a\nwell regulated standing army, the rudest, the most groundless, and\nthe most licentious remonstrances, can give little disturbance. He\ncan safely pardon or neglect them, and his consciousness of his own\nsuperiority naturally disposes him to do so. That degree of liberty\nwhich approaches to licentiousness, can be tolerated only in countries\nwhere the sovereign is secured by a well regulated standing army. It is\nin such countries only, that the public safety does not require that\nthe sovereign should be trusted with any discretionary power, for\nsuppressing even the impertinent wantonness of this licentious liberty.\n\nThe first duty of the sovereign, therefore, that of defending the\nsociety from the violence and injustice of other independent societies,\ngrows gradually more and more expensive, as the society advances in\ncivilization. The military force of the society, which originally cost\nthe sovereign no expense, either in time of peace, or in time of war,\nmust, in the progress of improvement, first be maintained by him in time\nof war, and afterwards even in time of peace.\n\nThe great change introduced into the art of war by the invention of\nfire-arms, has enhanced still further both the expense of exercising\nand disciplining any particular number of soldiers in time of peace,\nand that of employing them in time of war. Both their arms and their\nammunition are become more expensive. A musket is a more expensive\nmachine than a javelin or a bow and arrows; a cannon or a mortar, than a\nbalista or a catapulta. The powder which is spent in a modern review\nis lost irrecoverably, and occasions a very considerable expense. The\njavelins and arrows which were thrown or shot in an ancient one, could\neasily be picked up again, and were, besides, of very little value.\nThe cannon and the mortar are not only much dearer, but much heavier\nmachines than the balista or catapulta; and require a greater expense,\nnot only to prepare them for the field, but to carry them to it. As the\nsuperiority of the modern artillery, too, over that of the ancients,\nis very great; it has become much more difficult, and consequently\nmuch more expensive, to fortify a town, so as to resist, even for a\nfew weeks, the attack of that superior artillery. In modern times, many\ndifferent causes contribute to render the defence of the society\nmore expensive. The unavoidable effects of the natural progress of\nimprovement have, in this respect, been a good deal enhanced by a great\nrevolution in the art of war, to which a mere accident, the invention of\ngunpowder, seems to have given occasion.\n\nIn modern war, the great expense of firearms gives an evident advantage\nto the nation which can best afford that expense; and, consequently, to\nan opulent and civilized, over a poor and barbarous nation. In ancient\ntimes, the opulent and civilized found it difficult to defend themselves\nagainst the poor and barbarous nations. In modern times, the poor and\nbarbarous find it difficult to defend themselves against the opulent and\ncivilized. The invention of fire-arms, an invention which at first\nsight appears to be so pernicious, is certainly favourable, both to the\npermanency and to the extension of civilization.\n\n\nPART II. Of the Expense of Justice\n\nThe second duty of the sovereign, that of protecting, as far as\npossible, every member of the society from the injustice or oppression\nof every other member of it, or the duty of establishing an exact\nadministration of justice, requires two very different degrees of\nexpense in the different periods of society.\n\nAmong nations of hunters, as there is scarce any property, or at least\nnone that exceeds the value of two or three days labour; so there is\nseldom any established magistrate, or any regular administration of\njustice. Men who have no property, can injure one another only in\ntheir persons or reputations. But when one man kills, wounds, beats, or\ndefames another, though he to whom the injury is done suffers, he\nwho does it receives no benefit. It is otherwise with the injuries to\nproperty. The benefit of the person who does the injury is often equal\nto the loss of him who suffers it. Envy, malice, or resentment, are the\nonly passions which can prompt one man to injure another in his person\nor reputation. But the greater part of men are not very frequently under\nthe influence of those passions; and the very worst men are so only\noccasionally. As their gratification, too, how agreeable soever it may\nbe to certain characters, is not attended with any real or permanent\nadvantage, it is, in the greater part of men, commonly restrained by\nprudential considerations. Men may live together in society with some\ntolerable degree of security, though there is no civil magistrate to\nprotect them from the injustice of those passions. But avarice and\nambition in the rich, in the poor the hatred of labour and the love\nof present ease and enjoyment, are the passions which prompt to invade\nproperty; passions much more steady in their operation, and much more\nuniversal in their influence. Wherever there is a great property, there\nis great inequality. For one very rich man, there must be at least five\nhundred poor, and the affluence of the few supposes the indigence of the\nmany. The affluence of the rich excites the indignation of the poor,\nwho are often both driven by want, and prompted by envy to invade his\npossessions. It is only under the shelter of the civil magistrate, that\nthe owner of that valuable property, which is acquired by the labour\nof many years, or perhaps of many successive generations, can sleep\na single night in security. He is at all times surrounded by unknown\nenemies, whom, though he never provoked, he can never appease, and from\nwhose injustice he can be protected only by the powerful arm of the\ncivil magistrate, continually held up to chastise it. The acquisition\nof valuable and extensive property, therefore, necessarily requires the\nestablishment of civil government. Where there is no property, or at\nleast none that exceeds the value of two or three days labour, civil\ngovernment is not so necessary.\n\nCivil government supposes a certain subordination. But as the necessity\nof civil government gradually grows up with the acquisition of\nvaluable property; so the principal causes, which naturally introduce\nsubordination, gradually grow up with the growth of that valuable\nproperty.\n\nThe causes or circumstances which naturally introduce subordination, or\nwhich naturally and antecedent to any civil institution, give some men\nsome superiority over the greater part of their brethren, seem to be\nfour in number.\n\nThe first of those causes or circumstances, is the superiority of\npersonal qualifications, of strength, beauty, and agility of body; of\nwisdom and virtue; of prudence, justice, fortitude, and moderation of\nmind. The qualifications of the body, unless supported by those of the\nmind, can give little authority in any period of society. He is a very\nstrong man, who, by mere strength of body, can force two weak ones\nto obey him. The qualifications of the mind can alone give very great\nauthority. They are however, invisible qualities; always disputable, and\ngenerally disputed. No society, whether barbarous or civilized, has\never found it convenient to settle the rules of precedency of rank and\nsubordination, according to those invisible qualities; but according to\nsomething that is more plain and palpable.\n\nThe second of those causes or circumstances, is the superiority of age.\nAn old man, provided his age is not so far advanced as to give suspicion\nof dotage, is everywhere more respected than a young man of equal rank,\nfortune, and abilities. Among nations of hunters, such as the native\ntribes of North America, age is the sole foundation of rank and\nprecedency. Among them, father is the appellation of a superior;\nbrother, of an equal; and son, of an inferior. In the most opulent and\ncivilized nations, age regulates rank among those who are in every\nother respect equal; and among whom, therefore, there is nothing else to\nregulate it. Among brothers and among sisters, the eldest always takes\nplace; and in the succession of the paternal estate, every thing which\ncannot be divided, but must go entire to one person, such as a title\nof honour, is in most cases given to the eldest. Age is a plain and\npalpable quality, which admits of no dispute.\n\nThe third of those causes or circumstances, is the superiority of\nfortune. The authority of riches, however, though great in every age\nof society, is, perhaps, greatest in the rudest ages of society, which\nadmits of any considerable inequality of fortune. A Tartar chief, the\nincrease of whose flocks and herds is sufficient to maintain a\nthousand men, cannot well employ that increase in any other way than\nin maintaining a thousand men. The rude state of his society does not\nafford him any manufactured produce any trinkets or baubles of any kind,\nfor which he can exchange that part of his rude produce which is over\nand above his own consumption. The thousand men whom he thus maintains,\ndepending entirely upon him for their subsistence, must both obey\nhis orders in war, and submit to his jurisdiction in peace. He is\nnecessarily both their general and their judge, and his chieftainship\nis the necessary effect of the superiority of his fortune. In an opulent\nand civilized society, a man may possess a much greater fortune, and\nyet not be able to command a dozen of people. Though the produce of\nhis estate may be sufficient to maintain, and may, perhaps, actually\nmaintain, more than a thousand people, yet, as those people pay for\nevery thing which they get from him, as he gives scarce any thing to\nany body but in exchange for an equivalent, there is scarce anybody\nwho considers himself as entirely dependent upon him, and his authority\nextends only over a few menial servants. The authority of fortune,\nhowever, is very great, even in an opulent and civilized society. That\nit is much greater than that either of age or of personal qualities, has\nbeen the constant complaint of every period of society which admitted\nof any considerable inequality of fortune. The first period of society,\nthat of hunters, admits of no such inequality. Universal poverty\nestablishes their universal equality; and the superiority, either of age\nor of personal qualities, are the feeble, but the sole foundations of\nauthority and subordination. There is, therefore, little or no authority\nor subordination in this period of society. The second period of\nsociety, that of shepherds, admits of very great inequalities of\nfortune, and there is no period in which the superiority of fortune\ngives so great authority to those who possess it. There is no period,\naccordingly, in which authority and subordination are more perfectly\nestablished. The authority of an Arabian scherif is very great; that of\na Tartar khan altogether despotical.\n\nThe fourth of those causes or circumstances, is the superiority of\nbirth. Superiority of birth supposes an ancient superiority of fortune\nin the family of the person who claims it. All families are equally\nancient; and the ancestors of the prince, though they may be better\nknown, cannot well be more numerous than those of the beggar. Antiquity\nof family means everywhere the antiquity either of wealth, or of that\ngreatness which is commonly either founded upon wealth, or accompanied\nwith it. Upstart greatness is everywhere less respected than ancient\ngreatness. The hatred of usurpers, the love of the family of an ancient\nmonarch, are in a great measure founded upon the contempt which men\nnaturally have for the former, and upon their veneration for the latter.\nAs a military officer submits, without reluctance, to the authority of a\nsuperior by whom he has always been commanded, but cannot bear that his\ninferior should be set over his head; so men easily submit to a family\nto whom they and their ancestors have always submitted; but are\nfired with indignation when another family, in whom they had never\nacknowledged any such superiority, assumes a dominion over them.\n\nThe distinction of birth, being subsequent to the inequality of fortune,\ncan have no place in nations of hunters, among whom all men, being equal\nin fortune, must likewise be very nearly equal in birth. The son of\na wise and brave man may, indeed, even among them, be somewhat more\nrespected than a man of equal merit, who has the misfortune to be the\nson of a fool or a coward. The difference, however will not be very\ngreat; and there never was, I believe, a great family in the world,\nwhose illustration was entirely derived from the inheritance of wisdom\nand virtue.\n\nThe distinction of birth not only may, but always does, take place among\nnations of shepherds. Such nations are always strangers to every sort\nof luxury, and great wealth can scarce ever be dissipated among them\nby improvident profusion. There are no nations, accordingly, who abound\nmore in families revered and honoured on account of their descent from\na long race of great and illustrious ancestors; because there are no\nnations among whom wealth is likely to continue longer in the same\nfamilies.\n\nBirth and fortune are evidently the two circumstances which principally\nset one man above another. They are the two great sources of personal\ndistinction, and are, therefore, the principal causes which naturally\nestablish authority and subordination among men. Among nations of\nshepherds, both those causes operate with their full force. The great\nshepherd or herdsman, respected on account of his great wealth, and\nof the great number of those who depend upon him for subsistence, and\nrevered on account of the nobleness of his birth, and of the immemorial\nantiquity or his illustrious family, has a natural authority over all\nthe inferior shepherds or herdsmen of his horde or clan. He can command\nthe united force of a greater number of people than any of them. His\nmilitary power is greater than that of any of them. In time of war,\nthey are all of them naturally disposed to muster themselves under his\nbanner, rather than under that of any other person; and his birth and\nfortune thus naturally procure to him some sort of executive power. By\ncommanding, too, the united force of a greater number of people than any\nof them, he is best able to compel any one of them, who may have injured\nanother, to compensate the wrong. He is the person, therefore, to whom\nall those who are too weak to defend themselves naturally look up for\nprotection. It is to him that they naturally complain of the injuries\nwhich they imagine have been done to them; and his interposition, in\nsuch cases, is more easily submitted to, even by the person complained\nof, than that of any other person would be. His birth and fortune thus\nnaturally procure him some sort of judicial authority.\n\nIt is in the age of shepherds, in the second period of society, that the\ninequality of fortune first begins to take place, and introduces among\nmen a degree of authority and subordination, which could not possibly\nexist before. It thereby introduces some degree of that civil government\nwhich is indispensably necessary for its own preservation; and it seems\nto do this naturally, and even independent of the consideration of\nthat necessity. The consideration of that necessity comes, no doubt,\nafterwards, to contribute very much to maintain and secure that\nauthority and subordination. The rich, in particular, are necessarily\ninterested to support that order of things, which can alone secure\nthem in the possession of their own advantages. Men of inferior wealth\ncombine to defend those of superior wealth in the possession of their\nproperty, in order that men of superior wealth may combine to defend\nthem in the possession of theirs. All the inferior shepherds and\nherdsmen feel, that the security of their own herds and flocks depends\nupon the security of those of the great shepherd or herdsman; that the\nmaintenance of their lesser authority depends upon that of his greater\nauthority; and that upon their subordination to him depends his power of\nkeeping their inferiors in subordination to them. They constitute a\nsort of little nobility, who feel themselves interested to defend the\nproperty, and to support the authority, of their own little sovereign,\nin order that he may be able to defend their property, and to support\ntheir authority. Civil government, so far as it is instituted for the\nsecurity of property, is, in reality, instituted for the defence of the\nrich against the poor, or of those who have some property against those\nwho have none at all.\n\nThe judicial authority of such a sovereign, however, far from being a\ncause of expense, was, for a long time, a source of revenue to him. The\npersons who applied to him for justice were always willing to pay\nfor it, and a present never failed to accompany a petition. After the\nauthority of the sovereign, too, was thoroughly established, the person\nfound guilty, over and above the satisfaction which he was obliged to\nmake to the party, was like-wise forced to pay an amercement to the\nsovereign. He had given trouble, he had disturbed, he had broke the\npeace of his lord the king, and for those offences an amercement was\nthought due. In the Tartar governments of Asia, in the governments\nof Europe which were founded by the German and Scythian nations who\noverturned the Roman empire, the administration of justice was a\nconsiderable source of revenue, both to the sovereign, and to all\nthe lesser chiefs or lords who exercised under him any particular\njurisdiction, either over some particular tribe or clan, or over some\nparticular territory or district. Originally, both the sovereign and the\ninferior chiefs used to exercise this jurisdiction in their own persons.\nAfterwards, they universally found it convenient to delegate it to\nsome substitute, bailiff, or judge. This substitute, however, was still\nobliged to account to his principal or constituent for the profits of\nthe jurisdiction. Whoever reads the instructions (They are to be found\nin Tyrol's History of England) which were given to the judges of the\ncircuit in the time of Henry II will see clearly that those judges were\na sort of itinerant factors, sent round the country for the purpose\nof levying certain branches of the king's revenue. In those days, the\nadministration of justice not only afforded a certain revenue to the\nsovereign, but, to procure this revenue, seems to have been one of the\nprincipal advantages which he proposed to obtain by the administration\nof justice.\n\nThis scheme of making the administration of justice subservient to the\npurposes of revenue, could scarce fail to be productive of several very\ngross abuses. The person who applied for justice with a large present\nin his hand, was likely to get something more than justice; while he\nwho applied for it with a small one was likely to get something less.\nJustice, too, might frequently be delayed, in order that this present\nmight be repeated. The amercement, besides, of the person complained\nof, might frequently suggest a very strong reason for finding him in the\nwrong, even when he had not really been so. That such abuses were far\nfrom being uncommon, the ancient history of every country in Europe\nbears witness.\n\nWhen the sovereign or chief exercises his judicial authority in his\nown person, how much soever he might abuse it, it must have been scarce\npossible to get any redress; because there could seldom be any body\npowerful enough to call him to account. When he exercised it by a\nbailiff, indeed, redress might sometimes be had. If it was for his own\nbenefit only, that the bailiff had been guilty of an act of injustice,\nthe sovereign himself might not always be unwilling to punish him, or\nto oblige him to repair the wrong. But if it was for the benefit of his\nsovereign; if it was in order to make court to the person who appointed\nhim, and who might prefer him, that he had committed any act of\noppression; redress would, upon most occasions, be as impossible as if\nthe sovereign had committed it himself. In all barbarous governments,\naccordingly, in all those ancient governments of Europe in\nparticular, which were founded upon the ruins of the Roman empire, the\nadministration of justice appears for a long time to have been extremely\ncorrupt; far from being quite equal and impartial, even under the best\nmonarchs, and altogether profligate under the worst.\n\nAmong nations of shepherds, where the sovereign or chief is only the\ngreatest shepherd or herdsman of the horde or clan, he is maintained in\nthe same manner as any of his vassals or subjects, by the increase of\nhis own herds or flocks. Among those nations of husbandmen, who are\nbut just come out of the shepherd state, and who are not much advanced\nbeyond that state, such as the Greek tribes appear to have been about\nthe time of the Trojan war, and our German and Scythian ancestors, when\nthey first settled upon the ruins of the western empire; the sovereign\nor chief is, in the same manner, only the greatest landlord of the\ncountry, and is maintained in the same manner as any other landlord, by\na revenue derived from his own private estate, or from what, in modern\nEurope, was called the demesne of the crown. His subjects, upon ordinary\noccasions, contribute nothing to his support, except when, in order to\nprotect them from the oppression of some of their fellow-subjects, they\nstand in need of his authority. The presents which they make him upon\nsuch occasions constitute the whole ordinary revenue, the whole of\nthe emoluments which, except, perhaps, upon some very extraordinary\nemergencies, he derives from his dominion over them. When Agamemnon, in\nHomer, offers to Achilles, for his friendship, the sovereignty of seven\nGreek cities, the sole advantage which he mentions as likely to be\nderived from it was, that the people would honour him with presents. As\nlong as such presents, as long as the emoluments of justice, or what\nmay be called the fees of court, constituted, in this manner, the whole\nordinary revenue which the sovereign derived from his sovereignty, it\ncould not well be expected, it could not even decently be proposed,\nthat he should give them up altogether. It might, and it frequently was\nproposed, that he should regulate and ascertain them. But after they\nhad been so regulated and ascertained, how to hinder a person who was\nall-powerful from extending them beyond those regulations, was still\nvery difficult, not to say impossible. During the continuance of\nthis state of things, therefore, the corruption of justice, naturally\nresulting from the arbitrary and uncertain nature of those presents,\nscarce admitted of any effectual remedy.\n\nBut when, from different causes, chiefly from the continually increasing\nexpense of defending the nation against the invasion of other nations,\nthe private estate of the sovereign had become altogether insufficient\nfor defraying the expense of the sovereignty; and when it had become\nnecessary that the people should, for their own security, contribute\ntowards this expense by taxes of different kinds; it seems to have been\nvery commonly stipulated, that no present for the administration of\njustice should, under any pretence, be accepted either by the sovereign,\nor by his bailiffs and substitutes, the judges. Those presents, it seems\nto have been supposed, could more easily be abolished altogether, than\neffectually regulated and ascertained. Fixed salaries were appointed\nto the judges, which were supposed to compensate to them the loss\nof whatever might have been their share of the ancient emoluments of\njustice; as the taxes more than compensated to the sovereign the loss of\nhis. Justice was then said to be administered gratis.\n\nJustice, however, never was in reality administered gratis in any\ncountry. Lawyers and attorneys, at least, must always be paid by the\nparties; and if they were not, they would perform their duty still worse\nthan they actually perform it. The fees annually paid to lawyers and\nattorneys, amount, in every court, to a much greater sum than the\nsalaries of the judges. The circumstance of those salaries being paid\nby the crown, can nowhere much diminish the necessary expense of a\nlaw-suit. But it was not so much to diminish the expense, as to\nprevent the corruption of justice, that the judges were prohibited from\nreceiving my present or fee from the parties.\n\nThe office of judge is in itself so very honourable, that men are\nwilling to accept of it, though accompanied with very small emoluments.\nThe inferior office of justice of peace, though attended with a good\ndeal of trouble, and in most cases with no emoluments at all, is an\nobject of ambition to the greater part of our country gentlemen. The\nsalaries of all the different judges, high and low, together with the\nwhole expense of the administration and execution of justice, even\nwhere it is not managed with very good economy, makes, in any civilized\ncountry, but a very inconsiderable part of the whole expense of\ngovernment.\n\nThe whole expense of justice, too, might easily be defrayed by the fees\nof court; and, without exposing the administration of justice to any\nreal hazard of corruption, the public revenue might thus be entirely\ndischarged from a certain, though perhaps but a small incumbrance. It is\ndifficult to regulate the fees of court effectually, where a person\nso powerful as the sovereign is to share in them and to derive any\nconsiderable part of his revenue from them. It is very easy, where the\njudge is the principal person who can reap any benefit from them. The\nlaw can very easily oblige the judge to respect the regulation though\nit might not always be able to make the sovereign respect it. Where the\nfees of court are precisely regulated and ascertained where they are\npaid all at once, at a certain period of every process, into the hands\nof a cashier or receiver, to be by him distributed in certain known\nproportions among the different judges after the process is decided and\nnot till it is decided; there seems to be no more danger of corruption\nthan when such fees are prohibited altogether. Those fees, without\noccasioning any considerable increase in the expense of a law-suit,\nmight be rendered fully sufficient for defraying the whole expense\nof justice. But not being paid to the judges till the process was\ndetermined, they might be some incitement to the diligence of the\ncourt in examining and deciding it. In courts which consisted of a\nconsiderable number of judges, by proportioning the share of each judge\nto the number of hours and days which he had employed in examining the\nprocess, either in the court, or in a committee, by order of the court,\nthose fees might give some encouragement to the diligence of each\nparticular judge. Public services are never better performed, than when\ntheir reward comes only in consequence of their being performed, and\nis proportioned to the diligence employed in performing them. In the\ndifferent parliaments of France, the fees of court (called epices and\nvacations) constitute the far greater part of the emoluments of the\njudges. After all deductions are made, the neat salary paid by the crown\nto a counsellor or judge in the parliament of Thoulouse, in rank and\ndignity the second parliament of the kingdom, amounts only to 150\nlivres, about £6:11s. sterling a-year. About seven years ago, that sum\nwas in the same place the ordinary yearly wages of a common footman. The\ndistribution of these epices, too, is according to the diligence of the\njudges. A diligent judge gains a comfortable, though moderate revenue,\nby his office; an idle one gets little more than his salary. Those\nparliaments are, perhaps, in many respects, not very convenient courts\nof justice; but they have never been accused; they seem never even to\nhave been suspected of corruption.\n\nThe fees of court seem originally to have been the principal support of\nthe different courts of justice in England. Each court endeavoured to\ndraw to itself as much business as it could, and was, upon that account,\nwilling to take cognizance of many suits which were not originally\nintended to fall under its jurisdiction. The court of king's bench,\ninstituted for the trial of criminal causes only, took cognizance of\ncivil suits; the plaintiff pretending that the defendant, in not doing\nhim justice, had been guilty of some trespass or misdemeanour. The court\nof exchequer, instituted for the levying of the king's revenue, and for\nenforcing the payment of such debts only as were due to the king, took\ncognizance of all other contract debts; the planitiff alleging that\nhe could not pay the king, because the defendant would not pay him.\nIn consequence of such fictions, it came, in many cases, to depend\naltogether upon the parties, before what court they would choose to have\ntheir cause tried, and each court endeavoured, by superior dispatch and\nimpartiality, to draw to itself as many causes as it could. The present\nadmirable constitution of the courts of justice in England was,\nperhaps, originally, in a great measure, formed by this emulation,\nwhich anciently took place between their respective judges: each judge\nendeavouring to give, in his own court, the speediest and most\neffectual remedy which the law would admit, for every sort of injustice.\nOriginally, the courts of law gave damages only for breach of contract.\nThe court of chancery, as a court of conscience, first took upon it\nto enforce the specific performance of agreements. When the breach of\ncontract consisted in the non-payment of money, the damage sustained\ncould be compensated in no other way than by ordering payment, which was\nequivalent to a specific performance of the agreement. In such cases,\ntherefore, the remedy of the courts of law was sufficient. It was not so\nin others. When the tenant sued his lord for having unjustly outed him\nof his lease, the damages which he recovered were by no means equivalent\nto the possession of the land. Such causes, therefore, for some time,\nwent all to the court of chancery, to the no small loss of the courts of\nlaw. It was to draw back such causes to themselves, that the courts\nof law are said to have invented the artificial and fictitious writ\nof ejectment, the most effectual remedy for an unjust outer or\ndispossession of land.\n\nA stamp-duty upon the law proceedings of each particular court, to be\nlevied by that court, and applied towards the maintenance of the judges,\nand other officers belonging to it, might in the same manner, afford a\nrevenue sufficient for defraying the expense of the administration of\njustice, without bringing any burden upon the general revenue of the\nsociety. The judges, indeed, might in this case, be under the temptation\nof multiplying unnecessarily the proceedings upon every cause, in order\nto increase, as much as possible, the produce of such a stamp-duty. It\nhas been the custom in modern Europe to regulate, upon most occasions,\nthe payment of the attorneys and clerks of court according to the number\nof pages which they had occasion to write; the court, however, requiring\nthat each page should contain so many lines, and each line so many\nwords. In order to increase their payment, the attorneys and clerks have\ncontrived to multiply words beyond all necessity, to the corruption of\nthe law language of, I believe, every court of justice in Europe. A like\ntemptation might, perhaps, occasion a like corruption in the form of law\nproceedings.\n\nBut whether the administration of justice be so contrived as to defray\nits own expense, or whether the judges be maintained by fixed salaries\npaid to them from some other fund, it does not seen necessary that the\nperson or persons entrusted with the executive power should be charged\nwith the management of that fund, or with the payment of those salaries.\nThat fund might arise from the rent of landed estates, the management\nof each estate being entrusted to the particular court which was to be\nmaintained by it. That fund might arise even from the interest of a\nsum of money, the lending out of which might, in the same manner, be\nentrusted to the court which was to be maintained by it. A part, though\nindeed but a small part of the salary of the judges of the court of\nsession in Scotland, arises from the interest of a sum of money. The\nnecessary instability of such a fund seems, however, to render it an\nimproper one for the maintenance of an institution which ought to last\nfor ever.\n\nThe separation of the judicial from the executive power, seems\noriginally to have arisen from the increasing business of the society,\nin consequence of its increasing improvement. The administration of\njustice became so laborious and so complicated a duty, as to require the\nundivided attention of the person to whom it was entrusted. The person\nentrusted with the executive power, not having leisure to attend to the\ndecision of private causes himself, a deputy was appointed to decide\nthem in his stead. In the progress of the Roman greatness, the consul\nwas too much occupied with the political affairs of the state, to attend\nto the administration of justice. A praetor, therefore, was appointed to\nadminister it in his stead. In the progress of the European monarchies,\nwhich were founded upon the ruins of the Roman empire, the sovereigns\nand the great lords came universally to consider the administration\nof justice as an office both too laborious and too ignoble for them to\nexecute in their own persons. They universally, therefore, discharged\nthemselves of it, by appointing a deputy, bailiff or judge.\n\nWhen the judicial is united to the executive power, it is scarce\npossible that justice should not frequently be sacrificed to what is\nvulgarly called politics. The persons entrusted with the great interests\nof the state may even without any corrupt views, sometimes imagine it\nnecessary to sacrifice to those interests the rights of a private man.\nBut upon the impartial administration of justice depends the liberty of\nevery individual, the sense which he has of his own security. In order\nto make every individual feel himself perfectly secure in the possession\nof every right which belongs to him, it is not only necessary that\nthe judicial should be separated from the executive power, but that it\nshould be rendered as much as possible independent of that power. The\njudge should not be liable to be removed from his office according to\nthe caprice of that power. The regular payment of his salary should not\ndepend upon the good will, or even upon the good economy of that power.\n\n\nPART III. Of the Expense of public Works and public Institutions.\n\nThe third and last duty of the sovereign or commonwealth, is that of\nerecting and maintaining those public institutions and those public\nworks, which though they may be in the highest degree advantageous to\na great society, are, however, of such a nature, that the profit\ncould never repay the expense to any individual, or small number of\nindividuals; and which it, therefore, cannot be expected that any\nindividual, or small number of individuals, should erect or maintain.\nThe performance of this duty requires, too, very different degrees of\nexpense in the different periods of society.\n\nAfter the public institutions and public works necessary for the defence\nof the society, and for the administration of justice, both of which\nhave already been mentioned, the other works and institutions of this\nkind are chiefly for facilitating the commerce of the society, and\nthose for promoting the instruction of the people. The institutions for\ninstruction are of two kinds: those for the education of the youth, and\nthose for the instruction of people of all ages. The consideration of\nthe manner in which the expense of those different sorts of public works\nand institutions may be most properly defrayed will divide this third\npart of the present chapter into three different articles.\n\nARTICLE I.--Of the public Works and Institutions for facilitating the\nCommerce of the Society.\n\nAnd, first, of those which are necessary for facilitating Commerce in\ngeneral.\n\nThat the erection and maintenance of the public works which facilitate\nthe commerce of any country, such as good roads, bridges, navigable\ncanals, harbours, etc. must require very different degrees of expense\nin the different periods of society, is evident without any proof. The\nexpense of making and maintaining the public roads of any country must\nevidently increase with the annual produce of the land and labour of\nthat country, or with the quantity and weight of the goods which it\nbecomes necessary to fetch and carry upon those roads. The strength of\na bridge must be suited to the number and weight of the carriages which\nare likely to pass over it. The depth and the supply of water for a\nnavigable canal must be proportioned to the number and tonnage of\nthe lighters which are likely to carry goods upon it; the extent of a\nharbour, to the number of the shipping which are likely to take shelter\nin it.\n\nIt does not seem necessary that the expense of those public works should\nbe defrayed from that public revenue, as it is commonly called, of which\nthe collection and application are in most countries, assigned to the\nexecutive power. The greater part of such public works may easily be\nso managed, as to afford a particular revenue, sufficient for defraying\ntheir own expense without bringing any burden upon the general revenue\nof the society.\n\nA highway, a bridge, a navigable canal, for example, may, in most cases,\nbe both made add maintained by a small toll upon the carriages which\nmake use of them; a harbour, by a moderate port-duty upon the tonnage\nof the shipping which load or unload in it. The coinage, another\ninstitution for facilitating commerce, in many countries, not only\ndefrays its own expense, but affords a small revenue or a seignorage\nto the sovereign. The post-office, another institution for the same\npurpose, over and above defraying its own expense, affords, in almost\nall countries, a very considerable revenue to the sovereign.\n\nWhen the carriages which pass over a highway or a bridge, and the\nlighters which sail upon a navigable canal, pay toll in proportion to\ntheir weight or their tonnage, they pay for the maintenance of those\npublic works exactly in proportion to the wear and tear which they\noccasion of them. It seems scarce possible to invent a more equitable\nway of maintaining such works. This tax or toll, too, though it is\nadvanced by the carrier, is finally paid by the consumer, to whom it\nmust always be charged in the price of the goods. As the expense of\ncarriage, however, is very much reduced by means of such public works,\nthe goods, notwithstanding the toll, come cheaper to the consumer than\nthey could otherwise have done, their price not being so much raised by\nthe toll, as it is lowered by the cheapness of the carriage. The person\nwho finally pays this tax, therefore, gains by the application more than\nhe loses by the payment of it. His payment is exactly in proportion to\nhis gain. It is, in reality, no more than a part of that gain which he\nis obliged to give up, in order to get the rest. It seems impossible\nto imagine a more equitable method of raising a tax. When the toll upon\ncarriages of luxury, upon coaches, post-chaises, etc. is made somewhat\nhigher in proportion to their weight, than upon carriages of necessary\nuse, such as carts, waggons, etc. the indolence and vanity of the rich\nis made to contribute, in a very easy manner, to the relief of the\npoor, by rendering cheaper the transportation of heavy goods to all the\ndifferent parts of the country.\n\nWhen high-roads, bridges, canals, etc. are in this manner made and\nsupported by the commerce which is carried on by means of them, they can\nbe made only where that commerce requires them, and, consequently,\nwhere it is proper to make them. Their expense, too, their grandeur and\nmagnificence, must be suited to what that commerce can afford to\npay. They must be made, consequently, as it is proper to make them. A\nmagnificent high-road cannot be made through a desert country, where\nthere is little or no commerce, or merely because it happens to lead to\nthe country villa of the intendant of the province, or to that of some\ngreat lord, to whom the intendant finds it convenient to make his court.\nA great bridge cannot be thrown over a river at a place where\nnobody passes, or merely to embellish the view from the windows of a\nneighbouring palace; things which sometimes happen in countries, where\nworks of this kind are carried on by any other revenue than that which\nthey themselves are capable of affording.\n\nIn several different parts of Europe, the toll or lock-duty upon a canal\nis the property of private persons, whose private interest obliges\nthem to keep up the canal. If it is not kept in tolerable order, the\nnavigation necessarily ceases altogether, and, along with it, the whole\nprofit which they can make by the tolls. If those tolls were put under\nthe management of commissioners, who had themselves no interest in\nthem, they might be less attentive to the maintenance of the works which\nproduced them. The canal of Languedoc cost the king of France and the\nprovince upwards of thirteen millions of livres, which (at twenty-eight\nlivres the mark of silver, the value of French money in the end of\nthe last century) amounted to upwards of nine hundred thousand pounds\nsterling. When that great work was finished, the most likely method, it\nwas found, of keeping it in constant repair, was to make a present of\nthe tolls to Riquet, the engineer who planned and conducted the work.\nThose tolls constitute, at present, a very large estate to the different\nbranches of the family of that gentleman, who have, therefore, a great\ninterest to keep the work in constant repair. But had those tolls been\nput under the management of commissioners, who had no such interest,\nthey might perhaps, have been dissipated in ornamental and unnecessary\nexpenses, while the most essential parts of the works were allowed to go\nto ruin.\n\nThe tolls for the maintenance of a highroad cannot, with any safety,\nbe made the property of private persons. A high-road, though entirely\nneglected, does not become altogether impassable, though a canal does.\nThe proprietors of the tolls upon a high-road, therefore, might neglect\naltogether the repair of the road, and yet continue to levy very\nnearly the same tolls. It is proper, therefore, that the tolls for\nthe maintenance of such a work should be put under the management of\ncommissioners or trustees.\n\nIn Great Britain, the abuses which the trustees have committed in\nthe management of those tolls, have, in many cases, been very justly\ncomplained of. At many turnpikes, it has been said, the money levied is\nmore than double of what is necessary for executing, in the completest\nmanner, the work, which is often executed in a very slovenly manner, and\nsometimes not executed at all. The system of repairing the high-roads by\ntolls of this kind, it must be observed, is not of very long standing.\nWe should not wonder, therefore, if it has not yet been brought to that\ndegree of perfection of which it seems capable. If mean and improper\npersons are frequently appointed trustees; and if proper courts of\ninspection and account have not yet been established for controlling\ntheir conduct, and for reducing the tolls to what is barely sufficient\nfor executing the work to be done by them; the recency of the\ninstitution both accounts and apologizes for those defects, of which,\nby the wisdom of parliament, the greater part may, in due time, be\ngradually remedied.\n\nThe money levied at the different turnpikes in Great Britain, is\nsupposed to exceed so much what is necessary for repairing the roads,\nthat the savings which, with proper economy, might be made from it, have\nbeen considered, even by some ministers, as a very great resource, which\nmight, at some time or another, be applied to the exigencies of the\nstate. Government, it has been said, by taking the management of the\nturnpikes into its own hands, and by employing the soldiers, who would\nwork for a very small addition to their pay, could keep the roads in\ngood order, at a much less expense than it can be done by trustees,\nwho have no other workmen to employ, but such as derive their whole\nsubsistence from their wages. A great revenue, half a million, perhaps\n{Since publishing the two first editions of this book, I have got good\nreasons to believe that all the turnpike tolls levied in Great Britain\ndo not produce a neat revenue that amounts to half a million; a sum\nwhich, under the management of government, would not be sufficient to\nkeep, in repair five of the principal roads in the kingdom}, it has been\npretended, might in this manner be gained, without laying any new burden\nupon the people; and the turnpike roads might be made to contribute to\nthe general expense of the state, in the same manner as the post-office\ndoes at present.\n\nThat a considerable revenue might be gained in this manner, I have no\ndoubt, though probably not near so much as the projectors of this plan\nhave supposed. The plan itself, however, seems liable to several very\nimportant objections.\n\nFirst, If the tolls which are levied at the turnpikes should ever be\nconsidered as one of the resources for supplying the exigencies of\nthe state, they would certainly be augmented as those exigencies\nwere supposed to require. According to the policy of Great Britain,\ntherefore, they would probably he augmented very fast. The facility with\nwhich a great revenue could be drawn from them, would probably encourage\nadministration to recur very frequently te this resource. Though it\nmay, perhaps, be more than doubtful whether half a million could by any\neconomy be saved out of the present tolls, it can scarcely be doubted,\nbut that a million might be saved out of them, if they were doubled; and\nperhaps two millions, if they were tripled {I have now good reason to\nbelieve that all these conjectural sums are by much too large.}. This\ngreat revenue, too, might be levied without the appointment of a single\nnew officer to collect and receive it. But the turnpike tolls, being\ncontinually augmented in this manner, instead of facilitating the inland\ncommerce of the country, as at present, would soon become a very great\nincumbrance upon it. The expense of transporting all heavy goods from\none part of the country to another, would soon be so much increased, the\nmarket for all such goods, consequently, would soon be so much narrowed,\nthat their production would be in a great measure discouraged, and\nthe most important branches of the domestic industry of the country\nannihilated altogether.\n\nSecondly, A tax upon carriages, in proportion to their weight, though a\nvery equal tax when applied to the sole purpose of repairing the roads,\nis a very unequal one when applied to any other purpose, or to supply\nthe common exigencies of the state. When it is applied to the sole\npurpose above mentioned, each carriage is supposed to pay exactly for\nthe wear and tear which that carriage occasions of the roads. But when\nit is applied to any other purpose, each carriage is supposed to pay\nfor more than that wear and tear, and contributes to the supply of some\nother exigency of the state. But as the turnpike toll raises the price\nof goods in proportion to their weight and not to their value, it is\nchiefly paid by the consumers of coarse and bulky, not by those\nof precious and light commodities. Whatever exigency of the state,\ntherefore, this tax might be intended to supply, that exigency would\nbe chiefly supplied at the expense of the poor, not of the rich; at the\nexpense of those who are least able to supply it, not of those who are\nmost able.\n\nThirdly, If government should at any time neglect the reparation of the\nhigh-roads, it would be still more difficult, than it is at present, to\ncompel the proper application of any part of the turnpike tolls. A large\nrevenue might thus be levied upon the people, without any part of it\nbeing applied to the only purpose to which a revenue levied in this\nmanner ought ever to be applied. If the meanness and poverty of the\ntrustees of turnpike roads render it sometimes difficult, at present,\nto oblige them to repair their wrong; their wealth and greatness would\nrender it ten times more so in the case which is here supposed.\n\nIn France, the funds destined for the reparation of the high-roads\nare under the immediate direction of the executive power. Those funds\nconsist, partly in a certain number of days labour, which the country\npeople are in most parts of Europe obliged to give to the reparation of\nthe highways; and partly in such a portion of the general revenue of the\nstate as the king chooses to spare from his other expenses.\n\nBy the ancient law of France, as well as by that of most other parts of\nEurope, the labour of the country people was under the direction of a\nlocal or provincial magistracy, which had no immediate dependency upon\nthe king's council. But, by the present practice, both the labour of the\ncountry people, and whatever other fund the king may choose to assign\nfor the reparation of the high-roads in any particular province or\ngenerality, are entirely under the management of the intendant; an\nofficer who is appointed and removed by the king's council who receives\nhis orders from it, and is in constant correspondence with it. In the\nprogress of despotism, the authority of the executive power gradually\nabsorbs that of every other power in the state, and assumes to itself\nthe management of every branch of revenue which is destined for any\npublic purpose. In France, however, the great post-roads, the roads\nwhich make the communication between the principal towns of the kingdom,\nare in general kept in good order; and, in some provinces, are even a\ngood deal superior to the greater part of the turnpike roads of England.\nBut what we call the cross roads, that is, the far greater part of the\nroads in the country, are entirely neglected, and are in many places\nabsolutely impassable for any heavy carriage. In some places it is even\ndangerous to travel on horseback, and mules are the only conveyance\nwhich can safely be trusted. The proud minister of an ostentatious\ncourt, may frequently take pleasure in executing a work of splendour and\nmagnificence, such as a great highway, which is frequently seen by the\nprincipal nobility, whose applauses not only flatter his vanity, but\neven contribute to support his interest at court. But to execute a great\nnumber of little works, in which nothing that can be done can make any\ngreat appearance, or excite the smallest degree of admiration in any\ntraveller, and which, in short, have nothing to recommend them but their\nextreme utility, is a business which appears, in every respect, too mean\nand paltry to merit the attention of so great a magistrate. Under such\nan administration therefore, such works are almost always entirely\nneglected.\n\nIn China, and in several other governments of Asia, the executive power\ncharges itself both with the reparation of the high-roads, and with the\nmaintenance of the navigable canals. In the instructions which are\ngiven to the governor of each province, those objects, it is said, are\nconstantly recommended to him, and the judgment which the court forms of\nhis conduct is very much regulated by the attention which he appears\nto have paid to this part of his instructions. This branch of public\npolice, accordingly, is said to be very much attended to in all those\ncountries, but particularly in China, where the high-roads, and still\nmore the navigable canals, it is pretended, exceed very much every thing\nof the same kind which is known in Europe. The accounts of those works,\nhowever, which have been transmitted to Europe, have generally been\ndrawn up by weak and wondering travellers; frequently by stupid and\nlying missionaries. If they had been examined by more intelligent\neyes, and if the accounts of them had been reported by more faithful\nwitnesses, they would not, perhaps, appear to be so wonderful. The\naccount which Bernier gives of some works of this kind in Indostan,\nfalls very short of what had been reported of them by other travellers,\nmore disposed to the marvellous than he was. It may too, perhaps, be in\nthose countries, as it is in France, where the great roads, the great\ncommunications, which are likely to be the subjects of conversation\nat the court and in the capital, are attended to, and all the rest\nneglected. In China, besides, in Indostan, and in several other\ngovernments of Asia, the revenue of the sovereign arises almost\naltogether from a land tax or land rent, which rises or falls with the\nrise and fall of the annual produce of the land. The great interest of\nthe sovereign, therefore, his revenue, is in such countries necessarily\nand immediately connected with the cultivation of the land, with the\ngreatness of its produce, and with the value of its produce. But in\norder to render that produce both as great and as valuable as possible,\nit is necessary to procure to it as extensive a market as possible,\nand consequently to establish the freest, the easiest, and the least\nexpensive communication between all the different parts of the country;\nwhich can be done only by means of the best roads and the best navigable\ncanals. But the revenue of the sovereign does not, in any part of\nEurope, arise chiefly from a land tax or land rent. In all the great\nkingdoms of Europe, perhaps, the greater part of it may ultimately\ndepend upon the produce of the land: but that dependency is neither so\nimmediate nor so evident. In Europe, therefore, the sovereign does not\nfeel himself so directly called upon to promote the increase, both in\nquantity and value of the produce of the land, or, by maintaining good\nroads and canals, to provide the most extensive market for that produce.\nThough it should be true, therefore, what I apprehend is not a little\ndoubtful, that in some parts of Asia this department of the public\npolice is very properly managed by the executive power, there is not the\nleast probability that, during the present state of things, it could be\ntolerably managed by that power in any part of Europe.\n\nEven those public works, which are of such a nature that they cannot\nafford any revenue for maintaining themselves, but of which the\nconveniency is nearly confined to some particular place or district,\nare always better maintained by a local or provincial revenue, under the\nmanagement of a local and provincial administration, than by the general\nrevenue of the state, of which the executive power must always have the\nmanagement. Were the streets of London to be lighted and paved at the\nexpense of the treasury, is there any probability that they would be so\nwell lighted and paved as they are at present, or even at so small an\nexpense? The expense, besides, instead of being raised by a local tax\nupon the inhabitants of each particular street, parish, or district in\nLondon, would, in this case, be defrayed out of the general revenue\nof the state, and would consequently be raised by a tax upon all the\ninhabitants of the kingdom, of whom the greater part derive no sort of\nbenefit from the lighting and paving of the streets of London.\n\nThe abuses which sometimes creep into the local and provincial\nadministration of a local and provincial revenue, how enormous soever\nthey may appear, are in reality, however, almost always very trifling in\ncomparison of those which commonly take place in the administration and\nexpenditure of the revenue of a great empire. They are, besides, much\nmore easily corrected. Under the local or provincial administration of\nthe justices of the peace in Great Britain, the six days labour\nwhich the country people are obliged to give to the reparation of the\nhighways, is not always, perhaps, very judiciously applied, but it is\nscarce ever exacted with any circumstance of cruelty or oppression. In\nFrance, under the administration of the intendants, the application is\nnot always more judicious, and the exaction is frequently the most\ncruel and oppressive. Such corvees, as they are called, make one of the\nprincipal instruments of tyranny by which those officers chastise any\nparish or communeaute, which has had the misfortune to fall under their\ndispleasure.\n\n\nOf the public Works and Institution which are necessary for facilitating\nparticular Branches of Commerce.\n\nThe object of the public works and institutions above mentioned, is\nto facilitate commerce in general. But in order to facilitate some\nparticular branches of it, particular institutions are necessary, which\nagain require a particular and extraordinary expense.\n\nSome particular branches of commerce which are carried on with barbarous\nand uncivilized nations, require extraordinary protection. An ordinary\nstore or counting-house could give little security to the goods of the\nmerchants who trade to the western coast of Africa. To defend them from\nthe barbarous natives, it is necessary that the place where they are\ndeposited should be in some measure fortified. The disorders in the\ngovernment of Indostan have been supposed to render a like precaution\nnecessary, even among that mild and gentle people; and it was under\npretence of securing their persons and property from violence, that both\nthe English and French East India companies were allowed to erect the\nfirst forts which they possessed in that country. Among other nations,\nwhose vigorous government will suffer no strangers to possess any\nfortified place within their territory, it may be necessary to maintain\nsome ambassador, minister, or consul, who may both decide, according\nto their own customs, the differences arising among his own countrymen,\nand, in their disputes with the natives, may by means of his public\ncharacter, interfere with more authority and afford them a more powerful\nprotection than they could expect from any private man. The interests\nof commerce have frequently made it necessary to maintain ministers in\nforeign countries, where the purposes either of war or alliance\nwould not have required any. The commerce of the Turkey company\nfirst occasioned the establishment of an ordinary ambassador at\nConstantinople. The first English embassies to Russia arose altogether\nfrom commercial interests. The constant interference with those\ninterests, necessarily occasioned between the subjects of the different\nstates of Europe, has probably introduced the custom of keeping, in all\nneighbouring countries, ambassadors or ministers constantly resident,\neven in the time of peace. This custom, unknown to ancient times, seems\nnot to be older than the end of the fifteenth, or beginning of the\nsixteenth century; that is, than the time when commerce first began to\nextend itself to the greater part of the nations of Europe, and when\nthey first began to attend to its interests.\n\nIt seems not unreasonable, that the extraordinary expense which the\nprotection of any particular branch of commerce may occasion, should be\ndefrayed by a moderate tax upon that particular branch; by a moderate\nfine, for example, to be paid by the traders when they first enter into\nit; or, what is more equal, by a particular duty of so much per cent.\nupon the goods which they either import into, or export out of, the\nparticular countries with which it is carried on. The protection of\ntrade, in general, from pirates and freebooters, is said to have given\noccasion to the first institution of the duties of customs. But, if\nit was thought reasonable to lay a general tax upon trade, in order\nto defray the expense of protecting trade in general, it should seem\nequally reasonable to lay a particular tax upon a particular branch of\ntrade, in order to defray the extraordinary expense of protecting that\nbranch.\n\nThe protection of trade, in general, has always been considered as\nessential to the defence of the commonwealth, and, upon that account,\na necessary part of the duty of the executive power. The collection and\napplication of the general duties of customs, therefore, have always\nbeen left to that power. But the protection of any particular branch of\ntrade is a part of the general protection of trade; a part, therefore,\nof the duty of that power; and if nations always acted consistently, the\nparticular duties levied for the purposes of such particular protection,\nshould always have been left equally to its disposal. But in this\nrespect, as well as in many others, nations have not always acted\nconsistently; and in the greater part of the commercial states of\nEurope, particular companies of merchants have had the address to\npersuade the legislature to entrust to them the performance of this part\nof the duty of the sovereign, together with all the powers which are\nnecessarily connected with it.\n\nThese companies, though they may, perhaps, have been useful for the\nfirst introduction of some branches of commerce, by making, at their\nown expense, an experiment which the state might not think it prudent\nto make, have in the long-run proved, universally, either burdensome or\nuseless, and have either mismanaged or confined the trade.\n\nWhen those companies do not trade upon a joint stock, but are obliged\nto admit any person, properly qualified, upon paying a certain fine,\nand agreeing to submit to the regulations of the company, each member\ntrading upon his own stock, and at his own risk, they are called\nregulated companies. When they trade upon a joint stock, each member\nsharing in the common profit or loss, in proportion to his share in this\nstock, they are called joint-stock companies. Such companies, whether\nregulated or joint-stock, sometimes have, and sometimes have not,\nexclusive privileges.\n\nRegulated companies resemble, in every respect, the corporation of\ntrades, so common in the cities and towns of all the different countries\nof Europe; and are a sort of enlarged monopolies of the same kind. As no\ninhabitant of a town can exercise an incorporated trade, without first\nobtaining his freedom in the incorporation, so, in most cases, no\nsubject of the state can lawfully carry on any branch of foreign trade,\nfor which a regulated company is established, without first becoming a\nmember of that company. The monopoly is more or less strict, according\nas the terms of admission are more or less difficult, and according as\nthe directors of the company have more or less authority, or have it\nmore or less in their power to manage in such a manner as to confine the\ngreater part of the trade to themselves and their particular friends. In\nthe most ancient regulated companies, the privileges of apprenticeship\nwere the same as in other corporations, and entitled the person who had\nserved his time to a member of the company, to become himself a member,\neither without paying any fine, or upon paying a much smaller one than\nwhat was exacted of other people. The usual corporation spirit, wherever\nthe law does not restrain it, prevails in all regulated companies. When\nthey have been allowed to act according to their natural genius, they\nhave always, in order to confine the competition to as small a number of\npersons as possible, endeavoured to subject the trade to many burdensome\nregulations. When the law has restrained them from doing this, they have\nbecome altogether useless and insignificant.\n\nThe regulated companies for foreign commerce which at present subsist\nin Great Britain, are the ancient merchant-adventurers company, now\ncommonly called the Hamburgh company, the Russia company, the Eastland\ncompany, the Turkey company, and the African company.\n\nThe terms of admission into the Hamburgh company are now said to be\nquite easy; and the directors either have it not in their power to\nsubject the trade to any troublesome restraint or regulations, or, at\nleast, have not of late exercised that power. It has not always been so.\nAbout the middle of the last century, the fine for admission was fifty,\nand at one time one hundred pounds, and the conduct of the company was\nsaid to be extremely oppressive. In 1643, in 1645, and in 1661, the\nclothiers and free traders of the west of England complained of them to\nparliament, as of monopolists, who confined the trade, and oppressed the\nmanufactures of the country. Though those complaints produced no act\nof parliament, they had probably intimidated the company so far, as to\noblige them to reform their conduct. Since that time, at least, there\nhave been no complaints against them. By the 10th and 11th of William\nIII. c.6, the fine for admission into the Russia company was reduced to\nfive pounds; and by the 25th of Charles II. c.7, that for admission\ninto the Eastland company to forty shillings; while, at the same time,\nSweden, Denmark, and Norway, all the countries on the north side of the\nBaltic, were exempted from their exclusive charter. The conduct of those\ncompanies had probably given occasion to those two acts of parliament.\nBefore that time, Sir Josiah Child had represented both these and the\nHamburgh company as extremely oppressive, and imputed to their bad\nmanagement the low state of the trade, which we at that time carried\non to the countries comprehended within their respective charters. But\nthough such companies may not, in the present times, be very oppressive,\nthey are certainly altogether useless. To be merely useless, indeed,\nis perhaps, the highest eulogy which can ever justly be bestowed upon a\nregulated company; and all the three companies above mentioned seem, in\ntheir present state, to deserve this eulogy.\n\nThe fine for admission into the Turkey company was formerly twenty-five\npounds for all persons under twenty-six years of age, and fifty pounds\nfor all persons above that age. Nobody but mere merchants could be\nadmitted; a restriction which excluded all shop-keepers and retailers.\nBy a bye-law, no British manufactures could be exported to Turkey but in\nthe general ships of the company; and as those ships sailed always\nfrom the port of London, this restriction confined the trade to that\nexpensive port, and the traders to those who lived in London and in its\nneighbourhood. By another bye-law, no person living within twenty miles\nof London, and not free of the city, could be admitted a member; another\nrestriction which, joined to the foregoing, necessarily excluded all but\nthe freemen of London. As the time for the loading and sailing of those\ngeneral ships depended altogether upon the directors, they could easily\nfill them with their own goods, and those of their particular friends,\nto the exclusion of others, who, they might pretend, had made their\nproposals too late. In this state of things, therefore, this company\nwas, in every respect, a strict and oppressive monopoly. Those abuses\ngave occasion to the act of the 26th of George II. c. 18, reducing\nthe fine for admission to twenty pounds for all persons, without any\ndistinction of ages, or any restriction, either to mere merchants, or to\nthe freemen of London; and granting to all such persons the liberty of\nexporting, from all the ports of Great Britain, to any port in Turkey,\nall British goods, of which the exportation was not prohibited, upon\npaying both the general duties of customs, and the particular duties\nassessed for defraying the necessary expenses of the company; and\nsubmitting, at the same time, to the lawful authority of the British\nambassador and consuls resident in Turkey, and to the bye-laws of the\ncompany duly enacted. To prevent any oppression by those bye-laws, it\nwas by the same act ordained, that if any seven members of the company\nconceived themselves aggrieved by any bye-law which should be enacted\nafter the passing of this act, they might appeal to the board of trade\nand plantations (to the authority of which a committee of the privy\ncouncil has now succeeded), provided such appeal was brought within\ntwelve months after the bye-law was enacted; and that, if any seven\nmembers conceived themselves aggrieved by any bye-law which had been\nenacted before the passing of this act, they might bring a like appeal,\nprovided it was within twelve months after the day on which this act was\nto take place. The experience of one year, however, may not always\nbe sufficient to discover to all the members of a great company the\npernicious tendency of a particular bye-law; and if several of them\nshould afterwards discover it, neither the board of trade, nor the\ncommittee of council, can afford them any redress. The object, besides,\nof the greater part of the bye-laws of all regulated companies, as well\nas of all other corporations, is not so much to oppress those who are\nalready members, as to discourage others from becoming so; which may\nbe done, not only by a high fine, but by many other contrivances. The\nconstant view of such companies is always to raise the rate of their own\nprofit as high as they can; to keep the market, both for the goods which\nthey export, and for those which they import, as much understocked as\nthey can; which can be done only by restraining the competition, or by\ndiscouraging new adventurers from entering into the trade. A fine, even\nof twenty pounds, besides, though it may not, perhaps, be sufficient\nto discourage any man from entering into the Turkey trade, with an\nintention to continue in it, may be enough to discourage a speculative\nmerchant from hazarding a single adventure in it. In all trades, the\nregular established traders, even though not incorporated, naturally\ncombine to raise profits, which are noway so likely to be kept, at all\ntimes, down to their proper level, as by the occasional competition of\nspeculative adventurers. The Turkey trade, though in some measure laid\nopen by this act of parliament, is still considered by many people as\nvery far from being altogether free. The Turkey company contribute to\nmaintain an ambassador and two or three consuls, who, like other public\nministers, ought to be maintained altogether by the state, and the trade\nlaid open to all his majesty's subjects. The different taxes levied by\nthe company, for this and other corporation purposes, might afford a\nrevenue much more than sufficient to enable a state to maintain such\nministers.\n\nRegulated companies, it was observed by Sir Josiah Child, though they\nhad frequently supported public ministers, had never maintained any\nforts or garrisons in the countries to which they traded; whereas\njoint-stock companies frequently had. And, in reality, the former seem\nto be much more unfit for this sort of service than the latter. First,\nthe directors of a regulated company have no particular interest in the\nprosperity of the general trade of the company, for the sake of which\nsuch forts and garrisons are maintained. The decay of that general trade\nmay even frequently contribute to the advantage of their own private\ntrade; as, by diminishing the number of their competitors, it may\nenable them both to buy cheaper, and to sell dearer. The directors of\na joint-stock company, on the contrary, having only their share in\nthe profits which are made upon the common stock committed to their\nmanagement, have no private trade of their own, of which the interest\ncan be separated from that of the general trade of the company. Their\nprivate interest is connected with the prosperity of the general trade\nof the company, and with the maintenance of the forts and garrisons\nwhich are necessary for its defence. They are more likely, therefore,\nto have that continual and careful attention which that maintenance\nnecessarily requires. Secondly, The directors of a joint-stock company\nhave always the management of a large capital, the joint stock of the\ncompany, a part of which they may frequently employ, with propriety, in\nbuilding, repairing, and maintaining such necessary forts and garrisons.\nBut the directors of a regulated company, having the management of no\ncommon capital, have no other fund to employ in this way, but the casual\nrevenue arising from the admission fines, and from the corporation\nduties imposed upon the trade of the company. Though they had the same\ninterest, therefore, to attend to the maintenance of such forts\nand garrisons, they can seldom have the same ability to render that\nattention effectual. The maintenance of a public minister, requiring\nscarce any attention, and but a moderate and limited expense, is a\nbusiness much more suitable both to the temper and abilities of a\nregulated company.\n\nLong after the time of Sir Josiah Child, however, in 1750, a regulated\ncompany was established, the present company of merchants trading to\nAfrica; which was expressly charged at first with the maintenance of all\nthe British forts and garrisons that lie between Cape Blanc and the Cape\nof Good Hope, and afterwards with that of those only which lie between\nCape Rouge and the Cape of Good Hope. The act which establishes this\ncompany (the 23rd of George II. c.51 ), seems to have had two distinct\nobjects in view; first, to restrain effectually the oppressive and\nmonopolizing spirit which is natural to the directors of a regulated\ncompany; and, secondly, to force them, as much as possible, to give\nan attention, which is not natural to them, towards the maintenance of\nforts and garrisons.\n\nFor the first of these purposes, the fine for admission is limited\nto forty shillings. The company is prohibited from trading in their\ncorporate capacity, or upon a joint stock; from borrowing money upon\ncommon seal, or from laying any restraints upon the trade, which may\nbe carried on freely from all places, and by all persons being British\nsubjects, and paying the fine. The government is in a committee of nine\npersons, who meet at London, but who are chosen annually by the freemen\nof the company at London, Bristol, and Liverpool; three from each place.\nNo committeeman can be continued in office for more than three years\ntogether. Any committee-man might be removed by the board of trade and\nplantations, now by a committee of council, after being heard in his own\ndefence. The committee are forbid to export negroes from Africa, or to\nimport any African goods into Great Britain. But as they are charged\nwith the maintenance of forts and garrisons, they may, for that purpose\nexport from Great Britain to Africa goods and stores of different kinds.\nOut of the moneys which they shall receive from the company, they are\nallowed a sum, not exceeding eight hundred pounds, for the salaries\nof their clerks and agents at London, Bristol, and Liverpool, the\nhouse-rent of their offices at London, and all other expenses of\nmanagement, commission, and agency, in England. What remains of this\nsum, after defraying these different expenses, they may divide among\nthemselves, as compensation for their trouble, in what manner they think\nproper. By this constitution, it might have been expected, that the\nspirit of monopoly would have been effectually restrained, and the first\nof these purposes sufficiently answered. It would seem, however, that\nit had not. Though by the 4th of George III. c.20, the fort of Senegal,\nwith all its dependencies, had been invested in the company of merchants\ntrading to Africa, yet, in the year following (by the 5th of George III.