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Title: An Inquiry into the Nature and Causes of the Wealth of Nations

Author: Adam Smith

Release Date: April, 2002 [EBook #3300]
[This file was last updated on September 4, 2004]

Edition: 11

Language: English

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*** START OF THIS PROJECT GUTENBERG EBOOK WEALTH OF NATIONS ***




This etext was produced by Colin Muir  <unco@btinternet.com>






AN INQUIRY INTO THE NATURE AND CAUSES OF
THE WEALTH OF NATIONS.

by Adam Smith




INTRODUCTION AND PLAN OF THE WORK.


The annual labour of every nation is the fund which originally
supplies it with all the necessaries and conveniencies of life which
it annually consumes, and which consist always either in the immediate
produce of that labour, or in what is purchased with that produce from
other nations.

According, therefore, as this produce, or what is purchased with it,
bears a greater or smaller proportion to the number of those who are
to consume it, the nation will be better or worse supplied with all
the necessaries and conveniencies for which it has occasion.

But this proportion must in every nation be regulated by two different
circumstances: first, by the skill, dexterity, and judgment with which
its labour is generally applied; and, secondly, by the proportion
between the number of those who are employed in useful labour, and
that of those who are not so employed. Whatever be the soil, climate,
or extent of territory of any particular nation, the abundance or
scantiness of its annual supply must, in that particular situation,
depend upon those two circumstances.

The abundance or scantiness of this supply, too, seems to depend more
upon the former of those two circumstances than upon the latter. Among
the savage nations of hunters and fishers, every individual who is
able to work is more or less employed in useful labour, and endeavours
to provide, as well as he can, the necessaries and conveniencies of
life, for himself, and such of his family or tribe as are either too
old, or too young, or too infirm, to go a-hunting and fishing. Such
nations, however, are so miserably poor, that, from mere want, they
are frequently reduced, or at least think themselves reduced, to the
necessity sometimes of directly destroying, and sometimes of
abandoning their infants, their old people, and those afflicted with
lingering diseases, to perish with hunger, or to be devoured by wild
beasts. Among civilized and thriving nations, on the contrary, though
a great number of people do not labour at all, many of whom consume
the produce of ten times, frequently of a hundred times, more labour
than the greater part of those who work; yet the produce of the whole
labour of the society is so great, that all are often abundantly
supplied; and a workman, even of the lowest and poorest order, if he
is frugal and industrious, may enjoy a greater share of the
necessaries and conveniencies of life than it is possible for any
savage to acquire.

The causes of this improvement in the productive powers of labour, and
the order according to which its produce is naturally distributed
among the different ranks and conditions of men in the society, make
the subject of the first book of this Inquiry.

Whatever be the actual state of the skill, dexterity, and judgment,
with which labour is applied in any nation, the abundance or
scantiness of its annual supply must depend, during the continuance of
that state, upon the proportion between the number of those who are
annually employed in useful labour, and that of those who are not so
employed. The number of useful and productive labourers, it will
hereafter appear, is everywhere in proportion to the quantity of
capital stock which is employed in setting them to work, and to the
particular way in which it is so employed. The second book, therefore,
treats of the nature of capital stock, of the manner in which it is
gradually accumulated, and of the different quantities of labour which
it puts into motion, according to the different ways in which it is
employed.

Nations tolerably well advanced as to skill, dexterity, and judgment,
in the application of labour, have followed very different plans in
the general conduct or direction of it; and those plans have not all
been equally favourable to the greatness of its produce. The policy of
some nations has given extraordinary encouragement to the industry of
the country; that of others to the industry of towns. Scarce any
nation has dealt equally and impartially with every sort of industry.
Since the down-fall of the Roman empire, the policy of Europe has been
more favourable to arts, manufactures, and commerce, the industry of
towns, than to agriculture, the Industry of the country. The
circumstances which seem to have introduced and established this
policy are explained in the third book.

Though those different plans were, perhaps, first introduced by the
private interests and prejudices of particular orders of men, without
any regard to, or foresight of, their consequences upon the general
welfare of the society; yet they have given occasion to very different
theories of political economy; of which some magnify the importance of
that industry which is carried on in towns, others of that which is
carried on in the country. Those theories have had a considerable
influence, not only upon the opinions of men of learning, but upon the
public conduct of princes and sovereign states. I have endeavoured, in
the fourth book, to explain as fully and distinctly as I can those
different theories, and the principal effects which they have produced
in different ages and nations.

To explain in what has consisted the revenue of the great body of the
people, or what has been the nature of those funds, which, in
different ages and nations, have supplied their annual consumption, is
the object of these four first books. The fifth and last book treats
of the revenue of the sovereign, or commonwealth. In this book I have
endeavoured to shew, first, what are the necessary expenses of the
sovereign, or commonwealth; which of those expenses ought to be
defrayed by the general contribution of the whole society, and which
of them, by that of some particular part only, or of some particular
members of it: secondly, what are the different methods in which the
whole society may be made to contribute towards defraying the expenses
incumbent on the whole society, and what are the principal advantages
and inconveniencies of each of those methods; and, thirdly and lastly,
what are the reasons and causes which have induced almost all modern
governments to mortgage some part of this revenue, or to contract
debts; and what have been the effects of those debts upon the real
wealth, the annual produce of the land and labour of the society.




BOOK I.

OF THE CAUSES OF IMPROVEMENT IN THE PRODUCTIVE POWERS OF LABOUR, AND
OF THE ORDER ACCORDING TO WHICH ITS PRODUCE IS NATURALLY DISTRIBUTED
AMONG THE DIFFERENT RANKS OF THE PEOPLE.



CHAPTER I.

OF THE DIVISION OF LABOUR.

The greatest improvements in the productive powers of labour, and the
greater part of the skill, dexterity, and judgment, with which it is
anywhere directed, or applied, seem to have been the effects of the
division of labour. The effects of the division of labour, in the
general business of society, will be more easily understood, by
considering in what manner it operates in some particular
manufactures. It is commonly supposed to be carried furthest in some
very trifling ones; not perhaps that it really is carried further in
them than in others of more importance: but in those trifling
manufactures which are destined to supply the small wants of but a
small number of people, the whole number of workmen must necessarily
be small; and those employed in every different branch of the work can
often be collected into the same workhouse, and placed at once under
the view of the spectator.

In those great manufactures, on the contrary, which are destined to
supply the great wants of the great body of the people, every
different branch of the work employs so great a number of workmen,
that it is impossible to collect them all into the same workhouse. We
can seldom see more, at one time, than those employed in one single
branch. Though in such manufactures, therefore, the work may really be
divided into a much greater number of parts, than in those of a more
trifling nature, the division is not near so obvious, and has
accordingly been much less observed.

To take an example, therefore, from a very trifling manufacture, but
one in which the division of labour has been very often taken notice
of, the trade of a pin-maker: a workman not educated to this business
(which the division of labour has rendered a distinct trade, nor
acquainted with the use of the machinery employed in it (to the
invention of which the same division of labour has probably given
occasion), could scarce, perhaps, with his utmost industry, make one
pin in a day, and certainly could not make twenty. But in the way in
which this business is now carried on, not only the whole work is a
peculiar trade, but it is divided into a number of branches, of which
the greater part are likewise peculiar trades. One man draws out the
wire; another straights it; a third cuts it; a fourth points it; a
fifth grinds it at the top for receiving the head; to make the head
requires two or three distinct operations; to put it on is a peculiar
business; to whiten the pins is another; it is even a trade by itself
to put them into the paper; and the important business of making a pin
is, in this manner, divided into about eighteen distinct operations,
which, in some manufactories, are all performed by distinct hands,
though in others the same man will sometimes perform two or three of
them. I have seen a small manufactory of this kind, where ten men only
were employed, and where some of them consequently performed two or
three distinct operations. But though they were very poor, and
therefore but indifferently accommodated with the necessary machinery,
they could, when they exerted themselves, make among them about twelve
pounds of pins in a day. There are in a pound upwards of four thousand
pins of a middling size. Those ten persons, therefore, could make
among them upwards of forty-eight thousand pins in a day. Each person,
therefore, making a tenth part of forty-eight thousand pins, might be
considered as making four thousand eight hundred pins in a day. But if
they had all wrought separately and independently, and without any of
them having been educated to this peculiar business, they certainly
could not each of them have made twenty, perhaps not one pin in a day;
that is, certainly, not the two hundred and fortieth, perhaps not the
four thousand eight hundredth, part of what they are at present
capable of performing, in consequence of a proper division and
combination of their different operations.

In every other art and manufacture, the effects of the division of
labour are similar to what they are in this very trifling one, though,
in many of them, the labour can neither be so much subdivided, nor
reduced to so great a simplicity of operation. The division of labour,
however, so far as it can be introduced, occasions, in every art, a
proportionable increase of the productive powers of labour. The
separation of different trades and employments from one another, seems
to have taken place in consequence of this advantage. This separation,
too, is generally carried furthest in those countries which enjoy the
highest degree of industry and improvement; what is the work of one
man, in a rude state of society, being generally that of several in an
improved one. In every improved society, the farmer is generally
nothing but a farmer; the manufacturer, nothing but a manufacturer.
The labour, too, which is necessary to produce any one complete
manufacture, is almost always divided among a great number of hands.
How many different trades are employed in each branch of the linen and
woollen manufactures, from the growers of the flax and the wool, to
the bleachers and smoothers of the linen, or to the dyers and dressers
of the cloth! The nature of agriculture, indeed, does not admit of so
many subdivisions of labour, nor of so complete a separation of one
business from another, as manufactures. It is impossible to separate
so entirely the business of the grazier from that of the corn-farmer,
as the trade of the carpenter is commonly separated from that of the
smith. The spinner is almost always a distinct person from the,
weaver; but the ploughman, the harrower, the sower of the seed, and
the reaper of the corn, are often the same. The occasions for those
different sorts of labour returning with the different seasons of the
year, it is impossible that one man should be constantly employed in
any one of them. This impossibility of making so complete and entire a
separation of all the different branches of labour employed in
agriculture, is perhaps the reason why the improvement of the
productive powers of labour, in this art, does not always keep pace
with their improvement in manufactures. The most opulent nations,
indeed, generally excel all their neighbours in agriculture as well as
in manufactures; but they are commonly more distinguished by their
superiority in the latter than in the former. Their lands are in
general better cultivated, and having more labour and expense bestowed
upon them, produce more in proportion to the extent and natural
fertility of the ground. But this superiority of produce is seldom
much more than in proportion to the superiority of labour and expense.
In agriculture, the labour of the rich country is not always much more
productive than that of the poor; or, at least, it is never so much
more productive, as it commonly is in manufactures. The corn of the
rich country, therefore, will not always, in the same degree of
goodness, come cheaper to market than that of the poor. The corn of
Poland, in the same degree of goodness, is as cheap as that of France,
notwithstanding the superior opulence and improvement of the latter
country. The corn of France is, in the corn-provinces, fully as good,
and in most years nearly about the same price with the corn of
England, though, in opulence and improvement, France is perhaps
inferior to England. The corn-lands of England, however, are better
cultivated than those of France, and the corn-lands of France are said
to be much better cultivated than those of Poland. But though the poor
country, notwithstanding the inferiority of its cultivation, can, in
some measure, rival the rich in the cheapness and goodness of its
corn, it can pretend to no such competition in its manufactures, at
least if those manufactures suit the soil, climate, and situation, of
the rich country. The silks of France are better and cheaper than
those of England, because the silk manufacture, at least under the
present high duties upon the importation of raw silk, does not so well
suit the climate of England as that of France. But the hardware and
the coarse woollens of England are beyond all comparison superior to
those of France, and much cheaper, too, in the same degree of
goodness. In Poland there are said to be scarce any manufactures of
any kind, a few of those coarser household manufactures excepted,
without which no country can well subsist.

This great increase in the quantity of work, which, in consequence of
the division of labour, the same number of people are capable of
performing, is owing to three different circumstances; first, to the
increase of dexterity in every particular workman; secondly, to the
saving of the time which is commonly lost in passing from one species
of work to another; and, lastly, to the invention of a great number of
machines which facilitate and abridge labour, and enable one man to do
the work of many.

First, the improvement of the dexterity of the workmen, necessarily
increases the quantity of the work he can perform; and the division of
labour, by reducing every man's business to some one simple operation,
and by making this operation the sole employment of his life,
necessarily increases very much the dexterity of the workman. A common
smith, who, though accustomed to handle the hammer, has never been
used to make nails, if, upon some particular occasion, he is obliged
to attempt it, will scarce, I am assured, be able to make above two or
three hundred nails in a day, and those, too, very bad ones. A smith
who has been accustomed to make nails, but whose sole or principal
business has not been that of a nailer, can seldom, with his utmost
diligence, make more than eight hundred or a thousand nails in a day.
I have seen several boys, under twenty years of age, who had never
exercised any other trade but that of making nails, and who, when they
exerted themselves, could make, each of them, upwards of two thousand
three hundred nails in a day. The making of a nail, however, is by no
means one of the simplest operations. The same person blows the
bellows, stirs or mends the fire as there is occasion, heats the iron,
and forges every part of the nail: in forging the head, too, he is
obliged to change his tools. The different operations into which the
making of a pin, or of a metal button, is subdivided, are all of them
much more simple, and the dexterity of the person, of whose life it
has been the sole business to perform them, is usually much greater.
The rapidity with which some of the operations of those manufactures
are performed, exceeds what the human hand could, by those who had
never seen them, he supposed capable of acquiring.

Secondly, The advantage which is gained by saving the time commonly
lost in passing from one sort of work to another, is much greater than
we should at first view be apt to imagine it. It is impossible to pass
very quickly from one kind of work to another, that is carried on in a
different place, and with quite different tools. A country weaver, who
cultivates a small farm, must loose a good deal of time in passing
from his loom to the field, and from the field to his loom. When the
two trades can be carried on in the same workhouse, the loss of time
is, no doubt, much less. It is, even in this case, however, very
considerable. A man commonly saunters a little in turning his hand
from one sort of employment to another. When he first begins the new
work, he is seldom very keen and hearty; his mind, as they say, does
not go to it, and for some time he rather trifles than applies to good
purpose. The habit of sauntering, and of indolent careless
application, which is naturally, or rather necessarily, acquired by
every country workman who is obliged to change his work and his tools
every half hour, and to apply his hand in twenty different ways almost
every day of his life, renders him almost always slothful and lazy,
and incapable of any vigorous application, even on the most pressing
occasions. Independent, therefore, of his deficiency in point of
dexterity, this cause alone must always reduce considerably the
quantity of work which he is capable of performing.

Thirdly, and lastly, everybody must be sensible how much labour is
facilitated and abridged by the application of proper machinery. It is
unnecessary to give any example. I shall only observe, therefore, that
the invention of all those machines by which labour is so much
facilitated and abridged, seems to have been originally owing to the
division of labour. Men are much more likely to discover easier and
readier methods of attaining any object, when the whole attention of
their minds is directed towards that single object, than when it is
dissipated among a great variety of things. But, in consequence of the
division of labour, the whole of every man's attention comes naturally
to be directed towards some one very simple object. It is naturally to
be expected, therefore, that some one or other of those who are
employed in each particular branch of labour should soon find out
easier and readier methods of performing their own particular work,
whenever the nature of it admits of such improvement. A great part of
the machines made use of in those manufactures in which labour is most
subdivided, were originally the invention of common workmen, who,
being each of them employed in some very simple operation, naturally
turned their thoughts towards finding out easier and readier methods
of performing it. Whoever has been much accustomed to visit such
manufactures, must frequently have been shewn very pretty machines,
which were the inventions of such workmen, in order to facilitate and
quicken their own particular part of the work. In the first fire
engines {this was the current designation for steam engines}, a boy
was constantly employed to open and shut alternately the communication
between the boiler and the cylinder, according as the piston either
ascended or descended. One of those boys, who loved to play with his
companions, observed that, by tying a string from the handle of the
valve which opened this communication to another part of the machine,
the valve would open and shut without his assistance, and leave him at
liberty to divert himself with his play-fellows. One of the greatest
improvements that has been made upon this machine, since it was first
invented, was in this manner the discovery of a boy who wanted to save
his own labour.

All the improvements in machinery, however, have by no means been the
inventions of those who had occasion to use the machines. Many
improvements have been made by the ingenuity of the makers of the
machines, when to make them became the business of a peculiar trade;
and some by that of those who are called philosophers, or men of
speculation, whose trade it is not to do any thing, but to observe
every thing, and who, upon that account, are often capable of
combining together the powers of the most distant and dissimilar
objects in the progress of society, philosophy or speculation becomes,
like every other employment, the principal or sole trade and
occupation of a particular class of citizens. Like every other
employment, too, it is subdivided into a great number of different
branches, each of which affords occupation to a peculiar tribe or
class of philosophers; and this subdivision of employment in
philosophy, as well as in every other business, improve dexterity, and
saves time. Each individual becomes more expert in his own peculiar
branch, more work is done upon the whole, and the quantity of science
is considerably increased by it.

It is the great multiplication of the productions of all the different
arts, in consequence of the division of labour, which occasions, in a
well-governed society, that universal opulence which extends itself to
the lowest ranks of the people. Every workman has a great quantity of
his own work to dispose of beyond what he himself has occasion for;
and every other workman being exactly in the same situation, he is
enabled to exchange a great quantity of his own goods for a great
quantity or, what comes to the same thing, for the price of a great
quantity of theirs. He supplies them abundantly with what they have
occasion for, and they accommodate him as amply with what he has
occasion for, and a general plenty diffuses itself through all the
different ranks of the society.

Observe the accommodation of the most common artificer or daylabourer
in a civilized and thriving country, and you will perceive that the
number of people, of whose industry a part, though but a small part,
has been employed in procuring him this accommodation, exceeds all
computation. The woollen coat, for example, which covers the
day-labourer, as coarse and rough as it may appear, is the produce of
the joint labour of a great multitude of workmen. The shepherd, the
sorter of the wool, the wool-comber or carder, the dyer, the
scribbler, the spinner, the weaver, the fuller, the dresser, with many
others, must all join their different arts in order to complete even
this homely production. How many merchants and carriers, besides, must
have been employed in transporting the materials from some of those
workmen to others who often live in a very distant part of the
country? How much commerce and navigation in particular, how many
ship-builders, sailors, sail-makers, rope-makers, must have been
employed in order to bring together the different drugs made use of by
the dyer, which often come from the remotest corners of the world?
What a variety of labour, too, is necessary in order to produce the
tools of the meanest of those workmen! To say nothing of such
complicated machines as the ship of the sailor, the mill of the
fuller, or even the loom of the weaver, let us consider only what a
variety of labour is requisite in order to form that very simple
machine, the shears with which the shepherd clips the wool. The miner,
the builder of the furnace for smelting the ore the feller of the
timber, the burner of the charcoal to be made use of in the
smelting-house, the brickmaker, the bricklayer, the workmen who attend
the furnace, the millwright, the forger, the smith, must all of them
join their different arts in order to produce them. Were we to
examine, in the same manner, all the different parts of his dress and
household furniture, the coarse linen shirt which he wears next his
skin, the shoes which cover his feet, the bed which he lies on, and
all the different parts which compose it, the kitchen-grate at which
he prepares his victuals, the coals which he makes use of for that
purpose, dug from the bowels of the earth, and brought to him,
perhaps, by a long sea and a long land-carriage, all the other
utensils of his kitchen, all the furniture of his table, the knives
and forks, the earthen or pewter plates upon which he serves up and
divides his victuals, the different hands employed in preparing his
bread and his beer, the glass window which lets in the heat and the
light, and keeps out the wind and the rain, with all the knowledge and
art requisite for preparing that beautiful and happy invention,
without which these northern parts of the world could scarce have
afforded a very comfortable habitation, together with the tools of all
the different workmen employed in producing those different
conveniencies; if we examine, I say, all these things, and consider
what a variety of labour is employed about each of them, we shall be
sensible that, without the assistance and co-operation of many
thousands, the very meanest person in a civilized country could not be
provided, even according to, what we very falsely imagine, the easy
and simple manner in which he is commonly accommodated. Compared,
indeed, with the more extravagant luxury of the great, his
accommodation must no doubt appear extremely simple and easy; and yet
it may be true, perhaps, that the accommodation of an European prince
does not always so much exceed that of an industrious and frugal
peasant, as the accommodation of the latter exceeds that of many an
African king, the absolute masters of the lives and liberties of ten
thousand naked savages.




CHAPTER II.

OF THE PRINCIPLE WHICH GIVES OCCASION TO THE DIVISION OF LABOUR.

This division of labour, from which so many advantages are derived, is
not originally the effect of any human wisdom, which foresees and
intends that general opulence to which it gives occasion. It is the
necessary, though very slow and gradual, consequence of a certain
propensity in human nature, which has in view no such extensive
utility; the propensity to truck, barter, and exchange one thing for
another.

Whether this propensity be one of those original principles in human
nature, of which no further account can be given, or whether, as seems
more probable, it be the necessary consequence of the faculties of
reason and speech, it belongs not to our present subject to inquire.
It is common to all men, and to be found in no other race of animals,
which seem to know neither this nor any other species of contracts.
Two greyhounds, in running down the same hare, have sometimes the
appearance of acting in some sort of concert. Each turns her towards
his companion, or endeavours to intercept her when his companion turns
her towards himself. This, however, is not the effect of any contract,
but of the accidental concurrence of their passions in the same object
at that particular time. Nobody ever saw a dog make a fair and
deliberate exchange of one bone for another with another dog. Nobody
ever saw one animal, by its gestures and natural cries signify to
another, this is mine, that yours; I am willing to give this for that.
When an animal wants to obtain something either of a man, or of
another animal, it has no other means of persuasion, but to gain the
favour of those whose service it requires. A puppy fawns upon its dam,
and a spaniel endeavours, by a thousand attractions, to engage the
attention of its master who is at dinner, when it wants to be fed by
him. Man sometimes uses the same arts with his brethren, and when he
has no other means of engaging them to act according to his
inclinations, endeavours by every servile and fawning attention to
obtain their good will. He has not time, however, to do this upon
every occasion. In civilized society he stands at all times in need of
the co-operation and assistance of great multitudes, while his whole
life is scarce sufficient to gain the friendship of a few persons. In
almost every other race of animals, each individual, when it is grown
up to maturity, is entirely independent, and in its natural state has
occasion for the assistance of no other living creature. But man has
almost constant occasion for the help of his brethren, and it is in
vain for him to expect it from their benevolence only. He will be more
likely to prevail if he can interest their self-love in his favour,
and shew them that it is for their own advantage to do for him what he
requires of them. Whoever offers to another a bargain of any kind,
proposes to do this. Give me that which I want, and you shall have
this which you want, is the meaning of every such offer; and it is in
this manner that we obtain from one another the far greater part of
those good offices which we stand in need of. It is not from the
benevolence of the butcher the brewer, or the baker that we expect our
dinner, but from their regard to their own interest. We address
ourselves, not to their humanity, but to their self-love, and never
talk to them of our own necessities, but of their advantages. Nobody
but a beggar chooses to depend chiefly upon the benevolence of his
fellow-citizens. Even a beggar does not depend upon it entirely. The
charity of well-disposed people, indeed, supplies him with the whole
fund of his subsistence. But though this principle ultimately provides
him with all the necessaries of life which he has occasion for, it
neither does nor can provide him with them as he has occasion for
them. The greater part of his occasional wants are supplied in the
same manner as those of other people, by treaty, by barter, and by
purchase. With the money which one man gives him he purchases food.
The old clothes which another bestows upon him he exchanges for other
clothes which suit him better, or for lodging, or for food, or for
money, with which he can buy either food, clothes, or lodging, as he
has occasion.

As it is by treaty, by barter, and by purchase, that we obtain from
one another the greater part of those mutual good offices which we
stand in need of, so it is this same trucking disposition which
originally gives occasion to the division of labour. In a tribe of
hunters or shepherds, a particular person makes bows and arrows, for
example, with more readiness and dexterity than any other. He
frequently exchanges them for cattle or for venison, with his
companions; and he finds at last that he can, in this manner, get more
cattle and venison, than if he himself went to the field to catch
them. From a regard to his own interest, therefore, the making of bows
and arrows grows to be his chief business, and he becomes a sort of
armourer. Another excels in making the frames and covers of their
little huts or moveable houses. He is accustomed to be of use in this
way to his neighbours, who reward him in the same manner with cattle
and with venison, till at last he finds it his interest to dedicate
himself entirely to this employment, and to become a sort of
house-carpenter. In the same manner a third becomes a smith or a
brazier; a fourth, a tanner or dresser of hides or skins, the
principal part of the clothing of savages. And thus the certainty of
being able to exchange all that surplus part of the produce of his own
labour, which is over and above his own consumption, for such parts of
the produce of other men's labour as he may have occasion for,
encourages every man to apply himself to a particular occupation, and
to cultivate and bring to perfection whatever talent of genius he may
possess for that particular species of business.

The difference of natural talents in different men, is, in reality,
much less than we are aware of; and the very different genius which
appears to distinguish men of different professions, when grown up to
maturity, is not upon many occasions so much the cause, as the effect
of the division of labour. The difference between the most dissimilar
characters, between a philosopher and a common street porter, for
example, seems to arise not so much from nature, as from habit,
custom, and education. When they came in to the world, and for the
first six or eight years of their existence, they were, perhaps, very
much alike, and neither their parents nor play-fellows could perceive
any remarkable difference. About that age, or soon after, they come to
be employed in very different occupations. The difference of talents
comes then to be taken notice of, and widens by degrees, till at last
the vanity of the philosopher is willing to acknowledge scarce any
resemblance. But without the disposition to truck, barter, and
exchange, every man must have procured to himself every necessary and
conveniency of life which he wanted. All must have had the same duties
to perform, and the same work to do, and there could have been no such
difference of employment as could alone give occasion to any great
difference of talents.

As it is this disposition which forms that difference of talents, so
remarkable among men of different professions, so it is this same
disposition which renders that difference useful. Many tribes of
animals, acknowledged to be all of the same species, derive from
nature a much more remarkable distinction of genius, than what,
antecedent to custom and education, appears to take place among men.
By nature a philosopher is not in genius and disposition half so
different from a street porter, as a mastiff is from a grey-hound, or
a grey-hound from a spaniel, or this last from a shepherd's dog. Those
different tribes of animals, however, though all of the same species
are of scarce any use to one another. The strength of the mastiff is
not in the least supported either by the swiftness of the greyhound,
or by the sagacity of the spaniel, or by the docility of the
shepherd's dog. The effects of those different geniuses and talents,
for want of the power or disposition to barter and exchange, cannot be
brought into a common stock, and do not in the least contribute to the
better accommodation and conveniency of the species. Each animal is
still obliged to support and defend itself, separately and
independently, and derives no sort of advantage from that variety of
talents with which nature has distinguished its fellows. Among men, on
the contrary, the most dissimilar geniuses are of use to one another;
the different produces of their respective talents, by the general
disposition to truck, barter, and exchange, being brought, as it were,
into a common stock, where every man may purchase whatever part of the
produce of other men's talents he has occasion for,




CHAPTER III.

THAT THE DIVISION OF LABOUR IS LIMITED BY THE EXTENT OF THE MARKET.

As it is the power of exchanging that gives occasion to the division
of labour, so the extent of this division must always be limited by
the extent of that power, or, in other words, by the extent of the
market. When the market is very small, no person can have any
encouragement to dedicate himself entirely to one employment, for want
of the power to exchange all that surplus part of the produce of his
own labour, which is over and above his own consumption, for such
parts of the produce of other men's labour as he has occasion for.

There are some sorts of industry, even of the lowest kind, which can
be carried on nowhere but in a great town. A porter, for example, can
find employment and subsistence in no other place. A village is by
much too narrow a sphere for him; even an ordinary market-town is
scarce large enough to afford him constant occupation. In the lone
houses and very small villages which are scattered about in so desert
a country as the highlands of Scotland, every farmer must be butcher,
baker, and brewer, for his own family. In such situations we can
scarce expect to find even a smith, a carpenter, or a mason, within
less than twenty miles of another of the same trade. The scattered
families that live at eight or ten miles distance from the nearest of
them, must learn to perform themselves a great number of little pieces
of work, for which, in more populous countries, they would call in the
assistance of those workmen. Country workmen are almost everywhere
obliged to apply themselves to all the different branches of industry
that have so much affinity to one another as to be employed about the
same sort of materials. A country carpenter deals in every sort of
work that is made of wood; a country smith in every sort of work that
is made of iron. The former is not only a carpenter, but a joiner, a
cabinet-maker, and even a carver in wood, as well as a wheel-wright, a
plough-wright, a cart and waggon-maker. The employments of the latter
are still more various. It is impossible there should be such a trade
as even that of a nailer in the remote and inland parts of the
highlands of Scotland. Such a workman at the rate of a thousand nails
a-day, and three hundred working days in the year, will make three
hundred thousand nails in the year. But in such a situation it would
be impossible to dispose of one thousand, that is, of one day's work
in the year. As by means of water-carriage, a more extensive market is
opened to every sort of industry than what land-carriage alone can
afford it, so it is upon the sea-coast, and along the banks of
navigable rivers, that industry of every kind naturally begins to
subdivide and improve itself, and it is frequently not till a long
time after that those improvements extend themselves to the inland
parts of the country. A broad-wheeled waggon, attended by two men, and
drawn by eight horses, in about six weeks time, carries and brings
back between London and Edinburgh near four ton weight of goods. In
about the same time a ship navigated by six or eight men, and sailing
between the ports of London and Leith, frequently carries and brings
back two hundred ton weight of goods. Six or eight men, therefore, by
the help of water-carriage, can carry and bring back, in the same
time, the same quantity of goods between London and Edinburgh as fifty
broad-wheeled waggons, attended by a hundred men, and drawn by four
hundred horses. Upon two hundred tons of goods, therefore, carried by
the cheapest land-carriage from London to Edinburgh, there must be
charged the maintenance of a hundred men for three weeks, and both the
maintenance and what is nearly equal to maintenance the wear and tear
of four hundred horses, as well as of fifty great waggons. Whereas,
upon the same quantity of goods carried by water, there is to be
charged only the maintenance of six or eight men, and the wear and
tear of a ship of two hundred tons burthen, together with the value of
the superior risk, or the difference of the insurance between land and
water-carriage. Were there no other communication between those two
places, therefore, but by land-carriage, as no goods could be
transported from the one to the other, except such whose price was
very considerable in proportion to their weight, they could carry on
but a small part of that commerce which at present subsists between
them, and consequently could give but a small part of that
encouragement which they at present mutually afford to each other's
industry. There could be little or no commerce of any kind between the
distant parts of the world. What goods could bear the expense of
land-carriage between London and Calcutta? Or if there were any so
precious as to be able to support this expense, with what safety could
they be transported through the territories of so many barbarous
nations? Those two cities, however, at present carry on a very
considerable commerce with each other, and by mutually affording a
market, give a good deal of encouragement to each other's industry.

Since such, therefore, are the advantages of water-carriage, it is
natural that the first improvements of art and industry should be made
where this conveniency opens the whole world for a market to the
produce of every sort of labour, and that they should always be much
later in extending themselves into the inland parts of the country.
The inland parts of the country can for a long time have no other
market for the greater part of their goods, but the country which lies
round about them, and separates them from the sea-coast, and the great
navigable rivers. The extent of the market, therefore, must for a long
time be in proportion to the riches and populousness of that country,
and consequently their improvement must always be posterior to the
improvement of that country. In our North American colonies, the
plantations have constantly followed either the sea-coast or the banks
of the navigable rivers, and have scarce anywhere extended themselves
to any considerable distance from both.

The nations that, according to the best authenticated history, appear
to have been first civilized, were those that dwelt round the coast of
the Mediterranean sea. That sea, by far the greatest inlet that is
known in the world, having no tides, nor consequently any waves,
except such as are caused by the wind only, was, by the smoothness of
its surface, as well as by the multitude of its islands, and the
proximity of its neighbouring shores, extremely favourable to the
infant navigation of the world; when, from their ignorance of the
compass, men were afraid to quit the view of the coast, and from the
imperfection of the art of ship-building, to abandon themselves to the
boisterous waves of the ocean. To pass beyond the pillars of Hercules,
that is, to sail out of the straits of Gibraltar, was, in the ancient
world, long considered as a most wonderful and dangerous exploit of
navigation. It was late before even the Phoenicians and Carthaginians,
the most skilful navigators and ship-builders of those old times,
attempted it; and they were, for a long time, the only nations that
did attempt it.

Of all the countries on the coast of the Mediterranean sea, Egypt
seems to have been the first in which either agriculture or
manufactures were cultivated and improved to any considerable degree.
Upper Egypt extends itself nowhere above a few miles from the Nile;
and in Lower Egypt, that great river breaks itself into many different
canals, which, with the assistance of a little art, seem to have
afforded a communication by water-carriage, not only between all the
great towns, but between all the considerable villages, and even to
many farm-houses in the country, nearly in the same manner as the
Rhine and the Maese do in Holland at present. The extent and easiness
of this inland navigation was probably one of the principal causes of
the early improvement of Egypt.