\nc.44), not only Senegal and its dependencies, but the whole coast, from\nthe port of Sallee, in South Barbary, to Cape Rouge, was exempted from\nthe jurisdiction of that company, was vested in the crown, and the trade\nto it declared free to all his majesty's subjects. The company had been\nsuspected of restraining the trade and of establishing some sort of\nimproper monopoly. It is not, however, very easy to conceive how, under\nthe regulations of the 23d George II. they could do so. In the printed\ndebates of the house of commons, not always the most authentic records\nof truth, I observe, however, that they have been accused of this. The\nmembers of the committee of nine being all merchants, and the governors\nand factors in their different forts and settlements being all dependent\nupon them, it is not unlikely that the latter might have given peculiar\nattention to the consignments and commissions of the former, which would\nestablish a real monopoly.\n\nFor the second of these purposes, the maintenance of the forts and\ngarrisons, an annual sum has been allotted to them by parliament,\ngenerally about £13,000. For the proper application of this sum, the\ncommittee is obliged to account annually to the cursitor baron of\nexchequer; which account is afterwards to be laid before parliament.\nBut parliament, which gives so little attention to the application of\nmillions, is not likely to give much to that of £13,000 a-year; and the\ncursitor baron of exchequer, from his profession and education, is\nnot likely to be profoundly skilled in the proper expense of forts and\ngarrisons. The captains of his majesty's navy, indeed, or any other\ncommissioned officers, appointed by the board of admiralty, may\ninquire into the condition of the forts and garrisons, and report their\nobservations to that board. But that board seems to have no direct\njurisdiction over the committee, nor any authority to correct those\nwhose conduct it may thus inquire into; and the captains of his\nmajesty's navy, besides, are not supposed to be always deeply learned\nin the science of fortification. Removal from an office, which can\nbe enjoyed only for the term of three years, and of which the lawful\nemoluments, even during that term, are so very small, seems to be the\nutmost punishment to which any committee-man is liable, for any fault,\nexcept direct malversation, or embezzlement, either of the public money,\nor of that of the company; and the fear of the punishment can never be\na motive of sufficient weight to force a continual and careful attention\nto a business to which he has no other interest to attend. The committee\nare accused of having sent out bricks and stones from England for the\nreparation of Cape Coast Castle, on the coast of Guinea; a business\nfor which parliament had several times granted an extraordinary sum of\nmoney. These bricks and stones, too, which had thus been sent upon so\nlong a voyage, were said to have been of so bad a quality, that it was\nnecessary to rebuild, from the foundation, the walls which had been\nrepaired with them. The forts and garrisons which lie north of Cape\nRouge, are not only maintained at the expense of the state, but are\nunder the immediate government of the executive power; and why those\nwhich lie south of that cape, and which, too, are, in part at least,\nmaintained at the expense of the state, should be under a different\ngovernment, it seems not very easy even to imagine a good reason.\nThe protection of the Mediterranean trade was the original purpose or\npretence of the garrisons of Gibraltar and Minorca; and the maintenance\nand government of those garrisons have always been, very properly,\ncommitted, not to the Turkey company, but to the executive power. In\nthe extent of its dominion consists, in a great measure, the pride and\ndignity of that power; and it is not very likely to fail in attention\nto what is necessary for the defence of that dominion. The garrisons at\nGibraltar and Minorca, accordingly, have never been neglected. Though\nMinorca has been twice taken, and is now probably lost for ever, that\ndisaster has never been imputed to any neglect in the executive power.\nI would not, however, be understood to insinuate, that either of those\nexpensive garrisons was ever, even in the smallest degree, necessary for\nthe purpose for which they were originally dismembered from the Spanish\nmonarchy. That dismemberment, perhaps, never served any other real\npurpose than to alienate from England her natural ally the king of\nSpain, and to unite the two principal branches of the house of Bourbon\nin a much stricter and more permanent alliance than the ties of blood\ncould ever have united them.\n\nJoint-stock companies, established either by royal charter, or by act of\nparliament, are different in several respects, not only from regulated\ncompanies, but from private copartneries.\n\nFirst, In a private copartnery, no partner without the consent of the\ncompany, can transfer his share to another person, or introduce a new\nmember into the company. Each member, however, may, upon proper warning,\nwithdraw from the copartnery, and demand payment from them of his share\nof the common stock. In a joint-stock company, on the contrary, no\nmember can demand payment of his share from the company; but each member\ncan, without their consent, transfer his share to another person, and\nthereby introduce a new member. The value of a share in a joint stock\nis always the price which it will bring in the market; and this may be\neither greater or less in any proportion, than the sum which its owner\nstands credited for in the stock of the company.\n\nSecondly, In a private copartnery, each partner is bound for the debts\ncontracted by the company, to the whole extent of his fortune. In a\njoint-stock company, on the contrary, each partner is bound only to the\nextent of his share.\n\nThe trade of a joint-stock company is always managed by a court of\ndirectors. This court, indeed, is frequently subject, in many respects,\nto the control of a general court of proprietors. But the greater part\nof these proprietors seldom pretend to understand any thing of the\nbusiness of the company; and when the spirit of faction happens not to\nprevail among them, give themselves no trouble about it, but receive\ncontentedly such halfyearly or yearly dividend as the directors think\nproper to make to them. This total exemption front trouble and front\nrisk, beyond a limited sum, encourages many people to become adventurers\nin joint-stock companies, who would, upon no account, hazard their\nfortunes in any private copartnery. Such companies, therefore, commonly\ndraw to themselves much greater stocks, than any private copartnery\ncan boast of. The trading stock of the South Sea company at one time\namounted to upwards of thirty-three millions eight hundred thousand\npounds. The divided capital of the Bank of England amounts, at present,\nto ten millions seven hundred and eighty thousand pounds. The directors\nof such companies, however, being the managers rather of other people's\nmoney than of their own, it cannot well be expected that they should\nwatch over it with the same anxious vigilance with which the partners in\na private copartnery frequently watch over their own. Like the stewards\nof a rich man, they are apt to consider attention to small matters\nas not for their master's honour, and very easily give themselves a\ndispensation from having it. Negligence and profusion, therefore, must\nalways prevail, more or less, in the management of the affairs of such a\ncompany. It is upon this account, that joint-stock companies for foreign\ntrade have seldom been able to maintain the competition against private\nadventurers. They have, accordingly, very seldom succeeded without an\nexclusive privilege; and frequently have not succeeded with one. Without\nan exclusive privilege, they have commonly mismanaged the trade. With an\nexclusive privilege, they have both mismanaged and confined it.\n\nThe Royal African company, the predecessors of the present African\ncompany, had an exclusive privilege by charter; but as that charter had\nnot been confirmed by act of parliament, the trade, in consequence of\nthe declaration of rights, was, soon after the Revolution, laid open to\nall his majesty's subjects. The Hudson's Bay company are, as to their\nlegal rights, in the same situation as the Royal African company. Their\nexclusive charter has not been confirmed by act of parliament. The South\nSea company, as long as they continued to be a trading company, had an\nexclusive privilege confirmed by act of parliament; as have likewise the\npresent united company of merchants trading to the East Indies.\n\nThe Royal African company soon found that they could not maintain the\ncompetition against private adventurers, whom, notwithstanding the\ndeclaration of rights, they continued for some time to call interlopers,\nand to persecute as such. In 1698, however, the private adventurers\nwere subjected to a duty of ten per cent. upon almost all the\ndifferent branches of their trade, to be employed by the company in\nthe maintenance of their forts and garrisons. But, notwithstanding this\nheavy tax, the company were still unable to maintain the competition.\nTheir stock and credit gradually declined. In 1712, their debts had\nbecome so great, that a particular act of parliament was thought\nnecessary, both for their security and for that of their creditors. It\nwas enacted, that the resolution of two-thirds of these creditors in\nnumber and value should bind the rust, both with regard to the time\nwhich should be allowed to the company for the payment of their debts,\nand with regard to any other agreement which it might be thought proper\nto make with them concerning those debts. In 1730, their affairs were\nin so great disorder, that they were altogether incapable of maintaining\ntheir forts and garrisons, the sole purpose and pretext of their\ninstitution. From that year till their final dissolution, the parliament\njudged it necessary to allow the annual sum of £10,000 for that purpose.\nIn 1732, after having been for many years losers by the trade of\ncarrying negroes to the West Indies, they at last resolved to give it up\naltogether; to sell to the private traders to America the negroes which\nthey purchased upon the coast; awl to employ their servants in a trade\nto the inland parts of Africa for gold dust, elephants teeth, dyeing\ndrugs, etc. But their success in this more confined trade was not\ngreater than in their former extensive one. Their affairs continued to\ngo gradually to decline, till at last, being in every respect a bankrupt\ncompany, they were dissolved by act of parliament, and their forts and\ngarrisons vested in the present regulated company of merchants trading\nto Africa. Before the erection of the Royal African company, there had\nbeen three other joint-stock companies successively established,\none after another, for the African trade. They were all equally\nunsuccessful. They all, however, had exclusive charters, which, though\nnot confirmed by act of parliament, were in those days supposed to\nconvey a real exclusive privilege.\n\nThe Hudson's Bay company, before their misfortunes in the late war, had\nbeen much more fortunate than the Royal African company. Their necessary\nexpense is much smaller. The whole number of people whom they maintain\nin their different settlements and habitations, which they have honoured\nwith the name of forts, is said not to exceed a hundred and twenty\npersons. This number, however, is sufficient to prepare beforehand the\ncargo of furs and other goods necessary for loading their ships, which,\non account of the ice, can seldom remain above six or eight weeks in\nthose seas. This advantage of having a cargo ready prepared, could not,\nfor several years, be acquired by private adventurers; and without\nit there seems to be no possibility of trading to Hudson's Bay. The\nmoderate capital of the company, which, it is said, does not exceed one\nhundred and ten thousand pounds, may, besides, be sufficient to enable\nthem to engross the whole, or almost the whole trade and surplus\nproduce, of the miserable though extensive country comprehended within\ntheir charter. No private adventurers, accordingly, have ever attempted\nto trade to that country in competition with them. This company,\ntherefore, have always enjoyed an exclusive trade, in fact, though they\nmay have no right to it in law. Over and above all this, the moderate\ncapital of this company is said to be divided among a very small number\nof proprietors. But a joint-stock company, consisting of a small number\nof proprietors, with a moderate capital, approaches very nearly to the\nnature of a private copartnery, and may be capable of nearly the\nsame degree of vigilance and attention. It is not to be wondered\nat, therefore, if, in consequence of these different advantages, the\nHudson's Bay company had, before the late war, been able to carry on\ntheir trade with a considerable degree of success. It does not seem\nprobable, however, that their profits ever approached to what the late\nMr Dobbs imagined them. A much more sober and judicious writer, Mr\nAnderson, author of the Historical and Chronological Deduction of\nCommerce, very justly observes, that upon examining the accounts which\nMr Dobbs himself has given for several years together, of their exports\nand imports, and upon making proper allowances for their extraordinary\nrisk and expense, it does not appear that their profits deserve to be\nenvied, or that they can much, if at all, exceed the ordinary profits of\ntrade.\n\nThe South Sea company never had any forts or garrisons to maintain, and\ntherefore were entirely exempted from one great expense, to which other\njoint-stock companies for foreign trade are subject; but they had an\nimmense capital divided among an immense number of proprietors. It\nwas naturally to be expected, therefore, that folly, negligence, and\nprofusion, should prevail in the whole management of their affairs.\nThe knavery and extravagance of their stock-jobbing projects are\nsufficiently known, and the explication of them would be foreign to\nthe present subject. Their mercantile projects were not much better\nconducted. The first trade which they engaged in, was that of supplying\nthe Spanish West Indies with negroes, of which (in consequence of what\nwas called the Assiento Contract granted them by the treaty of Utrecht)\nthey had the exclusive privilege. But as it was not expected that much\nprofit could be made by this trade, both the Portuguese and French\ncompanies, who had enjoyed it upon the same terms before them, having\nbeen ruined by it, they were allowed, as compensation, to send annually\na ship of a certain burden, to trade directly to the Spanish West\nIndies. Of the ten voyages which this annual ship was allowed to make,\nthey are said to have gained considerably by one, that of the Royal\nCaroline, in 1731; and to have been losers, more or less, by almost all\nthe rest. Their ill success was imputed, by their factors and agents,\nto the extortion and oppression of the Spanish government; but was,\nperhaps, principally owing to the profusion and depredations of those\nvery factors and agents; some of whom are said to have acquired great\nfortunes, even in one year. In 1734, the company petitioned the king,\nthat they might be allowed to dispose of the trade and tonnage of their\nannual ship, on account of the little profit which they made by it,\nand to accept of such equivalent as they could obtain from the king of\nSpain.\n\nIn 1724, this company had undertaken the whale fishery. Of this, indeed,\nthey had no monopoly; but as long as they carried it on, no other\nBritish subjects appear to have engaged in it. Of the eight voyages\nwhich their ships made to Greenland, they were gainers by one, and\nlosers by all the rest. After their eighth and last voyage, when they\nhad sold their ships, stores, and utensils, they found that their\nwhole loss upon this branch, capital and interest included, amounted to\nupwards of £237,000.\n\nIn 1722, this company petitioned the parliament to be allowed to divide\ntheir immense capital of more than thirty-three millions eight hundred\nthousand pounds, the whole of which had been lent to government, into\ntwo equal parts; the one half, or upwards of £16,900,000, to be put upon\nthe same footing with other government annuities, and not to be subject\nto the debts contracted, or losses incurred, by the directors of the\ncompany, in the prosecution of their mercantile projects; the other half\nto remain as before, a trading stock, and to be subject to those debts\nand losses. The petition was too reasonable not to be granted. In\n1733, they again petitioned the parliament, that three-fourths of their\ntrading stock might be turned into annuity stock, and only one-fourth\nremain as trading stock, or exposed to the hazards arising from the bad\nmanagement of their directors. Both their annuity and trading stocks\nhad, by this time, been reduced more than two millions each, by several\ndifferent payments from government; so that this fourth amounted only to\n£3,662,784:8:6. In 1748, all the demands of the company upon the king of\nSpain, in consequence of the assiento contract, were, by the treaty of\nAix-la-Chapelle, given up for what was supposed an equivalent. An end\nwas put to their trade with the Spanish West Indies; the remainder of\ntheir trading stock was turned into an annuity stock; and the company\nceased, in every respect, to be a trading company.\n\nIt ought to be observed, that in the trade which the South Sea company\ncarried on by means of their annual ship, the only trade by which it\never was expected that they could make any considerable profit, they\nwere not without competitors, either in the foreign or in the home\nmarket. At Carthagena, Porto Bello, and La Vera Cruz, they had to\nencounter the competition of the Spanish merchants, who brought from\nCadiz to those markets European goods, of the same kind with the outward\ncargo of their ship; and in England they had to encounter that of the\nEnglish merchants, who imported from Cadiz goods of the Spanish West\nIndies, of the same kind with the inward cargo. The goods, both of the\nSpanish and English merchants, indeed, were, perhaps, subject to higher\nduties. But the loss occasioned by the negligence, profusion, and\nmalversation of the servants of the company, had probably been a tax\nmuch heavier than all those duties. That a joint-stock company should be\nable to carry on successfully any branch of foreign trade, when private\nadventurers can come into any sort of open and fair competition with\nthem, seems contrary to all experience.\n\nThe old English East India company was established in 1600, by a charter\nfrom Queen Elizabeth. In the first twelve voyages which they fitted\nout for India, they appear to have traded as a regulated company, with\nseparate stocks, though only in the general ships of the company. In\n1612, they united into a joint stock. Their charter was exclusive, and,\nthough not confirmed by act of parliament, was in those days supposed to\nconvey a real exclusive privilege. For many years, therefore, they were\nnot much disturbed by interlopers. Their capital, which never exceeded\n£744,000, and of which £50 was a share, was not so exorbitant, nor\ntheir dealings so extensive, as to afford either a pretext for\ngross negligence and profusion, or a cover to gross malversation.\nNotwithstanding some extraordinary losses, occasioned partly by the\nmalice of the Dutch East India company, and partly by other accidents,\nthey carried on for many years a successful trade. But in process of\ntime, when the principles of liberty were better understood, it became\nevery day more and more doubtful, how far a royal charter, not confirmed\nby act of parliament, could convey an exclusive privilege. Upon this\nquestion the decisions of the courts of justice were not uniform, but\nvaried with the authority of government, and the humours of the times.\nInterlopers multiplied upon them; and towards the end of the reign of\nCharles II., through the whole of that of James II., and during a part\nof that of William III., reduced them to great distress. In 1698,\na proposal was made to parliament, of advancing two millions to\ngovernment, at eight per cent. provided the subscribers were erected\ninto a new East India company, with exclusive privileges. The old East\nIndia company offered seven hundred thousand pounds, nearly the amount\nof their capital, at four per cent. upon the same conditions. But such\nwas at that time the state of public credit, that it was more convenient\nfor government to borrow two millions at eight per cent. than seven\nhundred thousand pounds at four. The proposal of the new subscribers was\naccepted, and a new East India company established in consequence. The\nold East India company, however, had a right to continue their trade\ntill 1701. They had, at the same time, in the name of their treasurer,\nsubscribed very artfully three hundred and fifteen thousand pounds into\nthe stock of the new. By a negligence in the expression of the act of\nparliament, which vested the East India trade in the subscribers to\nthis loan of two millions, it did not appear evident that they were\nall obliged to unite into a joint stock. A few private traders, whose\nsubscriptions amounted only to seven thousand two hundred pounds,\ninsisted upon the privilege of trading separately upon their own stocks,\nand at their own risks. The old East India company had a right to a\nseparate trade upon their own stock till 1701; and they had likewise,\nboth before and after that period, a right, like that or other\nprivate traders, to a separate trade upon the £315,000, which they had\nsubscribed into the stock of the new company. The competition of the\ntwo companies with the private traders, and with one another, is said to\nhave well nigh ruined both. Upon a subsequent occasion, in 1750, when\na proposal was made to parliament for putting the trade under the\nmanagement of a regulated company, and thereby laying it in some\nmeasure open, the East India company, in opposition to this proposal,\nrepresented, in very strong terms, what had been, at this time, the\nmiserable effects, as they thought them, of this competition. In India,\nthey said, it raised the price of goods so high, that they were not\nworth the buying; and in England, by overstocking the market, it sunk\ntheir price so low, that no profit could be made by them. That by a more\nplentiful supply, to the great advantage and conveniency of the public,\nit must have reduced very much the price of India goods in the English\nmarket, cannot well be doubted; but that it should have raised very much\ntheir price in the Indian market, seems not very probable, as all the\nextraordinary demand which that competition could occasion must have\nbeen but as a drop of water in the immense ocean of Indian commerce. The\nincrease of demand, besides, though in the beginning it may sometimes\nraise the price of goods, never fails to lower it in the long-run. It\nencourages production, and thereby increases the competition of the\nproducers, who, in order to undersell one another, have recourse to\nnew divisions or labour and new improvements of art, which might never\notherwise have been thought of. The miserable effects of which\nthe company complained, were the cheapness of consumption, and the\nencouragement given to production; precisely the two effects which it\nis the great business of political economy to promote. The competition,\nhowever, of which they gave this doleful account, had not been allowed\nto be of long continuance. In 1702, the two companies were, in some\nmeasure, united by an indenture tripartite, to which the queen was the\nthird party; and in 1708, they were by act of parliament, perfectly\nconsolidated into one company, by their present name of the United\nCompany of Merchants trading to the East Indies. Into this act it was\nthought worth while to insert a clause, allowing the separate traders\nto continue their trade till Michaelmas 1711; but at the same time\nempowering the directors, upon three years notice, to redeem their\nlittle capital of seven thousand two hundred pounds, and thereby to\nconvert the whole stock of the company into a joint stock. By the\nsame act, the capital of the company, in consequence of a new loan\nto government, was augmented from two millions to three millions two\nhundred thousand pounds. In 1743, the company advanced another million\nto government. But this million being raised, not by a call upon the\nproprietors, but by selling annuities and contracting bond-debts, it did\nnot augment the stock upon which the proprietors could claim a dividend.\nIt augmented, however, their trading stock, it being equally liable\nwith the other three millions two hundred thousand pounds, to the losses\nsustained, and debts contracted by the company in prosecution of their\nmercantile projects. From 1708, or at least from 1711, this company,\nbeing delivered from all competitors, and fully established in the\nmonopoly of the English commerce to the East Indies, carried on a\nsuccessful trade, and from their profits, made annually a moderate\ndividend to their proprietors. During the French war, which began in\n1741, the ambition of Mr. Dupleix, the French governor of Pondicherry,\ninvolved them in the wars of the Carnatic, and in the politics of the\nIndian princes. After many signal successes, and equally signal losses,\nthey at last lost Madras, at that time their principal settlement in\nIndia. It was restored to them by the treaty of Aix-la-Chapelle; and,\nabout this time the spirit of war and conquest seems to have taken\npossession of their servants in India, and never since to have left\nthem. During the French war, which began in 1755, their arms partook\nof the general good fortune of those of Great Britain. They defended\nMadras, took Pondicherry, recovered Calcutta, and acquired the revenues\nof a rich and extensive territory, amounting, it was then said, to\nupwards of three millions a-year. They remained for several years in\nquiet possession of this revenue; but in 1767, administration laid claim\nto their territorial acquisitions, and the revenue arising from them,\nas of right belonging to the crown; and the company, in compensation\nfor this claim, agreed to pay to government £400,000 a-year. They had,\nbefore this, gradually augmented their dividend from about six to ten\nper cent.; that is, upon their capital of three millions two hundred\nthousand pounds, they had increased it by £128,000, or had raised it\nfrom one hundred and ninety-two thousand to three hundred and twenty\nthousand pounds a-year. They were attempting about this time to raise\nit still further, to twelve and a-half per cent., which would have made\ntheir annual payments to their proprietors equal to what they had agreed\nto pay annually to government, or to £400,000 a-year. But during the two\nyears in which their agreement with government was to take place, they\nwere restrained from any further increase of dividend by two successive\nacts of parliament, of which the object was to enable them to make a\nspeedier progress in the payment of their debts, which were at this time\nestimated at upwards of six or seven millions sterling. In 1769,\nthey renewed their agreement with government for five years more,\nand stipulated, that during the course of that period, they should be\nallowed gradually to increase their dividend to twelve and a-half per\ncent; never increasing it, however, more than one per cent. in one year.\nThis increase of dividend, therefore, when it had risen to its utmost\nheight, could augment their annual payments, to their proprietors and\ngovernment together, but by £680,000, beyond what they had been before\ntheir late territorial acquisitions. What the gross revenue of those\nterritorial acquisitions was supposed to amount to, has already been\nmentioned; and by an account brought by the Cruttenden East Indiaman in\n1769, the neat revenue, clear of all deductions and military charges,\nwas stated at two millions forty-eight thousand seven hundred and\nforty-seven pounds. They were said, at the same time, to possess\nanother revenue, arising partly from lands, but chiefly from the customs\nestablished at their different settlements, amounting to £439,000. The\nprofits of their trade, too, according to the evidence of their chairman\nbefore the house of commons, amounted, at this time, to at least\n£400,000 a-year; according to that of their accountant, to at least\n£500,000; according to the lowest account, at least equal to the highest\ndividend that was to be paid to their proprietors. So great a revenue\nmight certainly have afforded an augmentation of £680,000 in their\nannual payments; and, at the same time, have left a large sinking fund,\nsufficient for the speedy reduction of their debt. In 1773, however,\ntheir debts, instead of being reduced, were augmented by an arrear to\nthe treasury in the payment of the four hundred thousand pounds; by\nanother to the custom-house for duties unpaid; by a large debt to the\nbank, for money borrowed; and by a fourth, for bills drawn upon them\nfrom India, and wantonly accepted, to the amount of upwards of twelve\nhundred thousand pounds. The distress which these accumulated claims\nbrought upon them, obliged them not only to reduce all at once their\ndividend to six per cent. but to throw themselves upon the mercy of\ngovermnent, and to supplicate, first, a release from the further payment\nof the stipulated £400,000 a-year; and, secondly, a loan of fourteen\nhundred thousand, to save them from immediate bankruptcy. The great\nincrease of their fortune had, it seems, only served to furnish their\nservants with a pretext for greater profusion, and a cover for greater\nmalversation, than in proportion even to that increase of fortune.\nThe conduct of their servants in India, and the general state of\ntheir affairs both in India and in Europe, became the subject of a\nparliamentary inquiry: in consequence of which, several very important\nalterations were made in the constitution of their government, both\nat home and abroad. In India, their principal settlements or Madras,\nBombay, and Calcutta, which had before been altogether independent of\none another, were subjected to a governor-general, assisted by a council\nof four assessors, parliament assuming to itself the first nomination\nof this governor and council, who were to reside at Calcutta; that city\nhaving now become, what Madras was before, the most important of the\nEnglish settlements in India. The court of the Mayor of Calcutta,\noriginally instituted for the trial of mercantile causes, which arose in\nthe city and neighbourhood, had gradually extended its jurisdiction\nwith the extension of the empire. It was now reduced and confined to the\noriginal purpose of its institution. Instead of it, a new supreme court\nof judicature was established, consisting of a chief justice and three\njudges, to be appointed by the crown. In Europe, the qualification\nnecessary to entitle a proprietor to vote at their general courts was\nraised, from five hundred pounds, the original price of a share in the\nstock of the company, to a thousand pounds. In order to vote upon this\nqualification, too, it was declared necessary, that he should have\npossessed it, if acquired by his own purchase, and not by inheritance,\nfor at least one year, instead of six months, the term requisite before.\nThe court of twenty-four directors had before been chosen annually; but\nit was now enacted, that each director should, for the future, be chosen\nfor four years; six of them, however, to go out of office by rotation\nevery year, and not be capable of being re-chosen at the election of\nthe six new directors for the ensuing year. In consequence of these\nalterations, the courts, both of the proprietors and directors, it was\nexpected, would be likely to act with more dignity and steadiness\nthan they had usually done before. But it seems impossible, by any\nalterations, to render those courts, in any respect, fit to govern, or\neven to share in the government of a great empire; because the greater\npart of their members must always have too little interest in the\nprosperity of that empire, to give any serious attention to what may\npromote it. Frequently a man of great, sometimes even a man of small\nfortune, is willing to purchase a thousand pounds share in India stock,\nmerely for the influence which he expects to aquire by a vote in the\ncourt of proprietors. It gives him a share, though not in the plunder,\nyet in the appointment of the plunderers of India; the court of\ndirectors, though they make that appointment, being necessarily more or\nless under the influence of the proprietors, who not only elect those\ndirectors, but sometimes over-rule the appointments of their servants in\nIndia. Provided he can enjoy this influence for a few years, and thereby\nprovide for a certain number of his friends, he frequently cares little\nabout the dividend, or even about the value of the stock upon which\nhis vote is founded. About the prosperity of the great empire, in the\ngovernment of which that vote gives him a share, he seldom cares at all.\nNo other sovereigns ever were, or, from the nature of things, ever could\nbe, so perfectly indifferent about the happiness or misery of their\nsubjects, the improvement or waste of their dominions, the glory or\ndisgrace of their administration, as, from irresistible moral causes,\nthe greater part of the proprietors of such a mercantile company are,\nand necessarily must be. This indifference, too, was more likely to be\nincreased than diminished by some of the new regulations which were\nmade in consequence of the parliamentary inquiry. By a resolution of the\nhouse of commons, for example, it was declared, that when the £1,400,000\nlent to the company by government, should be paid, and their bond-debts\nbe reduced to £1,500,000, they might then, and not till then, divide\neight per cent. upon their capital; and that whatever remained of their\nrevenues and neat profits at home should be divided into four parts;\nthree of them to be paid into the exchequer for the use of the public,\nand the fourth to be reserved as a fund, either for the further\nreduction of their bond-debts, or for the discharge of other contingent\nexigencies which the company might labour under. But if the company were\nbad stewards and bad sovereigns, when the whole of their neat revenue\nand profits belonged to themselves, and were at their own disposal, they\nwere surely not likely to be better when three-fourths of them were to\nbelong to other people, and the other fourth, though to be laid out for\nthe benefit of the company, yet to be so under the inspection and with\nthe approbation of other people.\n\nIt might be more agreeable to the company, that their own servants and\ndependants should have either the pleasure of wasting, or the profit\nof embezzling, whatever surplus might remain, after paying the proposed\ndividend of eight per cent. than that it should come into the hands of a\nset of people with whom those resolutions could scarce fail to set\nthem in some measure at variance. The interest of those servants and\ndependants might so far predominate in the court of proprietors, as\nsometimes to dispose it to support the authors of depredations which\nhad been committed in direct violation of its own authority. With the\nmajority of proprietors, the support even of the authority of their own\ncourt might sometimes be a matter of less consequence than the support\nof those who had set that authority at defiance.\n\nThe regulations of 1773, accordingly, did not put an end to the disorder\nof the company's government in India. Notwithstanding that, during a\nmomentary fit of good conduct, they had at one time collected into the\ntreasury of Calcutta more than £3,000,000 sterling; notwithstanding that\nthey had afterwards extended either their dominion or their depredations\nover a vast accession of some of the richest and most fertile countries\nin India, all was wasted and destroyed. They found themselves altogether\nunprepared to stop or resist the incursion of Hyder Ali; and in\nconsequence of those disorders, the company is now (1784) in greater\ndistress than ever; and, in order to prevent immediate bankruptcy, is\nonce more reduced to supplicate the assistance of government. Different\nplans have been proposed by the different parties in parliament for the\nbetter management of its affairs; and all those plans seem to agree\nin supposing, what was indeed always abundantly evident, that it is\naltogether unfit to govern its territorial possessions. Even the company\nitself seems to be convinced of its own incapacity so far, and seems,\nupon that account willing to give them up to government.\n\nWith the right of possessing forts and garrisons in distant and\nbarbarous countries is necessarily connected the right of making peace\nand war in those countries. The joint-stock companies, which have had\nthe one right, have constantly exercised the other, and have frequently\nhad it expressly conferred upon them. How unjustly, how capriciously,\nhow cruelly, they have commonly exercised it, is too well known from\nrecent experience.\n\nWhen a company of merchants undertake, at their own risk and expense, to\nestablish a new trade with some remote and barbarous nation, it may not\nbe unreasonable to incorporate them into a joint-stock company, and\nto grant them, in case of their success, a monopoly of the trade for a\ncertain number of years. It is the easiest and most natural way in which\nthe state can recompense them for hazarding a dangerous and expensive\nexperiment, of which the public is afterwards to reap the benefit.\nA temporary monopoly of this kind may be vindicated, upon the same\nprinciples upon which a like monopoly of a new machine is granted to its\ninventor, and that of a new book to its author. But upon the expiration\nof the term, the monopoly ought certainly to determine; the forts and\ngarrisons, if it was found necessary to establish any, to be taken into\nthe hands of government, their value to be paid to the company, and the\ntrade to be laid open to all the subjects of the state. By a perpetual\nmonopoly, all the other subjects of the state are taxed very absurdly\nin two different ways: first, by the high price of goods, which, in the\ncase of a free trade, they could buy much cheaper; and, secondly, by\ntheir total exclusion from a branch of business which it might be both\nconvenient and profitable for many of them to carry on. It is for the\nmost worthless of all purposes, too, that they are taxed in this manner.\nIt is merely to enable the company to support the negligence, profusion,\nand malversation of their own servants, whose disorderly conduct seldom\nallows the dividend of the company to exceed the ordinary rate of profit\nin trades which are altogether free, and very frequently makes a fall\neven a good deal short of that rate. Without a monopoly, however, a\njoint-stock company, it would appear from experience, cannot long carry\non any branch of foreign trade. To buy in one market, in order to sell\nwith profit in another, when there are many competitors in both; to\nwatch over, not only the occasional variations in the demand, but the\nmuch greater and more frequent variations in the competition, or in the\nsupply which that demand is likely to get from other people; and to\nsuit with dexterity and judgment both the quantity and quality of each\nassortment of goods to all these circumstances, is a species of warfare,\nof which the operations are continually changing, and which can scarce\never be conducted successfully, without such an unremitting exertion of\nvigilance and attention as cannot long be expected from the directors\nof a joint-stock company. The East India company, upon the redemption\nof their funds, and the expiration of their exclusive privilege, have\na right, by act of parliament, to continue a corporation with a joint\nstock, and to trade in their corporate capacity to the East Indies, in\ncommon with the rest of their fellow subjects. But in this situation,\nthe superior vigilance and attention of a private adventurer would, in\nall probability, soon make them weary of the trade.\n\nAn eminent French author, of great knowledge in matters of political\neconomy, the Abbe Morellet, gives a list of fifty-five joint-stock\ncompanies for foreign trade, which have been established in different\nparts of Europe since the year 1600, and which, according to him,\nhave all failed from mismanagement, notwithstanding they had exclusive\nprivileges. He has been misinformed with regard to the history of two or\nthree of them, which were not joint-stock companies and have not failed.\nBut, in compensation, there have been several joint-stock companies\nwhich have failed, and which he has omitted.\n\nThe only trades which it seems possible for a joint-stock company to\ncarry on successfully, without an exclusive privilege, are those, of\nwhich all the operations are capable of being reduced to what is called\na routine, or to such a uniformity of method as admits of little or\nno variation. Of this kind is, first, the banking trade; secondly, the\ntrade of insurance from fire and from sea risk, and capture in time of\nwar; thirdly, the trade of making and maintaining a navigable cut or\ncanal; and, fourthly, the similar trade of bringing water for the supply\nof a great city.\n\nThough the principles of the banking trade may appear somewhat abstruse,\nthe practice is capable of being reduced to strict rules. To depart\nupon any occasion from those rules, in consequence of some flattering\nspeculation of extraordinary gain, is almost always extremely dangerous\nand frequently fatal to the banking company which attempts it. But the\nconstitution of joint-stock companies renders them in general, more\ntenacious of established rules than any private copartnery. Such\ncompanies, therefore, seem extremely well fitted for this trade. The\nprincipal banking companies in Europe, accordingly, are joint-stock\ncompanies, many of which manage their trade very successfully without\nany exclusive privilege. The bank of England has no other exclusive\nprivilege, except that no other banking company in England shall consist\nof more than six persons. The two banks of Edinburgh are joint-stock\ncompanies, without any exclusive privilege.\n\nThe value of the risk, either from fire, or from loss by sea, or by\ncapture, though it cannot, perhaps, be calculated very exactly, admits,\nhowever, of such a gross estimation, as renders it, in some degree,\nreducible to strict rule and method. The trade of insurance, therefore,\nmay be carried on successfully by a joint-stock company, without\nany exclusive privilege. Neither the London Assurance, nor the Royal\nExchange Assurance companies have any such privilege.\n\nWhen a navigable cut or canal has been once made, the management of it\nbecomes quite simple and easy, and it is reducible to strict rule and\nmethod. Even the making of it is so, as it may be contracted for with\nundertakers, at so much a mile, and so much a lock. The same thing may\nbe said of a canal, an aqueduct, or a great pipe for bringing water\nto supply a great city. Such under-takings, therefore, may be, and\naccordingly frequently are, very successfully managed by joint-stock\ncompanies, without any exclusive privilege.\n\nTo establish a joint-stock company, however, for any undertaking, merely\nbecause such a company might be capable of managing it successfully;\nor, to exempt a particular set of dealers from some of the general laws\nwhich take place with regard to all their neighbours, merely because\nthey might be capable of thriving, if they had such an exemption, would\ncertainly not be reasonable. To render such an establishment perfectly\nreasonable, with the circumstance of being reducible to strict rule\nand method, two other circumstances ought to concur. First, it ought to\nappear with the clearest evidence, that the undertaking is of greater\nand more general utility than the greater part of common trades;\nand, secondly, that it requires a greater capital than can easily\nbe collected into a private copartnery. If a moderate capital were\nsufficient, the great utility of the undertaking would not be a\nsufficient reason for establishing a joint-stock company; because, in\nthis case, the demand for what it was to produce, would readily and\neasily be supplied by private adventurers. In the four trades above\nmentioned, both those circumstances concur.\n\nThe great and general utility of the banking trade, when prudently\nmanaged, has been fully explained in the second book of this Inquiry.\nBut a public bank, which is to support public credit, and, upon\nparticular emergencies, to advance to government the whole produce of a\ntax, to the amount, perhaps, of several millions, a year or two before\nit comes in, requires a greater capital than can easily be collected\ninto any private copartnery.\n\nThe trade of insurance gives great security to the fortunes of private\npeople, and, by dividing among a great many that loss which would ruin\nan individual, makes it fall light and easy upon the whole society. In\norder to give this security, however, it is necessary that the insurers\nshould have a very large capital. Before the establishment of the two\njoint-stock companies for insurance in London, a list, it is said,\nwas laid before the attorney-general, of one hundred and fifty private\nusurers, who had failed in the course of a few years.\n\nThat navigable cuts and canals, and the works which are sometimes\nnecessary for supplying a great city with water, are of great and\ngeneral utility, while, at the same time, they frequently require\na greater expense than suits the fortunes of private people, is\nsufficiently obvious.\n\nExcept the four trades above mentioned, I have not been able to\nrecollect any other, in which all the three circumstances requisite for\nrendering reasonable the establishment of a joint-stock company concur.\nThe English copper company of London, the lead-smelting company, the\nglass-grinding company, have not even the pretext of any great or\nsingular utility in the object which they pursue; nor does the pursuit\nof that object seem to require any expense unsuitable to the fortunes of\nmany private men. Whether the trade which those companies carry on, is\nreducible to such strict rule and method as to render it fit for the\nmanagement of a joint-stock company, or whether they have any reason\nto boast of their extraordinary profits, I do not pretend to know. The\nmine-adventurers company has been long ago bankrupt. A share in the\nstock of the British Linen company of Edinburgh sells, at present,\nvery much below par, though less so than it did some years ago. The\njoint-stock companies, which are established for the public-spirited\npurpose of promoting some particular manufacture, over and above\nmanaging their own affairs ill, to the diminution of the general stock\nof the society, can, in other respects, scarce ever fail to do more harm\nthan good. Notwithstanding the most upright intentions, the unavoidable\npartiality of their directors to particular branches of the manufacture,\nof which the undertakers mislead and impose upon them, is a real\ndiscouragement to the rest, and necessarily breaks, more or less,\nthat natural proportion which would otherwise establish itself between\njudicious industry and profit, and which, to the general industry of the\ncountry, is of all encouragements the greatest and the most effectual.\n\nART. II.--Of the Expense of the Institution for the Education of Youth.\n\nThe institutions for the education of the youth may, in the same manner,\nfurnish a revenue sufficient for defraying their own expense. The fee or\nhonorary, which the scholar pays to the master, naturally constitutes a\nrevenue of this kind.\n\nEven where the reward of the master does not arise altogether from this\nnatural revenue, it still is not necessary that it should be derived\nfrom that general revenue of the society, of which the collection and\napplication are, in most countries, assigned to the executive power.\nThrough the greater part of Europe, accordingly, the endowment of\nschools and colleges makes either no charge upon that general revenue,\nor but a very small one. It everywhere arises chiefly from some local\nor provincial revenue, from the rent of some landed estate, or from the\ninterest of some sum of money, allotted and put under the management\nof trustees for this particular purpose, sometimes by the sovereign\nhimself, and sometimes by some private donor.\n\nHave those public endowments contributed in general, to promote the end\nof their institution? Have they contributed to encourage the diligence,\nand to improve the abilities, of the teachers? Have they directed the\ncourse of education towards objects more useful, both to the individual\nand to the public, than those to which it would naturally have gone of\nits own accord? It should not seem very difficult to give at least a\nprobable answer to each of those questions.\n\nIn every profession, the exertion of the greater part of those who\nexercise it, is always in proportion to the necessity they are under of\nmaking that exertion. This necessity is greatest with those to whom\nthe emoluments of their profession are the only source from which they\nexpect their fortune, or even their ordinary revenue and subsistence.\nIn order to acquire this fortune, or even to get this subsistence, they\nmust, in the course of a year, execute a certain quantity of work of\na known value; and, where the competition is free, the rivalship of\ncompetitors, who are all endeavouring to justle one another out of\nemployment, obliges every man to endeavour to execute his work with a\ncertain degree of exactness. The greatness of the objects which are to\nbe acquired by success in some particular professions may, no doubt,\nsometimes animate the exertions of a few men of extraordinary spirit and\nambition. Great objects, however, are evidently not necessary, in order\nto occasion the greatest exertions. Rivalship and emulation render\nexcellency, even in mean professions, an object of ambition, and\nfrequently occasion the very greatest exertions. Great objects, on the\ncontrary, alone and unsupported by the necessity of application,\nhave seldom been sufficient to occasion any considerable exertion. In\nEngland, success in the profession of the law leads to some very great\nobjects of ambition; and yet how few men, born to easy fortunes, have\never in this country been eminent in that profession?\n\nThe endowments of schools and colleges have necessarily diminished,\nmore or less, the necessity of application in the teachers. Their\nsubsistence, so far as it arises from their salaries, is evidently\nderived from a fund, altogether independent of their success and\nreputation in their particular professions.\n\nIn some universities, the salary makes but a part, and frequently but a\nsmall part, of the emoluments of the teacher, of which the greater\npart arises from the honoraries or fees of his pupils. The necessity\nof application, though always more or less diminished, is not, in this\ncase, entirely taken away. Reputation in his profession is still of some\nimportance to him, and he still has some dependency upon the affection,\ngratitude, and favourable report of those who have attended upon his\ninstructions; and these favourable sentiments he is likely to gain in\nno way so well as by deserving them, that is, by the abilities and\ndiligence with which he discharges every part of his duty.\n\nIn other universities, the teacher is prohibited from receiving any\nhonorary or fee from his pupils, and his salary constitutes the whole of\nthe revenue which he derives from his office. His interest is, in this\ncase, set as directly in opposition to his duty as it is possible to set\nit. It is the interest of every man to live as much at his ease as he\ncan; and if his emoluments are to be precisely the same, whether he\ndoes or does not perform some very laborious duty, it is certainly his\ninterest, at least as interest is vulgarly understood, either to neglect\nit altogether, or, if he is subject to some authority which will not\nsuffer him to do this, to perform it in as careless and slovenly a\nmanner as that authority will permit. If he is naturally active and a\nlover of labour, it is his interest to employ that activity in any way\nfrom which he can derive some advantage, rather than in the performance\nof his duty, from which he can derive none.\n\nIf the authority to which he is subject resides in the body corporate,\nthe college, or university, of which he himself is a member, and in\nwhich the greater part of the other members are, like himself, persons\nwho either are, or ought to be teachers, they are likely to make a\ncommon cause, to be all very indulgent to one another, and every man to\nconsent that his neighbour may neglect his duty, provided he himself\nis allowed to neglect his own. In the university of Oxford, the greater\npart of the public professors have, for these many years, given up\naltogether even the pretence of teaching.\n\nIf the authority to which he is subject resides, not so much in the body\ncorporate, of which he is a member, as in some other extraneous persons,\nin the bishop of the diocese, for example, in the governor of the\nprovince, or, perhaps, in some minister of state, it is not, indeed,\nin this case, very likely that he will be suffered to neglect his duty\naltogether. All that such superiors, however, can force him to do, is\nto attend upon his pupils a certain number of hours, that is, to give\na certain number of lectures in the week, or in the year. What those\nlectures shall be, must still depend upon the diligence of the teacher;\nand that diligence is likely to be proportioned to the motives which he\nhas for exerting it. An extraneous jurisdiction of this kind, besides,\nis liable to be exercised both ignorantly and capriciously. In its\nnature, it is arbitrary and discretionary; and the persons who exercise\nit, neither attending upon the lectures of the teacher themselves, nor\nperhaps understanding the sciences which it is his business to teach,\nare seldom capable of exercising it with judgment. From the insolence of\noffice, too, they are frequently indifferent how they exercise it,\nand are very apt to censure or deprive him of his office wantonly and\nwithout any just cause. The person subject to such jurisdiction is\nnecessarily degraded by it, and, instead of being one of the most\nrespectable, is rendered one of the meanest and most contemptible\npersons in the society. It is by powerful protection only, that he can\neffectually guard himself against the bad usage to which he is at all\ntimes exposed; and this protection he is most likely to gain, not by\nability or diligence in his profession, but by obsequiousness to the\nwill of his superiors, and by being ready, at all times, to sacrifice\nto that will the rights, the interest, and the honour of the body\ncorporate, of which he is a member. Whoever has attended for any\nconsiderable time to the administration of a French university, must\nhave had occasion to remark the effects which naturally result from an\narbitrary and extraneous jurisdiction of this kind.\n\nWhatever forces a certain number of students to any college or\nuniversity, independent of the merit or reputation of the teachers,\ntends more or less to diminish the necessity of that merit or\nreputation.\n\nThe privileges of graduates in arts, in law, physic, and divinity,\nwhen they can be obtained only by residing a certain number of years in\ncertain universities, necessarily force a certain number of students\nto such universities, independent of the merit or reputation of\nthe teachers. The privileges of graduates are a sort of statutes of\napprenticeship, which have contributed to the improvement of education\njust as the other statutes of apprenticeship have to that of arts and\nmanufactures.\n\nThe charitable foundations of scholarships, exhibitions, bursaries, etc.\nnecessarily attach a certain number of students to certain colleges,\nindependent altogether of the merit of those particular colleges. Were\nthe students upon such charitable foundations left free to choose what\ncollege they liked best, such liberty might perhaps contribute to excite\nsome emulation among different colleges. A regulation, on the contrary,\nwhich prohibited even the independent members of every particular\ncollege from leaving it, and going to any other, without leave first\nasked and obtained of that which they meant to abandon, would tend very\nmuch to extinguish that emulation.\n\nIf in each college, the tutor or teacher, who was to instruct each\nstudent in all arts and sciences, should not be voluntarily chosen by\nthe student, but appointed by the head of the college; and if, in case\nof neglect, inability, or bad usage, the student should not be allowed\nto change him for another, without leave first asked and obtained; such\na regulation would not only tend very much to extinguish all emulation\namong the different tutors of the same college, but to diminish very\nmuch, in all of them, the necessity of diligence and of attention to\ntheir respective pupils. Such teachers, though very well paid by their\nstudents, might be as much disposed to neglect them, as those who\nare not paid by them at all or who have no other recompense but their\nsalary.\n\nIf the teacher happens to be a man of sense, it must be an unpleasant\nthing to him to be conscious, while he is lecturing to his students,\nthat he is either speaking or reading nonsense, or what is very little\nbetter than nonsense. It must, too, be unpleasant to him to observe,\nthat the greater part of his students desert his lectures; or perhaps,\nattend upon them with plain enough marks of neglect, contempt, and\nderision. If he is obliged, therefore, to give a certain number of\nlectures, these motives alone, without any other interest, might dispose\nhim to take some pains to give tolerably good ones. Several different\nexpedients, however, may be fallen upon, which will effectually blunt\nthe edge of all those incitements to diligence. The teacher, instead\nof explaining to his pupils himself the science in which he proposes to\ninstruct them, may read some book upon it; and if this book is written\nin a foreign and dead language, by interpreting it to them into\ntheir own, or, what would give him still less trouble, by making them\ninterpret it to him, and by now and then making an occasional remark\nupon it, he may flatter himself that he is giving a lecture. The\nslightest degree of knowledge and application will enable him to do\nthis, without exposing himself to contempt or derision, by saying any\nthing that is really foolish, absurd, or ridiculous. The discipline of\nthe college, at the same time, may enable him to force all his pupils to\nthe most regular attendance upon his sham lecture, and to maintain\nthe most decent and respectful behaviour during the whole time of the\nperformance.\n\nThe discipline of colleges and universities is in general contrived, not\nfor the benefit of the students, but for the interest, or, more properly\nspeaking, for the ease of the masters. Its object is, in all cases,\nto maintain the authority of the master, and, whether he neglects or\nperforms his duty, to oblige the students in all cases to behave to him\nas if he performed it with the greatest diligence and ability. It seems\nto presume perfect wisdom and virtue in the one order, and the greatest\nweakness and folly in the other. Where the masters, however, really\nperform their duty, there are no examples, I believe, that the greater\npart of the students ever neglect theirs. No discipline is ever\nrequisite to force attendance upon lectures which are really worth the\nattending, as is well known wherever any such lectures are given. Force\nand restraint may, no doubt, be in some degree requisite, in order\nto oblige children, or very young boys, to attend to those parts of\neducation, which it is thought necessary for them to acquire during\nthat early period of life; but after twelve or thirteen years of age,\nprovided the master does his duty, force or restraint can scarce ever be\nnecessary to carry on any part of education. Such is the generosity\nof the greater part of young men, that so far from being disposed to\nneglect or despise the instructions of their master, provided he shews\nsome serious intention of being of use to them, they are generally\ninclined to pardon a great deal of incorrectness in the performance of\nhis duty, and sometimes even to conceal from the public a good deal of\ngross negligence.\n\nThose parts of education, it is to be observed, for the teaching of\nwhich there are no public institutions, are generally the best taught.\nWhen a young man goes to a fencing or a dancing school, he does not,\nindeed, always learn to fence or to dance very well; but he seldom fails\nof learning to fence or to dance. The good effects of the riding school\nare not commonly so evident. The expense of a riding school is so great,\nthat in most places it is a public institution. The three most essential\nparts of literary education, to read, write, and account, it still\ncontinues to be more common to acquire in private than in public\nschools; and it very seldom happens, that anybody fails of acquiring\nthem to the degree in which it is necessary to acquire them.\n\nIn England, the public schools are much less corrupted than the\nuniversities. In the schools, the youth are taught, or at least may be\ntaught, Greek and Latin; that is, everything which the masters\npretend to teach, or which it is expected they should teach. In the\nuniversities, the youth neither are taught, nor always can find any\nproper means of being taught the sciences, which it is the business of\nthose incorporated bodies to teach. The reward of the schoolmaster, in\nmost cases, depends principally, in some cases almost entirely, upon\nthe fees or honoraries of his scholars. Schools have no exclusive\nprivileges. In order to obtain the honours of graduation, it is not\nnecessary that a person should bring a certificate of his having studied\na certain number of years at a public school. If, upon examination, he\nappears to understand what is taught there, no questions are asked about\nthe place where he learnt it.\n\nThe parts of education which are commonly taught in universities, it may\nperhaps be said, are not very well taught. But had it not been for those\ninstitutions, they would not have been commonly taught at all; and both\nthe individual and the public would have suffered a good deal from the\nwant of those important parts of education.\n\nThe present universities of Europe were originally, the greater part\nof them, ecclesiastical corporations, instituted for the education of\nchurchmen. They were founded by the authority of the pope; and were so\nentirely under his immediate protection, that their members, whether\nmasters or students, had all of them what was then called the benefit\nof clergy, that is, were exempted from the civil jurisdiction of the\ncountries in which their respective universities were situated, and were\namenable only to the ecclesiastical tribunals. What was taught in the\ngreater part of those universities was suitable to the end of their\ninstitution, either theology, or something that was merely preparatory\nto theology.\n\nWhen Christianity was first established by law, a corrupted Latin had\nbecome the common language of all the western parts of Europe. The\nservice of the church, accordingly, and the translation of the Bible\nwhich were read in churches, were both in that corrupted Latin; that\nis, in the common language of the country, After the irruption of the\nbarbarous nations who overturned the Roman empire, Latin gradually\nceased to be the language of any part of Europe. But the reverence of\nthe people naturally preserves the established forms and ceremonies\nof religion long after the circumstances which first introduced and\nrendered them reasonable, are no more. Though Latin, therefore, was no\nlonger understood anywhere by the great body of the people, the whole\nservice of the church still continued to be performed in that language.\nTwo different languages were thus established in Europe, in the same\nmanner as in ancient Egypt: a language of the priests, and a language of\nthe people; a sacred and a profane, a learned and an unlearned language.\nBut it was necessary that the priests should understand something of\nthat sacred and learned language in which they were to officiate; and\nthe study of the Latin language therefore made, from the beginning, an\nessential part of university education.\n\nIt was not so with that either of the Greek or of the Hebrew language.\nThe infallible decrees of the church had pronounced the Latin\ntranslation of the Bible, commonly called the Latin Vulgate, to have\nbeen equally dictated by divine inspiration, and therefore of equal\nauthority with the Greek and Hebrew originals. The knowledge of those\ntwo languages, therefore, not being indispensably requisite to a\nchurchman, the study of them did not for along time make a necessary\npart of the common course of university education. There are some\nSpanish universities, I am assured, in which the study of the Greek\nlanguage has never yet made any part of that course. The first reformers\nfound the Greek text of the New Testament, and even the Hebrew text of\nthe Old, more favourable to their opinions than the vulgate translation,\nwhich, as might naturally be supposed, had been gradually accommodated\nto support the doctrines of the Catholic Church. They set themselves,\ntherefore, to expose the many errors of that translation, which the\nRoman catholic clergy were thus put under the necessity of defending or\nexplaining. But this could not well be done without some knowledge\nof the original languages, of which the study was therefore gradually\nintroduced into the greater part of universities; both of those which\nembraced, and of those which rejected, the doctrines of the reformation.\nThe Greek language was connected with every part of that classical\nlearning, which, though at first principally cultivated by catholics and\nItalians, happened to come into fashion much about the same time that\nthe doctrines of the reformation were set on foot. In the greater part\nof universities, therefore, that language was taught previous to the\nstudy of philosophy, and as soon as the student had made some progress\nin the Latin. The Hebrew language having no connection with classical\nlearning, and, except the Holy Scriptures, being the language of not a\nsingle book in any esteem the study of it did not commonly commence\ntill after that of philosophy, and when the student had entered upon the\nstudy of theology.\n\nOriginally, the first rudiments, both of the Greek and Latin languages,\nwere taught in universities; and in some universities they still\ncontinue to be so. In others, it is expected that the student should\nhave previously acquired, at least, the rudiments of one or both of\nthose languages, of which the study continues to make everywhere a very\nconsiderable part of university education.\n\nThe ancient Greek philosophy was divided into three great branches;\nphysics, or natural philosophy; ethics, or moral philosophy; and logic.\nThis general division seems perfectly agreeable to the nature of things.\n\nThe great phenomena of nature, the revolutions of the heavenly bodies,\neclipses, comets; thunder and lightning, and other extraordinary\nmeteors; the generation, the life, growth, and dissolution of plants and\nanimals; are objects which, as they necessarily excite the wonder, so\nthey naturally call forth the curiosity of mankind to inquire into\ntheir causes. Superstition first attempted to satisfy this curiosity, by\nreferring all those wonderful appearances to the immediate agency of the\ngods. Philosophy afterwards endeavoured to account for them from more\nfamiliar causes, or from such as mankind were better acquainted with,\nthan the agency of the gods. As those great phenomena are the first\nobjects of human curiosity, so the science which pretends to explain\nthem must naturally have been the first branch of philosophy that was\ncuitivated. The first philosophers, accordingly, of whom history has\npreserved any account, appear to have been natural philosophers.\n\nIn every age and country of the world, men must have attended to the\ncharacters, designs, and actions of one another; and many reputable\nrules and maxims for the conduct of human life must have been laid down\nand approved of by common consent. As soon as writing came into\nfashion, wise men, or those who fancied themselves such, would naturally\nendeavour to increase the number of those established and respected\nmaxims, and to express their own sense of what was either proper or\nimproper conduct, sometimes in the more artificial form of apologues,\nlike what are called the fables of Aesop; and sometimes in the more\nsimple one of apophthegms or wise sayings, like the proverbs of Solomon,\nthe verses of Theognis and Phocyllides, and some part of the works of\nHesiod. They might continue in this manner, for a long time, merely to\nmultiply the number of those maxims of prudence and morality, without\neven attempting to arrange them in any very distinct or methodical\norder, much less to connect them together by one or more general\nprinciples, from which they were all deducible, like effects from their\nnatural causes. The beauty of a systematical arrangement of different\nobservations, connected by a few common principles, was first seen\nin the rude essays of those ancient times towards a system of natural\nphilosophy. Something of the same kind was afterwards attempted in\nmorals. The maxims of common life were arranged in some methodical\norder, and connected together by a few common principles, in the same\nmanner as they had attempted to arrange and connect the phenomena of\nnature. The science which pretends to investigate and explain those\nconnecting principles, is what is properly called Moral Philosophy.\n\nDifferent authors gave different systems, both of natural and moral\nphilosophy. But the arguments by which they supported those different\nsystems, far from being always demonstrations, were frequently at best\nbut very slender probabilities, and sometimes mere sophisms, which had\nno other foundation but the inaccuracy and ambiguity of common language.\nSpeculative systems, have, in all ages of the world, been adopted for\nreasons too frivolous to have determined the judgment of any man of\ncommon sense, in a matter of the smallest pecuniary interest. Gross\nsophistry has scarce ever had any influence upon the opinions of\nmankind, except in matters of philosophy and speculation; and in these\nit has frequently had the greatest. The patrons of each system of\nnatural and moral philosophy, naturally endeavoured to expose the\nweakness of the arguments adduced to support the systems which\nwere opposite to their own. In examining those arguments, they were\nnecessarily led to consider the difference between a probable and a\ndemonstrative argument, between a fallacious and a conclusive one;\nand logic, or the science of the general principles of good and bad\nreasoning, necessarily arose out of the observations which a scrutiny\nof this kind gave occasion to; though, in its origin, posterior both to\nphysics and to ethics, it was commonly taught, not indeed in all, but\nin the greater part of the ancient schools of philosophy, previously to\neither of those sciences. The student, it seems to have been thought,\nought to understand well the difference between good and bad reasoning,\nbefore he was led to reason upon subjects of so great importance.\n\nThis ancient division of philosophy into three parts was, in the greater\npart of the universities of Europe, changed for another into five.\n\nIn the ancient philosophy, whatever was taught concerning the nature\neither of the human mind or of the Deity, made a part of the system of\nphysics. Those beings, in whatever their essence might be supposed to\nconsist, were parts of the great system of the universe, and parts, too,\nproductive of the most important effects. Whatever human reason could\neither conclude or conjecture concerning them, made, as it were, two\nchapters, though no doubt two very important ones, of the science which\npretended to give an account of the origin and revolutions of the\ngreat system of the universe. But in the universities of Europe, where\nphilosophy was taught only as subservient to theology, it was natural to\ndwell longer upon these two chapters than upon any other of the science.\nThey were gradually more and more extended, and were divided into many\ninferior chapters; till at last the doctrine of spirits, of which so\nlittle can be known, came to take up as much room in the system of\nphilosophy as the doctrine of bodies, of which so much can be known. The\ndoctrines concerning those two subjects were considered as making two\ndistinct sciences. What are called metaphysics, or pneumatics, were\nset in opposition to physics, and were cultivated not only as the more\nsublime, but, for the purposes of a particular profession, as the\nmore useful science of the two. The proper subject of experiment and\nobservation, a subject in which a careful attention is capable of making\nso many useful discoveries, was almost entirely neglected. The subject\nin which, after a very few simple and almost obvious truths, the most\ncareful attention can discover nothing but obscurity and uncertainty,\nand can consequently produce nothing but subtleties and sophisms, was\ngreatly cultivated.\n\nWhen those two sciences had thus been set in opposition to one another,\nthe comparison between them naturally gave birth to a third, to what\nwas called ontology, or the science which treated of the qualities\nand attributes which were common to both the subjects of the other two\nsciences. But if subtleties and sophisms composed the greater part of\nthe metaphysics or pneumatics of the schools, they composed the whole\nof this cobweb science of ontology, which was likewise sometimes called\nmetaphysics.\n\nWherein consisted the happiness and perfection of a man, considered not\nonly as an individual, but as the member of a family, of a state, and\nof the great society of mankind, was the object which the ancient moral\nphilosophy proposed to investigate. In that philosophy, the duties\nof human life were treated of as subservient to the happiness and\nperfection of human life, But when moral, as well as natural philosophy,\ncame to be taught only as subservient to theology, the duties of human\nlife were treated of as chiefly subservient to the happiness of a\nlife to come. In the ancient philosophy, the perfection of virtue was\nrepresented as necessarily productive, to the person who possessed it,\nof the most perfect happiness in this life. In the modern philosophy,\nit was frequently represented as generally, or rather as almost always,\ninconsistent with any degree of happiness in this life; and heaven was\nto be earned only by penance and mortification, by the austerities and\nabasement of a monk, not by the liberal, generous, and spirited conduct\nof a man. Casuistry, and an ascetic morality, made up, in most cases,\nthe greater part of the moral philosophy of the schools. By far the most\nimportant of all the different branches of philosophy became in this\nmanner by far the most corrupted.\n\nSuch, therefore, was the common course of philosophical education in\nthe greater part of the universities in Europe. Logic was taught first;\nontology came in the second place; pneumatology, comprehending the\ndoctrine concerning the nature of the human soul and of the Deity, in\nthe third; in the fourth followed a debased system of moral philosophy,\nwhich was considered as immediately connected with the doctrines of\npneumatology, with the immortality of the human soul, and with the\nrewards and punishments which, from the justice of the Deity, were to\nbe expected in a life to come: a short and superficial system of physics\nusually concluded the course.\n\nThe alterations which the universities of Europe thus introduced into\nthe ancient course of philosophy were all meant for the education of\necclesiastics, and to render it a more proper introduction to the study\nof theology. But the additional quantity of subtlety and sophistry, the\ncasuistry and ascetic morality which those alterations introduced into\nit, certainly did not render it more for the education of gentlemen or\nmen of the world, or more likely either to improve the understanding or\nto mend the heart.\n\nThis course of philosophy is what still continues to be taught in the\ngreater part of the universities of Europe, with more or less diligence,\naccording as the constitution of each particular university happens to\nrender diligence more or less necessary to the teachers. In some of the\nrichest and best endowed universities, the tutors content themselves\nwith teaching a few unconnected shreds and parcels of this corrupted\ncourse; and even these they commonly teach very negligently and\nsuperficially.\n\nThe improvements which, in modern times have been made in several\ndifferent branches of philosophy, have not, the greater part of them,\nbeen made in universities, though some, no doubt, have. The greater\npart of universities have not even been very forward to adopt those\nimprovements after they were made; and several of those learned\nsocieties have chosen to remain, for a long time, the sanctuaries\nin which exploded systems and obsolete prejudices found shelter and\nprotection, after they had been hunted out of every other corner of the\nworld. In general, the richest and best endowed universities have been\nslowest in adopting those improvements, and the most averse to permit\nany considerable change in the established plan of education. Those\nimprovements were more easily introduced into some of the poorer\nuniversities, in which the teachers, depending upon their reputation\nfor the greater part of their subsistence, were obliged to pay more\nattention to the current opinions of the world.\n\nBut though the public schools and universities of Europe were originally\nintended only for the education of a particular profession, that of\nchurchmen; and though they were not always very diligent in instructing\ntheir pupils, even in the sciences which were supposed necessary for\nthat profession; yet they gradually drew to themselves the education of\nalmost all other people, particularly of almost all gentlemen and men of\nfortune. No better method, it seems, could be fallen upon, of spending,\nwith any advantage, the long interval between infancy and that period of\nlife at which men begin to apply in good earnest to the real business of\nthe world, the business which is to employ them during the remainder\nof their days. The greater part of what is taught in schools and\nuniversities, however, does not seem to be the most proper preparation\nfor that business.\n\nIn England, it becomes every day more and more the custom to send young\npeople to travel in foreign countries immediately upon their leaving\nschool, and without sending them to any university. Our young people, it\nis said, generally return home much improved by their travels. A young\nman, who goes abroad at seventeen or eighteen, and returns home at\none-and-twenty, returns three or four years older than he was when he\nwent abroad; and at that age it is very difficult not to improve a good\ndeal in three or four years. In the course of his travels, he generally\nacquires some knowledge of one or two foreign languages; a knowledge,\nhowever, which is seldom sufficient to enable him either to speak or\nwrite them with propriety. In other respects, he commonly returns home\nmore conceited, more unprincipled, more dissipated, and more incapable\nof my serious application, either to study or to business, than he could\nwell have become in so short a time had he lived at home. By travelling\nso very young, by spending in the most frivolous dissipation the most\nprevious years of his life, at a distance from the inspection and\ncontrol of his parents and relations, every useful habit, which the\nearlier parts of his education might have had some tendency to form\nin him, instead of being riveted and confirmed, is almost necessarily\neither weakened or effaced. Nothing but the discredit into which the\nuniversities are allowing themselves to fall, could ever have brought\ninto repute so very absurd a practice as that of travelling at this\nearly period of life. By sending his son abroad, a father delivers\nhimself, at least for some time, from so disagreeable an object as that\nof a son unemployed, neglected, and going to ruin before his eyes.\n\nSuch have been the effects of some of the modern institutions for\neducation.\n\nDifferent plans and different institutions for education seem to have\ntaken place in other ages and nations.\n\nIn the republics of ancient Greece, every free citizen was instructed,\nunder the direction of the public magistrate, in gymnastic exercises and\nin music. By gymnastic exercises, it was intended to harden his body, to\nsharpen his courage, and to prepare him for the fatigues and dangers of\nwar; and as the Greek militia was, by all accounts, one of the best that\never was in the world, this part of their public education must have\nanswered completely the purpose for which it was intended. By the\nother part, music, it was proposed, at least by the philosophers and\nhistorians, who have given us an account of those institutions,\nto humanize the mind, to soften the temper, and to dispose it for\nperforming all the social and moral duties of public and private life.\n\nIn ancient Rome, the exercises of the Campus Martius answered the same\npurpose as those of the Gymnasium in ancient Greece, and they seem to\nhave answered it equally well. But among the Romans there was nothing\nwhich corresponded to the musical education of the Greeks. The morals of\nthe Romans, however, both in private and public life, seem to have been,\nnot only equal, but, upon the whole, a good deal superior to those of\nthe Greeks. That they were superior in private life, we have the express\ntestimony of Polybius, and of Dionysius of Halicarnassus, two authors\nwell acquainted with both nations; and the whole tenor of the Greek and\nRoman history bears witness to the superiority of the public morals of\nthe Romans. The good temper and moderation of contending factions seem\nto be the most essential circumstances in the public morals of a free\npeople. But the factions of the Greeks were almost always violent and\nsanguinary; whereas, till the time of the Gracchi, no blood had ever\nbeen shed in any Roman faction; and from the time of the Gracchi,\nthe Roman republic may be considered as in reality dissolved.\nNotwithstanding, therefore, the very respectable authority of Plato,\nAristotle, and Polybius, and notwithstanding the very ingenious reasons\nby which Mr. Montesquieu endeavours to support that authority, it seems\nprobable that the musical education of the Greeks had no great effect\nin mending their morals, since, without any such education, those of\nthe Romans were, upon the whole, superior. The respect of those ancient\nsages for the institutions of their ancestors had probably disposed them\nto find much political wisdom in what was, perhaps, merely an ancient\ncustom, continued, without interruption, from the earliest period\nof those societies, to the times in which they had arrived at a\nconsiderable degree of refinement. Music and dancing are the\ngreat amusements of almost all barbarous nations, and the great\naccomplishments which are supposed to fit any man for entertaining his\nsociety. It is so at this day among the negroes on the coast of Africa.\nIt was so among the ancient Celtes, among the ancient Scandinavians,\nand, as we may learn from Homer, among the ancient Greeks, in the times\npreceding the Trojan war. When the Greek tribes had formed themselves\ninto little republics, it was natural that the study of those\naccomplishments should for a long time make a part of the public and\ncommon education of the people.\n\nThe masters who instructed the young people, either in music or in\nmilitary exercises, do not seem to have been paid, or even appointed by\nthe state, either in Rome or even at Athens, the Greek republic of whose\nlaws and customs we are the best informed. The state required that every\nfree citizen should fit himself for defending it in war, and should upon\nthat account, learn his military exercises. But it left him to learn\nthem of such masters as he could find; and it seems to have advanced\nnothing for this purpose, but a public field or place of exercise, in\nwhich he should practise and perform them.\n\nIn the early ages, both of the Greek and Roman republics, the other\nparts of education seem to have consisted in learning to read,\nwrite, and account, according to the arithmetic of the times. These\naccomplishments the richer citizens seem frequently to have acquired at\nhome, by the assistance of some domestic pedagogue, who was, generally,\neither a slave or a freedman; and the poorer citizens in the schools\nof such masters as made a trade of teaching for hire. Such parts of\neducation, however, were abandoned altogether to the care of the parents\nor guardians of each individual. It does not appear that the state ever\nassumed any inspection or direction of them. By a law of Solon, indeed,\nthe children were acquitted from maintaining those parents who had\nneglected to instruct them in some profitable trade or business.\n\nIn the progress of refinement, when philosophy and rhetoric came into\nfashion, the better sort of people used to send their children to the\nschools of philosophers and rhetoricians, in order to be instructed in\nthese fashionable sciences. But those schools were not supported by the\npublic. They were, for a long time, barely tolerated by it. The demand\nfor philosophy and rhetoric was, for a long time, so small, that the\nfirst professed teachers of either could not find constant employment in\nany one city, but were obliged to travel about from place to place. In\nthis manner lived Zeno of Elea, Protagoras, Gorgias, Hippias, and many\nothers. As the demand increased, the school, both of philosophy and\nrhetoric, became stationary, first in Athens, and afterwards in several\nother cities. The state, however, seems never to have encouraged them\nfurther, than by assigning to some of them a particular place to teach\nin, which was sometimes done, too, by private donors. The state seems\nto have assigned the Academy to Plato, the Lyceum to Aristotle, and\nthe Portico to Zeno of Citta, the founder of the Stoics. But Epicurus\nbequeathed his gardens to his own school. Till about the time of Marcus\nAntoninus, however, no teacher appears to have had any salary from the\npublic, or to have had any other emoluments, but what arose from the\nhonorarius or fees of his scholars. The bounty which that philosophical\nemperor, as we learn from Lucian, bestowed upon one of the teachers\nof philosophy, probably lasted no longer than his own life. There was\nnothing equivalent to the privileges of graduation; and to have attended\nany of those schools was not necessary, in order to be permitted to\npractise any particular trade or profession. If the opinion of their own\nutility could not draw scholars to them, the law neither forced anybody\nto go to them, nor rewarded anybody for having gone to them. The\nteachers had no jurisdiction over their pupils, nor any other authority\nbesides that natural authority which superior virtue and abilities never\nfail to procure from young people towards those who are entrusted with\nany part of their education.\n\nAt Rome, the study of the civil law made a part of the education, not of\nthe greater part of the citizens, but of some particular families. The\nyoung people, however, who wished to acquire knowledge in the law, had\nno public school to go to, and had no other method of studying it, than\nby frequenting the company of such of their relations and friends as\nwere supposed to understand it. It is, perhaps, worth while to remark,\nthat though the laws of the twelve tables were many of them copied from\nthose of some ancient Greek republics, yet law never seems to have grown\nup to be a science in any republic of ancient Greece. In Rome it became\na science very early, and gave a considerable degree of illustration\nto those citizens who had the reputation of understanding it. In the\nrepublics of ancient Greece, particularly in Athens, the ordinary courts\nof justice consisted of numerous, and therefore disorderly, bodies of\npeople, who frequently decided almost at random, or as clamour, faction,\nand party-spirit, happened to determine. The ignominy of an unjust\ndecision, when it was to be divided among five hundred, a thousand, or\nfifteen hundred people (for some of their courts were so very numerous),\ncould not fall very heavy upon any individual. At Rome, on the contrary,\nthe principal courts of justice consisted either of a single judge,\nor of a small number of judges, whose characters, especially as they\ndeliberated always in public, could not fail to be very much affected by\nany rash or unjust decision. In doubtful cases such courts, from their\nanxiety to avoid blame, would naturally endeavour to shelter themselves\nunder the example or precedent of the judges who had sat before them,\neither in the same or in some other court. This attention to practice\nand precedent, necessarily formed the Roman law into that regular and\norderly system in which it has been delivered down to us; and the like\nattention has had the like effects upon the laws of every other country\nwhere such attention has taken place. The superiority of character in\nthe Romans over that of the Greeks, so much remarked by Polybius and\nDionysius of Halicarnassus, was probably more owing to the better\nconstitution of their courts of justice, than to any of the\ncircumstances to which those authors ascribe it. The Romans are said to\nhave been particularly distinguished for their superior respect to an\noath. But the people who were accustomed to make oath only before some\ndiligent and well informed court of justice, would naturally be much\nmore attentive to what they swore, than they who were accustomed to do\nthe same thing before mobbish and disorderly assemblies.\n\nThe abilities, both civil and military, of the Greeks and Romans, will\nreadily be allowed to have been at least equal to those of any modern\nnation. Our prejudice is perhaps rather to overrate them. But except in\nwhat related to military exercises, the state seems to have been at no\npains to form those great abilities; for I cannot be induced to believe\nthat the musical education of the Greeks could be of much consequence\nin forming them. Masters, however, had been found, it seems, for\ninstructing the better sort of people among those nations, in every\nart and science in which the circumstances of their society rendered it\nnecessary or convenient for them to be instructed. The demand for such\ninstruction produced, what it always produces, the talent for giving\nit; and the emulation which an unrestrained competition never fails to\nexcite, appears to have brought that talent to a very high degree of\nperfection. In the attention which the ancient philosophers excited, in\nthe empire which they acquired over the opinions and principles of their\nauditors, in the faculty which they possessed of giving a certain tone\nand character to the conduct and conversation of those auditors, they\nappear to have been much superior to any modern teachers. In modern\ntimes, the diligence of public teachers is more or less corrupted by\nthe circumstances which render them more or less independent of their\nsuccess and reputation in their particular professions. Their salaries,\ntoo, put the private teacher, who would pretend to come into competition\nwith them, in the same state with a merchant who attempts to\ntrade without a bounty, in competition with those who trade with a\nconsiderable one. If he sells his goods at nearly the same price, he\ncannot have the same profit; and poverty and beggary at least, if not\nbankruptcy and ruin, will infallibly be his lot. If he attempts to\nsell them much dearer, he is likely to have so few customers, that his\ncircumstances will not be much mended. The privileges of graduation,\nbesides, are in many countries necessary, or at least extremely\nconvenient, to most men of learned professions, that is, to the far\ngreater part of those who have occasion for a learned education. But\nthose privileges can be obtained only by attending the lectures of\nthe public teachers. The most careful attendance upon the ablest\ninstructions of any private teacher cannot always give any title to\ndemand them. It is from these different causes that the private teacher\nof any of the sciences, which are commonly taught in universities, is,\nin modern times, generally considered as in the very lowest order of\nmen of letters. A man of real abilities can scarce find out a more\nhumiliating or a more unprofitable employment to turn them to. The\nendowments of schools and colleges have in this manner not only\ncorrupted the diligence of public teachers, but have rendered it almost\nimpossible to have any good private ones.\n\nWere there no public institutions for education, no system, no science,\nwould be taught, for which there was not some demand, or which the\ncircumstances of the times did not render it either necessary or\nconvenient, or at least fashionable to learn. A private teacher could\nnever find his account in teaching either an exploded and antiquated\nsystem of a science acknowledged to be useful, or a science universally\nbelieved to be a mere useless and pedantic heap of sophistry and\nnonsense. Such systems, such sciences, can subsist nowhere but in those\nincorporated societies for education, whose prosperity and revenue are\nin a great measure independent of their industry. Were there no public\ninstitutions for education, a gentleman, after going through, with\napplication and abilities, the most complete course of education which\nthe circumstances of the times were supposed to afford, could not come\ninto the world completely ignorant of everything which is the common\nsubject of conversation among gentlemen and men of the world.\n\nThere are no public institutions for the education of women, and there\nis accordingly nothing useless, absurd, or fantastical, in the common\ncourse of their education. They are taught what their parents or\nguardians judge it necessary or useful for them to learn, and they are\ntaught nothing else. Every part of their education tends evidently to\nsome useful purpose; either to improve the natural attractions of their\nperson, or to form their mind to reserve, to modesty, to chastity, and\nto economy; to render them both likely to became the mistresses of a\nfamily, and to behave properly when they have become such. In every part\nof her life, a woman feels some conveniency or advantage from every part\nof her education. It seldom happens that a man, in any part of his life,\nderives any conveniency or advantage from some of the most laborious and\ntroublesome parts of his education.\n\nOught the public, therefore, to give no attention, it may be asked, to\nthe education of the people? Or, if it ought to give any, what are\nthe different parts of education which it ought to attend to in the\ndifferent orders of the people? and in what manner ought it to attend to\nthem?\n\nIn some cases, the state of society necessarily places the greater part\nof individuals in such situations as naturally form in them, without any\nattention of government, almost all the abilities and virtues which that\nstate requires, or perhaps can admit of. In other cases, the state\nof the society does not place the greater part of individuals in such\nsituations; and some attention of government is necessary, in order to\nprevent the almost entire corruption and degeneracy of the great body of\nthe people.\n\nIn the progress of the division of labour, the employment of the far\ngreater part of those who live by labour, that is, of the great body\nof the people, comes to be confined to a few very simple operations;\nfrequently to one or two. But the understandings of the greater part of\nmen are necessarily formed by their ordinary employments. The man whose\nwhole life is spent in performing a few simple operations, of which the\neffects, too, are perhaps always the same, or very nearly the same, has\nno occasion to exert his understanding, or to exercise his invention, in\nfinding out expedients for removing difficulties which never occur. He\nnaturally loses, therefore, the habit of such exertion, and generally\nbecomes as stupid and ignorant as it is possible for a human creature\nto become. The torpor of his mind renders him not only incapable\nof relishing or bearing a part in any rational conversation, but of\nconceiving any generous, noble, or tender sentiment, and consequently of\nforming any just judgment concerning many even of the ordinary duties of\nprivate life. Of the great and extensive interests of his country he is\naltogether incapable of judging; and unless very particular pains have\nbeen taken to render him otherwise, he is equally incapable of defending\nhis country in war. The uniformity of his stationary life naturally\ncorrupts the courage of his mind, and makes him regard, with abhorrence,\nthe irregular, uncertain, and adventurous life of a soldier. It corrupts\neven the activity of his body, and renders him incapable of exerting his\nstrength with vigour and perseverance in any other employment, than that\nto which he has been bred. His dexterity at his own particular\ntrade seems, in this manner, to be acquired at the expense of his\nintellectual, social, and martial virtues. But in every improved and\ncivilized society, this is the state into which the labouring poor,\nthat is, the great body of the people, must necessarily fall, unless\ngovernment takes some pains to prevent it.\n\nIt is otherwise in the barbarous societies, as they are commonly called,\nof hunters, of shepherds, and even of husbandmen in that rude state\nof husbandry which precedes the improvement of manufactures, and the\nextension of foreign commerce. In such societies, the varied occupations\nof every man oblige every man to exert his capacity, and to invent\nexpedients for removing difficulties which are continually occurring.\nInvention is kept alive, and the mind is not suffered to fall into that\ndrowsy stupidity, which, in a civilized society, seems to benumb the\nunderstanding of almost all the inferior ranks of people. In those\nbarbarous societies, as they are called, every man, it has already been\nobserved, is a warrior. Every man, too, is in some measure a statesman,\nand can form a tolerable judgment concerning the interest of the\nsociety, and the conduct of those who govern it. How far their chiefs\nare good judges in peace, or good leaders in war, is obvious to the\nobservation of almost every single man among them. In such a society,\nindeed, no man can well acquire that improved and refined understanding\nwhich a few men sometimes possess in a more civilized state. Though in a\nrude society there is a good deal of variety in the occupations of every\nindividual, there is not a great deal in those of the whole society.\nEvery man does, or is capable of doing, almost every thing which any\nother man does, or is capable of being. Every man has a considerable\ndegree of knowledge, ingenuity, and invention but scarce any man has\na great degree. The degree, however, which is commonly possessed, is\ngenerally sufficient for conducting the whole simple business of the\nsociety. In a civilized state, on the contrary, though there is little\nvariety in the occupations of the greater part of individuals, there is\nan almost infinite variety in those of the whole society. These varied\noccupations present an almost infinite variety of objects to the\ncontemplation of those few, who, being attached to no particular\noccupation themselves, have leisure and inclination to examine the\noccupations of other people. The contemplation of so great a variety\nof objects necessarily exercises their minds in endless comparisons\nand combinations, and renders their understandings, in an extraordinary\ndegree, both acute anti comprehensive. Unless those few, however, happen\nto be placed in some very particular situations, their great abilities,\nthough honourable to themselves, may contribute very little to the good\ngovernment or happiness of their society. Notwithstanding the great\nabilities of those few, all the nobler parts of the human character may\nbe, in a great measure, obliterated and extinguished in the great body\nof the people.\n\nThe education of the common people requires, perhaps, in a civilized\nand commercial society, the attention of the public, more than that of\npeople of some rank and fortune. People of some rank and fortune are\ngenerally eighteen or nineteen years of age before they enter upon that\nparticular business, profession, or trade, by which they propose to\ndistinguish themselves in the world. They have, before that, full time\nto acquire, or at least to fit themselves for afterwards acquiring,\nevery accomplishment which can recommend them to the public esteem,\nor render them worthy of it. Their parents or guardians are generally\nsufficiently anxious that they should be so accomplished, and are in\nmost cases, willing enough to lay out the expense which is necessary\nfor that purpose. If they are not always properly educated, it is seldom\nfrom the want of expense laid out upon their education, but from the\nimproper application of that expense. It is seldom from the want of\nmasters, but from the negligence and incapacity of the masters who are\nto be had, and from the difficulty, or rather from the impossibility,\nwhich there is, in the present state of things, of finding any better.\nThe employments, too, in which people of some rank or fortune spend the\ngreater part of their lives, are not, like those of the common people,\nsimple and uniform. They are almost all of them extremely complicated,\nand such as exercise the head more than the hands. The understandings\nof those who are engaged in such employments, can seldom grow torpid for\nwant of exercise. The employments of people of some rank and fortune,\nbesides, are seldom such as harass them from morning to night. They\ngenerally have a good deal of leisure, during which they may perfect\nthemselves in every branch, either of useful or ornamental knowledge,\nof which they may have laid the foundation, or for which they may have\nacquired some taste in the earlier part of life.\n\nIt is otherwise with the common people. They have little time to spare\nfor education. Their parents can scarce afford to maintain them, even\nin infancy. As soon as they are able to work, they must apply to some\ntrade, by which they can earn their subsistence. That trade, too, is\ngenerally so simple and uniform, as to give little exercise to the\nunderstanding; while, at the same time, their labour is both so constant\nand so severe, that it leaves them little leisure and less inclination\nto apply to, or even to think of any thing else.\n\nBut though the common people cannot, in any civilized society, be so\nwell instructed as people of some rank and fortune; the most essential\nparts of education, however, to read, write, and account, can be\nacquired at so early a period of life, that the greater part, even of\nthose who are to be bred to the lowest occupations, have time to acquire\nthem before they can be employed in those occupations. For a very small\nexpense, the public can facilitate, can encourage and can even impose\nupon almost the whole body of the people, the necessity of acquiring\nthose most essential parts of education.\n\nThe public can facilitate this acquisition, by establishing in every\nparish or district a little school, where children maybe taught for\na reward so moderate, that even a common labourer may afford it; the\nmaster being partly, but not wholly, paid by the public; because, if\nhe was wholly, or even principally, paid by it, he would soon learn\nto neglect his business. In Scotland, the establishment of such parish\nschools has taught almost the whole common people to read, and a\nvery great proportion of them to write and account. In England, the\nestablishment of charity schools has had an effect of the same\nkind, though not so universally, because the establishment is not so\nuniversal. If, in those little schools, the books by which the children\nare taught to read, were a little more instructive than they commonly\nare; and if, instead of a little smattering in Latin, which the children\nof the common people are sometimes taught there, and which can scarce\never be of any use to them, they were instructed in the elementary parts\nof geometry and mechanics; the literary education of this rank of people\nwould, perhaps, be as complete as can be. There is scarce a common\ntrade, which does not afford some opportunities of applying to it the\nprinciples of geometry and mechanics, and which would not, therefore,\ngradually exercise and improve the common people in those principles,\nthe necessary introduction to the most sublime, as well as to the most\nuseful sciences.\n\nThe public can encourage the acquisition of those most essential\nparts of education, by giving small premiums, and little badges of\ndistinction, to the children of the common people who excel in them.\n\nThe public can impose upon almost the whole body of the people the\nnecessity of acquiring the most essential parts of education, by\nobliging every man to undergo an examination or probation in them,\nbefore he can obtain the freedom in any corporation, or be allowed to\nset up any trade, either in a village or town corporate.\n\nIt was in this manner, by facilitating the acquisition of their military\nand gymnastic exercises, by encouraging it, and even by imposing upon\nthe whole body of the people the necessity of learning those exercises,\nthat the Greek and Roman republics maintained the martial spirit of\ntheir respective citizens. They facilitated the acquisition of those\nexercises, by appointing a certain place for learning and practising\nthem, and by granting to certain masters the privilege of teaching in\nthat place. Those masters do not appear to have had either salaries or\nexclusive privileges of any kind. Their reward consisted altogether in\nwhat they got from their scholars; and a citizen, who had learnt his\nexercises in the public gymnasia, had no sort of legal advantage over\none who had learnt them privately, provided the latter had learned\nthem equally well. Those republics encouraged the acquisition of those\nexercises, by bestowing little premiums and badges of distinction upon\nthose who excelled in them. To have gained a prize in the Olympic,\nIsthmian, or Nemaean games, gave illustration, not only to the person\nwho gained it, but to his whole family and kindred. The obligation which\nevery citizen was under, to serve a certain number of years, if called\nupon, in the armies of the republic, sufficiently imposed the necessity\nof learning those exercises, without which he could not be fit for that\nservice.\n\nThat in the progress of improvement, the practice of military exercises,\nunless government takes proper pains to support it, goes gradually to\ndecay, and, together with it, the martial spirit of the great body of\nthe people, the example of modern Europe sufficiently demonstrates. But\nthe security of every society must always depend, more or less, upon the\nmartial spirit of the great body of the people. In the present times,\nindeed, that martial spirit alone, and unsupported by a well-disciplined\nstanding army, would not, perhaps, be sufficient for the defence and\nsecurity of any society. But where every citizen had the spirit of a\nsoldier, a smaller standing army would surely be requisite. That spirit,\nbesides, would necessarily diminish very much the dangers to liberty,\nwhether real or imaginary, which are commonly apprehended from a\nstanding army. As it would very much facilitate the operations of that\narmy against a foreign invader; so it would obstruct them as much, if\nunfortunately they should ever be directed against the constitution of\nthe state.\n\nThe ancient institutions of Greece and Rome seem to have been much more\neffectual for maintaining the martial spirit of the great body of the\npeople, than the establishment of what are called the militias of modern\ntimes. They were much more simple. When they were once established,\nthey executed themselves, and it required little or no attention from\ngovernment to maintain them in the most perfect vigour. Whereas to\nmaintain, even in tolerable execution, the complex regulations of\nany modern militia, requires the continual and painful attention of\ngovernment, without which they are constantly falling into total neglect\nand disuse. The influence, besides, of the ancient institutions, was\nmuch more universal. By means of them, the whole body of the people was\ncompletely instructed in the use of arms; whereas it is but a very small\npart of them who can ever be so instructed by the regulations of any\nmodern militia, except, perhaps, that of Switzerland. But a coward, a\nman incapable either of defending or of revenging himself, evidently\nwants one of the most essential parts of the character of a man. He is\nas much mutilated and deformed in his mind as another is in his body,\nwho is either deprived of some of its most essential members, or has\nlost the use of them. He is evidently the more wretched and miserable\nof the two; because happiness and misery, which reside altogether in the\nmind, must necessarily depend more upon the healthful or unhealthful,\nthe mutilated or entire state of the mind, than upon that of the body.\nEven though the martial spirit of the people were of no use towards the\ndefence of the society, yet, to prevent that sort of mental mutilation,\ndeformity, and wretchedness, which cowardice necessarily involves in it,\nfrom spreading themselves through the great body of the people, would\nstill deserve the most serious attention of government; in the same\nmanner as it would deserve its most serious attention to prevent a\nleprosy, or any other loathsome and offensive disease, though neither\nmortal nor dangerous, from spreading itself among them; though, perhaps,\nno other public good might result from such attention, besides the\nprevention of so great a public evil.\n\nThe same thing may be said of the gross ignorance and stupidity which,\nin a civilized society, seem so frequently to benumb the understandings\nof all the inferior ranks of people. A man without the proper use of the\nintellectual faculties of a man, is, if possible, more contemptible than\neven a coward, and seems to be mutilated and deformed in a still more\nessential part of the character of human nature. Though the state was\nto derive no advantage from the instruction of the inferior ranks of\npeople, it would still deserve its attention that they should not be\naltogether uninstructed. The state, however, derives no inconsiderable\nadvantage from their instruction. The more they are instructed, the less\nliable they are to the delusions of enthusiasm and superstition, which,\namong ignorant nations frequently occasion the most dreadful disorders.\nAn instructed and intelligent people, besides, are always more decent\nand orderly than an ignorant and stupid one. They feel themselves, each\nindividually, more respectable, and more likely to obtain the respect\nof their lawful superiors, and they are, therefore, more disposed to\nrespect those superiors. They are more disposed to examine, and more\ncapable of seeing through, the interested complaints of faction and\nsedition; and they are, upon that account, less apt to be misled into\nany wanton or unnecessary opposition to the measures of government. In\nfree countries, where the safety of government depends very much upon\nthe favourable judgment which the people may form of its conduct,\nit must surely be of the highest importance, that they should not be\ndisposed to judge rashly or capriciously concerning it.\n\nArt. III.--Of the Expense of the Institutions for the Instruction of\nPeople of all Ages.\n\nThe institutions for the instruction of people of all ages, are chiefly\nthose for religious instruction. This is a species of instruction, of\nwhich the object is not so much to render the people good citizens in\nthis world, as to prepare them for another and a better world in\nthe life to come. The teachers of the doctrine which contains this\ninstruction, in the same manner as other teachers, may either depend\naltogether for their subsistence upon the voluntary contributions of\ntheir hearers; or they may derive it from some other fund, to which the\nlaw of their country may entitle them; such as a landed estate, a tythe\nor land tax, an established salary or stipend. Their exertion, their\nzeal and industry, are likely to be much greater in the former situation\nthan in the latter. In this respect, the teachers of a new religion\nhave always had a considerable advantage in attacking those ancient and\nestablished systems, of which the clergy, reposing themselves upon their\nbenefices, had neglected to keep up the fervour of faith and devotion\nin the great body of the people; and having given themselves up to\nindolence, were become altogether incapable of making any vigorous\nexertion in defence even of their own establishment. The clergy of an\nestablished and well endowed religion frequently become men of learning\nand elegance, who possess all the virtues of gentlemen, or which can\nrecommend them to the esteem of gentlemen; but they are apt gradually\nto lose the qualities, both good and bad, which gave them authority and\ninfluence with the inferior ranks of people, and which had perhaps been\nthe original causes of the success and establishment of their religion.\nSuch a clergy, when attacked by a set of popular and bold, though\nperhaps stupid and ignorant enthusiasts, feel themselves as perfectly\ndefenceless as the indolent, effeminate, and full fed nations of the\nsouthern parts of Asia, when they were invaded by the active, hardy, and\nhungry Tartars of the north. Such a clergy, upon such an emergency, have\ncommonly no other resource than to call upon the civil magistrate to\npersecute, destroy, or drive out their adversaries, as disturbers of the\npublic peace. It was thus that the Roman catholic clergy called upon the\ncivil magistrate to persecute the protestants, and the church of England\nto persecute the dissenters; and that in general every religious sect,\nwhen it has once enjoyed, for a century or two, the security of a legal\nestablishment, has found itself incapable of making any vigorous defence\nagainst any new sect which chose to attack its doctrine or discipline.\nUpon such occasions, the advantage, in point of learning and good\nwriting, may sometimes be on the side of the established church. But the\narts of popularity, all the arts of gaining proselytes, are constantly\non the side of its adversaries. In England, those arts have been long\nneglected by the well endowed clergy of the established church, and are\nat present chiefly cultivated by the dissenters and by the methodists.\nThe independent provisions, however, which in many places have been made\nfor dissenting teachers, by means of voluntary subscriptions, of trust\nrights, and other evasions of the law, seem very much to have abated the\nzeal and activity of those teachers. They have many of them become very\nlearned, ingenious, and respectable men; but they have in general ceased\nto be very popular preachers. The methodists, without half the learning\nof the dissenters, are much more in vogue.\n\nIn the church of Rome the industry and zeal of the inferior clergy are\nkept more alive by the powerful motive of self-interest, than perhaps in\nany established protestant church. The parochial clergy derive many of\nthem, a very considerable part of their subsistence from the voluntary\noblations of the people; a source of revenue, which confession gives\nthem many opportunities of improving. The mendicant orders derive their\nwhole subsistence from such oblations. It is with them as with the\nhussars and light infantry of some armies; no plunder, no pay. The\nparochial clergy are like those teachers whose reward depends partly\nupon their salary, and partly upon the fees or honoraries which they\nget from their pupils; and these must always depend, more or less,\nupon their industry and reputation. The mendicant orders are like those\nteachers whose subsistence depends altogether upon their industry. They\nare obliged, therefore, to use every art which can animate the devotion\nof the common people. The establishment of the two great mendicant\norders of St Dominic and St. Francis, it is observed by Machiavel,\nrevived, in the thirteenth and fourteenth centuries, the languishing\nfaith and devotion of the catholic church. In Roman catholic countries,\nthe spirit of devotion is supported altogether by the monks, and by the\npoorer parochial clergy. The great dignitaries of the church, with all\nthe accomplishments of gentlemen and men of the world, and sometimes\nwith those of men of learning, are careful to maintain the necessary\ndiscipline over their inferiors, but seldom give themselves any trouble\nabout the instruction of the people.\n\n\"Most of the arts and professions in a state,\" says by far the most\nillustrious philosopher and historian of the present age, \"are of such a\nnature, that, while they promote the interests of the society, they are\nalso useful or agreeable to some individuals; and, in that case,\nthe constant rule of the magistrate, except, perhaps, on the first\nintroduction of any art, is, to leave the profession to itself, and\ntrust its encouragement to the individuals who reap the benefit of\nit. The artizans, finding their profits to rise by the favour of their\ncustomers, increase, as much as possible, their skill and industry; and\nas matters are not disturbed by any injudicious tampering, the commodity\nis always sure to be at all times nearly proportioned to the demand.\n\n\"But there are also some callings which, though useful and even\nnecessary in a state, bring no advantage or pleasure to any individual;\nand the supreme power is obliged to alter its conduct with regard to the\nretainers of those professions. It must give them public encouragement\nin order to their subsistence; and it must provide against that\nnegligence to which they will naturally be subject, either by annexing\nparticular honours to profession, by establishing a long subordination\nof ranks, and a strict dependence, or by some other expedient. The\npersons employed in the finances, fleets, and magistracy, are instances\nof this order of men.\n\n\"It may naturally be thought, at first sight, that the ecclesiastics\nbelong to the first class, and that their encouragement, as well as that\nof lawyers and physicians, may safely be entrusted to the liberality of\nindividuals, who are attached to their doctrines, and who find benefit\nor consolation from their spiritual ministry and assistance. Their\nindustry and vigilance will, no doubt, be whetted by such an additional\nmotive; and their skill in the profession, as well as their address in\ngoverning the minds of the people, must receive daily increase, from\ntheir increasing practice, study, and attention.\n\n\"But if we consider the matter more closely, we shall find that this\ninterested diligence of the clergy is what every wise legislator will\nstudy to prevent; because, in every religion except the true, it is\nhighly pernicious, and it has even a natural tendency to pervert the\ntruth, by infusing into it a strong mixture of superstition, folly, and\ndelusion. Each ghostly practitioner, in order to render himself more\nprecious and sacred in the eyes of his retainers, will inspire them\nwith the most violent abhorrence of all other sects, and continually\nendeavour, by some novelty, to excite the languid devotion of his\naudience. No regard will be paid to truth, morals, or decency, in the\ndoctrines inculcated. Every tenet will be adopted that best suits the\ndisorderly affections of the human frame. Customers will be drawn to\neach conventicle by new industry and address, in practising on the\npassions and credulity of the populace. And, in the end, the civil\nmagistrate will find that he has dearly paid for his intended frugality,\nin saving a fixed establishment for the priests; and that, in reality,\nthe most decent and advantageous composition, which he can make with\nthe spiritual guides, is to bribe their indolence, by assigning stated\nsalaries to their profession, and rendering it superfluous for them to\nbe farther active, than merely to prevent their flock from straying in\nquest of new pastors. And in this manner ecclesiastical establishments,\nthough commonly they arose at first from religious views, prove in the\nend advantageous to the political interests of society.\"\n\nBut whatever may have been the good or bad effects of the independent\nprovision of the clergy, it has, perhaps, been very seldom bestowed\nupon them from any view to those effects. Times of violent religious\ncontroversy have generally been times of equally violent political\nfaction. Upon such occasions, each political party has either found\nit, or imagined it, for his interest, to league itself with some one or\nother of the contending religious sects. But this could be done only by\nadopting, or, at least, by favouring the tenets of that particular sect.\nThe sect which had the good fortune to be leagued with the conquering\nparty necessarily shared in the victory of its ally, by whose favour and\nprotection it was soon enabled, in some degree, to silence and subdue\nall its adversaries. Those adversaries had generally leagued themselves\nwith the enemies of the conquering party, and were, therefore the\nenemies of that party. The clergy of this particular sect having thus\nbecome complete masters of the field, and their influence and authority\nwith the great body of the people being in its highest vigour, they were\npowerful enough to overawe the chiefs and leaders of their own party,\nand to oblige the civil magistrate to respect their opinions and\ninclinations. Their first demand was generally that he should silence\nand subdue all their adversaries; and their second, that he should\nbestow an independent provision on themselves. As they had generally\ncontributed a good deal to the victory, it seemed not unreasonable that\nthey should have some share in the spoil. They were weary, besides,\nof humouring the people, and of depending upon their caprice for a\nsubsistence. In making this demand, therefore, they consulted their own\nease and comfort, without troubling themselves about the effect which it\nmight have, in future times, upon the influence and authority of their\norder. The civil magistrate, who could comply with their demand only by\ngiving them something which he would have chosen much rather to take,\nor to keep to himself, was seldom very forward to grant it. Necessity,\nhowever, always forced him to submit at last, though frequently not till\nafter many delays, evasions, and affected excuses.\n\nBut if politics had never called in the aid of religion, had the\nconquering party never adopted the tenets of one sect more than those\nof another, when it had gained the victory, it would probably have dealt\nequally and impartially with all the different sects, and have allowed\nevery man to choose his own priest, and his own religion, as he thought\nproper. There would, and, in this case, no doubt, have been, a great\nmultitude of religious sects. Almost every different congregation might\nprobably have had a little sect by itself, or have entertained some\npeculiar tenets of its own. Each teacher, would, no doubt, have felt\nhimself under the necessity of making the utmost exertion, and of using\nevery art, both to preserve and to increase the number of his disciples.\nBut as every other teacher would have felt himself under the same\nnecessity, the success of no one teacher, or sect of teachers, could\nhave been very great. The interested and active zeal of religious\nteachers can be dangerous and troublesome only where there is either but\none sect tolerated in the society, or where the whole of a large society\nis divided into two or three great sects; the teachers of each acting by\nconcert, and under a regular discipline and subordination. But that zeal\nmust be altogether innocent, where the society is divided into two or\nthree hundred, or, perhaps, into as many thousand small sects, of which\nno one could be considerable enough to disturb the public tranquillity.\nThe teachers of each sect, seeing themselves surrounded on all sides\nwith more adversaries than friends, would be obliged to learn that\ncandour and moderation which are so seldom to be found among the\nteachers of those great sects, whose tenets, being supported by the\ncivil magistrate, are held in veneration by almost all the inhabitants\nof extensive kingdoms and empires, and who, therefore, see nothing round\nthem but followers, disciples, and humble admirers. The teachers of\neach little sect, finding themselves almost alone, would be obliged to\nrespect those of almost every other sect; and the concessions which\nthey would mutually find in both convenient and agreeable to make one to\nanother, might in time, probably reduce the doctrine of the greater part\nof them to that pure and rational religion, free from every mixture of\nabsurdity, imposture, or fanaticism, such as wise men have, in all ages\nof the world, wished to see established; but such as positive law has,\nperhaps, never yet established, and probably never will establish in any\ncountry; because, with regard to religion, positive law always has\nbeen, and probably always will be, more or less influenced by popular\nsuperstition and enthusiasm. This plan of ecclesiastical government, or,\nmore properly, of no ecclesiastical government, was what the sect called\nIndependents (a sect, no doubt, of very wild enthusiasts), proposed to\nestablish in England towards the end of the civil war. If it had been\nestablished, though of a very unphilosophical origin, it would probably,\nby this time, have been productive of the most philosophical good temper\nand moderation with regard to every sort of religious principle. It has\nbeen established in Pennsylvania, where, though the quakers happen to\nbe the most numerous, the law, in reality, favours no one sect more\nthan another; and it is there said to have been productive of this\nphilosophical good temper and moderation.\n\nBut though this equality of treatment should not be productive of this\ngood temper and moderation in all, or even in the greater part of the\nreligious sects of a particular country; yet, provided those sects\nwere sufficiently numerous, and each of them consequently too small\nto disturb the public tranquillity, the excessive zeal of each for\nits particular tenets could not well be productive of any very hurtful\neffects, but, on the contrary, of several good ones; and if the\ngovernment was perfectly decided, both to let them all alone, and to\noblige them all to let alone one another, there is little danger that\nthey would not of their own accord, subdivide themselves fast enough, so\nas soon to become sufficiently numerous.\n\nIn every civilized society, in every society where the distinction of\nranks has once been completely established, there have been always two\ndifferent schemes or systems of morality current at the same time;\nof which the one may be called the strict or austere; the other the\nliberal, or, if you will, the loose system. The former is generally\nadmired and revered by the common people; the latter is commonly more\nesteemed and adopted by what are called the people of fashion. The\ndegree of disapprobation with which we ought to mark the vices of\nlevity, the vices which are apt to arise from great prosperity, and from\nthe excess of gaiety and good humour, seems to constitute the principal\ndistinction between those two opposite schemes or systems. In the\nliberal or loose system, luxury, wanton, and even disorderly mirth,\nthe pursuit of pleasure to some degree of intemperance, the breach of\nchastity, at least in one of the two sexes, etc. provided they are\nnot accompanied with gross indecency, and do not lead to falsehood and\ninjustice, are generally treated with a good deal of indulgence, and are\neasily either excused or pardoned altogether. In the austere system, on\nthe contrary, those excesses are regarded with the utmost abhorrence\nand detestation. The vices of levity are always ruinous to the common\npeople, and a single week's thoughtlessness and dissipation is often\nsufficient to undo a poor workman for ever, and to drive him, through\ndespair, upon committing the most enormous crimes. The wiser and better\nsort of the common people, therefore, have always the utmost abhorrence\nand detestation of such excesses, which their experience tells them\nare so immediately fatal to people of their condition. The disorder and\nextravagance of several years, on the contrary, will not always ruin\na man of fashion; and people of that rank are very apt to consider the\npower of indulging in some degree of excess, as one of the advantages of\ntheir fortune; and the liberty of doing so without censure or reproach,\nas one of the privileges which belong to their station. In people of\ntheir own station, therefore, they regard such excesses with but a small\ndegree of disapprobation, and censure them either very slightly or not\nat all.\n\nAlmost all religious sects have begun among the common people, from whom\nthey have generally drawn their earliest, as well as their most numerous\nproselytes. The austere system of morality has, accordingly, been\nadopted by those sects almost constantly, or with very few exceptions;\nfor there have been some. It was the system by which they could best\nrecommend themselves to that order of people, to whom they first\nproposed their plan of reformation upon what had been before\nestablished. Many of them, perhaps the greater part of them, have even\nendeavoured to gain credit by refining upon this austere system, and by\ncarrying it to some degree of folly and extravagance; and this excessive\nrigour has frequently recommended them, more than any thing else, to the\nrespect and veneration of the common people.\n\nA man of rank and fortune is, by his station, the distinguished member\nof a great society, who attend to every part of his conduct, and who\nthereby oblige him to attend to every part of it himself. His authority\nand consideration depend very much upon the respect which this society\nbears to him. He dares not do anything which would disgrace or discredit\nhim in it; and he is obliged to a very strict observation of that\nspecies of morals, whether liberal or austere, which the general consent\nof this society prescribes to persons of his rank and fortune. A man of\nlow condition, on the contrary, is far from being a distinguished member\nof any great society. While he remains in a country village, his conduct\nmay be attended to, and he may be obliged to attend to it himself. In\nthis situation, and in this situation only, he may have what is called a\ncharacter to lose. But as soon as he comes into a great city, he is sunk\nin obscurity and darkness. His conduct is observed and attended to by\nnobody; and he is, therefore, very likely to neglect it himself, and\nto abandon himself to every sort of low profligacy and vice. He never\nemerges so effectually from this obscurity, his conduct never excites\nso much the attention of any respectable society, as by his becoming the\nmember of a small religious sect. He from that moment acquires a degree\nof consideration which he never had before. All his brother sectaries\nare, for the credit of the sect, interested to observe his conduct; and,\nif he gives occasion to any scandal, if he deviates very much from\nthose austere morals which they almost always require of one another,\nto punish him by what is always a very severe punishment, even where no\nevil effects attend it, expulsion or excommunication from the sect. In\nlittle religious sects, accordingly, the morals of the common people\nhave been almost always remarkably regular and orderly; generally much\nmore so than in the established church. The morals of those little\nsects, indeed, have frequently been rather disagreeably rigorous and\nunsocial.\n\nThere are two very easy and effectual remedies, however, by whose\njoint operation the state might, without violence, correct whatever was\nunsocial or disagreeably rigorous in the morals of all the little sects\ninto which the country was divided.\n\nThe first of those remedies is the study of science and philosophy,\nwhich the state might render almost universal among all people of\nmiddling or more than middling rank and fortune; not by giving salaries\nto teachers in order to make them negligent and idle, but by instituting\nsome sort of probation, even in the higher and more difficult sciences,\nto be undergone by every person before he was permitted to exercise any\nliberal profession, or before he could be received as a candidate for\nany honourable office, of trust or profit. If the state imposed upon\nthis order of men the necessity of learning, it would have no occasion\nto give itself any trouble about providing them with proper teachers.\nThey would soon find better teachers for themselves, than any whom\nthe state could provide for them. Science is the great antidote to the\npoison of enthusiasm and superstition; and where all the superior ranks\nof people were secured from it, the inferior ranks could not be much\nexposed to it.\n\nThe second of those remedies is the frequency and gaiety of public\ndiversions. The state, by encouraging, that is, by giving entire liberty\nto all those who, from their own interest, would attempt, without\nscandal or indecency, to amuse and divert the people by painting,\npoetry, music, dancing; by all sorts of dramatic representations and\nexhibitions; would easily dissipate, in the greater part of them, that\nmelancholy and gloomy humour which is almost always the nurse of popular\nsuperstition and enthusiasm. Public diversions have always been the\nobjects of dread and hatred to all the fanatical promoters of those\npopular frenzies. The gaiety and good humour which those diversions\ninspire, were altogether inconsistent with that temper of mind which was\nfittest for their purpose, or which they could best work upon. Dramatic\nrepresentations, besides, frequently exposing their artifices to public\nridicule, and sometimes even to public execration, were, upon that\naccount, more than all other diversions, the objects of their peculiar\nabhorrence.\n\nIn a country where the law favoured the teachers of no one religion more\nthan those of another, it would not be necessary that any of them\nshould have any particular or immediate dependency upon the sovereign\nor executive power; or that he should have anything to do either\nin appointing or in dismissing them from their offices. In such a\nsituation, he would have no occasion to give himself any concern about\nthem, further than to keep the peace among them, in the same manner\nas among the rest of his subjects, that is, to hinder them from\npersecuting, abusing, or oppressing one another. But it is quite\notherwise in countries where there is an established or governing\nreligion. The sovereign can in this case never be secure, unless he has\nthe means of influencing in a considerable degree the greater part of\nthe teachers of that religion.\n\nThe clergy of every established church constitute a great incorporation.\nThey can act in concert, and pursue their interest upon one plan, and\nwith one spirit as much as if they were under the direction of one man;\nand they are frequently, too, under such direction. Their interest as an\nincorporated body is never the same with that of the sovereign, and is\nsometimes directly opposite to it. Their great interest is to maintain\ntheir authority with the people, and this authority depends upon the\nsupposed certainty and importance of the whole doctrine which they\ninculcate, and upon the supposed necessity of adopting every part of it\nwith the most implicit faith, in order to avoid eternal misery. Should\nthe sovereign have the imprudence to appear either to deride, or doubt\nhimself of the most trifling part of their doctrine, or from humanity,\nattempt to protect those who did either the one or the other, the\npunctilious honour of a clergy, who have no sort of dependency upon him,\nis immediately provoked to proscribe him as a profane person, and to\nemploy all the terrors of religion, in order to oblige the people to\ntransfer their allegiance to some more orthodox and obedient prince.\nShould he oppose any of their pretensions or usurpations, the danger\nis equally great. The princes who have dared in this manner to rebel\nagainst the church, over and above this crime of rebellion, have\ngenerally been charged, too, with the additional crime of heresy,\nnotwithstanding their solemn protestations of their faith, and humble\nsubmission to every tenet which she thought proper to prescribe to them.\nBut the authority of religion is superior to every other authority. The\nfears which it suggests conquer all other fears. When the authorized\nteachers of religion propagate through the great body of the people,\ndoctrines subversive of the authority of the sovereign, it is by\nviolence only, or by the force of a standing army, that he can maintain\nhis authority. Even a standing army cannot in this case give him any\nlasting security; because if the soldiers are not foreigners, which can\nseldom be the case, but drawn from the great body of the people, which\nmust almost always be the case, they are likely to be soon corrupted by\nthose very doctrines. The revolutions which the turbulence of the Greek\nclergy was continually occasioning at Constantinople, as long as the\neastern empire subsisted; the convulsions which, during the course of\nseveral centuries, the turbulence of the Roman clergy was continually\noccasioning in every part of Europe, sufficiently demonstrate how\nprecarious and insecure must always be the situation of the sovereign,\nwho has no proper means of influencing the clergy of the established and\ngoverning religion of his country.\n\nArticles of faith, as well as all other spiritual matters, it is evident\nenough, are not within the proper department of a temporal sovereign,\nwho, though he may be very well qualified for protecting, is seldom\nsupposed to be so for instructing the people. With regard to such\nmatters, therefore, his authority can seldom be sufficient to\ncounterbalance the united authority of the clergy of the established\nchurch. The public tranquillity, however, and his own security, may\nfrequently depend upon the doctrines which they may think proper to\npropagate concerning such matters. As he can seldom directly oppose\ntheir decision, therefore, with proper weight and authority, it is\nnecessary that he should be able to influence it; and he can influence\nit only by the fears and expectations which he may excite in the greater\npart of the individuals of the order. Those fears and expectations\nmay consist in the fear of deprivation or other punishment, and in the\nexpectation of further preferment.\n\nIn all Christian churches, the benefices of the clergy are a sort of\nfreeholds, which they enjoy, not during pleasure, but during life or\ngood behaviour. If they held them by a more precarious tenure, and were\nliable to be turned out upon every slight disobligation either of the\nsovereign or of his ministers, it would perhaps be impossible for them\nto maintain their authority with the people, who would then consider\nthem as mercenary dependents upon the court, in the sincerity of whose\ninstructions they could no longer have any confidence. But should the\nsovereign attempt irregularly, and by violence, to deprive any number\nof clergymen of their freeholds, on account, perhaps, of their having\npropagated, with more than ordinary zeal, some factious or seditious\ndoctrine, he would only render, by such persecution, both them and\ntheir doctrine ten times more popular, and therefore ten times more\ntroublesome and dangerous, than they had been before. Fear is in almost\nall cases a wretched instrument of govermnent, and ought in particular\nnever to be employed against any order of men who have the smallest\npretensions to independency. To attempt to terrify them, serves only to\nirritate their bad humour, and to confirm them in an opposition, which\nmore gentle usage, perhaps, might easily induce them either to soften,\nor to lay aside altogether. The violence which the French government\nusually employed in order to oblige all their parliaments, or sovereign\ncourts of justice, to enregister any unpopular edict, very seldom\nsucceeded. The means commonly employed, however, the imprisonment of\nall the refractory members, one would think, were forcible enough. The\nprinces of the house of Stuart sometimes employed the like means in\norder to influence some of the members of the parliament of England, and\nthey generally found them equally intractable. The parliament of England\nis now managed in another manner; and a very small experiment, which the\nduke of Choiseul made, about twelve years ago, upon the parliament of\nParis, demonstrated sufficiently that all the parliaments of France\nmight have been managed still more easily in the same manner. That\nexperiment was not pursued. For though management and persuasion are\nalways the easiest and safest instruments of government as force and\nviolence are the worst and the most dangerous; yet such, it seems, is\nthe natural insolence of man, that he almost always disdains to use the\ngood instrument, except when he cannot or dare not use the bad one. The\nFrench government could and durst use force, and therefore disdained to\nuse management and persuasion. But there is no order of men, it appears\nI believe, from the experience of all ages, upon whom it is so dangerous\nor rather so perfectly ruinous, to employ force and violence, as\nupon the respected clergy of an established church. The rights, the\nprivileges, the personal liberty of every individual ecclesiastic, who\nis upon good terms with his own order, are, even in the most despotic\ngovernments, more respected than those of any other person of nearly\nequal rank and fortune. It is so in every gradation of despotism, from\nthat of the gentle and mild government of Paris, to that of the violent\nand furious government of Constantinople. But though this order of men\ncan scarce ever be forced, they may be managed as easily as any other;\nand the security of the sovereign, as well as the public tranquillity,\nseems to depend very much upon the means which he has of managing them;\nand those means seem to consist altogether in the preferment which he\nhas to bestow upon them.\n\nIn the ancient constitution of the Christian church, the bishop of each\ndiocese was elected by the joint votes of the clergy and of the people\nof the episcopal city. The people did not long retain their right of\nelection; and while they did retain it, they almost always acted under\nthe influence of the clergy, who, in such spiritual matters, appeared\nto be their natural guides. The clergy, however, soon grew weary of the\ntrouble of managing them, and found it easier to elect their own bishops\nthemselves. The abbot, in the same manner, was elected by the monks\nof the monastery, at least in the greater part of abbacies. All the\ninferior ecclesiastical benefices comprehended within the diocese were\ncollated by the bishop, who bestowed them upon such ecclesiastics as\nhe thought proper. All church preferments were in this manner in\nthe disposal of the church. The sovereign, though he might have some\nindirect influence in those elections, and though it was sometimes usual\nto ask both his consent to elect, and his approbation of the election,\nyet had no direct or sufficient means of managing the clergy. The\nambition of every clergyman naturally led him to pay court, not so much\nto his sovereign as to his own order, from which only he could expect\npreferment.\n\nThrough the greater part of Europe, the pope gradually drew to himself,\nfirst the collation of almost all bishoprics and abbacies, or of\nwhat were called consistorial benefices, and afterwards, by various\nmachinations and pretences, of the greater part of inferior benefices\ncomprehended within each diocese, little more being left to the bishop\nthan what was barely necessary to give him a decent authority with his\nown clergy. By this arrangement the condition of the sovereign was still\nworse than it had been before. The clergy of all the different countries\nof Europe were thus formed into a sort of spiritual army, dispersed in\ndifferent quarters indeed, but of which all the movements and operations\ncould now be directed by one head, and conducted upon one uniform\nplan. The clergy of each particular country might be considered as a\nparticular detachment of that army, of which the operations could easily\nbe supported and seconded by all the other detachments quartered in\nthe different countries round about. Each detachment was not only\nindependent of the sovereign of the country in which it was quartered,\nand by which it was maintained, but dependent upon a foreign sovereign,\nwho could at any time turn its arms against the sovereign of that\nparticular country, and support them by the arms of all the other\ndetachments.\n\nThose arms were the most formidable that can well be imagined. In\nthe ancient state of Europe, before the establishment of arts and\nmanufactures, the wealth of the clergy gave them the same sort of\ninfluence over the common people which that of the great barons gave\nthem over their respective vassals, tenants, and retainers. In the great\nlanded estates, which the mistaken piety both of princes and private\npersons had bestowed upon the church, jurisdictions were established, of\nthe same kind with those of the great barons, and for the same reason.\nIn those great landed estates, the clergy, or their bailiffs, could\neasily keep the peace, without the support or assistance either of the\nking or of any other person; and neither the king nor any other person\ncould keep the peace there without the support and assistance of the\nclergy. The jurisdictions of the clergy, therefore, in their particular\nbaronies or manors, were equally independent, and equally exclusive\nof the authority of the king's courts, as those of the great temporal\nlords. The tenants of the clergy were, like those of the great barons,\nalmost all tenants at will, entirely dependent upon their immediate\nlords, and, therefore, liable to be called out at pleasure, in order to\nfight in any quarrel in which the clergy might think proper to engage\nthem. Over and above the rents of those estates, the clergy possessed in\nthe tithes a very large portion of the rents of all the other estates in\nevery kingdom of Europe. The revenues arising from both those species\nof rents were, the greater part of them, paid in kind, in corn, wine,\ncattle, poultry, etc. The quantity exceeded greatly what the clergy\ncould themselves consume; and there were neither arts nor manufactures,\nfor the produce of which they could exchange the surplus. The clergy\ncould derive advantage from this immense surplus in no other way than\nby employing it, as the great barons employed the like surplus of their\nrevenues, in the most profuse hospitality, and in the most extensive\ncharity. Both the hospitality and the charity of the ancient clergy,\naccordingly, are said to have been very great. They not only maintained\nalmost the whole poor of every kingdom, but many knights and gentlemen\nhad frequently no other means of subsistence than by travelling about\nfrom monastery to monastery, under pretence of devotion, but in reality\nto enjoy the hospitality of the clergy. The retainers of some particular\nprelates were often as numerous as those of the greatest lay-lords;\nand the retainers of all the clergy taken together were, perhaps, more\nnumerous than those of all the lay-lords. There was always much more\nunion among the clergy than among the lay-lords. The former were under a\nregular discipline and subordination to the papal authority. The latter\nwere under no regular discipline or subordination, but almost always\nequally jealous of one another, and of the king. Though the tenants and\nretainers of the clergy, therefore, had both together been less numerous\nthan those of the great lay-lords, and their tenants were probably much\nless numerous, yet their union would have rendered them more formidable.\nThe hospitality and charity of the clergy, too, not only gave them the\ncommand of a great temporal force, but increased very much the weight of\ntheir spiritual weapons. Those virtues procured them the highest respect\nand veneration among all the inferior ranks of people, of whom many\nwere constantly, and almost all occasionally, fed by them. Everything\nbelonging or related to so popular an order, its possessions, its\nprivileges, its doctrines, necessarily appeared sacred in the eyes\nof the common people; and every violation of them, whether real or\npretended, the highest act of sacrilegious wickedness and profaneness.\nIn this state of things, if the sovereign frequently found it difficult\nto resist the confederacy of a few of the great nobility, we cannot\nwonder that he should find it still more so to resist the united force\nof the clergy of his own dominions, supported by that of the clergy of\nall the neighbouring dominions. In such circumstances, the wonder is,\nnot that he was sometimes obliged to yield, but that he ever was able to\nresist.