The improvements in agriculture and manufactures seem likewise to have
been of very great antiquity in the provinces of Bengal, in the East
Indies, and in some of the eastern provinces of China, though the
great extent of this antiquity is not authenticated by any histories
of whose authority we, in this part of the world, are well assured. In
Bengal, the Ganges, and several other great rivers, form a great
number of navigable canals, in the same manner as the Nile does in
Egypt. In the eastern provinces of China, too, several great rivers
form, by their different branches, a multitude of canals, and, by
communicating with one another, afford an inland navigation much more
extensive than that either of the Nile or the Ganges, or, perhaps,
than both of them put together. It is remarkable, that neither the
ancient Egyptians, nor the Indians, nor the Chinese, encouraged
foreign commerce, but seem all to have derived their great opulence
from this inland navigation.

All the inland parts of Africa, and all that part of Asia which lies
any considerable way north of the Euxine and Caspian seas, the ancient
Scythia, the modern Tartary and Siberia, seem, in all ages of the
world, to have been in the same barbarous and uncivilized state in
which we find them at present. The sea of Tartary is the frozen ocean,
which admits of no navigation; and though some of the greatest rivers
in the world run through that country, they are at too great a
distance from one another to carry commerce and communication through
the greater part of it. There are in Africa none of those great
inlets, such as the Baltic and Adriatic seas in Europe, the
Mediterranean and Euxine seas in both Europe and Asia, and the gulfs
of Arabia, Persia, India, Bengal, and Siam, in Asia, to carry maritime
commerce into the interior parts of that great continent; and the
great rivers of Africa are at too great a distance from one another to
give occasion to any considerable inland navigation. The commerce,
besides, which any nation can carry on by means of a river which does
not break itself into any great number of branches or canals, and
which runs into another territory before it reaches the sea, can never
be very considerable, because it is always in the power of the nations
who possess that other territory to obstruct the communication between
the upper country and the sea. The navigation of the Danube is of very
little use to the different states of Bavaria, Austria, and Hungary,
in comparison of what it would be, if any of them possessed the whole
of its course, till it falls into the Black sea.




CHAPTER IV.

OF THE ORIGIN AND USE OF MONEY.

When the division of labour has been once thoroughly established, it
is but a very small part of a man's wants which the produce of his own
labour can supply. He supplies the far greater part of them by
exchanging that surplus part of the produce of his own labour, which
is over and above his own consumption, for such parts of the produce
of other men's labour as he has occasion for. Every man thus lives by
exchanging, or becomes, in some measure, a merchant, and the society
itself grows to be what is properly a commercial society.

But when the division of labour first began to take place, this power
of exchanging must frequently have been very much clogged and
embarrassed in its operations. One man, we shall suppose, has more of
a certain commodity than he himself has occasion for, while another
has less. The former, consequently, would be glad to dispose of; and
the latter to purchase, a part of this superfluity. But if this latter
should chance to have nothing that the former stands in need of, no
exchange can be made between them. The butcher has more meat in his
shop than he himself can consume, and the brewer and the baker would
each of them be willing to purchase a part of it. But they have
nothing to offer in exchange, except the different productions of
their respective trades, and the butcher is already provided with all
the bread and beer which he has immediate occasion for. No exchange
can, in this case, be made between them. He cannot be their merchant,
nor they his customers; and they are all of them thus mutually less
serviceable to one another. In order to avoid the inconveniency of
such situations, every prudent man in every period of society, after
the first establishment of the division of labour, must naturally have
endeavoured to manage his affairs in such a manner, as to have at all
times by him, besides the peculiar produce of his own industry, a
certain quantity of some one commodity or other, such as he imagined
few people would be likely to refuse in exchange for the produce of
their industry. Many different commodities, it is probable, were
successively both thought of and employed for this purpose. In the
rude ages of society, cattle are said to have been the common
instrument of commerce; and, though they must have been a most
inconvenient one, yet, in old times, we find things were frequently
valued according to the number of cattle which had been given in
exchange for them. The armour of Diomede, says Homer, cost only nine
oxen; but that of Glaucus cost a hundred oxen. Salt is said to be the
common instrument of commerce and exchanges in Abyssinia; a species of
shells in some parts of the coast of India; dried cod at Newfoundland;
tobacco in Virginia; sugar in some of our West India colonies; hides
or dressed leather in some other countries; and there is at this day a
village In Scotland, where it is not uncommon, I am told, for a
workman to carry nails instead of money to the baker's shop or the
ale-house.

In all countries, however, men seem at last to have been determined by
irresistible reasons to give the preference, for this employment, to
metals above every other commodity. Metals can not only be kept with
as little loss as any other commodity, scarce any thing being less
perishable than they are, but they can likewise, without any loss, be
divided into any number of parts, as by fusion those parts can easily
be re-united again; a quality which no other equally durable
commodities possess, and which, more than any other quality, renders
them fit to be the instruments of commerce and circulation. The man
who wanted to buy salt, for example, and had nothing but cattle to
give in exchange for it, must have been obliged to buy salt to the
value of a whole ox, or a whole sheep, at a time. He could seldom buy
less than this, because what he was to give for it could seldom be
divided without loss; and if he had a mind to buy more, he must, for
the same reasons, have been obliged to buy double or triple the
quantity, the value, to wit, of two or three oxen, or of two or three
sheep. If, on the contrary, instead of sheep or oxen, he had metals to
give in exchange for it, he could easily proportion the quantity of
the metal to the precise quantity of the commodity which he had
immediate occasion for.

Different metals have been made use of by different nations for this
purpose. Iron was the common instrument of commerce among the ancient
Spartans, copper among the ancient Romans, and gold and silver among
all rich and commercial nations.

Those metals seem originally to have been made use of for this purpose
in rude bars, without any stamp or coinage. Thus we are told by Pliny
(Plin. Hist Nat. lib. 33, cap. 3), upon the authority of Timaeus, an
ancient historian, that, till the time of Servius Tullius, the Romans
had no coined money, but made use of unstamped bars of copper, to
purchase whatever they had occasion for. These rude bars, therefore,
performed at this time the function of money.

The use of metals in this rude state was attended with two very
considerable inconveniences; first, with the trouble of weighing, and
secondly, with that of assaying them. In the precious metals, where a
small difference in the quantity makes a great difference in the
value, even the business of weighing, with proper exactness, requires
at least very accurate weights and scales. The weighing of gold, in
particular, is an operation of some nicety In the coarser metals,
indeed, where a small error would be of little consequence, less
accuracy would, no doubt, be necessary. Yet we should find it
excessively troublesome if every time a poor man had occasion either
to buy or sell a farthing's worth of goods, he was obliged to weigh
the farthing. The operation of assaying is still more difficult, still
more tedious; and, unless a part of the metal is fairly melted in the
crucible, with proper dissolvents, any conclusion that can be drawn
from it is extremely uncertain. Before the institution of coined
money, however, unless they went through this tedious and difficult
operation, people must always have been liable to the grossest frauds
and impositions; and instead of a pound weight of pure silver, or pure
copper, might receive, in exchange for their goods, an adulterated
composition of the coarsest and cheapest materials, which had,
however, in their outward appearance, been made to resemble those
metals. To prevent such abuses, to facilitate exchanges, and thereby
to encourage all sorts of industry and commerce, it has been found
necessary, in all countries that have made any considerable advances
towards improvement, to affix a public stamp upon certain quantities
of such particular metals, as were in those countries commonly made
use of to purchase goods. Hence the origin of coined money, and of
those public offices called mints; institutions exactly of the same
nature with those of the aulnagers and stamp-masters of woollen and
linen cloth. All of them are equally meant to ascertain, by means of a
public stamp, the quantity and uniform goodness of those different
commodities when brought to market.

The first public stamps of this kind that were affixed to the current
metals, seem in many cases to have been intended to ascertain, what it
was both most difficult and most important to ascertain, the goodness
or fineness of the metal, and to have resembled the sterling mark
which is at present affixed to plate and bars of silver, or the
Spanish mark which is sometimes affixed to ingots of gold, and which,
being struck only upon one side of the piece, and not covering the
whole surface, ascertains the fineness, but not the weight of the
metal. Abraham weighs to Ephron the four hundred shekels of silver
which he had agreed to pay for the field of Machpelah. They are said,
however, to be the current money of the merchant, and yet are received
by weight, and not by tale, in the same manner as ingots of gold and
bars of silver are at present. The revenues of the ancient Saxon kings
of England are said to have been paid, not in money, but in kind, that
is, in victuals and provisions of all sorts. William the Conqueror
introduced the custom of paying them in money. This money, however,
was for a long time, received at the exchequer, by weight, and not by
tale,

The inconveniency and difficulty of weighing those metals with
exactness, gave occasion to the institution of coins, of which the
stamp, covering entirely both sides of the piece, and sometimes the
edges too, was supposed to ascertain not only the fineness, but the
weight of the metal. Such coins, therefore, were received by tale, as
at present, without the trouble of weighing.

The denominations of those coins seem originally to have expressed the
weight or quantity of metal contained in them. In the time of Servius
Tullius, who first coined money at Rome, the Roman as or pondo
contained a Roman pound of good copper. It was divided, in the same
manner as our Troyes pound, into twelve ounces, each of which
contained a real ounce of good copper. The English pound sterling, in
the time of Edward I. contained a pound, Tower weight, of silver of a
known fineness. The Tower pound seems to have been something more than
the Roman pound, and something less than the Troyes pound. This last
was not introduced into the mint of England till the 18th of Henry the
VIII. The French livre contained, in the time of Charlemagne, a pound,
Troyes weight, of silver of a known fineness. The fair of Troyes in
Champaign was at that time frequented by all the nations of Europe,
and the weights and measures of so famous a market were generally
known and esteemed. The Scots money pound contained, from the time of
Alexander the First to that of Robert Bruce, a pound of silver of the
same weight and fineness with the English pound sterling. English,
French, and Scots pennies, too, contained all of them originally a
real penny-weight of silver, the twentieth part of an ounce, and the
two hundred-and-fortieth part of a pound. The shilling, too, seems
originally to have been the denomination of a weight. "When wheat is
at twelve shillings the quarter," says an ancient statute of Henry
III. "then wastel bread of a farthing shall weigh eleven shillings and
fourpence". The proportion, however, between the shilling, and either
the penny on the one hand, or the pound on the other, seems not to
have been so constant and uniform as that between the penny and the
pound. During the first race of the kings of France, the French sou or
shilling appears upon different occasions to have contained five,
twelve, twenty, and forty pennies. Among the ancient Saxons, a
shilling appears at one time to have contained only five pennies, and
it is not improbable that it may have been as variable among them as
among their neighbours, the ancient Franks. From the time of
Charlemagne among the French, and from that of William the Conqueror
among the English, the proportion between the pound, the shilling, and
the penny, seems to have been uniformly the same as at present, though
the value of each has been very different; for in every country of the
world, I believe, the avarice and injustice of princes and sovereign
states, abusing the confidence of their subjects, have by degrees
diminished the real quantity of metal, which had been originally
contained in their coins. The Roman as, in the latter ages of the
republic, was reduced to the twenty-fourth part of its original value,
and, instead of weighing a pound, came to weigh only half an ounce.
The English pound and penny contain at present about a third only; the
Scots pound and penny about a thirty-sixth; and the French pound and
penny about a sixty-sixth part of their original value. By means of
those operations, the princes and sovereign states which performed
them were enabled, in appearance, to pay their debts and fulfil their
engagements with a smaller quantity of silver than would otherwise
have been requisite. It was indeed in appearance only; for their
creditors were really defrauded of a part of what was due to them. All
other debtors in the state were allowed the same privilege, and might
pay with the same nominal sum of the new and debased coin whatever
they had borrowed in the old. Such operations, therefore, have always
proved favourable to the debtor, and ruinous to the creditor, and have
sometimes produced a greater and more universal revolution in the
fortunes of private persons, than could have been occasioned by a very
great public calamity.

It is in this manner that money has become, in all civilized nations,
the universal instrument of commerce, by the intervention of which
goods of all kinds are bought and sold, or exchanged for one another.

What are the rules which men naturally observe, in exchanging them
either for money, or for one another, I shall now proceed to examine.
These rules determine what may be called the relative or exchangeable
value of goods.

The word VALUE, it is to be observed, has two different meanings, and
sometimes expresses the utility of some particular object, and
sometimes the power of purchasing other goods which the possession of
that object conveys. The one may be called 'value in use;' the other,
'value in exchange.' The things which have the greatest value in use
have frequently little or no value in exchange; and, on the contrary,
those which have the greatest value in exchange have frequently little
or no value in use. Nothing is more useful than water; but it will
purchase scarce any thing; scarce any thing can be had in exchange for
it. A diamond, on the contrary, has scarce any value in use; but a
very great quantity of other goods may frequently be had in exchange
for it.

In order to investigate the principles which regulate the exchangeable
value of commodities, I shall endeavour to shew,

First, what is the real measure of this exchangeable value; or wherein
consists the real price of all commodities.

Secondly, what are the different parts of which this real price is
composed or made up.

And, lastly, what are the different circumstances which sometimes
raise some or all of these different parts of price above, and
sometimes sink them below, their natural or ordinary rate; or, what
are the causes which sometimes hinder the market price, that is, the
actual price of commodities, from coinciding exactly with what may be
called their natural price.

I shall endeavour to explain, as fully and distinctly as I can, those
three subjects in the three following chapters, for which I must very
earnestly entreat both the patience and attention of the reader: his
patience, in order to examine a detail which may, perhaps, in some
places, appear unnecessarily tedious; and his attention, in order to
understand what may perhaps, after the fullest explication which I am
capable of giving it, appear still in some degree obscure. I am always
willing to run some hazard of being tedious, in order to be sure that
I am perspicuous; and, after taking the utmost pains that I can to be
perspicuous, some obscurity may still appear to remain upon a subject,
in its own nature extremely abstracted.






CHAPTER V.

OF THE REAL AND NOMINAL PRICE OF COMMODITIES, OR OF THEIR PRICE IN
LABOUR, AND THEIR PRICE IN MONEY.

Every man is rich or poor according to the degree in which he can
afford to enjoy the necessaries, conveniencies, and amusements of
human life. But after the division of labour has once thoroughly taken
place, it is but a very small part of these with which a man's own
labour can supply him. The far greater part of them he must derive
from the labour of other people, and he must be rich or poor according
to the quantity of that labour which he can command, or which he can
afford to purchase. The value of any commodity, therefore, to the
person who possesses it, and who means not to use or consume it
himself, but to exchange it for other commodities, is equal to the
quantity of labour which it enables him to purchase or command. Labour
therefore, is the real measure of the exchangeable value of all
commodities.

The real price of every thing, what every thing really costs to the
man who wants to acquire it, is the toil and trouble of acquiring it.
What every thing is really worth to the man who has acquired it and
who wants to dispose of it, or exchange it for something else, is the
toil and trouble which it can save to himself, and which it can impose
upon other people. What is bought with money, or with goods, is
purchased by labour, as much as what we acquire by the toil of our own
body. That money, or those goods, indeed, save us this toil. They
contain the value of a certain quantity of labour, which we exchange
for what is supposed at the time to contain the value of an equal
quantity. Labour was the first price, the original purchase money that
was paid for all things. It was not by gold or by silver, but by
labour, that all the wealth of the world was originally purchased; and
its value, to those who possess it, and who want to exchange it for
some new productions, is precisely equal to the quantity of' labour
which it can enable them to purchase or command.

Wealth, as Mr Hobbes says, is power. But the person who either
acquires, or succeeds to a great fortune, does not necessarily acquire
or succeed to any political power, either civil or military. His
fortune may, perhaps, afford him the means of acquiring both; but the
mere possession of that fortune does not necessarily convey to him
either. The power which that possession immediately and directly
conveys to him, is the power of purchasing a certain command over all
the labour, or over all the produce of labour which is then in the
market. His fortune is greater or less, precisely in proportion to the
extent of this power, or to the quantity either of other men's labour,
or, what is the same thing, of the produce of other men's labour,
which it enables him to purchase or command. The exchangeable value of
every thing must always be precisely equal to the extent of this power
which it conveys to its owner.

But though labour be the real measure of the exchangeable value of all
commodities, it is not that by which their value is commonly
estimated. It is often difficult to ascertain the proportion between
two different quantities of labour. The time spent in two different
sorts of work will not always alone determine this proportion. The
different degrees of hardship endured, and of ingenuity exercised,
must likewise be taken into account. There may be more labour in an
hour's hard work, than in two hours easy business; or in an hour's
application to a trade which it cost ten years labour to learn, than
in a month's industry, at an ordinary and obvious employment. But it
is not easy to find any accurate measure either of hardship or
ingenuity. In exchanging, indeed, the different productions of
different sorts of labour for one another, some allowance is commonly
made for both. It is adjusted, however, not by any accurate measure,
but by the higgling and bargaining of the market, according to that
sort of rough equality which, though not exact, is sufficient for
carrying on the business of common life.

Every commodity, besides, Is more frequently exchanged for, and
thereby compared with, other commodities, than with labour. It is more
natural, therefore, to estimate its exchangeable value by the quantity
of some other commodity, than by that of the labour which it can
produce. The greater part of people, too, understand better what is
meant by a quantity of a particular commodity, than by a quantity of
labour. The one is a plain palpable object; the other an abstract
notion, which though it can be made sufficiently intelligible, is not
altogether so natural and obvious.

But when barter ceases, and money has become the common instrument of
commerce, every particular commodity is more frequently exchanged for
money than for any other commodity. The butcher seldom carries his
beef or his mutton to the baker or the brewer, in order to exchange
them for bread or for beer; but he carries them to the market, where
he exchanges them for money, and afterwards exchanges that money for
bread and for beer. The quantity of money which he gets for them
regulates, too, the quantity of bread and beer which he can afterwards
purchase. It is more natural and obvious to him, therefore, to
estimate their value by the quantity of money, the commodity for which
he immediately exchanges them, than by that of bread and beer, the
commodities for which he can exchange them only by the intervention of
another commodity; and rather to say that his butcher's meat is worth
three-pence or fourpence a-pound, than that it is worth three or four
pounds of bread, or three or four quarts of small beer. Hence it comes
to pass, that the exchangeable value of every commodity is more
frequently estimated by the quantity of money, than by the quantity
either of labour or of any other commodity which can be had in
exchange for it.

Gold and silver, however, like every other commodity, vary in their
value; are sometimes cheaper and sometimes dearer, sometimes of easier
and sometimes of more difficult purchase. The quantity of labour which
any particular quantity of them can purchase or command, or the
quantity of other goods which it will exchange for, depends always
upon the fertility or barrenness of the mines which happen to be known
about the time when such exchanges are made. The discovery of the
abundant mines of America, reduced, in the sixteenth century, the
value of gold and silver in Europe to about a third of what it had
been before. As it cost less labour to bring those metals from the
mine to the market, so, when they were brought thither, they could
purchase or command less labour; and this revolution in their value,
though perhaps the greatest, is by no means the only one of which
history gives some account. But as a measure of quantity, such as the
natural foot, fathom, or handful, which is continually varying in its
own quantity, can never be an accurate measure of the quantity of
other things; so a commodity which is itself continually varying in
its own value, can never be an accurate measure of the value of other
commodities. Equal quantities of labour, at all times and places, may
be said to be of equal value to the labourer. In his ordinary state of
health, strength, and spirits; in the ordinary degree of his skill and
dexterity, he must always lay down the same portion of his ease, his
liberty, and his happiness. The price which he pays must always be the
same, whatever may be the quantity of goods which he receives in
return for it. Of these, indeed, it may sometimes purchase a greater
and sometimes a smaller quantity; but it is their value which varies,
not that of the labour which purchases them. At all times and places,
that is dear which it is difficult to come at, or which it costs much
labour to acquire; and that cheap which is to be had easily, or with
very little labour. Labour alone, therefore, never varying in its own
value, is alone the ultimate and real standard by which the value of
all commodities can at all times and places be estimated and compared.
It is their real price; money is their nominal price only.

But though equal quantities of labour are always of equal value to the
labourer, yet to the person who employs him they appear sometimes to
be of greater, and sometimes of smaller value. He purchases them
sometimes with a greater, and sometimes with a smaller quantity of
goods, and to him the price of labour seems to vary like that of all
other things. It appears to him dear in the one case, and cheap in the
other. In reality, however, it is the goods which are cheap in the one
case, and dear in the other.

In this popular sense, therefore, labour, like commodities, may be
said to have a real and a nominal price. Its real price may be said to
consist in the quantity of the necessaries and conveniencies of life
which are given for it; its nominal price, in the quantity of money.
The labourer is rich or poor, is well or ill rewarded, in proportion
to the real, not to the nominal price of his labour.

The distinction between the real and the nominal price of commodities
and labour is not a matter of mere speculation, but may sometimes be
of considerable use in practice. The same real price is always of the
same value; but on account of the variations in the value of gold and
silver, the same nominal price is sometimes of very different values.
When a landed estate, therefore, is sold with a reservation of a
perpetual rent, if it is intended that this rent should always be of
the same value, it is of importance to the family in whose favour it
is reserved, that it should not consist in a particular sum of money.
Its value would in this case be liable to variations of two different
kinds: first, to those which arise from the different quantities of
gold and silver which are contained at different times in coin of the
same denomination; and, secondly, to those which arise from the
different values of equal quantities of gold and silver at different
times.

Princes and sovereign states have frequently fancied that they had a
temporary interest to diminish the quantity of pure metal contained in
their coins; but they seldom have fancied that they had any to augment
it. The quantity of metal contained in the coins, I believe of all
nations, has accordingly been almost continually diminishing, and
hardly ever augmenting. Such variations, therefore, tend almost always
to diminish the value of a money rent.

The discovery of the mines of America diminished the value of gold and
silver in Europe. This diminution, it is commonly supposed, though I
apprehend without any certain proof, is still going on gradually, and
is likely to continue to do so for a long time. Upon this supposition,
therefore, such variations are more likely to diminish than to augment
the value of a money rent, even though it should be stipulated to be
paid, not in such a quantity of coined money of such a denomination
(in so many pounds sterling, for example), but in so many ounces,
either of pure silver, or of silver of a certain standard.

The rents which have been reserved in corn, have preserved their value
much better than those which have been reserved in money, even where
the denomination of the coin has not been altered. By the 18th of
Elizabeth, it was enacted, that a third of the rent of all college
leases should be reserved in corn, to be paid either in kind, or
according to the current prices at the nearest public market. The
money arising from this corn rent, though originally but a third of
the whole, is, in the present times, according to Dr. Blackstone,
commonly near double of what arises from the other two-thirds. The old
money rents of colleges must, according to this account, have sunk
almost to a fourth part of their ancient value, or are worth little
more than a fourth part of the corn which they were formerly worth.
But since the reign of Philip and Mary, the denomination of the
English coin has undergone little or no alteration, and the same
number of pounds, shillings, and pence, have contained very nearly the
same quantity of pure silver. This degradation, therefore, in the
value of the money rents of colleges, has arisen altogether from the
degradation in the price of silver.

When the degradation in the value of silver is combined with the
diminution of the quantity of it contained in the coin of the same
denomination, the loss is frequently still greater. In Scotland, where
the denomination of the coin has undergone much greater alterations
than it ever did in England, and in France, where it has undergone
still greater than it ever did in Scotland, some ancient rents,
originally of considerable value, have, in this manner, been reduced
almost to nothing.

Equal quantities of labour will, at distant times, be purchased more
nearly with equal quantities of corn, the subsistence of the labourer,
than with equal quantities of gold and silver, or, perhaps, of any
other commodity. Equal quantities of corn, therefore, will, at distant
times, be more nearly of the same real value, or enable the possessor
to purchase or command more nearly the same quantity of the labour of
other people. They will do this, I say, more nearly than equal
quantities of almost any other commodity; for even equal quantities of
corn will not do it exactly. The subsistence of the labourer, or the
real price of labour, as I shall endeavour to shew hereafter, is very
different upon different occasions; more liberal in a society
advancing to opulence, than in one that is standing still, and in one
that is standing still, than in one that is going backwards. Every
other commodity, however, will, at any particular time, purchase a
greater or smaller quantity of labour, in proportion to the quantity
of subsistence which it can purchase at that time. A rent, therefore,
reserved in corn, is liable only to the variations in the quantity of
labour which a certain quantity of corn can purchase. But a rent
reserved in any other commodity is liable, not only to the variations
in the quantity of labour which any particular quantity of corn can
purchase, but to the variations in the quantity of corn which can be
purchased by any particular quantity of that commodity.

Though the real value of a corn rent, it is to be observed, however,
varies much less from century to century than that of a money rent, it
varies much more from year to year. The money price of labour, as I
shall endeavour to shew hereafter, does not fluctuate from year to
year with the money price of corn, but seems to be everywhere
accommodated, not to the temporary or occasional, but to the average
or ordinary price of that necessary of life. The average or ordinary
price of corn, again is regulated, as I shall likewise endeavour to
shew hereafter, by the value of silver, by the richness or barrenness
of the mines which supply the market with that metal, or by the
quantity of labour which must be employed, and consequently of corn
which must be consumed, in order to bring any particular quantity of
silver from the mine to the market. But the value of silver, though it
sometimes varies greatly from century to century, seldom varies much
from year to year, but frequently continues the same, or very nearly
the same, for half a century or a century together. The ordinary or
average money price of corn, therefore, may, during so long a period,
continue the same, or very nearly the same, too, and along with it the
money price of labour, provided, at least, the society continues, in
other respects, in the same, or nearly in the same, condition. In the
mean time, the temporary and occasional price of corn may frequently
be double one year of what it had been the year before, or fluctuate,
for example, from five-and-twenty to fifty shillings the quarter. But
when corn is at the latter price, not only the nominal, but the real
value of a corn rent, will be double of what it is when at the former,
or will command double the quantity either of labour, or of the
greater part of other commodities; the money price of labour, and
along with it that of most other things, continuing the same during
all these fluctuations.

Labour, therefore, it appears evidently, is the only universal, as
well as the only accurate, measure of value, or the only standard by
which we can compare the values of different commodities, at all
times, and at all places. We cannot estimate, it is allowed, the real
value of different commodities from century to century by the
quantities of silver which were given for them. We cannot estimate it
from year to year by the quantities of corn. By the quantities of
labour, we can, with the greatest accuracy, estimate it, both from
century to century, and from year to year. From century to century,
corn is a better measure than silver, because, from century to
century, equal quantities of corn will command the same quantity of
labour more nearly than equal quantities of silver. From year to year,
on the contrary, silver is a better measure than corn, because equal
quantities of it will more nearly command the same quantity of labour.

But though, in establishing perpetual rents, or even in letting very
long leases, it may be of use to distinguish between real and nominal
price; it is of none in buying and selling, the more common and
ordinary transactions of human life.

At the same time and place, the real and the nominal price of all
commodities are exactly in proportion to one another. The more or less
money you get for any commodity, in the London market, for example,
the more or less labour it will at that time and place enable you to
purchase or command. At the same time and place, therefore, money is
the exact measure of the real exchangeable value of all commodities.
It is so, however, at the same time and place only.

Though at distant places there is no regular proportion between the
real and the money price of commodities, yet the merchant who carries
goods from the one to the other, has nothing to consider but the money
price, or the difference between the quantity of silver for which he
buys them, and that for which he is likely to sell them. Half an ounce
of silver at Canton in China may command a greater quantity both of
labour and of the necessaries and conveniencies of life, than an ounce
at London. A commodity, therefore, which sells for half an ounce of
silver at Canton, may there be really dearer, of more real importance
to the man who possesses it there, than a commodity which sells for an
ounce at London is to the man who possesses it at London. If a London
merchant, however, can buy at Canton, for half an ounce of silver, a
commodity which he can afterwards sell at London for an ounce, he
gains a hundred per cent. by the bargain, just as much as if an ounce
of silver was at London exactly of the same value as at Canton. It is
of no importance to him that half an ounce of silver at Canton would
have given him the command of more labour, and of a greater quantity
of the necessaries and conveniencies of life than an ounce can do at
London. An ounce at London will always give him the command of double
the quantity of all these, which half an ounce could have done there,
and this is precisely what he wants.

As it is the nominal or money price of goods, therefore, which finally
determines the prudence or imprudence of all purchases and sales, and
thereby regulates almost the whole business of common life in which
price is concerned, we cannot wonder that it should have been so much
more attended to than the real price.

In such a work as this, however, it may sometimes be of use to compare
the different real values of a particular commodity at different times
and places, or the different degrees of power over the labour of other
people which it may, upon different occasions, have given to those who
possessed it. We must in this case compare, not so much the different
quantities of silver for which it was commonly sold, as the different
quantities or labour which those different quantities of silver could
have purchased. But the current prices of labour, at distant times and
places, can scarce ever be known with any degree of exactness. Those
of corn, though they have in few places been regularly recorded, are
in general better known, and have been more frequently taken notice of
by historians and other writers. We must generally, therefore, content
ourselves with them, not as being always exactly in the same
proportion as the current prices of labour, but as being the nearest
approximation which can commonly be had to that proportion. I shall
hereafter have occasion to make several comparisons of this kind.

In the progress of industry, commercial nations have found it
convenient to coin several different metals into money; gold for
larger payments, silver for purchases of moderate value, and copper,
or some other coarse metal, for those of still smaller consideration,
They have always, however, considered one of those metals as more
peculiarly the measure of value than any of the other two; and this
preference seems generally to have been given to the metal which they
happen first to make use of as the instrument of commerce. Having once
begun to use it as their standard, which they must have done when they
had no other money, they have generally continued to do so even when
the necessity was not the same.

The Romans are said to have had nothing but copper money till within
five years before the first Punic war (Pliny, lib. xxxiii. cap. 3),
when they first began to coin silver. Copper, therefore, appears to
have continued always the measure of value in that republic. At Rome
all accounts appear to have been kept, and the value of all estates to
have been computed, either in asses or in sestertii. The as was always
the denomination of a copper coin. The word sestertius signifies two
asses and a half. Though the sestertius, therefore, was originally a
silver coin, its value was estimated in copper. At Rome, one who owed
a great deal of money was said to have a great deal of other people's
copper.

The northern nations who established themselves upon the ruins of the
Roman empire, seem to have had silver money from the first beginning
of their settlements, and not to have known either gold or copper
coins for several ages thereafter. There were silver coins in England
in the time of the Saxons; but there was little gold coined till the
time of Edward III nor any copper till that of James I. of Great
Britain. In England, therefore, and for the same reason, I believe, in
all other modern nations of Europe, all accounts are kept, and the
value of all goods and of all estates is generally computed, in
silver: and when we mean to express the amount of a person's fortune,
we seldom mention the number of guineas, but the number of pounds
sterling which we suppose would be given for it.

Originally, in all countries, I believe, a legal tender of payment
could be made only in the coin of that metal which was peculiarly
considered as the standard or measure of value. In England, gold was
not considered as a legal tender for a long time after it was coined
into money. The proportion between the values of gold and silver money
was not fixed by any public law or proclamation, but was left to be
settled by the market. If a debtor offered payment in gold, the
creditor might either reject such payment altogether, or accept of it
at such a valuation of the gold as he and his debtor could agree upon.
Copper is not at present a legal tender, except in the change of the
smaller silver coins.

In this state of things, the distinction between the metal which was
the standard, and that which was not the standard, was something more
than a nominal distinction.

In process of time, and as people became gradually more familiar with
the use of the different metals in coin, and consequently better
acquainted with the proportion between their respective values, it
has, in most countries, I believe, been found convenient to ascertain
this proportion, and to declare by a public law, that a guinea, for
example, of such a weight and fineness, should exchange for
one-and-twenty shillings, or be a legal tender for a debt of that
amount. In this state of things, and during the continuance of any one
regulated proportion of this kind, the distinction between the metal,
which is the standard, and that which is not the standard, becomes
little more than a nominal distinction.

In consequence of any change, however, in this regulated proportion,
this distinction becomes, or at least seems to become, something more
than nominal again. If the regulated value of a guinea, for example,
was either reduced to twenty, or raised to two-and-twenty shillings,
all accounts being kept, and almost all obligations for debt being
expressed, in silver money, the greater part of payments could in
either case be made with the same quantity of silver money as before;
but would require very different quantities of gold money; a greater
in the one case, and a smaller in the other. Silver would appear to be
more invariable in its value than gold. Silver would appear to measure
the value of gold, and gold would not appear to measure the value of
silver. The value of gold would seem to depend upon the quantity of
silver which it would exchange for, and the value of silver would not
seem to depend upon the quantity of gold which it would exchange for.
This difference, however, would be altogether owing to the custom of
keeping accounts, and of expressing the amount of all great and small
sums rather in silver than in gold money. One of Mr Drummond's notes
for five-and-twenty or fifty guineas would, after an alteration of
this kind, be still payable with five-and-twenty or fifty guineas, in
the same manner as before. It would, after such an alteration, be
payable with the same quantity of gold as before, but with very
different quantities of silver. In the payment of such a note, gold
would appear to be more invariable in its value than silver. Gold
would appear to measure the value of silver, and silver would not
appear to measure the value of gold. If the custom of keeping
accounts, and of expressing promissory-notes and other obligations for
money, in this manner should ever become general, gold, and not
silver, would be considered as the metal which was peculiarly the
standard or measure of value.

In reality, during the continuance of any one regulated proportion
between the respective values of the different metals in coin, the
value of the most precious metal regulates the value of the whole
coin. Twelve copper pence contain half a pound avoirdupois of copper,
of not the best quality, which, before it is coined, is seldom worth
seven-pence in silver. But as, by the regulation, twelve such pence
are ordered to exchange for a shilling, they are in the market
considered as worth a shilling, and a shilling can at any time be had
for them. Even before the late reformation of the gold coin of Great
Britain, the gold, that part of it at least which circulated in London
and its neighbourhood, was in general less degraded below its standard
weight than the greater part of the silver. One-and-twenty worn and
defaced shillings, however, were considered as equivalent to a guinea,
which, perhaps, indeed, was worn and defaced too, but seldom so much
so. The late regulations have brought the gold coin as near, perhaps,
to its standard weight as it is possible to bring the current coin of
any nation; and the order to receive no gold at the public offices but
by weight, is likely to preserve it so, as long as that order is
enforced. The silver coin still continues in the same worn and
degraded state as before the reformation of the cold coin. In the
market, however, one-and-twenty shillings of this degraded silver coin
are still considered as worth a guinea of this excellent gold coin.

The reformation of the gold coin has evidently raised the value of the
silver coin which can be exchanged for it.

In the English mint, a pound weight of gold is coined into forty-four
guineas and a half, which at one-and-twenty shillings the guinea, is
equal to forty-six pounds fourteen shillings and sixpence. An ounce of
such gold coin, therefore, is worth £ 3:17:10½ in silver. In England,
no duty or seignorage is paid upon the coinage, and he who carries a
pound weight or an ounce weight of standard gold bullion to the mint,
gets back a pound weight or an ounce weight of gold in coin, without
any deduction. Three pounds seventeen shillings and tenpence halfpenny
an ounce, therefore, is said to be the mint price of gold in England,
or the quantity of gold coin which the mint gives in return for
standard gold bullion.

Before the reformation of the gold coin, the price of standard gold
bullion in the market had, for many years, been upwards of £3:18s.
sometimes £ 3:19s, and very frequently £4 an ounce; that sum, it is
probable, in the worn and degraded gold coin, seldom containing more
than an ounce of standard gold. Since the reformation of the gold
coin, the market price of standard gold bullion seldom exceeds £
3:17:7 an ounce. Before the reformation of the gold coin, the market
price was always more or less above the mint price. Since that
reformation, the market price has been constantly below the mint
price. But that market price is the same whether it is paid in gold or
in silver coin. The late reformation of the gold coin, therefore, has
raised not only the value of the gold coin, but likewise that of the
silver coin in proportion to gold bullion, and probably, too, in
proportion to all other commodities; though the price of the greater
part of other commodities being influenced by so many other causes,
the rise in the value of either gold or silver coin in proportion to
them may not be so distinct and sensible.

In the English mint, a pound weight of standard silver bullion is
coined into sixty-two shillings, containing, in the same manner, a
pound weight of standard silver. Five shillings and twopence an ounce,
therefore, is said to be the mint price of silver in England, or the
quantity of silver coin which the mint gives in return for standard
silver bullion. Before the reformation of the gold coin, the market
price of standard silver bullion was, upon different occasions, five
shillings and fourpence, five shillings and fivepence, five shillings
and sixpence, five shillings and sevenpence, and very often five
shillings and eightpence an ounce. Five shillings and sevenpence,
however, seems to have been the most common price. Since the
reformation of the gold coin, the market price of standard silver
bullion has fallen occasionally to five shillings and threepence, five
shillings and fourpence, and five shillings and fivepence an ounce,
which last price it has scarce ever exceeded. Though the market price
of silver bullion has fallen considerably since the reformation of the
gold coin, it has not fallen so low as the mint price.

In the proportion between the different metals in the English coin, as
copper is rated very much above its real value, so silver is rated
somewhat below it. In the market of Europe, in the French coin and in
the Dutch coin, an ounce of fine gold exchanges for about fourteen
ounces of fine silver. In the English coin, it exchanges for about
fifteen ounces, that is, for more silver than it is worth, according
to the common estimation of Europe. But as the price of copper in bars
is not, even in England, raised by the high price of copper in English
coin, so the price of silver in bullion is not sunk by the low rate of
silver in English coin. Silver in bullion still preserves its proper
proportion to gold, for the same reason that copper in bars preserves
its proper proportion to silver.

Upon the reformation of the silver coin, in the reign of William III.,
the price of silver bullion still continued to be somewhat above the
mint price. Mr Locke imputed this high price to the permission of
exporting silver bullion, and to the prohibition of exporting silver
coin. This permission of exporting, he said, rendered the demand for
silver bullion greater than the demand for silver coin. But the number
of people who want silver coin for the common uses of buying and
selling at home, is surely much greater than that of those who want
silver bullion either for the use of exportation or for any other use.
There subsists at present a like permission of exporting gold bullion,
and a like prohibition of exporting gold coin; and yet the price of
gold bullion has fallen below the mint price. But in the English coin,
silver was then, in the same manner as now, under-rated in proportion
to gold; and the gold coin (which at that time, too, was not supposed
to require any reformation) regulated then, as well as now, the real
value of the whole coin. As the reformation of the silver coin did not
then reduce the price of silver bullion to the mint price, it is not
very probable that a like reformation will do so now.

Were the silver coin brought back as near to its standard weight as
the gold, a guinea, it is probable, would, according to the present
proportion, exchange for more silver in coin than it would purchase in
bullion. The silver coin containing its full standard weight, there
would in this case, be a profit in melting it down, in order, first to
sell the bullion for gold coin, and afterwards to exchange this gold
coin for silver coin, to be melted down in the same manner. Some
alteration in the present proportion seems to be the only method of
preventing this inconveniency.

The inconveniency, perhaps, would be less, if silver was rated in the
coin as much above its proper proportion to gold as it is at present
rated below it, provided it was at the same time enacted, that silver
should not be a legal tender for more than the change of a guinea, in
the same manner as copper is not a legal tender for more than the
change of a shilling. No creditor could, in this case, be cheated in
consequence of the high valuation of silver in coin; as no creditor
can at present be cheated in consequence of the high valuation of
copper. The bankers only would suffer by this regulation. When a run
comes upon them, they sometimes endeavour to gain time, by paying in
sixpences, and they would be precluded by this regulation from this
discreditable method of evading immediate payment. They would be
obliged, in consequence, to keep at all times in their coffers a
greater quantity of cash than at present; and though this might, no
doubt, be a considerable inconveniency to them, it would, at the same
time, be a considerable security to their creditors.

Three pounds seventeen shillings and tenpence halfpenny (the mint
price of gold) certainly does not contain, even in our present
excellent gold coin, more than an ounce of standard gold, and it may
be thought, therefore, should not purchase more standard bullion. But
gold in coin is more convenient than gold in bullion; and though, in
England, the coinage is free, yet the gold which is carried in bullion
to the mint, can seldom be returned in coin to the owner till after a
delay of several weeks. In the present hurry of the mint, it could not
be returned till after a delay of several months. This delay is
equivalent to a small duty, and renders gold in coin somewhat more
valuable than an equal quantity of gold in bullion. If, in the English
coin, silver was rated according to its proper proportion to gold, the
price of silver bullion would probably fall below the mint price, even
without any reformation of the silver coin; the value even of the
present worn and defaced silver coin being regulated by the value of
the excellent gold coin for which it can be changed.

A small seignorage or duty upon the coinage of both gold and silver,
would probably increase still more the superiority of those metals in
coin above an equal quantity of either of them in bullion. The coinage
would, in this case, increase the value of the metal coined in
proportion to the extent of this small duty, for the same reason that
the fashion increases the value of plate in proportion to the price of
that fashion. The superiority of coin above bullion would prevent the
melting down of the coin, and would discourage its exportation. If,
upon any public exigency, it should become necessary to export the
coin, the greater part of it would soon return again, of its own
accord. Abroad, it could sell only for its weight in bullion. At home,
it would buy more than that weight. There would be a profit,
therefore, in bringing it home again. In France, a seignorage of about
eight per cent. is imposed upon the coinage, and the French coin, when
exported, is said to return home again, of its own accord.

The occasional fluctuations in the market price of gold and silver
bullion arise from the same causes as the like fluctuations in that of
all other commodities. The frequent loss of those metals from various
accidents by sea and by land, the continual waste of them in gilding
and plating, in lace and embroidery, in the wear and tear of coin, and
in that of plate, require, in all countries which possess no mines of
their own, a continual importation, in order to repair this loss and
this waste. The merchant importers, like all other merchants, we may
believe, endeavour, as well as they can, to suit their occasional
importations to what they judge is likely to be the immediate demand.
With all their attention, however, they sometimes overdo the business,
and sometimes underdo it. When they import more bullion than is
wanted, rather than incur the risk and trouble of exporting it again,
they are sometimes willing to sell a part of it for something less
than the ordinary or average price. When, on the other hand, they
import less than is wanted, they get something more than this price.
But when, under all those occasional fluctuations, the market price
either of gold or silver bullion continues for several years together
steadily and constantly, either more or less above, or more or less
below the mint price, we may be assured that this steady and constant,
either superiority or inferiority of price, is the effect of something
in the state of the coin, which, at that time, renders a certain
quantity of coin either of more value or of less value than the
precise quantity of bullion which it ought to contain. The constancy
and steadiness of the effect supposes a proportionable constancy and
steadiness in the cause.

The money of any particular country is, at any particular time and
place, more or less an accurate measure or value, according as the
current coin is more or less exactly agreeable to its standard, or
contains more or less exactly the precise quantity of pure gold or
pure silver which it ought to contain. If in England, for example,
forty-four guineas and a half contained exactly a pound weight of
standard gold, or eleven ounces of fine gold, and one ounce of alloy,
the gold coin of England would be as accurate a measure of the actual
value of goods at any particular time and place as the nature of the
thing would admit. But if, by rubbing and wearing, forty-four guineas
and a half generally contain less than a pound weight of standard
gold, the diminution, however, being greater in some pieces than in
others, the measure of value comes to be liable to the same sort of
uncertainty to which all other weights and measures are commonly
exposed. As it rarely happens that these are exactly agreeable to
their standard, the merchant adjusts the price of his goods as well as
he can, not to what those weights and measures ought to be, but to
what, upon an average, he finds, by experience, they actually are. In
consequence of a like disorder in the coin, the price of goods comes,
in the same manner, to be adjusted, not to the quantity of pure gold
or silver which the coin ought to contain, but to that which, upon an
average, it is found, by experience, it actually does contain.

By the money price of goods, it is to be observed, I understand always
the quantity of pure gold or silver for which they are sold, without
any regard to the denomination of the coin. Six shillings and eight
pence, for example, in the time of Edward I., I consider as the same
money price with a pound sterling in the present times, because it
contained, as nearly as we can judge, the same quantity of pure
silver.




CHAPTER VI.

OF THE COMPONENT PART OF THE PRICE OF COMMODITIES.

In that early and rude state of society which precedes both the
accumulation of stock and the appropriation of land, the proportion
between the quantities of labour necessary for acquiring different
objects, seems to be the only circumstance which can afford any rule
for exchanging them for one another. If among a nation of hunters, for
example, it usually costs twice the labour to kill a beaver which it
does to kill a deer, one beaver should naturally exchange for or be
worth two deer. It is natural that what is usually the produce of two
days or two hours labour, should be worth double of what is usually
the produce of one day's or one hour's labour.

If the one species of labour should be more severe than the other,
some allowance will naturally be made for this superior hardship; and
the produce of one hour's labour in the one way may frequently
exchange for that of two hour's labour in the other.

Or if the one species of labour requires an uncommon degree of
dexterity and ingenuity, the esteem which men have for such talents,
will naturally give a value to their produce, superior to what would
be due to the time employed about it. Such talents can seldom be
acquired but in consequence of long application, and the superior
value of their produce may frequently be no more than a reasonable
compensation for the time and labour which must be spent in acquiring
them. In the advanced state of society, allowances of this kind, for
superior hardship and superior skill, are commonly made in the wages
of labour; and something of the same kind must probably have taken
place in its earliest and rudest period.

In this state of things, the whole produce of labour belongs to the
labourer; and the quantity of labour commonly employed in acquiring or
producing any commodity, is the only circumstance which can regulate
the quantity of labour which it ought commonly to purchase, command,
or exchange for.

As soon as stock has accumulated in the hands of particular persons,
some of them will naturally employ it in setting to work industrious
people, whom they will supply with materials and subsistence, in order
to make a profit by the sale of their work, or by what their labour
adds to the value of the materials. In exchanging the complete
manufacture either for money, for labour, or for other goods, over and
above what may be sufficient to pay the price of the materials, and
the wages of the workmen, something must be given for the profits of
the undertaker of the work, who hazards his stock in this adventure.
The value which the workmen add to the materials, therefore, resolves
itself in this case into two parts, of which the one pays their wages,
the other the profits of their employer upon the whole stock of
materials and wages which he advanced. He could have no interest to
employ them, unless he expected from the sale of their work something
more than what was sufficient to replace his stock to him; and he
could have no interest to employ a great stock rather than a small
one, unless his profits were to bear some proportion to the extent of
his stock.

The profits of stock, it may perhaps be thought, are only a different
name for the wages of a particular sort of labour, the labour of
inspection and direction. They are, however, altogether different, are
regulated by quite different principles, and bear no proportion to the
quantity, the hardship, or the ingenuity of this supposed labour of
inspection and direction. They are regulated altogether by the value
of the stock employed, and are greater or smaller in proportion to the
extent of this stock. Let us suppose, for example, that in some
particular place, where the common annual profits of manufacturing
stock are ten per cent. there are two different manufactures, in each
of which twenty workmen are employed, at the rate of fifteen pounds a
year each, or at the expense of three hundred a-year in each
manufactory. Let us suppose, too, that the coarse materials annually
wrought up in the one cost only seven hundred pounds, while the finer
materials in the other cost seven thousand. The capital annually
employed in the one will, in this case, amount only to one thousand
pounds; whereas that employed in the other will amount to seven
thousand three hundred pounds. At the rate of ten per cent. therefore,
the undertaker of the one will expect a yearly profit of about one
hundred pounds only; while that of the other will expect about seven
hundred and thirty pounds. But though their profits are so very
different, their labour of inspection and direction may be either
altogether or very nearly the same. In many great works, almost the
whole labour of this kind is committed to some principal clerk. His
wages properly express the value of this labour of inspection and
direction. Though in settling them some regard is had commonly, not
only to his labour and skill, but to the trust which is reposed in
him, yet they never bear any regular proportion to the capital of
which he oversees the management; and the owner of this capital,
though he is thus discharged of almost all labour, still expects that
his profit should bear a regular proportion to his capital. In the
price of commodities, therefore, the profits of stock constitute a
component part altogether different from the wages of labour, and
regulated by quite different principles.

In this state of things, the whole produce of labour does not always
belong to the labourer. He must in most cases share it with the owner
of the stock which employs him. Neither is the quantity of labour
commonly employed in acquiring or producing any commodity, the only
circumstance which can regulate the quantity which it ought commonly
to purchase, command or exchange for. An additional quantity, it is
evident, must be due for the profits of the stock which advanced the
wages and furnished the materials of that labour.

As soon as the land of any country has all become private property,
the landlords, like all other men, love to reap where they never
sowed, and demand a rent even for its natural produce. The wood of the
forest, the grass of the field, and all the natural fruits of the
earth, which, when land was in common, cost the labourer only the
trouble of gathering them, come, even to him, to have an additional
price fixed upon them. He must then pay for the licence to gather
them, and must give up to the landlord a portion of what his labour
either collects or produces. This portion, or, what comes to the same
thing, the price of this portion, constitutes the rent of land, and in
the price of the greater part of commodities, makes a third component
part.

The real value of all the different component parts of price, it must
be observed, is measured by the quantity of labour which they can,
each of them, purchase or command. Labour measures the value, not only
of that part of price which resolves itself into labour, but of that
which resolves itself into rent, and of that which resolves itself
into profit.

In every society, the price of every commodity finally resolves itself
into some one or other, or all of those three parts; and in every
improved society, all the three enter, more or less, as component
parts, into the price of the far greater part of commodities.

In the price of corn, for example, one part pays the rent of the
landlord, another pays the wages or maintenance of the labourers and
labouring cattle employed in producing it, and the third pays the
profit of the farmer. These three parts seem either immediately or
ultimately to make up the whole price of corn. A fourth part, it may
perhaps be thought is necessary for replacing the stock of the farmer,
or for compensating the wear and tear of his labouring cattle, and
other instruments of husbandry. But it must be considered, that the
price of any instrument of husbandry, such as a labouring horse, is
itself made up of the same time parts; the rent of the land upon which
he is reared, the labour of tending and rearing him, and the profits
of the farmer, who advances both the rent of this land, and the wages
of this labour. Though the price of the corn, therefore, may pay the
price as well as the maintenance of the horse, the whole price still
resolves itself, either immediately or ultimately, into the same three
parts of rent, labour, and profit.

In the price of flour or meal, we must add to the price of the corn,
the profits of the miller, and the wages of his servants; in the price
of bread, the profits of the baker, and the wages of his servants; and
in the price of both, the labour of transporting the corn from the
house of the farmer to that of the miller, and from that of the miller
to that of the baker, together with the profits of those who advance
the wages of that labour.

The price of flax resolves itself into the same three parts as that of
corn. In the price of linen we must add to this price the wages of the
flax-dresser, of the spinner, of the weaver, of the bleacher, etc.
together with the profits of their respective employers.

As any particular commodity comes to be more manufactured, that part
of the price which resolves itself into wages and profit, comes to be
greater in proportion to that which resolves itself into rent. In the
progress of the manufacture, not only the number of profits increase,
but every subsequent profit is greater than the foregoing; because the
capital from which it is derived must always be greater. The capital
which employs the weavers, for example, must be greater than that
which employs the spinners; because it not only replaces that capital
with its profits, but pays, besides, the wages of the weavers: and the
profits must always bear some proportion to the capital.

In the most improved societies, however, there are always a few
commodities of which the price resolves itself into two parts only the
wages of labour, and the profits of stock; and a still smaller number,
in which it consists altogether in the wages of labour. In the price
of sea-fish, for example, one part pays the labour of the fisherman,
and the other the profits of the capital employed in the fishery. Rent
very seldom makes any part of it, though it does sometimes, as I shall
shew hereafter. It is otherwise, at least through the greater part of
Europe, in river fisheries. A salmon fishery pays a rent; and rent,
though it cannot well be called the rent of land, makes a part of the
price of a salmon, as well as wares and profit. In some parts of
Scotland, a few poor people make a trade of gathering, along the
sea-shore, those little variegated stones commonly known by the name
of Scotch pebbles. The price which is paid to them by the
stone-cutter, is altogether the wages of their labour; neither rent
nor profit makes an part of it.

But the whole price of any commodity must still finally resolve itself
into some one or other or all of those three parts; as whatever part
of it remains after paying the rent of the land, and the price of the
whole labour employed in raising, manufacturing, and bringing it to
market, must necessarily be profit to somebody.

As the price or exchangeable value of every particular commodity,
taken separately, resolves itself into some one or other, or all of
those three parts; so that of all the commodities which compose the
whole annual produce of the labour of every country, taken complexly,
must resolve itself into the same three parts, and be parcelled out
among different inhabitants of the country, either as the wages of
their labour, the profits of their stock, or the rent of their land.
The whole of what is annually either collected or produced by the
labour of every society, or, what comes to the same thing, the whole
price of it, is in this manner originally distributed among some of
its different members. Wages, profit, and rent, are the three original
sources of all revenue, as well as of all exchangeable value. All
other revenue is ultimately derived from some one or other of these.

Whoever derives his revenue from a fund which is his own, must draw it
either from his labour, from his stock, or from his land. The revenue
derived from labour is called wages; that derived from stock, by the
person who manages or employs it, is called profit; that derived from
it by the person who does not employ it himself, but lends it to
another, is called the interest or the use of money. It is the
compensation which the borrower pays to the lender, for the profit
which he has an opportunity of making by the use of the money. Part of
that profit naturally belongs to the borrower, who runs the risk and
takes the trouble of employing it, and part to the lender, who affords
him the opportunity of making this profit. The interest of money is
always a derivative revenue, which, if it is not paid from the profit
which is made by the use of the money, must be paid from some other
source of revenue, unless perhaps the borrower is a spendthrift, who
contracts a second debt in order to pay the interest of the first. The
revenue which proceeds altogether from land, is called rent, and
belongs to the landlord. The revenue of the farmer is derived partly
from his labour, and partly from his stock. To him, land is only the
instrument which enables him to earn the wages of this labour, and to
make the profits of this stock. All taxes, and all the revenue which
is founded upon them, all salaries, pensions, and annuities of every
kind, are ultimately derived from some one or other of those three
original sources of revenue, and are paid either immediately or
mediately from the wages of labour, the profits of stock, or the rent
of land.

When those three different sorts of revenue belong to different
persons, they are readily distinguished; but when they belong to the
same, they are sometimes confounded with one another, at least in
common language.

A gentleman who farms a part of his own estate, after paying the
expense of cultivation, should gain both the rent of the landlord and
the profit of the farmer. He is apt to denominate, however, his whole
gain, profit, and thus confounds rent with profit, at least in common
language. The greater part of our North American and West Indian
planters are in this situation. They farm, the greater part of them,
their own estates: and accordingly we seldom hear of the rent of a
plantation, but frequently of its profit.

Common farmers seldom employ any overseer to direct the general
operations of the farm. They generally, too, work a good deal with
their own hands, as ploughmen, harrowers, etc. What remains of the
crop, after paying the rent, therefore, should not only replace to
them their stock employed in cultivation, together with its ordinary
profits, but pay them the wages which are due to them, both as
labourers and overseers. Whatever remains, however, after paying the
rent and keeping up the stock, is called profit. But wages evidently
make a part of it. The farmer, by saving these wages, must necessarily
gain them. Wages, therefore, are in this case confounded with profit.

An independent manufacturer, who has stock enough both to purchase
materials, and to maintain himself till he can carry his work to
market, should gain both the wages of a journeyman who works under a
master, and the profit which that master makes by the sale of that
journeyman's work. His whole gains, however, are commonly called
profit, and wages are, in this case, too, confounded with profit.

A gardener who cultivates his own garden with his own hands, unites in
his own person the three different characters, of landlord, farmer,
and labourer. His produce, therefore, should pay him the rent of the
first, the profit of the second, and the wages of the third. The
whole, however, is commonly considered as the earnings of his labour.
Both rent and profit are, in this case, confounded with wages.

As in a civilized country there are but few commodities of which the
exchangeable value arises from labour only, rent and profit
contributing largely to that of the far greater part of them, so the
annual produce of its labour will always be sufficient to purchase or
command a much greater quantity of labour than what was employed in
raising, preparing, and bringing that produce to market. If the
society were annually to employ all the labour which it can annually
purchase, as the quantity of labour would increase greatly every year,
so the produce of every succeeding year would be of vastly greater
value than that of the foregoing. But there is no country in which the
whole annual produce is employed in maintaining the industrious. The
idle everywhere consume a great part of it; and, according to the
different proportions in which it is annually divided between those
two different orders of people, its ordinary or average value must
either annually increase or diminish, or continue the same from one
year to another.




CHAPTER VII.

OF THE NATURAL AND MARKET PRICE OF COMMODITIES.

There is in every society or neighbourhood an ordinary or average
rate, both of wages and profit, in every different employment of
labour and stock. This rate is naturally regulated, as I shall shew
hereafter, partly by the general circumstances of the society, their
riches or poverty, their advancing, stationary, or declining
condition, and partly by the particular nature of each employment.

There is likewise in every society or neighbourhood an ordinary or
average rate of rent, which is regulated, too, as I shall shew
hereafter, partly by the general circumstances of the society or
neighbourhood in which the land is situated, and partly by the natural
or improved fertility of the land.

These ordinary or average rates may be called the natural rates of
wages, profit and rent, at the time and place in which they commonly
prevail.

When the price of any commodity is neither more nor less than what is
sufficient to pay the rent of the land, the wages of the labour, and
the profits of the stock employed in raising, preparing, and bringing
it to market, according to their natural rates, the commodity is then
sold for what may be called its natural price.

The commodity is then sold precisely for what it is worth, or for what
it really costs the person who brings it to market; for though, in
common language, what is called the prime cost of any commodity does
not comprehend the profit of the person who is to sell it again, yet,
if he sells it at a price which does not allow him the ordinary rate
of profit in his neighbourhood, he is evidently a loser by the trade;
since, by employing his stock in some other way, he might have made
that profit. His profit, besides, is his revenue, the proper fund of
his subsistence. As, while he is preparing and bringing the goods to
market, he advances to his workmen their wages, or their subsistence;
so he advances to himself, in the same manner, his own subsistence,
which is generally suitable to the profit which he may reasonably
expect from the sale of his goods. Unless they yield him this profit,
therefore, they do not repay him what they may very properly be said
to have really cost him.

Though the price, therefore, which leaves him this profit, is not
always the lowest at which a dealer may sometimes sell his goods, it
is the lowest at which he is likely to sell them for any considerable
time; at least where there is perfect liberty, or where he may change
his trade as often as he pleases.

The actual price at which any commodity is commonly sold, is called
its market price. It may either be above, or below, or exactly the
same with its natural price.

The market price of every particular commodity is regulated by the
proportion between the quantity which is actually brought to market,
and the demand of those who are willing to pay the natural price of
the commodity, or the whole value of the rent, labour, and profit,
which must be paid in order to bring it thither. Such people may be
called the effectual demanders, and their demand the effectual demand;
since it maybe sufficient to effectuate the bringing of the commodity
to market. It is different from the absolute demand. A very poor man
may be said, in some sense, to have a demand for a coach and six; he
might like to have it; but his demand is not an effectual demand, as
the commodity can never be brought to market in order to satisfy it.

When the quantity of any commodity which is brought to market falls
short of the effectual demand, all those who are willing to pay the
whole value of the rent, wages, and profit, which must be paid in
order to bring it thither, cannot be supplied with the quantity which
they want. Rather than want it altogether, some of them will be
willing to give more. A competition will immediately begin among them,
and the market price will rise more or less above the natural price,
according as either the greatness of the deficiency, or the wealth and
wanton luxury of the competitors, happen to animate more or less the
eagerness of the competition. Among competitors of equal wealth and
luxury, the same deficiency will generally occasion a more or less
eager competition, according as the acquisition of the commodity
happens to be of more or less importance to them. Hence the exorbitant
price of the necessaries of life during the blockade of a town, or in
a famine.

When the quantity brought to market exceeds the effectual demand, it
cannot be all sold to those who are willing to pay the whole value of
the rent, wages, and profit, which must be paid in order to bring it
thither. Some part must be sold to those who are willing to pay less,
and the low price which they give for it must reduce the price of the
whole. The market price will sink more or less below the natural
price, according as the greatness of the excess increases more or less
the competition of the sellers, or according as it happens to be more
or less important to them to get immediately rid of the commodity. The
same excess in the importation of perishable, will occasion a much
greater competition than in that of durable commodities; in the
importation of oranges, for example, than in that of old iron.

When the quantity brought to market is just sufficient to supply the
effectual demand, and no more, the market price naturally comes to be
either exactly, or as nearly as can be judged of, the same with the
natural price. The whole quantity upon hand can be disposed of for
this price, and can not be disposed of for more. The competition of
the different dealers obliges them all to accept of this price, but
does not oblige them to accept of less.

The quantity of every commodity brought to market naturally suits
itself to the effectual demand. It is the interest of all those who
employ their land, labour, or stock, in bringing any commodity to
market, that the quantity never should exceed the effectual demand;
and it is the interest of all other people that it never should fall
short of that demand.

If at any time it exceeds the effectual demand, some of the component
parts of its price must be paid below their natural rate. If it is
rent, the interest of the landlords will immediately prompt them to
withdraw a part of their land; and if it is wages or profit, the
interest of the labourers in the one case, and of their employers in
the other, will prompt them to withdraw a part of their labour or
stock, from this employment. The quantity brought to market will soon
be no more than sufficient to supply the effectual demand. All the
different parts of its price will rise to their natural rate, and the
whole price to its natural price.

If, on the contrary, the quantity brought to market should at any time
fall short of the effectual demand, some of the component parts of its
price must rise above their natural rate. If it is rent, the interest
of all other landlords will naturally prompt them to prepare more land
for the raising of this commodity; if it is wages or profit, the
interest of all other labourers and dealers will soon prompt them to
employ more labour and stock in preparing and bringing it to market.
The quantity brought thither will soon be sufficient to supply the
effectual demand. All the different parts of its price will soon sink
to their natural rate, and the whole price to its natural price.

The natural price, therefore, is, as it were, the central price, to
which the prices of all commodities are continually gravitating.
Different accidents may sometimes keep them suspended a good deal
above it, and sometimes force them down even somewhat below it. But
whatever may be the obstacles which hinder them from settling in this
centre of repose and continuance, they are constantly tending towards
it.

The whole quantity of industry annually employed in order to bring any
commodity to market, naturally suits itself in this manner to the
effectual demand. It naturally aims at bringing always that precise
quantity thither which may be sufficient to supply, and no more than
supply, that demand.

But, in some employments, the same quantity of industry will, in
different years, produce very different quantities of commodities;
while, in others, it will produce always the same, or very nearly the
same. The same number of labourers in husbandry will, in different
years, produce very different quantities of corn, wine, oil, hops,
etc. But the same number of spinners or weavers will every year
produce the same, or very nearly the same, quantity of linen and
woollen cloth. It is only the average produce of the one species of
industry which can be suited, in any respect, to the effectual demand;
and as its actual produce is frequently much greater, and frequently
much less, than its average produce, the quantity of the commodities
brought to market will sometimes exceed a good deal, and sometimes
fall short a good deal, of the effectual demand. Even though that
demand, therefore, should continue always the same, their market price
will be liable to great fluctuations, will sometimes fall a good deal
below, and sometimes rise a good deal above, their natural price. In
the other species of industry, the produce of equal quantities of
labour being always the same, or very nearly the same, it can be more
exactly suited to the effectual demand. While that demand continues
the same, therefore, the market price of the commodities is likely to
do so too, and to be either altogether, or as nearly as can be judged
of, the same with the natural price. That the price of linen and
woollen cloth is liable neither to such frequent, nor to such great
variations, as the price of corn, every man's experience will inform
him. The price of the one species of commodities varies only with the
variations in the demand; that of the other varies not only with the
variations in the demand, but with the much greater, and more
frequent, variations in the quantity of what is brought to market, in
order to supply that demand.

The occasional and temporary fluctuations in the market price of any
commodity fall chiefly upon those parts of its price which resolve
themselves into wages and profit. That part which resolves itself into
rent is less affected by them. A rent certain in money is not in the
least affected by them, either in its rate or in its value. A rent
which consists either in a certain proportion, or in a certain
quantity, of the rude produce, is no doubt affected in its yearly
value by all the occasional and temporary fluctuations in the market
price of that rude produce; but it is seldom affected by them in its
yearly rate. In settling the terms of the lease, the landlord and
farmer endeavour, according to their best judgment, to adjust that
rate, not to the temporary and occasional, but to the average and
ordinary price of the produce.

Such fluctuations affect both the value and the rate, either of wages
or of profit, according as the market happens to be either overstocked
or understocked with commodities or with labour, with work done, or
with work to be done. A public mourning raises the price of black
cloth ( with which the market is almost always understocked upon such
occasions), and augments the profits of the merchants who possess any
considerable quantity of it. It has no effect upon the wages of the
weavers. The market is understocked with commodities, not with labour,
with work done, not with work to be done. It raises the wages of
journeymen tailors. The market is here understocked with labour. There
is an effectual demand for more labour, for more work to be done, than
can be had. It sinks the price of coloured silks and cloths, and
thereby reduces the profits of the merchants who have any considerable
quantity of them upon hand. It sinks, too, the wages of the workmen
employed in preparing such commodities, for which all demand is
stopped for six months, perhaps for a twelvemonth. The market is here
overstocked both with commodities and with labour.

But though the market price of every particular commodity is in this
manner continually gravitating, if one may say so, towards the natural
price; yet sometimes particular accidents, sometimes natural causes,
and sometimes particular regulations of policy, may, in many
commodities, keep up the market price, for a long time together, a
good deal above the natural price.

When, by an increase in the effectual demand, the market price of some
particular commodity happens to rise a good deal above the natural
price, those who employ their stocks in supplying that market, are
generally careful to conceal this change. If it was commonly known,
their great profit would tempt so many new rivals to employ their
stocks in the same way, that, the effectual demand being fully
supplied, the market price would soon be reduced to the natural price,
and, perhaps, for some time even below it. If the market is at a great
distance from the residence of those who supply it, they may sometimes
be able to keep the secret for several years together, and may so long
enjoy their extraordinary profits without any new rivals. Secrets of
this kind, however, it must be acknowledged, can seldom be long kept;
and the extraordinary profit can last very little longer than they are
kept.

Secrets in manufactures are capable of being longer kept than secrets
in trade. A dyer who has found the means of producing a particular
colour with materials which cost only half the price of those commonly
made use of, may, with good management, enjoy the advantage of his
discovery as long as he lives, and even leave it as a legacy to his
posterity. His extraordinary gains arise from the high price which is
paid for his private labour. They properly consist in the high wages
of that labour. But as they are repeated upon every part of his stock,
and as their whole amount bears, upon that account, a regular
proportion to it, they are commonly considered as extraordinary
profits of stock.