\n\nThe privileges of the clergy in those ancient times (which to us,\nwho live in the present times, appear the most absurd), their total\nexemption from the secular jurisdiction, for example, or what in England\nwas called the benefit of clergy, were the natural, or rather the\nnecessary, consequences of this state of things. How dangerous must it\nhave been for the sovereign to attempt to punish a clergyman for any\ncrime whatever, if his order were disposed to protect him, and to\nrepresent either the proof as insufficient for convicting so holy a man,\nor the punishment as too severe to be inflicted upon one whose person\nhad been rendered sacred by religion? The sovereign could, in\nsuch circumstances, do no better than leave him to be tried by the\necclesiastical courts, who, for the honour of their own order, were\ninterested to restrain, as much as possible, every member of it from\ncommitting enormous crimes, or even from giving occasion to such gross\nscandal as might disgust the minds of the people.\n\nIn the state in which things were, through the greater part of Europe,\nduring the tenth, eleventh, twelfth, and thirteenth centuries, and for\nsome time both before and after that period, the constitution of the\nchurch of Rome may be considered as the most formidable combination that\never was formed against the authority and security of civil government,\nas well as against the liberty, reason, and happiness of mankind, which\ncan flourish only where civil government is able to protect them. In\nthat constitution, the grossest delusions of superstition were supported\nin such a manner by the private interests of so great a number of\npeople, as put them out of all danger from any assault of human reason;\nbecause, though human reason might, perhaps, have been able to unveil,\neven to the eyes of the common people, some of the delusions of\nsuperstition, it could never have dissolved the ties of private\ninterest. Had this constitution been attacked by no other enemies but\nthe feeble efforts of human reason, it must have endured for ever. But\nthat immense and well-built fabric, which all the wisdom and virtue\nof man could never have shaken, much less have overturned, was, by\nthe natural course of things, first weakened, and afterwards in part\ndestroyed; and is now likely, in the course of a few centuries more,\nperhaps, to crumble into ruins altogether.\n\nThe gradual improvements of arts, manufactures, and commerce, the same\ncauses which destroyed the power of the great barons, destroyed, in\nthe same manner, through the greater part of Europe, the whole temporal\nmanufactures, and commerce, the clergy, like the great barons, found\nsomething for which they could exchange their rude produce, and thereby\ndiscovered the means of spending their whole revenues upon their own\npersons, without giving any considerable share of them to other people.\nTheir charity became gradually less extensive, their hospitality less\nliberal, or less profuse. Their retainers became consequently less\nnumerous, and, by degrees, dwindled away altogether. The clergy, too,\nlike the great barons, wished to get a better rent from their\nlanded estates, in order to spend it, in the same manner, upon the\ngratification of their own private vanity and folly. But this increase\nof rent could be got only by granting leases to their tenants, who\nthereby became, in a great measure, independent of them. The ties of\ninterest, which bound the inferior ranks of people to the clergy, were\nin this manner gradually broken and dissolved. They were even broken and\ndissolved sooner than those which bound the same ranks of people to the\ngreat barons; because the benefices of the church being, the greater\npart of them, much smaller than the estates of the great barons, the\npossessor of each benefice was much sooner able to spend the whole\nof its revenue upon his own person. During the greater part of the\nfourteenth and fifteenth centuries, the power of the great barons was,\nthrough the greater part of Europe, in full vigour. But the temporal\npower of the clergy, the absolute command which they had once had over\nthe great body of the people was very much decayed. The power of the\nchurch was, by that time, very nearly reduced, through the greater part\nof Europe, to what arose from their spiritual authority; and even that\nspiritual authority was much weakened, when it ceased to be supported by\nthe charity and hospitality of the clergy. The inferior ranks of\npeople no longer looked upon that order as they had done before; as the\ncomforters of their distress, and the relievers of their indigence. On\nthe contrary, they were provoked and disgusted by the vanity, luxury,\nand expense of the richer clergy, who appeared to spend upon their own\npleasures what had always before been regarded as the patrimony of the\npoor.\n\nIn this situation of things, the sovereigns in the different states of\nEurope endeavoured to recover the influence which they had once had in\nthe disposal of the great benefices of the church; by procuring to the\ndeans and chapters of each diocese the restoration of their ancient\nright of electing the bishop; and to the monks of each abbacy that\nof electing the abbot. The re-establishing this ancient order was the\nobject of several statutes enacted in England during the course of\nthe fourteenth century, particularly of what is called the statute of\nprovisors; and of the pragmatic sanction, established in France in\nthe fifteenth century. In order to render the election valid, it was\nnecessary that the sovereign should both consent to it before hand, and\nafterwards approve of the person elected; and though the election was\nstill supposed to be free, he had, however all the indirect means which\nhis situation necessarily afforded him, of influencing the clergy in\nhis own dominions. Other regulations, of a similar tendency, were\nestablished in other parts of Europe. But the power of the pope, in\nthe collation of the great benefices of the church, seems, before the\nreformation, to have been nowhere so effectually and so universally\nrestrained as in France and England. The concordat afterwards, in the\nsixteenth century, gave to the kings of France the absolute right\nof presenting to all the great, or what are called the consistorial,\nbenefices of the Gallican church.\n\nSince the establishment of the pragmatic sanction and of the concordat,\nthe clergy of France have in general shewn less respect to the decrees\nof the papal court, than the clergy of any other catholic country. In\nall the disputes which their sovereign has had with the pope, they have\nalmost constantly taken part with the former. This independency of the\nclergy of France upon the court of Rome seems to be principally founded\nupon the pragmatic sanction and the concordat. In the earlier periods of\nthe monarchy, the clergy of France appear to have been as much devoted\nto the pope as those of any other country. When Robert, the second\nprince of the Capetian race, was most unjustly excommunicated by the\ncourt of Rome, his own servants, it is said, threw the victuals\nwhich came from his table to the dogs, and refused to taste any thing\nthemselves which had been polluted by the contact of a person in his\nsituation. They were taught to do so, it may very safely be presumed, by\nthe clergy of his own dominions.\n\nThe claim of collating to the great benefices of the church, a claim in\ndefence of which the court of Rome had frequently shaken, and\nsometimes overturned, the thrones of some of the greatest sovereigns in\nChristendom, was in this manner either restrained or modified, or given\nup altogether, in many different parts of Europe, even before the\ntime of the reformation. As the clergy had now less influence over the\npeople, so the state had more influence over the clergy. The clergy,\ntherefore, had both less power, and less inclination, to disturb the\nstate.\n\nThe authority of the church of Rome was in this state of declension,\nwhen the disputes which gave birth to the reformation began in Germany,\nand soon spread themselves through every part of Europe. The new\ndoctrines were everywhere received with a high degree of popular favour.\nThey were propagated with all that enthusiastic zeal which commonly\nanimates the spirit of party, when it attacks established authority. The\nteachers of those doctrines, though perhaps, in other respects, not more\nlearned than many of the divines who defended the established church,\nseem in general to have been better acquainted with ecclesiastical\nhistory, and with the origin and progress of that system of opinions\nupon which the authority of the church was established; and they had\nthereby the advantage in almost every dispute. The austerity of their\nmanners gave them authority with the common people, who contrasted the\nstrict regularity of their conduct with the disorderly lives of the\ngreater part of their own clergy. They possessed, too, in a much higher\ndegree than their adversaries, all the arts of popularity and of gaining\nproselytes; arts which the lofty and dignified sons of the church had\nlong neglected, as being to them in a great measure useless. The reason\nof the new doctrines recommended them to some, their novelty to many;\nthe hatred and contempt of the established clergy to a still greater\nnumber: but the zealous, passionate, and fanatical, though frequently\ncoarse and rustic eloquence, with which they were almost everywhere\ninculcated, recommended them to by far the greatest number.\n\nThe success of the new doctrines was almost everywhere so great, that\nthe princes, who at that time happened to be on bad terms with the court\nof Rome, were, by means of them, easily enabled, in their own dominions,\nto overturn the church, which having lost the respect and veneration\nof the inferior ranks of people, could make scarce any resistance. The\ncourt of Rome had disobliged some of the smaller princes in the northern\nparts of Germany, whom it had probably considered as too insignificant\nto be worth the managing. They universally, therefore, established the\nreformation in their own dominions. The tyranny of Christiern II., and\nof Troll archbishop of Upsal, enabled Gustavus Vasa to expel them\nboth from Sweden. The pope favoured the tyrant and the archbishop, and\nGustavus Vasa found no difficulty in establishing the reformation\nin Sweden. Christiern II. was afterwards deposed from the throne of\nDenmark, where his conduct had rendered him as odious as in Sweden.\nThe pope, however, was still disposed to favour him; and Frederic of\nHolstein, who had mounted the throne in his stead, revenged himself,\nby following the example of Gustavus Vasa. The magistrates of Berne and\nZurich, who had no particular quarrel with the pope, established with\ngreat ease the reformation in their respective cantons, where just\nbefore some of the clergy had, by an imposture somewhat grosser than\nordinary, rendered the whole order both odious and contemptible.\n\nIn this critical situation of its affairs the papal court was at\nsufficient pains to cultivate the friendship of the powerful sovereigns\nof France and Spain, of whom the latter was at that time emperor of\nGermany. With their assistance, it was enabled, though not without great\ndifficulty, and much bloodshed, either to suppress altogether, or to\nobstruct very much, the progress of the reformation in their dominions.\nIt was well enough inclined, too, to be complaisant to the king of\nEngland. But from the circumstances of the times, it could not be so\nwithout giving offence to a still greater sovereign, Charles V., king\nof Spain and emperor of Germany. Henry VIII., accordingly, though he\ndid not embrace himself the greater part of the doctrines of the\nreformation, was yet enabled, by their general prevalence, to suppress\nall the monasteries, and to abolish the authority of the church of Rome\nin his dominions. That he should go so far, though he went no further,\ngave some satisfaction to the patrons of the reformation, who, having\ngot possession of the government in the reign of his son and successor\ncompleted, without any difficulty, the work which Henry VIII. had begun.\n\nIn some countries, as in Scotland, where the government was weak,\nunpopular, and not very firmly established, the reformation was strong\nenough to overturn, not only the church, but the state likewise, for\nattempting to support the church.\n\nAmong the followers of the reformation, dispersed in all the different\ncountries of Europe, there was no general tribunal, which, like that of\nthe court of Rome, or an oecumenical council, could settle all disputes\namong them, and, with irresistible authority, prescribe to all of them\nthe precise limits of orthodoxy. When the followers of the reformation\nin one country, therefore, happened to differ from their brethren in\nanother, as they had no common judge to appeal to, the dispute could\nnever be decided; and many such disputes arose among them. Those\nconcerning the government of the church, and the right of conferring\necclesiastical benefices, were perhaps the most interesting to the peace\nand welfare of civil society. They gave birth, accordingly, to the two\nprincipal parties or sects among the followers of the reformation, the\nLutheran and Calvinistic sects, the only sects among them, of which the\ndoctrine and discipline have ever yet been established by law in any\npart of Europe.\n\nThe followers of Luther, together with what is called the church of\nEngland, preserved more or less of the episcopal government, established\nsubordination among the clergy, gave the sovereign the disposal of all\nthe bishoprics, and other consistorial benefices within his dominions,\nand thereby rendered him the real head of the church; and without\ndepriving the bishop of the right of collating to the smaller benefices\nwithin his diocese, they, even to those benefices, not only admitted,\nbut favoured the right of presentation, both in the sovereign and in\nall other lay patrons. This system of church government was, from the\nbeginning, favourable to peace and good order, and to submission to the\ncivil sovereign. It has never, accordingly, been the occasion of any\ntumult or civil commotion in any country in which it has once been\nestablished. The church of England, in particular, has always valued\nherself, with great reason, upon the unexceptionable loyalty of her\nprinciples. Under such a government, the clergy naturally endeavour to\nrecommend themselves to the sovereign, to the court, and to the nobility\nand gentry of the country, by whose influence they chiefly expect to\nobtain preferment. They pay court to those patrons, sometimes, no\ndoubt, by the vilest flattery and assentation; but frequently, too, by\ncultivating all those arts which best deserve, and which are therefore\nmost likely to gain them, the esteem of people of rank and fortune; by\ntheir knowledge in all the different branches of useful and ornamental\nlearning, by the decent liberality of their manners, by the social good\nhumour of their conversation, and by their avowed contempt of those\nabsurd and hypocritical austerities which fanatics inculcate and pretend\nto practise, in order to draw upon themselves the veneration, and upon\nthe greater part of men of rank and fortune, who avow that they do\nnot practise them, the abhorrence of the common people. Such a clergy,\nhowever, while they pay their court in this manner to the higher ranks\nof life, are very apt to neglect altogether the means of maintaining\ntheir influence and authority with the lower. They are listened to,\nesteemed, and respected by their superiors; but before their inferiors\nthey are frequently incapable of defending, effectually, and to the\nconviction of such hearers, their own sober and moderate doctrines,\nagainst the most ignorant enthusiast who chooses to attack them.\n\nThe followers of Zuinglius, or more properly those of Calvin, on the\ncontrary, bestowed upon the people of each parish, whenever the church\nbecame vacant, the right of electing their own pastor; and established,\nat the same time, the most perfect equality among the clergy. The former\npart of this institution, as long as it remained in vigour, seems to\nhave been productive of nothing but disorder and confusion, and to\nhave tended equally to corrupt the morals both of the clergy and of the\npeople. The latter part seems never to have had any effects but what\nwere perfectly agreeable.\n\nAs long as the people of each parish preserved the right of electing\ntheir own pastors, they acted almost always under the influence of the\nclergy, and generally of the most factious and fanatical of the order.\nThe clergy, in order to preserve their influence in those popular\nelections, became, or affected to become, many of them, fanatics\nthemselves, encouraged fanaticism among the people, and gave the\npreference almost always to the most fanatical candidate. So small a\nmatter as the appointment of a parish priest, occasioned almost always\na violent contest, not only in one parish, but in all the neighbouring\nparishes who seldom failed to take part in the quarrel. When the parish\nhappened to be situated in a great city, it divided all the inhabitants\ninto two parties; and when that city happened, either to constitute\nitself a little republic, or to be the head and capital of a little\nrepublic, as in the case with many of the considerable cities in\nSwitzerland and Holland, every paltry dispute of this kind, over and\nabove exasperating the animosity of all their other factions, threatened\nto leave behind it, both a new schism in the church, and a new faction\nin the state. In those small republics, therefore, the magistrate very\nsoon found it necessary, for the sake of preserving the public peace,\nto assume to himself the right of presenting to all vacant benefices. In\nScotland, the most extensive country in which this presbyterian form\nof church government has ever been established, the rights of patronage\nwere in effect abolished by the act which established presbytery in the\nbeginning of the reign of William III. That act, at least, put in the\npower of certain classes of people in each parish to purchase, for\na very small price, the right of electing their own pastor. The\nconstitution which this act established, was allowed to subsist for\nabout two-and-twenty years, but was abolished by the 10th of queen\nAnne, ch.12, on account of the confusions and disorders which this\nmore popular mode of election had almost everywhere occasioned. In so\nextensive a country as Scotland, however, a tumult in a remote parish\nwas not so likely to give disturbance to government as in a smaller\nstate. The 10th of queen Anne restored the rights of patronage. But\nthough, in Scotland, the law gives the benefice, without any exception\nto the person presented by the patron; yet the church requires sometimes\n(for she has not in this respect been very uniform in her decisions)\na certain concurrence of the people, before she will confer upon the\npresentee what is called the cure of souls, or the ecclesiastical\njurisdiction in the parish. She sometimes, at least, from an affected\nconcern for the peace of the parish, delays the settlement till this\nconcurrence can be procured. The private tampering of some of the\nneighbouring clergy, sometimes to procure, but more frequently to\nprevent this concurrence, and the popular arts which they cultivate, in\norder to enable them upon such occasions to tamper more effectually, are\nperhaps the causes which principally keep up whatever remains of the old\nfanatical spirit, either in the clergy or in the people of Scotland.\n\nThe equality which the presbyterian form of church government\nestablishes among the clergy, consists, first, in the equality of\nauthority or ecclesiastical jurisdiction; and, secondly, in the equality\nof benefice. In all presbyterian churches, the equality of authority is\nperfect; that of benefice is not so. The difference, however, between\none benefice and another, is seldom so considerable, as commonly to\ntempt the possessor even of the small one to pay court to his patron, by\nthe vile arts of flattery and assentation, in order to get a better.\nIn all the presbyterian churches, where the rights of patronage are\nthoroughly established, it is by nobler and better arts, that the\nestablished clergy in general endeavour to gain the favour of their\nsuperiors; by their learning, by the irreproachable regularity of their\nlife, and by the faithful and diligent discharge of their duty. Their\npatrons even frequently complain of the independency of their spirit,\nwhich they are apt to construe into ingratitude for past favours, but\nwhich, at worse, perhaps, is seldom anymore than that indifference which\nnaturally arises from the consciousness that no further favours of the\nkind are ever to be expected. There is scarce, perhaps, to be found\nanywhere in Europe, a more learned, decent, independent, and respectable\nset of men, than the greater part of the presbyterian clergy of Holland,\nGeneva, Switzerland, and Scotland.\n\nWhere the church benefices are all nearly equal, none of them can be\nvery great; and this mediocrity of benefice, though it may be, no doubt,\ncarried too far, has, however, some very agreeable effects. Nothing but\nexemplary morals can give dignity to a man of small fortune. The\nvices of levity and vanity necessarily render him ridiculous, and are,\nbesides, almost as ruinous to him as they are to the common people.\nIn his own conduct, therefore, he is obliged to follow that system of\nmorals which the common people respect the most. He gains their esteem\nand affection, by that plan of life which his own interest and situation\nwould lead him to follow. The common people look upon him with that\nkindness with which we naturally regard one who approaches somewhat to\nour own condition, but who, we think, ought to be in a higher. Their\nkindness naturally provokes his kindness. He becomes careful to instruct\nthem, and attentive to assist and relieve them. He does not even despise\nthe prejudices of people who are disposed to be so favourable to him,\nand never treats them with those contemptuous and arrogant airs, which\nwe so often meet with in the proud dignitaries of opulent and well\nendowed churches. The presbyterian clergy, accordingly, have more\ninfluence over the minds of the common people, than perhaps the clergy\nof any other established church. It is, accordingly, in presbyterian\ncountries only, that we ever find the common people converted, without\npersecution completely, and almost to a man, to the established church.\n\nIn countries where church benefices are, the greater part of them, very\nmoderate, a chair in a university is generally a better establishment\nthan a church benefice. The universities have, in this case, the picking\nand chusing of their members from all the churchmen of the country, who,\nin every country, constitute by far the most numerous class of men of\nletters. Where church benefices, on the contrary, are many of them\nvery considerable, the church naturally draws from the universities the\ngreater part of their eminent men of letters; who generally find some\npatron, who does himself honour by procuring them church preferment. In\nthe former situation, we are likely to find the universities filled with\nthe most eminent men of letters that are to be found in the country. In\nthe latter, we are likely to find few eminent men among them, and those\nfew among the youngest members of the society, who are likely, too, to\nbe drained away from it, before they can have acquired experience and\nknowledge enough to be of much use to it. It is observed by Mr. de\nVoltaire, that father Porée, a jesuit of no great eminence in the\nrepublic of letters, was the only professor they had ever had in France,\nwhose works were worth the reading. In a country which has produced\nso many eminent men of letters, it must appear somewhat singular, that\nscarce one of them should have been a professor in a university. The\nfamous Cassendi was, in the beginning of his life, a professor in\nthe university of Aix. Upon the first dawning of his genius, it was\nrepresented to him, that by going into the church he could easily find\na much more quiet and comfortable subsistence, as well as a better\nsituation for pursuing his studies; and he immediately followed the\nadvice. The observation of Mr. de Voltaire may be applied, I believe,\nnot only to France, but to all other Roman Catholic countries. We very\nrarely find in any of them an eminent man of letters, who is a professor\nin a university, except, perhaps, in the professions of law and physic;\nprofessions from which the church is not so likely to draw them. After\nthe church of Rome, that of England is by far the richest and best\nendowed church in Christendom. In England, accordingly, the church\nis continually draining the universities of all their best and ablest\nmembers; and an old college tutor who is known and distinguished in\nEurope as an eminent man of letters, is as rarely to be found there\nas in any Roman catholic country, In Geneva, on the contrary, in the\nprotestant cantons of Switzerland, in the protestant countries of\nGermany, in Holland, in Scotland, in Sweden, and Denmark, the most\neminent men of letters whom those countries have produced, have, not\nall indeed, but the far greater part of them, been professors in\nuniversities. In those countries, the universities are continually\ndraining the church of all its most eminent men of letters.\n\nIt may, perhaps, be worth while to remark, that, if we except the poets,\na few orators, and a few historians, the far greater part of the other\neminent men of letters, both of Greece and Rome, appear to have been\neither public or private teachers; generally either of philosophy or\nof rhetoric. This remark will be found to hold true, from the days of\nLysias and Isocrates, of Plato and Aristotle, down to those of Plutarch\nand Epictetus, Suetonius, and Quintilian. To impose upon any man the\nnecessity of teaching, year after year, in any particular branch of\nscience seems in reality to be the most effectual method for rendering\nhim completely master of it himself. By being obliged to go every\nyear over the same ground, if he is good for any thing, he necessarily\nbecomes, in a few years, well acquainted with every part of it, and if,\nupon any particular point, he should form too hasty an opinion one year,\nwhen he comes, in the course of his lectures to reconsider the same\nsubject the year thereafter, he is very likely to correct it. As to be a\nteacher of science is certainly the natural employment of a mere man of\nletters; so is it likewise, perhaps, the education which is most likely\nto render him a man of solid learning and knowledge. The mediocrity\nof church benefices naturally tends to draw the greater part of men of\nletters in the country where it takes place, to the employment in which\nthey can be the most useful to the public, and at the same time to give\nthem the best education, perhaps, they are capable of receiving. It\ntends to render their learning both as solid as possible, and as useful\nas possible.\n\nThe revenue of every established church, such parts of it excepted as\nmay arise from particular lands or manors, is a branch, it ought to be\nobserved, of the general revenue of the state, which is thus diverted to\na purpose very different from the defence of the state. The tithe,\nfor example, is a real land tax, which puts it out of the power of the\nproprietors of land to contribute so largely towards the defence of the\nstate as they otherwise might be able to do. The rent of land, however,\nis, according to some, the sole fund; and, according to others, the\nprincipal fund, from which, in all great monarchies, the exigencies of\nthe state must be ultimately supplied. The more of this fund that is\ngiven to the church, the less, it is evident, can be spared to the\nstate. It may be laid down as a certain maxim, that all other things\nbeing supposed equal, the richer the church, the poorer must necessarily\nbe, either the sovereign on the one hand, or the people on the other;\nand, in all cases, the less able must the state be to defend itself. In\nseveral protestant countries, particularly in all the protestant cantons\nof Switzerland, the revenue which anciently belonged to the Roman\ncatholic church, the tithes and church lands, has been found a fund\nsufficient, not only to afford competent salaries to the established\nclergy, but to defray, with little or no addition, all the other\nexpenses of the state. The magistrates of the powerful canton of Berne,\nin particular, have accumulated, out of the savings from this fund, a\nvery large sum, supposed to amount to several millions; part or which is\ndeposited in a public treasure, and part is placed at interest in what\nare called the public funds of the different indebted nations of Europe;\nchiefly in those of France and Great Britain. What may be the amount\nof the whole expense which the church, either of Berne, or of any other\nprotestant canton, costs the state, I do not pretend to know. By a very\nexact account it appears, that, in 1755, the whole revenue of the clergy\nof the church of Scotland, including their glebe or church lands, and\nthe rent of their manses or dwelling-houses, estimated according to\na reasonable valuation, amounted only to £68,514:1:5 1/12d. This very\nmoderate revenue affords a decent subsistence to nine hundred and\nforty-four ministers. The whole expense of the church, including what is\noccasionally laid out for the building and reparation of churches, and\nof the manses of ministers, cannot well be supposed to exceed eighty\nor eighty-five thousand pounds a-year. The most opulent church in\nChristendom does not maintain better the uniformity of faith, the\nfervour of devotion, the spirit of order, regularity, and austere\nmorals, in the great body of the people, than this very poorly endowed\nchurch of Scotland. All the good effects, both civil and religious,\nwhich an established church can be supposed to produce, are produced\nby it as completely as by any other. The greater part of the protestant\nchurches of Switzerland, which, in general, are not better endowed than\nthe church of Scotland, produce those effects in a still higher degree.\nIn the greater part of the protestant cantons, there is not a\nsingle person to be found, who does not profess himself to be of the\nestablished church. If he professes himself to be of any other, indeed,\nthe law obliges him to leave the canton. But so severe, or, rather,\nindeed, so oppressive a law, could never have been executed in such free\ncountries, had not the diligence of the clergy beforehand converted to\nthe established church the whole body of the people, with the exception\nof, perhaps, a few individuals only. In some parts of Switzerland,\naccordingly, where, from the accidental union of a protestant and\nRoman catholic country, the conversion has not been so complete, both\nreligions are not only tolerated, but established by law.\n\nThe proper performance of every service seems to require, that its pay\nor recompence should be, as exactly as possible, proportioned to the\nnature of the service. If any service is very much underpaid, it is\nvery apt to suffer by the meanness and incapacity of the greater part of\nthose who are employed in it. If it is very much overpaid, it is apt to\nsuffer, perhaps still more, by their negligence and idleness. A man of\na large revenue, whatever may be his profession, thinks he ought to live\nlike other men of large revenues; and to spend a great part of his time\nin festivity, in vanity, and in dissipation. But in a clergyman, this\ntrain of life not only consumes the time which ought to be employed\nin the duties of his function, but in the eyes of the common people,\ndestroys almost entirely that sanctity of character, which can alone\nenable him to perform those duties with proper weight and authority.\n\n\nPART IV. Of the Expense of supporting the Dignity of the Sovereign.\n\nOver and above the expenses necessary for enabling the sovereign to\nperform his several duties, a certain expense is requisite for the\nsupport of his dignity. This expense varies, both with the different\nperiods of improvement, and with the different forms of government.\n\nIn an opulent and improved society, where all the different orders of\npeople are growing every day more expensive in their houses, in their\nfurniture, in their tables, in their dress, and in their equipage; it\ncannot well be expected that the sovereign should alone hold out against\nthe fashion. He naturally, therefore, or rather necessarily, becomes\nmore expensive in all those different articles too. His dignity even\nseems to require that he should become so.\n\nAs, in point of dignity, a monarch is more raised above his subjects\nthan the chief magistrate of any republic is ever supposed to be above\nhis fellow-citizens; so a greater expense is necessary for supporting\nthat higher dignity. We naturally expect more splendour in the court of\na king, than in the mansion-house of a doge or burgo-master.\n\nCONCLUSION.\n\nThe expense of defending the society, and that of supporting the dignity\nof the chief magistrate, are both laid out for the general benefit of\nthe whole society. It is reasonable, therefore, that they should be\ndefrayed by the general contribution of the whole society; all the\ndifferent members contributing, as nearly as possible, in proportion to\ntheir respective abilities.\n\nThe expense of the administration of justice, too, may no doubt be\nconsidered as laid out for the benefit of the whole society. There is\nno impropriety, therefore, in its being defrayed by the general\ncontribution of the whole society. The persons, however, who give\noccasion to this expense, are those who, by their injustice in one way\nor another, make it necessary to seek redress or protection from the\ncourts of justice. The persons, again, most immediately benefited by\nthis expense, are those whom the courts of justice either restore\nto their rights, or maintain in their rights. The expense of the\nadministration of justice, therefore, may very properly be defrayed\nby the particular contribution of one or other, or both, of those two\ndifferent sets of persons, according as different occasions may require,\nthat is, by the fees of court. It cannot be necessary to have recourse\nto the general contribution of the whole society, except for the\nconviction of those criminals who have not themselves any estate or fund\nsufficient for paying those fees.\n\nThose local or provincial expenses, of which the benefit is local\nor provincial (what is laid out, for example, upon the police of\na particular town or district), ought to be defrayed by a local or\nprovincial revenue, and ought to be no burden upon the general revenue\nof the society. It is unjust that the whole society should contribute\ntowards an expense, of which the benefit is confined to a part of the\nsociety.\n\nThe expense of maintaining good roads and communications is, no doubt,\nbeneficial to the whole society, and may, therefore, without any\ninjustice, be defrayed by the general contributions of the whole\nsociety. This expense, however, is most immediately and directly\nbeneficial to those who travel or carry goods from one place to another,\nand to those who consume such goods. The turnpike tolls in England,\nand the duties called peages in other countries, lay it altogether upon\nthose two different sets of people, and thereby discharge the general\nrevenue of the society from a very considerable burden.\n\nThe expense of the institutions for education and religious instruction,\nis likewise, no doubt, beneficial to the whole society, and may,\ntherefore, without injustice, be defrayed by the general contribution\nof the whole society. This expense, however, might, perhaps, with equal\npropriety, and even with some advantage, be defrayed altogether by those\nwho receive the immediate benefit of such education and instruction, or\nby the voluntary contribution of those who think they have occasion for\neither the one or the other.\n\nWhen the institutions, or public works, which are beneficial to the\nwhole society, either cannot be maintained altogether, or are not\nmaintained altogether, by the contribution of such particular members\nof the society as are most immediately benefited by them; the deficiency\nmust, in most cases, be made up by the general contribution of the whole\nsociety. The general revenue of the society, over and above defraying\nthe expense of defending the society, and of supporting the dignity of\nthe chief magistrate, must make up for the deficiency of many particular\nbranches of revenue. The sources of this general or public revenue, I\nshall endeavour to explain in the following chapter.\n\n\nCHAPTER II. OF THE SOURCES OF THE GENERAL OR PUBLIC REVENUE OF THE\nSOCIETY.\n\nThe revenue which must defray, not only the expense of defending the\nsociety and of supporting the dignity of the chief magistrate, but all\nthe other necessary expenses of government, for which the constitution\nof the state has not provided any particular revenue may be drawn,\neither, first, from some fund which peculiarly belongs to the sovereign\nor commonwealth, and which is independent of the revenue of the people;\nor, secondly, from the revenue of the people.\n\n\nPART I. Of the Funds, or Sources, of Revenue, which may peculiarly\nbelong to the Sovereign or Commonwealth.\n\nThe funds, or sources, of revenue, which may peculiarly belong to the\nsovereign or commonwealth, must consist, either in stock, or in land.\n\nThe sovereign, like, any other owner of stock, may derive a revenue from\nit, either by employing it himself, or by lending it. His revenue is, in\nthe one case, profit, in the other interest.\n\nThe revenue of a Tartar or Arabian chief consists in profit. It arises\nprincipally from the milk and increase of his own herds and flocks,\nof which he himself superintends the management, and is the principal\nshepherd or herdsman of his own horde or tribe. It is, however, in this\nearliest and rudest state of civil government only, that profit has ever\nmade the principal part of the public revenue of a monarchical state.\n\nSmall republics have sometimes derived a considerable revenue from the\nprofit of mercantile projects. The republic of Hamburgh is said to do\nso from the profits of a public wine-cellar and apothecary's shop. {See\nMemoires concernant les Droits et Impositions en Europe, tome i. page\n73. This work was compiled by the order of the court, for the use of a\ncommission employed for some years past in considering the proper means\nfor reforming the finances of France. The account of the French taxes,\nwhich takes up three volumes in quarto, may be regarded as perfectly\nauthentic. That of those of other European nations was compiled from\nsuch information as the French ministers at the different courts could\nprocure. It is much shorter, and probably not quite so exact as that\nof the French taxes.} That state cannot be very great, of which the\nsovereign has leisure to carry on the trade of a wine-merchant or an\napothecary. The profit of a public bank has been a source of revenue to\nmore considerable states. It has been so, not only to Hamburgh, but to\nVenice and Amsterdam. A revenue of this kind has even by some people\nbeen thought not below the attention of so great an empire as that of\nGreat Britain. Reckoning the ordinary dividend of the bank of England at\nfive and a-half per cent., and its capital at ten millions seven hundred\nand eighty thousand pounds, the neat annual profit, after paying the\nexpense of management, must amount, it is said, to five hundred and\nninety-two thousand nine hundred pounds. Government, it is pretended,\ncould borrow this capital at three per cent. interest, and, by taking\nthe management of the bank into its own hands, might make a clear profit\nof two hundred and sixty-nine thousand five hundred pounds a-year. The\norderly, vigilant, and parsimonious administration of such aristocracies\nas those of Venice and Amsterdam, is extremely proper, it appears from\nexperience, for the management of a mercantile project of this kind. But\nwhether such a government us that of England, which, whatever may be\nits virtues, has never been famous for good economy; which, in time of\npeace, has generally conducted itself with the slothful and negligent\nprofusion that is, perhaps, natural to monarchies; and, in time of\nwar, has constantly acted with all the thoughtless extravagance that\ndemocracies are apt to fall into, could be safely trusted with the\nmanagement of such a project, must at least be a good deal more\ndoubtful.\n\nThe post-office is properly a mercantile project. The government\nadvances the expense of establishing the different offices, and of\nbuying or hiring the necessary horses or carriages, and is repaid, with\na large profit, by the duties upon what is carried. It is, perhaps,\nthe only mercantile project which has been successfully managed by, I\nbelieve, every sort of government. The capital to be advanced is not\nvery considerable. There is no mystery in the business. The returns are\nnot only certain but immediate.\n\nPrinces, however, have frequently engaged in many other mercantile\nprojects, and have been willing, like private persons, to mend their\nfortunes, by becoming adventurers in the common branches of trade. They\nhave scarce ever succeeded. The profusion with which the affairs of\nprinces are always managed, renders it almost impossible that they\nshould. The agents of a prince regard the wealth of their master as\ninexhaustible; are careless at what price they buy, are careless at what\nprice they sell, are careless at what expense they transport his\ngoods from one place to another. Those agents frequently live with the\nprofusion of princes; and sometimes, too, in spite of that profusion,\nand by a proper method of making up their accounts, acquire the fortunes\nof princes. It was thus, as we are told by Machiavel, that the agents\nof Lorenzo of Medicis, not a prince of mean abilities, carried on his\ntrade. The republic of Florence was several times obliged to pay\nthe debt into which their extravagance had involved him. He found\nit convenient, accordingly to give up the business of merchant, the\nbusiness to which his family had originally owed their fortune, and,\nin the latter part of his life, to employ both what remained of that\nfortune, and the revenue of the state, of which he had the disposal, in\nprojects and expenses more suitable to his station.\n\nNo two characters seem more inconsistent than those of trader and\nsovereign. If the trading spirit of the English East India company\nrenders them very bad sovereigns, the spirit of sovereignty seems to\nhave rendered them equally bad traders. While they were traders only,\nthey managed their trade successfully, and were able to pay from their\nprofits a moderate dividend to the proprietors of their stock. Since\nthey became sovereigns, with a revenue which, it is said, was originally\nmore than three millions sterling, they have been obliged to beg\nthe ordinary assistance of government, in order to avoid immediate\nbankruptcy. In their former situation, their servants in India\nconsidered themselves as the clerks of merchants; in their present\nsituation, those servants consider themselves as the ministers of\nsovereigns.\n\nA state may sometimes derive some part of its public revenue from the\ninterest of money, as well as from the profits of stock. If it has\namassed a treasure, it may lend a part of that treasure, either to\nforeign states, or to its own subjects.\n\nThe canton of Berne derives a considerable revenue by lending a part\nof its treasure to foreign states, that is, by placing it in the public\nfunds of the different indebted nations of Europe, chiefly in those of\nFrance and England. The security of this revenue must depend, first,\nupon the security of the funds in which it is placed, or upon the good\nfaith of the government which has the management of them; and, secondly,\nupon the certainty or probability of the continuance of peace with the\ndebtor nation. In the case of a war, the very first act of hostility on\nthe part of the debtor nation might be the forfeiture of the funds of\nits credit. This policy of lending money to foreign states is, so far\nas I know peculiar to the canton of Berne.\n\nThe city of Hamburgh {See Memoire concernant les Droites et Impositions\nen Europe tome i p. 73.}has established a sort of public pawn-shop,\nwhich lends money to the subjects of the state, upon pledges, at six per\ncent. interest. This pawn-shop, or lombard, as it is called, affords a\nrevenue, it is pretended, to the state, of a hundred and fifty thousand\ncrowns, which, at four and sixpence the crown, amounts to £33,750\nsterling.\n\nThe government of Pennsylvania, without amassing any treasure, invented\na method of lending, not money, indeed, but what is equivalent to money,\nto its subjects. By advancing to private people, at interest, and upon\nland security to double the value, paper bills of credit, to be redeemed\nfifteen years after their date; and, in the mean time, made transferable\nfrom hand to hand, like banknotes, and declared by act of assembly to\nbe a legal tender in all payments from one inhabitant of the province\nto another, it raised a moderate revenue, which went a considerable way\ntowards defraying an annual expense of about £4,500, the whole ordinary\nexpense of that frugal and orderly government. The success of an\nexpedient of this kind must have depended upon three different\ncircumstances: first, upon the demand for some other instrument of\ncommerce, besides gold and silver money, or upon the demand for such a\nquantity of consumable stock as could not be had without sending abroad\nthe greater part of their gold and silver money, in order to purchase\nit; secondly, upon the good credit of the government which made use\nof this expedient; and, thirdly, upon the moderation with which it was\nused, the whole value of the paper bills of credit never exceeding\nthat of the gold and silver money which would have been necessary for\ncarrying on their circulation, had there been no paper bills of credit.\nThe same expedient was, upon different occasions, adopted by several\nother American colonies; but, from want of this moderation, it produced,\nin the greater part of them, much more disorder than conveniency.\n\nThe unstable and perishable nature of stock and credit, however, renders\nthem unfit to be trusted to as the principal funds of that sure, steady,\nand permanent revenue, which can alone give security and dignity to\ngovernment. The government of no great nation, that was advanced beyond\nthe shepherd state, seems ever to have derived the greater part of its\npublic revenue from such sources.\n\nLand is a fund of more stable and permanent nature; and the rent of\npublic lands, accordingly, has been the principal source of the public\nrevenue of many a great nation that was much advanced beyond the\nshepherd state. From the produce or rent of the public lands, the\nancient republics of Greece and Italy derived for a long the the greater\npart of that revenue which defrayed the necessary expenses of the\ncommonwealth. The rent of the crown lands constituted for a long time\nthe greater part of the revenue of the ancient sovereigns of Europe.\n\nWar, and the preparation for war, are the two circumstances which, in\nmodern times, occasion the greater part of the necessary expense or all\ngreat states. But in the ancient republics of Greece and Italy, every\ncitizen was a soldier, and both served, and prepared himself for\nservice, at his own expense. Neither of those two circumstances,\ntherefore, could occasion any very considerable expense to the state.\nThe rent of a very moderate landed estate might be fully sufficient for\ndefraying all the other necessary expenses of government.\n\nIn the ancient monarchies of Europe, the manners and customs of the time\nsufficiently prepared the great body of the people for war; and when\nthey took the field, they were, by the condition of their feudal\ntenures, to be maintained either at their own expense, or at that\nof their immediate lords, without bringing any new charge upon the\nsovereign. The other expenses of government were, the greater part of\nthem, very moderate. The administration of justice, it has been shewn,\ninstead of being a cause of expense was a source of revenue. The labour\nof the country people, for three days before, and for three days after,\nharvest, was thought a fund sufficient for making and maintaining all\nthe bridges, highways, and other public works, which the commerce of the\ncountry was supposed to require. In those days the principal expense\nof the sovereign seems to have consisted in the maintenance of his own\nfamily and household. The officers of his household, accordingly, were\nthen the great officers of state. The lord treasurer received his rents.\nThe lord steward and lord chamberlain looked after the expense of his\nfamily. The care of his stables was committed to the lord constable and\nthe lord marshal. His houses were all built in the form of castles,\nand seem to have been the principal fortresses which he possessed. The\nkeepers of those houses or castles might be considered as a sort of\nmilitary governors. They seem to have been the only military\nofficers whom it was necessary to maintain in time of peace. In these\ncircumstances, the rent of a great landed estate might, upon ordinary\noccasions, very well defray all the necessary expenses of government.\n\nIn the present state of the greater part of the civilized monarchies\nof Europe, the rent of all the lands in the country, managed as they\nprobably would be, if they all belonged to one proprietor, would scarce,\nperhaps, amount to the ordinary revenue which they levy upon the people\neven in peaceable times. The ordinary revenue of Great Britain, for\nexample, including not only what is necessary for defraying the current\nexpense of the year, but for paying the interest of the public debts,\nand for sinking a part of the capital of those debts, amounts to upwards\nof ten millions a-year. But the land tax, at four shillings in the\npound, falls short of two millions a-year. This land tax, as it is\ncalled however, is supposed to be one-fifth, not only of the rent of all\nthe land, but of that of all the houses, and of the interest of all the\ncapital stock of Great Britain, that part of it only excepted which\nis either lent to the public, or employed as farming stock in the\ncultivation of land. A very considerable part of the produce of this tax\narises from the rent of houses and the interest of capital stock. The\nland tax of the city of London, for example, at four shillings in the\npound, amounts to £123,399: 6: 7; that of the city of Westminster to\n£63,092: 1: 5; that of the palaces of Whitehall and St. James's, to\n£30,754: 6: 3. A certain proportion of the land tax is, in the same\nmanner, assessed upon all the other cities and towns corporate in the\nkingdom; and arises almost altogether, either from the rent of houses,\nor from what is supposed to be the interest of trading and capital\nstock. According to the estimation, therefore, by which Great Britain is\nrated to the land tax, the whole mass of revenue arising from the rent\nof all the lands, from that of all the houses, and from the interest\nof all the capital stock, that part of it only excepted which is either\nlent to the public, or employed in the cultivation of land, does\nnot exceed ten millions sterling a-year, the ordinary revenue which\ngovernment levies upon the people, even in peaceable times. The\nestimation by which Great Britain is rated to the land tax is, no doubt,\ntaking the whole kingdom at an average, very much below the real value;\nthough in several particular counties and districts it is said to be\nnearly equal to that value. The rent of the lands alone, exclusive of\nthat of houses and of the interest of stock, has by many people been\nestimated at twenty millions; an estimation made in a great measure at\nrandom, and which, I apprehend, is as likely to be above as below the\ntruth. But if the lands of Great Britain, in the present state of their\ncultivation, do not afford a rent of more than twenty millions a-year,\nthey could not well afford the half, most probably not the fourth part\nof that rent, if they all belonged to a single proprietor, and were put\nunder the negligent, expensive, and oppressive management of his factors\nand agents. The crown lands of Great Britain do not at present afford\nthe fourth part of the rent which could probably be drawn from them if\nthey were the property of private persons. If the crown lands were more\nextensive, it is probable, they would be still worse managed.\n\nThe revenue which the great body of the people derives from land is, in\nproportion, not to the rent, but to the produce of the land. The whole\nannual produce of the land of every country, if we except what is\nreserved for seed, is either annually consumed by the great body of\nthe people, or exchanged for something else that is consumed by\nthem. Whatever keeps down the produce of the land below what it would\notherwise rise to, keeps down the revenue of the great body of the\npeople, still more than it does that of the proprietors of land.\nThe rent of land, that portion of the produce which belongs to the\nproprietors, is scarce anywhere in Great Britain supposed to be more\nthan a third part of the whole produce. If the land which, in one state\nof cultivation, affords a revenue of ten millions sterling a-year, would\nin another afford a rent of twenty millions; the rent being, in\nboth cases, supposed a third part of the produce, the revenue of the\nproprietors would be less than it otherwise might be, by ten millions\na-year only; but the revenue of the great hotly of the people would be\nless than it otherwise might be, by thirty millions a-year, deducting\nonly what would be necessary for seed. The population of the country\nwould be less by the number of people which thirty millions a-year,\ndeducting always the seed, could maintain, according to the particular\nmode of living, and expense which might take place in the different\nranks of men, among whom the remainder was distributed.\n\nThough there is not at present in Europe, any civilized state of any\nkind which derives the greater part of its public revenue from the rent\nof lands which are the property of the state; yet, in all the great\nmonarchies of Europe, there are still many large tracts of land which\nbelong to the crown. They are generally forest, and sometimes forests\nwhere, after travelling several miles, you will scarce find a single\ntree; a mere waste and loss of country, in respect both of produce and\npopulation. In every great monarchy of Europe, the sale of the crown\nlands would produce a very large sum of money, which, if applied to the\npayment of the public debts, would deliver from mortgage a much greater\nrevenue than any which those lands have even afforded to the crown.\nIn countries where lands, improved and cultivated very highly, and\nyielding, at the time of sale, as great a rent as can easily be got\nfrom them, commonly sell at thirty years purchase; the unimproved,\nuncultivated, and low-rented crown lands, might well be expected to sell\nat forty, fifty, or sixty years purchase. The crown might immediately\nenjoy the revenue which this great price would redeem from mortgage. In\nthe course of a few years, it would probably enjoy another revenue. When\nthe crown lands had become private property, they would, in the course\nof a few years, become well improved and well cultivated. The increase\nof their produce would increase the population of the country, by\naugmenting the revenue and consumption of the people. But the revenue\nwhich the crown derives from the duties or custom and excise, would\nnecessarily increase with the revenue and consumption of the people.\n\nThe revenue which, in any civilized monarchy, the crown derives from\nthe crown lands, though it appears to cost nothing to individuals, in\nreality costs more to the society than perhaps any other equal revenue\nwhich the crown enjoys. It would, in all cases, be for the interest of\nthe society, to replace this revenue to the crown by some other equal\nrevenue, and to divide the lands among the people, which could not well\nbe done better, perhaps, than by exposing them to public sale.\n\nLands, for the purposes of pleasure and magnificence, parks, gardens,\npublic walks, etc. possessions which are everywhere considered as causes\nof expense, not as sources of revenue, seem to be the only lands which,\nin a great and civilized monarchy, ought to belong to the crown.\n\nPublic stock and public lands, therefore, the two sources of revenue\nwhich may peculiarly belong to the sovereign or commonwealth, being both\nimproper and insufficient funds for defraying the necessary expense of\nany great and civilized state; it remains that this expense must, the\ngreater part of it, be defrayed by taxes of one kind or another; the\npeople contributing a part of their own private revenue, in order to\nmake up a public revenue to the sovereign or commonwealth.\n\n\n\nPART II. Of Taxes.\n\nThe private revenue of individuals, it has been shown in the first book\nof this Inquiry, arises, ultimately from three different sources; rent,\nprofit, and wages. Every tax must finally be paid from some one or\nother of those three different sources of revenue, or from all of them\nindifferently. I shall endeavour to give the best account I can, first,\nof those taxes which, it is intended should fall upon rent; secondly, of\nthose which, it is intended should fall upon profit; thirdly, of those\nwhich, it is intended should fall upon wages; and fourthly, of those\nwhich, it is intended should fall indifferently upon all those three\ndifferent sources of private revenue. The particular consideration of\neach of these four different sorts of taxes will divide the second part\nof the present chapter into four articles, three of which will require\nseveral other subdivisions. Many of these taxes, it will appear from\nthe following review, are not finally paid from the fund, or source of\nrevenue, upon which it is intended they should fall.\n\nBefore I enter upon the examination of particular taxes, it is necessary\nto premise the four following maximis with regard to taxes in general.\n\n\n1. The subjects of every state ought to contribute towards the support\nof the government, as nearly as possible, in proportion to their\nrespective abilities; that is, in proportion to the revenue which they\nrespectively enjoy under the protection of the state. The expense of\ngovernment to the individuals of a great nation, is like the expense of\nmanagement to the joint tenants of a great estate, who are all obliged\nto contribute in proportion to their respective interests in the estate.\nIn the observation or neglect of this maxim, consists what is called the\nequality or inequality of taxation. Every tax, it must be observed once\nfor all, which falls finally upon one only of the three sorts of revenue\nabove mentioned, is necessarily unequal, in so far as it does not affect\nthe other two. In the following examination of different taxes, I shall\nseldom take much farther notice of this sort of inequality; but shall,\nin most cases, confine my observations to that inequality which is\noccasioned by a particular tax falling unequally upon that particular\nsort of private revenue which is affected by it.\n\n2. The tax which each individual is bound to pay, ought to be certain\nand not arbitrary. The time of payment, the manner of payment, the\nquantity to be paid, ought all to be clear and plain to the contributor,\nand to every other person. Where it is otherwise, every person subject\nto the tax is put more or less in the power of the tax-gatherer, who can\neither aggravate the tax upon any obnoxious contributor, or extort, by\nthe terror of such aggravation, some present or perquisite to himself.\nThe uncertainty of taxation encourages the insolence, and favours the\ncorruption, of an order of men who are naturally unpopular, even where\nthey are neither insolent nor corrupt. The certainty of what each\nindividual ought to pay is, in taxation, a matter of so great\nimportance, that a very considerable degree of inequality, it appears,\nI believe, from the experience of all nations, is not near so great an\nevil as a very small degree of uncertainty.\n\n3. Every tax ought to be levied at the time, or in the manner, in which\nit is most likely to be convenient for the contributor to pay it. A tax\nupon the rent of land or of houses, payable at the same term at which\nsuch rents are usually paid, is levied at the time when it is most\nlikely to be convenient for the contributor to pay; or when he is most\nlikely to have wherewithall to pay. Taxes upon such consumable goods\nas are articles of luxury, are all finally paid by the consumer, and\ngenerally in a manner that is very convenient for him. He pays them\nby little and little, as he has occasion to buy the goods. As he is at\nliberty too, either to buy or not to buy, as he pleases, it must be his\nown fault if he ever suffers any considerable inconveniency from such\ntaxes.\n\n4. Every tax ought to be so contrived, as both to take out and to keep\nout of the pockets of the people as little as possible, over and above\nwhat it brings into the public treasury of the state. A tax may either\ntake out or keep out of the pockets of the people a great deal more than\nit brings into the public treasury, in the four following ways. First,\nthe levying of it may require a great number of officers, whose salaries\nmay eat up the greater part of the produce of the tax, and whose\nperquisites may impose another additional tax upon the people. Secondly,\nit may obstruct the industry of the people, and discourage them from\napplying to certain branches of business which might give maintenance\nand employment to great multitudes. While it obliges the people to pay,\nit may thus diminish, or perhaps destroy, some of the funds which might\nenable them more easily to do so. Thirdly, by the forfeitures and\nother penalties which those unfortunate individuals incur, who attempt\nunsuccessfully to evade the tax, it may frequently ruin them, and\nthereby put an end to the benefit which the community might have\nreceived from the employment of their capitals. An injudicious tax\noffers a great temptation to smuggling. But the penalties of smuggling\nmust arise in proportion to the temptation. The law, contrary to all the\nordinary principles of justice, first creates the temptation, and then\npunishes those who yield to it; and it commonly enhances the punishment,\ntoo, in proportion to the very circumstance which ought certainly to\nalleviate it, the temptation to commit the crime. {See Sketches of the\nHistory of Man page 474, and Seq.} Fourthly, by subjecting the people to\nthe frequent visits and the odious examination of the tax-gatherers, it\nmay expose them to much unnecessary trouble, vexation, and oppression;\nand though vexation is not, strictly speaking, expense, it is certainly\nequivalent to the expense at which every man would be willing to redeem\nhimself from it. It is in some one or other of these four different\nways, that taxes are frequently so much more burdensome to the people\nthan they are beneficial to the sovereign.\n\nThe evident justice and utility of the foregoing maxims have recommended\nthem, more or less, to the attention of all nations. All nations have\nendeavoured, to the best of their judgment, to render their taxes\nas equal as they could contrive; as certain, as convenient to the\ncontributor, both the time and the mode of payment, and in proportion\nto the revenue which they brought to the prince, as little burdensome\nto the people. The following short review of some of the principal taxes\nwhich have taken place in different ages and countries, will show, that\nthe endeavours of all nations have not in this respect been equally\nsuccessful.\n\n\nARTICLE I.--Taxes upon Rent--Taxes upon the Rent of Land.\n\nA tax upon the rent of land may either be imposed according to a certain\ncanon, every district being valued at a curtain rent, which valuation is\nnot afterwards to be altered; or it may be imposed in such a manner, as\nto vary with every variation in the real rent of the land, and to rise\nor fall with the improvement or declension of its cultivation.\n\nA land tax which, like that of Great Britain, is assessed upon each\ndistrict according to a certain invariable canon, though it should\nbe equal at the time of its first establishment, necessarily becomes\nunequal in process of time, according to the unequal degrees of\nimprovement or neglect in the cultivation of the different parts of the\ncountry. In England, the valuation, according to which the different\ncounties and parishes were assessed to the land tax by the 4th of\nWilliam and Mary, was very unequal even at its first establishment.\nThis tax, therefore, so far offends against the first of the four maxims\nabove mentioned. It is perfectly agreeable to the other three. It is\nperfectly certain. The time of payment for the tax, being the same as\nthat for the rent, is as convenient as it can be to the contributor.\nThough the landlord is, in all cases, the real contributor, the tax\nis commonly advanced by the tenant, to whom the landlord is obliged\nto allow it in the payment of the rent. This tax is levied by a much\nsmaller number of officers than any other which affords nearly the same\nrevenue. As the tax upon each district does not rise with the rise of\nthe rent, the sovereign does not share in the profits of the landlord's\nimprovements. Those improvements sometimes contribute, indeed, to the\ndischarge of the other landlords of the district. But the aggravation of\nthe tax, which this may sometimes occasion upon a particular estate, is\nalways so very small, that it never can discourage those improvements,\nnor keep down the produce of the land below what it would otherwise rise\nto. As it has no tendency to diminish the quantity, it can have none to\nraise the price of that produce. It does not obstruct the industry of\nthe people; it subjects the landlord to no other inconveniency besides\nthe unavoidable one of paying the tax. The advantage, however, which the\nland-lord has derived from the invariable constancy of the valuation, by\nwhich all the lands of Great Britain are rated to the land-tax, has been\nprincipally owing to some circumstances altogether extraneous to the\nnature of the tax.\n\nIt has been owing in part, to the great prosperity of almost every part\nof the country, the rents of almost all the estates of Great Britain\nhaving, since the time when this valuation was first established, been\ncontinually rising, and scarce any of them having fallen. The landlords,\ntherefore, have almost all gained the difference between the tax which\nthey would have paid, according to the present rent of their estates,\nand that which they actually pay according to the ancient valuation.\nHad the state of the country been different, had rents been gradually\nfalling in consequence of the declension of cultivation, the landlords\nwould almost all have lost this difference. In the state of things which\nhas happened to take place since the revolution, the constancy of the\nvaluation has been advantageous to the landlord and hurtful to\nthe sovereign. In a different state of things it might have been\nadvantageous to the sovereign and hurtful to the landlord.\n\nAs the tax is made payable in money, so the valuation of the land is\nexpressed in money. Since the establishment of this valuation, the value\nof silver has been pretty uniform, and there has been no alteration in\nthe standard of the coin, either as to weight or fineness. Had silver\nrisen considerably in its value, as it seems to have done in the course\nof the two centuries which preceded the discovery of the mines\nof America, the constancy of the valuation might have proved very\noppressive to the landlord. Had silver fallen considerably in its value,\nas it certainly did for about a century at least after the discovery\nof those mines, the same constancy of valuation would have reduced very\nmuch this branch of the revenue of the sovereign. Had any considerable\nalteration been made in the standard of the money, either by sinking the\nsame quantity of silver to a lower denomination, or by raising it to\na higher; had an ounce of silver, for example, instead of being coined\ninto five shillings and two pence, been coined either into pieces which\nbore so low a denomination as two shillings and seven pence, or into\npieces which bore so high a one as ten shillings and four pence, it\nwould, in the one case, have hurt the revenue of the proprietor, in the\nother that of the sovereign.\n\nIn circumstances, therefore, somewhat different from those which have\nactually taken place, this constancy of valuation might have been a very\ngreat inconveniency, either to the contributors or to the commonwealth.\nIn the course of ages, such circumstances, however, must at some time or\nother happen. But though empires, like all the other works of men, have\nall hitherto proved mortal, yet every empire aims at immortality. Every\nconstitution, therefore, which it is meant should be as permanent as\nthe empire itself, ought to be convenient, not in certain circumstances\nonly, but in all circumstances; or ought to be suited, not to those\ncircumstances which are transitory, occasional, or accidental, but to\nthose which are necessary, and therefore always the same.\n\nA tax upon the rent of land, which varies with every variation of the\nrent, or which rises and falls according to the improvement or neglect\nof cultivation, is recommended by that sect of men of letters in France,\nwho call themselves the economists, as the most equitable of all taxes.\nAll taxes, they pretend, fall ultimately upon the rent of land, and\nought, therefore, to be imposed equally upon the fund which must finally\npay them. That all taxes ought to fall as equally as possible upon\nthe fund which must finally pay them, is certainly true. But without\nentering into the disagreeable discussion of the metaphysical arguments\nby which they support their very ingenious theory, it will sufficiently\nappear, from the following review, what are the taxes which fall finally\nupon the rent of the land, and what are those which fall finally upon\nsome other fund.\n\nIn the Venetian territory, all the arable lands which are given in lease\nto farmers are taxed at a tenth of the rent. {Memoires concernant les\nDroits, p. 240, 241.} The leases are recorded in a public register,\nwhich is kept by the officers of revenue in each province or district.\nWhen the proprietor cultivates his own lands, they are valued according\nto an equitable estimation, and he is allowed a deduction of one-fifth\nof the tax; so that for such land he pays only eight instead of ten per\ncent. of the supposed rent.\n\nA land-tax of this kind is certainly more equal than the land-tax\nof England. It might not, perhaps, be altogether so certain, and the\nassessment of the tax might frequently occasion a good deal more trouble\nto the landlord. It might, too, be a good deal more expensive in the\nlevying.\n\nSuch a system of administration, however, might, perhaps, be contrived,\nas would in a great measure both prevent this uncertainty, and moderate\nthis expense.\n\nThe landlord and tenant, for example, might jointly be obliged to record\ntheir lease in a public register. Proper penalties might be enacted\nagainst concealing or misrepresenting any of the conditions; and if\npart of those penalties were to be paid to either of the two parties\nwho informed against and convicted the other of such concealment or\nmisrepresentation, it would effectually deter them from combining\ntogether in order to defraud the public revenue. All the conditions of\nthe lease might be sufficiently known from such a record.\n\nSome landlords, instead of raising the rent, take a fine for the renewal\nof the lease. This practice is, in most cases, the expedient of a\nspendthrift, who, for a sum of ready money sells a future revenue of\nmuch greater value. It is, in most cases, therefore, hurtful to the\nlandlord; it is frequently hurtful to the tenant; and it is always\nhurtful to the community. It frequently takes from the tenant so great\na part of his capital, and thereby diminishes so much his ability to\ncultivate the land, that he finds it more difficult to pay a small\nrent than it would otherwise have been to pay a great one. Whatever\ndiminishes his ability to cultivate, necessarily keeps down, below what\nit would otherwise have been, the most important part of the revenue of\nthe community. By rendering the tax upon such fines a good deal heavier\nthan upon the ordinary rent, this hurtful practice might be discouraged,\nto the no small advantage of all the different parties concerned, of the\nlandlord, of the tenant, of the sovereign, and of the whole community.\n\nSome leases prescribe to the tenant a certain mode of cultivation, and a\ncertain succession of crops, during the whole continuance of the lease.\nThis condition, which is generally the effect of the landlord's\nconceit of his own superior knowledge (a conceit in most cases very\nill-founded), ought always to be considered as an additional rent, as a\nrent in service, instead of a rent in money. In order to discourage the\npractice, which is generally a foolish one, this species of rent might\nbe valued rather high, and consequently taxed somewhat higher than\ncommon money-rents.\n\nSome landlords, instead of a rent in money, require a rent in kind, in\ncorn, cattle, poultry, wine, oil, etc.; others, again, require a rent\nin service. Such rents are always more hurtful to the tenant than\nbeneficial to the landlord. They either take more, or keep more out\nof the pocket of the former, than they put into that of the latter. In\nevery country where they take place, the tenants are poor and beggarly,\npretty much according to the degree in which they take place. By\nvaluing, in the same manner, such rents rather high, and consequently\ntaxing them somewhat higher than common money-rents, a practice which\nis hurtful to the whole community, might, perhaps, be sufficiently\ndiscouraged.