Such enhancements of the market price are evidently the effects of
particular accidents, of which, however, the operation may sometimes
last for many years together.

Some natural productions require such a singularity of soil and
situation, that all the land in a great country, which is fit for
producing them, may not be sufficient to supply the effectual demand.
The whole quantity brought to market, therefore, may be disposed of to
those who are willing to give more than what is sufficient to pay the
rent of the land which produced them, together with the wages of the
labour and the profits of the stock which were employed in preparing
and bringing them to market, according to their natural rates. Such
commodities may continue for whole centuries together to be sold at
this high price; and that part of it which resolves itself into the
rent of land, is in this case the part which is generally paid above
its natural rate. The rent of the land which affords such singular and
esteemed productions, like the rent of some vineyards in France of a
peculiarly happy soil and situation, bears no regular proportion to
the rent of other equally fertile and equally well cultivated land in
its neighbourhood. The wages of the labour, and the profits of the
stock employed in bringing such commodities to market, on the
contrary, are seldom out of their natural proportion to those of the
other employments of labour and stock in their neighbourhood.

Such enhancements of the market price are evidently the effect of
natural causes, which may hinder the effectual demand from ever being
fully supplied, and which may continue, therefore, to operate for
ever.

A monopoly granted either to an individual or to a trading company,
has the same effect as a secret in trade or manufactures. The
monopolists, by keeping the market constantly understocked by never
fully supplying the effectual demand, sell their commodities much
above the natural price, and raise their emoluments, whether they
consist in wages or profit, greatly above their natural rate.

The price of monopoly is upon every occasion the highest which can be
got. The natural price, or the price of free competition, on the
contrary, is the lowest which can be taken, not upon every occasion
indeed, but for any considerable time together. The one is upon every
occasion the highest which can be squeezed out of the buyers, or which
it is supposed they will consent to give; the other is the lowest
which the sellers can commonly afford to take, and at the same time
continue their business.

The exclusive privileges of corporations, statutes of apprenticeship,
and all those laws which restrain in particular employments, the
competition to a smaller number than might otherwise go into them,
have the same tendency, though in a less degree. They are a sort of
enlarged monopolies, and may frequently, for ages together, and in
whole classes of employments, keep up the market price of particular
commodities above the natural price, and maintain both the wages of
the labour and the profits of the stock employed about them somewhat
above their natural rate.

Such enhancements of the market price may last as long as the
regulations of policy which give occasion to them.

The market price of any particular commodity, though it may continue
long above, can seldom continue long below, its natural price.
Whatever part of it was paid below the natural rate, the persons whose
interest it affected would immediately feel the loss, and would
immediately withdraw either so much land or no much labour, or so much
stock, from being employed about it, that the quantity brought to
market would soon be no more than sufficient to supply the effectual
demand. Its market price, therefore, would soon rise to the natural
price; this at least would be the case where there was perfect
liberty.

The same statutes of apprenticeship and other corporation laws,
indeed, which, when a manufacture is in prosperity, enable the workman
to raise his wages a good deal above their natural rate, sometimes
oblige him, when it decays, to let them down a good deal below it. As
in the one case they exclude many people from his employment, so in
the other they exclude him from many employments. The effect of such
regulations, however, is not near so durable in sinking the workman's
wages below, as in raising them above their natural rate. Their
operation in the one way may endure for many centuries, but in the
other it can last no longer than the lives of some of the workmen who
were bred to the business in the time of its prosperity. When they are
gone, the number of those who are afterwards educated to the trade
will naturally suit itself to the effectual demand. The policy must be
as violent as that of Indostan or ancient Egypt (where every man was
bound by a principle of religion to follow the occupation of his
father, and was supposed to commit the most horrid sacrilege if he
changed it for another), which can in any particular employment, and
for several generations together, sink either the wages of labour or
the profits of stock below their natural rate.

This is all that I think necessary to be observed at present
concerning the deviations, whether occasional or permanent, of the
market price of commodities from the natural price.

The natural price itself varies with the natural rate of each of its
component parts, of wages, profit, and rent; and in every society this
rate varies according to their circumstances, according to their
riches or poverty, their advancing, stationary, or declining
condition. I shall, in the four following chapters, endeavour to
explain, as fully and distinctly as I can, the causes of those
different variations.

First, I shall endeavour to explain what are the circumstances which
naturally determine the rate of wages, and in what manner those
circumstances are affected by the riches or poverty, by the advancing,
stationary, or declining state of the society.

Secondly, I shall endeavour to shew what are the circumstances which
naturally determine the rate of profit; and in what manner, too, those
circumstances are affected by the like variations in the state of the
society.

Though pecuniary wages and profit are very different in the different
employments of labour and stock; yet a certain proportion seems
commonly to take place between both the pecuniary wages in all the
different employments of labour, and the pecuniary profits in all the
different employments of stock. This proportion, it will appear
hereafter, depends partly upon the nature of the different
employments, and partly upon the different laws and policy of the
society in which they are carried on. But though in many respects
dependent upon the laws and policy, this proportion seems to be little
affected by the riches or poverty of that society, by its advancing,
stationary, or declining condition, but to remain the same, or very
nearly the same, in all those different states. I shall, in the third
place, endeavour to explain all the different circumstances which
regulate this proportion.

In the fourth and last place, I shall endeavour to shew what are the
circumstances which regulate the rent of land, and which either raise
or lower the real price of all the different substances which it
produces.




CHAPTER VIII.

OF THE WAGES OF LABOUR.

The produce of labour constitutes the natural recompence or wages of
labour.

In that original state of things which precedes both the appropriation
of land and the accumulation of stock, the whole produce of labour
belongs to the labourer. He has neither landlord nor master to share
with him.

Had this state continued, the wages of labour would have augmented
with all those improvements in its productive powers, to which the
division of labour gives occasion. All things would gradually have
become cheaper. They would have been produced by a smaller quantity of
labour; and as the commodities produced by equal quantities of labour
would naturally in this state of things be exchanged for one another,
they would have been purchased likewise with the produce of a smaller
quantity.

But though all things would have become cheaper in reality, in
appearance many things might have become dearer, than before, or have
been exchanged for a greater quantity of other goods. Let us suppose,
for example, that in the greater part of employments the productive
powers of labour had been improved to tenfold, or that a day's labour
could produce ten times the quantity of work which it had done
originally; but that in a particular employment they had been improved
only to double, or that a day's labour could produce only twice the
quantity of work which it had done before. In exchanging the produce
of a day's labour in the greater part of employments for that of a
day's labour in this particular one, ten times the original quantity
of work in them would purchase only twice the original quantity in it.
Any particular quantity in it, therefore, a pound weight, for example,
would appear to be five times dearer than before. In reality, however,
it would be twice as cheap. Though it required five times the quantity
of other goods to purchase it, it would require only half the quantity
of labour either to purchase or to produce it. The acquisition,
therefore, would be twice as easy as before.

But this original state of things, in which the labourer enjoyed the
whole produce of his own labour, could not last beyond the first
introduction of the appropriation of land and the accumulation of
stock. It was at an end, therefore, long before the most considerable
improvements were made in the productive powers of labour; and it
would be to no purpose to trace further what might have been its
effects upon the recompence or wages of labour.

As soon as land becomes private property, the landlord demands a share
of almost all the produce which the labourer can either raise or
collect from it. His rent makes the first deduction from the produce
of the labour which is employed upon land.

It seldom happens that the person who tills the ground has wherewithal
to maintain himself till he reaps the harvest. His maintenance is
generally advanced to him from the stock of a master, the farmer who
employs him, and who would have no interest to employ him, unless he
was to share in the produce of his labour, or unless his stock was to
be replaced to him with a profit. This profit makes a second deduction
from the produce of the labour which is employed upon land.

The produce of almost all other labour is liable to the like deduction
of profit. In all arts and manufactures, the greater part of the
workmen stand in need of a master, to advance them the materials of
their work, and their wages and maintenance, till it be completed. He
shares in the produce of their labour, or in the value which it adds
to the materials upon which it is bestowed; and in this share consists
his profit.

It sometimes happens, indeed, that a single independent workman has
stock sufficient both to purchase the materials of his work, and to
maintain himself till it be completed. He is both master and workman,
and enjoys the whole produce of his own labour, or the whole value
which it adds to the materials upon which it is bestowed. It includes
what are usually two distinct revenues, belonging to two distinct
persons, the profits of stock, and the wages of labour.

Such cases, however, are not very frequent; and in every part of
Europe twenty workmen serve under a master for one that is
independent, and the wages of labour are everywhere understood to be,
what they usually are, when the labourer is one person, and the owner
of the stock which employs him another.

What are the common wages of labour, depends everywhere upon the
contract usually made between those two parties, whose interests are
by no means the same. The workmen desire to get as much, the masters
to give as little, as possible. The former are disposed to combine in
order to raise, the latter in order to lower, the wages of labour.

It is not, however, difficult to foresee which of the two parties
must, upon all ordinary occasions, have the advantage in the dispute,
and force the other into a compliance with their terms. The masters,
being fewer in number, can combine much more easily: and the law,
besides, authorises, or at least does not prohibit, their
combinations, while it prohibits those of the workmen. We have no acts
of parliament against combining to lower the price of work, but many
against combining to raise it. In all such disputes, the masters can
hold out much longer. A landlord, a farmer, a master manufacturer, or
merchant, though they did not employ a single workman, could generally
live a year or two upon the stocks, which they have already acquired.
Many workmen could not subsist a week, few could subsist a month, and
scarce any a year, without employment. In the long run, the workman
may be as necessary to his master as his master is to him; but the
necessity is not so immediate.

We rarely hear, it has been said, of the combinations of masters,
though frequently of those of workmen. But whoever imagines, upon this
account, that masters rarely combine, is as ignorant of the world as
of the subject. Masters are always and everywhere in a sort of tacit,
but constant and uniform, combination, not to raise the wages of
labour above their actual rate. To violate this combination is
everywhere a most unpopular action, and a sort of reproach to a master
among his neighbours and equals. We seldom, indeed, hear of this
combination, because it is the usual, and, one may say, the natural
state of things, which nobody ever hears of. Masters, too, sometimes
enter into particular combinations to sink the wages of labour even
below this rate. These are always conducted with the utmost silence
and secrecy till the moment of execution; and when the workmen yield,
as they sometimes do without resistance, though severely felt by them,
they are never heard of by other people. Such combinations, however,
are frequently resisted by a contrary defensive combination of the
workmen, who sometimes, too, without any provocation of this kind,
combine, of their own accord, to raise tile price of their labour.
Their usual pretences are, sometimes the high price of provisions,
sometimes the great profit which their masters make by their work. But
whether their combinations be offensive or defensive, they are always
abundantly heard of. In order to bring the point to a speedy decision,
they have always recourse to the loudest clamour, and sometimes to the
most shocking violence and outrage. They are desperate, and act with
the folly and extravagance of desperate men, who must either starve,
or frighten their masters into an immediate compliance with their
demands. The masters, upon these occasions, are just as clamorous upon
the other side, and never cease to call aloud for the assistance of
the civil magistrate, and the rigorous execution of those laws which
have been enacted with so much severity against the combination of
servants, labourers, and journeymen. The workmen, accordingly, very
seldom derive any advantage from the violence of those tumultuous
combinations, which, partly from the interposition of the civil
magistrate, partly from the superior steadiness of the masters, partly
from the necessity which the greater part of the workmen are under of
submitting for the sake of present subsistence, generally end in
nothing but the punishment or ruin of the ringleaders.

But though, in disputes with their workmen, masters must generally
have the advantage, there is, however, a certain rate, below which it
seems impossible to reduce, for any considerable time, the ordinary
wages even of the lowest species of labour.

A man must always live by his work, and his wages must at least be
sufficient to maintain him. They must even upon most occasions be
somewhat more, otherwise it would be impossible for him to bring up a
family, and the race of such workmen could not last beyond the first
generation. Mr Cantillon seems, upon this account, to suppose that the
lowest species of common labourers must everywhere earn at least
double their own maintenance, in order that, one with another, they
may be enabled to bring up two children; the labour of the wife, on
account of her necessary attendance on the children, being supposed no
more than sufficient to provide for herself: But one half the children
born, it is computed, die before the age of manhood. The poorest
labourers, therefore, according to this account, must, one with
another, attempt to rear at least four children, in order that two
may have an equal chance of living to that age. But the necessary
maintenance of four children, it is supposed, may be nearly equal to
that of one man. The labour of an able-bodied slave, the same author
adds, is computed to be worth double his maintenance; and that of the
meanest labourer, he thinks, cannot be worth less than that of an
able-bodied slave. Thus far at least seems certain, that, in order to
bring up a family, the labour of the husband and wife together must,
even in the lowest species of common labour, be able to earn something
more than what is precisely necessary for their own maintenance; but
in what proportion, whether in that above-mentioned, or many other, I
shall not take upon me to determine.

There are certain circumstances, however, which sometimes give the
labourers an advantage, and enable them to raise their wages
considerably above this rate, evidently the lowest which is consistent
with common humanity.

When in any country the demand for those who live by wages, labourers,
journeymen, servants of every kind, is continually increasing; when
every year furnishes employment for a greater number than had been
employed the year before, the workmen have no occasion to combine in
order to raise their wages. The scarcity of hands occasions a
competition among masters, who bid against one another in order to get
workmen, and thus voluntarily break through the natural combination of
masters not to raise wages. The demand for those who live by wages, it
is evident, cannot increase but in proportion to the increase of the
funds which are destined to the payment of wages. These funds are of
two kinds, first, the revenue which is over and above what is
necessary for the maintenance; and, secondly, the stock which is over
and above what is necessary for the employment of their masters.

When the landlord, annuitant, or monied man, has a greater revenue
than what he judges sufficient to maintain his own family, he employs
either the whole or a part of the surplus in maintaining one or more
menial servants. Increase this surplus, and he will naturally increase
the number of those servants.

When an independent workman, such as a weaver or shoemaker, has got
more stock than what is sufficient to purchase the materials of his
own work, and to maintain himself till he can dispose of it, he
naturally employs one or more journeymen with the surplus, in order to
make a profit by their work. Increase this surplus, and he will
naturally increase the number of his journeymen.

The demand for those who live by wages, therefore, necessarily
increases with the increase of the revenue and stock of every country,
and cannot possibly increase without it. The increase of revenue and
stock is the increase of national wealth. The demand for those who
live by wages, therefore, naturally increases with the increase of
national wealth, and cannot possibly increase without it.

It is not the actual greatness of national wealth, but its continual
increase, which occasions a rise in the wages of labour. It is not,
accordingly, in the richest countries, but in the most thriving, or in
those which are growing rich the fastest, that the wages of labour are
highest. England is certainly, in the present times, a much richer
country than any part of North America. The wages of labour, however,
are much higher in North America than in any part of England. In the
province of New York, common labourers earned in 1773, before the
commencement of the late disturbances, three shillings and sixpence
currency, equal to two shillings sterling, a-day; ship-carpenters, ten
shillings and sixpence currency, with a pint of rum, worth sixpence
sterling, equal in all to six shillings and sixpence sterling;
house-carpenters and bricklayers, eight shillings currency, equal to
four shillings and sixpence sterling; journeymen tailors, five
shillings currency, equal to about two shillings and tenpence
sterling. These prices are all above the London price; and wages are
said to be as high in the other colonies as in New York. The price of
provisions is everywhere in North America much lower than in England.
A dearth has never been known there. In the worst seasons they have
always had a sufficiency for themselves, though less for exportation.
If the money price of labour, therefore, be higher than it is anywhere
in the mother-country, its real price, the real command of the
necessaries and conveniencies of life which it conveys to the
labourer, must be higher in a still greater proportion.

But though North America is not yet so rich as England, it is much
more thriving, and advancing with much greater rapidity to the further
acquisition of riches. The most decisive mark of the prosperity of any
country is the increase of the number of its inhabitants. In Great
Britain, and most other European countries, they are not supposed to
double in less than five hundred years. In the British colonies in
North America, it has been found that they double in twenty or
five-and-twenty years. Nor in the present times is this increase
principally owing to the continual importation of new inhabitants, but
to the great multiplication of the species. Those who live to old age,
it is said, frequently see there from fifty to a hundred, and
sometimes many more, descendants from their own body. Labour is there
so well rewarded, that a numerous family of children, instead of being
a burden, is a source of opulence and prosperity to the parents. The
labour of each child, before it can leave their house, is computed to
be worth a hundred pounds clear gain to them. A young widow with four
or five young children, who, among the middling or inferior ranks of
people in Europe, would have so little chance for a second husband, is
there frequently courted as a sort of fortune. The value of children
is the greatest of all encouragements to marriage. We cannot,
therefore, wonder that the people in North America should generally
marry very young. Notwithstanding the great increase occasioned by
such early marriages, there is a continual complaint of the scarcity
of hands in North America. The demand for labourers, the funds
destined for maintaining them increase, it seems, still faster than
they can find labourers to employ.

Though the wealth of a country should be very great, yet if it has
been long stationary, we must not expect to find the wages of labour
very high in it. The funds destined for the payment of wages, the
revenue and stock of its inhabitants, may be of the greatest extent;
but if they have continued for several centuries of the same, or very
nearly of the same extent, the number of labourers employed every year
could easily supply, and even more than supply, the number wanted the
following year. There could seldom be any scarcity of hands, nor could
the masters be obliged to bid against one another in order to get
them. The hands, on the contrary, would, in this case, naturally
multiply beyond their employment. There would be a constant scarcity
of employment, and the labourers would be obliged to bid against one
another in order to get it. If in such a country the wages off labour
had ever been more than sufficient to maintain the labourer, and to
enable him to bring up a family, the competition of the labourers and
the interest of the masters would soon reduce them to the lowest rate
which is consistent with common humanity. China has been long one of
the richest, that is, one of the most fertile, best cultivated, most
industrious, and most populous, countries in the world. It seems,
however, to have been long stationary. Marco Polo, who visited it more
than five hundred years ago, describes its cultivation, industry, and
populousness, almost in the same terms in which they are described by
travellers in the present times. It had, perhaps, even long before his
time, acquired that full complement of riches which the nature of its
laws and institutions permits it to acquire. The accounts of all
travellers, inconsistent in many other respects, agree in the low
wages of labour, and in the difficulty which a labourer finds in
bringing up a family in China. If by digging the ground a whole day he
can get what will purchase a small quantity of rice in the evening, he
is contented. The condition of artificers is, if possible, still
worse. Instead of waiting indolently in their work-houses for the
calls of their customers, as in Europe, they are continually running
about the streets with the tools of their respective trades, offering
their services, and, as it were, begging employment. The poverty of
the lower ranks of people in China far surpasses that of the most
beggarly nations in Europe. In the neighbourhood of Canton, many
hundred, it is commonly said, many thousand families have no
habitation on the land, but live constantly in little fishing-boats
upon the rivers and canals. The subsistence which they find there is
so scanty, that they are eager to fish up the nastiest garbage thrown
overboard from any European ship. Any carrion, the carcase of a dead
dog or cat, for example, though half putrid and stinking, is as
welcome to them as the most wholesome food to the people of other
countries. Marriage is encouraged in China, not by the profitableness
of children, but by the liberty of destroying them. In all great
towns, several are every night exposed in the street, or drowned like
puppies in the water. The performance of this horrid office is even
said to be the avowed business by which some people earn their
subsistence.

China, however, though it may, perhaps, stand still, does not seem to
go backwards. Its towns are nowhere deserted by their inhabitants. The
lands which had once been cultivated, are nowhere neglected. The same,
or very nearly the same, annual labour, must, therefore, continue to
be performed, and the funds destined for maintaining it must not,
consequently, be sensibly diminished. The lowest class of labourers,
therefore, notwithstanding their scanty subsistence, must some way or
another make shift to continue their race so far as to keep up their
usual numbers.

But it would be otherwise in a country where the funds destined for
the maintenance of labour were sensibly decaying. Every year the
demand for servants and labourers would, in all the different classes
of employments, be less than it had been the year before. Many who had
been bred in the superior classes, not being able to find employment
in their own business, would be glad to seek it in the lowest. The
lowest class being not only overstocked with its own workmen, but with
the overflowings of all the other classes, the competition for
employment would be so great in it, as to reduce the wages of labour
to the most miserable and scanty subsistence of the labourer. Many
would not be able to find employment even upon these hard terms, but
would either starve, or be driven to seek a subsistence, either by
begging, or by the perpetration perhaps, of the greatest enormities.
Want, famine, and mortality, would immediately prevail in that class,
and from thence extend themselves to all the superior classes, till
the number of inhabitants in the country was reduced to what could
easily be maintained by the revenue and stock which remained in it,
and which had escaped either the tyranny or calamity which had
destroyed the rest. This, perhaps, is nearly the present state of
Bengal, and of some other of the English settlements in the East
Indies. In a fertile country, which had before been much depopulated,
where subsistence, consequently, should not be very difficult, and
where, notwithstanding, three or four hundred thousand people die of
hunger in one year, we maybe assured that the funds destined for the
maintenance of the labouring poor are fast decaying. The difference
between the genius of the British constitution, which protects and
governs North America, and that of the mercantile company which
oppresses and domineers in the East Indies, cannot, perhaps, be better
illustrated than by the different state of those countries.

The liberal reward of labour, therefore, as it is the necessary
effect, so it is the natural symptom of increasing national wealth.
The scanty maintenance of the labouring poor, on the other hand, is
the natural symptom that things are at a stand, and their starving
condition, that they are going fast backwards.

In Great Britain, the wages of labour seem, in the present times, to
be evidently more than what is precisely necessary to enable the
labourer to bring up a family. In order to satisfy ourselves upon this
point, it will not be necessary to enter into any tedious or doubtful
calculation of what may be the lowest sum upon winch it is possible to
do this. There are many plain symptoms, that the wages of labour are
nowhere in this country regulated by this lowest rate, which is
consistent with common humanity.

First, in almost every part of Great Britain there is a distinction,
even in the lowest species of labour, between summer and winter wages.
Summer wages are always highest. But, on account of the extraordinary
expense of fuel, the maintenance of a family is most expensive in
winter. Wages, therefore, being highest when this expense is lowest,
it seems evident that they are not regulated by what is necessary for
this expense, but by the quantity and supposed value of the work. A
labourer, it may be said, indeed, ought to save part of his summer
wages, in order to defray his winter expense; and that, through the
whole year, they do not exceed what is necessary to maintain his
family through the whole year. A slave, however, or one absolutely
dependent on us for immediate subsistence, would not be treated in
this manner. His daily subsistence would be proportioned to his daily
necessities.

Secondly, the wages of labour do not, in Great Britain, fluctuate with
the price of provisions. These vary everywhere from year to year,
frequently from month to month. But in many places, the money price of
labour remains uniformly the same, sometimes for half a century
together. If, in these places, therefore, the labouring poor can
maintain their families in dear years, they must be at their ease in
times of moderate plenty, and in affluence in those of extraordinary
cheapness. The high price of provisions during these ten years past,
has not, in many parts of the kingdom, been accompanied with any
sensible rise in the money price of labour. It has, indeed, in some;
owing, probably, more to the increase of the demand for labour, than
to that of the price of provisions.

Thirdly, as the price of provisions varies more from year to year than
the wages of labour, so, on the other hand, the wages of labour vary
more from place to place than the price of provisions. The prices of
bread and butchers' meat are generally the same, or very nearly the
same, through the greater part of the united kingdom. These, and most
other things which are sold by retail, the way in which the labouring
poor buy all things, are generally fully as cheap, or cheaper, in
great towns than in the remoter parts of the country, for reasons
which I shall have occasion to explain hereafter. But the wages of
labour in a great town and its neighbourhood, are frequently a fourth
or a fifth part, twenty or five-and--twenty per cent. higher than at a
few miles distance. Eighteen pence a day may be reckoned the common
price of labour in London and its neighbourhood. At a few miles
distance, it falls to fourteen and fifteen pence. Tenpence may be
reckoned its price in Edinburgh and its neighbourhood. At a few miles
distance, it falls to eightpence, the usual price of common labour
through the greater part of the low country of Scotland, where it
varies a good deal less than in England. Such a difference of prices,
which, it seems, is not always sufficient to transport a man from one
parish to another, would necessarily occasion so great a
transportation of the most bulky commodities, not only from one parish
to another, but from one end of the kingdom, almost from one end of
the world to the other, as would soon reduce them more nearly to a
level. After all that has been said of the levity and inconstancy of
human nature, it appears evidently from experience, that man is, of
all sorts of luggage, the most difficult to be transported. If the
labouring poor, therefore, can maintain their families in those parts
of the kingdom where the price of labour is lowest, they must be in
affluence where it is highest.

Fourthly, the variations in the price of labour not only do not
correspond, either in place or time, with those in the price of
provisions, but they are frequently quite opposite.

Grain, the food of the common people, is dearer in Scotland than in
England, whence Scotland receives almost every year very large
supplies. But English corn must be sold dearer in Scotland, the
country to which it is brought, than in England, the country from
which it comes; and in proportion to its quality it cannot be sold
dearer in Scotland than the Scotch corn that comes to the same market
in competition with it. The quality of grain depends chiefly upon the
quantity of flour or meal which it yields at the mill; and, in this
respect, English grain is so much superior to the Scotch, that though
often dearer in appearance, or in proportion to the measure of its
bulk, it is generally cheaper in reality, or in proportion to its
quality, or even to the measure of its weight. The price of labour, on
the contrary, is dearer in England than in Scotland. If the labouring
poor, therefore, can maintain their families in the one part of the
united kingdom, they must be in affluence in the other. Oatmeal,
indeed, supplies the common people in Scotland with the greatest and
the best part of their food, which is, in general, much inferior to
that of their neighbours of the same rank in England. This difference,
however, in the mode of their subsistence, is not the cause, but the
effect, of the difference in their wages; though, by a strange
misapprehension, I have frequently heard it represented as the cause.
It is not because one man keeps a coach, while his neighbour walks
a-foot, that the one is rich, and the other poor; but because the one
is rich, he keeps a coach, and because the other is poor, he walks
a-foot.

During the course of the last century, taking one year with another,
grain was dearer in both parts of the united kingdom than during that
of the present. This is a matter of fact which cannot now admit of any
reasonable doubt; and the proof of it is, if possible, still more
decisive with regard to Scotland than with regard to England. It is in
Scotland supported by the evidence of the public fiars, annual
valuations made upon oath, according to the actual state of the
markets, of all the different sorts of grain in every different county
of Scotland. If such direct proof could require any collateral
evidence to confirm it, I would observe, that this has likewise been
the case in France, and probably in most other parts of Europe. With
regard to France, there is the clearest proof. But though it is
certain, that in both parts of the united kingdom grain was somewhat
dearer in the last century than in the present, it is equally certain
that labour was much cheaper. If the labouring poor, therefore, could
bring up their families then, they must be much more at their ease
now. In the last century, the most usual day-wages of common labour
through the greater part of Scotland were sixpence in summer, and
fivepence in winter. Three shillings a-week, the same price, very
nearly still continues to be paid in some parts of the Highlands and
Western islands. Through the greater part of the Low country, the most
usual wages of common labour are now eight pence a-day; tenpence,
sometimes a shilling, about Edinburgh, in the counties which border
upon England, probably on account of that neighbourhood, and in a few
other places where there has lately been a considerable rise in the
demand for labour, about Glasgow, Carron, Ayrshire, etc. In England,
the improvements of agriculture, manufactures, and commerce, began
much earlier than in Scotland. The demand for labour, and consequently
its price, must necessarily have increased with those improvements. In
the last century, accordingly, as well as in the present, the wages of
labour were higher in England than in Scotland. They have risen, too,
considerably since that time, though, on account of the greater
variety of wages paid there in different places, it is more difficult
to ascertain how much. In 1614, the pay of a foot soldier was the same
as in the present times, eightpence a-day. When it was first
established, it would naturally be regulated by the usual wages of
common labourers, the rank of people from which foot soldiers are
commonly drawn. Lord-chief-justice Hales, who wrote in the time of
Charles II. computes the necessary expense of a labourer's family,
consisting of six persons, the father and mother, two children able to
do something, and two not able, at ten shillings a-week, or twenty-six
pounds a-year. If they cannot earn this by their labour, they must
make it up, he supposes, either by begging or stealing. He appears to
have enquired very carefully into this subject {See his scheme for the
maintenance of the poor, in Burn's History of the Poor Laws.}. In
1688, Mr Gregory King, whose skill in political arithmetic is so much
extolled by Dr Davenant, computed the ordinary income of labourers and
out-servants to be fifteen pounds a-year to a family, which he
supposed to consist, one with another, of three and a half persons.
His calculation, therefore, though different in appearance,
corresponds very nearly at bottom with that of Judge Hales. Both
suppose the weekly expense of such families to be about twenty-pence
a-head. Both the pecuniary income and expense of such families have
increased considerably since that time through the greater part of the
kingdom, in some places more, and in some less, though perhaps scarce
anywhere so much as some exaggerated accounts of the present wages of
labour have lately represented them to the public. The price of
labour, it must be observed, cannot be ascertained very accurately
anywhere, different prices being often paid at the same place and for
the same sort of labour, not only according to the different abilities
of the workman, but according to the easiness or hardness of the
masters. Where wages are not regulated by law, all that we can pretend
to determine is, what are the most usual; and experience seems to shew
that law can never regulate them properly, though it has often
pretended to do so.

The real recompence of labour, the real quantity of the necessaries
and conveniencies of life which it can procure to the labourer, has,
during the course of the present century, increased perhaps in a still
greater proportion than its money price. Not only grain has become
somewhat cheaper, but many other things, from which the industrious
poor derive an agreeable and wholesome variety of food, have become a
great deal cheaper. Potatoes, for example, do not at present, through
the greater part of the kingdom, cost half the price which they used
to do thirty or forty years ago. The same thing may be said of
turnips, carrots, cabbages; things which were formerly never raised
but by the spade, but which are now commonly raised by the plough. All
sort of garden stuff, too, has become cheaper. The greater part of the
apples, and even of the onions, consumed in Great Britain, were, in
the last century, imported from Flanders. The great improvements in
the coarser manufactories of both linen and woollen cloth furnish the
labourers with cheaper and better clothing; and those in the
manufactories of the coarser metals, with cheaper and better
instruments of trade, as well as with many agreeable and convenient
pieces of household furniture. Soap, salt, candles, leather, and
fermented liquors, have, indeed, become a good deal dearer, chiefly
from the taxes which have been laid upon them. The quantity of these,
however, which the labouring poor an under any necessity of consuming,
is so very small, that the increase in their price does not compensate
the diminution in that of so many other things. The common complaint,
that luxury extends itself even to the lowest ranks of the people, and
that the labouring poor will not now be contented with the same food,
clothing, and lodging, which satisfied them in former times, may
convince us that it is not the money price of labour only, but its
real recompence, which has augmented.

Is this improvement in the circumstances of the lower ranks of the
people to be regarded as an advantage, or as an inconveniency, to the
society? The answer seems at first abundantly plain. Servants,
labourers, and workmen of different kinds, make up the far greater
part of every great political society. But what improves the
circumstances of the greater part, can never be regarded as any
inconveniency to the whole. No society can surely be flourishing and
happy, of which the far greater part of the members are poor and
miserable. It is but equity, besides, that they who feed, clothe, and
lodge the whole body of the people, should have such a share of the
produce of their own labour as to be themselves tolerably well fed,
clothed, and lodged.

Poverty, though it no doubt discourages, does not always prevent,
marriage. It seems even to be favourable to generation. A half-starved
Highland woman frequently bears more than twenty children, while a
pampered fine lady is often incapable of bearing any, and is generally
exhausted by two or three. Barrenness, so frequent among women of
fashion, is very rare among those of inferior station. Luxury, in the
fair sex, while it inflames, perhaps, the passion for enjoyment, seems
always to weaken, and frequently to destroy altogether, the powers of
generation.

But poverty, though it does not prevent the generation, is extremely
unfavourable to the rearing of children. The tender plant is produced;
but in so cold a soil, and so severe a climate, soon withers and dies.
It is not uncommon, I have been frequently told, in the Highlands of
Scotland, for a mother who has born twenty children not to have two
alive. Several officers of great experience have assured me, that, so
far from recruiting their regiment, they have never been able to
supply it with drums and fifes, from all the soldiers' children that
were born in it. A greater number of fine children, however, is seldom
seen anywhere than about a barrack of soldiers. Very few of them, it
seems, arrive at the age of thirteen or fourteen. In some places, one
half the children die before they are four years of age, in many
places before they are seven, and in almost all places before they are
nine or ten. This great mortality, however will everywhere be found
chiefly among the children of the common people, who cannot afford to
tend them with the same care as those of better station. Though their
marriages are generally more fruitful than those of people of fashion,
a smaller proportion of their children arrive at maturity. In
foundling hospitals, and among the children brought up by parish
charities, the mortality is still greater than among those of the
common people.

Every species of animals naturally multiplies in proportion to the
means of their subsistence, and no species can ever multiply be yond
it. But in civilized society, it is only among the inferior ranks of
people that the scantiness of subsistence can set limits to the
further multiplication of the human species; and it can do so in no
other way than by destroying a great part of the children which their
fruitful marriages produce.

The liberal reward of labour, by enabling them to provide better for
their children, and consequently to bring up a greater number,
naturally tends to widen and extend those limits. It deserves to be
remarked, too, that it necessarily does this as nearly as possible in
the proportion which the demand for labour requires. If this demand is
continually increasing, the reward of labour must necessarily
encourage in such a manner the marriage and multiplication of
labourers, as may enable them to supply that continually increasing
demand by a continually increasing population. If the reward should at
any time be less than what was requisite for this purpose, the
deficiency of hands would soon raise it; and if it should at any time
be more, their excessive multiplication would soon lower it to this
necessary rate. The market would be so much understocked with labour
in the one case, and so much overstocked in the other, as would soon
force back its price to that proper rate which the circumstances of
the society required. It is in this manner that the demand for men,
like that for any other commodity, necessarily regulates the
production of men, quickens it when it goes on too slowly, and stops
it when it advances too fast. It is this demand which regulates and
determines the state of propagation in all the different countries of
the world; in North America, in Europe, and in China; which renders it
rapidly progressive in the first, slow and gradual in the second, and
altogether stationary in the last.

The wear and tear of a slave, it has been said, is at the expense of
his master; but that of a free servant is at his own expense. The wear
and tear of the latter, however, is, in reality, as much at the
expense of his master as that of the former. The wages paid to
journeymen and servants of every kind must be such as may enable them,
one with another to continue the race of journeymen and servants,
according as the increasing, diminishing, or stationary demand of the
society, may happen to require. But though the wear and tear of a free
servant be equally at the expense of his master, it generally costs
him much less than that of a slave. The fund destined for replacing or
repairing, if I may say so, the wear and tear of the slave, is
commonly managed by a negligent master or careless overseer. That
destined for performing the same office with regard to the freeman is
managed by the freeman himself. The disorders which generally prevail
in the economy of the rich, naturally introduce themselves into the
management of the former; the strict frugality and parsimonious
attention of the poor as naturally establish themselves in that of the
latter. Under such different management, the same purpose must require
very different degrees of expense to execute it. It appears,
accordingly, from the experience of all ages and nations, I believe,
that the work done by freemen comes cheaper in the end than that
performed by slaves. It is found to do so even at Boston, New-York,
and Philadelphia, where the wages of common labour are so very high.

The liberal reward of labour, therefore, as it is the effect of
increasing wealth, so it is the cause of increasing population. To
complain of it, is to lament over the necessary cause and effect of
the greatest public prosperity.

It deserves to be remarked, perhaps, that it is in the progressive
state, while the society is advancing to the further acquisition,
rather than when it has acquired its full complement of riches, that
the condition of the labouring poor, of the great body of the people,
seems to be the happiest and the most comfortable. It is hard in the
stationary, and miserable in the declining state. The progressive
state is, in reality, the cheerful and the hearty state to all the
different orders of the society; the stationary is dull; the declining
melancholy.

The liberal reward of labour, as it encourages the propagation, so it
increases the industry of the common people. The wages of labour are
the encouragement of industry, which, like every other human quality,
improves in proportion to the encouragement it receives. A plentiful
subsistence increases the bodily strength of the labourer, and the
comfortable hope of bettering his condition, and of ending his days,
perhaps, in ease and plenty, animates him to exert that strength to
the utmost. Where wages are high, accordingly, we shall always find
the workmen more active, diligent, and expeditious, than where they
are low; in England, for example, than in Scotland; in the
neighbourhood of great towns, than in remote country places. Some
workmen, indeed, when they can earn in four days what will maintain
them through the week, will be idle the other three. This, however, is
by no means the case with the greater part. Workmen, on the contrary,
when they are liberally paid by the piece, are very apt to overwork
themselves, and to ruin their health and constitution in a few years.
A carpenter in London, and in some other places, is not supposed to
last in his utmost vigour above eight years. Something of the same
kind happens in many other trades, in which the workmen are paid by
the piece; as they generally are in manufactures, and even in country
labour, wherever wages are higher than ordinary. Almost every class of
artificers is subject to some peculiar infirmity occasioned by
excessive application to their peculiar species of work. Ramuzzini, an
eminent Italian physician, has written a particular book concerning
such diseases. We do not reckon our soldiers the most industrious set
of people among us; yet when soldiers have been employed in some
particular sorts of work, and liberally paid by the piece, their
officers have frequently been obliged to stipulate with the
undertaker, that they should not be allowed to earn above a certain
sum every day, according to the rate at which they were paid. Till
this stipulation was made, mutual emulation, and the desire of greater
gain, frequently prompted them to overwork themselves, and to hurt
their health by excessive labour. Excessive application, during four
days of the week, is frequently the real cause of the idleness of the
other three, so much and so loudly complained of. Great labour, either
of mind or body, continued for several days together is, in most men,
naturally followed by a great desire of relaxation, which, if not
restrained by force, or by some strong necessity, is almost
irresistible. It is the call of nature, which requires to be relieved
by some indulgence, sometimes of ease only, but sometimes too of
dissipation and diversion. If it is not complied with, the
consequences are often dangerous and sometimes fatal, and such as
almost always, sooner or later, bring on the peculiar infirmity of the
trade. If masters would always listen to the dictates of reason and
humanity, they have frequently occasion rather to moderate, than to
animate the application of many of their workmen. It will be found, I
believe, in every sort of trade, that the man who works so moderately,
as to be able to work constantly, not only preserves his health the
longest, but, in the course of the year, executes the greatest
quantity of work.

In cheap years it is pretended, workmen are generally more idle, and
in dear times more industrious than ordinary. A plentiful subsistence,
therefore, it has been concluded, relaxes, and a scanty one quickens
their industry. That a little more plenty than ordinary may render
some workmen idle, cannot be well doubted; but that it should have
this effect upon the greater part, or that men in general should work
better when they are ill fed, than when they are well fed, when they
are disheartened than when they are in good spirits, when they are
frequently sick than when they are generally in good health, seems not
very probable. Years of dearth, it is to be observed, are generally
among the common people years of sickness and mortality, which cannot
fail to diminish the produce of their industry.

In years of plenty, servants frequently leave their masters, and trust
their subsistence to what they can make by their own industry. But the
same cheapness of provisions, by increasing the fund which is destined
for the maintenance of servants, encourages masters, farmers
especially, to employ a greater number. Farmers, upon such occasions,
expect more profit from their corn by maintaining a few more labouring
servants, than by selling it at a low price in the market. The demand
for servants increases, while the number of those who offer to supply
that demand diminishes. The price of labour, therefore, frequently
rises in cheap years.

In years of scarcity, the difficulty and uncertainty of subsistence
make all such people eager to return to service. But the high price of
provisions, by diminishing the funds destined for the maintenance of
servants, disposes masters rather to diminish than to increase the
number of those they have. In dear years, too, poor independent
workmen frequently consume the little stock with which they had used
to supply themselves with the materials of their work, and are obliged
to become journeymen for subsistence. More people want employment than
easily get it; many are willing to take it upon lower terms than
ordinary; and the wages of both servants and journeymen frequently
sink in dear years.

Masters of all sorts, therefore, frequently make better bargains with
their servants in dear than in cheap years, and find them more humble
and dependent in the former than in the latter. They naturally,
therefore, commend the former as more favourable to industry.
Landlords and farmers, besides, two of the largest classes of masters,
have another reason for being pleased with dear years. The rents of
the one, and the profits of the other, depend very much upon the price
of provisions. Nothing can be more absurd, however, than to imagine
that men in general should work less when they work for themselves,
than when they work for other people. A poor independent workman will
generally be more industrious than even a journeyman who works by the
piece. The one enjoys the whole produce of his own industry, the other
shares it with his master. The one, in his separate independent state,
is less liable to the temptations of bad company, which, in large
manufactories, so frequently ruin the morals of the other. The
superiority of the independent workman over those servants who are
hired by the month or by the year, and whose wages and maintenance are
the same, whether they do much or do little, is likely to be still
greater. Cheap years tend to increase the proportion of independent
workmen to journeymen and servants of all kinds, and dear years to
diminish it.

A French author of great knowledge and ingenuity, Mr Messance,
receiver of the taillies in the election of St Etienne, endeavours to
shew that the poor do more work in cheap than in dear years, by
comparing the quantity and value of the goods made upon those
different occasions in three different manufactures; one of coarse
woollens, carried on at Elbeuf; one of linen, and another of silk,
both which extend through the whole generality of Rouen. It appears
from his account, which is copied from the registers of the public
offices, that the quantity and value of the goods made in all those
three manufactories has generally been greater in cheap than in dear
years, and that it has always been; greatest in the cheapest, and
least in the dearest years. All the three seem to be stationary
manufactures, or which, though their produce may vary somewhat from
year to year, are, upon the whole, neither going backwards nor
forwards.

The manufacture of linen in Scotland, and that of coarse woollens in
the West Riding of Yorkshire, are growing manufactures, of which the
produce is generally, though with some variations, increasing both in
quantity and value. Upon examining, however, the accounts which have
been published of their annual produce, I have not been able to
observe that its variations have had any sensible connection with the
dearness or cheapness of the seasons. In 1740, a year of great
scarcity, both manufactures, indeed, appear to have declined very
considerably. But in 1756, another year or great scarcity, the Scotch
manufactures made more than ordinary advances. The Yorkshire
manufacture, indeed, declined, and its produce did not rise to what it
had been in 1755, till 1766, after the repeal of the American stamp
act. In that and the following year, it greatly exceeded what it had
ever been before, and it has continued to advance ever since.

The produce of all great manufactures for distant sale must
necessarily depend, not so much upon the dearness or cheapness of the
seasons in the countries where they are carried on, as upon the
circumstances which affect the demand in the countries where they are
consumed; upon peace or war, upon the prosperity or declension of
other rival manufactures and upon the good or bad humour of their
principal customers. A great part of the extraordinary work, besides,
which is probably done in cheap years, never enters the public
registers of manufactures. The men-servants, who leave their masters,
become independent labourers. The women return to their parents, and
commonly spin, in order to make clothes for themselves and their
families. Even the independent workmen do not always, work for public
sale, but are employed by some of their neighbours in manufactures for
family use. The produce of their labour, therefore, frequently makes
no figure in those public registers, of which the records are
sometimes published with so much parade, and from which our merchants
and manufacturers would often vainly pretend to announce the
prosperity or declension of the greatest empires.

Through the variations in the price of labour not only do not always
correspond with those in the price of provisions, but are frequently
quite opposite, we must not, upon this account, imagine that the price
of provisions has no influence upon that of labour. The money price of
labour is necessarily regulated by two circumstances; the demand for
labour, and the price of the necessaries and conveniencies of life.
The demand for labour, according as it happens to be increasing,
stationary, or declining, or to require an increasing, stationary, or
declining population, determines the quantities of the necessaries and
conveniencies of life which must be given to the labourer; and the
money price of labour is determined by what is requisite for
purchasing this quantity. Though the money price of labour, therefore,
is sometimes high where the price of provisions is low, it would be
still higher, the demand continuing the same, if the price of
provisions was high.

It is because the demand for labour increases in years of sudden and
extraordinary plenty, and diminishes in those of sudden and
extraordinary scarcity, that the money price of labour sometimes rises
in the one, and sinks in the other.

In a year of sudden and extraordinary plenty, there are funds in the
hands of many of the employers of industry, sufficient to maintain and
employ a greater number of industrious people than had been employed
the year before; and this extraordinary number cannot always be had.
Those masters, therefore, who want more workmen, bid against one
another, in order to get them, which sometimes raises both the real
and the money price of their labour.

The contrary of this happens in a year of sudden and extraordinary
scarcity. The funds destined for employing industry are less than they
had been the year before. A considerable number of people are thrown
out of employment, who bid one against another, in order to get it,
which sometimes lowers both the real and the money price of labour. In
1740, a year of extraordinary scarcity, many people were willing to
work for bare subsistence. In the succeeding years of plenty, it was
more difficult to get labourers and servants. The scarcity of a dear
year, by diminishing the demand for labour, tends to lower its price,
as the high price of provisions tends to raise it. The plenty of a
cheap year, on the contrary, by increasing the demand, tends to raise
the price of labour, as the cheapness of provisions tends to lower it.
In the ordinary variations of the prices of provisions, those two
opposite causes seem to counterbalance one another, which is probably,
in part, the reason why the wages of labour are everywhere so much
more steady and permanent than the price of provisions.

The increase in the wages of labour necessarily increases the price of
many commodities, by increasing that part of it which resolves itself
into wages, and so far tends to diminish their consumption, both at
home and abroad. The same cause, however, which raises the wages of
labour, the increase of stock, tends to increase its productive
powers, and to make a smaller quantity of labour produce a greater
quantity of work. The owner of the stock which employs a great number
of labourers necessarily endeavours, for his own advantage, to make
such a proper division and distribution of employment, that they may
be enabled to produce the greatest quantity of work possible. For the
same reason, he endeavours to supply them with the best machinery
which either he or they can think of. What takes place among the
labourers in a particular workhouse, takes place, for the same reason,
among those of a great society. The greater their number, the more
they naturally divide themselves into different classes and
subdivisions of employments. More heads are occupied in inventing the
most proper machinery for executing the work of each, and it is,
therefore, more likely to be invented. There me many commodities,
therefore, which, in consequence of these improvements, come to be
produced by so much less labour than before, that the increase of
its price is more than compensated by the diminution of its quantity.




CHAPTER IX.

OF THE PROFITS OF STOCK.

The rise and fall in the profits of stock depend upon the same causes
with the rise and fall in the wages of labour, the increasing or
declining state of the wealth of the society; but those causes affect
the one and the other very differently.

The increase of stock, which raises wages, tends to lower profit. When
the stocks of many rich merchants are turned into the same trade,
their mutual competition naturally tends to lower its profit; and when
there is a like increase of stock in all the different trades carried
on in the same society, the same competition must produce the same
effect in them all.

It is not easy, it has already been observed, to ascertain what are
the average wages of labour, even in a particular place, and at a
particular time. We can, even in this case, seldom determine more than
what are the most usual wages. But even this can seldom be done with
regard to the profits of stock. Profit is so very fluctuating, that
the person who carries on a particular trade, cannot always tell you
himself what is the average of his annual profit. It is affected, not
only by every variation of price in the commodities which he deals in,
but by the good or bad fortune both of his rivals and of his
customers, and by a thousand other accidents, to which goods, when
carried either by sea or by land, or even when stored in a warehouse,
are liable. It varies, therefore, not only from year to year, but from
day to day, and almost from hour to hour. To ascertain what is the
average profit of all the different trades carried on in a great
kingdom, must be much more difficult; and to judge of what it may have
been formerly, or in remote periods of time, with any degree of
precision, must be altogether impossible.

But though it may be impossible to determine, with any degree of
precision, what are or were the average profits of stock, either in
the present or in ancient times, some notion may be formed of them
from the interest of money. It may be laid down as a maxim, that
wherever a great deal can be made by the use of money, a great deal
will commonly be given for the use of it; and that, wherever little
can be made by it, less will commonly he given for it. Accordingly,
therefore, as the usual market rate of interest varies in any country,
we may be assured that the ordinary profits of stock must vary with
it, must sink as it sinks, and rise as it rises. The progress of
interest, therefore, may lead us to form some notion of the progress
of profit.

By the 37th of Henry VIII. all interest above ten per cent. was
declared unlawful. More, it seems, had sometimes been taken before
that. In the reign of Edward VI. religious zeal prohibited all
interest. This prohibition, however, like all others of the same kind,
is said to have produced no effect, and probably rather increased than
diminished the evil of usury. The statute of Henry VIII. was revived
by the 13th of Elizabeth, cap. 8. and ten per cent. continued to be
the legal rate of interest till the 21st of James I. when it was
restricted to eight per cent. It was reduced to six per cent. soon
after the Restoration, and by the 12th of Queen Anne, to five per
cent. All these different statutory regulations seem to have been made
with great propriety. They seem to have followed, and not to have gone
before, the market rate of interest, or the rate at which people of
good credit usually borrowed. Since the time of Queen Anne, five per
cent. seems to have been rather above than below the market rate.
Before the late war, the government borrowed at three per cent.; and
people of good credit in the capital, and in many other parts of the
kingdom, at three and a-half, four, and four and a-half per cent.

Since the time of Henry VIII. the wealth and revenue of the country
have been continually advancing, and in the course of their progress,
their pace seems rather to have been gradually accelerated than
retarded. They seem not only to have been going on, but to have been
going on faster and faster. The wages of labour have been continually
increasing during the same period, and, in the greater part of the
different branches of trade and manufactures, the profits of stock
have been diminishing.

It generally requires a greater stock to carry on any sort of trade in
a great town than in a country village. The great stocks employed in
every branch of trade, and the number of rich competitors, generally
reduce the rate of profit in the former below what it is in the
latter. But the wages of labour are generally higher in a great town
than in a country village. In a thriving town, the people who have
great stocks to employ, frequently cannot get the number of workmen
they want, and therefore bid against one another, in order to get as
many as they can, which raises the wages of labour, and lowers the
profits of stock. In the remote parts of the country, there is
frequently not stock sufficient to employ all the people, who
therefore bid against one another, in order to get employment, which
lowers the wages of labour, and raises the profits of stock.

In Scotland, though the legal rate of interest is the same as in
England, the market rate is rather higher. People of the best credit
there seldom borrow under five per cent. Even private bankers in
Edinburgh give four per cent. upon their promissory-notes, of which
payment, either in whole or in part may be demanded at pleasure.
Private bankers in London give no interest for the money which is
deposited with them. There are few trades which cannot be carried on
with a smaller stock in Scotland than in England. The common rate of
profit, therefore, must be somewhat greater. The wages of labour, it
has already been observed, are lower in Scotland than in England. The
country, too, is not only much poorer, but the steps by which it
advances to a better condition, for it is evidently advancing, seem to
be much slower and more tardy. The legal rate of interest in France
has not during the course of the present century, been always
regulated by the market rate {See Denisart, Article Taux des
Interests, tom. iii, p.13}. In 1720, interest was reduced from the
twentieth to the fiftieth penny, or from five to two per cent. In
1724, it was raised to the thirtieth penny, or to three and a third
per cent. In 1725, it was again raised to the twentieth penny, or to
five per cent. In 1766, during the administration of Mr Laverdy, it
was reduced to the twenty-fifth penny, or to four per cent. The Abbé
Terray raised it afterwards to the old rate of five per cent. The
supposed purpose of many of those violent reductions of interest was
to prepare the way for reducing that of the public debts; a purpose
which has sometimes been executed. France is, perhaps, in the present
times, not so rich a country as England; and though the legal rate of
interest has in France frequently been lower than in England, the
market rate has generally been higher; for there, as in other
countries, they have several very safe and easy methods of evading the
law. The profits of trade, I have been assured by British merchants
who had traded in both countries, are higher in France than in
England; and it is no doubt upon this account, that many British
subjects chuse rather to employ their capitals in a country where
trade is in disgrace, than in one where it is highly respected. The
wages of labour are lower in France than in England. When you go from
Scotland to England, the difference which you may remark between the
dress and countenance of the common people in the one country and in
the other, sufficiently indicates the difference in their condition.
The contrast is still greater when you return from France. France,
though no doubt a richer country than Scotland, seems not to be going
forward so fast. It is a common and even a popular opinion in the
country, that it is going backwards; an opinion which I apprehend, is
ill-founded, even with regard to France, but which nobody can possibly
entertain with regard to Scotland, who sees the country now, and who
saw it twenty or thirty years ago.

The province of Holland, on the other hand, in proportion to the
extent of its territory and the number of its people, is a richer
country than England. The government there borrow at two per cent. and
private people of good credit at three. The wages of labour are said
to be higher in Holland than in England, and the Dutch, it is well
known, trade upon lower profits than any people in Europe. The trade
of Holland, it has been pretended by some people, is decaying, and it
may perhaps be true that some particular branches of it are so; but
these symptoms seem to indicate sufficiently that there is no general
decay. When profit diminishes, merchants are very apt to complain that
trade decays, though the diminution of profit is the natural effect of
its prosperity, or of a greater stock being employed in it than
before. During the late war, the Dutch gained the whole carrying trade
of France, of which they still retain a very large share. The great
property which they possess both in French and English funds, about
forty millions, it is said in the latter (in which, I suspect,
however, there is a considerable exaggeration ), the great sums which
they lend to private people, in countries where the rate of interest
is higher than in their own, are circumstances which no doubt
demonstrate the redundancy of their stock, or that it has increased
beyond what they can employ with tolerable profit in the proper
business of their own country; but they do not demonstrate that that
business has decreased. As the capital of a private man, though
acquired by a particular trade, may increase beyond what he can employ
in it, and yet that trade continue to increase too, so may likewise
the capital of a great nation.

In our North American and West Indian colonies, not only the wages of
labour, but the interest of money, and consequently the profits of
stock, are higher than in England. In the different colonies, both the
legal and the market rate of interest run from six to eight percent.
High wages of labour and high profits of stock, however, are things,
perhaps, which scarce ever go together, except in the peculiar
circumstances of new colonies. A new colony must always, for some
time, be more understocked in proportion to the extent of its
territory, and more underpeopled in proportion to the extent of its
stock, than the greater part of other countries. They have more land
than they have stock to cultivate. What they have, therefore, is
applied to the cultivation only of what is most fertile and most
favourably situated, the land near the sea-shore, and along the banks
of navigable rivers. Such land, too, is frequently purchased at a
price below the value even of its natural produce. Stock employed in
the purchase and improvement of such lands, must yield a very large
profit, and, consequently, afford to pay a very large interest. Its
rapid accumulation in so profitable an employment enables the planter
to increase the number of his hands faster than he can find them in a
new settlement. Those whom he can find, therefore, are very liberally
rewarded. As the colony increases, the profits of stock gradually
diminish. When the most fertile and best situated lands have been all
occupied, less profit can be made by the cultivation of what is
inferior both in soil and situation, and less interest can be afforded
for the stock which is so employed. In the greater part of our
colonies, accordingly, both the legal and the market rate of interest
have been considerably reduced during the course of the present
century. As riches, improvement, and population, have increased,
interest has declined. The wages of labour do not sink with the
profits of stock. The demand for labour increases with the increase of
stock, whatever be its profits; and after these are diminished, stock
may not only continue to increase, but to increase much faster than
before. It is with industrious nations, who are advancing in the
acquisition of riches, as with industrious individuals. A great stock,
though with small profits, generally increases faster than a small
stock with great profits. Money, says the proverb, makes money. When
you have got a little, it is often easy to get more. The great
difficulty is to get that little. The connection between the increase
of stock and that of industry, or of the demand for useful labour, has
partly been explained already, but will be explained more fully
hereafter, in treating of the accumulation of stock.

The acquisition of new territory, or of new branches of trade, may
sometimes raise the profits of stock, and with them the interest of
money, even in a country which is fast advancing in the acquisition of
riches. The stock of the country, not being sufficient for the whole
accession of business which such acquisitions present to the different
people among whom it is divided, is applied to those particular
branches only which afford the greatest profit. Part of what had
before been employed in other trades, is necessarily withdrawn from
them, and turned into some of the new and more profitable ones. In all
those old trades, therefore, the competition comes to be Jess than
before. The market comes to be less fully supplied with many different
sorts of goods. Their price necessarily rises more or less, and yields
a greater profit to those who deal in them, who can, therefore, afford
to borrow at a higher interest. For some time after the conclusion of
the late war, not only private people of the best credit, but some of
the greatest companies in London, commonly borrowed at five per cent.
who, before that, had not been used to pay more than four, and four
and a half per cent. The great accession both of territory and trade
by our acquisitions in North America and the West Indies, will
sufficiently account for this, without supposing any diminution in the
capital stock of the society. So great an accession of new business to
be carried on by the old stock, must necessarily have diminished the
quantity employed in a great number of particular branches, in which
the competition being less, the profits must have been greater. I
shall hereafter have occasion to mention the reasons which dispose me
to believe that the capital stock of Great Britain was not diminished,
even by the enormous expense of the late war.

The diminution of the capital stock of the society, or of the funds
destined for the maintenance of industry, however, as it lowers the
wages of labour, so it raises the profits of stock, and consequently
the interest of money. By the wages of labour being lowered, the
owners of what stock remains in the society can bring their goods at
less expense to market than before; and less stock being employed in
supplying the market than before, they can sell them dearer. Their
goods cost them less, and they get more for them. Their profits,
therefore, being augmented at both ends, can well afford a large
interest. The great fortunes so suddenly and so easily acquired in
Bengal and the other British settlements in the East Indies, may
satisfy us, that as the wages of labour are very low, so the profits
of stock are very high in those ruined countries. The interest of
money is proportionably so. In Bengal, money is frequently lent to the
farmers at forty, fifty, and sixty per cent. and the succeeding crop
is mortgaged for the payment. As the profits which can afford such an
interest must eat up almost the whole rent of the landlord, so such
enormous usury must in its turn eat up the greater part of those
profits. Before the fall of the Roman republic, a usury of the same
kind seems to have been common in the provinces, under the ruinous
administration of their proconsuls. The virtuous Brutus lent money in
Cyprus at eight-and-forty per cent. as we learn from the letters of
Cicero.

In a country which had acquired that full complement of riches which
the nature of its soil and climate, and its situation with respect to
other countries, allowed it to acquire, which could, therefore,
advance no further, and which was not going backwards, both the wages
of labour and the profits of stock would probably be very low. In a
country fully peopled in proportion to what either its territory could
maintain, or its stock employ, the competition for employment would
necessarily be so great as to reduce the wages of labour to what was
barely sufficient to keep up the number of labourers, and the country
being already fully peopled, that number could never be augmented. In
a country fully stocked in proportion to all the business it had to
transact, as great a quantity of stock would be employed in every
particular branch as the nature and extent of the trade would admit.
The competition, therefore, would everywhere be as great, and,
consequently, the ordinary profit as low as possible.

But, perhaps, no country has ever yet arrived at this degree of
opulence. China seems to have been long stationary, and had, probably,
long ago acquired that full complement of riches which is consistent
with the nature of its laws and institutions. But this complement may
be much inferior to what, with other laws and institutions, the nature
of its soil, climate, and situation, might admit of. A country which
neglects or despises foreign commerce, and which admits the vessel of
foreign nations into one or two of its ports only, cannot transact the
same quantity of business which it might do with different laws and
institutions. In a country, too, where, though the rich, or the owners
of large capitals, enjoy a good deal of security, the poor, or the
owners of small capitals, enjoy scarce any, but are liable, under the
pretence of justice, to be pillaged and plundered at any time by the
inferior mandarins, the quantity of stock employed in all the
different branches of business transacted within it, can never be
equal to what the nature and extent of that business might admit. In
every different branch, the oppression of the poor must establish the
monopoly of the rich, who, by engrossing the whole trade to
themselves, will be able to make very large profits. Twelve per cent.
accordingly, is said to be the common interest of money in China, and
the ordinary profits of stock must be sufficient to afford this large
interest.

A defect in the law may sometimes raise the rate of interest
considerably above what the condition of the country, as to wealth or
poverty, would require. When the law does not enforce the performance
of contracts, it puts all borrowers nearly upon the same footing with
bankrupts, or people of doubtful credit, in better regulated
countries. The uncertainty of recovering his money makes the lender
exact the same usurious interest which is usually required from
bankrupts. Among the barbarous nations who overran the western
provinces of the Roman empire, the performance of contracts was left
for many ages to the faith of the contracting parties. The courts of
justice of their kings seldom intermeddled in it. The high rate of
interest which took place in those ancient times, may, perhaps, be
partly accounted for from this cause.

When the law prohibits interest altogether, it does not prevent it.
Many people must borrow, and nobody will lend without such a
consideration for the use of their money as is suitable, not only to
what can be made by the use of it, but to the difficulty and danger of
evading the law. The high rate of interest among all Mahometan nations
is accounted for by M. Montesquieu, not from their poverty, but partly
from this, and partly from the difficulty of recovering the money.

The lowest ordinary rate of profit must always be something more than
what is sufficient to compensate the occasional losses to which every
employment of stock is exposed. It is this surplus only which is neat
or clear profit. What is called gross profit, comprehends frequently
not only this surplus, but what is retained for compensating such
extraordinary losses. The interest which the borrower can afford to
pay is in proportion to the clear profit only. The lowest ordinary
rate of interest must, in the same manner, be something more than
sufficient to compensate the occasional losses to which lending, even
with tolerable prudence, is exposed. Were it not, mere charity or
friendship could be the only motives for lending.

In a country which had acquired its full complement of riches, where,
in every particular branch of business, there was the greatest
quantity of stock that could be employed in it, as the ordinary rate
of clear profit would be very small, so the usual market rate of
interest which could be afforded out of it would be so low as to
render it impossible for any but the very wealthiest people to live
upon the interest of their money. All people of small or middling
fortunes would be obliged to superintend themselves the employment of
their own stocks. It would be necessary that almost every man should
be a man of business, or engage in some sort of trade. The province of
Holland seems to be approaching near to this state. It is there
unfashionable not to be a man of business. Necessity makes it usual
for almost every man to be so, and custom everywhere regulates
fashion. As it is ridiculous not to dress, so is it, in some measure,
not to be employed like other people. As a man of a civil profession
seems awkward in a camp or a garrison, and is even in some danger of
being despised there, so does an idle man among men of business.

The highest ordinary rate of profit may be such as, in the price of
the greater part of commodities, eats up the whole of what should go
to the rent of the land, and leaves only what is sufficient to pay the
labour of preparing and bringing them to market, according to the
lowest rate at which labour can anywhere be paid, the bare subsistence
of the labourer. The workman must always have been fed in some way or
other while he was about the work, but the landlord may not always
have been paid. The profits of the trade which the servants of the
East India Company carry on in Bengal may not, perhaps, be very far
from this rate.

The proportion which the usual market rate of interest ought to bear
to the ordinary rate of clear profit, necessarily varies as profit
rises or falls. Double interest is in Great Britain reckoned what the
merchants call a good, moderate, reasonable profit; terms which, I
apprehend, mean no more than a common and usual profit. In a country
where the ordinary rate of clear profit is eight or ten per cent. it
may be reasonable that one half of it should go to interest, wherever
business is carried on with borrowed money. The stock is at the risk
of the borrower, who, as it were, insures it to the lender; and four
or five per cent. may, in the greater part of trades, be both a
sufficient profit upon the risk of this insurance, and a sufficient
recompence for the trouble of employing the stock. But the proportion
between interest and clear profit might not be the same in countries
where the ordinary rate of profit was either a good deal lower, or a
good deal higher. If it were a good deal lower, one half of it,
perhaps, could not be afforded for interest; and more might be
afforded if it were a good deal higher.

In countries which are fast advancing to riches, the low rate of
profit may, in the price of many commodities, compensate the high
wages of labour, and enable those countries to sell as cheap as their
less thriving neighbours, among whom the wages of labour may be lower.

In reality, high profits tend much more to raise the price of work
than high wages. If, in the linen manufacture, for example, the wages
of the different working people, the flax-dressers, the spinners, the
weavers, etc. should all of them be advanced twopence a-day, it would
be necessary to heighten the price of a piece of linen only by a
number of twopences equal to the number of people that had been
employed about it, multiplied by the number of days during which they
had been so employed. That part of the price of the commodity which
resolved itself into the wages, would, through all the different
stages of the manufacture, rise only in arithmetical proportion to
this rise of wages. But if the profits of all the different employers
of those working people should be raised five per cent. that part of
the price of the commodity which resolved itself into profit would,
through all the different stages of the manufacture, rise in
geometrical proportion to this rise of profit. The employer of the
flax dressers would, in selling his flax, require an additional five
per cent. upon the whole value of the materials and wages which he
advanced to his workmen. The employer of the spinners would require an
additional five per cent. both upon the advanced price of the flax,
and upon the wages of the spinners. And the employer of the weavers
would require alike five per cent. both upon the advanced price of the
linen-yarn, and upon the wages of the weavers. In raising the price of
commodities, the rise of wages operates in the same manner as simple
interest does in the accumulation of debt. The rise of profit operates
like compound interest. Our merchants and master manufacturers
complain much of the bad effects of high wages in raising the price,
and thereby lessening the sale of their goods, both at home and
abroad. They say nothing concerning the bad effects of high profits;
they are silent with regard to the pernicious effects of their own
gains; they complain only of those of other people.




CHAPTER X.

OF WAGES AND PROFIT IN THE DIFFERENT EMPLOYMENTS OF LABOUR AND STOCK.

The whole of the advantages and disadvantages of the different
employments of labour and stock, must, in the same neighbourhood, be
either perfectly equal, or continually tending to equality. If, in the
same neighbourhood, there was any employment evidently either more or
less advantageous than the rest, so many people would crowd into it in
the one case, and so many would desert it in the other, that its
advantages would soon return to the level of other employments. This,
at least, would be the case in a society where things were left to
follow their natural course, where there was perfect liberty, and
where every man was perfectly free both to choose what occupation he
thought proper, and to change it as often as he thought proper. Every
man's interest would prompt him to seek the advantageous, and to shun
the disadvantageous employment.

Pecuniary wages and profit, indeed, are everywhere in Europe extremely
different, according to the different employments of labour and stock.
But this difference arises, partly from certain circumstances in the
employments themselves, which, either really, or at least in the
imagination of men, make up for a small pecuniary gain in some, and
counterbalance a great one in others, and partly from the policy of
Europe, which nowhere leaves things at perfect liberty.

The particular consideration of those circumstances, and of that
policy, will divide this Chapter into two parts.