\n\nWhen the landlord chose to occupy himself a part of his own lands,\nthe rent might be valued according to an equitable arbitration of the\nfarmers and landlords in the neighbourhood, and a moderate abatement of\nthe tax might be granted to him, in the same manner as in the Venetian\nterritory, provided the rent of the lands which he occupied did not\nexceed a certain sum. It is of importance that the landlord should be\nencouraged to cultivate a part of his own land. His capital is generally\ngreater than that of the tenant, and, with less skill, he can frequently\nraise a greater produce. The landlord can afford to try experiments, and\nis generally disposed to do so. His unsuccessful experiments occasion\nonly a moderate loss to himself. His successful ones contribute to the\nimprovement and better cultivation of the whole country. It might be of\nimportance, however, that the abatement of the tax should encourage\nhim to cultivate to a certain extent only. If the landlords should, the\ngreater part of them, be tempted to farm the whole of their own lands,\nthe country (instead of sober and industrious tenants, who are bound by\ntheir own interest to cultivate as well as their capital and skill will\nallow them) would be filled with idle and profligate bailiffs, whose\nabusive management would soon degrade the cultivation, and reduce the\nannual produce of the land, to the diminution, not only of the revenue\nof their masters, but of the most important part of that of the whole\nsociety.\n\nSuch a system of administration might, perhaps, free a tax of this kind\nfrom any degree of uncertainty, which could occasion either oppression\nor inconveniency to the contributor; and might, at the same time, serve\nto introduce into the common management of land such a plan of policy\nas might contribute a good deal to the general improvement and good\ncultivation of the country.\n\nThe expense of levying a land-tax, which varied with every variation of\nthe rent, would, no doubt, be somewhat greater than that of levying one\nwhich was always rated according to a fixed valuation. Some additional\nexpense would necessarily be incurred, both by the different\nregister-offices which it would be proper to establish in the different\ndistricts of the country, and by the different valuations which might\noccasionally be made of the lands which the proprietor chose to occupy\nhimself. The expense of all this, however, might be very moderate, and\nmuch below what is incurred in the levying of many other taxes, which\nafford a very inconsiderable revenue in comparison of what might easily\nbe drawn from a tax of this kind.\n\nThe discouragement which a variable land-tax of this kind might give to\nthe improvement of land, seems to be the most important objection which\ncan be made to it. The landlord would certainly be less disposed to\nimprove, when the sovereign, who contributed nothing to the expense, was\nto share in the profit of the improvement. Even this objection might,\nperhaps, be obviated, by allowing the landlord, before he began his\nimprovement, to ascertain, in conjunction with the officers of revenue,\nthe actual value of his lands, according to the equitable arbitration of\na certain number of landlords and farmers in the neighbourhood, equally\nchosen by both parties: and by rating him, according to this valuation,\nfor such a number of years as might be fully sufficient for his complete\nindemnification. To draw the attention of the sovereign towards the\nimprovement of the land, from a regard to the increase of his own\nrevenue, is one or the principal advantages proposed by this species of\nland-tax. The term, therefore, allowed, for the indemnification of the\nlandlord, ought not to be a great deal longer than what was necessary\nfor that purpose, lest the remoteness of the interest should discourage\ntoo much this attention. It had better, however, be somewhat too long,\nthan in any respect too short. No incitement to the attention of the\nsovereign can ever counterbalance the smallest discouragement to that of\nthe landlord. The attention of the sovereign can be, at best, but a very\ngeneral and vague consideration of what is likely to contribute to the\nbetter cultivation of the greater part of his dominions. The attention\nof the landlord is a particular and minute consideration of what is\nlikely to be the most advantageous application of every inch of ground\nupon his estate. The principal attention of the sovereign ought to be,\nto encourage, by every means in his power, the attention both of\nthe landlord and of the farmer, by allowing both to pursue their own\ninterest in their own way, and according to their own judgment; by\ngiving to both the most perfect security that they shall enjoy the full\nrecompence of their own industry; and by procuring to both the most\nextensive market for every part of their produce, in consequence of\nestablishing the easiest and safest communications, both by land and\nby water, through every part of his own dominions, as well as the most\nunbounded freedom of exportation to the dominions of all other princes.\n\nIf, by such a system of administration, a tax of this kind could be so\nmanaged as to give, not only no discouragement, but, on the contrary,\nsome encouragement to the improvement or land, it does not appear likely\nto occasion any other inconveniency to the landlord, except always the\nunavoidable one of being obliged to pay the tax. In all the variations\nof the state of the society, in the improvement and in the declension\nof agriculture; in all the variations in the value of silver, and in all\nthose in the standard of the coin, a tax of this kind would, of its own\naccord, and without any attention of government, readily suit itself to\nthe actual situation of things, and would be equally just and equitable\nin all those different changes. It would, therefore, be much more proper\nto be established as a perpetual and unalterable regulation, or as what\nis called a fundamental law of the commonwealth, than any tax which was\nalways to be levied according to a certain valuation.\n\nSome states, instead of the simple and obvious expedient of a register\nof leases, have had recourse to the laborious and expensive one of an\nactual survey and valuation of all the lands in the country. They have\nsuspected, probably, that the lessor and lessee, in order to defraud the\npublic revenue, might combine to conceal the real terms of the lease.\nDoomsday-book seems to have been the result of a very accurate survey of\nthis kind.\n\nIn the ancient dominions of the king of Prussia, the land-tax is\nassessed according to an actual survey and valuation, which is reviewed\nand altered from time to time. {Memoires concurent les Droits, etc.\ntom, i. p. 114, 115, 116, etc.} According to that valuation, the lay\nproprietors pay from twenty to twenty-five per cent. of their revenue;\necclesiastics from forty to forty-five per cent. The survey and\nvaluation of Silesia was made by order of the present king, it is said,\nwith great accuracy. According to that valuation, the lands belonging to\nthe bishop of Breslaw are taxed at twenty-five per cent. of their rent.\nThe other revenues of the ecclesiastics of both religions at fifty per\ncent. The commanderies of the Teutonic order, and of that of Malta,\nat forty per cent. Lands held by a noble tenure, at thirty-eight and\none-third per cent. Lands held by a base tenure, at thirty-five and\none-third per cent.\n\nThe survey and valuation of Bohemia is said to have been the work of\nmore than a hundred years. It was not perfected till after the peace of\n1748, by the orders of the present empress queen. {Id. tom i. p.85, 84.}\nThe survey of the duchy of Milan, which was begun in the time of Charles\nVI., was not perfected till after 1760 It is esteemed one of the most\naccurate that has ever been made. The survey of Savoy and Piedmont was\nexecuted under the orders of the late king of Sardinia. {Id. p. 280,\netc.; also p, 287. etc. to 316.}\n\nIn the dominions of the king of Prussia, the revenue of the church\nis taxed much higher than that of lay proprietors. The revenue of the\nchurch is, the greater part of it, a burden upon the rent of land. It\nseldom happens that any part of it is applied towards the improvement\nof land; or is so employed as to contribute, in any respect, towards\nincreasing the revenue of the great body of the people. His Prussian\nmajesty had probably, upon that account, thought it reasonable that it\nshould contribute a good deal more towards relieving the exigencies of\nthe state. In some countries, the lands of the church are exempted from\nall taxes. In others, they are taxed more lightly than other lands. In\nthe duchy of Milan, the lands which the church possessed before 1575,\nare rated to the tax at a third only or their value.\n\nIn Silesia, lands held by a noble tenure are taxed three per cent.\nhigher than those held by a base tenure. The honours and privileges of\ndifferent kinds annexed to the former, his Prussian majesty had probably\nimagined, would sufficiently compensate to the proprietor a small\naggravation of the tax; while, at the same time, the humiliating\ninferiority of the latter would be in some measure alleviated, by being\ntaxed somewhat more lightly. In other countries, the system of taxation,\ninstead of alleviating, aggravates this inequality. In the dominions of\nthe king of Sardinia, and in those provinces of France which are subject\nto what is called the real or predial taille, the tax falls altogether\nupon the lands held by a base tenure. Those held by a noble one are\nexempted.\n\nA land tax assessed according to a general survey and valuation, how\nequal soever it may be at first, must, in the course of a very moderate\nperiod of time, become unequal. To prevent its becoming so would require\nthe continual and painful attention of government to all the variations\nin the state and produce of every different farm in the country. The\ngovernments of Prussia, of Bohemia, of Sardinia, and of the duchy\nof Milan, actually exert an attention of this kind; an attention so\nunsuitable to the nature of government, that it is not likely to be of\nlong continuance, and which, if it is continued, will probably, in the\nlong-run, occasion much more trouble and vexation than it can possibly\nbring relief to the contributors.\n\nIn 1666, the generality of Montauban was assessed to the real or predial\ntaille, according, it is said, to a very exact survey and valuation.\n{Memoires concernant les Droits, etc. tom. ii p. 139, etc.} By 1727,\nthis assessment had become altogether unequal. In order to remedy this\ninconveniency, government has found no better expedient, than to impose\nupon the whole generality an additional tax of a hundred and twenty\nthousand livres. This additional tax is rated upon all the different\ndistricts subject to the taille according to the old assessment. But it\nis levied only upon those which, in the actual state of things, are by\nthat assessment under-taxed; and it is applied to the relief of those\nwhich, by the same assessment, are over-taxed. Two districts, for\nexample, one of which ought, in the actual state of things, to be taxed\nat nine hundred, the other at eleven hundred livres, are, by the old\nassessment, both taxed at a thousand livres. Both these districts are,\nby the additional tax, rated at eleven hundred livres each. But this\nadditional tax is levied only upon the district under-charged, and it is\napplied altogether to the relief of that overcharged, which consequently\npays only nine hundred livres. The government neither gains nor loses\nby the additional tax, which is applied altogether to remedy the\ninequalities arising from the old assessment. The application is pretty\nmuch regulated according to the discretion of the intendant of the\ngenerality, and must, therefore, be in a great measure arbitrary.\n\n\nTaxes which are proportioned, not in the Rent, but to the Produce of\nLand.\n\nTaxes upon the produce of land are, In reality, taxes upon the rent; and\nthough they may be originally advanced by the farmer, are finally paid\nby the landlord. When a certain portion of the produce is to be paid\naway for a tax, the farmer computes as well as he can, what the value\nof this portion is, one year with another, likely to amount to, and he\nmakes a proportionable abatement in the rent which he agrees to pay to\nthe landlord. There is no farmer who does not compute beforehand what\nthe church tythe, which is a land tax of this kind, is, one year with\nanother, likely to amount to.\n\nThe tythe, and every other land tax of this kind, under the appearance\nof perfect equality, are very unequal taxes; a certain portion of the\nproduce being in differrent situations, equivalent to a very different\nportion of the rent. In some very rich lands, the produce is so great,\nthat the one half of it is fully sufficient to replace to the farmer his\ncapital employed in cultivation, together with the ordinary profits of\nfarming stock in the neighbourhood. The other half, or, what comes to\nthe same thing, the value of the other half, he could afford to pay\nas rent to the landlord, if there was no tythe. But if a tenth of\nthe produce is taken from him in the way of tythe, he must require an\nabatement of the fifth part of his rent, otherwise he cannot get back\nhis capital with the ordinary profit. In this case, the rent of the\nlandlord, instead of amounting to a half, or five-tenths of the whole\nproduce, will amount only to four-tenths of it. In poorer lands, on\nthe contrary, the produce is sometimes so small, and the expense of\ncultivation so great, that it requires four-fifths of the whole produce,\nto replace to the farmer his capital with the ordinary profit. In this\ncase, though there was no tythe, the rent of the landlord could amount\nto no more than one-fifth or two-tenths of the whole produce. But if\nthe farmer pays one-tenth of the produce in the way of tythe, he must\nrequire an equal abatement of the rent of the landlord, which will thus\nbe reduced to one-tenth only of the whole produce. Upon the rent of rich\nlands the tythe may sometimes be a tax of no more than one-fifth part,\nor four shillings in the pound; whereas upon that of poorer lands, it\nmay sometimes be a tax of one half, or of ten shillings in the pound.\n\nThe tythe, as it is frequently a very unequal tax upon the rent, so\nit is always a great discouragement, both to the improvements of the\nlandlord, and to the cultivation of the farmer. The one cannot venture\nto make the most important, which are generally the most expensive\nimprovements; nor the other to raise the most valuable, which are\ngenerally, too, the most expensive crops; when the church, which lays\nout no part of the expense, is to share so very largely in the profit.\nThe cultivation of madder was, for a long time, confined by the tythe to\nthe United Provinces, which, being presbyterian countries, and upon that\naccount exempted from this destructive tax, enjoyed a sort of monopoly\nof that useful dyeing drug against the rest of Europe. The late attempts\nto introduce the culture of this plant into England, have been made only\nin consequence of the statute, which enacted that five shillings an acre\nshould be received in lieu of all manner of tythe upon madder.\n\nAs through the greater part of Europe, the church, so in many different\ncountries of Asia, the state, is principally supported by a land tax,\nproportioned not to the rent, but to the produce of the land. In China,\nthe principal revenue of the sovereign consists in a tenth part of the\nproduce of all the lands of the empire. This tenth part, however, is\nestimated so very moderately, that, in many provinces, it is said not\nto exceed a thirtieth part of the ordinary produce. The land tax or land\nrent which used to be paid to the Mahometan government of Bengal, before\nthat country fell into the hands of the English East India company, is\nsaid to have amounted to about a fifth part of the produce. The land tax\nof ancient Egypt is said likewise to have amounted to a fifth part.\n\nIn Asia, this sort of land tax is said to interest the sovereign in the\nimprovement and cultivation of land. The sovereigns of China, those of\nBengal while under the Mahometan govermnent, and those of ancient Egypt,\nare said, accordingly, to have been extremely attentive to the making\nand maintaining of good roads and navigable canals, in order to\nincrease, as much as possible, both the quantity and value of every part\nof the produce of the land, by procuring to every part of it the most\nextensive market which their own dominions could afford. The tythe\nof the church is divided into such small portions that no one of its\nproprietors can have any interest of this kind. The parson of a parish\ncould never find his account, in making a road or canal to a distant\npart of the country, in order to extend the market for the produce of\nhis own particular parish. Such taxes, when destined for the maintenance\nof the state, have some advantages, which may serve in some measure to\nbalance their inconveniency. When destined for the maintenance of the\nchurch, they are attended with nothing but inconveniency.\n\nTaxes upon the produce of land may be levied, either in kind, or,\naccording to a certain valuation in money.\n\nThe parson of a parish, or a gentleman of small fortune who lives upon\nhis estate, may sometimes, perhaps find some advantage in receiving,\nthe one his tythe, and the other his rent, in kind. The quantity to be\ncollected, and the district within which it is to be collected, are so\nsmall, that they both can oversee, with their own eyes, the collection\nand disposal of every part of what is due to them. A gentleman of great\nfortune, who lived in the capital, would be in danger of suffering much\nby the neglect, and more by the fraud, of his factors and agents, if the\nrents of an estate in a distant province were to be paid to him in this\nmanner. The loss of the sovereign, from the abuse and depredation of his\ntax-gatherers, would necessarily be much greater. The servants of the\nmost careless private person are, perhaps, more under the eye of their\nmaster than those of the most careful prince; and a public revenue,\nwhich was paid in kind, would suffer so much from the mismanagement\nof the collectors, that a very small part of what was levied upon the\npeople would ever arrive at the treasury of the prince. Some part of the\npublic revenue of China, however, is said to be paid in this manner. The\nmandarins and other tax-gatherers will, no doubt, find their advantage\nin continuing the practice of a payment, which is so much more liable to\nabuse than any payment in money.\n\nA tax upon the produce of land, which is levied in money, may be levied,\neither according to a valuation, which varies with all the variations of\nthe market price; or according to a fixed valuation, a bushel of wheat,\nfor example, being always valued at one and the same money price,\nwhatever may be the state of the market. The produce of a tax levied in\nthe former way will vary only according to the variations in the\nreal produce of the land, according to the improvement or neglect of\ncultivation. The produce of a tax levied in the latter way will vary,\nnot only according to the variations in the produce of the land, but\naccording both to those in the value of the precious metals, and those\nin the quantity of those metals which is at different times contained\nin coin of the same denomination. The produce of the former will always\nbear the same proportion to the value of the real produce of the land.\nThe produce of the latter may, at different times, bear very different\nproportions to that value.\n\nWhen, instead either of a certain portion of the produce of land, or of\nthe price of a certain portion, a certain sum of money is to be paid in\nfull compensation for all tax or tythe; the tax becomes, in this case,\nexactly of the same nature with the land tax of England. It neither\nrises nor falls with the rent of the land. It neither encourages nor\ndiscourages improvement. The tythe in the greater part of those parishes\nwhich pay what is called a modus, in lieu of all other tythe is a tax\nof this kind. During the Mahometan government of Bengal, instead of the\npayment in kind of the fifth part of the produce, a modus, and, it is\nsaid, a very moderate one, was established in the greater part of the\ndistricts or zemindaries of the country. Some of the servants of the\nEast India company, under pretence of restoring the public revenue to\nits proper value, have, in some provinces, exchanged this modus for a\npayment in kind. Under their management, this change is likely both to\ndiscourage cultivation, and to give new opportunities for abuse in the\ncollection of the public revenue, which has fallen very much below what\nit was said to have been when it first fell under the management of the\ncompany. The servants of the company may, perhaps, have profited by the\nchange, but at the expense, it is probable, both of their masters and of\nthe country.\n\nTaxes upon the Rent of Houses.\n\nThe rent of a house may be distinguished into two parts, of which the\none may very properly be called the building-rent; the other is commonly\ncalled the ground-rent.\n\nThe building-rent is the interest or profit of the capital expended in\nbuilding the house. In order to put the trade of a builder upon a level\nwith other trades, it is necessary that this rent should be sufficient,\nfirst, to pay him the same interest which he would have got for his\ncapital, if he had lent it upon good security; and, secondly, to keep\nthe house in constant repair, or, what comes to the same thing, to\nreplace, within a certain term of years, the capital which had been\nemployed in building it. The building-rent, or the ordinary profit of\nbuilding, is, therefore, everywhere regulated by the ordinary interest\nof money. Where the market rate of interest is four per cent. the rent\nof a house, which, over and above paying the ground-rent, affords six\nor six and a-half per cent. upon the whole expense of building, may,\nperhaps, afford a sufficient profit to the builder. Where the market\nrate of interest is five per cent. it may perhaps require seven or seven\nand a half per cent. If, in proportion to the interest of money, the\ntrade of the builders affords at any time much greater profit than this,\nit will soon draw so much capital from other trades as will reduce the\nprofit to its proper level. If it affords at any time much less than\nthis, other trades will soon draw so much capital from it as will again\nraise that profit.\n\nWhatever part of the whole rent of a house is over and above what is\nsufficient for affording this reasonable profit, naturally goes to the\nground-rent; and, where the owner of the ground and the owner of the\nbuilding are two different persons, is, in most cases, completely paid\nto the former. This surplus rent is the price which the inhabitant of\nthe house pays for some real or supposed advantage of the situation. In\ncountry houses, at a distance from any great town, where there is plenty\nof ground to chuse upon, the ground-rent is scarce anything, or no more\nthan what the ground which the house stands upon would pay, if employed\nin agriculture. In country villas, in the neighbourhood of some great\ntown, it is sometimes a good deal higher; and the peculiar conveniency\nor beauty of situation is there frequently very well paid for.\nGround-rents are generally highest in the capital, and in those\nparticular parts of it where there happens to be the greatest demand\nfor houses, whatever be the reason of that demand, whether for trade and\nbusiness, for pleasure and society, or for mere vanity and fashion.\n\nA tax upon house-rent, payable by the tenant, and proportioned to the\nwhole rent of each house, could not, for any considerable time at least,\naffect the building-rent. If the builder did not get his reasonable\nprofit, he would be obliged to quit the trade; which, by raising the\ndemand for building, would, in a short time, bring back his profit to\nits proper level with that of other trades. Neither would such a tax\nfall altogether upon the ground-rent; but it would divide itself in such\na manner, as to fall partly upon the inhabitant of the house, and partly\nupon the owner of the ground.\n\nLet us suppose, for example, that a particular person judges that he\ncan afford for house-rent all expense of sixty pounds a-year; and let\nus suppose, too, that a tax of four shillings in the pound, or of\none-fifth, payable by the inhabitant, is laid upon house-rent. A house\nof sixty pounds rent will, in that case, cost him seventy-two pounds\na-year, which is twelve pounds more than he thinks he can afford. He\nwill, therefore, content himself with a worse house, or a house of fifty\npounds rent, which, with the additional ten pounds that he must pay for\nthe tax, will make up the sum of sixty pounds a-year, the expense which\nhe judges he can afford, and, in order to pay the tax, he will give up a\npart of the additional conveniency which he might have had from a house\nof ten pounds a-year more rent. He will give up, I say, a part of this\nadditional conveniency; for he will seldom be obliged to give up the\nwhole, but will, in consequence of the tax, get a better house for fifty\npounds a-year, than he could have got if there had been no tax for as\na tax of this kind, by taking away this particular competitor, must\ndiminish the competition for houses of sixty pounds rent, so it must\nlikewise diminish it for those of fifty pounds rent, and in the same\nmanner for those of all other rents, except the lowest rent, for which\nit would for some time increase the competition. But the rents of\nevery class of houses for which the competition was diminished, would\nnecessarily be more or less reduced. As no part of this reduction,\nhowever, could for any considerable time at least, affect the\nbuilding-rent, the whole of it must, in the long-run, necessarily fall\nupon the ground-rent. The final payment of this tax, therefore, would\nfall partly upon the inhabitant of the house, who, in order to pay his\nshare, would be obliged to give up a part of his conveniency; and partly\nupon the owner of the ground, who, in order to pay his share, would be\nobliged to give up a part of his revenue. In what proportion this final\npayment would be divided between them, it is not, perhaps, very easy to\nascertain. The division would probably be very different in different\ncircumstances, and a tax of this kind might, according to those\ndifferent circumstances, affect very unequally, both the inhabitant of\nthe house and the owner of the ground.\n\nThe inequality with which a tax of this kind might fall upon the owners\nof different ground-rents, would arise altogether from the accidental\ninequality of this division. But the inequality with which it might fall\nupon the inhabitants of different houses, would arise, not only\nfrom this, but from another cause. The proportion of the expense of\nhouse-rent to the whole expense of living, is different in the different\ndegrees of fortune. It is, perhaps, highest in the highest degree, and\nit diminishes gradually through the inferior degrees, so as in general\nto be lowest in the lowest degree. The necessaries of life occasion the\ngreat expense of the poor. They find it difficult to get food, and\nthe greater part of their little revenue is spent in getting it. The\nluxuries and vanities of life occasion the principal expense of the\nrich; and a magnificent house embellishes and sets off to the best\nadvantage all the other luxuries and vanities which they possess. A tax\nupon house-rents, therefore, would in general fall heaviest upon the\nrich; and in this sort of inequality there would not, perhaps, be any\nthing very unreasonable. It is not very unreasonable that the rich\nshould contribute to the public expense, not only in proportion to their\nrevenue, but something more than in that proportion.\n\nThe rent of houses, though it in some respects resembles the rent of\nland, is in one respect essentially different from it. The rent of land\nis paid for the use of a productive subject. The land which pays it\nproduces it. The rent of houses is paid for the use of an unproductive\nsubject. Neither the house, nor the ground which it stands upon, produce\nanything. The person who pays the rent, therefore, must draw it from\nsome other source of revenue, distinct from and independent of this\nsubject. A tax upon the rent of houses, so far as it falls upon the\ninhabitants, must be drawn from the same source as the rent itself,\nand must be paid from their revenue, whether derived from the wages of\nlabour, the profits of stock, or the rent of land. So far as it falls\nupon the inhabitants, it is one of those taxes which fall, not upon one\nonly, but indifferently upon all the three different sources of revenue;\nand is, in every respect, of the same nature as a tax upon any other\nsort of consumable commodities. In general, there is not perhaps,\nany one article of expense or consumption by which the liberality or\nnarrowness of a man's whole expense can be better judged of than by his\nhouse-rent. A proportional tax upon this particular article of expense\nmight, perhaps, produce a more considerable revenue than any which has\nhitherto been drawn from it in any part of Europe. If the tax, indeed,\nwas very high, the greater part of people would endeavour to evade it as\nmuch as they could, by contenting themselves with smaller houses, and by\nturning the greater part of their expense into some other channel.\n\nThe rent of houses might easily be ascertained with sufficient accuracy,\nby a policy of the same kind with that which would be necessary for\nascertaining the ordinary rent of land. Houses not inhabited ought to\npay no tax. A tax upon them would fall altogether upon the proprietor,\nwho would thus be taxed for a subject which afforded him neither\nconveniency nor revenue. Houses inhabited by the proprietor ought to\nbe rated, not according to the expense which they might have cost in\nbuilding, but according to the rent which an equitable arbitration might\njudge them likely to bring if leased to a tenant. If rated according to\nthe expense which they might have cost in building, a tax of three or\nfour shillings in the pound, joined with other taxes, would ruin almost\nall the rich and great families of this, and, I believe, of every other\ncivilized country. Whoever will examine with attention the different\ntown and country houses of some of the richest and greatest families\nin this country, will find that, at the rate of only six and a-half, or\nseven per cent. upon the original expense of building, their house-rent\nis nearly equal to the whole neat rent of their estates. It is the\naccumulated expense of several successive generations, laid out upon\nobjects of great beauty and magnificence, indeed, but, in proportion\nto what they cost, of very small exchangeable value. {Since the\nfirst publication of this book, a tax nearly upon the above-mentioned\nprinciples has been imposed.}\n\nGround-rents are a still more proper subject of taxation than the rent\nof houses. A tax upon ground-rents would not raise the rent of houses;\nit would fall altogether upon the owner of the ground-rent, who acts\nalways as a monopolist, and exacts the greatest rent which can be got\nfor the use of his ground. More or less can be got for it, according as\nthe competitors happen to be richer or poorer, or can afford to gratify\ntheir fancy for a particular spot of ground at a greater or smaller\nexpense. In every country, the greatest number of rich competitors is in\nthe capital, and it is there accordingly that the highest ground-rents\nare always to be found. As the wealth of those competitors would in no\nrespect be increased by a tax upon ground-rents, they would not probably\nbe disposed to pay more for the use of the ground. Whether the tax was\nto be advanced by the inhabitant or by the owner of the ground, would be\nof little importance. The more the inhabitant was obliged to pay for the\ntax, the less he would incline to pay for the ground; so that the\nfinal payment of the tax would fall altogether upon the owner of the\nground-rent. The ground-rents of uninhabited houses ought to pay no\ntax. Both ground-rents, and the ordinary rent of land, are a species\nof revenue which the owner, in many cases, enjoys without any care or\nattention of his own. Though a part of this revenue should be taken from\nhim in order to defray the expenses of the state, no discouragement will\nthereby be given to any sort of industry. The annual produce of the land\nand labour of the society, the real wealth and revenue of the great\nbody of the people, might be the same after such a tax as before.\nGround-rents, and the ordinary rent of land, are therefore, perhaps, the\nspecies of revenue which can best bear to have a peculiar tax imposed\nupon them.\n\nGround-rents seem, in this respect, a more proper subject of peculiar\ntaxation, than even the ordinary rent of land. The ordinary rent of land\nis, in many cases, owing partly, at least, to the attention and good\nmanagement of the landlord. A very heavy tax might discourage, too much,\nthis attention and good management. Ground-rents, so far as they exceed\nthe ordinary rent of land, are altogether owing to the good government\nof the sovereign, which, by protecting the industry either of the whole\npeople or of the inhabitants of some particular place, enables them to\npay so much more than its real value for the ground which they\nbuild their houses upon; or to make to its owner so much more than\ncompensation for the loss which he might sustain by this use of it.\nNothing can be more reasonable, than that a fund, which owes its\nexistence to the good government of the state, should be taxed\npeculiarly, or should contribute something more than the greater part of\nother funds, towards the support of that government.\n\nThough, in many different countries of Europe, taxes have been imposed\nupon the rent of houses, I do not know of any in which ground-rents have\nbeen considered as a separate subject of taxation. The contrivers of\ntaxes have, probably, found some difficulty in ascertaining what part of\nthe rent ought to be considered as ground-rent, and what part ought\nto be considered as building-rent. It should not, however, seem very\ndifficult to distinguish those two parts of the rent from one another.\n\nIn Great Britain the rent of houses is supposed to be taxed in the same\nproportion as the rent of land, by what is called the annual land tax.\nThe valuation, according to which each different parish and district is\nassessed to this tax, is always the same. It was originally extremely\nunequal, and it still continues to be so. Through the greater part of\nthe kingdom this tax falls still more lightly upon the rent of\nhouses than upon that of land. In some few districts only, which were\noriginally rated high, and in which the rents of houses have fallen\nconsiderably, the land tax of three or four shillings in the pound\nis said to amount to an equal proportion of the real rent of houses.\nUntenanted houses, though by law subject to the tax, are, in most\ndistricts, exempted from it by the favour of the assessors; and this\nexemption sometimes occasions some little variation in the rate of\nparticular houses, though that of the district is always the same.\nImprovements of rent, by new buildings, repairs, etc. go to the\ndischarge of the district, which occasions still further variations in\nthe rate of particular houses.\n\nIn the province of Holland, {Memoires concernant les Droits, etc. p.\n223.} every house is taxed at two and a-half per cent. of its value,\nwithout any regard, either to the rent which it actually pays, or to the\ncircumstance of its being tenanted or untenanted. There seems to be\na hardship in obliging the proprietor to pay a tax for an untenanted\nhouse, from which he can derive no revenue, especially so very heavy a\ntax. In Holland, where the market rate of interest does not exceed three\nper cent., two and a-half per cent. upon the whole value of the house\nmust, in most cases, amount to more than a third of the building-rent,\nperhaps of the whole rent. The valuation, indeed, according to which the\nhouses are rated, though very unequal, is said to be always below the\nreal value. When a house is rebuilt, improved, or enlarged, there is a\nnew valuation, and the tax is rated accordingly.\n\nThe contrivers of the several taxes which in England have, at different\ntimes, been imposed upon houses, seem to have imagined that there was\nsome great difficulty in ascertaining, with tolerable exactness, what\nwas the real rent of every house. They have regulated their taxes,\ntherefore, according to some more obvious circumstance, such as they\nhad probably imagined would, in most cases, bear some proportion to the\nrent.\n\nThe first tax of this kind was hearth-money; or a tax of two shillings\nupon every hearth. In order to ascertain how many hearths were in the\nhouse, it was necessary that the tax-gatherer should enter every room\nin it. This odious visit rendered the tax odious. Soon after the\nRevolution, therefore, it was abolished as a badge of slavery.\n\nThe next tax of this kind was a tax of two shillings upon every\ndwelling-house inhabited. A house with ten windows to pay four shillings\nmore. A house with twenty windows and upwards to pay eight shillings.\nThis tax was afterwards so far altered, that houses with twenty windows,\nand with less than thirty, were ordered to pay ten shillings, and those\nwith thirty windows and upwards to pay twenty shillings. The number of\nwindows can, in most cases, be counted from the outside, and, in all\ncases, without entering every room in the house. The visit of the\ntax-gatherer, therefore, was less offensive in this tax than in the\nhearth-money.\n\nThis tax was afterwards repealed, and in the room of it was established\nthe window-tax, which has undergone two several alterations and\naugmentations. The window tax, as it stands at present (January 1775),\nover and above the duty of three shillings upon every house in England,\nand of one shilling upon every house in Scotland, lays a duty upon every\nwindow, which in England augments gradually from twopence, the lowest\nrate upon houses with not more than seven windows, to two shillings, the\nhighest rate upon houses with twenty-five windows and upwards.\n\nThe principal objection to all such taxes is their inequality; an\ninequality of the worst kind, as they must frequently fall much heavier\nupon the poor than upon the rich. A house of ten pounds rent in a\ncountry town, may sometimes have more windows than a house of five\nhundred pounds rent in London; and though the inhabitant of the former\nis likely to be a much poorer man than that of the latter, yet, so far\nas his contribution is regulated by the window tax, he must contribute\nmore to the support of the state. Such taxes are, therefore, directly\ncontrary to the first of the four maxims above mentioned. They do not\nseem to offend much against any of the other three.\n\nThe natural tendency of the window tax, and of all other taxes upon\nhouses, is to lower rents. The more a man pays for the tax, the less, it\nis evident, he can afford to pay for the rent. Since the imposition of\nthe window tax, however, the rents of houses have, upon the whole, risen\nmore or less, in almost every town and village of Great Britain, with\nwhich I am acquainted. Such has been, almost everywhere, the increase of\nthe demand for houses, that it has raised the rents more than the window\ntax could sink them; one of the many proofs of the great prosperity of\nthe country, and of the increasing revenue of its inhabitants. Had it\nnot been for the tax, rents would probably have risen still higher.\n\nARTICLE II.--Taxes upon Profit, or upon the Revenue arising from Stock.\n\nThe revenue or profit arising from stock naturally divides itself into\ntwo parts; that which pays the interest, and which belongs to the owner\nof the stock; and that surplus part which is over and above what is\nnecessary for paying the interest.\n\nThis latter part of profit is evidently a subject not taxable directly.\nIt is the compensation, and, in most cases, it is no more than a very\nmoderate compensation for the risk and trouble of employing the\nstock. The employer must have this compensation, otherwise he cannot,\nconsistently with his own interest, continue the employment. If he was\ntaxed directly, therefore, in proportion to the whole profit, he would\nbe obliged either to raise the rate of his profit, or to charge the tax\nupon the interest of money; that is, to pay less interest. If he raised\nthe rate of his profit in proportion to the tax, the whole tax, though\nit might be advanced by him, would be finally paid by one or other of\ntwo different sets of people, according to the different ways in which\nhe might employ the stock of which he had the management. If he employed\nit as a farming stock, in the cultivation of land, he could raise the\nrate of his profit only by retaining a greater portion, or, what comes\nto the same thing, the price of a greater portion, of the produce of the\nland; and as this could be done only by a reduction of rent, the final\npayment of the tax would fall upon the landlord. If he employed it as a\nmercantile or manufacturing stock, he could raise the rate of his profit\nonly by raising the price of his goods; in which case, the final payment\nof the tax would fall altogether upon the consumers of those goods. If\nhe did not raise the rate of his profit, he would be obliged to charge\nthe whole tax upon that part of it which was allotted for the interest\nof money. He could afford less interest for whatever stock he borrowed,\nand the whole weight of the tax would, in this case, fall ultimately\nupon the interest of money. So far as he could not relieve himself from\nthe tax in the one way, he would be obliged to relieve himself in the\nother.\n\nThe interest of money seems, at first sight, a subject equally capable\nof being taxed directly as the rent of land. Like the rent of land,\nit is a neat produce, which remains, after completely compensating the\nwhole risk and trouble of employing the stock. As a tax upon the rent of\nland cannot raise rents, because the neat produce which remains, after\nreplacing the stock of the farmer, together with his reasonable profit,\ncannot be greater after the tax than before it, so, for the same reason,\na tax upon the interest of money could not raise the rate of interest;\nthe quantity of stock or money in the country, like the quantity of\nland, being supposed to remain the same after the tax as before it.\nThe ordinary rate of profit, it has been shewn, in the first book,\nis everywhere regulated by the quantity of stock to be employed, in\nproportion to the quantity of the employment, or of the business which\nmust be done by it. But the quantity of the employment, or of the\nbusiness to be done by stock, could neither be increased nor diminished\nby any tax upon the interest of money. If the quantity of the stock to\nbe employed, therefore, was neither increased nor diminished by it,\nthe ordinary rate of profit would necessarily remain the same. But the\nportion of this profit, necessary for compensating the risk and trouble\nof the employer, would likewise remain the same; that risk and trouble\nbeing in no respect altered. The residue, therefore, that portion which\nbelongs to the owner of the stock, and which pays the interest of money,\nwould necessarily remain the same too. At first sight, therefore, the\ninterest of money seems to be a subject as fit to be taxed directly as\nthe rent of land.\n\nThere are, however, two different circumstances, which render the\ninterest of money a much less proper subject of direct taxation than the\nrent of land.\n\nFirst, the quantity and value of the land which any man possesses, can\nnever be a secret, and can always be ascertained with great exactness.\nBut the whole amount of the capital stock which he possesses is almost\nalways a secret, and can scarce ever be ascertained with tolerable\nexactness. It is liable, besides, to almost continual variations. A year\nseldom passes away, frequently not a month, sometimes scarce a single\nday, in which it does not rise or fall more or less. An inquisition into\nevery man's private circumstances, and an inquisition which, in order\nto accommodate the tax to them, watched over all the fluctuations of his\nfortune, would be a source of such continual and endless vexation as no\nperson could support.\n\nSecondly, land is a subject which cannot be removed; whereas stock\neasily may. The proprietor of land is necessarily a citizen of the\nparticular country in which his estate lies. The proprietor of stock is\nproperly a citizen of the world, and is not necessarily attached to any\nparticular country. He would be apt to abandon the country in which he\nwas exposed to a vexatious inquisition, in order to be assessed to a\nburdensome tax; and would remove his stock to some other country, where\nhe could either carry on his business, or enjoy his fortune more at his\nease. By removing his stock, he would put an end to all the industry\nwhich it had maintained in the country which he left. Stock cultivates\nland; stock employs labour. A tax which tended to drive away stock from\nany particular country, would so far tend to dry up every source of\nrevenue, both to the sovereign and to the society. Not only the\nprofits of stock, but the rent of land, and the wages of labour, would\nnecessarily be more or less diminished by its removal.\n\nThe nations, accordingly, who have attempted to tax the revenue arising\nfrom stock, instead of any severe inquisition of this kind, have been\nobliged to content themselves with some very loose, and, therefore, more\nor less arbitrary estimation. The extreme inequality and uncertainty of\na tax assessed in this manner, can be compensated only by its extreme\nmoderation; in consequence of which, every man finds himself rated\nso very much below his real revenue, that he gives himself little\ndisturbance though his neighbour should be rated somewhat lower.\n\nBy what is called the land tax in England, it was intended that the\nstock should be taxed in the same proportion as land. When the tax upon\nland was at four shillings in the pound, or at one-fifth of the supposed\nrent, it was intended that stock should be taxed at one-fifth of the\nsupposed interest. When the present annual land tax was first imposed,\nthe legal rate of interest was six per cent. Every hundred pounds stock,\naccordingly, was supposed to be taxed at twenty-four shillings, the\nfifth part of six pounds. Since the legal rate of interest has been\nreduced to five per cent. every hundred pounds stock is supposed to be\ntaxed at twenty shillings only. The sum to be raised, by what is called\nthe land tax, was divided between the country and the principal towns.\nThe greater part of it was laid upon the country; and of what was laid\nupon the towns, the greater part was assessed upon the houses. What\nremained to be assessed upon the stock or trade of the towns (for the\nstock upon the land was not meant to be taxed) was very much below the\nreal value of that stock or trade. Whatever inequalities, therefore,\nthere might be in the original assessment, gave little disturbance.\nEvery parish and district still continues to be rated for its land, its\nhouses, and its stock, according to the original assessment; and the\nalmost universal prosperity of the country, which, in most places, has\nraised very much the value of all these, has rendered those inequalities\nof still less importance now. The rate, too, upon each district,\ncontinuing always the same, the uncertainty of this tax, so far as it\nmight he assessed upon the stock of any individual, has been very much\ndiminished, as well as rendered of much less consequence. If the greater\npart of the lands of England are not rated to the land tax at half their\nactual value, the greater part of the stock of England is, perhaps,\nscarce rated at the fiftieth part of its actual value. In some towns,\nthe whole land tax is assessed upon houses; as in Westminster, where\nstock and trade are free. It is otherwise in London.\n\nIn all countries, a severe inquisition into the circumstances of private\npersons has been carefully avoided.\n\nAt Hamburg, {Memoires concernant les Droits, tom. i, p.74} every\ninhabitant is obliged to pay to the state one fourth per cent. of all\nthat he possesses; and as the wealth of the people of Hamburg consists\nprincipally in stock, this tax maybe considered as a tax upon stock.\nEvery man assesses himself, and, in the presence of the magistrate,\nputs annually into the public coffer a certain sum of money, which he\ndeclares upon oath, to be one fourth per cent. of all that he possesses,\nbut without declaring what it amounts to, or being liable to any\nexamination upon that subject. This tax is generally supposed to be paid\nwith great fidelity. In a small republic, where the people have entire\nconfidence in their magistrates, are convinced of the necessity of the\ntax for the support of the state, and believe that it will be faithfully\napplied to that purpose, such conscientious and voluntary payment may\nsometimes be expected. It is not peculiar to the people of Hamburg.\n\nThe canton of Underwald, in Switzerland, is frequently ravaged by storms\nand inundations, and it is thereby exposed to extraordinary expenses.\nUpon such occasions the people assemble, and every one is said to\ndeclare with the greatest frankness what he is worth, in order to\nbe taxed accordingly. At Zurich, the law orders, that in cases of\nnecessity, every one should be taxed in proportion to his revenue;\nthe amount of which he is obliged to declare upon oath. They have no\nsuspicion, it is said, that any of their fellow citizens will deceive\nthem. At Basil, the principal revenue of the state arises from a small\ncustom upon goods exported. All the citizens make oath, that they will\npay every three months all the taxes imposed by law. All merchants, and\neven all inn-keepers, are trusted with keeping themselves the account\nof the goods which they sell, either within or without the territory. At\nthe end of every three months, they send this account to the treasurer,\nwith the amount of the tax computed at the bottom of it. It is not\nsuspected that the revenue suffers by this confidence. {Memoires\nconcernant les Droits, tom. i p. 163, 167,171.}\n\nTo oblige every citizen to declare publicly upon oath, the amount of\nhis fortune, must not, it seems, in those Swiss cantons, be reckoned\na hardship. At Hamburg it would be reckoned the greatest. Merchants\nengaged in the hazardous projects of trade, all tremble at the thoughts\nof being obliged, at all times, to expose the real state of their\ncircumstances. The ruin of their credit, and the miscarriage of their\nprojects, they foresee, would too often be the consequence. A sober and\nparsimonious people, who are strangers to all such projects, do not feel\nthat they have occasion for any such concealment.\n\nIn Holland, soon after the exaltation of the late prince of Orange to\nthe stadtholdership, a tax of two per cent. or the fiftieth penny, as it\nwas called, was imposed upon the whole substance of every citizen. Every\ncitizen assesed himself, and paid his tax, in the same manner as at\nHamburg, and it was in general supposed to have been paid with great\nfidelity. The people had at that time the greatest affection for\ntheir new government, which they had just established by a general\ninsurrection. The tax was to be paid but once, in order to relieve\nthe state in a particular exigency. It was, indeed, too heavy to be\npermanent. In a country where the market rate of interest seldom exceeds\nthree per cent., a tax of two per cent. amounts to thirteen shillings\nand four pence in the pound, upon the highest neat revenue which is\ncommonly drawn from stock. It is a tax which very few people could pay,\nwithout encroaching more or less upon their capitals. In a particular\nexigency, the people may, from great public zeal, make a great effort,\nand give up even a part of their capital, in order to relieve the\nstate. But it is impossible that they should continue to do so for any\nconsiderable time; and if they did, the tax would soon ruin them so\ncompletely, as to render them altogether incapable of supporting the\nstate.\n\nThe tax upon stock, imposed by the land tax bill in England, though it\nis proportioned to the capital, is not intended to diminish or, take\naway any part of that capital. It is meant only to be a tax upon the\ninterest of money, proportioned to that upon the rent of land; so that\nwhen the latter is at four shillings in the pound, the former may be at\nfour shillings in the pound too. The tax at Hamburg, and the still more\nmoderate taxes of Underwald and Zurich, are meant, in the same manner,\nto be taxes, not upon the capital, but upon the interest or neat revenue\nof stock. That of Holland was meant to be a tax upon the capital.\n\nTaxes upon the Profit of particular Employments.\n\nIn some countries, extraordinary taxes are imposed upon the profits\nof stock; sometimes when employed in particular branches of trade, and\nsometimes when employed in agriculture.\n\nOf the former kind, are in England, the tax upon hawkers and pedlars,\nthat upon hackney-coaches and chairs, and that which the keepers of\nale-houses pay for a licence to retail ale and spiritous liquors. During\nthe late war, another tax of the same kind was proposed upon shops. The\nwar having been undertaken, it was said, in defence of the trade of the\ncountry, the merchants, who were to profit by it, ought to contribute\ntowards the support of it.\n\nA tax, however, upon the profits of stock employed in any particular\nbranch of trade, can never fall finally upon the dealers (who must\nin all ordinary cases have their reasonable profit, and, where the\ncompetition is free, can seldom have more than that profit), but always\nupon the consumers, who must be obliged to pay in the price of the goods\nthe tax which the dealer advances; and generally with some overcharge.\n\nA tax of this kind, when it is proportioned to the trade of the dealer,\nis finally paid by the consumer, and occasions no oppression to the\ndealer. When it is not so proportioned, but is the same upon all\ndealers, though in this case, too, it is finally paid by the consumer,\nyet it favours the great, and occasions some oppression to the small\ndealer. The tax of five shillings a-week upon every hackney coach, and\nthat of ten shillings a-year upon every hackney chair, so far as it is\nadvanced by the different keepers of such coaches and chairs, is exactly\nenough proportioned to the extent of their respective dealings. It\nneither favours the great, nor oppresses the smaller dealer. The tax of\ntwenty shillings a-year for a licence to sell ale; of forty shillings\nfor a licence to sell spiritous liquors; and of forty shillings more\nfor a licence to sell wine, being the same upon all retailers, must\nnecessarily give some advantage to the great, and occasion some\noppression to the small dealers. The former must find it more easy\nto get back the tax in the price of their goods than the latter.\nThe moderation of the tax, however, renders this inequality of less\nimportance; and it may to many people appear not improper to give some\ndiscouragement to the multiplication of little ale-houses. The tax upon\nshops, it was intended, should be the same upon all shops. It could not\nwell have been otherwise. It would have been impossible to proportion,\nwith tolerable exactness, the tax upon a shop to the extent of the\ntrade carried on in it, without such an inquisition as would have\nbeen altogether insupportable in a free country. If the tax had been\nconsiderable, it would have oppressed the small, and forced almost the\nwhole retail trade into the hands of the great dealers. The competition\nof the former being taken away, the latter would have enjoyed a monopoly\nof the trade; and, like all other monopolists, would soon have combined\nto raise their profits much beyond what was necessary for the payment\nof the tax. The final payment, instead of falling upon the shop-keeper,\nwould have fallen upon the consumer, with a considerable overcharge to\nthe profit of the shop-keeper. For these reasons, the project of a tax\nupon shops was laid aside, and in the room of it was substituted the\nsubsidy, 1759.\n\nWhat in France is called the personal taille, is perhaps, the most\nimportant tax upon the profits of stock employed in agriculture, that is\nlevied in any part of Europe.\n\nIn the disorderly state of Europe, during the prevalence of the feudal\ngovernment, the sovereign was obliged to content himself with taxing\nthose who were too weak to refuse to pay taxes. The great lords, though\nwilling to assist him upon particular emergencies, refused to subject\nthemselves to any constant tax, and he was not strong enough to force\nthem. The occupiers of land all over Europe were, the greater part of\nthem, originally bond-men. Through the greater part of Europe, they\nwere gradually emancipated. Some of them acquired the property of landed\nestates, which they held by some base or ignoble tenure, sometimes under\nthe king, and sometimes under some other great lord, like the ancient\ncopy-holders of England. Others, without acquiring the property,\nobtained leases for terms of years, of the lands which they occupied\nunder their lord, and thus became less dependent upon him. The great\nlords seem to have beheld the degree of prosperity and independency,\nwhich this inferior order of men had thus come to enjoy, with a\nmalignant and contemptuous indignation, and willingly consented that the\nsovereign should tax them. In some countries, this tax was confined to\nthe lands which were held in property by an ignoble tenure; and, in this\ncase, the taille was said to be real. The land tax established by the\nlate king of Sardinia, and the taille in the provinces of Languedoc,\nProvence, Dauphine, and Britanny; in the generality of Montauban, and in\nthe elections of Agen and Condom, as well as in some other districts of\nFrance; are taxes upon lands held in property by an ignoble tenure. In\nother countries, the tax was laid upon the supposed profits of all those\nwho held, in farm or lease, lands belonging to other people, whatever\nmight be the tenure by which the proprietor held them; and in this\ncase, the taille was said to be personal. In the greater part of those\nprovinces of France, which are called the countries of elections, the\ntaille is of this kind. The real taille, as it is imposed only upon a\npart of the lands of the country, is necessarily an unequal, but it is\nnot always an arbitrary tax, though it is so upon some occasions. The\npersonal taille, as it is intended to be proportioned to the profits of\na certain class of people, which can only be guessed at, is necessarily\nboth arbitrary and unequal.\n\nIn France, the personal taille at present (1775) annually imposed upon\nthe twenty generalities, called the countries of elections, amounts to\n40,107,239 livres, 16 sous. {Memoires concernant les Droits, etc tom.\nii, p.17.} the proportion in which this sum is assessed upon those\ndifferent provinces, varies from year to year, according to the reports\nwhich are made to the king's council concerning the goodness or badness\nof the crops, as well as other circumstances, which may either increase\nor diminish their respective abilities to pay. Each generality is\ndivided into a certain number of elections; and the proportion in\nwhich the sum imposed upon the whole generality is divided among those\ndifferent elections, varies likewise from year to year, according to the\nreports made to the council concerning their respective abilities. It\nseems impossible, that the council, with the best intentions, can ever\nproportion, with tolerable exactness, either of these two assessments\nto the real abilities of the province or district upon which they are\nrespectively laid. Ignorance and misinformation must always, more or\nless, mislead the most upright council. The proportion which each parish\nought to support of what is assessed upon the whole election, and that\nwhich each individual ought to support of what is assessed upon his\nparticular parish, are both in the same manner varied from year to year,\naccording as circumstances are supposed to require. These circumstances\nare judged of, in the one case, by the officers of the election, in the\nother, by those of the parish; and both the one and the other are, more\nor less, under the direction and influence of the intendant. Not only\nignorance and misinformation, but friendship, party animosity, and\nprivate resentment, are said frequently to mislead such assessors. No\nman subject to such a tax, it is evident, can ever be certain, before he\nis assessed, of what he is to pay. He cannot even be certain after he is\nassessed. If any person has been taxed who ought to have been exempted,\nor if any person has been taxed beyond his proportion, though both\nmust pay in the mean time, yet if they complain, and make good their\ncomplaints, the whole parish is reimposed next year, in order to\nreimburse them. If any of the contributors become bankrupt or insolvent,\nthe collector is obliged to advance his tax; and the whole parish\nis reimposed next year, in order to reimburse the collector. If the\ncollector himself should become bankrupt, the parish which elects him\nmust answer for his conduct to the receiver-general of the election.\nBut, as it might be troublesome for the receiver to prosecute the whole\nparish, he takes at his choice five or six of the richest contributors,\nand obliges them to make good what had been lost by the insolvency of\nthe collector. The parish is afterwards reimposed, in order to reimburse\nthose five or six. Such reimpositions are always over and above the\ntaille of the particular year in which they are laid on.\n\nWhen a tax is imposed upon the profits of stock in a particular branch\nof trade, the traders are all careful to bring no more goods to market\nthan what they can sell at a price sufficient to reimburse them from\nadvancing the tax. Some of them withdraw a part of their stocks from the\ntrade, and the market is more sparingly supplied than before. The price\nof the goods rises, and the final payment of the tax falls upon the\nconsumer. But when a tax is imposed upon the profits of stock employed\nin agriculture, it is not the interest of the farmers to withdraw any\npart of their stock from that employment. Each farmer occupies a certain\nquantity of land, for which he pays rent. For the proper cultivation of\nthis land, a certain quantity of stock is necessary; and by withdrawing\nany part of this necessary quantity, the farmer is not likely to be more\nable to pay either the rent or the tax. In order to pay the tax, it\ncan never be his interest to diminish the quantity of his produce, nor\nconsequently to supply the market more sparingly than before. The tax,\ntherefore, will never enable him to raise the price of his produce,\nso as to reimburse himself, by throwing the final payment upon the\nconsumer. The farmer, however, must have his reasonable profit as well\nas every other dealer, otherwise he must give up the trade. After the\nimposition of a tax of this kind, he can get this reasonable profit only\nby paying less rent to the landlord. The more he is obliged to pay in\nthe way of tax, the less he can afford to pay in the way of rent. A tax\nof this kind, imposed during the currency of a lease, may, no doubt,\ndistress or ruin the farmer. Upon the renewal of the lease, it must\nalways fall upon the landlord.\n\nIn the countries where the personal taille takes place, the farmer is\ncommonly assessed in proportion to the stock which he appears to employ\nin cultivation. He is, upon this account, frequently afraid to have\na good team of horses or oxen, but endeavours to cultivate with the\nmeanest and most wretched instruments of husbandry that he can. Such\nis his distrust in the justice of his assessors, that he counterfeits\npoverty, and wishes to appear scarce able to pay anything, for fear of\nbeing obliged to pay too much. By this miserable policy, he does not,\nperhaps, always consult his own interest in the most effectual manner;\nand he probably loses more by the diminution of his produce, than\nhe saves by that of his tax. Though, in consequence of this wretched\ncultivation, the market is, no doubt, somewhat worse supplied; yet the\nsmall rise of price which this may occasion, as it is not likely even to\nindemnify the farmer for the diminution of his produce, it is still less\nlikely to enable him to pay more rent to the landlord. The public,\nthe farmer, the landlord, all suffer more or less by this degraded\ncultivation. That the personal taille tends, in many different ways, to\ndiscourage cultivation, and consequently to dry up the principal source\nof the wealth of every great country, I have already had occasion to\nobserve in the third book of this Inquiry.\n\nWhat are called poll-taxes in the southern provinces of North America,\nand the West India islands, annual taxes of so much a-head upon every\nnegro, are properly taxes upon the profits of a certain species of stock\nemployed in agriculture. As the planters, are the greater part of them,\nboth farmers and landlords, the final payment of the tax falls upon them\nin their quality of landlords, without any retribution.\n\nTaxes of so much a head upon the bondmen employed in cultivation, seem\nanciently to have been common all over Europe. There subsists at present\na tax of this kind in the empire of Russia. It is probably upon this\naccount that poll-taxes of all kinds have often been represented as\nbadges of slavery. Every tax, however, is, to the person who pays it, a\nbadge, not of slavery, but of liberty. It denotes that he is subject to\ngovernment, indeed; but that, as he has some property, he cannot himself\nbe the property of a master. A poll tax upon slaves is altogether\ndifferent from a poll-tax upon freemen. The latter is paid by the\npersons upon whom it is imposed; the former, by a different set of\npersons. The latter is either altogether arbitrary, or altogether\nunequal, and, in most cases, is both the one and the other; the former,\nthough in some respects unequal, different slaves being of different\nvalues, is in no respect arbitrary. Every master, who knows the number\nof his own slaves, knows exactly what he has to pay. Those different\ntaxes, however, being called by the same name, have been considered as\nof the same nature.\n\nThe taxes which in Holland are imposed upon men and maid servants, are\ntaxes, not upon stock, but upon expense; and so far resemble the taxes\nupon consumable commodities. The tax of a guinea a-head for every\nman-servant, which has lately been imposed in Great Britain, is of\nthe same kind. It falls heaviest upon the middling rank. A man of two\nhundred a-year may keep a single man-servant. A man of ten thousand\na-year will not keep fifty. It does not affect the poor.\n\nTaxes upon the profits of stock, in particular employments, can never\naffect the interest of money. Nobody will lend his money for less\ninterest to those who exercise the taxed, than to those who exercise the\nuntaxed employments. Taxes upon the revenue arising from stock in all\nemployments, where the government attempts to levy them with any degree\nof exactness, will, in many cases, fall upon the interest of money. The\nvingtieme, or twentieth penny, in France, is a tax of the same kind with\nwhat is called the land tax in England, and is assessed, in the same\nmanner, upon the revenue arising upon land, houses, and stock. So far as\nit affects stock, it is assessed, though not with great rigour, yet with\nmuch more exactness than that part of the land tax in England which is\nimposed upon the same fund. It, in many cases, falls altogether upon\nthe interest of money. Money is frequently sunk in France, upon what\nare called contracts for the constitution of a rent; that is, perpetual\nannuities, redeemable at any time by the debtor, upon payment of the sum\noriginally advanced, but of which this redemption is not exigible by\nthe creditor except in particular cases. The vingtieme seems not to have\nraised the rate of those annuities, though it is exactly levied upon\nthem all.\n\nAPPENDIX TO ARTICLES I. AND II.--Taxes upon the Capital Value of Lands,\nHouses, and Stock.\n\nWhile property remains in the possession of the same person, whatever\npermanent taxes may have been imposed upon it, they have never been\nintended to diminish or take away any part of its capital value, but\nonly some part of the revenue arising from it. But when property changes\nhands, when it is transmitted either from the dead to the living, or\nfrom the living to the living, such taxes have frequently been imposed\nupon it as necessarily take away some part of its capital value.\n\nThe transference of all sorts of property from the dead to the living,\nand that of immoveable property of land and houses from the living to\nthe living, are transactions which are in their nature either public\nand notorious, or such as cannot be long concealed. Such transactions,\ntherefore, may be taxed directly. The transference of stock or moveable\nproperty, from the living to the living, by the lending of money, is\nfrequently a secret transaction, and may always be made so. It cannot\neasily, therefore, be taxed directly. It has been taxed indirectly in\ntwo different ways; first, by requiring that the deed, containing the\nobligation to repay, should be written upon paper or parchment which\nhad paid a certain stamp duty, otherwise not to be valid; secondly,\nby requiring, under the like penalty of invalidity, that it should be\nrecorded either in a public or secret register, and by imposing certain\nduties upon such registration. Stamp duties, and duties of registration,\nhave frequently been imposed likewise upon the deeds transferring\nproperty of all kinds from the dead to the living, and upon those\ntransferring immoveable property from the living to the living;\ntransactions which might easily have been taxed directly.\n\nThe vicesima hereditatum, or the twentieth penny of inheritances,\nimposed by Augustus upon the ancient Romans, was a tax upon the\ntransference of property from the dead to the living. Dion Cassius,\n{ Lib. 55. See also Burman. de Vectigalibus Pop. Rom. cap. xi. and\nBouchaud de l'impot du vingtieme sur les successions.} the author who\nwrites concerning it the least indistinctly, says, that it was imposed\nupon all successions, legacies and donations, in case of death, except\nupon those to the nearest relations, and to the poor.\n\nOf the same kind is the Dutch tax upon successions. {See Memoires\nconcernant les Droits, etc. tom i, p. 225.} Collateral successions are\ntaxed according to the degree of relation, from five to thirty per\ncent. upon the whole value of the succession. Testamentary donations,\nor legacies to collaterals, are subject to the like duties. Those from\nhusband to wife, or from wife to husband, to the fiftieth penny.\nThe luctuosa hereditas, the mournful succession of ascendants to\ndescendants, to the twentieth penny only. Direct successions, or those\nof descendants to ascendants, pay no tax. The death of a father, to such\nof his children as live in the same house with him, is seldom attended\nwith any increase, and frequently with a considerable diminution\nof revenue; by the loss of his industry, of his office, or of some\nlife-rent estate, of which he may have been in possession. That tax\nwould be cruel and oppressive, which aggravated their loss, by taking\nfrom them any part of his succession. It may, however, sometimes be\notherwise with those children, who, in the language of the Roman\nlaw, are said to be emancipated; in that of the Scotch law, to be\nforis-familiated; that is, who have received their portion, have\ngot families of their own, and are supported by funds separate and\nindependent of those of their father. Whatever part of his succession\nmight come to such children, would be a real addition to their fortune,\nand might, therefore, perhaps, without more inconveniency than what\nattends all duties of this kind, be liable to some tax. The casualties\nof the feudal law were taxes upon the transference of land, both from\nthe dead to the living, and from the living to the living. In ancient\ntimes, they constituted, in every part of Europe, one of the principal\nbranches of the revenue of the crown.\n\nThe heir of every immediate vassal of the crown paid a certain duty,\ngenerally a year's rent, upon receiving the investiture of the estate.\nIf the heir was a minor, the whole rents of the estate, during the\ncontinuance of the minority, devolved to the superior, without any other\ncharge besides the maintenance of the minor, and the payment of the\nwidow's dower, when there happened to be a dowager upon the land. When\nthe minor came to de of age, another tax, called relief, was still due\nto the superior, which generally amounted likewise to a year's rent. A\nlong minority, which, in the present times, so frequently disburdens a\ngreat estate of all its incumbrances, and restores the family to their\nancient splendour, could in those times have no such effect. The waste,\nand not the disincumbrance of the estate, was the common effect of a\nlong minority.\n\nBy a feudal law, the vassal could not alienate without the consent of\nhis superior, who generally extorted a fine or composition on granting\nit. This fine, which was at first arbitrary, came, in many countries,\nto be regulated at a certain portion of the price of the land. In some\ncountries, where the greater part of the other feudal customs have gone\ninto disuse, this tax upon the alienation of land still continues to\nmake a very considerable branch of the revenue of the sovereign. In the\ncanton of Berne it is so high as a sixth part of the price of all\nnoble fiefs, and a tenth part of that of all ignoble ones. {Memoires\nconcernant les Droits, etc, tom.i p.154} In the canton of Lucern, the\ntax upon the sale of land is not universal, and takes place only in\ncertain districts. But if any person sells his land in order to remove\nout of the territory, he pays ten per cent. upon the whole price of the\nsale. {id. p.157.} Taxes of the same kind, upon the sale either of all\nlands, or of lands held by certain tenures, take place in many other\ncountries, and make a more or less considerable branch of the revenue of\nthe sovereign.\n\nSuch transactions may be taxed indirectly, by means either of stamp\nduties, or of duties upon registration; and those duties either may,\nor may not, be proportioned to the value of the subject which is\ntransferred.\n\nIn Great Britain, the stamp duties are higher or lower, not so much\naccording to the value of the property transferred (an eighteen-penny\nor half-crown stamp being sufficient upon a bond for the largest sum\nof money), as according to the nature of the deed. The highest do not\nexceed six pounds upon every sheet of paper, or skin of parchment; and\nthese high duties fall chiefly upon grants from the crown, and upon\ncertain law proceedings, without any regard to the value of the subject.\nThere are, in Great Britain, no duties on the registration of deeds or\nwritings, except the fees of the officers who keep the register; and\nthese are seldom more than a reasonable recompence for their labour. The\ncrown derives no revenue from them.\n\nIn Holland {Memoires concernant les Droits, etc. tom. i. p 223, 224,\n225.} there are both stamp duties and duties upon registration; which\nin some cases are, and in some are not, proportioned to the value of the\nproperty transferred. All testaments must be written upon stamped paper,\nof which the price is proportioned to the property disposed of; so that\nthere are stamps which cost from three pence or three stivers a-sheet,\nto three hundred florins, equal to about twenty-seven pounds ten\nshillings of our money. If the stamp is of an inferior price to what the\ntestator ought to have made use of, his succession is confiscated. This\nis over and above all their other taxes on succession. Except bills of\nexchange, and some other mercantile bills, all other deeds, bonds, and\ncontracts, are subject to a stamp duty. This duty, however, does not\nrise in proportion to the value of the subject. All sales of land and\nof houses, and all mortgages upon either, must be registered, and, upon\nregistration, pay a duty to the state of two and a-half per cent. upon\nthe amount of the price or of the mortgage. This duty is extended to\nthe sale of all ships and vessels of more than two tons burden, whether\ndecked or undecked. These, it seems, are considered as a sort of houses\nupon the water. The sale of moveables, when it is ordered by a court of\njustice, is subject to the like duty of two and a-half per cent.\n\nIn France, there are both stamp duties and duties upon registration.\nThe former are considered as a branch of the aids of excise, and, in\nthe provinces where those duties take place, are levied by the excise\nofficers. The latter are considered as a branch of the domain of the\ncrown and are levied by a different set of officers.\n\nThose modes of taxation by stamp duties and by duties upon registration,\nare of very modern invention. In the course of little more than a\ncentury, however, stamp duties have, in Europe, become almost universal,\nand duties upon registration extremely common. There is no art which one\ngovernment sooner learns of another, than that of draining money from\nthe pockets of the people.\n\nTaxes upon the transference of property from the dead to the living,\nfall finally, as well as immediately, upon the persons to whom the\nproperty is transferred. Taxes upon the sale of land fall altogether\nupon the seller. The seller is almost always under the necessity of\nselling, and must, therefore, take such a price as he can get. The buyer\nis scarce ever under the necessity of buying, and will, therefore, only\ngive such a price as he likes. He considers what the land will cost him,\nin tax and price together. The more he is obliged to pay in the way\nof tax, the less he will be disposed to give in the way of price. Such\ntaxes, therefore, fall almost always upon a necessitous person, and\nmust, therefore, be frequently very cruel and oppressive. Taxes upon the\nsale of new-built houses, where the building is sold without the ground,\nfall generally upon the buyer, because the builder must generally have\nhis profit; otherwise he must give up the trade. If he advances the tax,\ntherefore, the buyer must generally repay it to him. Taxes upon the sale\nof old houses, for the same reason as those upon the sale of land, fall\ngenerally upon the seller; whom, in most cases, either conveniency\nor necessity obliges to sell. The number of new-built houses that are\nannually brought to market, is more or less regulated by the demand.\nUnless the demand is such as to afford the builder his profit, after\npaying all expenses, he will build no more houses. The number of old\nhouses which happen at any time to come to market, is regulated by\naccidents, of which the greater part have no relation to the demand. Two\nor three great bankruptcies in a mercantile town, will bring many houses\nto sale, which must be sold for what can be got for them. Taxes upon\nthe sale of ground-rents fall altogether upon the seller, for the same\nreason as those upon the sale of lands. Stamp duties, and duties\nupon the registration of bonds and contracts for borrowed money, fall\naltogether upon the borrower, and, in fact, are always paid by him.\nDuties of the same kind upon law proceedings fall upon the suitors. They\nreduce to both the capital value of the subject in dispute. The more\nit costs to acquire any property, the less must be the neat value of it\nwhen acquired.\n\nAll taxes upon the transference of property of every kind, so far as\nthey diminish the capital value of that property, tend to diminish the\nfunds destined for the maintenance of productive labour. They are all\nmore or less unthrifty taxes that increase the revenue of the sovereign,\nwhich seldom maintains any but unproductive labourers, at the expense of\nthe capital of the people, which maintains none but productive.\n\n\nSuch taxes, even when they are proportioned to the value of the property\ntransferred, are still unequal; the frequency of transference not being\nalways equal in property of equal value. When they are not proportioned\nto this value, which is the case with the greater part of the stamp\nduties and duties of registration, they are still more so. They are in\nno respect arbitrary, but are, or may be, in all cases, perfectly clear\nand certain. Though they sometimes fall upon the person who is not\nvery able to pay, the time of payment is, in most cases, sufficiently\nconvenient for him. When the payment becomes due, he must, in most\ncases, have the more to pay. They are levied at very little expense, and\nin general subject the contributors to no other inconveniency, besides\nalways the unavoidable one of paying the tax. In France, the stamp\nduties are not much complained of. Those of registration, which they\ncall the Controle, are. They give occasion, it is pretended, to much\nextortion in the officers of the farmers-general who collect the tax,\nwhich is in a great measure arbitrary and uncertain. In the greater\npart of the libels which have been written against the present system of\nfinances in France, the abuses of the controle make a principal article.\nUncertainty, however, does not seem to be necessarily inherent in the\nnature of such taxes. If the popular complaints are well founded, the\nabuse must arise, not so much from the nature of the tax as from the\nwant of precision and distinctness in the words of the edicts or laws\nwhich impose it.\n\nThe registration of mortgages, and in general of all rights upon\nimmoveable property, as it gives great security both to creditors and\npurchasers, is extremely advantageous to the public. That of the greater\npart of deeds of other kinds, is frequently inconvenient and even\ndangerous to individuals, without any advantage to the public. All\nregisters which, it is acknowledged, ought to be kept secret, ought\ncertainly never to exist. The credit of individuals ought certainly\nnever to depend upon so very slender a security, as the probity and\nreligion of the inferior officers of revenue. But where the fees of\nregistration have been made a source of revenue to the sovereign,\nregister-offices have commonly been multiplied without end, both for the\ndeeds which ought to be registered, and for those which ought not.\nIn France there are several different sorts of secret registers. This\nabuse, though not perhaps a necessary, it must be acknowledged, is a\nvery natural effect of such taxes.\n\nSuch stamp duties as those in England upon cards and dice, upon\nnewspapers and periodical pamphlets, etc. are properly taxes upon\nconsumption; the final payment falls upon the persons who use or consume\nsuch commodities. Such stamp duties as those upon licences to retail\nale, wine, and spiritous liquors, though intended, perhaps, to fall upon\nthe profits of the retailers, are likewise finally paid by the consumers\nof those liquors. Such taxes, though called by the same name, and levied\nby the same officers, and in the same manner with the stamp duties above\nmentioned upon the transference of property, are, however, of a quite\ndifferent nature, and fall upon quite different funds.\n\nARTICLE III.--Taxes upon the Wages of Labour.\n\nThe wages of the inferior classes of work men, I have endeavoured to\nshow in the first book are everywhere necessarily regulated by two\ndifferent circumstances; the demand for labour, and the ordinary or\naverage price of provisions. The demand for labour, according as it\nhappens to be either increasing stationary or declining; or to require\nan increasing, stationary, or declining population, regulates the\nsubsistence of the labourer, and determines in what degree it shall\nbe either liberal, moderate, or scanty. The ordinary average price of\nprovisions determines the quantity of money which must be paid to the\nworkman, in order to enable him, one year with another, to purchase\nthis liberal, moderate, or scanty subsistence. While the demand for the\nlabour and the price of provisions, therefore, remain the same, a direct\ntax upon the wages of labour can have no other effect, than to raise\nthem somewhat higher than the tax. Let us suppose, for example, that,\nin a particular place, the demand for labour and the price of provisions\nwere such as to render ten shillings a-week the ordinary wages of\nlabour; and that a tax of one-fifth, or four shillings in the pound, was\nimposed upon wages. If the demand for labour and the price of provisions\nremained the same, it would still be necessary that the labourer should,\nin that place, earn such a subsistence as could be bought only for ten\nshillings a-week; so that, after paying the tax, he should have ten\nshillings a-week free wages. But, in order to leave him such free wages,\nafter paying such a tax, the price of labour must, in that place, soon\nrise, not to twelve shillings a week only, but to twelve and sixpence;\nthat is, in order to enable him to pay a tax of one-fifth, his wages\nmust necessarily soon rise, not one-fifth part only, but one-fourth.\nWhatever was the proportion of the tax, the wages of labour must, in all\ncases rise, not only in that proportion, but in a higher proportion. If\nthe tax for example, was one-tenth, the wages of labour must necessarily\nsoon rise, not one-tenth part only, but one-eighth.\n\nA direct tax upon the wages of labour, therefore, though the labourer\nmight, perhaps, pay it out of his hand, could not properly be said to be\neven advanced by him; at least if the demand for labour and the average\nprice of provisions remained the same after the tax as before it. In all\nsuch cases, not only the tax, but something more than the tax, would\nin reality be advanced by the person who immediately employed him. The\nfinal payment would, in different cases, fall upon different persons.\nThe rise which such a tax might occasion in the wages of manufacturing\nlabour would be advanced by the master manufacturer, who would both be\nentitled and obliged to charge it, with a profit, upon the price of his\ngoods. The final payment of this rise of wages, therefore, together with\nthe additional profit of the master manufacturer would fall upon the\nconsumer. The rise which such a tax might occasion in the wages of\ncountry labour would be advanced by the farmer, who, in order to\nmaintain the same number of labourers as before, would be obliged to\nemploy a greater capital. In order to get back this greater capital,\ntogether with the ordinary profits of stock, it would be necessary that\nhe should retain a larger portion, or, what comes to the same thing,\nthe price of a larger portion, of the produce of the land, and,\nconsequently, that he should pay less rent to the landlord. The final\npayment of this rise of wages, therefore, would, in this case, fall upon\nthe landlord, together with the additional profit of the farmer who had\nadvanced it. In all cases, a direct tax upon the wages of labour must,\nin the long-run, occasion both a greater reduction in the rent of land,\nand a greater rise in the price of manufactured goods than would have\nfollowed from the proper assessment of a sum equal to the produce of\nthe tax, partly upon the rent of land, and partly upon consumable\ncommodities.\n\nIf direct taxes upon the wages of labour have not always occasioned a\nproportionable rise in those wages, it is because they have generally\noccasioned a considerable fall in the demand of labour. The declension\nof industry, the decrease of employment for the poor, the diminution of\nthe annual produce of the land and labour of the country, have generally\nbeen the effects of such taxes. In consequence of them, however, the\nprice of labour must always be higher than it otherwise would have\nbeen in the actual state of the demand; and this enhancement of price,\ntogether with the profit of those who advance it, must always be finally\npaid by the landlords and consumers.\n\nA tax upon the wages of country labour does not raise the price of the\nrude produce of land in proportion to the tax; for the same reason\nthat a tax upon the farmer's profit does not raise that price in that\nproportion.\n\nAbsurd and destructive as such taxes are, however, they take place in\nmany countries. In France, that part of the taille which is charged\nupon the industry of workmen and day-labourers in country villages, is\nproperly a tax of this kind. Their wages are computed according to the\ncommon rate of the district in which they reside; and, that they may be\nas little liable as possible to any overcharge, their yearly gains\nare estimated at no more than two hundred working days in the year.\n{Memoires concernant les Droits, etc. tom. ii. p. 108.} The tax of\neach individual is varied from year to year, according to different\ncircumstances, of which the collector or the commissary, whom intendant\nappoints to assist him, are the judges. In Bohemia, in consequence of\nthe alteration in the system of finances which was begun in 1748, a very\nheavy tax is imposed upon the industry of artificers. They are divided\ninto four classes. The highest class pay a hundred florins a year,\nwhich, at two-and-twenty pence half penny a-florin, amounts to £9:7:6.\nThe second class are taxed at seventy; the third at fifty; and the\nfourth, comprehending artificers in villages, and the lowest class of\nthose in towns, at twenty-five florins. {Memoires concemant les Droits,\netc. tom. iii. p. 87.}\n\nThe recompence of ingenious artists, and of men of liberal professions,\nI have endeavoured to show in the first book, necessarily keeps a\ncertain proportion to the emoluments of inferior trades. A tax upon\nthis recompence, therefore, could have no other effect than to raise\nit somewhat higher than in proportion to the tax. If it did not rise in\nthis manner, the ingenious arts and the liberal professions, being; no\nlonger upon a level with other trades, would be so much deserted, that\nthey would soon return to that level.\n\nThe emoluments of offices are not, like those of trades and professions,\nregulated by the free competition of the market, and do not, therefore,\nalways bear a just proportion to what the nature of the employment\nrequires. They are, perhaps, in most countries, higher than it requires;\nthe persons who have the administration of government being generally\ndisposed to regard both themselves and their immediate dependents,\nrather more than enough. The emoluments of offices, therefore, can, in\nmost cases, very well bear to be taxed. The persons, besides, who enjoy\npublic offices, especially the more lucrative, are, in all countries,\nthe objects of general envy; and a tax upon their emoluments, even\nthough it should be somewhat higher than upon any other sort of revenue,\nis always a very popular tax. In England, for example, when, by the\nland-tax, every other sort of revenue was supposed to be assessed at\nfour shillings in the pound, it was very popular to lay a real tax of\nfive shillings and sixpence in the pound upon the salaries of offices\nwhich exceeded a hundred pounds a-year; the pensions of the younger\nbranches of the royal family, the pay of the officers of the army and\nnavy, and a few others less obnoxious to envy, excepted. There are in\nEngland no other direct taxes upon the wages of labour.\n\nARTICLE IV.--Taxes which it is intended should fall indifferently upon\nevery different Species of Revenue.\n\nThe taxes which it is intended should fall indifferently upon every\ndifferent species of revenue, are capitation taxes, and taxes upon\nconsumable commodities. Those must be paid indifferently, from whatever\nrevenue the contributors may possess; from the rent of their land, from\nthe profits of their stock, or from the wages of their labour.\n\nCapitation Taxes.\n\nCapitation taxes, if it is attempted to proportion them to the fortune\nor revenue of each contributor, become altogether arbitrary. The state\nof a man's fortune varies from day to day; and, without an inquisition,\nmore intolerable than any tax, and renewed at least once every year,\ncan only be guessed at. His assessment, therefore, must, in most\ncases, depend upon the good or bad humour of his assessors, and must,\ntherefore, be altogether arbitrary and uncertain.\n\nCapitation taxes, if they are proportioned, not to the supposed fortune,\nbut to the rank of each contributor, become altogether unequal; the\ndegrees of fortune being frequently unequal in the same degree of rank.\n\nSuch taxes, therefore, if it is attempted to render them equal, become\naltogether arbitrary and uncertain; and if it is attempted to render\nthem certain and not arbitrary, become altogether unequal. Let the tax\nbe light or heavy, uncertainty is always a great grievance. In a light\ntax, a considerable degree of inequality may be supported; in a heavy\none, it is altogether intolerable.\n\nIn the different poll-taxes which took place in England during the\nreign of William III. the contributors were, the greater part of them,\nassessed according to the degree of their rank; as dukes, marquises,\nearls, viscounts, barons, esquires, gentlemen, the eldest and youngest\nsons of peers, etc. All shop-keepers and tradesmen worth more than three\nhundred pounds, that is, the better sort of them, were subject to the\nsame assessment, how great soever might be the difference in their\nfortunes. Their rank was more considered than their fortune. Several of\nthose who, in the first poll-tax, were rated according to their supposed\nfortune were afterwards rated according to their rank. Serjeants,\nattorneys, and proctors at law, who, in the first poll-tax, were\nassessed at three shillings in the pound of their supposed income, were\nafterwards assessed as gentlemen. In the assessment of a tax which was\nnot very heavy, a considerable degree of inequality had been found less\ninsupportable than any degree of uncertainty.\n\nIn the capitation which has been levied in France, without-any\ninterruption, since the beginning of the present century, the highest\norders of people are rated according to their rank, by an invariable\ntariff; the lower orders of people, according to what is supposed to\nbe their fortune, by an assessment which varies from year to year. The\nofficers of the king's court, the judges, and other officers in the\nsuperior courts of justice, the officers of the troops, etc are assessed\nin the first manner. The inferior ranks of people in the provinces\nare assessed in the second. In France, the great easily submit to a\nconsiderable degree of inequality in a tax which, so far as it affects\nthem, is not a very heavy one; but could not brook the arbitrary\nassessment of an intendant.\n\nThe inferior ranks of people must, in that country, suffer patiently the\nusage which their superiors think proper to give them.\n\nIn England, the different poll-taxes never produced the sum which\nhad been expected from them, or which it was supposed they might have\nproduced, had they been exactly levied. In France, the capitation always\nproduces the sum expected from it. The mild government of England, when\nit assessed the different ranks of people to the poll-tax, contented\nitself with what that assessment happened to produce, and required no\ncompensation for the loss which the state might sustain, either by those\nwho could not pay, or by those who would not pay (for there were many\nsuch), and who, by the indulgent execution of the law, were not\nforced to pay. The more severe government of France assesses upon each\ngenerality a certain sum, which the intendant must find as he can.\nIf any province complains of being assessed too high, it may, in\nthe assessment of next year, obtain an abatement proportioned to the\novercharge of the year before; but it must pay in the mean time. The\nintendant, in order to be sure of finding the sum assessed upon his\ngenerality, was empowered to assess it in a larger sum, that the failure\nor inability of some of the contributors might be compensated by the\novercharge of the rest; and till 1765, the fixation of this surplus\nassessment was left altogether to his discretion. In that year, indeed,\nthe council assumed this power to itself. In the capitation of the\nprovinces, it is observed by the perfectly well informed author of the\nMemoirs upon the Impositions in France, the proportion which falls\nupon the nobility, and upon those whose privileges exempt them from the\ntaille, is the least considerable. The largest falls upon those subject\nto the taille, who are assessed to the capitation at so much a-pound of\nwhat they pay to that other tax. Capitation taxes, so far as they are\nlevied upon the lower ranks of people, are direct taxes upon the wages\nof labour, and are attended with all the inconveniencies of such taxes.\n\nCapitation taxes are levied at little expense; and, where they are\nrigorously exacted, afford a very sure revenue to the state. It is upon\nthis account that, in countries where the case, comfort, and security\nof the inferior ranks of people are little attended to, capitation taxes\nare very common. It is in general, however, but a small part of the\npublic revenue, which, in a great empire, has ever been drawn from such\ntaxes; and the greatest sum which they have ever afforded, might always\nhave been found in some other way much more convenient to the people.\n\nTaxes upon Consumable Commodities.\n\nThe impossibility of taxing the people, in proportion to their revenue,\nby any capitation, seems to have given occasion to the invention of\ntaxes upon consumable commodities. The state not knowing how to tax,\ndirectly and proportionably, the revenue of its subjects, endeavours to\ntax it indirectly by taxing their expense, which, it is supposed, will,\nin most cases, be nearly in proportion to their revenue. Their expense\nis taxed, by taxing the consumable commodities upon which it is laid\nout.\n\nConsumable commodities are either necessaries or luxuries.\n\nBy necessaries I understand, not only the commodities which are\nindispensibly necessary for the support of life, but whatever the custom\nof the country renders it indecent for creditable people, even of the\nlowest order, to be without. A linen shirt, for example, is, strictly\nspeaking, not a necessary of life. The Greeks and Romans lived, I\nsuppose, very comfortably, though they had no linen. But in the present\ntimes, through the greater part of Europe, a creditable day-labourer\nwould be ashamed to appear in public without a linen shirt, the want of\nwhich would be supposed to denote that disgraceful degree of poverty,\nwhich, it is presumed, nobody can well fall into without extreme bad\nconduct. Custom, in the same manner, has rendered leather shoes a\nnecessary of life in England. The poorest creditable person, of either\nsex, would be ashamed to appear in public without them. In Scotland,\ncustom has rendered them a necessary of life to the lowest order of men;\nbut not to the same order of women, who may, without any discredit, walk\nabout barefooted. In France, they are necessaries neither to men nor to\nwomen; the lowest rank of both sexes appearing there publicly, without\nany discredit, sometimes in wooden shoes, and sometimes barefooted.\nUnder necessaries, therefore, I comprehend, not only those things which\nnature, but those things which the established rules of decency have\nrendered necessary to the lowest rank of people. All other things I call\nluxuries, without meaning, by this appellation, to throw the smallest\ndegree of reproach upon the temperate use of them. Beer and ale, for\nexample, in Great Britain, and wine, even in the wine countries, I call\nluxuries. A man of any rank may, without any reproach, abstain totally\nfrom tasting such liquors. Nature does not render them necessary for the\nsupport of life; and custom nowhere renders it indecent to live without\nthem.\n\nAs the wages of labour are everywhere regulated, partly by the demand\nfor it, and partly by the average price of the necessary articles of\nsubsistence; whatever raises this average price must necessarily raise\nthose wages; so that the labourer may still be able to purchase that\nquantity of those necessary articles which the state of the demand for\nlabour, whether increasing, stationary, or declining, requires that he\nshould have. {See book i.chap. 8} A tax upon those articles necessarily\nraises their price somewhat higher than the amount of the tax, because\nthe dealer, who advances the tax, must generally get it back, with a\nprofit. Such a tax must, therefore, occasion a rise in the wages of\nlabour, proportionable to this rise of price.\n\nIt is thus that a tax upon the necessaries of life operates exactly in\nthe same manner as a direct tax upon the wages of labour. The labourer,\nthough he may pay it out of his hand, cannot, for any considerable time\nat least, be properly said even to advance it. It must always, in the\nlong-run, be advanced to him by his immediate employer, in the advanced\nstate of wages. His employer, if he is a manufacturer, will charge upon\nthe price of his goods the rise of wages, together with a profit, so\nthat the final payment of the tax, together with this overcharge, will\nfall upon the consumer. If his employer is a farmer, the final payment,\ntogether with a like overcharge, will fall upon the rent of the\nlandlord.\n\nIt is otherwise with taxes upon what I call luxuries, even upon those\nof the poor. The rise in the price of the taxed commodities, will\nnot necessarily occasion any rise in the wages of labour. A tax upon\ntobacco, for example, though a luxury of the poor, as well as of the\nrich, will not raise wages. Though it is taxed in England at three\ntimes, and in France at fifteen times its original price, those high\nduties seem to have no effect upon the wages of labour. The same thing\nmaybe said of the taxes upon tea and sugar, which, in England and\nHolland, have become luxuries of the lowest ranks of people; and of\nthose upon chocolate, which, in Spain, is said to have become so.\n\nThe different taxes which, in Great Britain, have, in the course of the\npresent century, been imposed upon spiritous liquors, are not supposed\nto have had any effect upon the wages of labour. The rise in the price\nof porter, occasioned by an additional tax of three shillings upon the\nbarrel of strong beer, has not raised the wages of common labour in\nLondon. These were about eighteen pence or twenty pence a-day before the\ntax, and they are not more now.\n\nThe high price of such commodities does not necessarily diminish the\nability of the inferior ranks of people to bring up families. Upon the\nsober and industrious poor, taxes upon such commodities act as sumptuary\nlaws, and dispose them either to moderate, or to refrain altogether from\nthe use of superfluities which they can no longer easily afford. Their\nability to bring up families, in consequence of this forced frugality,\ninstead of being diminished, is frequently, perhaps, increased by the\ntax. It is the sober and industrious poor who generally bring up the\nmost numerous families, and who principally supply the demand for useful\nlabour. All the poor, indeed, are not sober and industrious; and the\ndissolute and disorderly might continue to indulge themselves in the\nuse of such commodities, after this rise of price, in the same manner as\nbefore, without regarding the distress which this indulgence might bring\nupon their families. Such disorderly persons, however, seldom rear up\nnumerous families, their children generally perishing from neglect,\nmismanagement, and the scantiness or unwholesomeness of their food. If\nby the strength of their constitution, they survive the hardships to\nwhich the bad conduct of their parents exposes them, yet the example\nof that bad conduct commonly corrupts their morals; so that, instead of\nbeing useful to society by their industry, they become public nuisances\nby their vices and disorders. Through the advanced price of the luxuries\nof the poor, therefore, might increase somewhat the distress of such\ndisorderly families, and thereby diminish somewhat their ability to\nbring up children, it would not probably diminish much the useful\npopulation of the country.\n\nAny rise in the average price of necessaries, unless it be compensated\nby a proportionable rise in the wages of labour, must necessarily\ndiminish, more or less, the ability of the poor to bring up numerous\nfamilies, and, consequently, to supply the demand for useful labour;\nwhatever may be the state of that demand, whether increasing,\nstationary, or declining; or such as requires an increasing, stationary,\nor declining population.\n\nTaxes upon luxuries have no tendency to raise the price of any\nother commodities, except that of the commodities taxed. Taxes upon\nnecessaries, by raising the wages of labour, necessarily tend to raise\nthe price of all manufactures, and consequently to diminish the extent\nof their sale and consumption. Taxes upon luxuries are finally paid by\nthe consumers of the commodities taxed, without any retribution. They\nfall indifferently upon every species of revenue, the wages of labour,\nthe profits of stock, and the rent of land. Taxes upon necessaries,\nso far as they affect the labouring poor, are finally paid, partly by\nlandlords, in the diminished rent of their lands, and partly by rich\nconsumers, whether landlords or others, in the advanced price of\nmanufactured goods; and always with a considerable overcharge. The\nadvanced price of such manufactures as are real necessaries of life, and\nare destined for the consumption of the poor, of coarse woollens, for\nexample, must be compensated to the poor by a farther advancement\nof their wages. The middling and superior ranks of people, if they\nunderstood their own interest, ought always to oppose all taxes upon the\nnecessaries of life, as well as all taxes upon the wages of labour.\nThe final payment of both the one and the other falls altogether\nupon themselves, and always with a considerable overcharge. They fall\nheaviest upon the landlords, who always pay in a double capacity; in\nthat of landlords, by the reduction, of their rent; and in that of rich\nconsumers, by the increase of their expense. The observation of Sir\nMatthew Decker, that certain taxes are, in the price of certain goods,\nsometimes repeated and accumulated four or five times, is perfectly\njust with regard to taxes upon the necessaries of life. In the price of\nleather, for example, you must pay not only for the tax upon the leather\nof your own shoes, but for a part of that upon those of the shoemaker\nand the tanner. You must pay, too, for the tax upon the salt, upon the\nsoap, and upon the candles which those workmen consume while employed in\nyour service; and for the tax upon the leather, which the saltmaker,\nthe soap-maker, and the candle-maker consume, while employed in their\nservice.\n\nIn Great Britain, the principal taxes upon the necessaries of life, are\nthose upon the four commodities just now mentioned, salt, leather, soap,\nand candles.\n\nSalt is a very ancient and a very universal subject of taxation. It was\ntaxed among the Romans, and it is so at present in, I believe, every\npart of Europe. The quantity annually consumed by any individual is so\nsmall, and may be purchased so gradually, that nobody, it seems to have\nbeen thought, could feel very sensibly even a pretty heavy tax upon it.\nIt is in England taxed at three shillings and fourpence a bushel;\nabout three times the original price of the commodity. In some other\ncountries, the tax is still higher. Leather is a real necessary of life.\nThe use of linen renders soap such. In countries where the winter nights\nare long, candles are a necessary instrument of trade. Leather and soap\nare in Great Britain taxed at three halfpence a-pound; candles at a\npenny; taxes which, upon the original price of leather, may amount to\nabout eight or ten per cent.; upon that of soap, to about twenty or\nfive-and-twenty per cent.; and upon that of candles to about fourteen or\nfifteen per cent.; taxes which, though lighter than that upon salt, are\nstill very heavy. As all those four commodities are real necessaries of\nlife, such heavy taxes upon them must increase somewhat the expense of\nthe sober and industrious poor, and must consequently raise more or less\nthe wages of their labour.\n\nIn a country where the winters are so cold as in Great Britain, fuel is,\nduring that season, in the strictest sense of the word, a necessary\nof life, not only for the purpose of dressing victuals, but for the\ncomfortable subsistence of many different sorts of workmen who work\nwithin doors; and coals are the cheapest of all fuel. The price of fuel\nhas so important an influence upon that of labour, that all over Great\nBritain, manufactures have confined themselves principally to the coal\ncounties; other parts of the country, on account of the high price\nof this necessary article, not being able to work so cheap. In some\nmanufactures, besides, coal is a necessary instrument of trade; as in\nthose of glass, iron, and all other metals. If a bounty could in any\ncase be reasonable, it might perhaps be so upon the transportation of\ncoals from those parts of the country in which they abound, to those\nin which they are wanted. But the legislature, instead of a bounty, has\nimposed a tax of three shillings and threepence a-ton upon coals carried\ncoastways; which, upon most sorts of coal, is more than sixty per cent.\nof the original price at the coal pit. Coals carried, either by land or\nby inland navigation, pay no duty. Where they are naturally cheap, they\nare consumed duty free; where they are naturally dear, they are loaded\nwith a heavy duty.\n\nSuch taxes, though they raise the price of subsistence, and consequently\nthe wages of labour, yet they afford a considerable revenue to\ngovernment, which it might not be easy to find in any other way. There\nmay, therefore, be good reasons for continuing them. The bounty upon the\nexportation of corn, so far us it tends, in the actual state of tillage,\nto raise the price of that necessary article, produces all the like bad\neffects; and instead of affording any revenue, frequently occasions a\nvery great expense to government. The high duties upon the importation\nof foreign corn, which, in years of moderate plenty, amount to a\nprohibition; and the absolute prohibition of the importation, either of\nlive cattle, or of salt provisions, which takes place in the ordinary\nstate of the law, and which, on account of the scarcity, is at present\nsuspended for a limited time with regard to Ireland and the British\nplantations, have all had the bad effects of taxes upon the necessaries\nof life, and produce no revenue to government. Nothing seems necessary\nfor the repeal of such regulations, but to convince the public of\nthe futility of that system in consequence of which they have been\nestablished.\n\nTaxes upon the necessaries of life are much higher in many other\ncountries than in Great Britain. Duties upon flour and meal when ground\nat the mill, and upon bread when baked at the oven, take place in many\ncountries. In Holland the money-price of the: bread consumed in towns\nis supposed to be doubled by means of such taxes. In lieu of a part of\nthem, the people who live in the country, pay every year so much a-head,\naccording to the sort of bread they are supposed to consume. Those who\nconsume wheaten bread pay three guilders fifteen stivers; about six\nshillings and ninepence halfpenny. Those, and some other taxes of the\nsame kind, by raising the price of labour, are said to have ruined the\ngreater part of the manufactures of Holland {Memoires concernant les\nDroits, etc. p. 210, 211.}. Similar taxes, though not quite so heavy,\ntake place in the Milanese, in the states of Genoa, in the duchy of\nModena, in the duchies of Parma, Placentia, and Guastalla, and the\nEcclesiastical state. A French author {Le Reformateur} of some note, has\nproposed to reform the finances of his country, by substituting in the\nroom of the greater part of other taxes, this most ruinous of all taxes.\nThere is nothing so absurd, says Cicero, which has not sometimes been\nasserted by some philosophers.\n\nTaxes upon butcher's meat are still more common than those upon\nbread. It may indeed be doubted, whether butcher's meat is any where a\nnecessary of life. Grain and other vegetables, with the help of milk,\ncheese, and butter, or oil, where butter is not to be had, it is known\nfrom experience, can, without any butcher's meat, afford the most\nplentiful, the most wholesome, the most nourishing, and the most\ninvigorating diet. Decency nowhere requires that any man should eat\nbutcher's meat, as it in most places requires that he should wear a\nlinen shirt or a pair of leather shoes.\n\nConsumable commodities, whether necessaries or luxuries, may be taxed in\ntwo different ways. The consumer may either pay an annual sum on account\nof his using or consuming goods of a certain kind; or the goods may be\ntaxed while they remain in the hands of the dealer, and before they\nare delivered to the consumer. The consumable goods which last a\nconsiderable time before they are consumed altogether, are most properly\ntaxed in the one way; those of which the consumption is either immediate\nor more speedy, in the other. The coach-tax and plate tax are examples\nof the former method of imposing; the greater part of the other duties\nof excise and customs, of the latter.\n\nA coach may, with good management, last ten or twelve years. It might\nbe taxed, once for all, before it comes out of the hands of the\ncoach-maker. But it is certainly more convenient for the buyer to pay\nfour pounds a-year for the privilege of keeping a coach, than to pay all\nat once forty or forty-eight pounds additional price to the coach-maker;\nor a sum equivalent to what the tax is likely to cost him during the\ntime he uses the same coach. A service of plate in the same manner, may\nlast more than a century. It is certainly-easier for the consumer to pay\nfive shillings a-year for every hundred ounces of plate, near one per\ncent. of the value, than to redeem this long annuity at five-and-twenty\nor thirty years purchase, which would enhance the price at least\nfive-and-twenty or thirty per cent. The different taxes which affect\nhouses, are certainly more conveniently paid by moderate annual\npayments, than by a heavy tax of equal value upon the first building or\nsale of the house.\n\nIt was the well-known proposal of Sir Matthew Decker, that all\ncommodities, even those of which the consumption is either immediate or\nspeedy, should be taxed in this manner; the dealer advancing nothing,\nbut the consumer paying a certain annual sum for the licence to consume\ncertain goods. The object of his scheme was to promote all the different\nbranches of foreign trade, particularly the carrying trade, by taking\naway all duties upon importation and exportation, and thereby enabling\nthe merchant to employ his whole capital and credit in the purchase of\ngoods and the freight of ships, no part of either being diverted towards\nthe advancing of taxes, The project, however, of taxing, in this manner,\ngoods of immediate or speedy consumption, seems liable to the four\nfollowing very important objections. First, the tax would be more\nunequal, or not so well proportioned to the expense and consumption\nof the different contributors, as in the way in which it is commonly\nimposed. The taxes upon ale, wine, and spiritous liquors, which are\nadvanced by the dealers, are finally paid by the different consumers,\nexactly in proportion to their respective consumption. But if the tax\nwere to be paid by purchasing a licence to drink those liquors, the\nsober would, in proportion to his consumption, be taxed much more\nheavily than the drunken consumer. A family which exercised great\nhospitality, would be taxed much more lightly than one who entertained\nfewer guests. Secondly, this mode of taxation, by paying for an annual,\nhalf-yearly, or quarterly licence to consume certain goods, would\ndiminish very much one of the principal conveniences of taxes upon\ngoods of speedy consumption; the piece-meal payment. In the price of\nthreepence halfpenny, which is at present paid for a pot of porter,\nthe different taxes upon malt, hops, and beer, together with the\nextraordinary profit which the brewer charges for having advanced\nthan, may perhaps amount to about three halfpence. If a workman can\nconveniently spare those three halfpence, he buys a pot of porter. If\nhe cannot, he contents himself with a pint; and, as a penny saved is a\npenny got, he thus gains a farthing by his temperance. He pays the tax\npiece-meal, as he can afford to pay it, and when he can afford to pay\nit, and every act of payment is perfectly voluntary, and what he can\navoid if he chuses to do so. Thirdly, such taxes would operate less\nas sumptuary laws. When the licence was once purchased, whether the\npurchaser drunk much or drunk little, his tax would be the same.\nFourthly, if a workman were to pay all at once, by yearly, half-yearly,\nor quarterly payments, a tax equal to what he at present pays, with\nlittle or no inconveniency, upon all the different pots and pints\nof porter which he drinks in any such period of time, the sum might\nfrequently distress him very much. This mode of taxation, therefore,\nit seems evident, could never, without the most grievous oppression,\nproduce a revenue nearly equal to what is derived from the present mode\nwithout any oppression. In several countries, however, commodities of\nan immediate or very speedy consumption are taxed in this manner. In\nHolland, people pay so much a-head for a licence to drink tea. I have\nalready mentioned a tax upon bread, which, so far as it is consumed in\nfarm houses and country villages, is there levied in the same manner.\n\nThe duties of excise are imposed chiefly upon goods of home produce,\ndestined for home consumption. They are imposed only upon a few sorts\nof goods of the most general use. There can never be any doubt, either\nconcerning the goods which are subject to those duties, or concerning\nthe particular duty which each species of goods is subject to. They fall\nalmost altogether upon what I call luxuries, excepting always the four\nduties above mentioned, upon salt, soap, leather, candles, and perhaps\nthat upon green glass.\n\nThe duties of customs are much more ancient than those of excise. They\nseem to have been called customs, as denoting customary payments, which\nhad been in use for time immemorial. They appear to have been originally\nconsidered as taxes upon the profits of merchants. During the barbarous\ntimes of feudal anarchy, merchants, like all the other inhabitants of\nburghs, were considered as little better than emancipated bondmen, whose\npersons were despised, and whose gains were envied. The great nobility,\nwho had consented that the king should tallage the profits of their own\ntenants, were not unwilling that he should tallage likewise those of an\norder of men whom it was much less their interest to protect. In those\nignorant times, it was not understood, that the profits of merchants are\na subject not taxable directly; or that the final payment of all such\ntaxes must fall, with a considerable overcharge, upon the consumers.\n\nThe gains of alien merchants were looked upon more unfavourably than\nthose of English merchants. It was natural, therefore, that those of\nthe former should be taxed more heavily than those of the latter.\nThis distinction between the duties upon aliens and those upon English\nmerchants, which was begun from ignorance, has been continued front the\nspirit of monopoly, or in order to give our own merchants an advantage,\nboth in the home and in the foreign market.\n\nWith this distinction, the ancient duties of customs were imposed\nequally upon all sorts of goods, necessaries as well its luxuries, goods\nexported as well as goods imported. Why should the dealers in one sort\nof goods, it seems to have been thought, be more favoured than those in\nanother? or why should the merchant exporter be more favoured than the\nmerchant importer?\n\nThe ancient customs were divided into three branches. The first, and,\nperhaps, the most ancient of all those duties, was that upon wool and\nleather. It seems to have been chiefly or altogether an exportation\nduty. When the woollen manufacture came to be established in England,\nlest the king should lose any part of his customs upon wool by the\nexportation of woollen cloths, a like duty was imposed upon them. The\nother two branches were, first, a duty upon wine, which being imposed\nat so much a-ton, was called a tonnage; and, secondly, a duty upon all\nother goods, which being imposed at so much a-pound of their supposed\nvalue, was called a poundage. In the forty-seventh year of Edward III.,\na duty of sixpence in the pound was imposed upon all goods exported\nand imported, except wools, wool-felts, leather, and wines which were\nsubject to particular duties. In the fourteenth of Richard II.,\nthis duty was raised to one shilling in the pound; but, three years\nafterwards, it was again reduced to sixpence. It was raised to\neightpence in the second year of Henry IV.; and, in the fourth of\nthe same prince, to one shilling. From this time to the ninth year of\nWilliam III., this duty continued at one shilling in the pound. The\nduties of tonnage and poundage were generally granted to the king by one\nand the same act of parliament, and were called the subsidy of tonnage\nand poundage. The subsidy of poundage having continued for so long a\ntime at one shilling in the pound, or at five per cent., a subsidy came,\nin the language of the customs, to denote a general duty of this kind of\nfive per cent. This subsidy, which is now called the old subsidy, still\ncontinues to be levied, according to the book of rates established by\nthe twelfth of Charles II. The method of ascertaining, by a book of\nrates, the value of goods subject to this duty, is said to be older than\nthe time of James I. The new subsidy, imposed by the ninth and tenth of\nWilliam III., was an additional five per cent. upon the greater part\nof goods. The one-third and the two-third subsidy made up between them\nanother five per cent. of which they were proportionable parts. The\nsubsidy of 1747 made a fourth five per cent. upon the greater part of\ngoods; and that of 1759, a fifth upon some particular sorts of goods.\nBesides those five subsidies, a great variety of other duties have\noccasionally been imposed upon particular sorts of goods, in order\nsometimes to relieve the exigencie's of the state, and sometimes to\nregulate the trade of the country, according to the principles of the\nmercantile system.\n\nThat system has come gradually more and more into fashion. The\nold subsidy was imposed indifferently upon exportation, as well as\nimportation. The four subsequent subsidies, as well as the other duties\nwhich have since been occasionally imposed upon particular sorts\nof goods, have, with a few exceptions, been laid altogether upon\nimportation. The greater part of the ancient duties which had\nbeen imposed upon the exportation of the goods of home produce and\nmanufacture, have either been lightened or taken away altogether. In\nmost cases, they have been taken away. Bounties have even been given\nupon the exportation of some of them. Drawbacks, too, sometimes of the\nwhole, and, in most cases, of a part of the duties which are paid\nupon the importation of foreign goods, have been granted upon their\nexportation. Only half the duties imposed by the old subsidy upon\nimportation, are drawn back upon exportation; but the whole of those\nimposed by the latter subsidies and other imposts are, upon the greater\nparts of the goods, drawn back in the same manner. This growing favour\nof exportation, and discouragement of importation, have suffered only\na few exceptions, which chiefly concern the materials of some\nmanufactures. These our merchants and manufacturers are willing should\ncome as cheap as possible to themselves, and as dear as possible to\ntheir rivals and competitors in other countries. Foreign materials are,\nupon this account, sometimes allowed to be imported duty-free; spanish\nwool, for example, flax, and raw linen yarn. The exportation of the\nmaterials of home produce, and of those which are the particular produce\nof our colonies, has sometimes been prohibited, and sometimes subjected\nto higher duties. The exportation of English wool has been prohibited.\nThat of beaver skins, of beaver wool, and of gum-senega, has been\nsubjected to higher duties; Great Britain, by the conquests of Canada\nand Senegal, having got almost the monopoly of those commodities.\n\nThat the mercantile system has not been very favourable to the revenue\nof the great body of the people, to the annual produce of the land and\nlabour of the country, I have endeavoured to show in the fourth book of\nthis Inquiry. It seems not to have been more favourable to the revenue\nof the sovereign; so far, at least, as that revenue depends upon the\nduties of customs.\n\nIn consequence of that system, the importation of several sorts of goods\nhas been prohibited altogether. This prohibition has, in some cases,\nentirely prevented, and in others has very much diminished, the\nimportation of those commodities, by reducing the importers to the\nnecessity of smuggling. It has entirely prevented the importation of\nforeign wollens; and it has very much diminished that of foreign silks\nand velvets, In both cases, it has entirely annihilated the revenue of\ncustoms which might have been levied upon such importation.\n\nThe high duties which have been imposed upon the importation of\nmany different sorts of foreign goods in order to discourage their\nconsumption in Great Britain, have, in many cases, served only to\nencourage smuggling, and, in all cases, have reduced the revenues of the\ncustoms below what more moderate duties would have afforded. The saying\nof Dr. Swift, that in the arithmetic of the customs, two and two,\ninstead of making four, make sometimes only one, holds perfectly true\nwith regard to such heavy duties, which never could have been imposed,\nhad not the mercantile system taught us, in many cases, to employ\ntaxation as an instrument, not of revenue, but of monopoly.\n\nThe bounties which are sometimes given upon the exportation of home\nproduce and manufactures, and the drawbacks which are paid upon the\nre-exportation of the greater part of foreign goods, have given occasion\nto many frauds, and to a species of smuggling, more destructive of\nthe public revenue than any other. In order to obtain the bounty or\ndrawback, the goods, it is well known, are sometimes shipped, and sent\nto sea, but soon afterwards clandestinely re-landed in some other part\nof the country. The defalcation of the revenue of customs occasioned by\nbounties and drawbacks, of which a great part are obtained fraudulently,\nis very great. The gross produce of the customs, in the year which ended\non the 5th of January 1755, amounted to £5,068,000. The bounties which\nwere paid out of this revenue, though in that year there was no bounty\nupon corn, amounted to £167,806. The drawbacks which were paid upon\ndebentures and certificates, to £2,156,800. Bounties and drawbacks\ntogether amounted to £2,324,600. In consequence of these deductions, the\nrevenue of the customs amounted only to £2,743,400; from which deducting\n£287,900 for the expense of management, in salaries and other\nincidents, the neat revenue of the customs for that year comes out to\nbe £2,455,500. The expense of management, amounts, in this manner, to\nbetween five and six per cent. upon the gross revenue of the customs;\nand to something more than ten per cent. upon what remains of that\nrevenue, after deducting what is paid away in bounties and drawbacks.\n\nHeavy duties being imposed upon almost all goods imported, our merchant\nimporters smuggle as much, and make entry of as little as they can.\nOur merchant exporters, on the contrary, make entry of more than they\nexport; sometimes out of vanity, and to pass for great dealers in goods\nwhich pay no duty gain a bounty back. Our exports, in consequence of\nthese different frauds, appear upon the custom-house books greatly\nto overbalance our imports, to the unspeakable comfort of those\npoliticians, who measure the national prosperity by what they call the\nbalance of trade.\n\nAll goods imported, unless particularly exempted, and such exemptions\nare not very numerous, are liable to some duties of customs. If any\ngoods are imported, not mentioned in the book of rates, they are taxed\nat 4s:9¾d. for every twenty shillings value, according to the oath\nof the importer, that is, nearly at five subsidies, or five poundage\nduties. The book of rates is extremely comprehensive, and enumerates a\ngreat variety of articles, many of them little used, and, therefore, not\nwell known. It is, upon this account, frequently uncertain under\nwhat article a particular sort of goods ought to be classed, and,\nconsequently what duty they ought to pay. Mistakes with regard to this\nsometimes ruin the custom-house officer, and frequently occasion much\ntrouble, expense, and vexation to the importer. In point of perspicuity,\nprecision, and distinctness, therefore, the duties of customs are much\ninferior to those of excise.\n\nIn order that the greater part of the members of any society should\ncontribute to the public revenue, in proportion to their respective\nexpense, it does not seem necessary that every single article of that\nexpense should be taxed. The revenue which is levied by the duties of\nexcise is supposed to fall as equally upon the contributors as that\nwhich is levied by the duties of customs; and the duties of excise\nare imposed upon a few articles only of the most general used and\nconsumption. It has been the opinion of many people, that, by proper\nmanagement, the duties of customs might likewise, without any loss\nto the public revenue, and with great advantage to foreign trade, be\nconfined to a few articles only.\n\nThe foreign articles, of the most general use and consumption in\nGreat Britain, seem at present to consist chiefly in foreign wines and\nbrandies; in some of the productions of America and the West Indies,\nsugar, rum, tobacco, cocoa-nuts, etc. and in some of those of the East\nIndies, tea, coffee, china-ware, spiceries of all kinds, several sorts\nof piece-goods, etc. These different articles afford, the greater part\nof the perhaps, at present, revenue which is drawn from the duties of\ncustoms. The taxes which at present subsist upon foreign manufactures,\nif you except those upon the few contained in the foregoing enumeration,\nhave, the greater part of them, been imposed for the purpose, not of\nrevenue, but of monopoly, or to give our own merchants an advantage in\nthe home market. By removing all prohibitions, and by subjecting all\nforeign manufactures to such moderate taxes, as it was found from\nexperience, afforded upon each article the greatest revenue to the\npublic, our own workmen might still have a considerable advantage in\nthe home market; and many articles, some of which at present afford\nno revenue to government, and others a very inconsiderable one, might\nafford a very great one.\n\nHigh taxes, sometimes by diminishing the consumption of the taxed\ncommodities, and sometimes by encouraging smuggling frequently afford\na smaller revenue to government than what might be drawn from more\nmoderate taxes.\n\nWhen the diminution of revenue is the effect of the diminution of\nconsumption, there can be but one remedy, and that is the lowering\nof the tax. When the diminution of revenue is the effect of the\nencouragement given to smuggling, it may, perhaps, be remedied in two\nways; either by diminishing the temptation to smuggle, or by increasing\nthe difficulty of smuggling. The temptation to smuggle can be diminished\nonly by the lowering of the tax; and the difficulty of smuggling can be\nincreased only by establishing that system of administration which is\nmost proper for preventing it.\n\nThe excise laws, it appears, I believe, from experience, obstruct and\nembarrass the operations of the smuggler much more effectually than\nthose of the customs. By introducing into the customs a system of\nadministration as similar to that of the excise as the nature of the\ndifferent duties will admit, the difficulty of smuggling might be very\nmuch increased. This alteration, it has been supposed by many people,\nmight very easily be brought about.\n\nThe importer of commodities liable to any duties of customs, it has been\nsaid, might, at his option, be allowed either to carry them to his own\nprivate warehouse; or to lodge them in a warehouse, provided either\nat his own expense or at that of the public, but under the key of the\ncustom-house officer, and never to be opened but in his presence. If\nthe merchant carried them to his own private warehouse, the duties to\nbe immediately paid, and never afterwards to be drawn back; and that\nwarehouse to be at all times subject to the visit and examination of\nthe custom-house officer, in order to ascertain how far the quantity\ncontained in it corresponded with that for which the duty had been paid.\nIf he carried them to the public warehouse, no duty to be paid till they\nwere taken out for home consumption. If taken out for exportation, to\nbe duty-free; proper security being always given that they should be\nso exported. The dealers in those particular commodities, either\nby wholesale or retail, to be at all times subject to the visit and\nexamination of the custom-house officer; and to be obliged to justify,\nby proper certificates, the payment of the duty upon the whole quantity\ncontained in their shops or warehouses. What are called the excise\nduties upon rum imported, are at present levied in this manner; and the\nsame system of administration might, perhaps, be extended to all duties\nupon goods imported; provided always that those duties were, like the\nduties of excise, confined to a few sorts of goods of the most general\nuse and consumption. If they were extended to almost all sorts of goods,\nas at present, public warehouses of sufficient extent could not easily\nbe provided; and goods of a very delicate nature, or of which the\npreservation required much care and attention, could not safely be\ntrusted by the merchant in any warehouse but his own.\n\nIf, by such a system of administration, smuggling to any considerable\nextent could be prevented, even under pretty high duties; and if every\nduty was occasionally either heightened or lowered according as it was\nmost likely, either the one way or the other, to afford the greatest\nrevenue to the state; taxation being always employed as an instrument of\nrevenue, and never of monopoly; it seems not improbable that a revenue,\nat least equal to the present neat revenue of the customs, might be\ndrawn from duties upon the importation of only a few sorts of goods of\nthe most general use and consumption; and that the duties of customs\nmight thus be brought to the same degree of simplicity, certainty, and\nprecision, as those of excise. What the revenue at present loses by\ndrawbacks upon the re-exportation of foreign goods, which are afterwards\nre-landed and consumed at home, would, under this system, be saved\naltogether. If to this saving, which would alone be very considerable,\nwere added the abolition of all bounties upon the exportation of home\nproduce; in all cases in which those bounties were not in reality\ndrawbacks of some duties of excise which had before been advanced; it\ncannot well be doubted, but that the neat revenue of customs might,\nafter an alteration of this kind, be fully equal to what it had ever\nbeen before.\n\nIf, by such a change of system, the public revenue suffered no loss,\nthe trade and manufactures of the country would certainly gain a very\nconsiderable advantage. The trade in the commodities not taxed, by far\nthe greatest number would be perfectly free, and might be carried on\nto and from all parts of the world with every possible advantage. Among\nthose commodities would be comprehended all the necessaries of life, and\nall the materials of manufacture. So far as the free importation of\nthe necessaries of life reduced their average money price in the home\nmarket, it would reduce the money price of labour, but without reducing\nin any respect its real recompence. The value of money is in proportion\nto the quantity of the necessaries of life which it will purchase. That\nof the necessaries of life is altogether independent of the quantity\nof money which can be had for them. The reduction in the money price of\nlabour would necessarily be attended with a proportionable one in that\nof all home manufactures, which would thereby gain some advantage in all\nforeign markets. The price of some manufactures would be reduced, in a\nstill greater proportion, by the free importation of the raw materials.\nIf raw silk could be imported from China and Indostan, duty-free, the\nsilk manufacturers in England could greatly undersell those of both\nFrance and Italy. There would be no occasion to prohibit the importation\nof foreign silks and velvets. The cheapness of their goods would secure\nto our own workmen, not only the possession of a home, but a very great\ncommand of the foreign market. Even the trade in the commodities taxed,\nwould be carried on with much more advantage than at present. If those\ncommodities were delivered out of the public warehouse for foreign\nexportation, being in this case exempted from all taxes, the trade in\nthem would be perfectly free. The carrying trade, in all sorts of goods,\nwould, under this system, enjoy every possible advantage. If these\ncommodities were delivered out for home consumption, the importer not\nbeing obliged to advance the tax till he had an opportunity of selling\nhis goods, either to some dealer, or to some consumer, he could always\nafford to sell them cheaper than if he had been obliged to advance it\nat the moment of importation. Under the same taxes, the foreign trade\nof consumption, even in the taxed commodities, might in this manner be\ncarried on with much more advantage than it is at present.\n\nIt was the object of the famous excise scheme of Sir Robert Walpole,\nto establish, with regard to wine and tobacco, a system not very unlike\nthat which is here proposed. But though the bill which was then brought\ninto Parliament, comprehended those two commodities only, it was\ngenerally supposed to be meant as an introduction to a more extensive\nscheme of the same kind. Faction, combined with the interest of\nsmuggling merchants, raised so violent, though so unjust a clamour,\nagainst that bill, that the minister thought proper to drop it; and,\nfrom a dread of exciting a clamour of the same kind, none of his\nsuccessors have dared to resume the project.\n\nThe duties upon foreign luxuries, imported for home consumption, though\nthey sometimes fall upon the poor, fall principally upon people of\nmiddling or more than middling fortune. Such are, for example, the\nduties upon foreign wines, upon coffee, chocolate, tea, sugar, etc.\n\nThe duties upon the cheaper luxuries of home produce, destined for home\nconsumption, fall pretty equally upon people of all ranks, in proportion\nto their respective expense. The poor pay the duties upon malt, hops,\nbeer, and ale, upon their own consumption; the rich, upon both their own\nconsumption and that of their servants.\n\nThe whole consumption of the inferior ranks of people, or of those\nbelow the middling rank, it must be observed, is, in every country, much\ngreater, not only in quantity, but in value, than that of the middling,\nand of those above the middling rank. The whole expense of the inferior\nis much greater titan that of the superior ranks. In the first place,\nalmost the whole capital of every country is annually distributed\namong the inferior ranks of people, as the wages of productive labour.\nSecondly, a great part of the revenue, arising from both the rent of\nland and the profits of stock, is annually distributed among the\nsame rank, in the wages and maintenance of menial servants, and other\nunproductive labourers. Thirdly, some part of the profits of stock\nbelongs to the same rank, as a revenue arising from the employment of\ntheir small capitals. The amount of the profits annually made by small\nshopkeepers, tradesmen, and retailers of all kinds, is everywhere\nvery considerable, and makes a very considerable portion of the annual\nproduce. Fourthly and lastly, some part even of the rent of land belongs\nto the same rank; a considerable part to those who are somewhat below\nthe middling rank, and a small part even to the lowest rank; common\nlabourers sometimes possessing in property an acre or two of land.\nThough the expense of those inferior ranks of people, therefore, taking\nthem individually, is very small, yet the whole mass of it, taking them\ncollectively, amounts always to by much the largest portion of the whole\nexpense of the society; what remains of the annual produce of the land\nand labour of the country, for the consumption of the superior ranks,\nbeing always much less, not only in quantity, but in value. The taxes\nupon expense, therefore, which fall chiefly upon that of the superior\nranks of people, upon the smaller portion of the annual produce,\nare likely to be much less productive than either those which fall\nindifferently upon the expense of all ranks, or even those which fall\nchiefly upon that of the inferior ranks, than either those which fall\nindifferently upon the whole annual produce, or those which fall\nchiefly upon the larger portion of it. The excise upon the materials\nand manufacture of home-made fermented and spirituous liquors, is,\naccordingly, of all the different taxes upon expense, by far the most\nproductive; and this branch of the excise falls very much, perhaps\nprincipally, upon the expense of the common people. In the year which\nended on the 5th of July 1775, the gross produce of this branch of the\nexcise amounted to £3,341,837:9:9.\n\nIt must always be remembered, however, that it is the luxuries, and not\nthe necessary expense of the inferior ranks of people, that ought ever\nto be taxed. The final payment of any tax upon their necessary expense,\nwould fall altogether upon the superior ranks of people; upon the\nsmaller portion of the annual produce, and not upon the greater. Such a\ntax must, in all cases, either raise the wages of labour, or lessen the\ndemand for it. It could not raise the wages of labour, without throwing\nthe final payment of the tax upon the superior ranks of people. It could\nnot lessen the demand for labour, without lessening the annual produce\nof the land and labour of the country, the fund upon which all taxes\nmust be finally paid. Whatever might be the state to which a tax of this\nkind reduced the demand for labour, it must always raise wages higher\nthan they otherwise would be in that state; and the final payment of\nthis enhancement of wages must, in all cases, fall upon the superior\nranks of people.\n\nFermented liquors brewed, and spiritous liquors distilled, not for sale,\nbut for private use, are not in Great Britain liable to any duties of\nexcise. This exemption, of which the object is to save private families\nfrom the odious visit and examination of the tax-gatherer, occasions\nthe burden of those duties to fall frequently much lighter upon the rich\nthan upon the poor. It is not, indeed, very common to distil for private\nuse, though it is done sometimes. But in the country, many middling and\nalmost all rich and great families, brew their own beer. Their strong\nbeer, therefore, costs them eight shillings a-barrel less than it costs\nthe common brewer, who must have his profit upon the tax, as well as\nupon all the other expense which he advances. Such families, therefore,\nmust drink their beer at least nine or ten shillings a-barrel cheaper\nthan any liquor of the same quality can be drank by the common people,\nto whom it is everywhere more convenient to buy their beer, by little\nand little, from the brewery or the ale-house. Malt, in the same manner,\nthat is made for the use of a private family, is not liable to the visit\nor examination of the tax-gatherer but, in this case the family must\ncompound at seven shillings and sixpence a-head for the tax. Seven\nshillings and sixpence are equal to the excise upon ten bushels of malt;\na quantity fully equal to what all the different members of any sober\nfamily, men, women, and children, are, at an average, likely to consume.\nBut in rich and great families, where country hospitality is much\npractised, the malt liquors consumed by the members of the family make\nbut a small part of the consmnption of the house. Either on account\nof this composition, however, or for other reasons, it is not near so\ncommon to malt as to brew for private use. It is difficult to imagine\nany equitable reason, why those who either brew or distil for private\nuse should not be subject to a composition of the same kind.\n\nA greater revenue than what is at present drawn from all the heavy taxes\nupon malt, beer, and ale, might be raised, it has frequently been said,\nby a much lighter tax upon malt; the opportunities of defrauding the\nrevenue being much greater in a brewery than in a malt-house; and those\nwho brew for private use being exempted from all duties or composition\nfor duties, which is not the case with those who malt for private use.\n\nIn the porter brewery of London, a quarter of malt is commonly brewed\ninto more than two barrels and a-half, sometimes into three barrels of\nporter. The different taxes upon malt amount to six shillings a-quarter;\nthose upon strong ale and beer to eight shillings a-barrel. In the\nporter brewery, therefore, the different taxes upon malt, beer, and ale,\namount to between twenty-six and thirty shillings upon the produce of\na quarter of malt. In the country brewery for common country sale, a\nquarter of malt is seldom brewed into less than two barrels of strong,\nand one barrel of small beer; frequently into two barrels and a-half of\nstrong beer. The different taxes upon small beer amount to one shilling\nand fourpence a-barrel. In the country brewery, therefore, the different\ntaxes upon malt, beer, and ale, seldom amount to less than twenty-three\nshillings and fourpence, frequently to twenty-six shillings, upon the\nproduce of a quarter of malt. Taking the whole kingdom at an average,\ntherefore, the whole amount of the duties upon malt, beer, and ale,\ncannot be estimated at less than twenty-four or twenty-five shillings\nupon the produce of a quarter of malt. But by taking off all the\ndifferent duties upon beer and ale, and by trebling the malt tax, or by\nraising it from six to eighteen shilling's upon the quarter of malt, a\ngreater revenue, it is said, might be raised by this single tax, than\nwhat is at present drawn from all those heavier taxes.\n\n\n  In 1772, the old malt tax produced.........  £722,023: 11: 11\n                             The additional... £356,776:  7:  9¾\n  In 1775, the old tax produced............... £561,627:  3:  7½\n                             The additional... £278,650: 15:  3¾\n  In 1774, the old tax  produced ............ £624,614: 17:  5¾\n                             The additional....£310,745:  2:  8½\n  In 1775, the old tax produced  ............£657,357:  0:  8¼\n                             The additional....£323,785: 12:  6¼\n                                             £5,855,580: 12:  0¾\n  Average of these four years ..............  £958,895:  3:  0\n\n  In 1772, the country excise produced.......£1,243,120:  5:  3\n                    The London brewery          408,260:  7:  2¾\n  In 1773, the country excise................£1,245,808:  3:  3\n                    The London brewery          405,406: 17: 10½\n  In 1774, the country excise................£1,246,373: 14:  5½\n                    The London brewery          320,601: 18:  0¼\n  In 1775, the country excise................£1,214,583:  6:  1¼\n                    The London brewery          463,670:  7:  0¼\n                                           4)£6,547,832: 19:  2¼\n  Average of these four years ..............£1,636,958:  4:  9½\n  To which adding the average malt tax........  958,895:  3:  0¼\n\n  The whole amount of those different\n                taxes comes out to be........£2,595,835:  7: 10\n\n  But, by trebling the malt tax,\n  or by raising it from six to\n  eighteen shillings upon the quarter\n  of malt, that single tax would produce.....£2,876,685:  9:  0\n  A sum which exceeds the\n                         foregoing by....       280,832:  1:  3\n\nUnder the old malt tax, indeed, is comprehended a tax of four shillings\nupon the hogshead of cyder, and another of ten shillings upon the\nbarrel of mum. In 1774, the tax upon cyder produced only £3,083:6:8.\nIt probably fell somewhat short of its usual amount; all the different\ntaxes upon cyder, having, that year, produced less than ordinary. The\ntax upon mum, though much heavier, is still less productive, on account\nof the smaller consumption of that liquor. But to balance whatever may\nbe the ordinary amount of those two taxes, there is comprehended\nunder what is called the country excise, first, the old excise of six\nshillings and eightpence upon the hogshead of cyder; secondly, a like\ntax of six shillings and eightpence upon the hogshead of verjuice;\nthirdly, another of eight shillings and ninepence upon the hogshead of\nvinegar; and, lastly, a fourth tax of elevenpence upon the gallon of\nmead or metheglin. The produce of those different taxes will probably\nmuch more than counterbalance that of the duties imposed, by what is\ncalled the annual malt tax, upon cyder and mum.\n\nMalt is consumed, not only in the brewery of beer and ale, but in the\nmanufacture of low wines and spirits. If the malt tax were to be raised\nto eighteen shillings upon the quarter, it might be necessary to make\nsome abatement in the different excises which are imposed upon those\nparticular sorts of low wines and spirits, of which malt makes any part\nof the materials. In what are called malt spirits, it makes commonly\nbut a third part of the materials; the other two-thirds being either raw\nbarley, or one-third barley and one-third wheat. In the distillery of\nmalt spirits, both the opportunity and the temptation to smuggle\nare much greater than either in a brewery or in a malt-house; the\nopportunity, on account of the smaller bulk and greater value of the\ncommodity, and the temptation, on account of the superior height of\nthe duties, which amounted to 3s. 10 2/3d. upon the gallon of spirits.