PART I. Inequalities arising from the nature of the employments
themselves.

The five following are the principal circumstances which, so far as I
have been able to observe, make up for a small pecuniary gain in some
employments, and counterbalance a great one in others. First, the
agreeableness or disagreeableness of the employments themselves;
secondly, the easiness and cheapness, or the difficulty and expense of
learning them; thirdly, the constancy or inconstancy of employment in
them; fourthly, the small or great trust which must be reposed in
those who exercise them; and, fifthly, the probability or
improbability of success in them.

First, the wages of labour vary with the ease or hardship, the
cleanliness or dirtiness, the honourableness or dishonourableness, of
the employment. Thus in most places, take the year round, a journeyman
tailor earns less than a journeyman weaver. His work is much easier. A
journeyman weaver earns less than a journeyman smith. His work is not
always easier, but it is much cleanlier. A journeyman blacksmith,
though an artificer, seldom earns so much in twelve hours, as a
collier, who is only a labourer, does in eight. His work is not quite
so dirty, is less dangerous, and is carried on in day-light, and above
ground. Honour makes a great part of the reward of all honourable
professions. In point of pecuniary gain, all things considered, they
are generally under-recompensed, as I shall endeavour to shew by and
by. Disgrace has the contrary effect. The trade of a butcher is a
brutal and an odious business; but it is in most places more
profitable than the greater part of common trades. The most detestable
of all employments, that of public executioner, is, in proportion to
the quantity of work done, better paid than any common trade whatever.

Hunting and fishing, the most important employments of mankind in the
rude state of society, become, in its advanced state, their most
agreeable amusements, and they pursue for pleasure what they once
followed from necessity. In the advanced state of society, therefore,
they are all very poor people who follow as a trade, what other people
pursue as a pastime. Fishermen have been so since the time of
Theocritus. {See Idyllium xxi.}. A poacher is everywhere a very poor
man in Great Britain. In countries where the rigour of the law suffers
no poachers, the licensed hunter is not in a much better condition.
The natural taste for those employments makes more people follow them,
than can live comfortably by them; and the produce of their labour, in
proportion to its quantity, comes always too cheap to market, to
afford any thing but the most scanty subsistence to the labourers.

Disagreeableness and disgrace affect the profits of stock in the same
manner as the wages of labour. The keeper of an inn or tavern, who is
never master of his own house, and who is exposed to the brutality of
every drunkard, exercises neither a very agreeable nor a very
creditable business. But there is scarce any common trade in which a
small stock yields so great a profit.

Secondly, the wages of labour vary with the easiness and cheapness, or
the difficulty and expense, of learning the business.

When any expensive machine is erected, the extraordinary work to be
performed by it before it is worn out, it must be expected, will
replace the capital laid out upon it, with at least the ordinary
profits. A man educated at the expense of much labour and time to any
of those employments which require extraordinary dexterity and skill,
may be compared to one of those expensive machines. The work which he
learns to perform, it must be expected, over and above the usual wages
of common labour, will replace to him the whole expense of his
education, with at least the ordinary profits of an equally valuable
capital. It must do this too in a reasonable time, regard being had to
the very uncertain duration of human life, in the same manner as to
the more certain duration of the machine.

The difference between the wages of skilled labour and those of common
labour, is founded upon this principle.

The policy of Europe considers the labour of all mechanics,
artificers, and manufacturers, as skilled labour; and that of all
country labourers us common labour. It seems to suppose that of the
former to be of a more nice and delicate nature than that of the
latter. It is so perhaps in some cases; but in the greater part it is
quite otherwise, as I shall endeavour to shew by and by. The laws and
customs of Europe, therefore, in order to qualify any person for
exercising the one species of labour, impose the necessity of an
apprenticeship, though with different degrees of rigour in different
places. They leave the other free and open to every body. During the
continuance of the apprenticeship, the whole labour of the apprentice
belongs to his master. In the meantime he must, in many cases, be
maintained by his parents or relations, and, in almost all cases, must
be clothed by them. Some money, too, is commonly given to the master
for teaching him his trade. They who cannot give money, give time, or
become bound for more than the usual number of years; a consideration
which, though it is not always advantageous to the master, on account
of the usual idleness of apprentices, is always disadvantageous to the
apprentice. In country labour, on the contrary, the labourer, while he
is employed about the easier, learns the more difficult parts of his
business, and his own labour maintains him through all the different
stages of his employment. It is reasonable, therefore, that in Europe
the wages of mechanics, artificers, and manufacturers, should be
somewhat higher than those of common labourers. They are so
accordingly, and their superior gains make them, in most places, be
considered as a superior rank of people. This superiority, however, is
generally very small: the daily or weekly earnings of journeymen in
the more common sorts of manufactures, such as those of plain linen
and woollen cloth, computed at an average, are, in most places, very
little more than the day-wages of common labourers. Their employment,
indeed, is more steady and uniform, and the superiority of their
earnings, taking the whole year together, may be somewhat greater. It
seems evidently, however, to be no greater than what is sufficient to
compensate the superior expense of their education. Education in the
ingenious arts, and in the liberal professions, is still more tedious
and expensive. The pecuniary recompence, therefore, of painters and
sculptors, of lawyers and physicians, ought to be much more liberal;
and it is so accordingly.

The profits of stock seem to be very little affected by the easiness
or difficulty of learning the trade in which it is employed. All the
different ways in which stock is commonly employed in great towns
seem, in reality, to be almost equally easy and equally difficult to
learn. One branch, either of foreign or domestic trade, cannot well be
a much more intricate business than another.

Thirdly, the wages of labour in different occupations vary with the
constancy or inconstancy of employment.

Employment is much more constant in some trades than in others. In the
greater part of manufactures, a journeyman maybe pretty sure of
employment almost every day in the year that he is able to work. A
mason or bricklayer, on the contrary, can work neither in hard frost
nor in foul weather, and his employment at all other times depends
upon the occasional calls of his customers. He is liable, in
consequence, to be frequently without any. What he earns, therefore,
while he is employed, must not only maintain him while he is idle, but
make him some compensation for those anxious and desponding moments
which the thought of so precarious a situation must sometimes
occasion. Where the computed earnings of the greater part of
manufacturers, accordingly, are nearly upon a level with the day-wages
of common labourers, those of masons and bricklayers are generally
from one-half more to double those wages. Where common labourers earn
four or five shillings a-week, masons and bricklayers frequently earn
seven and eight; where the former earn six, the latter often earn nine
and ten; and where the former earn nine and ten, as in London, the
latter commonly earn fifteen and eighteen. No species of skilled
labour, however, seems more easy to learn than that of masons and
bricklayers. Chairmen in London, during the summer season, are said
sometimes to be employed as bricklayers. The high wages of those
workmen, therefore, are not so much the recompence of their skill, as
the compensation for the inconstancy of their employment.

A house-carpenter seems to exercise rather a nicer and a more
ingenious trade than a mason. In most places, however, for it is not
universally so, his day-wages are somewhat lower. His employment,
though it depends much, does not depend so entirely upon the
occasional calls of his customers; and it is not liable to be
interrupted by the weather.

When the trades which generally afford constant employment, happen in
a particular place not to do so, the wages of the workmen always rise
a good deal above their ordinary proportion to those of common labour.
In London, almost all journeymen artificers are liable to be called
upon and dismissed by their masters from day to day, and from week to
week, in the same manner as day-labourers in other places. The lowest
order of artificers, journeymen tailors, accordingly, earn their
half-a-crown a-day, though eighteen pence may be reckoned the wages of
common labour. In small towns and country villages, the wages of
journeymen tailors frequently scarce equal those of common labour; but
in London they are often many weeks without employment, particularly
during the summer.

When the inconstancy of employment is combined with the hardship,
disagreeableness, and dirtiness of the work, it sometimes raises the
wages of the most common labour above those of the most skilful
artificers. A collier working by the piece is supposed, at Newcastle,
to earn commonly about double, and, in many parts of Scotland, about
three times, the wages of common labour. His high wages arise
altogether from the hardship, disagreeableness, and dirtiness of his
work. His employment may, upon most occasions, be as constant as he
pleases. The coal-heavers in London exercise a trade which, in
hardship, dirtiness, and disagreeableness, almost equals that of
colliers; and, from the unavoidable irregularity in the arrivals of
coal-ships, the employment of the greater part of them is necessarily
very inconstant. If colliers, therefore, commonly earn double and
triple the wages of common labour, it ought not to seem unreasonable
that coal-heavers should sometimes earn four and five times those
wages. In the inquiry made into their condition a few years ago, it
was found that, at the rate at which they were then paid, they could
earn from six to ten shillings a-day. Six shillings are about four
times the wages of common labour in London; and, in every particular
trade, the lowest common earnings may always be considered as those of
the far greater number. How extravagant soever those earnings may
appear, if they were more than sufficient to compensate all the
disagreeable circumstances of the business, there would soon be so
great a number of competitors, as, in a trade which has no exclusive
privilege, would quickly reduce them to a lower rate.

The constancy or inconstancy of employment cannot affect the ordinary
profits of stock in any particular trade. Whether the stock is or is
not constantly employed, depends, not upon the trade, but the trader.

Fourthly, the wages of labour vary according to the small or great
trust which must be reposed in the workmen.

The wages of goldsmiths and jewellers are everywhere superior to those
of many other workmen, not only of equal, but of much superior
ingenuity, on account of the precious materials with which they are
entrusted. We trust our health to the physician, our fortune, and
sometimes our life and reputation, to the lawyer and attorney. Such
confidence could not safely be reposed in people of a very mean or low
condition. Their reward must be such, therefore, as may give them that
rank in the society which so important a trust requires. The long time
and the great expense which must be laid out in their education, when
combined with this circumstance, necessarily enhance still further the
price of their labour.

When a person employs only his own stock in trade, there is no trust;
and the credit which he may get from other people, depends, not upon
the nature of the trade, but upon their opinion of his fortune,
probity and prudence. The different rates of profit, therefore, in the
different branches of trade, cannot arise from the different degrees
of trust reposed in the traders.

Fifthly, the wages of labour in different employments vary according
to the probability or improbability of success in them.

The probability that any particular person shall ever be qualified for
the employments to which he is educated, is very different in
different occupations. In the greatest part of mechanic trades success
is almost certain; but very uncertain in the liberal professions. Put
your son apprentice to a shoemaker, there is little doubt of his
learning to make a pair of shoes; but send him to study the law, it as
at least twenty to one if he ever makes such proficiency as will
enable him to live by the business. In a perfectly fair lottery, those
who draw the prizes ought to gain all that is lost by those who draw
the blanks. In a profession, where twenty fail for one that succeeds,
that one ought to gain all that should have been gained by the
unsuccessful twenty. The counsellor at law, who, perhaps, at near
forty years of age, begins to make something by his profession, ought
to receive the retribution, not only of his own so tedious and
expensive education, but of that of more than twenty others, who are
never likely to make any thing by it. How extravagant soever the fees
of counsellors at law may sometimes appear, their real retribution is
never equal to this. Compute, in any particular place, what is likely
to be annually gained, and what is likely to be annually spent, by all
the different workmen in any common trade, such as that of shoemakers
or weavers, and you will find that the former sum will generally
exceed the latter. But make the same computation with regard to all
the counsellors and students of law, in all the different Inns of
Court, and you will find that their annual gains bear but a very small
proportion to their annual expense, even though you rate the former as
high, and the latter as low, as can well be done. The lottery of the
law, therefore, is very far from being a perfectly fair lottery; and
that as well as many other liberal and honourable professions, is, in
point of pecuniary gain, evidently under-recompensed.

Those professions keep their level, however, with other occupations;
and, notwithstanding these discouragements, all the most generous and
liberal spirits are eager to crowd into them. Two different causes
contribute to recommend them. First, the desire of the reputation
which attends upon superior excellence in any of them; and, secondly,
the natural confidence which every man has, more or less, not only in
his own abilities, but in his own good fortune.

To excel in any profession, in which but few arrive at mediocrity, it
is the most decisive mark of what is called genius, or superior
talents. The public admiration which attends upon such distinguished
abilities makes always a part of their reward; a greater or smaller,
in proportion as it is higher or lower in degree. It makes a
considerable part of that reward in the profession of physic; a still
greater, perhaps, in that of law; in poetry and philosophy it makes
almost the whole.

There are some very agreeable and beautiful talents, of which the
possession commands a certain sort of admiration, but of which the
exercise, for the sake of gain, is considered, whether from reason or
prejudice, as a sort of public prostitution. The pecuniary recompence,
therefore, of those who exercise them in this manner, must be
sufficient, not only to pay for the time, labour, and expense of
acquiring the talents, but for the discredit which attends the
employment of them as the means of subsistence. The exorbitant rewards
of players, opera-singers, opera-dancers, etc. are founded upon those
two principles; the rarity and beauty of the talents, and the
discredit of employing them in this manner. It seems absurd at first
sight, that we should despise their persons, and yet reward their
talents with the most profuse liberality. While we do the one,
however, we must of necessity do the other, Should the public opinion
or prejudice ever alter with regard to such occupations, their
pecuniary recompence would quickly diminish. More people would apply
to them, and the competition would quickly reduce the price of their
labour. Such talents, though far from being common, are by no means so
rare as imagined. Many people possess them in great perfection, who
disdain to make this use of them; and many more are capable of
acquiring them, if any thing could be made honourably by them.

The over-weening conceit which the greater part of men have of their
own abilities, is an ancient evil remarked by the philosophers and
moralists of all ages. Their absurd presumption in their own good
fortune has been less taken notice of. It is, however, if possible,
still more universal. There is no man living, who, when in tolerable
health and spirits, has not some share of it. The chance of gain is by
every man more or less over-valued, and the chance of loss is by most
men under-valued, and by scarce any man, who is in tolerable health
and spirits, valued more than it is worth.

That the chance of gain is naturally overvalued, we may learn from the
universal success of lotteries. The world neither ever saw, nor ever
will see, a perfectly fair lottery, or one in which the whole gain
compensated the whole loss; because the undertaker could make nothing
by it. In the state lotteries, the tickets are really not worth the
price which is paid by the original subscribers, and yet commonly sell
in the market for twenty, thirty, and sometimes forty per cent.
advance. The vain hopes of gaining some of the great prizes is the
sole cause of this demand. The soberest people scarce look upon it as
a folly to pay a small sum for the chance of gaining ten or twenty
thousand pounds, though they know that even that small sum is perhaps
twenty or thirty per cent. more than the chance is worth. In a lottery
in which no prize exceeded twenty pounds, though in other respects it
approached much nearer to a perfectly fair one than the common state
lotteries, there would not be the same demand for tickets. In order to
have a better chance for some of the great prizes, some people
purchase several tickets; and others, small shares in a still greater
number. There is not, however, a more certain proposition in
mathematics, than that the more tickets you adventure upon, the more
likely you are to be a loser. Adventure upon all the tickets in the
lottery, and you lose for certain; and the greater the number of your
tickets, the nearer you approach to this certainty.

That the chance of loss is frequently undervalued, and scarce ever
valued more than it is worth, we may learn from the very moderate
profit of insurers. In order to make insurance, either from fire or
sea-risk, a trade at all, the common premium must be sufficient to
compensate the common losses, to pay the expense of management, and to
afford such a profit as might have been drawn from an equal capital
employed in any common trade. The person who pays no more than this,
evidently pays no more than the real value of the risk, or the lowest
price at which he can reasonably expect to insure it. But though many
people have made a little money by insurance, very few have made a
great fortune; and, from this consideration alone, it seems evident
enough that the ordinary balance of profit and loss is not more
advantageous in this than in other common trades, by which so many
people make fortunes. Moderate, however, as the premium of insurance
commonly is, many people despise the risk too much to care to pay it.
Taking the whole kingdom at an average, nineteen houses in twenty, or
rather, perhaps, ninety-nine in a hundred, are not insured from fire.
Sea-risk is more alarming to the greater part of people; and the
proportion of ships insured to those not insured is much greater. Many
sail, however, at all seasons, and even in time of war, without any
insurance. This may sometimes, perhaps, be done without any
imprudence. When a great company, or even a great merchant, has twenty
or thirty ships at sea, they may, as it were, insure one another. The
premium saved up on them all may more than compensate such losses as
they are likely to meet with in the common course of chances. The
neglect of insurance upon shipping, however, in the same manner as
upon houses, is, in most cases, the effect of no such nice
calculation, but of mere thoughtless rashness, and presumptuous
contempt of the risk.

The contempt of risk, and the presumptuous hope of success, are in no
period of life more active than at the age at which young people
choose their professions. How little the fear of misfortune is then
capable of balancing the hope of good luck, appears still more
evidently in the readiness of the common people to enlist as soldiers,
or to go to sea, than in the eagerness of those of better fashion to
enter into what are called the liberal professions.

What a common soldier may lose is obvious enough. Without regarding
the danger, however, young volunteers never enlist so readily as at
the beginning of a new war; and though they have scarce any chance of
preferment, they figure to themselves, in their youthful fancies, a
thousand occasions of acquiring honour and distinction which never
occur. These romantic hopes make the whole price of their blood. Their
pay is less than that of common labourers, and, in actual service,
their fatigues are much greater.

The lottery of the sea is not altogether so disadvantageous as that of
the army. The son of a creditable labourer or artificer may frequently
go to sea with his father's consent; but if he enlists as a soldier,
it is always without it. Other people see some chance of his making
something by the one trade; nobody but himself sees any of his making
any thing by the other. The great admiral is less the object of public
admiration than the great general; and the highest success in the sea
service promises a less brilliant fortune and reputation than equal
success in the land. The same difference runs through all the inferior
degrees of preferment in both. By the rules of precedency, a captain
in the navy ranks with a colonel in the army; but he does not rank
with him in the common estimation. As the great prizes in the lottery
are less, the smaller ones must be more numerous. Common sailors,
therefore, more frequently get some fortune and preferment than common
soldiers; and the hope of those prizes is what principally recommends
the trade. Though their skill and dexterity are much superior to that
of almost any artificers; and though their whole life is one continual
scene of hardship and danger; yet for all this dexterity and skill,
for all those hardships and dangers, while they remain in the
condition of common sailors, they receive scarce any other recompence
but the pleasure of exercising the one and of surmounting the other.
Their wages are not greater than those of common labourers at the port
which regulates the rate of seamen's wages. As they are continually
going from port to port, the monthly pay of those who sail from all
the different ports of Great Britain, is more nearly upon a level than
that of any other workmen in those different places; and the rate of
the port to and from which the greatest number sail, that is, the port
of London, regulates that of all the rest. At London, the wages of the
greater part of the different classes of workmen are about double
those of the same classes at Edinburgh. But the sailors who sail from
the port of London, seldom earn above three or four shillings a month
more than those who sail from the port of Leith, and the difference is
frequently not so great. In time of peace, and in the
merchant-service, the London price is from a guinea to about
seven-and-twenty shillings the calendar month. A common labourer in
London, at the rate of nine or ten shillings a week, may earn in the
calendar month from forty to five-and-forty shillings. The sailor,
indeed, over and above his pay, is supplied with provisions. Their
value, however, may not perhaps always exceed the difference between
his pay and that of the common labourer; and though it sometimes
should, the excess will not be clear gain to the sailor, because he
cannot share it with his wife and family, whom he must maintain out of
his wages at home.

The dangers and hair-breadth escapes of a life of adventures, instead
of disheartening young people, seem frequently to recommend a trade to
them. A tender mother, among the inferior ranks of people, is often
afraid to send her son to school at a sea-port town, lest the sight of
the ships, and the conversation and adventures of the sailors, should
entice him to go to sea. The distant prospect of hazards, from which
we can hope to extricate ourselves by courage and address, is not
disagreeable to us, and does not raise the wages of labour in any
employment. It is otherwise with those in which courage and address
can be of no avail. In trades which are known to be very unwholesome,
the wages of labour are always remarkably high. Unwholesomeness is a
species of disagreeableness, and its effects upon the wages of labour
are to be ranked under that general head.

In all the different employments of stock, the ordinary rate of profit
varies more or less with the certainty or uncertainty of the returns.
These are, in general, less uncertain in the inland than in the
foreign trade, and in some branches of foreign trade than in others;
in the trade to North America, for example, than in that to Jamaica.
The ordinary rate of profit always rises more or less with the risk.
it does not, however, seem to rise in proportion to it, or so as to
compensate it completely. Bankruptcies are most frequent in the most
hazardous trades. The most hazardous of all trades, that of a
smuggler, though, when the adventure succeeds, it is likewise the most
profitable, is the infallible road to bankruptcy. The presumptuous
hope of success seems to act here as upon all other occasions, and to
entice so many adventurers into those hazardous trades, that their
competition reduces the profit below what is sufficient to compensate
the risk. To compensate it completely, the common returns ought, over
and above the ordinary profits of stock, not only to make up for all
occasional losses, but to afford a surplus profit to the adventurers,
of the same nature with the profit of insurers. But if the common
returns were sufficient for all this, bankruptcies would not be more
frequent in these than in other trades.

Of the five circumstances, therefore, which vary the wages of labour,
two only affect the profits of stock; the agreeableness or
disagreeableness of the business, and the risk or security with which
it is attended. In point of agreeableness or disagreeableness, there
is little or no difference in the far greater part of the different
employments of stock, but a great deal in those of labour; and the
ordinary profit of stock, though it rises with the risk, does not
always seem to rise in proportion to it. It should follow from all
this, that, in the same society or neighbourhood, the average and
ordinary rates of profit in the different employments of stock should
be more nearly upon a level than the pecuniary wages of the different
sorts of labour.

They are so accordingly. The difference between the earnings of a
common labourer and those of a well employed lawyer or physician, is
evidently much greater than that between the ordinary profits in any
two different branches of trade. The apparent difference, besides, in
the profits of different trades, is generally a deception arising from
our not always distinguishing what ought to be considered as wages,
from what ought to be considered as profit.

Apothecaries' profit is become a bye-word, denoting something
uncommonly extravagant. This great apparent profit, however, is
frequently no more than the reasonable wages of labour. The skill of
an apothecary is a much nicer and more delicate matter than that of
any artificer whatever; and the trust which is reposed in him is of
much greater importance. He is the physician of the poor in all cases,
and of the rich when the distress or danger is not very great. His
reward, therefore, ought to be suitable to his skill and his trust;
and it arises generally from the price at which he sells his drugs.
But the whole drugs which the best employed apothecary in a large
market-town, will sell in a year, may not perhaps cost him above
thirty or forty pounds. Though he should sell them, therefore, for
three or four hundred, or at a thousand per cent. profit, this may
frequently be no more than the reasonable wages of his labour,
charged, in the only way in which he can charge them, upon the price
of his drugs. The greater part of the apparent profit is real wages
disguised in the garb of profit.

In a small sea-port town, a little grocer will make forty or fifty per
cent. upon a stock of a single hundred pounds, while a considerable
wholesale merchant in the same place will scarce make eight or ten per
cent. upon a stock of ten thousand. The trade of the grocer may be
necessary for the conveniency of the inhabitants, and the narrowness
of the market may not admit the employment of a larger capital in the
business. The man, however, must not only live by his trade, but live
by it suitably to the qualifications which it requires. Besides
possessing a little capital, he must be able to read, write, and
account and must be a tolerable judge, too, of perhaps fifty or sixty
different sorts of goods, their prices, qualities, and the markets
where they are to be had cheapest. He must have all the knowledge, in
short, that is necessary for a great merchant, which nothing hinders
him from becoming but the want of a sufficient capital. Thirty or
forty pounds a year cannot be considered as too great a recompence for
the labour of a person so accomplished. Deduct this from the seemingly
great profits of his capital, and little more will remain, perhaps,
than the ordinary profits of stock. The greater part of the apparent
profit is, in this case too, real wages.

The difference between the apparent profit of the retail and that of
the wholesale trade, is much less in the capital than in small towns
and country villages. Where ten thousand pounds can be employed in the
grocery trade, the wages of the grocer's labour must be a very
trifling addition to the real profits of so great a stock. The
apparent profits of the wealthy retailer, therefore, are there more
nearly upon a level with those of the wholesale merchant. It is upon
this account that goods sold by retail are generally as cheap, and
frequently much cheaper, in the capital than in small towns and
country villages. Grocery goods, for example, are generally much
cheaper; bread and butchers' meat frequently as cheap. It costs no
more to bring grocery goods to the great town than to the country
village; but it costs a great deal more to bring corn and cattle, as
the greater part of them must be brought from a much greater distance.
The prime cost of grocery goods, therefore, being the same in both
places, they are cheapest where the least profit is charged upon them.
The prime cost of bread and butchers' meat is greater in the great
town than in the country village; and though the profit is less,
therefore they are not always cheaper there, but often equally cheap.
In such articles as bread and butchers' meat, the same cause which
diminishes apparent profit, increases prime cost. The extent of the
market, by giving employment to greater stocks, diminishes apparent
profit; but by requiring supplies from a greater distance, it
increases prime cost. This diminution of the one and increase of the
other, seem, in most cases, nearly to counterbalance one another;
which is probably the reason that, though the prices of corn and
cattle are commonly very different in different parts of the kingdom,
those of bread and butchers' meat are generally very nearly the same
through the greater part of it.

Though the profits of stock, both in the wholesale and retail trade,
are generally less in the capital than in small towns and country
villages, yet great fortunes are frequently acquired from small
beginnings in the former, and scarce ever in the latter. In small
towns and country villages, on account of the narrowness of the
market, trade cannot always be extended as stock extends. In such
places, therefore, though the rate of a particular person's profits
may be very high, the sum or amount of them can never be very great,
nor consequently that of his annual accumulation. In great towns, on
the contrary, trade can be extended as stock increases, and the credit
of a frugal and thriving man increases much faster than his stock. His
trade is extended in proportion to the amount of both; and the sum or
amount of his profits is in proportion to the extent of his trade, and
his annual accumulation in proportion to the amount of his profits. It
seldom happens, however, that great fortunes are made, even in great
towns, by any one regular, established, and well-known branch of
business, but in consequence of a long life of industry, frugality,
and attention. Sudden fortunes, indeed, are sometimes made in such
places, by what is called the trade of speculation. The speculative
merchant exercises no one regular, established, or well-known branch
of business. He is a corn merchant this year, and a wine merchant the
next, and a sugar, tobacco, or tea merchant the year after. He enters
into every trade, when he foresees that it is likely to lie more than
commonly profitable, and he quits it when he foresees that its profits
are likely to return to the level of other trades. His profits and
losses, therefore, can bear no regular proportion to those of any one
established and well-known branch of business. A bold adventurer may
sometimes acquire a considerable fortune by two or three successful
speculations, but is just as likely to lose one by two or three
unsuccessful ones. This trade can be carried on nowhere but in great
towns. It is only in places of the most extensive commerce and
correspondence that the intelligence requisite for it can be had.

The five circumstances above mentioned, though they occasion
considerable inequalities in the wages of labour and profits of stock,
occasion none in the whole of the advantages and disadvantages, real
or imaginary, of the different employments of either. The nature of
those circumstances is such, that they make up for a small pecuniary
gain in some, and counterbalance a great one in others.

In order, however, that this equality may take place in the whole of
their advantages or disadvantages, three things are requisite, even
where there is the most perfect freedom. First the employments must be
well known and long established in the neighbourhood; secondly, they
must be in their ordinary, or what may be called their natural state;
and, thirdly, they must be the sole or principal employments of those
who occupy them.

First, This equality can take place only in those employments which
are well known, and have been long established in the neighbourhood.

Where all other circumstances are equal, wages are generally higher in
new than in old trades. When a projector attempts to establish a new
manufacture, he must at first entice his workmen from other
employments, by higher wages than they can either earn in their own
trades, or than the nature of his work would otherwise require; and a
considerable time must pass away before he can venture to reduce them
to the common level. Manufactures for which the demand arises
altogether from fashion and fancy, are continually changing, and
seldom last long enough to be considered as old established
manufactures. Those, on the contrary, for which the demand arises
chiefly from use or necessity, are less liable to change, and the same
form or fabric may continue in demand for whole centuries together.
The wages of labour, therefore, are likely to be higher in
manufactures of the former, than in those of the latter kind.
Birmingham deals chiefly in manufactures of the former kind; Sheffield
in those of the latter; and the wages of labour in those two different
places are said to be suitable to this difference in the nature of
their manufactures.

The establishment of any new manufacture, of any new branch of
commerce, or of any new practice in agriculture, is always a
speculation from which the projector promises himself extraordinary
profits. These profits sometimes are very great, and sometimes, more
frequently, perhaps, they are quite otherwise; but, in general, they
bear no regular proportion to those of other old trades in the
neighbourhood. If the project succeeds, they are commonly at first
very high. When the trade or practice becomes thoroughly established
and well known, the competition reduces them to the level of other
trades.

Secondly, this equality in the whole of the advantages and
disadvantages of the different employments of labour and stock, can
take place only in the ordinary, or what may be called the natural
state of those employments.

The demand for almost every different species of labour is sometimes
greater, and sometimes less than usual. In the one case, the
advantages of the employment rise above, in the other they fall below
the common level. The demand for country labour is greater at hay-time
and harvest than during the greater part of the year; and wages rise
with the demand. In time of war, when forty or fifty thousand sailors
are forced from the merchant service into that of the king, the demand
for sailors to merchant ships necessarily rises with their scarcity;
and their wages, upon such occasions, commonly rise from a guinea and
seven-and-twenty shillings to forty shilling's and three pounds
a-month. In a decaying manufacture, on the contrary, many workmen,
rather than quit their own trade, are contented with smaller wages
than would otherwise be suitable to the nature of their employment.

The profits of stock vary with the price of the commodities in which
it is employed. As the price of any commodity rises above the ordinary
or average rate, the profits of at least some part of the stock that
is employed in bringing it to market, rise above their proper level,
and as it falls they sink below it. All commodities are more or less
liable to variations of price, but some are much more so than others.
In all commodities which are produced by human industry, the quantity
of industry annually employed is necessarily regulated by the annual
demand, in such a manner that the average annual produce may, as
nearly as possible, be equal to the average annual consumption. In
some employments, it has already been observed, the same quantity of
industry will always produce the same, or very nearly the same
quantity of commodities. In the linen or woollen manufactures, for
example, the same number of hands will annually work up very nearly
the same quantity of linen and woollen cloth. The variations in the
market price of such commodities, therefore, can arise only from some
accidental variation in the demand. A public mourning raises the price
of black cloth. But as the demand for most sorts of plain linen and
woollen cloth is pretty uniform, so is likewise the price. But there
are other employments in which the same quantity of industry will not
always produce the same quantity of commodities. The same quantity of
industry, for example, will, in different years, produce very
different quantities of corn, wine, hops, sugar tobacco, etc. The
price of such commodities, therefore, varies not only with the
variations of demand, but with the much greater and more frequent
variations of quantity, and is consequently extremely fluctuating; but
the profit of some of the dealers must necessarily fluctuate with the
price of the commodities. The operations of the speculative merchant
are principally employed about such commodities. He endeavours to buy
them up when he foresees that their price is likely to rise, and to
sell them when it is likely to fall.

Thirdly, this equality in the whole of the advantages and
disadvantages of the different employments of labour and stock, can
take place only in such as are the sole or principal employments of
those who occupy them.

When a person derives his subsistence from one employment, which does
not occupy the greater part of his time, in the intervals of his
leisure he is often willing to work at another for less wages than
would otherwise suit the nature of the employment.

There still subsists, in many parts of Scotland, a set of people
called cottars or cottagers, though they were more frequent some years
ago than they are now. They are a sort of out-servants of the
landlords and farmers. The usual reward which they receive from their
master is a house, a small garden for pot-herbs, as much grass as will
feed a cow, and, perhaps, an acre or two of bad arable land. When
their master has occasion for their labour, he gives them, besides,
two pecks of oatmeal a-week, worth about sixteen pence sterling.
During a great part of the year, he has little or no occasion for
their labour, and the cultivation of their own little possession is
not sufficient to occupy the time which is left at their own disposal.
When such occupiers were more numerous than they are at present, they
are said to have been willing to give their spare time for a very
small recompence to any body, and to have wrought for less wages than
other labourers. In ancient times, they seem to have been common all
over Europe. In countries ill cultivated, and worse inhabited, the
greater part of landlords and farmers could not otherwise provide
themselves with the extraordinary number of hands which country labour
requires at certain seasons. The daily or weekly recompence which such
labourers occasionally received from their masters, was evidently not
the whole price of their labour. Their small tenement made a
considerable part of it. This daily or weekly recompence, however,
seems to have been considered as the whole of it, by many writers who
have collected the prices of labour and provisions in ancient times,
and who have taken pleasure in representing both as wonderfully low.

The produce of such labour comes frequently cheaper to market than
would otherwise be suitable to its nature. Stockings, in many parts of
Scotland, are knit much cheaper than they can anywhere be wrought upon
the loom. They are the work of servants and labourers who derive the
principal part of their subsistence from some other employment. More
than a thousand pair of Shetland stockings are annually imported into
Leith, of which the price is from fivepence to seven-pence a pair. At
Lerwick, the small capital of the Shetland islands, tenpence a-day, I
have been assured, is a common price of common labour. In the same
islands, they knit worsted stockings to the value of a guinea a pair
and upwards.