\n{Though the duties directly imposed upon proof spirits amount only to\n2s. 6d per gallon, these, added to the duties upon the low wines, from\nwhich they are distilled, amount to 3s 10 2/3d. Both low wines and proof\nspirits are, to prevent frauds, now rated according to what they gauge\nin the wash.}\n\nBy increasing the duties upon malt, and reducing those upon the\ndistillery, both the opportunities and the temptation to smuggle would\nbe diminished, which might occasion a still further augmentation of\nrevenue.\n\nIt has for some time past been the policy of Great Britain to discourage\nthe consumption of spiritous liquors, on account of their supposed\ntendency to ruin the health and to corrupt the morals of the common\npeople. According to this policy, the abatement of the taxes upon the\ndistillery ought not to be so great as to reduce, in any respect, the\nprice of those liquors. Spiritous liquors might remain as dear as ever;\nwhile, at the same time, the wholesome and invigorating liquors of beer\nand ale might be considerably reduced in their price. The people might\nthus be in part relieved from one of the burdens of which they at\npresent complain the most; while, at the same time, the revenue might be\nconsiderably augmented.\n\nThe objections of Dr. Davenant to this alteration in the present system\nof excise duties, seem to be without foundation. Those objections are,\nthat the tax, instead of dividing itself, as at present, pretty equally\nupon the profit of the maltster, upon that of the brewer and upon that\nof the retailer, would so far as it affected profit, fall altogether\nupon that of the maltster; that the maltster could not so easily get\nback the amount of the tax in the advanced price of his malt, as the\nbrewer and retailer in the advanced price of their liquor; and that so\nheavy a tax upon malt might reduce the rent and profit of barley land.\n\nNo tax can ever reduce, for any considerable time, the rate of profit in\nany particular trade, which must always keep its level with other trades\nin the neighbourhood. The present duties upon malt, beer, and ale, do\nnot affect the profits of the dealers in those commodities, who all get\nback the tax with an additional profit, in the enhanced price of their\ngoods. A tax, indeed, may render the goods upon which it is imposed so\ndear, as to diminish the consumption of them. But the consumption\nof malt is in malt liquors; and a tax of eighteen shillings upon the\nquarter of malt could not well render those liquors dearer than the\ndifferent taxes, amounting to twenty-four or twenty-five shillings,\ndo at present. Those liquors, on the contrary, would probably become\ncheaper, and the consumption of them would be more likely to increase\nthan to diminish.\n\nIt is not very easy to understand why it should be more difficult for\nthe maltster to get back eighteen shillings in the advanced price of his\nmalt, than it is at present for the brewer to get back twenty-four or\ntwenty-five, sometimes thirty shillings, in that of his liquor. The\nmaltster, indeed, instead of a tax of six shillings, would be obliged\nto advance one of eighteen shilling upon every quarter of malt. But\nthe brewer is at present obliged to advance a tax of twenty-four or\ntwenty-five, sometimes thirty shillings, upon every quarter of malt which\nhe brews. It could not be more inconvenient for the maltster to advance\na lighter tax, than it is at present for the brewer to advance a heavier\none. The maltster does not always keep in his granaries a stock of malt,\nwhich it will require a longer time to dispose of than the stock of beer\nand ale which the brewer frequently keeps in his cellars. The former,\ntherefore, may frequently get the returns of his money as soon as the\nlatter. But whatever inconveniency might arise to the maltster from\nbeing obliged to advance a heavier tax, it could easily be remedied,\nby granting him a few months longer credit than is at present commonly\ngiven to the brewer.\n\nNothing could reduce the rent and profit of barley land, which did not\nreduce the demand for barley. But a change of system, which reduced the\nduties upon a quarter of malt brewed into beer and ale, from twentyfour\nand twenty-five shillings to eighteen shillings, would be more likely to\nincrease than diminish that demand. The rent and profit of barley land,\nbesides, must always be nearly equal to those of other equally fertile\nand equally well cultivated land. If they were less, some part of the\nbarley land would soon be turned to some other purpose; and if they were\ngreater, more land would soon be turned to the raising of barley. When\nthe ordinary price of any particular produce of land is at what may be\ncalled a monopoly price, a tax upon it necessarily reduces the rent\nand profit of the land which grows it. A tax upon the produce of\nthose precious vineyards, of which the wine falls so much short of the\neffectual demand, that its price is always above the natural proportion\nto that of the produce of other equally fertile and equally well\ncultivated land, would necessarily reduce the rent and profit of those\nvineyards. The price of the wines being already the highest that could\nbe got for the quantity commonly sent to market, it could not be raised\nhigher without diminishing that quantity; and the quantity could not be\ndiminished without still greater loss, because the lands could not be\nturned to any other equally valuable produce. The whole weight of the\ntax, therefore, would fall upon the rent and profit; properly upon the\nrent of the vineyard. When it has been proposed to lay any new tax upon\nsugar, our sugar planters have frequently complained that the whole\nweight of such taxes fell not upon the consumer, but upon the producer;\nthey never having been able to raise the price of their sugar after the\ntax higher than it was before. The price had, it seems, before the tax,\nbeen a monopoly price; and the arguments adduced to show that sugar\nwas an improper subject of taxation, demonstrated perhaps that it was\na proper one; the gains of monopolists, whenever they can be come at,\nbeing certainly of all subjects the most proper. But the ordinary price\nof barley has never been a monopoly price; and the rent and profit of\nbarley land have never been above their natural proportion to those of\nother equally fertile and equally well cultivated land. The different\ntaxes which have been imposed upon malt, beer, and ale, have never\nlowered the price of barley; have never reduced the rent and profit of\nbarley land. The price of malt to the brewer has constantly risen in\nproportion to the taxes imposed upon it; and those taxes, together with\nthe different duties upon beer and ale, have constantly either raised\nthe price, or, what comes to the same thing, reduced the quality of\nthose commodities to the consumer. The final payment of those taxes has\nfallen constantly upon the consumer, and not upon the producer.\n\nThe only people likely to suffer by the change of system here proposed,\nare those who brew for their own private use. But the exemption, which\nthis superior rank of people at present enjoy, from very heavy taxes\nwhich are paid by the poor labourer and artificer, is surely most unjust\nand unequal, and ought to be taken away, even though this change was\nnever to take place. It has probably been the interest of this superior\norder of people, however, which has hitherto prevented a change of\nsystem that could not well fail both to increase the revenue and to\nrelieve the people.\n\nBesides such duties as those of custom and excise above mentioned, there\nare several others which affect the price of goods more unequally and\nmore indirectly. Of this kind are the duties, which, in French, are\ncalled peages, which in old Saxon times were called the duties of\npassage, and which seem to have been originally established for the\nsame purpose as our turnpike tolls, or the tolls upon our canals and\nnavigable rivers, for the maintenance of the road or of the navigation.\nThose duties, when applied to such purposes, are most properly imposed\naccording to the bulk or weight of the goods. As they were originally\nlocal and provincial duties, applicable to local and provincial\npurposes, the administration of them was, in most cases, entrusted to\nthe particular town, parish, or lordship, in which they were levied;\nsuch communities being, in some way or other, supposed to be accountable\nfor the application. The sovereign, who is altogether unaccountable, has\nin many countries assumed to himself the administration of those duties;\nand though he has in most cases enhanced very much the duty, he has in\nmany entirely neglected the application. If the turnpike tolls of Great\nBritain should ever become one of the resources of government, we may\nlearn, by the example of many other nations, what would probably be the\nconsequence. Such tolls, no doubt, are finally paid by the consumer; but\nthe consumer is not taxed in proportion to his expense, when he pays,\nnot according to the value, but according to the bulk or weight of what\nhe consumes. When such duties are imposed, not according to the bulk or\nweight, but according to the supposed value of the goods, they become\nproperly a sort of inland customs or excise, which obstruct very much\nthe most important of all branches of commerce, the interior commerce of\nthe country.\n\nIn some small states, duties similar to those passage duties are imposed\nupon goods carried across the territory, either by land or by water,\nfrom one foreign country to another. These are in some countries called\ntransit-duties. Some of the little Italian states which are situated\nupon the Po, and the rivers which run into it, derive some revenue from\nduties of this kind, which are paid altogether by foreigners, and which,\nperhaps, are the only duties that one state can impose upon the subjects\nof another, without obstruction in any respect, the industry or commerce\nof its own. The most important transit-duty in the world, is that levied\nby the king of Denmark upon all merchant ships which pass through the\nSound.\n\nSuch taxes upon luxuries, as the greater part of the duties of customs\nand excise, though they all fall indifferently upon every different\nspecies of revenue, and are paid finally, or without any retribution, by\nwhoever consumes the commodities upon which they are imposed; yet they\ndo not always fall equally or proportionally upon the revenue of\nevery individual. As every man's humour regulates the degree of his\nconsumption, every man contributes rather according to his humour, than\nproportion to his revenue: the profuse contribute more, the parsimonious\nless, than their proper proportion. During the minority of a man of\ngreat fortune, he contributes commonly very little, by his consumption,\ntowards the support of that state from whose protection he derives a\ngreat revenue. Those who live in another country, contribute nothing by\ntheir consumption towards the support of the government of that country,\nin which is situated the source of their revenue. If in this latter\ncountry there should be no land tax, nor any considerable duty upon the\ntransference either of moveable or immoveable property, as is the\ncase in Ireland, such absentees may derive a great revenue from\nthe protection of a government, to the support of which they do not\ncontribute a single shilling. This inequality is likely to be greatest\nin a country of which the government is, in some respects, subordinate\nand dependant upon that of some other. The people who possess the most\nextensive property in the dependant, will, in this case, generally\nchuse to live in the governing country. Ireland is precisely in this\nsituation; and we cannot therefore wonder, that the proposal of a tax\nupon absentees should be so very popular in that country. It might,\nperhaps, be a little difficult to ascertain either what sort, or what\ndegree of absence, would subject a man to be taxed as an absentee, or\nat what precise time the tax should either begin or end. If you\nexcept, however, this very peculiar situation, any inequality in the\ncontribution of individuals which can arise from such taxes, is much\nmore than compensated by the very circumstance which occasions that\ninequality; the circumstance that every man's contribution is altogether\nvoluntary; it being altogether in his power, either to consume, or\nnot to consume, the commodity taxed. Where such taxes, therefore, are\nproperly assessed, and upon proper commodities, they are paid with less\ngrumbling than any other. When they are advanced by the merchant\nor manufacturer, the consumer, who finally pays them, soon comes to\nconfound them with the price of the commodities, and almost forgets that\nhe pays any tax. Such taxes are, or may be, perfectly certain; or may\nbe assessed, so as to leave no doubt concerning either what ought to be\npaid, or when it ought to be paid; concerning either the quantity or the\ntime of payment. What ever uncertainty there may sometimes be, either in\nthe duties of customs in Great Britain, or in other duties of the\nsame kind in other countries, it cannot arise from the nature of those\nduties, but from the inaccurate or unskilful manner in which the law\nthat imposes them is expressed.\n\nTaxes upon luxuries generally are, and always may be, paid piece-meal,\nor in proportion as the contributors have occasion to purchase the goods\nupon which they are imposed. In the time and mode of payment, they are,\nor may be, of all taxes the most convenient. Upon the whole, such taxes,\ntherefore, are perhaps as agreeable to the three first of the four\ngeneral maxims concerning taxation, as any other. They offend in every\nrespect against the fourth.\n\nSuch taxes, in proportion to what they bring into the public treasury of\nthe state, always take out, or keep out, of the pockets of the people,\nmore than almost any other taxes. They seem to do this in all the four\ndifferent ways in which it is possible to do it.\n\nFirst, the levying of such taxes, even when imposed in the most\njudicious manner, requires a great number of custom-house and excise\nofficers, whose salaries and perquisites are a real tax upon the people,\nwhich brings nothing into the treasury of the state. This expense,\nhowever, it must be acknowledged, is more moderate in Great Britain than\nin most other countries. In the year which ended on the 5th of July,\n1775, the gross produce of the different duties, under the management\nof the commissioners of excise in England, amounted to £5,507,308:18:8¼,\nwhich was levied at an expense of little more than five and a-half per\ncent. From this gross produce, however, there must be deducted what was\npaid away in bounties and drawbacks upon the exportation of exciseable\ngoods, which will reduce the neat produce below five millions. {The\nneat produce of that year, after deducting all expenses and allowances,\namounted to £4,975,652:19:6.} The levying of the salt duty, and excise\nduty, but under a different management, is much more expensive. The neat\nrevenue of the customs does not amount to two millions and a-half, which\nis levied at an expense of more than ten per cent., in the salaries\nof officers and other incidents. But the perquisites of custom-house\nofficers are everywhere much greater than their salaries; at some ports\nmore than double or triple those salaries. If the salaries of officers,\nand other incidents, therefore, amount to more than ten per cent. upon\nthe neat revenue of the customs, the whole expense of levying that\nrevenue may amount, in salaries and perquisites together, to more than\ntwenty or thirty per cent. The officers of excise receive few or no\nperquisites; and the administration of that branch of the revenue being\nof more recent establishment, is in general less corrupted than that\nof the customs, into which length of time has introduced and authorised\nmany abuses. By charging upon malt the whole revenue which is at present\nlevied by the different duties upon malt and malt liquors, a saving, it\nis supposed, of more than £50,000, might be made in the annual expense\nof the excise. By confining the duties of customs to a few sorts of\ngoods, and by levying those duties according to the excise laws, a\nmuch greater saving might probably be made in the annual expense of the\ncustoms.\n\nSecondly, such taxes necessarily occasion some obstruction or\ndiscouragement to certain branches of industry. As they always raise the\nprice of the commodity taxed, they so far discourage its consumption,\nand consequently its production. If it is a commodity of home growth or\nmanufacture, less labour comes to be employed in raising and producing\nit. If it is a foreign commodity of which the tax increases in this\nmanner the price, the commodities of the same kind which are made at\nhome may thereby, indeed, gain some advantage in the home market, and\na greater quantity of domestic industry may thereby be turned toward\npreparing them. But though this rise of price in a foreign commodity,\nmay encourage domestic industry in one particular branch, it necessarily\ndiscourages that industry in almost every other. The dearer the\nBirmingham manufacturer buys his foreign wine, the cheaper he\nnecessarily sells that part of his hardware with which, or, what comes\nto the same thing, with the price of which, he buys it. That part of\nhis hardware, therefore, becomes of less value to him, and he has less\nencouragement to work at it. The dearer the consumers in one country pay\nfor the surplus produce of another, the cheaper they necessarily sell\nthat part of their own surplus produce with which, or, what comes to the\nsame thing, with the price of which, they buy it. That part of their\nown surplus produce becomes of less value to them, and they have less\nencouragement to increase its quantity. All taxes upon consumable\ncommodities, therefore, tend to reduce the quantity of productive labour\nbelow what it otherwise would be, either in preparing the commodities\ntaxed, if they are home commodities, or in preparing those with which\nthey are purchased, if they are foreign commodities. Such taxes, too,\nalways alter, more or less, the natural direction of national industry,\nand turn it into a channel always different from, and generally less\nadvantageous, than that in which it would have run of its own accord.\n\nThirdly, the hope of evading such taxes by smuggling, gives frequent\noccasion to forfeitures and other penalties, which entirely ruin the\nsmuggler; a person who, though no doubt highly blameable for violating\nthe laws of his country, is frequently incapable of violating those of\nnatural justice, and would have been, in every respect, an excellent\ncitizen, had not the laws of his country made that a crime which nature\nnever meant to be so. In those corrupted governments, where there is\nat least a general suspicion of much unnecessary expense, and great\nmisapplication of the public revenue, the laws which guard it are little\nrespected. Not many people are scrupulous about smuggling, when, without\nperjury, they can find an easy and safe opportunity of doing so. To\npretend to have any scruple about buying smuggled goods, though a\nmanifest encouragement to the violation of the revenue laws, and to the\nperjury which almost always attends it, would, in most countries, be\nregarded as one of those pedantic pieces of hypocrisy which, instead of\ngaining credit with anybody, serve only to expose the person who affects\nto practise them to the suspicion of being a greater knave than most of\nhis neighbours. By this indulgence of the public, the smuggler is often\nencouraged to continue a trade, which he is thus taught to consider as\nin some measure innocent; and when the severity of the revenue laws\nis ready to fall upon him, he is frequently disposed to defend with\nviolence, what he has been accustomed to regard as his just property.\nFrom being at first, perhaps, rather imprudent than criminal, he at last\ntoo often becomes one of the hardiest and most determined violators of\nthe laws of society. By the ruin of the smuggler, his capital, which\nhad before been employed in maintaining productive labour, is absorbed\neither in the revenue of the state, or in that of the revenue officer;\nand is employed in maintaining unproductive, to the diminution of the\ngeneral capital of the society, and of the useful industry which it\nmight otherwise have maintained.\n\nFourthly, such taxes, by subjecting at least the dealers in the taxed\ncommodities, to the frequent visits and odious examination of the\ntax-gatherers, expose them sometimes, no doubt, to some degree of\noppression, and always to much trouble and vexation; and though\nvexation, as has already been said, is not strictly speaking expense,\nit is certainly equivalent to the expense at which every man would\nbe willing to redeem himself from it. The laws of excise, though more\neffectual for the purpose for which they were instituted, are, in this\nrespect, more vexatious than those of the customs. When a merchant has\nimported goods subject to certain duties of customs; when he has paid\nthose duties, and lodged the goods in his warehouse; he is not, in most\ncases, liable to any further trouble or vexation from the custom-house\nofficer. It is otherwise with goods subject to duties of excise. The\ndealers have no respite from the continual visits and examination of\nthe excise officers. The duties of excise are, upon this account, more\nunpopular than those of the customs; and so are the officers who levy\nthem. Those officers, it is pretended, though in general, perhaps, they\ndo their duty fully as well as those of the customs; yet, as that\nduty obliges them to be frequently very troublesome to some of their\nneighbours, commonly contract a certain hardness of character, which the\nothers frequently have not. This observation, however, may very probably\nbe the mere suggestion of fraudulent dealers, whose smuggling is either\nprevented or detected by their diligence.\n\nThe inconveniencies, however, which are, perhaps, in some degree\ninseparable from taxes upon consumable communities, fall as light upon\nthe people of Great Britain as upon those of any other country of which\nthe government is nearly as expensive. Our state is not perfect, and\nmight be mended; but it is as good, or better, than that of most of our\nneighbours.\n\nIn consequence of the notion, that duties upon consumable goods\nwere taxes upon the profits of merchants, those duties have, in some\ncountries, been repeated upon every successive sale of the goods. If the\nprofits of the merchant-importer or merchant-manufacturer were taxed,\nequality seemed to require that those of all the middle buyers, who\nintervened between either of them and the consumer, should likewise be\ntaxed. The famous alcavala of Spain seems to have been established upon\nthis principle. It was at first a tax of ten per cent. afterwards of\nfourteen per cent. and it is at present only six per cent. upon the\nsale of every sort of property whether moveable or immoveable; and it\nis repeated every time the property is sold. {Memoires concernant les\nDroits, etc. tom. i, p. 15} The levying of this tax requires a multitude\nof revenue officers, sufficient to guard the transportation of goods,\nnot only from one province to another, but from one shop to another. It\nsubjects, not only the dealers in some sorts of goods, but those in all\nsorts, every farmer, every manufacturer, every merchant and shopkeeper,\nto the continual visit and examination of the tax-gatherers. Through the\ngreater part of the country in which a tax of this kind is established,\nnothing can be produced for distant sale. The produce of every part\nof the country must be proportioned to the consumption of the\nneighbourhood. It is to the alcavala, accordingly, that Ustaritz imputes\nthe ruin of the manufactures of Spain. He might have imputed to it,\nlikewise, the declension of agriculture, it being imposed not only upon\nmanufactures, but upon the rude produce of the land.\n\nIn the kingdom of Naples, there is a similar tax of three per cent. upon\nthe value of all contracts, and consequently upon that of all contracts\nof sale. It is both lighter than the Spanish tax, and the greater part\nof towns and parishes are allowed to pay a composition in lieu of it.\nThey levy this composition in what manner they please, generally in a\nway that gives no interruption to the interior commerce of the place.\nThe Neapolitan tax, therefore, is not near so ruinous as the Spanish\none.\n\nThe uniform system of taxation, which, with a few exception of no\ngreat consequence, takes place in all the different parts of the united\nkingdom of Great Britain, leaves the interior commerce of the country,\nthe inland and coasting trade, almost entirely free. The inland trade is\nalmost perfectly free; and the greater part of goods may be carried from\none end of the kingdom to the other, without requiring any permit or\nlet-pass, without being subject to question, visit or examination, from\nthe revenue officers. There are a few exceptions, but they are such as\ncan give no interruption to any important branch of inland commerce of\nthe country. Goods carried coastwise, indeed, require certificates or\ncoast-cockets. If you except coals, however, the rest are almost\nall duty-free. This freedom of interior commerce, the effect of the\nuniformity of the system of taxation, is perhaps one of the principal\ncauses of the prosperity of Great Britain; every great country being\nnecessarily the best and most extensive market for the greater part of\nthe productions of its own industry. If the same freedom in consequence\nof the same uniformity, could be extended to Ireland and the\nplantations, both the grandeur of the state, and the prosperity of every\npart of the empire, would probably be still greater than at present.\n\nIn France, the different revenue laws which take place in the different\nprovinces, require a multitude of revenue officers to surround, not\nonly the frontiers of the kingdom, but those of almost each particular\nprovince, in order either to prevent the importation of certain goods,\nor to subject it to the payment of certain duties, to the no small\ninterruption of the interior commerce of the country. Some provinces are\nallowed to compound for the gabelle, or salt tax; others are exempted\nfrom it altogether. Some provinces are exempted from the exclusive sale\nof tobacco, which the farmers-general enjoy through the greater part of\nthe kingdom. The aides, which correspond to the excise in England, are\nvery different in different provinces. Some provinces are exempted from\nthem, and pay a composition or equivalent. In those in which they take\nplace, and are in farm, there are many local duties which do not extend\nbeyond a particular town or district. The traites, which correspond\nto our customs, divide the kingdom into three great parts; first, the\nprovinces subject to the tariff of 1664, which are called the provinces\nof the five great farms, and under which are comprehended Picardy,\nNormandy, and the greater part of the interior provinces of the kingdom;\nsecondly, the provinces subject to the tariff of 1667, which are called\nthe provinces reckoned foreign, and under which are comprehended the\ngreater part of the frontier provinces; and, thirdly, those provinces\nwhich are said to be treated as foreign, or which, because they are\nallowed a free commerce with foreign countries, are, in their commerce\nwith the other provinces of France, subjected to the same duties as\nother foreign countries. These are Alsace, the three bishoprics of\nMentz, Toul, and Verdun, and the three cities of Dunkirk, Bayonne, and\nMarseilles. Both in the provinces of the five great farms (called so on\naccount of an ancient division of the duties of customs into five great\nbranches, each of which was originally the subject of a particular farm,\nthough they are now all united into one), and in those which are said\nto be reckoned foreign, there are many local duties which do not extend\nbeyond a particular town or district. There are some such even in the\nprovinces which are said to be treated as foreign, particularly in\nthe city of Marseilles. It is unnecessary to observe how much both the\nrestraints upon the interior commerce of the country, and the number\nof the revenue officers, must be multiplied, in order to guard the\nfrontiers of those different provinces and districts which are subject\nto such different systems of taxation.\n\nOver and above the general restraints arising from this complicated\nsystem of revenue laws, the commerce of wine (after corn, perhaps, the\nmost important production of France) is, in the greater part of the\nprovinces, subject to particular restraints arising from the favour\nwhich has been shown to the vineyards of particular provinces and\ndistricts above those of others. The provinces most famous for their\nwines, it will be found, I believe, are those in which the trade in that\narticle is subject to the fewest restraints of this kind. The extensive\nmarket which such provinces enjoy, encourages good management both in\nthe cultivation of their vineyards, and in the subsequent preparation of\ntheir wines.\n\nSuch various and complicated revenue laws are not peculiar to France.\nThe little duchy of Milan is divided into six provinces, in each of\nwhich there is a different system of taxation, with regard to several\ndifferent sorts of consumable goods. The still smaller territories of\nthe duke of Parma are divided into three or four, each of which has,\nin the same manner, a system of its own. Under such absurd management,\nnothing but the great fertility of the soil, and happiness of the\nclimate, could preserve such countries from soon relapsing into the\nlowest state of poverty and barbarism.\n\nTaxes upon consumable commodities may either he levied by an\nadministration, of which the officers are appointed by govermnent, and\nare immediately accountable to government, of which the revenue must,\nin this case, vary from year to year, according to the occasional\nvariations in the produce of the tax; or they may be let in farm for a\nrent certain, the farmer being allowed to appoint his own officers, who,\nthough obliged to levy the tax in the manner directed by the law, are\nunder his immediate inspection, and are immediately accountable to him.\nThe best and most frugal way of levying a tax can never be by farm. Over\nand above what is necessary for paying the stipulated rent, the salaries\nof the officers, and the whole expense of administration, the farmer\nmust always draw from the produce of the tax a certain profit,\nproportioned at least to the advance which he makes, to the risk which\nhe runs, to the trouble which he is at, and to the knowledge and skill\nwhich it requires to manage so very complicated a concern. Government,\nby establishing an administration under their own immediate inspection,\nof the same kind with that which the farmer establishes, might at\nleast save this profit, which is almost always exorbitant. To farm\nany considerable branch of the public revenue requires either a great\ncapital, or a great credit; circumstances which would alone restrain the\ncompetition for such an undertaking to a very small number of people. Of\nthe few who have this capital or credit, a still smaller number have the\nnecessary knowledge or experience; another circumstance which restrains\nthe competition still further. The very few who are in condition to\nbecome competitors, find it more for their interest to combine together;\nto become copartners, instead of competitors; and, when the farm is set\nup to auction, to offer no rent but what is much below the real value.\nIn countries where the public revenues are in farm, the farmers are\ngenerally the most opulent people. Their wealth would alone excite the\npublic indignation; and the vanity which almost always accompanies\nsuch upstart fortunes, the foolish ostentation with which they commonly\ndisplay that wealth, excite that indignation still more.\n\nThe farmers of the public revenue never find the laws too severe, which\npunish any attempt to evade the payment of a tax. They have no bowels\nfor the contributors, who are not their subjects, and whose universal\nbankruptcy, if it should happen the day after the farm is expired, would\nnot much affect their interest. In the greatest exigencies of the state,\nwhen the anxiety of the sovereign for the exact payment of his revenue\nis necessarily the greatest, they seldom fail to complain, that without\nlaws more rigorous than those which actually took place, it will be\nimpossible for them to pay even the usual rent. In those moments of\npublic distress, their commands cannot be disputed. The revenue laws,\ntherefore, become gradually more and more severe. The most sanguinary\nare always to be found in countries where the greater part of the public\nrevenue is in farm; the mildest, in countries where it is levied under\nthe immediate inspection of the sovereign. Even a bad sovereign feels\nmore compassion for his people than can ever be expected from the\nfarmers of his revenue. He knows that the permanent grandeur of his\nfamily depends upon the prosperity of his people, and he will never\nknowingly ruin that prosperity for the sake of any momentary interest of\nhis own. It is otherwise with the farmers of his revenue, whose grandeur\nmay frequently be the effect of the ruin, and not of the prosperity, of\nhis people.\n\nA tax is sometimes not only farmed for a certain rent, but the farmer\nhas, besides, the monopoly of the commodity taxed. In France, the duties\nupon tobacco and salt are levied in this manner. In such cases, the\nfarmer, instead of one, levies two exorbitant profits upon the people;\nthe profit of the farmer, and the still more exorbitant one of the\nmonopolist. Tobacco being a luxury, every man is allowed to buy or not\nto buy as he chuses; but salt being a necessary, every man is obliged to\nbuy of the farmer a certain quantity of it; because, if he did not buy\nthis quantity of the farmer, he would, it is presumed, buy it of some\nsmuggler. The taxes upon both commodities are exorbitant. The temptation\nto smuggle, consequently, is to many people irresistible; while, at\nthe same time, the rigour of the law, and the vigilance of the farmer's\nofficers, render the yielding to the temptation almost certainly\nruinous. The smuggling of salt and tobacco sends every year several\nhundred people to the galleys, besides a very considerable number whom\nit sends to the gibbet. Those taxes, levied in this manner, yield a very\nconsiderable revenue to government. In 1767, the farm of tobacco was let\nfor twenty-two millions five hundred and forty-one thousand two hundred\nand seventy-eight livres a-year; that of salt for thirty-six millions\nfour hundred and ninety-two thousand four hundred and four livres. The\nfarm, in both cases, was to commence in 1768, and to last for six years.\nThose who consider the blood of the people as nothing, in comparison\nwith the revenue of the prince, may, perhaps, approve of this method\nof levying taxes. Similar taxes and monopolies of salt and tobacco have\nbeen established in many other countries, particularly in the Austrian\nand Prussian dominions, and in the greater part of the states of Italy.\n\nIn France, the greater part of the actual revenue of the crown is\nderived from eight different sources; the taille, the capitation, the\ntwo vingtiemes, the gabelles, the aides, the traites, the domaine,\nand the farm of tobacco. The live last are, in the greater part of\nthe provinces, under farm. The three first are everywhere levied by\nan administration, under the immediate inspection and direction of\ngovernment; and it is universally acknowledged, that in proportion to\nwhat they take out of the pockets of the people, they bring more\ninto the treasury of the prince than the other five, of which the\nadministration is much more wasteful and expensive.\n\nThe finances of France seem, in their present state, to admit of three\nvery obvious reformations. First, by abolishing the taille and the\ncapitation, and by increasing the number of the vingtiemes, so as to\nproduce an additional revenue equal to the amount of those other taxes,\nthe revenue of the crown might be preserved; the expense of collection\nmight be much diminished; the vexation of the inferior ranks of people,\nwhich the taille and capitation occasion, might be entirely prevented;\nand the superior ranks might not be more burdened than the greater part\nof them are at present. The vingtieme, I have already observed, is a\ntax very nearly of the same kind with what is called the land tax of\nEngland. The burden of the taille, it is acknowledged, falls finally\nupon the proprietors of land; and as the greater part of the capitation\nis assessed upon those who are subject to the taille, at so much a-pound\nof that other tax, the final payment of the greater part of it must\nlikewise fall upon the same order of people. Though the number of the\nvingtiemes, therefore, was increased, so as to produce an additional\nrevenue equal to the amount of both those taxes, the superior ranks\nof people might not be more burdened than they are at present; many\nindividuals, no doubt, would, on account of the great inequalities with\nwhich the taille is commonly assessed upon the estates and tenants of\ndifferent individuals. The interest and opposition of such favoured\nsubjects, are the obstacles most likely to prevent this, or any other\nreformation of the same kind. Secondly, by rendering the gabelle, the\naides, the traites, the taxes upon tobacco, all the different customs\nand excises, uniform in all the different parts of the kingdom, those\ntaxes might be levied at much less expense, and the interior commerce of\nthe kingdom might be rendered as free as that of England. Thirdly, and\nlastly, by subjecting all those taxes to an administration under the\nimmediate inspection and direction or government, the exorbitant profits\nof the farmers-general might be added to the revenue of the state. The\nopposition arising from the private interest of individuals, is likely\nto be as effectual for preventing the two last as the first-mentioned\nscheme of reformation.\n\nThe French system of taxation seems, in every respect, inferior to the\nBritish. In Great Britain, ten millions sterling are annually levied\nupon less than eight millions of people, without its being possible to\nsay that any particular order is oppressed. From the Collections of the\nAbbé Expilly, and the observations of the author of the Essay upon\nthe Legislation and Commerce of Corn, it appears probable that France,\nincluding the provinces of Lorraine and Bar, contains about twenty-three\nor twenty-four millions of people; three times the number, perhaps,\ncontained in Great Britain. The soil and climate of France are better\nthan those of Great Britain. The country has been much longer in a\nstate of improvement and cultivation, and is, upon that account, better\nstocked with all those things which it requires a long time to raise\nup and accumulate; such as great towns, and convenient and well-built\nhouses, both in town and country. With these advantages, it might be\nexpected, that in France a revenue of thirty millions might be levied\nfor the support of the state, with as little inconvenience as a revenue\nof ten millions is in Great Britain. In 1765 and 1766, the whole revenue\npaid into the treasury of France, according to the best, though, I\nacknowledge, very imperfect accounts which I could get of it, usually\nrun between 308 and 325 millions of livres; that is, it did not amount\nto fifteen millions sterling; not the half of what might have been\nexpected, had the people contributed in the same proportion to their\nnumbers as the people of Great Britain. The people of France, however,\nit is generally acknowledged, are much more oppressed by taxes than the\npeople of Great Britain. France, however, is certainly the great empire\nin Europe, which, after that of Great Britain, enjoys the mildest and\nmost indulgent government.\n\nIn Holland, the heavy taxes upon the necessaries of life have ruined,\nit is said, their principal manufacturers, and are likely to discourage,\ngradually, even their fisheries and their trade in ship-building. The\ntaxes upon the necessaries of life are inconsiderable in Great Britain,\nand no manufacture has hitherto been ruined by them. The British taxes\nwhich bear hardest on manufactures, are some duties upon the importation\nof raw materials, particularly upon that of raw silk. The revenue of the\nStates-General and of the different cities, however, is said to amount\nto more than five millions two hundred and fifty thousand pounds\nsterling; and as the inhabitants of the United Provinces cannot well be\nsupposed to amount to more than a third part of those of Great Britain,\nthey must, in proportion to their number, be much more heavily taxed.\n\nAfter all the proper subjects of taxation have been exhausted, if the\nexigencies of the state still continue to require new taxes, they must\nbe imposed upon improper ones. The taxes upon the necessaries of life,\ntherefore, may be no impeachment of the wisdom of that republic, which,\nin order to acquire and to maintain its independency, has, in spite of\nits meat frugality, been involved in such expensive wars as have obliged\nit to contract great debts. The singular countries of Holland and\nZealand, besides, require a considerable expense even to preserve their\nexistence, or to prevent their being swallowed up by the sea, which must\nhave contributed to increase considerably the load of taxes in those two\nprovinces. The republican form of government seems to be the principal\nsupport of the present grandeur of Holland. The owners of great\ncapitals, the great mercantile families, have generally either some\ndirect share, or some indirect influence, in the administration of that\ngovernment. For the sake of the respect and authority which they derive\nfrom this situation, they are willing to live in a country where their\ncapital, if they employ it themselves, will bring them less profit, and\nif they lend it to another, less interest; and where the very\nmoderate revenue which they can draw from it will purchase less of the\nnecessaries and conveniencies of life than in any other part of Europe.\nThe residence of such wealthy people necessarily keeps alive, in spite\nof all disadvantages, a certain degree of industry in the country. Any\npublic calamity which should destroy the republican form of government,\nwhich should throw the whole administration into the hands of nobles and\nof soldiers, which should annihilate altogether the importance of those\nwealthy merchants, would soon render it disagreeable to them to live in\na country where they were no longer likely to be much respected. They\nwould remove both their residence and their capital to some other\ncountry, and the industry and commerce of Holland would soon follow the\ncapitals which supported them.\n\n\n\n\nCHAPTER III. OF PUBLIC DEBTS.\n\nIn that rude state of society which precedes the extension of commerce\nand the improvement of manufactures; when those expensive luxuries,\nwhich commerce and manufactures can alone introduce, are altogether\nunknown; the person who possesses a large revenue, I have endeavoured to\nshow in the third book of this Inquiry, can spend or enjoy that revenue\nin no other way than by maintaining nearly as many people as it can\nmaintain. A large revenue may at all times be said to consist in the\ncommand of a large quantity of the necessaries of life. In that rude\nstate of things, it is commonly paid in a large quantity of those\nnecessaries, in the materials of plain food and coarse clothing, in\ncorn and cattle, in wool and raw hides. When neither commerce nor\nmanufactures furnish any thing for which the owner can exchange the\ngreater part of those materials which are over and above his own\nconsumption, he can do nothing with the surplus, but feed and clothe\nnearly as many people as it will feed and clothe. A hospitality in which\nthere is no luxury, and a liberality in which there is no ostentation,\noccasion, in this situation of things, the principal expenses of the\nrich and the great. But these I have likewise endeavoured to show, in\nthe same book, are expenses by which people are not very apt to ruin\nthemselves. There is not, perhaps, any selfish pleasure so frivolous, of\nwhich the pursuit has not sometimes ruined even sensible men. A passion\nfor cock-fighting has ruined many. But the instances, I believe, are\nnot very numerous, of people who have been ruined by a hospitality\nor liberality of this kind; though the hospitality of luxury, and the\nliberality of ostentation have ruined many. Among our feudal ancestors,\nthe long time during which estates used to continue in the same family,\nsufficiently demonstrates the general disposition of people to live\nwithin their income. Though the rustic hospitality, constantly exercised\nby the great landholders, may not, to us in the present times, seem\nconsistent with that order which we are apt to consider as inseparably\nconnected with good economy; yet we must certainly allow them to have\nbeen at least so far frugal, as not commonly to have spent their whole\nincome. A part of their wool and raw hides, they had generally an\nopportunity of selling for money. Some part of this money, perhaps, they\nspent in purchasing the few objects of vanity and luxury, with which the\ncircumstances of the times could furnish them; but some part of it they\nseem commonly to have hoarded. They could not well, indeed, do any thing\nelse but hoard whatever money they saved. To trade, was disgraceful to\na gentleman; and to lend money at interest, which at that time was\nconsidered as usury, and prohibited bylaw, would have been still more\nso. In those times of violence and disorder, besides, it was convenient\nto have a hoard of money at hand, that in case they should be driven\nfrom their own home, they might have something of known value to carry\nwith them to some place of safety. The same violence which made it\nconvenient to hoard, made it equally convenient to conceal the hoard.\nThe frequency of treasure-trove, or of treasure found, of which no owner\nwas known, sufficiently demonstrates the frequency, in those times,\nboth of hoarding and of concealing the hoard. Treasure-trove was then\nconsidered as an important branch of the revenue of the sovereign. All\nthe treasure-trove of the kingdom would scarce, perhaps, in the present\ntimes, make an important branch of the revenue of a private gentleman of\na good estate.\n\nThe same disposition, to save and to hoard, prevailed in the sovereign,\nas well as in the subjects. Among nations, to whom commerce and\nmanufacture are little known, the sovereign, it has already been\nobserved in the Fourth book, is in a situation which naturally disposes\nhim to the parsimony requisite for accumulation. In that situation, the\nexpense, even of a sovereign, cannot be directed by that vanity which\ndelights in the gaudy finery of a court. The ignorance of the times\naffords but few of the trinkets in which that finery consists. Standing\narmies are not then necessary; so that the expense, even of a sovereign,\nlike that of any other great lord can be employed in scarce any thing\nbut bounty to his tenants, and hospitality to his retainers. But bounty\nand hospitality very seldom lead to extravagance; though vanity almost\nalways does. All the ancient sovereigns of Europe, accordingly, it has\nalready been observed, had treasures. Every Tartar chief, in the present\ntimes, is said to have one.\n\nIn a commercial country, abounding with every sort of expensive luxury,\nthe sovereign, in the same manner as almost all the great proprietors\nin his dominions, naturally spends a great part of his revenue in\npurchasing those luxuries. His own and the neighbouring countries supply\nhim abundantly with all the costly trinkets which compose the splendid,\nbut insignificant, pageantry of a court. For the sake of an inferior\npageantry of the same kind, his nobles dismiss their retainers,\nmake their tenants independent, and become gradually themselves as\ninsignificant as the greater part of the wealthy burghers in his\ndominions. The same frivolous passions, which influence their conduct,\ninfluence his. How can it be supposed that he should be the only rich\nman in his dominions who is insensible to pleasures of this kind? If he\ndoes not, what he is very likely to do, spend upon those pleasures so\ngreat a part of his revenue as to debilitate very much the defensive\npower of the state, it cannot well be expected that he should not spend\nupon them all that part of it which is over and above what is necessary\nfor supporting that defensive power. His ordinary expense becomes equal\nto his ordinary revenue, and it is well if it does not frequently\nexceed it. The amassing of treasure can no longer be expected; and\nwhen extraordinary exigencies require extraordinary expenses, he must\nnecessarily call upon his subjects for an extraordinary aid. The present\nand the late king of Prussia are the only great princes of Europe, who,\nsince the death of Henry IV. of France, in 1610, are supposed to\nhave amassed any considerable treasure. The parsimony which leads to\naccumulation has become almost as rare in republican as in monarchical\ngovernments. The Italian republics, the United Provinces of the\nNetherlands, are all in debt. The canton of Berne is the single republic\nin Europe which has amassed any considerable treasure. The other Swiss\nrepublics have not. The taste for some sort of pageantry, for splendid\nbuildings, at least, and other public ornaments, frequently prevails as\nmuch in the apparently sober senate-house of a little republic, as in\nthe dissipated court of the greatest king.\n\nThe want of parsimony, in time of peace, imposes the necessity of\ncontracting debt in time of war. When war comes, there is no money in\nthe treasury, but what is necessary for carrying on the ordinary expense\nof the peace establishment. In war, an establishment of three or four\ntimes that expense becomes necessary for the defence of the state;\nand consequently, a revenue three or four times greater than the peace\nrevenue. Supposing that the sovereign should have, what he scarce ever\nhas, the immediate means of augmenting his revenue in proportion to the\naugmentation of his expense; yet still the produce of the taxes, from\nwhich this increase of revenue must be drawn, will not begin to come\ninto the treasury, till perhaps ten or twelve months after they are\nimposed. But the moment in which war begins, or rather the moment in\nwhich it appears likely to begin, the army must be augmented, the fleet\nmust be fitted out, the garrisoned towns must be put into a posture\nof defence; that army, that fleet, those garrisoned towns, must be\nfurnished with arms, ammunition, and provisions. An immediate and great\nexpense must be incurred in that moment of immediate danger, which will\nnot wait for the gradual and slow returns of the new taxes. In this\nexigency, government can have no other resource but in borrowing.\n\nThe same commercial state of society which, by the operation of\nmoral causes, brings government in this manner into the necessity of\nborrowing, produces in the subjects both an ability and an inclination\nto lend. If it commonly brings along with it the necessity of borrowing,\nit likewise brings with it the facility of doing so.\n\nA country abounding with merchants and manufacturers, necessarily\nabounds with a set of people through whose hands, not only their own\ncapitals, but the capitals of all those who either lend them money, or\ntrust them with goods, pass as frequently, or more frequently, than the\nrevenue of a private man, who, without trade or business, lives upon\nhis income, passes through his hands. The revenue of such a man can\nregularly pass through his hands only once in a year. But the whole\namount of the capital and credit of a merchant, who deals in a trade of\nwhich the returns are very quick, may sometimes pass through his hands\ntwo, three, or four times in a year. A country abounding with merchants\nand manufacturers, therefore, necessarily abounds with a set of people,\nwho have it at all times in their power to advance, if they chuse to do\nso, a very large sum of money to government. Hence the ability in the\nsubjects of a commercial state to lend.\n\nCommerce and manufactures can seldom flourish long in any state which\ndoes not enjoy a regular administration of justice; in which the people\ndo not feel themselves secure in the possession of their property; in\nwhich the faith of contracts is not supported by law; and in which\nthe authority of the state is not supposed to be regularly employed\nin enforcing the payment of debts from all those who are able to pay.\nCommerce and manufactures, in short, can seldom flourish in any state,\nin which there is not a certain degree of confidence in the justice\nof government. The same confidence which disposes great merchants and\nmanufacturers upon ordinary occasions, to trust their property to the\nprotection of a particular government, disposes them, upon extraordinary\noccasions, to trust that government with the use of their property.\nBy lending money to government, they do not even for a moment diminish\ntheir ability to carry on their trade and manufactures; on the\ncontrary, they commonly augment it. The necessities of the state render\ngovernment, upon most occasions willing to borrow upon terms extremely\nadvantageous to the lender. The security which it grants to the original\ncreditor, is made transferable to any other creditor; and from the\nuniversal confidence in the justice of the state, generally sells in the\nmarket for more than was originally paid for it. The merchant or\nmonied man makes money by lending money to government, and instead of\ndiminishing, increases his trading capital. He generally considers it\nas a favour, therefore, when the administration admits him to a share\nin the first subscription for a new loan. Hence the inclination or\nwillingness in the subjects of a commercial state to lend.\n\nThe government of such a state is very apt to repose itself upon this\nability and willingness of its subjects to lend it their money on\nextraordinary occasions. It foresees the facility of borrowing, and\ntherefore dispenses itself from the duty of saving.\n\nIn a rude state of society, there are no great mercantile or\nmanufacturing capitals. The individuals, who hoard whatever money they\ncan save, and who conceal their hoard, do so from a distrust of the\njustice of government; from a fear, that if it was known that they had\na hoard, and where that hoard was to be found, they would quickly be\nplundered. In such a state of things, few people would be able,\nand nobody would be willing to lend their money to government on\nextraordinary exigencies. The sovereign feels that he must provide\nfor such exigencies by saving, because he foresees the absolute\nimpossibility of borrowing. This foresight increases still further his\nnatural disposition to save.\n\nThe progress of the enormous debts which at present oppress, and will\nin the long-run probably ruin, all the great nations of Europe, has\nbeen pretty uniform. Nations, like private men, have generally begun\nto borrow upon what may be called personal credit, without assigning\nor mortgaging any particular fund for the payment of the debt; and\nwhen this resource has failed them, they have gone on to borrow upon\nassignments or mortgages of particular funds.\n\nWhat is called the unfunded debt of Great Britain, is contracted in the\nformer of those two ways. It consists partly in a debt which bears, or\nis supposed to bear, no interest, and which resembles the debts that\na private man contracts upon account; and partly in a debt which bears\ninterest, and which resembles what a private man contracts upon his bill\nor promissory-note. The debts which are due, either for extraordinary\nservices, or for services either not provided for, or not paid at the\ntime when they are performed; part of the extraordinaries of the army,\nnavy, and ordnance, the arrears of subsidies to foreign princes, those\nof seamen's wages, etc. usually constitute a debt of the first kind.\nNavy and exchequer bills, which are issued sometimes in payment of a\npart of such debts, and sometimes for other purposes, constitute a debt\nof the second kind; exchequer bills bearing interest from the day on\nwhich they are issued, and navy bills six months after they are issued.\nThe bank of England, either by voluntarily discounting those bills\nat their current value, or by agreeing with government for certain\nconsiderations to circulate exchequer bills, that is, to receive them\nat par, paying the interest which happens to be due upon them, keeps up\ntheir value, and facilitates their circulation, and thereby frequently\nenables government to contract a very large debt of this kind. In\nFrance, where there is no bank, the state bills (billets d'etat {See\nExamen des Reflections Politiques sur les Finances.}) have sometimes\nsold at sixty and seventy per cent. discount. During the great recoinage\nin king William's time, when the bank of England thought proper to put a\nstop to its usual transactions, exchequer bills and tallies are said to\nhave sold from twenty-five to sixty per cent. discount; owing partly, no\ndoubt, to the supposed instability of the new government established by\nthe Revolution, but partly, too, to the want of the support of the bank\nof England.\n\nWhen this resource is exhausted, and it becomes necessary, in order to\nraise money, to assign or mortgage some particular branch of the public\nrevenue for the payment of the debt, government has, upon different\noccasions, done this in two different ways. Sometimes it has made this\nassignment or mortgage for a short period of time only, a year, or a few\nyears, for example; and sometimes for perpetuity. In the one case,\nthe fund was supposed sufficient to pay, within the limited time, both\nprincipal and interest of the money borrowed. In the other, it was\nsupposed sufficient to pay the interest only, or a perpetual annuity\nequivalent to the interest, government being at liberty to redeem, at\nany time, this annuity, upon paying back the principal sum borrowed.\nWhen money was raised in the one way, it was said to be raised by\nanticipation; when in the other, by perpetual funding, or, more shortly,\nby funding.\n\nIn Great Britain, the annual land and malt taxes are regularly\nanticipated every year, by virtue of a borrowing clause constantly\ninserted into the acts which impose them. The bank of England generally\nadvances at an interest, which, since the Revolution, has varied from\neight to three per cent., the sums of which those taxes are granted,\nand receives payment as their produce gradually comes in. If there is a\ndeficiency, which there always is, it is provided for in the supplies\nof the ensuing year. The only considerable branch of the public revenue\nwhich yet remains unmortgaged, is thus regularly spent before it comes\nin. Like an improvident spendthrift, whose pressing occasions will not\nallow him to wait for the regular payment of his revenue, the state is\nin the constant practice of borrowing of its own factors and agents, and\nof paying interest for the use of its own money.\n\nIn the reign of king William, and during a great part of that of queen\nAnne, before we had become so familiar as we are now with the practice\nof perpetual funding, the greater part of the new taxes were imposed but\nfor a short period of time (for four, five, six, or seven years only),\nand a great part of the grants of every year consisted in loans\nupon anticipations of the produce of those taxes. The produce being\nfrequently insufficient for paying, within the limited term, the\nprincipal and interest of the money borrowed, deficiencies arose; to\nmake good which, it became necessary to prolong the term.\n\nIn 1697, by the 8th of William III., c. 20, the deficiencies of several\ntaxes were charged upon what was then called the first general mortgage\nor fund, consisting of a prolongation to the first of August 1706, of\nseveral different taxes, which would have expired within a shorter term,\nand of which the produce was accumulated into one general fund. The\ndeficiencies charged upon this prolonged term amounted to £5,160,459:\n14: 9½.\n\nIn 1701, those duties, with some others, were still further prolonged,\nfor the like purposes, till the first of August 1710, and were called\nthe second general mortgage or fund. The deficiencies charged upon it\namounted to £2,055,999: 7: 11½.\n\nIn 1707, those duties were still further prolonged, as a fund for new\nloans, to the first of August 1712, and were called the third general\nmortgage or fund. The sum borrowed upon it was £983,254:11:9¼.\n\nIn 1708, those duties were all (except the old subsidy of tonnage and\npoundage, of which one moiety only was made a part of this fund, and a\nduty upon the importation of Scotch linen, which had been taken off by\nthe articles of union) still further continued, as a fund for new loans,\nto the first of August 1714, and were called the fourth general mortgage\nor fund. The sum borrowed upon it was £925,176:9:2¼.\n\nIn 1709, those duties were all ( except the old subsidy of tonnage and\npoundage, which was now left out of this fund altogether ) still further\ncontinued, for the same purpose, to the first of August 1716, and were\ncalled the fifth general mortgage or fund. The sum borrowed upon it was\n£922,029:6s.\n\nIn 1710, those duties were again prolonged to the first of August 1720,\nand were called the sixth general mortgage or fund. The sum borrowed\nupon it was £1,296,552:9:11¾.\n\nIn 1711, the same duties (which at this time were thus subject to four\ndifferent anticipations), together with several others, were continued\nfor ever, and made a fund for paying the interest of the capital of\nthe South-sea company, which had that year advanced to government, for\npaying debts, and making good deficiencies, the sum of £9,177,967:15:4d,\nthe greatest loan which at that time had ever been made.\n\nBefore this period, the principal, so far as I have been able to\nobserve, the only taxes, which, in order to pay the interest of a debt,\nhad been imposed for perpetuity, were those for paying the interest\nof the money which had been advanced to government by the bank and\nEast-India company, and of what it was expected would be advanced, but\nwhich was never advanced, by a projected land bank. The bank fund at\nthis time amounted to £3,375,027:17:10½, for which was paid an\nannuity or interest of £206,501:15:5d. The East-India fund amounted to\n£3,200,000, for which was paid an annuity or interest of £160,000; the\nbank fund being at six per cent., the East-India fund at five per cent.\ninterest.\n\nIn 1715, by the first of George I., c. 12, the different taxes which\nhad been mortgaged for paying the bank annuity, together with several\nothers, which, by this act, were likewise rendered perpetual, were\naccumulated into one common fund, called the aggregate fund, which was\ncharged not only with the payment of the bank annuity, but with several\nother annuities and burdens of different kinds. This fund was afterwards\naugmented by the third of George I., c.8., and by the fifth of George\nI., c. 3, and the different duties which were then added to it were\nlikewise rendered perpetual.\n\nIn 1717, by the third of George I., c. 7, several other taxes were\nrendered perpetual, and accumulated into another common fund, called\nthe general fund, for the payment of certain annuities, amounting in the\nwhole to £724,849:6:10½.\n\nIn consequence of those different acts, the greater part of the taxes,\nwhich before had been anticipated only for a short term of years were\nrendered perpetual, as a fund for paying, not the capital, but the\ninterest only, of the money which had been borrowed upon them by\ndifferent successive anticipations.\n\nHad money never been raised but by anticipation, the course of a\nfew years would have liberated the public revenue, without any other\nattention of government besides that of not overloading the fund, by\ncharging it with more debt than it could pay within the limited term,\nand not of anticipating a second time before the expiration of the first\nanticipation. But the greater part of European governments have been\nincapable of those attentions. They have frequently overloaded the fund,\neven upon the first anticipation; and when this happened not to be the\ncase, they have generally taken care to overload it, by anticipating\na second and a third time, before the expiration of the first\nanticipation. The fund becoming in this manner altogether insufficient\nfor paying both principal and interest of the money borrowed upon it,\nit became necessary to charge it with the interest only, or a perpetual\nannuity equal to the interest; and such improvident anticipations\nnecessarily gave birth to the more ruinous practice of perpetual\nfunding. But though this practice necessarily puts off the liberation of\nthe public revenue from a fixed period, to one so indefinite that it is\nnot very likely ever to arrive; yet, as a greater sum can, in all cases,\nbe raised by this new practice than by the old one of anticipation, the\nformer, when men have once become familiar with it, has, in the great\nexigencies of the state, been universally preferred to the latter. To\nrelieve the present exigency, is always the object which principally\ninterests those immediately concerned in the administration of public\naffairs. The future liberation of the public revenue they leave to the\ncare of posterity.\n\nDuring the reign of queen Anne, the market rate of interest had fallen\nfrom six to five per cent.; and, in the twelfth year of her reign, five\nper cent. was declared to be the highest rate which could lawfully be\ntaken for money borrowed upon private security. Soon after the\ngreater part of the temporary taxes of Great Britain had been rendered\nperpetual, and distributed into the aggregate, South-sea, and general\nfunds, the creditors of the public, like those of private persons, were\ninduced to accept of five per cent. for the interest of their money,\nwhich occasioned a saving of one per cent. upon the capital of the\ngreater part or the debts which had been thus funded for perpetuity, or\nof one-sixth of the greater part of the annuities which were paid out of\nthe three great funds above mentioned. This saving left a considerable\nsurplus in the produce of the different taxes which had been accumulated\ninto those funds, over and above what was necessary for paying the\nannuities which were now charged upon them, and laid the foundation of\nwhat has since been called the sinking fund. In 1717, it amounted to\n£523,454:7:7½. In 1727, the interest of the greater part of the public\ndebts was still further reduced to four per cent.; and, in 1753 and\n1757, to three and a-half, and three per cent., which reductions still\nfurther augmented the sinking fund.\n\nA sinking fund, though instituted for the payment of old, facilitates\nvery much the contracting of new debts. It is a subsidiary fund, always\nat hand, to be mortgaged in aid of any other doubtful fund, upon which\nmoney is proposed to be raised in any exigency of the state. Whether the\nsinking fund of Great Britain has been more frequently applied to the\none or to other of those two purposes, will sufficiently appear by and\nby.\n\nBesides those two methods of borrowing, by anticipations and by a\nperpetual funding, there are two other methods, which hold a sort of\nmiddle place between them; these are, that of borrowing upon annuities\nfor terms of years, and that of borrowing upon annuities for lives.\n\nDuring the reigns of king William and queen Anne, large sums were\nfrequently borrowed upon annuities for terms of years, which were\nsometimes longer and sometimes shorter. In 1695, an act was passed for\nborrowing one million upon an annuity of fourteen per cent., or £140,000\na-year, for sixteen years. In 1691, an act was passed for borrowing\na million upon annuities for lives, upon terms which, in the present\ntimes, would appear very advantageous; but the subscription was not\nfilled up. In the following year, the deficiency was made good, by\nborrowing upon annuities for lives, at fourteen per cent. or a little\nmore than seven years purchase. In 1695, the persons who had purchased\nthose annuities were allowed to exchange them for others of ninety-six\nyears, upon paying into the exchequer sixty-three pounds in the hundred;\nthat is, the difference between fourteen per cent. for life, and\nfourteen per cent. for ninety-six years, was sold for sixty-three\npounds, or for four and a-half years purchase. Such was the supposed\ninstability of government, that even these terms procured few\npurchasers. In the reign of queen Anne, money was, upon different\noccasions, borrowed both upon annuities for lives, and upon annuities\nfor terms of thirty-two, of eighty-nine, of ninety-eight, and of\nninety-nine years. In 1719, the proprietors of the annuities for\nthirty-two years were induced to accept, in lieu of them, South-sea\nstock to the amount of eleven and a-half years purchase of the\nannuities, together with an additional quantity of stock, equal to the\narrears which happened then to be due upon them. In 1720, the greater\npart of the other annuities for terms of years, both long and short,\nwere subscribed into the same fund. The long annuities, at that time,\namounted to £666,821: 8:3½ a-year. On the 5th of January 1775, the\nremainder of them, or what was not subscribed at that time, amounted\nonly to £136,453:12:8d.\n\nDuring the two wars which began in 1739 and in 1755, little money was\nborrowed, either upon annuities for terms of years, or upon those for\nlives. An annuity for ninety-eight or ninety-nine years, however, is\nworth nearly as much as a perpetuity, and should therefore, one might\nthink, be a fund for borrowing nearly as much. But those who, in order\nto make family settlements, and to provide for remote futurity, buy\ninto the public stocks, would not care to purchase into one of which\nthe value was continually diminishing; and such people make a very\nconsiderable proportion, both of the proprietors and purchasers of\nstock. An annuity for a long term of years, therefore, though its\nintrinsic value may be very nearly the same with that of a perpetual\nannuity, will not find nearly the same number of purchasers. The\nsubscribers to a new loan, who mean generally to sell their subscription\nas soon as possible, prefer greatly a perpetual annuity, redeemable by\nparliament, to an irredeemable annuity, for a long term of years, of\nonly equal amount. The value of the former may be supposed always\nthe same, or very nearly the same; and it makes, therefore, a more\nconvenient transferable stock than the latter.\n\nDuring the two last-mentioned wars, annuities, either for terms of years\nor for lives, were seldom granted, but as premiums to the subscribers of\na new loan, over and above the redeemable annuity or interest, upon the\ncredit of which the loan was supposed to be made. They were granted,\nnot as the proper fund upon which the money was borrowed, but as an\nadditional encouragement to the lender.\n\nAnnuities for lives have occasionally been granted in two different\nways; either upon separate lives, or upon lots of lives, which, in\nFrench, are called tontines, from the name of their inventor. When\nannuities are granted upon separate lives, the death of every individual\nannuitant disburdens the public revenue, so far as it was affected by\nhis annuity. When annuities are granted upon tontines, the liberation\nof the public revenue does not commence till the death of all the\nannuitants comprehended in one lot, which may sometimes consist of\ntwenty or thirty persons, of whom the survivors succeed to the annuities\nof all those who die before them; the last survivor succeeding to the\nannuities of the whole lot. Upon the same revenue, more money can always\nbe raised by tontines than by annuities for separate lives. An annuity,\nwith a right of survivorship, is really worth more than an equal annuity\nfor a separate life; and, from the confidence which every man naturally\nhas in his own good fortune, the principle upon which is founded the\nsuccess of all lotteries, such an annuity generally sells for something\nmore than it is worth. In countries where it is usual for government\nto raise money by granting annuities, tontines are, upon this account,\ngenerally preferred to annuities for separate lives. The expedient\nwhich will raise most money, is almost always preferred to that which\nis likely to bring about, in the speediest manner, the liberation of the\npublic revenue.\n\nIn France, a much greater proportion of the public debts consists in\nannuities for lives than in England. According to a memoir presented by\nthe parliament of Bourdeaux to the king, in 1764, the whole public debt\nof France is estimated at twenty-four hundred millions of livres; of\nwhich the capital, for which annuities for lives had been granted, is\nsupposed to amount to three hundred millions, the eighth part of the\nwhole public debt. The annuities themselves are computed to amount\nto thirty millions a-year, the fourth part of one hundred and twenty\nmillions, the supposed interest of that whole debt. These estimations,\nI know very well, are not exact; but having been presented by so\nvery respectable a body as approximations to the truth, they may, I\napprehend, be considered as such. It is not the different degrees of\nanxiety in the two governments of France and England for the liberation\nof the public revenue, which occasions this difference in their\nrespective modes of borrowing; it arises altogether from the different\nviews and interests of the lenders.\n\nIn England, the seat of government being in the greatest mercantile city\nin the world, the merchants are generally the people who advance money\nto government. By advancing it, they do not mean to diminish, but, on\nthe contrary, to increase their mercantile capitals; and unless they\nexpected to sell, with some profit, their share in the subscription\nfor a new loan, they never would subscribe. But if, by advancing their\nmoney, they were to purchase, instead of perpetual annuities, annuities\nfor lives only, whether their own or those of other people, they would\nnot always be so likely to sell them with a profit. Annuities upon their\nown lives they would always sell with loss; because no man will give for\nan annuity upon the life of another, whose age and state of health are\nnearly the same with his own, the same price which he would give for one\nupon his own. An annuity upon the life of a third person, indeed, is,\nno doubt, of equal value to the buyer and the seller; but its real value\nbegins to diminish from the moment it is granted, and continues to do\nso, more and more, as long as it subsists. It can never, therefore, make\nso convenient a transferable stock as a perpetual annuity, of which the\nreal value may be supposed always the same, or very nearly the same.\n\nIn France, the seat of government not being in a great mercantile city,\nmerchants do not make so great a proportion of the people who advance\nmoney to government. The people concerned in the finances, the\nfarmers-general, the receivers of the taxes which are not in farm, the\ncourt-bankers, etc. make the greater part of those who advance their\nmoney in all public exigencies. Such people are commonly men of mean\nbirth, but of great wealth, and frequently of great pride. They are too\nproud to marry their equals, and women of quality disdain to marry\nthem. They frequently resolve, therefore, to live bachelors; and having\nneither any families of their own, nor much regard for those of their\nrelations, whom they are not always very fond of acknowledging, they\ndesire only to live in splendour during their own time, and are not\nunwilling that their fortune should end with themselves. The number of\nrich people, besides, who are either averse to marry, or whose condition\nof life renders it either improper or inconvenient for them to do so, is\nmuch greater in France than in England. To such people, who have\nlittle or no care for posterity, nothing can be more convenient than to\nexchange their capital for a revenue, which is to last just as long, and\nno longer, than they wish it to do.\n\nThe ordinary expense of the greater part of modern governments, in time\nof peace, being equal, or nearly equal, to their ordinary revenue, when\nwar comes, they are both unwilling and unable to increase their revenue\nin proportion to the increase of their expense. They are unwilling, for\nfear of offending the people, who, by so great and so sudden an increase\nof taxes, would soon be disgusted with the war; and they are unable,\nfrom not well knowing what taxes would be sufficient to produce the\nrevenue wanted. The facility of borrowing delivers them from the\nembarrassment which this fear and inability would otherwise occasion. By\nmeans of borrowing, they are enabled, with a very moderate increase of\ntaxes, to raise, from year to year, money sufficient for carrying on the\nwar; and by the practice of perpetual funding, they are enabled, with\nthe smallest possible increase of taxes, to raise annually the largest\npossible sum of money. In great empires, the people who live in the\ncapital, and in the provinces remote from the scene of action, feel,\nmany of them, scarce any inconveniency from the war, but enjoy, at their\nease, the amusement of reading in the newspapers the exploits of their\nown fleets and armies. To them this amusement compensates the small\ndifference between the taxes which they pay on account of the war, and\nthose which they had been accustomed to pay in time of peace. They are\ncommonly dissatisfied with the return of peace, which puts an end to\ntheir amusement, and to a thousand visionary hopes of conquest and\nnational glory, from a longer continuance of the war.\n\nThe return of peace, indeed, seldom relieves them from the greater\npart of the taxes imposed during the war. These are mortgaged for the\ninterest of the debt contracted, in order to carry it on. If, over\nand above paying the interest of this debt, and defraying the ordinary\nexpense of government, the old revenue, together with the new taxes,\nproduce some surplus revenue, it may, perhaps, be converted into a\nsinking fund for paying off the debt. But, in the first place, this\nsinking fund, even supposing it should be applied to no other purpose,\nis generally altogether inadequate for paying, in the course of any\nperiod during which it can reasonably be expected that peace should\ncontinue, the whole debt contracted during the war; and, in the second\nplace, this fund is almost always applied to other purposes.\n\nThe new taxes were imposed for the sole purpose of paying the interest\nof the money borrowed upon them. If they produce more, it is generally\nsomething which was neither intended nor expected, and is, therefore,\nseldom very considerable. Sinking funds have generally arisen, not so\nmuch from any surplus of the taxes which was over and above what was\nnecessary for paying the interest or annuity originally charged upon\nthem, as from a subsequent reduction of that interest; that of Holland\nin 1655, and that of the ecclesiastical state in 1685, were both formed\nin this manner. Hence the usual insufficiency of such funds.\n\nDuring the most profound peace, various events occur, which require an\nextraordinary expense; and government finds it always more convenient to\ndefray this expense by misapplying the sinking fund, than by imposing a\nnew tax. Every new tax is immediately felt more or less by the people.\nIt occasions always some murmur, and meets with some opposition. The\nmore taxes may have been multiplied, the higher they may have been\nraised upon every different subject of taxation; the more loudly the\npeople complain of every new tax, the more difficult it becomes, too,\neither to find out new subjects of taxation, or to raise much higher\nthe taxes already imposed upon the old. A momentary suspension of the\npayment of debt is not immediately felt by the people, and occasions\nneither murmur nor complaint. To borrow of the sinking fund is always\nan obvious and easy expedient for getting out of the present difficulty.\nThe more the public debts may have been accumulated, the more necessary\nit may have become to study to reduce them; the more dangerous, the more\nruinous it may be to misapply any part of the sinking fund; the less\nlikely is the public debt to be reduced to any considerable degree, the\nmore likely, the more certainly, is the sinking fund to be misapplied\ntowards defraying all the extraordinary expenses which occur in time of\npeace. When a nation is already overburdened with taxes, nothing but the\nnecessities of a new war, nothing but either the animosity of national\nvengeance, or the anxiety for national security, can induce the people\nto submit, with tolerable patience, to a new tax. Hence the usual\nmisapplication of the sinking fund.\n\nIn Great Britain, from the time that we had first recourse to the\nruinous expedient of perpetual funding, the reduction of the public\ndebt, in time of peace, has never borne any proportion to its\naccumulation in time of war. It was in the war which began in 1668, and\nwas concluded by the treaty of Ryswick, in 1697, that the foundation of\nthe present enormous debt of Great Britain was first laid.\n\nOn the 31st of December 1697, the public debts of Great Britain, funded\nand unfunded, amounted to £21,515,742:13:8½. A great part of those\ndebts had been contracted upon short anticipations, and some part upon\nannuities for lives; so that, before the 31st of December 1701, in less\nthan four years, there had partly been paid off; and partly reverted\nto the public, the sum of £5,121,041:12:0¾d; a greater reduction of the\npublic debt than has ever since been brought about in so short a\nperiod of time. The remaining debt, therefore, amounted only to\n£16,394,701:1:7¼d.\n\nIn the war which began in 1702, and which was concluded by the treaty\nof Utrecht, the public debts were still more accumulated. On the 31st of\nDecember 1714, they amounted to £53,681,076:5:6½. The subscription\ninto the South-sea fund, of the short and long annuities, increased the\ncapital of the public debt; so that, on the 31st of December 1722, it\namounted to £55,282,978:1:3 5/6. The reduction of the debt began in\n1723, and went on so slowly, that, on the 31st of December 1739, during\nseventeen years-of profound peace, the whole sum paid off was no more\nthan £8,328,554:17:11 3/12, the capital of the public debt, at that\ntime, amounting to £46,954,623:3:4 7/12.\n\nThe Spanish war, which began in 1739, and the French war which soon\nfollowed it, occasioned a further increase of the debt, which, on the\n31st of December 1748, after the war had been concluded by the treaty of\nAix-la-Chapelle, amounted to £78,293,313:1:10¾. The most profound peace,\nof 17 years continuance, had taken no more than £8,328,354, 17:11¼ from\nit. A war, of less than nine years continuance, added £31,338,689:18: 6\n1/6 to it. {See James Postlethwaite's History of the Public Revenue.}\n\nDuring the administration of Mr. Pelham, the interest of the public debt\nwas reduced, or at least measures were taken for reducing it, from four\nto three per cent.; the sinking fund was increased, and some part of the\npublic debt was paid off. In 1755, before the breaking out of the late\nwar, the funded debt of Great Britain amounted to £72,289,675. On the\n5th of January 1763, at the conclusion of the peace, the funded debt\namounted debt to £122,603,336:8:2¼. The unfunded debt has been stated at\n£13,927,589:2:2. But the expense occasioned by the war did not end with\nthe conclusion of the peace; so that, though on the 5th of January\n1764, the funded debt was increased (partly by a new loan, and partly by\nfunding a part of the unfunded debt) to £129,586,789:10:1¾, there still\nremained (according to the very well informed author of Considerations\non the Trade and Finances of Great Britain) an unfunded debt, which was\nbrought to account in that and the following year, of £9,975,017: 12:2\n15/44d. In 1764, therefore, the public debt of Great Britain, funded\nand unfunded together, amounted, according to this author, to\n£139,561,807:2:4. The annuities for lives, too, which had been granted\nas premiums to the subscribers to the new loans in 1757, estimated at\nfourteen years purchase, were valued at £472,500; and the annuities for\nlong terms of years, granted as premiums likewise, in 1761 and 1762,\nestimated at twenty-seven and a-half years purchase, were valued at\n£6,826,875. During a peace of about seven years continuance, the prudent\nand truly patriotic administration of Mr. Pelham was not able to pay\noff an old debt of six millions. During a war of nearly the same\ncontinuance, a new debt of more than seventy-five millions was\ncontracted.\n\nOn the 5th of January 1775, the funded debt of Great Britain amounted to\n£124,996,086, 1:6¼d. The unfunded, exclusive of a large civil-list debt,\nto £4,150,236:3:11 7/8. Both together, to £129,146,322:5:6. According to\nthis account, the whole debt paid off, during eleven years of profound\npeace, amounted only to £10,415,476:16:9 7/8. Even this small reduction\nof debt, however, has not been all made from the savings out of the\nordinary revenue of the state. Several extraneous sums, altogether\nindependent of that ordinary revenue, have contributed towards it.\nAmongst these we may reckon an additional shilling in the pound land\ntax, for three years; the two millions received from the East-India\ncompany, as indemnification for their territorial acquisitions; and\nthe one hundred and ten thousand pounds received from the bank for the\nrenewal of their charter. To these must be added several other sums,\nwhich, as they arose out of the late war, ought perhaps to be considered\nas deductions from the expenses of it. The principal are,\n\n   The produce of French prizes..............    £690,449: 18: 9\n   Composition for French prisoners.........      670,000:  0: 0\n\n   What has been received from the sale\n   of the ceded islands.........................   95,500:  0: 0\n\n   Total, .....................................£1,455,949: 18: 9\n\nIf we add to this sum the balance of the earl of Chatham's and Mr.\nCalcraft's accounts, and other army savings of the same kind, together\nwith what has been received from the bank, the East-India company, and\nthe additional shilling in the pound land tax, the whole must be a good\ndeal more than five millions. The debt, therefore, which, since the\npeace, has been paid out of the savings from the ordinary revenue of\nthe state, has not, one year with another, amounted to half a million\na-year. The sinking fund has, no doubt, been considerably augmented\nsince the peace, by the debt which had been paid off, by the reduction\nof the redeemable four per cents to three per cents, and by the\nannuities for lives which have fallen in; and, if peace were to\ncontinue, a million, perhaps, might now be annually spared out of it\ntowards the discharge of the debt. Another million, accordingly,\nwas paid in the course of last year; but at the same time, a large\ncivil-list debt was left unpaid, and we are now involved in a new war,\nwhich, in its progress, may prove as expensive as any of our former\nwars. {It has proved more expensive than any one of our former wars, and\nhas involved us in an additional debt of more than one hundred millions.\nDuring a profound peace of eleven years, little more than ten millions\nof debt was paid; during a war of seven years, more than one hundred\nmillions was contracted.} The new debt which will probably be contracted\nbefore the end of the next campaign, may, perhaps, be nearly equal to\nall the old debt which has been paid off from the savings out of the\nordinary revenue of the state. It would be altogether chimerical,\ntherefore, to expect that the public debt should ever be completely\ndischarged, by any savings which are likely to be made from that\nordinary revenue as it stands at present.\n\nThe public funds of the different indebted nations of Europe,\nparticularly those of England, have, by one author, been represented as\nthe accumulation of a great capital, superadded to the other capital of\nthe country, by means of which its trade is extended, its manufactures\nare multiplied, and its lands cultivated and improved, much beyond what\nthey could have been by means of that other capital only. He does\nnot consider that the capital which the first creditors of the public\nadvanced to government, was, from the moment in which he advanced it, a\ncertain portion of the annual produce, turned away from serving in the\nfunction of a capital, to serve in that of a revenue; from maintaining\nproductive labourers, to maintain unproductive ones, and to be spent and\nwasted, generally in the course of the year, without even the hope of\nany future reproduction. In return for the capital which they advanced,\nthey obtained, indeed, an annuity of the public funds, in most cases,\nof more than equal value. This annuity, no doubt, replaced to them their\ncapital, and enabled them to carry on their trade and business to the\nsame, or, perhaps, to a greater extent than before; that is, they were\nenabled, either to borrow of other people a new capital, upon the\ncredit of this annuity or, by selling it, to get from other people a\nnew capital of their own, equal, or superior, to that which they had\nadvanced to government. This new capital, however, which they in this\nmanner either bought or borrowed of other people, must have existed in\nthe country before, and must have been employed, as all capitals are, in\nmaintaining productive labour. When it came into the hands of those who\nhad advanced their money to government, though it was, in some respects,\na new capital to them, it was not so to the country, but was only\na capital withdrawn from certain employments, in order to be turned\ntowards others. Though it replaced to them what they had advanced to\ngovernment, it did not replace it to the country. Had they not advanced\nthis capital to government, there would have been in the country two\ncapitals, two portions of the annual produce, instead of one, employed\nin maintaining productive labour.\n\nWhen, for defraying the expense of government, a revenue is raised\nwithin the year, from the produce of free or unmortgaged taxes, a\ncertain portion of the revenue of private people is only turned away\nfrom maintaining one species of unproductive labour, towards maintaining\nanother. Some part of what they pay in those taxes, might, no doubt,\nhave been accumulated into capital, and consequently employed in\nmaintaining productive labour; but the greater part would probably\nhave been spent, and consequently employed in maintaining unproductive\nlabour. The public expense, however, when defrayed in this manner, no\ndoubt hinders, more or less, the further accumulation of new\ncapital; but it does not necessarily occasion the destruction of any\nactually-existing capital.\n\nWhen the public expense is defrayed by funding, it is defrayed by the\nannual destruction of some capital which had before existed in the\ncountry; by the perversion of some portion of the annual produce which\nhad before been destined for the maintenance of productive labour,\ntowards that of unproductive labour. As in this case, however, the taxes\nare lighter than they would have been, had a revenue sufficient for\ndefraying the same expense been raised within the year; the private\nrevenue of individuals is necessarily less burdened, and consequently\ntheir ability to save and accumulate some part of that revenue into\ncapital, is a good deal less impaired. If the method of funding destroys\nmore old capital, it, at the same time, hinders less the accumulation or\nacquisition of new capital, than that of defraying the public expense\nby a revenue raised within the year. Under the system of funding, the\nfrugality and industry of private people can more easily repair the\nbreaches which the waste and extravagance of government may occasionally\nmake in the general capital of the society.\n\nIt is only during the continuance of war, however, that the system of\nfunding has this advantage over the other system. Were the expense of\nwar to be defrayed always by a revenue raised within the year, the taxes\nfrom which that extraordinary revenue was drawn would last no longer\nthan the war. The ability of private people to accumulate, though less\nduring the war, would have been greater during the peace, than under\nthe system of funding. War would not necessarily have occasioned the\ndestruction of any old capitals, and peace would have occasioned the\naccumulation of many more new. Wars would, in general, be more speedily\nconcluded, and less wantonly undertaken. The people feeling, during\ncontinuance of war, the complete burden of it, would soon grow weary\nof it; and government, in order to humour them, would not be under the\nnecessity of carrying it on longer than it was necessary to do so. The\nforesight of the heavy and unavoidable burdens of war would hinder the\npeople from wantonly calling for it when there was no real or solid\ninterest to fight for. The seasons during which the ability of private\npeople to accumulate was somewhat impaired, would occur more rarely,\nand be of shorter continuance. Those, on the contrary, during which that\nability was in the highest vigour would be of much longer duration than\nthey can well be under the system of funding.\n\nWhen funding, besides, has made a certain progress, the multiplication\nof taxes which it brings along with it, sometimes impairs as much the\nability of private people to accumulate, even in time of peace, as the\nother system would in time of war. The peace revenue of Great Britain\namounts at present to more than ten millions a-year. If free and\nunmortgaged, it might be sufficient, with proper management, and without\ncontracting a shilling of new debt, to carry on the most vigorous war.\nThe private revenue of the inhabitants of Great Britain is at present as\nmuch incumbered in time of peace, their ability to accumulate is as much\nimpaired, as it would have been in the time of the most expensive war,\nhad the pernicious system of funding never been adopted.\n\nIn the payment of the interest of the public debt, it has been said, it\nis the right hand which pays the left. The money does not go out of the\ncountry. It is only a part of the revenue of one set of the inhabitants\nwhich is transferred to another; and the nation is not a farthing the\npoorer. This apology is founded altogether in the sophistry of the\nmercantile system; and, after the long examination which I have already\nbestowed upon that system, it may, perhaps, be unnecessary to say\nanything further about it. It supposes, besides, that the whole public\ndebt is owing to the inhabitants of the country, which happens not to be\ntrue; the Dutch, as well as several other foreign nations, having a very\nconsiderable share in our public funds. But though the whole debt\nwere owing to the inhabitants of the country, it would not, upon that\naccount, be less pernicious.\n\nLand and capital stock are the two original sources of all revenue, both\nprivate and public. Capital stock pays the wages of productive labour,\nwhether employed in agriculture, manufactures, or commerce. The\nmanagement of those two original sources of revenue belongs to two\ndifferent sets of people; the proprietors of land, and the owners or\nemployers of capital stock.\n\nThe proprietor of land is interested, for the sake of his own revenue,\nto keep his estate in as good condition as he can, by building and\nrepairing his tenants houses, by making and maintaining the necessary\ndrains and inclosures, and all those other expensive improvements\nwhich it properly belongs to the landlord to make and maintain. But,\nby different land taxes, the revenue of the landlord may be so\nmuch diminished, and, by different duties upon the necessaries and\nconveniencies of life, that diminished revenue may be rendered of so\nlittle real value, that he may find himself altogether unable to make\nor maintain those expensive improvements. When the landlord, however,\nceases to do his part, it is altogether impossible that the tenant\nshould continue to do his. As the distress of the landlord increases,\nthe agriculture of the country must necessarily decline.\n\nWhen, by different taxes upon the necessaries and conveniencies of life,\nthe owners and employers of capital stock find, that whatever revenue\nthey derive from it, will not, in a particular country, purchase the\nsame quantity of those necessaries and conveniencies which an equal\nrevenue would in almost any other, they will be disposed to remove to\nsome other. And when, in order to raise those taxes, all or the greater\npart of merchants and manufacturers, that is, all or the greater part of\nthe employers of great capitals, come to be continually exposed to the\nmortifying and vexatious visits of the tax-gatherers, this disposition\nto remove will soon be changed into an actual removing. The industry of\nthe country will necessarily fall with the removal of the capital which\nsupported it, and the ruin of trade and manufactures will follow the\ndeclension of agriculture.\n\nTo transfer from the owners of those two great sources of revenue, land,\nand capital stock, from the persons immediately interested in the\ngood condition of every particular portion of land, and in the good\nmanagement of every particular portion of capital stock, to another set\nof persons (the creditors of the public, who have no such particular\ninterest ), the greater part of the revenue arising from either, must,\nin the long-run, occasion both the neglect of land, and the waste or\nremoval of capital stock. A creditor of the public has, no doubt, a\ngeneral interest in the prosperity of the agriculture, manufactures, and\ncommerce of the country; and consequently in the good condition of its\nland, and in the good management of its capital stock. Should there be\nany general failure or declension in any of these things, the produce of\nthe different taxes might no longer be sufficient to pay him the\nannuity or interest which is due to him. But a creditor of the public,\nconsidered merely as such, has no interest in the good condition of any\nparticular portion of land, or in the good management of any particular\nportion of capital stock. As a creditor of the public, he has no\nknowledge of any such particular portion. He has no inspection of it. He\ncan have no care about it. Its ruin may in some cases be unknown to him,\nand cannot directly affect him.\n\nThe practice of funding has gradually enfeebled every state which has\nadopted it. The Italian republics seem to have begun it. Genoa and\nVenice, the only two remaining which can pretend to an independent\nexistence, have both been enfeebled by it. Spain seems to have learned\nthe practice from the Italian republics, and (its taxes being probably\nless judicious than theirs) it has, in proportion to its natural\nstrength, been-still more enfeebled. The debts of Spain are of very old\nstanding. It was deeply in debt before the end of the sixteenth\ncentury, about a hundred years before England owed a shilling.\nFrance, notwithstanding all its natural resources, languishes under an\noppressive load of the same kind. The republic of the United Provinces\nis as much enfeebled by its debts as either Genoa or Venice. Is it\nlikely that, in Great Britain alone, a practice, which has brought\neither weakness or dissolution into every other country, should prove\naltogether innocent?\n\nThe system of taxation established in those different countries, it\nmay be said, is inferior to that of England. I believe it is so. But it\nought to be remembered, that when the wisest government has exhausted\nall the proper subjects of taxation, it must, in cases of urgent\nnecessity, have recourse to improper ones. The wise republic of Holland\nhas, upon some occasions, been obliged to have recourse to taxes as\ninconvenient as the greater part of those of Spain. Another war, begun\nbefore any considerable liberation of the public revenue had been\nbrought about, and growing in its progress as expensive as the last war,\nmay, from irresistible necessity, render the British system of taxation\nas oppressive as that of Holland, or even as that of Spain. To the\nhonour of our present system of taxation, indeed, it has hitherto given\nso little embarrassment to industry, that, during the course even of the\nmost expensive wars, the frugality and good conduct of individuals\nseem to have been able, by saving and accumulation, to repair all the\nbreaches which the waste and extravagance of government had made in the\ngeneral capital of the society. At the conclusion of the late war, the\nmost expensive that Great Britain ever waged, her agriculture was as\nflourishing, her manufacturers as numerous and as fully employed, and\nher commerce as extensive, as they had ever been before. The capital,\ntherefore, which supported all those different branches of industry,\nmust have been equal to what it had ever been before. Since the peace,\nagriculture has been still further improved; the rents of houses\nhave risen in every town and village of the country, a proof of the\nincreasing wealth and revenue of the people; and the annual amount of\nthe greater part of the old taxes, of the principal branches of the\nexcise and customs, in particular, has been continually increasing, an\nequally clear proof of an increasing consumption, and consequently of\nan increasing produce, which could alone support that consumption. Great\nBritain seems to support with ease, a burden which, half a century ago,\nnobody believed her capable of supporting, Let us not, however, upon\nthis account, rashly conclude that she is capable of supporting any\nburden; nor even be too confident that she could support, without great\ndistress, a burden a little greater than what has already been laid upon\nher.\n\nWhen national debts have once been accumulated to a certain degree,\nthere is scarce, I believe, a single instance of their having been\nfairly and completely paid. The liberation of the public revenue, if it\nhas ever been brought about at all, has always been brought about by a\nbankruptcy; sometimes by an avowed one, though frequently by a pretended\npayment.\n\nThe raising of the denomination of the coin has been the most usual\nexpedient by which a real public bankruptcy has been disguised under the\nappearance of a pretended payment. If a sixpence, for example, should,\neither by act of parliament or royal proclamation, be raised to the\ndenomination of a shilling, and twenty sixpences to that of a pound\nsterling; the person who, under the old denomination, had borrowed\ntwenty shillings, or near four ounces of silver, would, under the new,\npay with twenty sixpences, or with something less than two ounces. A\nnational debt of about a hundred and twenty-eight millions, near the\ncapital of the funded and unfunded debt of Great Britain, might, in this\nmanner, be paid with about sixty-four millions of our present money.\nIt would, indeed, be a pretended payment only, and the creditors of the\npublic would really be defrauded of ten shillings in the pound of what\nwas due to them. The calamity, too, would extend much further than to\nthe creditors of the public, and those of every private person would\nsuffer a proportionable loss; and this without any advantage, but in\nmost cases with a great additional loss, to the creditors of the public.\nIf the creditors of the public, indeed, were generally much in debt to\nother people, they might in some measure compensate their loss by paying\ntheir creditors in the same coin in which the public had paid them. But\nin most countries, the creditors of the public are, the greater part of\nthem, wealthy people, who stand more in the relation of creditors\nthan in that of debtors, towards the rest of their fellow citizens.\nA pretended payment of this kind, therefore, instead of alleviating,\naggravates, in most cases, the loss of the creditors of the public; and,\nwithout any advantage to the public, extends the calamity to a great\nnumber of other innocent people. It occasions a general and most\npernicious subversion of the fortunes of private people; enriching,\nin most cases, the idle and profuse debtor, at the expense of the\nindustrious and frugal creditor; and transporting a great part of\nthe national capital from the hands which were likely to increase and\nimprove it, to those who are likely to dissipate and destroy it. When\nit becomes necessary for a state to declare itself bankrupt, in the same\nmanner as when it becomes necessary for an individual to do so, a fair,\nopen, and avowed bankruptcy, is always the measure which is both least\ndishonourable to the debtor, and least hurtful to the creditor. The\nhonour of a state is surely very poorly provided for, when, in order to\ncover the disgrace of a real bankruptcy, it has recourse to a juggling\ntrick of this kind, so easily seen through, and at the same time so\nextremely pernicious.\n\nAlmost all states, however, ancient as well as modern, when reduced to\nthis necessity, have, upon some occasions, played this very juggling\ntrick. The Romans, at the end of the first Punic war, reduced the As,\nthe coin or denomination by which they computed the value of all their\nother coins, from containing twelve ounces of copper, to contain only\ntwo ounces; that is, they raised two ounces of copper to a denomination\nwhich had always before expressed the value of twelve ounces. The\nrepublic was, in this manner, enabled to pay the great debts which it\nhad contracted with the sixth part of what it really owed. So sudden and\nso great a bankruptcy, we should in the present times be apt to imagine,\nmust have occasioned a very violent popular clamour. It does not appear\nto have occasioned any. The law which enacted it was, like all other\nlaws relating to the coin, introduced and carried through the assembly\nof the people by a tribune, and was probably a very popular law. In\nRome, as in all other ancient republics, the poor people were constantly\nin debt to the rich and the great, who, in order to secure their votes\nat the annual elections, used to lend them money at exorbitant interest,\nwhich, being never paid, soon accumulated into a sum too great either\nfor the debtor to pay, or for any body else to pay for him. The debtor,\nfor fear of a very severe execution, was obliged, without any further\ngratuity, to vote for the candidate whom the creditor recommended. In\nspite of all the laws against bribery and corruption, the bounty of the\ncandidates, together with the occasional distributions of coin which\nwere ordered by the senate, were the principal funds from which, during\nthe latter times of the Roman republic, the poorer citizens derived\ntheir subsistence. To deliver themselves from this subjection to their\ncreditors, the poorer citizens were continually calling out, either for\nan entire abolition of debts, or for what they called new tables; that\nis, for a law which should entitle them to a complete acquittance, upon\npaying only a certain proportion of their accumulated debts. The law\nwhich reduced the coin of all denominations to a sixth part of its\nformer value, as it enabled them to pay their debts with a sixth part\nof what they really owed, was equivalent to the most advantageous new\ntables. In order to satisfy the people, the rich and the great were,\nupon several different occasions, obliged to consent to laws, both for\nabolishing debts, and for introducing new tables; and they probably were\ninduced to consent to this law, partly for the same reason, and partly\nthat, by liberating the public revenue, they might restore vigour to\nthat government, of which they themselves had the principal direction.\nAn operation of this kind would at once reduce a debt of £128,000,000 to\n£21,333,333:6:8. In the course of the second Punic war, the As was still\nfurther reduced, first, from two ounces of copper to one ounce,\nand afterwards from one ounce to half an ounce; that is, to the\ntwenty-fourth part of its original value. By combining the three Roman\noperations into one, a debt of a hundred and twenty-eight millions of\nour present money, might in this manner be reduced all at once to a debt\nof £5,333,333:6:8. Even the enormous debt of Great Britain might in this\nmanner soon be paid.\n\nBy means of such expedients, the coin of, I believe, all nations, has\nbeen gradually reduced more and more below its original value, and the\nsame nominal sum has been gradually brought to contain a smaller and a\nsmaller quantity of silver.\n\nNations have sometimes, for the same purpose, adulterated the standard\nof their coin; that is, have mixed a greater quantity of alloy in it. If\nin the pound weight of our silver coin, for example, instead of eighteen\npenny-weight, according to the present standard, there were mixed eight\nounces of alloy; a pound sterling, or twenty shillings of such coin,\nwould be worth little more than six shillings and eightpence of our\npresent money. The quantity of silver contained in six shillings and\neightpence of our present money, would thus be raised very nearly to the\ndenomination of a pound sterling. The adulteration of the standard has\nexactly the same effect with what the French call an augmentation, or a\ndirect raising of the denomination of the coin.\n\nAn augmentation, or a direct raising of the denomination of the coin,\nalways is, and from its nature must be, an open and avowed operation. By\nmeans of it, pieces of a smaller weight and bulk are called by the same\nname, which had before been given to pieces of a greater weight and\nbulk. The adulteration of the standard, on the contrary, has generally\nbeen a concealed operation. By means of it, pieces are issued from the\nmint, of the same denomination, and, as nearly as could be contrived,\nof the same weight, bulk, and appearance, with pieces which had been\ncurrent before of much greater value. When king John of France, {See Du\nCange Glossary, voce Moneta; the Benedictine Edition.} in order to pay\nhis debts, adulterated his coin, all the officers of his mint were sworn\nto secrecy. Both operations are unjust. But a simple augmentation is an\ninjustice of open violence; whereas an adulteration is an injustice of\ntreacherous fraud. This latter operation, therefore, as soon as it has\nbeen discovered, and it could never be concealed very long, has always\nexcited much greater indignation than the former. The coin, after any\nconsiderable augmentation, has very seldom been brought back to its\nformer weight; but after the greatest adulterations, it has almost\nalways been brought back to its former fineness. It has scarce ever\nhappened, that the fury and indignation of the people could otherwise be\nappeased.\n\nIn the end of the reign of Henry VIII., and in the beginning of that of\nEdward VI., the English coin was not only raised in its denomination,\nbut adulterated in its standard. The like frauds were practised in\nScotland during the minority of James VI. They have occasionally been\npractised in most other countries.\n\nThat the public revenue of Great Britain can never be completely\nliberated, or even that any considerable progress can ever be made\ntowards that liberation, while the surplus of that revenue, or what is\nover and above defraying the annual expense of the peace establishment,\nis so very small, it seems altogether in vain to expect. That\nliberation, it is evident, can never be brought about, without either\nsome very considerable augmentation of the public revenue, or some\nequally considerable reduction of the public expense.\n\nA more equal land tax, a more equal tax upon the rent of houses, and\nsuch alterations in the present system of customs and excise as those\nwhich have been mentioned in the foregoing chapter, might, perhaps,\nwithout increasing the burden of the greater part of the people, but\nonly distributing the weight of it more equally upon the whole, produce\na considerable augmentation of revenue. The most sanguine projector,\nhowever, could scarce flatter himself, that any augmentation of this\nkind would be such as could give any reasonable hopes, either of\nliberating the public revenue altogether, or even of making such\nprogress towards that liberation in time of peace, as either to prevent\nor to compensate the further accumulation of the public debt in the next\nwar.\n\nBy extending the British system of taxation to all the different\nprovinces of the empire, inhabited by people either of British or\nEuropean extraction, a much greater augmentation of revenue might be\nexpected. This, however, could scarce, perhaps, be done, consistently\nwith the principles of the British constitution, without admitting into\nthe British parliament, or, if you will, into the states-general of the\nBritish empire, a fair and equal representation of all those different\nprovinces; that of each province bearing the same proportion to the\nproduce of its taxes, as the representation of Great Britain might\nbear to the produce of the taxes levied upon Great Britain. The private\ninterest of many powerful individuals, the confirmed prejudices of great\nbodies of people, seem, indeed, at present, to oppose to so great a\nchange, such obstacles as it may be very difficult, perhaps altogether\nimpossible, to surmount. Without, however, pretending to determine\nwhether such a union be practicable or impracticable, it may not,\nperhaps, be improper, in a speculative work of this kind, to consider\nhow far the British system of taxation might be applicable to all the\ndifferent provinces of the empire; what revenue might be expected from\nit, if so applied; and in what manner a general union of this kind\nmight be likely to affect the happiness and prosperity of the differrent\nprovinces comprehended within it. Such a speculation, can, at worst,\nbe regarded but as a new Utopia, less amusing, certainly, but no more\nuseless and chimerical than the old one.\n\nThe land-tax, the stamp duties, and the different duties of customs and\nexcise, constitute the four principal branches of the British taxes.\n\nIreland is certainly as able, and our American and West India\nplantations more able, to pay a land tax, than Great Britain. Where the\nlandlord is subject neither to tythe nor poor's rate, he must certainly\nbe more able to pay such a tax, than where he is subject to both those\nother burdens. The tythe, where there is no modus, and where it is\nlevied in kind, diminishes more what would otherwise be the rent of the\nlandlord, than a land tax which really amounted to five shillings in the\npound. Such a tythe will be found, in most cases, to amount to more than\na fourth part of the real rent of the land, or of what remains after\nreplacing completely the capital of the farmer, together with his\nreasonable profit. If all moduses and all impropriations were taken\naway, the complete church tythe of Great Britain and Ireland could not\nwell be estimated at less than six or seven millions. If there was no\ntythe either in Great Britain or Ireland, the landlords could afford\nto pay six or seven millions additional land tax, without being more\nburdened than a very great part of them are at present. America pays\nno tythe, and could, therefore, very well afford to pay a land tax.\nThe lands in America and the West Indies, indeed, are, in general,\nnot tenanted nor leased out to farmers. They could not, therefore, be\nassessed according to any rent roll. But neither were the lands of Great\nBritain, in the 4th of William and Mary, assessed according to any rent\nroll, but according to a very loose and inaccurate estimation. The lands\nin America might be assessed either in the same manner, or according to\nan equitable valuation, in consequence of an accurate survey, like that\nwhich was lately made in the Milanese, and in the dominions of Austria,\nPrussia, and Sardinia.\n\nStamp duties, it is evident, might be levied without any variation, in\nall countries where the forms of law process, and the deeds by which\nproperty, both real and personal, is transferred, are the same, or\nnearly the same.\n\nThe extension of the custom-house laws of Great Britain to Ireland and\nthe plantations, provided it was accompanied, as in justice it ought to\nbe, with an extension of the freedom of trade, would be in the highest\ndegree advantageous to both. All the invidious restraints which at\npresent oppress the trade of Ireland, the distinction between the\nenumerated and non-enumerated commodities of America, would be entirely\nat an end. The countries north of Cape Finisterre would be as open to\nevery part of the produce of America, as those south of that cape are\nto some parts of that produce at present. The trade between all the\ndifferent parts of the British empire would, in consequence of this\nuniformity in the custom-house laws, be as free as the coasting trade\nof Great Britain is at present. The British empire would thus afford,\nwithin itself, an immense internal market for every part of the produce\nof all its different provinces. So great an extension of market would\nsoon compensate, both to Ireland and the plantations, all that they\ncould suffer from the increase of the duties of customs.\n\nThe excise is the only part of the British system of taxation, which\nwould require to be varied in any respect, according as it was applied\nto the different provinces of the empire. It might be applied to Ireland\nwithout any variation; the produce and consumption of that kingdom\nbeing exactly of the same nature with those of Great Britain. In its\napplication to America and the West Indies, of which the produce and\nconsumption are so very different from those of Great Britain,\nsome modification might be necessary, in the same manner as in its\napplication to the cyder and beer counties of England.\n\nA fermented liquor, for example, which is called beer, but which, as it\nis made of molasses, bears very little resemblance to our beer, makes\na considerable part of the common drink of the people in America. This\nliquor, as it can be kept only for a few days, cannot, like our beer,\nbe prepared and stored up for sale in great breweries; but every private\nfamily must brew it for their own use, in the same manner as they cook\ntheir victuals. But to subject every private family to the odious visits\nand examination of the tax-gatherers, in the same manner as we subject\nthe keepers of ale-houses and the brewers for public sale, would be\naltogether inconsistent with liberty. If, for the sake of equality, it\nwas thought necessary to lay a tax upon this liquor, it might be taxed\nby taxing the material of which it is made, either at the place of\nmanufacture, or, if the circumstances of the trade rendered such an\nexcise improper, by laying a duty upon its importation into the colony\nin which it was to be consumed. Besides the duty of one penny a-gallon\nimposed by the British parliament upon the importation of molasses into\nAmerica, there is a provincial tax of this kind upon their importation\ninto Massachusetts Bay, in ships belonging to any other colony, of\neight-pence the hogshead; and another upon their importation from the\nnorthern colonies into South Carolina, of five-pence the gallon. Or,\nif neither of these methods was found convenient, each family might\ncompound for its consumption of this liquor, either according to the\nnumber of persons of which it consisted, in the same manner as private\nfamilies compound for the malt tax in England; or according to the\ndifferent ages and sexes of those persons, in the same manner as several\ndifferent taxes are levied in Holland; or, nearly as Sir Matthew Decker\nproposes, that all taxes upon consumable commodities should be levied\nin England. This mode of taxation, it has already been observed, when\napplied to objects of a speedy consumption, is not a very convenient\none. It might be adopted, however, in cases where no better could be\ndone.\n\nSugar, rum, and tobacco, are commodities which are nowhere necessaries\nof life, which are become objects of almost universal consumption, and\nwhich are, therefore, extremely proper subjects of taxation. If a union\nwith the colonies were to take place, those commodities might be taxed,\neither before they go out of the hands of the manufacturer or grower;\nor, if this mode of taxation did not suit the circumstances of those\npersons, they might be deposited in public warehouses, both at the place\nof manufacture, and at all the different ports of the empire, to which\nthey might afterwards be transported, to remain there, under the joint\ncustody of the owner and the revenue officer, till such time as\nthey should be delivered out, either to the consumer, to the\nmerchant-retailer for home consumption, or to the merchant-exporter;\nthe tax not to be advanced till such delivery. When delivered out for\nexportation, to go duty-free, upon proper security being given, that\nthey should really be exported out of the empire. These are, perhaps,\nthe principal commodities, with regard to which the union with the\ncolonies might require some considerable change in the present system of\nBritish taxation.\n\nWhat might be the amount of the revenue which this system of taxation,\nextended to all the different provinces of the empire, might produce,\nit must, no doubt, be altogether impossible to ascertain with tolerable\nexactness. By means of this system, there is annually levied in Great\nBritain, upon less than eight millions of people, more than ten millions\nof revenue. Ireland contains more than two millions of people,\nand, according to the accounts laid before the congress, the twelve\nassociated provinces of America contain more than three. Those accounts,\nhowever, may have been exaggerated, in order, perhaps, either to\nencourage their own people, or to intimidate those of this country; and\nwe shall suppose, therefore, that our North American and West Indian\ncolonies, taken together, contain no more than three millions; or that\nthe whole British empire, in Europe and America, contains no more than\nthirteen millions of inhabitants. If, upon less than eight millions of\ninhabitants, this system of taxation raises a revenue of more than ten\nmillions sterling; it ought, upon thirteen millions of inhabitants,\nto raise a revenue of more than sixteen millions two hundred and fifty\nthousand pounds sterling. From this revenue, supposing that this system\ncould produce it, must be deducted the revenue usually raised in Ireland\nand the plantations, for defraying the expense of the respective civil\ngovernments. The expense of the civil and military establishment of\nIreland, together with the interest of the public debt, amounts, at a\nmedium of the two years which ended March 1775, to something less than\nseven hundred and fifty thousand pounds a year. By a very exact account\nof the revenue of the principal colonies of America and the West Indies,\nit amounted, before the commencement of the present disturbances, to a\nhundred and forty-one thousand eight hundred pounds. In this account,\nhowever, the revenue of Maryland, of North Carolina, and of all our late\nacquisitions, both upon the continent, and in the islands, is omitted;\nwhich may, perhaps, make a difference of thirty or forty thousand\npounds. For the sake of even numbers, therefore, let us suppose that the\nrevenue necessary for supporting the civil government of Ireland and the\nplantations may amount to a million. There would remain, consequently, a\nrevenue of fifteen millions two hundred and fifty thousand pounds, to be\napplied towards defraying the general expense of the empire, and towards\npaying the public debt. But if, from the present revenue of Great\nBritain, a million could, in peaceable times, be spared towards the\npayment of that debt, six millions two hundred and fifty thousand pounds\ncould very well be spared from this improved revenue. This great sinking\nfund, too, might be augmented every year by the interest of the debt\nwhich had been discharged the year before; and might, in this manner,\nincrease so very rapidly, as to be sufficient in a few years to\ndischarge the whole debt, and thus to restore completely the at-present\ndebilitated and languishing vigour of the empire. In the meantime, the\npeople might be relieved from some of the most burdensome taxes; from\nthose which are imposed either upon the necessaries of life, or upon the\nmaterials of manufacture. The labouring poor would thus be enabled to\nlive better, to work cheaper, and to send their goods cheaper to market.\nThe cheapness of their goods would increase the demand for them, and\nconsequently for the labour of those who produced them. This increase in\nthe demand for labour would both increase the numbers, and improve the\ncircumstances of the labouring poor. Their consumption would increase,\nand, together with it, the revenue arising from all those articles of\ntheir consumption upon which the taxes might be allowed to remain.\n\nThe revenue arising from this system of taxation, however, might not\nimmediately increase in proportion to the number of people who were\nsubjected to it. Great indulgence would for some time be due to those\nprovinces of the empire which were thus subjected to burdens to which\nthey had not before been accustomed; and even when the same taxes\ncame to be levied everywhere as exactly as possible, they would not\neverywhere produce a revenue proportioned to the numbers of the people.\nIn a poor country, the consumption of the principal commodities subject\nto the duties of customs and excise, is very small; and in a thinly\ninhabited country, the opportunities of smuggling are very great.\nThe consumption of malt liquors among the inferior ranks of people\nin Scotland is very small; and the excise upon malt, beer, and ale,\nproduces less there than in England, in proportion to the numbers of\nthe people and the rate of the duties, which upon malt is different,\non account of a supposed difference of quality. In these particular\nbranches of the excise, there is not, I apprehend, much more smuggling\nin the one country than in the other. The duties upon the distillery,\nand the greater part of the duties of customs, in proportion to the\nnumbers of people in the respective countries, produce less in Scotland\nthan in England, not only on account of the smaller consumption of the\ntaxed commodities, but of the much greater facility of smuggling. In\nIreland, the inferior ranks of people are still poorer than in Scotland,\nand many parts of the country are almost as thinly inhabited. In\nIreland, therefore, the consumption of the taxed commodities might, in\nproportion to the number of the people, be still less than in Scotland,\nand the facility of smuggling nearly the same. In America and the West\nIndies, the white people, even of the lowest rank, are in much better\ncircumstances than those of the same rank in England; and their\nconsumption of all the luxuries in which they usually indulge\nthemselves, is probably much greater. The blacks, indeed, who make the\ngreater part of the inhabitants, both of the southern colonies upon\nthe continent and of the West India islands, as they are in a state of\nslavery, are, no doubt, in a worse condition than the poorest people\neither in Scotland or Ireland. We must not, however, upon that account,\nimagine that they are worse fed, or that their consumption of articles\nwhich might be subjected to moderate duties, is less than that even of\nthe lower ranks of people in England. In order that they may work well,\nit is the interest of their master that they should be fed well, and\nkept in good heart, in the same manner as it is his interest that\nhis working cattle should be so. The blacks, accordingly, have almost\neverywhere their allowance of rum, and of molasses or spruce-beer, in\nthe same manner as the white servants; and this allowance would not\nprobably be withdrawn, though those articles should be subjected to\nmoderate duties. The consumption of the taxed commodities, therefore, in\nproportion to the number of inhabitants, would probably be as great in\nAmerica and the West Indies as in any part of the British empire. The\nopportunities of smuggling, indeed, would be much greater; America,\nin proportion to the extent of the country, being much more thinly\ninhabited than either Scotland or Ireland. If the revenue, however,\nwhich is at present raised by the different duties upon malt and malt\nliquors, were to be levied by a single duty upon malt, the opportunity\nof smuggling in the most important branch of the excise would be almost\nentirely taken away; and if the duties of customs, instead of being\nimposed upon almost all the different articles of importation, were\nconfined to a few of the most general use and consumption, and if\nthe levying of those duties were subjected to the excise laws, the\nopportunity of smuggling, though not so entirely taken away, would be\nvery much diminished. In consequence of those two apparently very simple\nand easy alterations, the duties of customs and excise might probably\nproduce a revenue as great, in proportion to the consumption of the most\nthinly inhabited province, as they do at present, in proportion to that\nof the most populous.\n\nThe Americans, it has been said, indeed, have no gold or silver money,\nthe interior commerce of the country being carried on by a paper\ncurrency; and the gold and silver, which occasionally come among them,\nbeing all sent to Great Britain, in return for the commodities which\nthey receive from us. But without gold and silver, it is added, there is\nno possibility of paying taxes. We already get all the gold and silver\nwhich they have. How is it possible to draw from them what they have\nnot?\n\nThe present scarcity of gold and silver money in America, is not the\neffect of the poverty of that country, or of the inability of the people\nthere to purchase those metals. In a country where the wages of labour\nare so much higher, and the price of provisions so much lower than in\nEngland, the greater part of the people must surely have wherewithal to\npurchase a greater quantity, if it were either necessary or convenient\nfor them to do so. The scarcity of those metals, therefore, must be the\neffect of choice, and not of necessity.\n\nIt is for transacting either domestic or foreign business, that gold or\nsilver money is either necessary or convenient.\n\nThe domestic business of every country, it has been shewn in the second\nbook of this Inquiry, may, at least in peaceable times, be transacted by\nmeans of a paper currency, with nearly the same degree of conveniency as\nby gold and silver money. It is convenient for the Americans, who could\nalways employ with profit, in the improvement of their lands, a greater\nstock than they can easily get, to save as much as possible the expense\nof so costly an instrument of commerce as gold and silver; and rather to\nemploy that part of their surplus produce which would be necessary for\npurchasing those metals, in purchasing the instruments of trade, the\nmaterials of clothing, several parts of household furniture, and the\niron work necessary for building and extending their settlements and\nplantations; in purchasing not dead stock, but active and productive\nstock. The colony governments find it for their interest to supply the\npeople with such a quantity of paper money as is fully sufficient, and\ngenerally more than sufficient, for transacting their domestic business.\nSome of those governments, that of Pennsylvania, particularly, derive a\nrevenue from lending this paper money to their subjects, at an interest\nof so much per cent. Others, like that of Massachusetts Bay, advance,\nupon extraordinary emergencies, a paper money of this kind for defraying\nthe public expense; and afterwards, when it suits the conveniency of the\ncolony, redeem it at the depreciated value to which it gradually falls.\nIn 1747, {See Hutchinson's History of Massachusetts Bay vol. ii. page\n436 et seq.} that colony paid in this manner the greater part of its\npublic debts, with the tenth part of the money for which its bills had\nbeen granted. It suits the conveniency of the planters, to save\nthe expense of employing gold and silver money in their domestic\ntransactions; and it suits the conveniency of the colony governments,\nto supply them with a medium, which, though attended with some very\nconsiderable disadvantages, enables them to save that expense. The\nredundancy of paper money necessarily banishes gold and silver from the\ndomestic transactions of the colonies, for the same reason that it has\nbanished those metals from the greater part of the domestic transactions\nin Scotland; and in both countries, it is not the poverty, but the\nenterprizing and projecting spirit of the people, their desire of\nemploying all the stock which they can get, as active and productive\nstock, which has occasioned this redundancy of paper money.\n\nIn the exterior commerce which the different colonies carry on with\nGreat Britain, gold and silver are more or less employed, exactly in\nproportion as they are more or less necessary. Where those metals are\nnot necessary, they seldom appear. Where they are necessary, they are\ngenerally found.\n\nIn the commerce between Great Britain and the tobacco colonies, the\nBritish goods are generally advanced to the colonists at a pretty long\ncredit, and are afterwards paid for in tobacco, rated at a certain\nprice. It is more convenient for the colonists to pay in tobacco than in\ngold and silver. It would be more convenient for any merchant to pay for\nthe goods which his correspondents had sold to him, in some other\nsort of goods which he might happen to deal in, than in money. Such a\nmerchant would have no occasion to keep any part of his stock by him\nunemployed, and in ready money, for answering occasional demands. He\ncould have, at all times, a larger quantity of goods in his shop or\nwarehouse, and he could deal to a greater extent. But it seldom happens\nto be convenient for all the correspondents of a merchant to receive\npayment for the goods which they sell to him, in goods of some other\nkind which he happens to deal in. The British merchants who trade to\nVirginia and Maryland, happen to be a particular set of correspondents,\nto whom it is more convenient to receive payment for the goods which\nthey sell to those colonies in tobacco, than in gold and silver. They\nexpect to make a profit by the sale of the tobacco; they could make none\nby that of the gold and silver. Gold and silver, therefore, very seldom\nappear in the commerce between Great Britain and the tobacco colonies.\nMaryland and Virginia have as little occasion for those metals in their\nforeign, as in their domestic commerce. They are said, accordingly, to\nhave less gold and silver money than any other colonies in America. They\nare reckoned, however, as thriving, and consequently as rich, as any of\ntheir neighbours.\n\nIn the northern colonies, Pennsylvania, New York, New Jersey, the four\ngovernments of New England, etc. the value of their own produce which\nthey export to Great Britain is not equal to that of the manufactures\nwhich they import for their own use, and for that of some of the other\ncolonies, to which they are the carriers. A balance, therefore, must\nbe paid to the mother-country in gold and silver and this balance they\ngenerally find.\n\nIn the sugar colonies, the value of the produce annually exported to\nGreat Britain is much greater than that of all the goods imported from\nthence. If the sugar and rum annually sent to the mother-country were\npaid for in those colonies, Great Britain would be obliged to send out,\nevery year, a very large balance in money; and the trade to the West\nIndies would, by a certain species of politicians, be considered as\nextremely disadvantageous. But it so happens, that many of the principal\nproprietors of the sugar plantations reside in Great Britain. Their\nrents are remitted to them in sugar and rum, the produce of their\nestates. The sugar and rum which the West India merchants purchase in\nthose colonies upon their own account, are not equal in value to\nthe goods which they annually sell there. A balance, therefore, must\nnecessarily be paid to them in gold and silver, and this balance, too,\nis generally found.\n\nThe difficulty and irregularity of payment from the different colonies\nto Great Britain, have not been at all in proportion to the greatness\nor smallness of the balances which were respectively due from them.\nPayments have, in general, been more regular from the northern than from\nthe tobacco colonies, though the former have generally paid a pretty\nlarge balance in money, while the latter have either paid no balance, or\na much smaller one. The difficulty of getting payment from our different\nsugar colonies has been greater or less in proportion, not so much\nto the extent of the balances respectively due from them, as to the\nquantity of uncultivated land which they contained; that is, to the\ngreater or smaller temptation which the planters have been under of\nover-trading, or of undertaking the settlement and plantation of greater\nquantities of waste land than suited the extent of their capitals. The\nreturns from the great island of Jamaica, where there is still much\nuncultivated land, have, upon this account, been, in general, more\nirregular and uncertain than those from the smaller islands of\nBarbadoes, Antigua, and St. Christopher's, which have, for these many\nyears, been completely cultivated, and have, upon that account, afforded\nless field for the speculations of the planter. The new acquisitions of\nGrenada, Tobago, St. Vincent's, and Dominica, have opened a new field\nfor speculations of this kind; and the returns front those islands have\nof late been as irregular and uncertain as those from the great island\nof Jamaica.\n\nIt is not, therefore, the poverty of the colonies which occasions, in\nthe greater part of them, the present scarcity of gold and silver money.\nTheir great demand for active and productive stock makes it convenient\nfor them to have as little dead stock as possible, and disposes them,\nupon that account, to content themselves with a cheaper, though less\ncommodious instrument of commerce, than gold and silver. They are\nthereby enabled to convert the value of that gold and silver into the\ninstruments of trade, into the materials of clothing, into household\nfurniture, and into the iron work necessary for building and extending\ntheir settlements and plantations. In those branches of business which\ncannot be transacted without gold and silver money, it appears, that\nthey can always find the necessary quantity of those metals; and if they\nfrequently do not find it, their failure is generally the effect, not\nof their necessary poverty, but of their unnecessary and excessive\nenterprise. It is not because they are poor that their payments are\nirregular and uncertain, but because they are too eager to become\nexcessively rich. Though all that part of the produce of the colony\ntaxes, which was over and above what was necessary for defraying the\nexpense of their own civil and military establishments, were to\nbe remitted to Great Britain in gold and silver, the colonies have\nabundantly wherewithal to purchase the requisite quantity of those\nmetals. They would in this case be obliged, indeed, to exchange a\npart of their surplus produce, with which they now purchase active\nand productive stock, for dead stock. In transacting their domestic\nbusiness, they would be obliged to employ a costly, instead of a cheap\ninstrument of commerce; and the expense of purchasing this costly\ninstrument might damp somewhat the vivacity and ardour of their\nexcessive enterprise in the improvement of land. It might not, however,\nbe necessary to remit any part of the American revenue in gold and\nsilver. It might be remitted in bills drawn upon, and accepted by,\nparticular merchants or companies in Great Britain, to whom a part of\nthe surplus produce of America had been consigned, who would pay into\nthe treasury the American revenue in money, after having themselves\nreceived the value of it in goods; and the whole business might\nfrequently be transacted without exporting a single ounce of gold or\nsilver from America.\n\nIt is not contrary to justice, that both Ireland and America should\ncontribute towards the discharge of the public debt of Great Britain.\nThat debt has been contracted in support of the government established\nby the Revolution; a government to which the protestants of Ireland owe,\nnot only the whole authority which they at present enjoy in their own\ncountry, but every security which they possess for their liberty, their\nproperty, and their religion; a government to which several of the\ncolonies of America owe their present charters, and consequently their\npresent constitution; and to which all the colonies of America owe the\nliberty, security, and property, which they have ever since enjoyed.\nThat public debt has been contracted in the defence, not of Great\nBritain alone, but of all the different provinces of the empire. The\nimmense debt contracted in the late war in particular, and a great part\nof that contracted in the war before, were both properly contracted in\ndefence of America.\n\nBy a union with Great Britain, Ireland would gain, besides the freedom\nof trade, other advantages much more important, and which would much\nmore than compensate any increase of taxes that might accompany that\nunion. By the union with England, the middling and inferior ranks of\npeople in Scotland gained a complete deliverance from the power of an\naristocracy, which had always before oppressed them. By a union with\nGreat Britain, the greater part of people of all ranks in Ireland\nwould gain an equally complete deliverance from a much more oppressive\naristocracy; an aristocracy not founded, like that of Scotland, in the\nnatural and respectable distinctions of birth and fortune, but in\nthe most odious of all distinctions, those of religious and political\nprejudices; distinctions which, more than any other, animate both the\ninsolence of the oppressors, and the hatred and indignation of the\noppressed, and which commonly render the inhabitants of the same country\nmore hostile to one another than those of different countries ever are.\nWithout a union with Great Britain, the inhabitants of Ireland are not\nlikely, for many ages, to consider themselves as one people.\n\nNo oppressive aristocracy has ever prevailed in the colonies. Even\nthey, however, would, in point of happiness and tranquillity, gain\nconsiderably by a union with Great Britain. It would, at least, deliver\nthem from those rancourous and virulent factions which are inseparable\nfrom small democracies, and which have so frequently divided the\naffections of their people, and disturbed the tranquillity of their\ngovernments, in their form so nearly democratical. In the case of a\ntotal separation from Great Britain, which, unless prevented by a union\nof this kind, seems very likely to take place, those factions would\nbe ten times more virulent than ever. Before the commencement of the\npresent disturbances, the coercive power of the mother-country had\nalways been able to restrain those factions from breaking out into any\nthing worse than gross brutality and insult. If that coercive power\nwere entirely taken away, they would probably soon break out into open\nviolence and bloodshed. In all great countries which are united under\none uniform government, the spirit of party commonly prevails less in\nthe remote provinces than in the centre of the empire. The distance of\nthose provinces from the capital, from the principal seat of the great\nscramble of faction and ambition, makes them enter less into the views\nof any of the contending parties, and renders them more indifferent and\nimpartial spectators of the conduct of all. The spirit of party prevails\nless in Scotland than in England. In the case of a union, it would\nprobably prevail less in Ireland than in Scotland; and the colonies\nwould probably soon enjoy a degree of concord and unanimity, at\npresent unknown in any part of the British empire. Both Ireland and the\ncolonies, indeed, would be subjected to heavier taxes than any which\nthey at present pay. In consequence, however, of a diligent and faithful\napplication of the public revenue towards the discharge of the national\ndebt, the greater part of those taxes might not be of long continuance,\nand the public revenue of Great Britain might soon be reduced to what\nwas necessary for maintaining a moderate peace-establishment.\n\nThe territorial acquisitions of the East India Company, the undoubted\nright of the Crown, that is, of the state and people of Great Britain,\nmight be rendered another source of revenue, more abundant, perhaps,\nthan all those already mentioned. Those countries are represented as\nmore fertile, more extensive, and, in proportion to their extent, much\nricher and more populous than Great Britain. In order to draw a great\nrevenue from them, it would not probably be necessary to introduce any\nnew system of taxation into countries which are already sufficiently,\nand more than sufficiently, taxed. It might, perhaps, be more proper to\nlighten than to aggravate the burden of those unfortunate countries, and\nto endeavour to draw a revenue from them, not by imposing new taxes, but\nby preventing the embezzlement and misapplication of the greater part of\nthose which they already pay.\n\nIf it should be found impracticable for Great Britain to draw any\nconsiderable augmentation of revenue from any of the resources above\nmentioned, the only resource which can remain to her, is a diminution\nof her expense. In the mode of collecting and in that of expending the\npublic revenue, though in both there may be still room for improvement,\nGreat Britain seems to be at least as economical as any of her\nneighbours. The military establishment which she maintains for her own\ndefence in time of peace, is more moderate than that of any European\nstate, which can pretend to rival her either in wealth or in power.\nNone of these articles, therefore, seem to admit of any considerable\nreduction of expense. The expense of the peace-establishment of the\ncolonies was, before the commencement of the present disturbances, very\nconsiderable, and is an expense which may, and, if no revenue can be\ndrawn from them, ought certainly to be saved altogether. This constant\nexpense in time of peace, though very great, is insignificant in\ncomparison with what the defence of the colonies has cost us in time\nof war. The last war, which was undertaken altogether on account of the\ncolonies, cost Great Britain, it has already been observed, upwards of\nninety millions. The Spanish war of 1739 was principally undertaken on\ntheir account; in which, and in the French war that was the consequence\nof it, Great Britain, spent upwards of forty millions; a great part of\nwhich ought justly to be charged to the colonies. In those two wars,\nthe colonies cost Great Britain much more than double the sum which the\nnational debt amounted to before the commencement of the first of them.\nHad it not been for those wars, that debt might, and probably would\nby this time, have been completely paid; and had it not been for the\ncolonies, the former of those wars might not, and the latter certainly\nwould not, have been undertaken. It was because the colonies were\nsupposed to be provinces of the British Empire, that this expense was\nlaid out upon them. But countries which contribute neither revenue nor\nmilitary force towards the support of the empire, cannot be considered\nas provinces. They may, perhaps, be considered as appendages, as a sort\nof splendid and shewy equipage of the empire. But if the empire can\nno longer support the expense of keeping up this equipage, it ought\ncertainly to lay it down; and if it cannot raise its revenue in\nproportion to its expense, it ought at least to accommodate its expense\nto its revenue. If the colonies, notwithstanding their refusal to submit\nto British taxes, are still to be considered as provinces of the British\nempire, their defence, in some future war, may cost Great Britain as\ngreat an expense as it ever has done in any former war. The rulers of\nGreat Britain have, for more than a century past, amused the people with\nthe imagination that they possessed a great empire on the west side of\nthe Atlantic. This empire, however, has hitherto existed in imagination\nonly. It has hitherto been, not an empire, but the project of an empire;\nnot a gold mine, but the project of a gold mine; a project which has\ncost, which continues to cost, and which, if pursued in the same way as\nit has been hitherto, is likely to cost, immense expense, without being\nlikely to bring any profit; for the effects of the monopoly of the\ncolony trade, it has been shewn, are to the great body of the people,\nmere loss instead of profit. It is surely now time that our rulers\nshould either realize this golden dream, in which they have been\nindulging themselves, perhaps, as well as the people; or that they\nshould awake from it themselves, and endeavour to awaken the people. If\nthe project cannot be completed, it ought to be given up. If any of the\nprovinces of the British empire cannot be made to contribute towards the\nsupport of the whole empire, it is surely time that Great Britain should\nfree herself from the expense of defending those provinces in time of\nwar, and of supporting any part of their civil or military establishment\nin time of peace; and endeavour to accommodate her future views and\ndesigns to the real mediocrity of her circumstances."