The spinning of linen yarn is carried on in Scotland nearly in the
same way as the knitting of stockings, by servants, who are chiefly
hired for other purposes. They earn but a very scanty subsistence, who
endeavour to get their livelihood by either of those trades. In most
parts of Scotland, she is a good spinner who can earn twentypence
a-week.

In opulent countries, the market is generally so extensive, that any
one trade is sufficient to employ the whole labour and stock of those
who occupy it. Instances of people living by one employment, and, at
the same time, deriving some little advantage from another, occur
chiefly in pour countries. The following instance, however, of
something of the same kind, is to be found in the capital of a very
rich one. There is no city in Europe, I believe, in which house-rent
is dearer than in London, and yet I know no capital in which a
furnished apartment can be hired so cheap. Lodging is not only much
cheaper in London than in Paris; it is much cheaper than in Edinburgh,
of the same degree of goodness; and, what may seem extraordinary, the
dearness of house-rent is the cause of the cheapness of lodging. The
dearness of house-rent in London arises, not only from those causes
which render it dear in all great capitals, the dearness of labour,
the dearness of all the materials of building, which must generally be
brought from a great distance, and, above all, the dearness of
ground-rent, every landlord acting the part of a monopolist, and
frequently exacting a higher rent for a single acre of bad land in a
town, than can be had for a hundred of the best in the country; but it
arises in part from the peculiar manners and customs of the people,
which oblige every master of a family to hire a whole house from top
to bottom. A dwelling-house in England means every thing that is
contained under the same roof. In France, Scotland, and many other
parts of Europe, it frequently means no more than a single storey. A
tradesman in London is obliged to hire a whole house in that part of
the town where his customers live. His shop is upon the ground floor,
and he and his family sleep in the garret; and he endeavours to pay a
part of his house-rent by letting the two middle storeys to lodgers.
He expects to maintain his family by his trade, and not by his
lodgers. Whereas at Paris and Edinburgh, people who let lodgings have
commonly no other means of subsistence; and the price of the lodging
must pay, not only the rent of the house, but the whole expense of the
family.


PART II. -- Inequalities occasioned by the Policy of Europe.

Such are the inequalities in the whole of the advantages and
disadvantages of the different employments of labour and stock, which
the defect of any of the three requisites above mentioned must
occasion, even where there is the most perfect liberty. But the policy
of Europe, by not leaving things at perfect liberty, occasions other
inequalities of much greater importance.

It does this chiefly in the three following ways. First, by
restraining the competition in some employments to a smaller number
than would otherwise be disposed to enter into them; secondly, by
increasing it in others beyond what it naturally would be; and,
thirdly, by obstructing the free circulation of labour and stock, both
from employment to employment, and from place to place.

First, The policy of Europe occasions a very important inequality in
the whole of the advantages and disadvantages of the different
employments of labour and stock, by restraining the competition in
some employments to a smaller number than might otherwise be disposed
to enter into them.

The exclusive privileges of corporations are the principal means it
makes use of for this purpose.

The exclusive privilege of an incorporated trade necessarily restrains
the competition, in the town where it is established, to those who are
free of the trade. To have served an apprenticeship in the town, under
a master properly qualified, is commonly the necessary requisite for
obtaining this freedom. The bye-laws of the corporation regulate
sometimes the number of apprentices which any master is allowed to
have, and almost always the number of years which each apprentice is
obliged to serve. The intention of both regulations is to restrain the
competition to a much smaller number than might otherwise be disposed
to enter into the trade. The limitation of the number of apprentices
restrains it directly. A long term of apprenticeship restrains it more
indirectly, but as effectually, by increasing the expense of
education.

In Sheffield, no master cutler can have more than one apprentice at a
time, by a bye-law of the corporation. In Norfolk and Norwich, no
master weaver can have more than two apprentices, under pain of
forfeiting five pounds a-month to the king. No master hatter can have
more than two apprentices anywhere in England, or in the English
plantations, under pain of forfeiting; five pounds a-month, half to
the king, and half to him who shall sue in any court of record. Both
these regulations, though they have been confirmed by a public law of
the kingdom, are evidently dictated by the same corporation-spirit
which enacted the bye-law of Sheffield. The silk-weavers in London had
scarce been incorporated a year, when they enacted a bye-law,
restraining any master from having more than two apprentices at a
time. It required a particular act of parliament to rescind this
bye-law.

Seven years seem anciently to have been, all over Europe, the usual
term established for the duration of apprenticeships in the greater
part of incorporated trades. All such incorporations were anciently
called universities, which, indeed, is the proper Latin name for any
incorporation whatever. The university of smiths, the university of
tailors, etc. are expressions which we commonly meet with in the old
charters of ancient towns. When those particular incorporations, which
are now peculiarly called universities, were first established, the
term of years which it was necessary to study, in order to obtain the
degree of master of arts, appears evidently to have been copied from
the term of apprenticeship in common trades, of which the
incorporations were much more ancient. As to have wrought seven years
under a master properly qualified, was necessary, in order to entitle
my person to become a master, and to have himself apprentices in a
common trade; so to have studied seven years under a master properly
qualified, was necessary to entitle him to become a master, teacher,
or doctor (words anciently synonymous), in the liberal arts, and to
have scholars or apprentices (words likewise originally synonymous) to
study under him.

By the 5th of Elizabeth, commonly called the Statute of
Apprenticeship, it was enacted, that no person should, for the future,
exercise any trade, craft, or mystery, at that time exercised in
England, unless he had previously served to it an apprenticeship of
seven years at least; and what before had been the bye-law of many
particular corporations, became in England the general and public law
of all trades carried on in market towns. For though the words of the
statute are very general, and seem plainly to include the whole
kingdom, by interpretation its operation has been limited to market
towns; it having been held that, in country villages, a person may
exercise several different trades, though he has not served a seven
years apprenticeship to each, they being necessary for the conveniency
of the inhabitants, and the number of people frequently not being
sufficient to supply each with a particular set of hands. By a strict
interpretation of the words, too, the operation of this statute has
been limited to those trades which were established in England before
the 5th of Elizabeth, and has never been extended to such as have been
introduced since that time. This limitation has given occasion to
several distinctions, which, considered as rules of police, appear as
foolish as can well be imagined. It has been adjudged, for example,
that a coach-maker can neither himself make nor employ journeymen to
make his coach-wheels, but must buy them of a master wheel-wright;
this latter trade having been exercised in England before the 5th of
Elizabeth. But a wheel-wright, though he has never served an
apprenticeship to a coachmaker, may either himself make or employ
journeymen to make coaches; the trade of a coachmaker not being within
the statute, because not exercised in England at the time when it was
made. The manufactures of Manchester, Birmingham, and Wolverhampton,
are many of them, upon this account, not within the statute, not
having been exercised in England before the 5th of Elizabeth.

In France, the duration of apprenticeships is different in different
towns and in different trades. In Paris, five years is the term
required in a great number; but, before any person can be qualified to
exercise the trade as a master, he must, in many of them, serve five
years more as a journeyman. During this latter term, he is called the
companion of his master, and the term itself is called his
companionship.

In Scotland, there is no general law which regulates universally the
duration of apprenticeships. The term is different in different
corporations. Where it is long, a part of it may generally be redeemed
by paying a small fine. In most towns, too, a very small fine is
sufficient to purchase the freedom of any corporation. The weavers of
linen and hempen cloth, the principal manufactures of the country, as
well as all other artificers subservient to them, wheel-makers,
reel-makers, etc. may exercise their trades in any town-corporate
without paying any fine. In all towns-corporate, all persons are free
to sell butchers' meat upon any lawful day of the week. Three years
is, in Scotland, a common term of apprenticeship, even in some very
nice trades; and, in general, I know of no country in Europe, in which
corporation laws are so little oppressive.

The property which every man has in his own labour, as it is the
original foundation of all other property, so it is the most sacred
and inviolable. The patrimony of a poor man lies in the strength and
dexterity of his hands; and to hinder him from employing this strength
and dexterity in what manner he thinks proper, without injury to his
neighbour, is a plain violation of this most sacred property. It is a
manifest encroachment upon the just liberty, both of the workman, and
of those who might be disposed to employ him. As it hinders the one
from working at what he thinks proper, so it hinders the others from
employing whom they think proper. To judge whether he is fit to be
employed, may surely be trusted to the discretion of the employers,
whose interest it so much concerns. The affected anxiety of the
lawgiver, lest they should employ an improper person, is evidently as
impertinent as it is oppressive.

The institution of long apprenticeships can give no security that
insufficient workmanship shall not frequently be exposed to public
sale. When this is done, it is generally the effect of fraud, and not
of inability; and the longest apprenticeship can give no security
against fraud. Quite different regulations are necessary to prevent
this abuse. The sterling mark upon plate, and the stamps upon linen
and woollen cloth, give the purchaser much greater security than any
statute of apprenticeship. He generally looks at these, but never
thinks it worth while to enquire whether the workman had served a
seven years apprenticeship.

The institution of long apprenticeships has no tendency to form young
people to industry. A journeyman who works by the piece is likely to
be industrious, because he derives a benefit from every exertion of
his industry. An apprentice is likely to be idle, and almost always is
so, because he has no immediate interest to be otherwise. In the
inferior employments, the sweets of labour consist altogether in the
recompence of labour. They who are soonest in a condition to enjoy the
sweets of it, are likely soonest to conceive a relish for it, and to
acquire the early habit of industry. A young man naturally conceives
an aversion to labour, when for a long time he receives no benefit
from it. The boys who are put out apprentices from public charities
are generally bound for more than the usual number of years, and they
generally turn out very idle and worthless.

Apprenticeships were altogether unknown to the ancients. The
reciprocal duties of master and apprentice make a considerable article
in every modern code. The Roman law is perfectly silent with regard to
them. I know no Greek or Latin word (I might venture, I believe, to
assert that there is none) which expresses the idea we now annex to
the word apprentice, a servant bound to work at a particular trade for
the benefit of a master, during a term of years, upon condition that
the master shall teach him that trade.

Long apprenticeships are altogether unnecessary. The arts, which are
much superior to common trades, such as those of making clocks and
watches, contain no such mystery as to require a long course of
instruction. The first invention of such beautiful machines, indeed,
and even that of some of the instruments employed in making them, must
no doubt have been the work of deep thought and long time, and may
justly be considered as among the happiest efforts of human ingenuity.
But when both have been fairly invented, and are well understood, to
explain to any young man, in the completest manner, how to apply the
instruments, and how to construct the machines, cannot well require
more than the lessons of a few weeks; perhaps those of a few days
might be sufficient. In the common mechanic trades, those of a few
days might certainly be sufficient. The dexterity of hand, indeed,
even in common trades, cannot be acquired without much practice and
experience. But a young man would practice with much more diligence
and attention, if from the beginning he wrought as a journeyman, being
paid in proportion to the little work which he could execute, and
paying in his turn for the materials which he might sometimes spoil
through awkwardness and inexperience. His education would generally in
this way be more effectual, and always less tedious and expensive. The
master, indeed, would be a loser. He would lose all the wages of the
apprentice, which he now saves, for seven years together. In the end,
perhaps, the apprentice himself would be a loser. In a trade so easily
learnt he would have more competitors, and his wages, when he came to
be a complete workman, would be much less than at present. The same
increase of competition would reduce the profits of the masters, as
well as the wages of workmen. The trades, the crafts, the mysteries,
would all be losers. But the public would be a gainer, the work of all
artificers coming in this way much cheaper to market.

It is to prevent his reduction of price, and consequently of wages and
profit, by restraining that free competition which would most
certainly occasion it, that all corporations, and the greater part of
corporation laws have been established. In order to erect a
corporation, no other authority in ancient times was requisite, in
many parts of Europe, but that of the town-corporate in which it was
established. In England, indeed, a charter from the king was likewise
necessary. But this prerogative of the crown seems to have been
reserved rather for extorting money from the subject, than for the
defence of the common liberty against such oppressive monopolies. Upon
paying a fine to the king, the charter seems generally to have been
readily granted; and when any particular class of artificers or
traders thought proper to act as a corporation, without a charter,
such adulterine guilds, as they were called, were not always
disfranchised upon that account, but obliged to fine annually to the
king, for permission to exercise their usurped privileges {See Madox
Firma Burgi p. 26 etc.}. The immediate inspection of all corporations,
and of the bye-laws which they might think proper to enact for their
own government, belonged to the town-corporate in which they were
established; and whatever discipline was exercised over them,
proceeded commonly, not from the king, but from that greater
incorporation of which those subordinate ones were only parts or
members.

The government of towns-corporate was altogether in the hands of
traders and artificers, and it was the manifest interest of every
particular class of them, to prevent the market from being
overstocked, as they commonly express it, with their own particular
species of industry; which is in reality to keep it always
understocked. Each class was eager to establish regulations proper for
this purpose, and, provided it was allowed to do so, was willing to
consent that every other class should do the same. In consequence of
such regulations, indeed, each class was obliged to buy the goods they
had occasion for from every other within the town, somewhat dearer
than they otherwise might have done. But, in recompence, they were
enabled to sell their own just as much dearer; so that, so far it was
as broad as long, as they say; and in the dealings of the different
classes within the town with one another, none of them were losers by
these regulations. But in their dealings with the country they were
all great gainers; and in these latter dealings consist the whole
trade which supports and enriches every town.

Every town draws its whole subsistence, and all the materials of its
industry, from the: country. It pays for these chiefly in two ways.
First, by sending back to the country a part of those materials
wrought up and manufactured; in which case, their price is augmented
by the wages of the workmen, and the profits of their masters or
immediate employers; secondly, by sending to it a part both of the
rude and manufactured produce, either of other countries, or of
distant parts of the same country, imported into the town; in which
case, too, the original price of those goods is augmented by the wages
of the carriers or sailors, and by the profits of the merchants who
employ them. In what is gained upon the first of those branches of
commerce, consists the advantage which the town makes by its
manufactures; in what is gained upon the second, the advantage of its
inland and foreign trade. The wages of the workmen, and the profits of
their different employers, make up the whole of what is gained upon
both. Whatever regulations, therefore, tend to increase those wages
and profits beyond what they otherwise: would be, tend to enable the
town to purchase, with a smaller quantity of its labour, the produce
of a greater quantity of the labour of the country. They give the
traders and artificers in the town an advantage over the landlords,
farmers, and labourers, in the country, and break down that natural
equality which would otherwise take place in the commerce which is
carried on between them. The whole annual produce of the labour of the
society is annually divided between those two different sets of
people. By means of those regulations, a greater share of it is given
to the inhabitants of the town than would otherwise fall to them, and
a less to those of' the country.

The price which the town really pays for the provisions and materials
annually imported into it, is the quantity of manufactures and other
goods annually exported from it. The dearer the latter are sold, the
cheaper the former are bought. The industry of the town becomes more,
and that of the country less advantageous.

That the industry which is carried on in towns is, everywhere in
Europe, more advantageous than that which is carried on in the
country, without entering into any very nice computations, we may
satisfy ourselves by one very simple and obvious observation. In every
country of Europe, we find at least a hundred people who have acquired
great fortunes, from small beginnings, by trade and manufactures, the
industry which properly belongs to towns, for one who has done so by
that which properly belongs to the country, the raising of rude
produce by the improvement and cultivation of land. Industry,
therefore, must be better rewarded, the wages of labour and the
profits of stock must evidently be greater, in the one situation than
in the other. But stock and labour naturally seek the most
advantageous employment. They naturally, therefore, resort as much as
they can to the town, and desert the country.

The inhabitants of a town being collected into one place, can easily
combine together. The most insignificant trades carried on in towns
have, accordingly, in some place or other, been incorporated; and even
where they have never been incorporated, yet the corporation-spirit,
the jealousy of strangers, the aversion to take apprentices, or to
communicate the secret of their trade, generally prevail in them, and
often teach them, by voluntary associations and agreements, to prevent
that free competition which they cannot prohibit by bye-laws. The
trades which employ but a small number of hands, run most easily into
such combinations. Half-a-dozen wool-combers, perhaps, are necessary
to keep a thousand spinners and weavers at work. By combining not to
take apprentices, they can not only engross the employment, but reduce
the whole manufacture into a sort of slavery to themselves, and raise
the price of their labour much above what is due to the nature of
their work.

The inhabitants of the country, dispersed in distant places, cannot
easily combine together. They have not only never been incorporated,
but the incorporation spirit never has prevailed among them. No
apprenticeship has ever been thought necessary to qualify for
husbandry, the great trade of the country. After what are called the
fine arts, and the liberal professions, however, there is perhaps no
trade which requires so great a variety of knowledge and experience.
The innumerable volumes which have been written upon it in all
languages, may satisfy us, that among the wisest and most learned
nations, it has never been regarded as a matter very easily
understood. And from all those volumes we shall in vain attempt to
collect that knowledge of its various and complicated operations which
is commonly possessed even by the common farmer; how contemptuously
soever the very contemptible authors of some of them may sometimes
affect to speak of him. There is scarce any common mechanic trade, on
the contrary, of which all the operations may not be as completely and
distinctly explained in a pamphlet of a very few pages, as it is
possible for words illustrated by figures to explain them. In the
history of the arts, now publishing by the French Academy of Sciences,
several of them are actually explained in this manner. The direction
of operations, besides, which must be varied with every change of the
weather, as well as with many other accidents, requires much more
judgment and discretion, than that of those which are always the same,
or very nearly the same.

Not only the art of the farmer, the general direction of the
operations of husbandry, but many inferior branches of country labour
require much more skill and experience than the greater part of
mechanic trades. The man who works upon brass and iron, works with
instruments, and upon materials of which the temper is always the
same, or very nearly the same. But the man who ploughs the ground with
a team of horses or oxen, works with instruments of which the health,
strength, and temper, are very different upon different occasions. The
condition of the materials which he works upon, too, is as variable as
that of the instruments which he works with, and both require to be
managed with much judgment and discretion. The common ploughman,
though generally regarded as the pattern of stupidity and ignorance,
is seldom defective in this judgment and discretion. He is less
accustomed, indeed, to social intercourse, than the mechanic who lives
in a town. His voice and language are more uncouth, and more difficult
to be understood by those who are not used to them. His understanding,
however, being accustomed to consider a greater variety of objects, is
generally much superior to that of the other, whose whole attention,
from morning till night, is commonly occupied in performing one or two
very simple operations. How much the lower ranks of people in the
country are really superior to those of the town, is well known to
every man whom either business or curiosity has led to converse much
with both. In China and Indostan, accordingly, both the rank and the
wages of country labourers are said to be superior to those of the
greater part of artificers and manufacturers. They would probably be
so everywhere, if corporation laws and the corporation spirit did not
prevent it.

The superiority which the industry of the towns has everywhere in
Europe over that of the country, is not altogether owing to
corporations and corporation laws. It is supported by many other
regulations. The high duties upon foreign manufactures, and upon all
goods imported by alien merchants, all tend to the same purpose.
Corporation laws enable the inhabitants of towns to raise their
prices, without fearing to be undersold by the free competition of
their own countrymen. Those other regulations secure them equally
against that of foreigners. The enhancement of price occasioned by
both is everywhere finally paid by the landlords, farmers, and
labourers, of the country, who have seldom opposed the establishment
of such monopolies. They have commonly neither inclination nor fitness
to enter into combinations; and the clamour and sophistry of merchants
and manufacturers easily persuade them, that the private interest of a
part, and of a subordinate part, of the society, is the general
interest of the whole.

In Great Britain, the superiority of the industry of the towns over
that of the country seems to have been greater formerly than in the
present times. The wages of country labour approach nearer to those of
manufacturing labour, and the profits of stock employed in agriculture
to those of trading and manufacturing stock, than they are said to
have none in the last century, or in the beginning of the present.
This change may be regarded as the necessary, though very late
consequence of the extraordinary encouragement given to the industry
of the towns. The stocks accumulated in them come in time to be so
great, that it can no longer be employed with the ancient profit in
that species of industry which is peculiar to them. That industry has
its limits like every other; and the increase of stock, by increasing
the competition, necessarily reduces the profit. The lowering of
profit in the town forces out stock to the country, where, by creating
a new demand for country labour, it necessarily raises its wages. It
then spreads itself, if I my say so, over the face of the land, and,
by being employed in agriculture, is in part restored to the country,
at the expense of which, in a great measure, it had originally been
accumulated in the town. That everywhere in Europe the greatest
improvements of the country have been owing to such over flowings of
the stock originally accumulated in the towns, I shall endeavour to
shew hereafter, and at the same time to demonstrate, that though some
countries have, by this course, attained to a considerable degree of
opulence, it is in itself necessarily slow, uncertain, liable to be
disturbed and interrupted by innumerable accidents, and, in every
respect, contrary to the order of nature and of reason The interests,
prejudices, laws, and customs, which have given occasion to it, I
shall endeavour to explain as fully and distinctly as I can in the
third and fourth books of this Inquiry.

People of the same trade seldom meet together, even for merriment and
diversion, but the conversation ends in a conspiracy against the
public, or in some contrivance to raise prices. It is impossible,
indeed, to prevent such meetings, by any law which either could be
executed, or would be consistent with liberty and justice. But though
the law cannot hinder people of the same trade from sometimes
assembling together, it ought to do nothing to facilitate such
assemblies, much less to render them necessary.

A regulation which obliges all those of the same trade in a particular
town to enter their names and places of abode in a public register,
facilitates such assemblies. It connects individuals who might never
otherwise be known to one another, and gives every man of the trade a
direction where to find every other man of it.

A regulation which enables those of the same trade to tax themselves,
in order to provide for their poor, their sick, their widows and
orphans, by giving them a common interest to manage, renders such
assemblies necessary.

An incorporation not only renders them necessary, but makes the act of
the majority binding upon the whole. In a free trade, an effectual
combination cannot be established but by the unanimous consent of
every single trader, and it cannot last longer than every single
trader continues of the same mind. The majority of a corporation can
enact a bye-law, with proper penalties, which will limit the
competition more effectually and more durably than any voluntary
combination whatever.

The pretence that corporations are necessary for the better government
of the trade, is without any foundation. The real and effectual
discipline which is exercised over a workman, is not that of his
corporation, but that of his customers. It is the fear of losing their
employment which restrains his frauds and corrects his negligence. An
exclusive corporation necessarily weakens the force of this
discipline. A particular set of workmen must then be employed, let
them behave well or ill. It is upon this account that, in many large
incorporated towns, no tolerable workmen are to be found, even in some
of the most necessary trades. If you would have your work tolerably
executed, it must be done in the suburbs, where the workmen, having no
exclusive privilege, have nothing but their character to depend upon,
and you must then smuggle it into the town as well as you can.

It is in this manner that the policy of Europe, by restraining the
competition in some employments to a smaller number than would
otherwise be disposed to enter into them, occasions a very important
inequality in the whole of the advantages and disadvantages of the
different employments of labour and stock.

Secondly, The policy of Europe, by increasing the competition in some
employments beyond what it naturally would be, occasions another
inequality, of an opposite kind, in the whole of the advantages and
disadvantages of the different employments of labour and stock.

It has been considered as of so much importance that a proper number
of young people should be educated for certain professions, that
sometimes the public, and sometimes the piety of private founders,
have established many pensions, scholarships, exhibitions, bursaries,
etc. for this purpose, which draw many more people into those trades
than could otherwise pretend to follow them. In all Christian
countries, I believe, the education of the greater part of churchmen
is paid for in this manner. Very few of them are educated altogether
at their own expense. The long, tedious, and expensive education,
therefore, of those who are, will not always procure them a suitable
reward, the church being crowded with people, who, in order to get
employment, are willing to accept of a much smaller recompence than
what such an education would otherwise have entitled them to; and in
this manner the competition of the poor takes away the reward of the
rich. It would be indecent, no doubt, to compare either a curate or a
chaplain with a journeyman in any common trade. The pay of a curate or
chaplain, however, may very properly be considered as of the same
nature with the wages of a journeyman. They are all three paid for
their work according to the contract which they may happen to make
with their respective superiors. Till after the middle of the
fourteenth century, five merks, containing about as much silver as ten
pounds of our present money, was in England the usual pay of a curate
or a stipendiary parish priest, as we find it regulated by the decrees
of several different national councils. At the same period, fourpence
a-day, containing the same quantity of silver as a shilling of our
present money, was declared to be the pay of a master mason; and
threepence a-day, equal to ninepence of our present money, that of a
journeyman mason. {See the Statute of Labourers, 25, Ed. III.} The
wages of both these labourer's, therefore, supposing them to have been
constantly employed, were much superior to those of the curate. The
wages of the master mason, supposing him to have been without
employment one-third of the year, would have fully equalled them. By
the 12th of Queen Anne, c. 12. it is declared, "That whereas, for want
of sufficient maintenance and encouragement to curates, the cures
have, in several places, been meanly supplied, the bishop is,
therefore, empowered to appoint, by writing under his hand and seal, a
sufficient certain stipend or allowance, not exceeding fifty, and not
less than twenty pounds a-year". Forty pounds a-year is reckoned at
present very good pay for a curate; and, notwithstanding this act of
parliament, there are many curacies under twenty pounds a-year. There
are journeymen shoemakers in London who earn forty pounds a-year, and
there is scarce an industrious workman of any kind in that metropolis
who does not earn more than twenty. This last sum, indeed, does not
exceed what frequently earned by common labourers in many country
parishes. Whenever the law has attempted to regulate the wages of
workmen, it has always been rather to lower them than to raise them.
But the law has, upon many occasions, attempted to raise the wages of
curates, and, for the dignity of the church, to oblige the rectors of
parishes to give them more than the wretched maintenance which they
themselves might be willing to accept of. And, in both cases, the law
seems to have been equally ineffectual, and has never either been able
to raise the wages of curates, or to sink those of labourers to the
degree that was intended; because it has never been able to hinder
either the one from being willing to accept of less than the legal
allowance, on account of the indigence of their situation and the
multitude of their competitors, or the other from receiving more, on
account of the contrary competition of those who expected to derive
either profit or pleasure from employing them.

The great benefices and other ecclesiastical dignities support the
honour of the church, notwithstanding the mean circumstances of some
of its inferior members. The respect paid to the profession, too,
makes some compensation even to them for the meanness of their
pecuniary recompence. In England, and in all Roman catholic countries,
the lottery of the church is in reality much more advantageous than is
necessary. The example of the churches of Scotland, of Geneva, and of
several other protestant churches, may satisfy us, that in so
creditable a profession, in which education is so easily procured, the
hopes of much more moderate benefices will draw a sufficient number of
learned, decent, and respectable men into holy orders.

In professions in which there are no benefices, such as law and
physic, if an equal proportion of people were educated at the public
expense, the competition would soon be so great as to sink very much
their pecuniary reward. It might then not be worth any man's while to
educate his son to either of those professions at his own expense.
They would be entirely abandoned to such as had been educated by those
public charities, whose numbers and necessities would oblige them in
general to content themselves with a very miserable recompence, to the
entire degradation of the now respectable professions of law and
physic.

That unprosperous race of men, commonly called men of letters, are
pretty much in the situation which lawyers and physicians probably
would be in, upon the foregoing supposition. In every part of Europe,
the greater part of them have been educated for the church, but have
been hindered by different reasons from entering into holy orders.
They have generally, therefore, been educated at the public expense;
and their numbers are everywhere so great, as commonly to reduce the
price of their labour to a very paltry recompence.

Before the invention of the art of printing, the only employment by
which a man of letters could make any thing by his talents, was that
of a public or private teacher, or by communicating to other people
the curious and useful knowledge which he had acquired himself; and
this is still surely a more honourable, a more useful, and, in
general, even a more profitable employment than that other of writing
for a bookseller, to which the art of printing has given occasion. The
time and study, the genius, knowledge, and application requisite to
qualify an eminent teacher of the sciences, are at least equal to what
is necessary for the greatest practitioners in law and physic. But the
usual reward of the eminent teacher bears no proportion to that of the
lawyer or physician, because the trade of the one is crowded with
indigent people, who have been brought up to it at the public expense;
whereas those of the other two are encumbered with very few who have
not been educated at their own. The usual recompence, however, of
public and private teachers, small as it may appear, would undoubtedly
be less than it is, if the competition of those yet more indigent men
of letters, who write for bread, was not taken out of the market.
Before the invention of the art of printing, a scholar and a beggar
seem to have been terms very nearly synonymous. The different
governors of the universities, before that time, appear to have often
granted licences to their scholars to beg.

In ancient times, before any charities of this kind had been
established for the education of indigent people to the learned
professions, the rewards of eminent teachers appear to have been much
more considerable. Isocrates, in what is called his discourse against
the sophists, reproaches the teachers of his own times with
inconsistency. "They make the most magnificent promises to their
scholars," says he, "and undertake to teach them to be wise, to be
happy, and to be just; and, in return for so important a service, they
stipulate the paltry reward of four or five minae." "They who teach
wisdom," continues he, "ought certainly to be wise themselves; but if
any man were to sell such a bargain for such a price, he would be
convicted of the most evident folly." He certainly does not mean here
to exaggerate the reward, and we may be assured that it was not less
than he represents it. Four minae were equal to thirteen pounds six
shillings and eightpence; five minae to sixteen pounds thirteen
shillings and fourpence. Something not less than the largest of those
two sums, therefore, must at that time have been usually paid to the
most eminent teachers at Athens. Isocrates himself demanded ten minae,
or £ 33:6:8 from each scholar. When he taught at Athens, he is said to
have had a hundred scholars. I understand this to be the number whom
he taught at one time, or who attended what we would call one course
of lectures; a number which will not appear extraordinary from so
great a city to so famous a teacher, who taught, too, what was at that
time the most fashionable of all sciences, rhetoric. He must have
made, therefore, by each course of lectures, a thousand minae, or £
3335:6:8. A thousand minae, accordingly, is said by Plutarch, in
another place, to have been his didactron, or usual price of teaching.
Many other eminent teachers in those times appear to have acquired
great fortunes. Georgias made a present to the temple of Delphi of his
own statue in solid gold. We must not, I presume, suppose that it was
as large as the life. His way of living, as well as that of Hippias
and Protagoras, two other eminent teachers of those times, is
represented by Plato as splendid, even to ostentation. Plato himself
is said to have lived with a good deal of magnificence. Aristotle,
after having been tutor to Alexander, and most munificently rewarded,
as it is universally agreed, both by him and his father, Philip,
thought it worth while, notwithstanding, to return to Athens, in order
to resume the teaching of his school. Teachers of the sciences were
probably in those times less common than they came to be in an age or
two afterwards, when the competition had probably somewhat reduced
both the price of their labour and the admiration for their persons.
The most eminent of them, however, appear always to have enjoyed a
degree of consideration much superior to any of the like profession in
the present times. The Athenians sent Carneades the academic, and
Diogenes the stoic, upon a solemn embassy to Rome; and though their
city had then declined from its former grandeur, it was still an
independent and considerable republic.

Carneades, too, was a Babylonian by birth; and as there never was a
people more jealous of admitting foreigners to public offices than the
Athenians, their consideration for him must have been very great.

This inequality is, upon the whole, perhaps rather advantageous than
hurtful to the public. It may somewhat degrade the profession of a
public teacher; but the cheapness of literary education is surely an
advantage which greatly overbalances this trifling inconveniency. The
public, too, might derive still greater benefit from it, if the
constitution of those schools and colleges, in which education is
carried on, was more reasonable than it is at present through the
greater part of Europe.

Thirdly, the policy of Europe, by obstructing the free circulation of
labour and stock, both from employment to employment, and from place
to place, occasions, in some cases, a very inconvenient inequality in
the whole of the advantages and disadvantages of their different
employments.

The statute of apprenticeship obstructs the free circulation of labour
from one employment to another, even in the same place. The exclusive
privileges of corporations obstruct it from one place to another, even
in the same employment.

It frequently happens, that while high wages are given to the workmen
in one manufacture, those in another are obliged to content themselves
with bare subsistence. The one is in an advancing state, and has
therefore a continual demand for new hands; the other is in a
declining state, and the superabundance of hands is continually
increasing. Those two manufactures may sometimes be in the same town,
and sometimes in the same neighbourhood, without being able to lend
the least assistance to one another. The statute of apprenticeship may
oppose it in the one case, and both that and an exclusive corporation
in the other. In many different manufactures, however, the operations
are so much alike, that the workmen could easily change trades with
one another, if those absurd laws did not hinder them. The arts of
weaving plain linen and plain silk, for example, are almost entirely
the same. That of weaving plain woollen is somewhat different; but the
difference is so insignificant, that either a linen or a silk weaver
might become a tolerable workman in a very few days. If any of those
three capital manufactures, therefore, were decaying, the workmen
might find a resource in one of the other two which was in a more
prosperous condition; and their wages would neither rise too high in
the thriving, nor sink too low in the decaying manufacture. The linen
manufacture, indeed, is in England, by a particular statute, open to
every body; but as it is not much cultivated through the greater part
of the country, it can afford no general resource to the work men of
other decaying manufactures, who, wherever the statute of
apprenticeship takes place, have no other choice, but dither to come
upon the parish, or to work as common labourers; for which, by their
habits, they are much worse qualified than for any sort of manufacture
that bears any resemblance to their own. They generally, therefore,
chuse to come upon the parish.

Whatever obstructs the free circulation of labour from one employment
to another, obstructs that of stock likewise; the quantity of stock
which can be employed in any branch of business depending very much
upon that of the labour which can be employed in it. Corporation laws,
however, give less obstruction to the free circulation of stock from
one place to another, than to that of labour. It is everywhere much
easier for a wealthy merchant to obtain the privilege of trading in a
town-corporate, than for a poor artificer to obtain that of working in
it.

The obstruction which corporation laws give to the free circulation of
labour is common, I believe, to every part of Europe. That which is
given to it by the poor laws is, so far as I know, peculiar to
England. It consists in the difficulty which a poor man finds in
obtaining a settlement, or even in being allowed to exercise his
industry in any parish but that to which he belongs. It is the labour
of artificers and manufacturers only of which the free circulation is
obstructed by corporation laws. The difficulty of obtaining
settlements obstructs even that of common labour. It may be worth
while to give some account of the rise, progress, and present state of
this disorder, the greatest, perhaps, of any in the police of England.

When, by the destruction of monasteries, the poor had been deprived of
the charity of those religious houses, after some other ineffectual
attempts for their relief, it was enacted, by the 43d of Elizabeth, c.
2. that every parish should be bound to provide for its own poor, and
that overseers of the poor should be annually appointed, who, with the
church-wardens, should raise, by a parish rate, competent sums for
this purpose.

By this statute, the necessity of providing for their own poor was
indispensably imposed upon every parish. Who were to be considered as
the poor of each parish became, therefore, a question of some
importance. This question, after some variation, was at last
determined by the 13th and 14th of Charles II. when it was enacted,
that forty days undisturbed residence should gain any person a
settlement in any parish; but that within that time it should be
lawful for two justices of the peace, upon complaint made by the
church-wardens or overseers of the poor, to remove any new inhabitant
to the parish where he was last legally settled; unless he either
rented a tenement of ten pounds a-year, or could give such security
for the discharge of the parish where he was then living, as those
justices should judge sufficient.

Some frauds, it is said, were committed in consequence of this
statute; parish officers sometime's bribing their own poor to go
clandestinely to another parish, and, by keeping themselves concealed
for forty days, to gain a settlement there, to the discharge of that
to which they properly belonged. It was enacted, therefore, by the 1st
of James II. that the forty days undisturbed residence of any person
necessary to gain a settlement, should be accounted only from the time
of his delivering notice, in writing, of the place of his abode and
the number of his family, to one of the church-wardens or overseers of
the parish where he came to dwell.

But parish officers, it seems, were not always more honest with regard
to their own than they had been with regard to other parishes, and
sometimes connived at such intrusions, receiving the notice, and
taking no proper steps in consequence of it. As every person in a
parish, therefore, was supposed to have an interest to prevent as much
as possible their being burdened by such intruders, it was further
enacted by the 3rd of William III. that the forty days residence
should be accounted only from the publication of such notice in
writing on Sunday in the church, immediately after divine service.

"After all," says Doctor Burn, "this kind of settlement, by continuing
forty days after publication of notice in writing, is very seldom
obtained; and the design of the acts is not so much for gaining of
settlements, as for the avoiding of them by persons coming into a
parish clandestinely, for the giving of notice is only putting a force
upon the parish to remove. But if a person's situation is such, that
it is doubtful whether he is actually removable or not, he shall, by
giving of notice, compel the parish either to allow him a settlement
uncontested, by suffering him to continue forty days, or by removing
him to try the right."

This statute, therefore, rendered it almost impracticable for a poor
man to gain a new settlement in the old way, by forty days
inhabitancy. But that it might not appear to preclude altogether the
common people of one' parish from ever establishing themselves with
security in another, it appointed four other ways by which a
settlement might be gained without any notice delivered or published.
The first was, by being taxed to parish rates and paying them; the
second, by being elected into an annual parish office, and serving in
it a year; the third, by serving an apprenticeship in the parish; the
fourth, by being hired into service there for a year, and continuing
in the same service during the whole of it. Nobody can gain a
settlement by either of the two first ways, but by the public deed of
the whole parish, who are too well aware of the consequences to adopt
any new-comer, who has nothing but his labour to support him, either
by taxing him to parish rates, or by electing him into a parish
office.

No married man can well gain any settlement in either of the two last
ways. An apprentice is scarce ever married; and it is expressly
enacted, that no married servant shall gain any settlement by being
hired for a year. The principal effect of introducing settlement by
service, has been to put out in a great measure the old fashion of
hiring for a year; which before had been so customary in England, that
even at this day, if no particular term is agreed upon, the law
intends that every servant is hired for a year. But masters are not
always willing to give their servants a settlement by hiring them in
this manner; and servants are not always willing to be so hired,
because, as every last settlement discharges all the foregoing, they
might thereby lose their original settlement in the places of their
nativity, the habitation of their parents and relations.

No independent workman, it is evident, whether labourer or artificer,
is likely to gain any new settlement, either by apprenticeship or by
service. When such a person, therefore, carried his industry to a new
parish, he was liable to be removed, how healthy and industrious
soever, at the caprice of any churchwarden or overseer, unless he
either rented a tenement of ten pounds a-year, a thing impossible for
one who has nothing but his labour to live by, or could give such
security for the discharge of the parish as two justices of the peace
should judge sufficient.

What security they shall require, indeed, is left altogether to their
discretion; but they cannot well require less than thirty pounds, it
having been enacted, that the purchase even of a freehold estate of
less than thirty pounds value, shall not gain any person a settlement,
as not being sufficient for the discharge of the parish. But this is a
security which scarce any man who lives by labour can give; and much
greater security is frequently demanded.

In order to restore, in some measure, that free circulation of labour
which those different statutes had almost entirely taken away, the
invention of certificates was fallen upon. By the 8th and 9th of
William III. it was enacted that if any person should bring a
certificate from the parish where he was last legally settled,
subscribed by the church-wardens and overseers of the poor, and
allowed by two justices of the peace, that every other parish should
be obliged to receive him; that he should not be removable merely upon
account of his being likely to become chargeable, but only upon his
becoming actually chargeable; and that then the parish which granted
the certificate should be obliged to pay the expense both of his
maintenance and of his removal. And in order to give the most perfect
security to the parish where such certificated man should come to
reside, it was further enacted by the same statute, that he should
gain no settlement there by any means whatever, except either by
renting a tenement of ten pounds a-year, or by serving upon his own
account in an annual parish office for one whole year; and
consequently neither by notice nor by service, nor by apprenticeship,
nor by paying parish rates. By the 12th of Queen Anne, too, stat. 1,
c.18, it was further enacted, that neither the servants nor
apprentices of such certificated man should gain any settlement in the
parish where he resided under such certificate.

How far this invention has restored that free circulation of labour,
which the preceding statutes had almost entirely taken away, we may
learn from the following very judicious observation of Doctor Burn.
"It is obvious," says he, "that there are divers good reasons for
requiring certificates with persons coming to settle in any place;
namely, that persons residing under them can gain no settlement,
neither by apprenticeship, nor by service, nor by giving notice, nor
by paying parish rates; that they can settle neither apprentices nor
servants; that if they become chargeable, it is certainly known
whither to remove them, and the parish shall be paid for the removal,
and for their maintenance in the mean time; and that, if they fall
sick, and cannot be removed, the parish which gave the certificate
must maintain them; none of all which can be without a certificate.
Which reasons will hold proportionably for parishes not granting
certificates in ordinary cases; for it is far more than an equal
chance, but that they will have the certificated persons again, and in
a worse condition." The moral of this observation seems to be, that
certificates ought always to be required by the parish where any poor
man comes to reside, and that they ought very seldom to be granted by
that which he purposes to leave. "There is somewhat of hardship in
this matter of certificates," says the same very intelligent author,
in his History of the Poor Laws, "by putting it in the power of a
parish officer to imprison a man as it were for life, however
inconvenient it may be for him to continue at that place where he has
had the misfortune to acquire what is called a settlement, or whatever
advantage he may propose himself by living elsewhere."

Though a certificate carries along with it no testimonial of good
behaviour, and certifies nothing but that the person belongs to the
parish to which he really does belong, it is altogether discretionary
in the parish officers either to grant or to refuse it. A mandamus was
once moved for, says Doctor Burn, to compel the church-wardens and
overseers to sign a certificate; but the Court of King's Bench
rejected the motion as a very strange attempt.

The very unequal price of labour which we frequently find in England,
in places at no great distance from one another, is probably owing to
the obstruction which the law of settlements gives to a poor man who
would carry his industry from one parish to another without a
certificate. A single man, indeed who is healthy and industrious, may
sometimes reside by sufferance without one; but a man with a wife and
family who should attempt to do so, would, in most parishes, be sure
of being removed; and, if the single man should afterwards marry, he
would generally be removed likewise. The scarcity of hands in one
parish, therefore, cannot always be relieved by their superabundance
in another, as it is constantly in Scotland, and. I believe, in all
other countries where there is no difficulty of settlement. In such
countries, though wages may sometimes rise a little in the
neighbourhood of a great town, or wherever else there is an
extraordinary demand for labour, and sink gradually as the distance
from such places increases, till they fall back to the common rate of
the country; yet we never meet with those sudden and unaccountable
differences in the wages of neighbouring places which we sometimes
find in England, where it is often more difficult for a poor man to
pass the artificial boundary of a parish, than an arm of the sea, or a
ridge of high mountains, natural boundaries which sometimes separate
very distinctly different rates of wages in other countries.

To remove a man who has committed no misdemeanour, from the parish
where he chooses to reside, is an evident violation of natural liberty
and justice. The common people of England, however, so jealous of
their liberty, but like the common people of most other countries,
never rightly understanding wherein it consists, have now, for more
than a century together, suffered themselves to be exposed to this
oppression without a remedy. Though men of reflection, too, have some.
times complained of the law of settlements as a public grievance; yet
it has never been the object of any general popular clamour, such as
that against general warrants, an abusive practice undoubtedly, but
such a one as was not likely to occasion any general oppression. There
is scarce a poor man in England, of forty years of age, I will venture
to say, who has not, in some part of his life, felt himself most
cruelly oppressed by this ill-contrived law of settlements.

I shall conclude this long chapter with observing, that though
anciently it was usual to rate wages, first by general laws extending
over the whole kingdom, and afterwards by particular orders of the
justices of peace in every particular county, both these practices
have now gone entirely into disuse. "By the experience of above four
hundred years," says Doctor Burn, "it seems time to lay aside all
endeavours to bring under strict regulations, what in its own nature
seems incapable of minute limitation; for if all persons in the same
kind of work were to receive equal wages, there would be no emulation,
and no room left for industry or ingenuity."

Particular acts of parliament, however, still attempt sometimes to
regulate wages in particular trades, and in particular places. Thus
the 8th of George III. prohibits, under heavy penalties, all master
tailors in London, and five miles round it, from giving, and their
workmen from accepting, more than two shillings and sevenpence
halfpenny a-day, except in the case of a general mourning. Whenever
the legislature attempts to regulate the differences between masters
and their workmen, its counsellors are always the masters. When the
regulation, therefore, is in favour of the workmen, it is always just
and equitable; but it is sometimes otherwise when in favour of the
masters. Thus the law which obliges the masters in several different
trades to pay their workmen in money, and not in goods, is quite just
and equitable. It imposes no real hardship upon the masters. It only
obliges them to pay that value in money, which they pretended to pay,
but did not always really pay, in goods. This law is in favour of the
workmen; but the 8th of George III. is in favour of the masters. When
masters combine together, in order to reduce the wages of their
workmen, they commonly enter into a private bond or agreement, not to
give more than a certain wage, under a certain penalty. Were the
workmen to enter into a contrary combination of the same kind, not to
accept of a certain wage, under a certain penalty, the law would
punish them very severely; and, if it dealt impartially, it would
treat the masters in the same manner. But the 8th of George III.
enforces by law that very regulation which masters sometimes attempt
to establish by such combinations. The complaint of the workmen, that
it puts the ablest and most industrious upon the same footing with an
ordinary workman, seems perfectly well founded.

In ancient times, too, it was usual to attempt to regulate the profits
of merchants and other dealers, by regulating the price of provisions
and ether goods. The assize of bread is, so far as I know, the only
remnant of this ancient usage. Where there is an exclusive
corporation, it may, perhaps, be proper to regulate the price of the
first necessary of life; but, where there is none, the competition
will regulate it much better than any assize. The method of fixing the
assize of bread, established by the 31st of George II. could not be
put in practice in Scotland, on account of a defect in the law, its
execution depending upon the office of clerk of the market, which does
not exist there. This defect was not remedied till the third of George
III. The want of an assize occasioned no sensible inconveniency; and
the establishment of one in the few places where it has yet taken
place has produced no sensible advantage. In the greater part of the
towns in Scotland, however, there is an incorporation of bakers, who
claim exclusive privileges, though they are not very strictly guarded.
The proportion between the different rates, both of wages and profit,
in the different employments of labour and stock, seems not to be much
affected, as has already been observed, by the riches or poverty, the
advancing, stationary, or declining state of the society. Such
revolutions in the public welfare, though they affect the general
rates both of wages and profit, must, in the end, affect them equally
in all different employments. The proportion between them, therefore,
must remain the same, and cannot well be altered, at least for any
considerable time, by any such revolutions.




CHAPTER XI.

OF THE RENT OF LAND.

Rent, considered as the price paid for the use of land, is naturally
the highest which the tenant can afford to pay in the actual
circumstances of the land. In adjusting the terms of the lease, the
landlord endeavours to leave him no greater share of the produce than
what is sufficient to keep up the stock from which he furnishes the
seed, pays the labour, and purchases and maintains the cattle and
other instruments of husbandry, together with the ordinary profits of
farming stock in the neighbourhood. This is evidently the smallest
share with which the tenant can content himself, without being a
loser, and the landlord seldom means to leave him any more. Whatever
part of the produce, or, what is the same thing, whatever part of its
price, is over and above this share, he naturally endeavours to
reserve to himself as the rent of his land, which is evidently the
highest the tenant can afford to pay in the actual circumstances of
the land. Sometimes, indeed, the liberality, more frequently the
ignorance, of the landlord, makes him accept of somewhat less than
this portion; and sometimes, too, though more rarely, the ignorance of
the tenant makes him undertake to pay somewhat more, or to content
himself with somewhat less, than the ordinary profits of farming stock
in the neighbourhood. This portion, however, may still be considered
as the natural rent of land, or the rent at which it is naturally
meant that land should, for the most part, be let.

The rent of land, it may be thought, is frequently no more than a
reasonable profit or interest for the stock laid out by the landlord
upon its improvement. This, no doubt, may be partly the case upon some
occasions; for it can scarce ever be more than partly the case. The
landlord demands a rent even for unimproved land, and the supposed
interest or profit upon the expense of improvement is generally an
addition to this original rent. Those improvements, besides, are not
always made by the stock of the landlord, but sometimes by that of the
tenant. When the lease comes to be renewed, however, the landlord
commonly demands the same augmentation of rent as if they had been all
made by his own.

He sometimes demands rent for what is altogether incapable of human
improvements. Kelp is a species of sea-weed, which, when burnt, yields
an alkaline salt, useful for making glass, soap, and for several other
purposes. It grows in several parts of Great Britain, particularly in
Scotland, upon such rocks only as lie within the high-water mark,
which are twice every day covered with the sea, and of which the
produce, therefore, was never augmented by human industry. The
landlord, however, whose estate is bounded by a kelp shore of this
kind, demands a rent for it as much as for his corn-fields.

The sea in the neighbourhood of the islands of Shetland is more than
commonly abundant in fish, which makes a great part of the subsistence
of their inhabitants. But, in order to profit by the produce of the
water, they must have a habitation upon the neighbouring land. The
rent of the landlord is in proportion, not to what the farmer can make
by the land, but to what he can make both by the land and the water.
It is partly paid in sea-fish; and one of the very few instances in
which rent makes a part of the price of that commodity, is to be found
in that country.

The rent of land, therefore, considered as the price paid for the use
of the land, is naturally a monopoly price. It is not at all
proportioned to what the landlord may have laid out upon the
improvement of the land, or to what he can afford to take, but to what
the farmer can afford to give.

Such parts only of the produce of land can commonly be brought to
market, of which the ordinary price is sufficient to replace the stock
which must be employed in bringing them thither, together with its
ordinary profits. If the ordinary price is more than this, the surplus
part of it will naturally go to the rent of the land. If it is not
more, though the commodity may be brought to market, it can afford no
rent to the landlord. Whether the price is, or is not more, depends
upon the demand.

There are some parts of the produce of land, for which the demand must
always be such as to afford a greater price than what is sufficient to
bring them to market; and there are others for which it either may or
may not be such as to afford this greater price. The former must
always afford a rent to the landlord. The latter sometimes may and
sometimes may not, according to different circumstances.

Rent, it is to be observed, therefore, enters into the composition of
the price of commodities in a different way from wages and profit.
High or low wages and profit are the causes of high or low price; high
or low rent is the effect of it. It is because high or low wages and
profit must be paid, in order to bring a particular commodity to
market, that its price is high or low. But it is because its price is
high or low, a great deal more, or very little more, or no more, than
what is sufficient to pay those wages and profit, that it affords a
high rent, or a low rent, or no rent at all.

The particular consideration, first, of those parts of the produce of
land which always afford some rent; secondly, of those which sometimes
may and sometimes may not afford rent; and, thirdly, of the variations
which, in the different periods of improvement, naturally take place
in the relative value of those two different sorts of rude produce,
when compared both with one another and with manufactured commodities,
will divide this chapter into three parts.


PART   I. --   Of the Produce of Land which always affords Rent.

As men, like all other animals, naturally multiply in proportion to
the means of their subsistence, food is always more or less in demand.
It can always purchase or command a greater or smaller quantity of
labour, and somebody can always be found who is willing to do
something in order to obtain it. The quantity of labour, indeed, which
it can purchase, is not always equal to what it could maintain, if
managed in the most economical manner, on account of the high wages
which are sometimes given to labour; but it can always purchase such a
quantity of labour as it can maintain, according to the rate at which
that sort of labour is commonly maintained in the neighbourhood.

But land, in almost any situation, produces a greater quantity of food
than what is sufficient to maintain all the labour necessary for
bringing it to market, in the most liberal way in which that labour is
ever maintained. The surplus, too, is always more than sufficient to
replace the stock which employed that labour, together with its
profits. Something, therefore, always remains for a rent to the
landlord.

The most desert moors in Norway and Scotland produce some sort of
pasture for cattle, of which the milk and the increase are always more
than sufficient, not only to maintain all the labour necessary for
tending them, and to pay the ordinary profit to the farmer or the
owner of the herd or flock, but to afford some small rent to the
landlord. The rent increases in proportion to the goodness of the
pasture. The same extent of ground not only maintains a greater number
of cattle, but as they we brought within a smaller compass, less
labour becomes requisite to tend them, and to collect their produce.
The landlord gains both ways; by the increase of the produce, and by
the diminution of the labour which must be maintained out of it.

The rent of land not only varies with its fertility, whatever be its
produce, but with its situation, whatever be its fertility. Land in
the neighbourhood of a town gives a greater rent than land equally
fertile in a distant part of the country. Though it may cost no more
labour to cultivate the one than the other, it must always cost more
to bring the produce of the distant land to market. A greater quantity
of labour, therefore, must be maintained out of it; and the surplus,
from which are drawn both the profit of the farmer and the rent of the
landlord, must be diminished. But in remote parts of the country, the
rate of profit, as has already been shewn, is generally higher than in
the neighbourhood of a large town. A smaller proportion of this
diminished surplus, therefore, must belong to the landlord.

Good roads, canals, and navigable rivers, by diminishing the expense
of carriage, put the remote parts of the country more nearly upon a
level with those in the neighbourhood of the town. They are upon that
account the greatest of all improvements. They encourage the
cultivation of the remote, which must always be the most extensive
circle of the country. They are advantageous to the town by breaking
down the monopoly of the country in its neighbourhood. They are
advantageous even to that part of the country. Though they introduce
some rival commodities into the old market, they open many new markets
to its produce. Monopoly, besides, is a great enemy to good
management, which can never be universally established, but in
consequence of that free and universal competition which forces every
body to have recourse to it for the sake of self defence. It is not
more than fifty years ago, that some of the counties in the
neighbourhood of London petitioned the parliament against the
extension of the turnpike roads into the remoter counties. Those
remoter counties, they pretended, from the cheapness of labour, would
be able to sell their grass and corn cheaper in the London market than
themselves, and would thereby reduce their rents, and ruin their
cultivation. Their rents, however, have risen, and their cultivation
has been improved since that time.

A corn field of moderate fertility produces a much greater quantity of
food for man, than the best pasture of equal extent. Though its
cultivation requires much more labour, yet the surplus which remains
after replacing the seed and maintaining all that labour, is likewise
much greater. If a pound of butcher's meat, therefore, was never
supposed to be worth more than a pound of bread, this greater surplus
would everywhere be of greater value and constitute a greater fund,
both for the profit of the farmer and the rent of the landlord. It
seems to have done so universally in the rude beginnings of
agriculture.

But the relative values of those two different species of food, bread
and butcher's meat, are very different in the different periods of
agriculture. In its rude beginnings, the unimproved wilds, which then
occupy the far greater part of the country, are all abandoned to
cattle. There is more butcher's meat than bread; and bread, therefore,
is the food for which there is the greatest competition, and which
consequently brings the greatest price. At Buenos Ayres, we are told
by Ulloa, four reals, one-and-twenty pence halfpenny sterling, was,
forty or fifty years ago, the ordinary price of an ox, chosen from a
herd of two or three hundred. He says nothing of the price of bread,
probably because he found nothing remarkable about it. An ox there, he
says, costs little more than the labour of catching him. But corn can
nowhere be raised without a great deal of labour; and in a country
which lies upon the river Plate, at that time the direct road from
Europe to the silver mines of Potosi, the money-price of labour could
be very cheap. It is otherwise when cultivation is extended over the
greater part of the country. There is then more bread than butcher's
meat. The competition changes its direction, and the price of
butcher's meat becomes greater than the price of bread.

By the extension, besides, of cultivation, the unimproved wilds become
insufficient to supply the demand for butcher's meat. A great part of
the cultivated lands must be employed in rearing and fattening cattle;
of which the price, therefore, must be sufficient to pay, not only the
labour necessary for tending them, but the rent which the landlord,
and the profit which the farmer, could have drawn from such land
employed in tillage. The cattle bred upon the most uncultivated moors,
when brought to the same market, are, in proportion to their weight or
goodness, sold at the same price as those which are reared upon the
most improved land. The proprietors of those moors profit by it, and
raise the rent of their land in proportion to the price of their
cattle. It is not more than a century ago, that in many parts of the
Highlands of Scotland, butcher's meat was as cheap or cheaper than
even bread made of oatmeal The Union opened the market of England to
the Highland cattle. Their ordinary price, at present, is about three
times greater than at the beginning of the century, and the rents of
many Highland estates have been tripled and quadrupled in the same
time. In almost every part of Great Britain, a pound of the best
butcher's meat is, in the present times, generally worth more than two
pounds of the best white bread; and in plentiful years it is sometimes
worth three or four pounds.

It is thus that, in the progress of improvement, the rent and profit
of unimproved pasture come to be regulated in some measure by the rent
and profit of what is improved, and these again by the rent and profit
of corn. Corn is an annual crop; butcher's meat, a crop which requires
four or five years to grow. As an acre of land, therefore, will
produce a much smaller quantity of the one species of food than of the
other, the inferiority of the quantity must be compensated by the
superiority of the price. If it was more than compensated, more
corn-land would be turned into pasture; and if it was not compensated,
part of what was in pasture would be brought back into corn.

This equality, however, between the rent and profit of grass and those
of corn; of the land of which the immediate produce is food for
cattle, and of that of which the immediate produce is food for men,
must be understood to take place only through the greater part of the
improved lands of a great country. In some particular local situations
it is quite otherwise, and the rent and profit of grass are much
superior to what can be made by corn.

Thus, in the neighbourhood of a great town, the demand for milk, and
for forage to horses, frequently contribute, together with the high
price of butcher's meat, to raise the value of grass above what may be
called its natural proportion to that of corn. This local advantage,
it is evident, cannot be communicated to the lands at a distance.

Particular circumstances have sometimes rendered some countries so
populous, that the whole territory, like the lands in the
neighbourhood of a great town, has not been sufficient to produce both
the grass and the corn necessary for the subsistence of their
inhabitants. Their lands, therefore, have been principally employed in
the production of grass, the more bulky commodity, and which cannot be
so easily brought from a great distance; and corn, the food of the
great body of the people, has been chiefly imported from foreign
countries. Holland is at present in this situation; and a considerable
part of ancient Italy seems to have been so during the prosperity of
the Romans. To feed well, old Cato said, as we are told by Cicero, was
the first and most profitable thing in the management of a private
estate; to feed tolerably well, the second; and to feed ill, the
third. To plough, he ranked only in the fourth place of profit and
advantage. Tillage, indeed, in that part of ancient Italy which lay in
the neighbour hood of Rome, must have been very much discouraged by
the distributions of corn which were frequently made to the people,
either gratuitously, or at a very low price. This corn was brought
from the conquered provinces, of which several, instead of taxes, were
obliged to furnish a tenth part of their produce at a stated price,
about sixpence a-peck, to the republic. The low price at which this
corn was distributed to the people, must necessarily have sunk the
price of what could be brought to the Roman market from Latium, or the
ancient territory of Rome, and must have discouraged its cultivation
in that country.

In an open country, too, of which the principal produce is corn, a
well-inclosed piece of grass will frequently rent higher than any corn
field in its neighbourhood. It is convenient for the maintenance of
the cattle employed in the cultivation of the corn; and its high rent
is, in this case, not so properly paid from the value of its own
produce, as from that of the corn lands which are cultivated by means
of it. It is likely to fall, if ever the neighbouring lands are
completely inclosed. The present high rent of inclosed land in
Scotland seems owing to the scarcity of inclosure, and will probably
last no longer than that scarcity. The advantage of inclosure is
greater for pasture than for corn. It saves the labour of guarding the
cattle, which feed better, too, when they are not liable to be
disturbed by their keeper or his dog.

But where there is no local advantage of this kind, the rent and
profit of corn, or whatever else is the common vegetable food of the
people, must naturally regulate upon the land which is fit for
producing it, the rent and profit of pasture.

The use of the artificial grasses, of turnips, carrots, cabbages, and
the other expedients which have been fallen upon to make an equal
quantity of land feed a greater number of cattle than when in natural
grass, should somewhat reduce, it might be expected, the superiority
which, in an improved country, the price of butcher's meat naturally
has over that of bread. It seems accordingly to have done so; and
there is some reason for believing that, at least in the London
market, the price of butcher's meat, in proportion to the price of
bread, is a good deal lower in the present times than it was in the
beginning of the last century.

In the Appendix to the life of Prince Henry, Doctor Birch has given us
an account of the prices of butcher's meat as commonly paid by that
prince. It is there said, that the four quarters of an ox, weighing
six hundred pounds, usually cost him nine pounds ten shillings, or
thereabouts; that is thirty-one shillings and eight-pence per hundred
pounds weight. Prince Henry died on the 6th of November 1612, in the
nineteenth year of his age.

In March 1764, there was a parliamentary inquiry into the causes of
the high price of provisions at that time. It was then, among other
proof to the same purpose, given in evidence by a Virginia merchant,
that in March 1763, he had victualled his ships for twentyfour or
twenty-five shillings the hundred weight of beef, which he considered
as the ordinary price; whereas, in that dear year, he had paid
twenty-seven shillings for the same weight and sort. This high price
in 1764 is, however, four shillings and eight-pence cheaper than the
ordinary price paid by Prince Henry; and it is the best beef only, it
must be observed, which is fit to be salted for those distant voyages.

The price paid by Prince Henry amounts to 3d. 4/5ths per pound weight
of the whole carcase, coarse and choice pieces taken together; and at
that rate the choice pieces could not have been sold by retail for
less than 4½d. or 5d. the pound.

In the parliamentary inquiry in 1764, the witnesses stated the price
of the choice pieces of the best beef to be to the consumer 4d. and
4½d. the pound; and the coarse pieces in general to be from seven
farthings to 2½d. and 2¾d.; and this, they said, was in general one
halfpenny dearer than the same sort of pieces had usually been sold in
the month of March. But even this high price is still a good deal
cheaper than what we can well suppose the ordinary retail price to
have been in the time of Prince Henry.

During the first twelve years of the last century, the average price
of the best wheat at the Windsor market was £ 1:18:3½d. the quarter of
nine Winchester bushels.

But in the twelve years preceding 1764 including that year, the
average price of the same measure of the best wheat at the same market
was £ 2:1:9½d.

In the first twelve years of the last century, therefore, wheat
appears to have been a good deal cheaper, and butcher's meat a good
deal dearer, than in the twelve years preceding 1764, including that
year.

In all great countries, the greater part of the cultivated lands are
employed in producing either food for men or food for cattle. The rent
and profit of these regulate the rent and profit of all other
cultivated land. If any particular produce afforded less, the land
would soon be turned into corn or pasture; and if any afforded more,
some part of the lands in corn or pasture would soon be turned to that
produce.

Those productions, indeed, which require either a greater original
expense of improvement, or a greater annual expense of cultivation in
order to fit the land for them, appear commonly to afford, the one a
greater rent, the other a greater profit, than corn or pasture. This
superiority, however, will seldom be found to amount to more than a
reasonable interest or compensation for this superior expense.

In a hop garden, a fruit garden, a kitchen garden, both the rent of
the landlord, and the profit of the farmer, are generally greater than
in acorn or grass field. But to bring the ground into this condition
requires more expense. Hence a greater rent becomes due to the
landlord. It requires, too, a more attentive and skilful management.
Hence a greater profit becomes due to the farmer. The crop, too, at
least in the hop and fruit garden, is more precarious. Its price,
therefore, besides compensating all occasional losses, must afford
something like the profit of insurance. The circumstances of
gardeners, generally mean, and always moderate, may satisfy us that
their great ingenuity is not commonly over-recompensed. Their
delightful art is practised by so many rich people for amusement, that
little advantage is to be made by those who practise it for profit;
because the persons who should naturally be their best customers,
supply themselves with all their most precious productions.

The advantage which the landlord derives from such improvements, seems
at no time to have been greater than what was sufficient to compensate
the original expense of making them. In the ancient husbandry, after
the vineyard, a well-watered kitchen garden seems to have been the
part of the farm which was supposed to yield the most valuable
produce. But Democritus, who wrote upon husbandry about two thousand
years ago, and who was regarded by the ancients as one of the fathers
of the art, thought they did not act wisely who inclosed a kitchen
garden. The profit, he said, would not compensate the expense of a
stone-wall: and bricks (he meant, I suppose, bricks baked in the sun)
mouldered with the rain and the winter-storm, and required continual
repairs. Columella, who reports this judgment of Democritus, does not
controvert it, but proposes a very frugal method of inclosing with a
hedge of brambles and briars, which he says he had found by experience
to be both a lasting and an impenetrable fence; but which, it seems,
was not commonly known in the time of Democritus. Palladius adopts the
opinion of Columella, which had before been recommended by Varro. In
the judgment of those ancient improvers, the produce of a kitchen
garden had, it seems, been little more than sufficient to pay the
extraordinary culture and the expense of watering; for in countries so
near the sun, it was thought proper, in those times as in the present,
to have the command of a stream of water, which could be conducted to
every bed in the garden. Through the greater part of Europe, a kitchen
garden is not at present supposed to deserve a better inclosure than
mat recommended by Columella. In Great Britain, and some other
northern countries, the finer fruits cannot Be brought to perfection
but by the assistance of a wall. Their price, therefore, in such
countries, must be sufficient to pay the expense of building and
maintaining what they cannot be had without. The fruit-wall frequently
surrounds the kitchen garden, which thus enjoys the benefit of an
inclosure which its own produce could seldom pay for.

That the vineyard, when properly planted and brought to perfection,
was the most valuable part of the farm, seems to have been an
undoubted maxim in the ancient agriculture, as it is in the modern,
through all the wine countries. But whether it was advantageous to
plant a new vineyard, was a matter of dispute among the ancient
Italian husbandmen, as we learn from Columella. He decides, like a
true lover of all curious cultivation, in favour of the vineyard; and
endeavours to shew, by a comparison of the profit and expense, that it
was a most advantageous improvement. Such comparisons, however,
between the profit and expense of new projects are commonly very
fallacious; and in nothing more so than in agriculture. Had the gain
actually made by such plantations been commonly as great as he
imagined it might have been, there could have been no dispute about
it. The same point is frequently at this day a matter of controversy
in the wine countries. Their writers on agriculture, indeed, the
lovers and promoters of high cultivation, seem generally disposed to
decide with Columella in favour of the vineyard. In France, the
anxiety of the proprietors of the old vineyards to prevent the
planting of any new ones, seems to favour their opinion, and to
indicate a consciousness in those who must have the experience, that
this species of cultivation is at present in that country more
profitable than any other. It seems, at the same time, however, to
indicate another opinion, that this superior profit can last no longer
than the laws which at present restrain the free cultivation of the
vine. In 1731, they obtained an order of council, prohibiting both the
planting of new vineyards, and the renewal of these old ones, of which
the cultivation had been interrupted for two years, without a
particular permission from the king, to be granted only in consequence
of an information from the intendant of the province, certifying that
he had examined the land, and that it was incapable of any other
culture. The pretence of this order was the scarcity of corn and
pasture, and the superabundance of wine. But had this superabundance
been real, it would, without any order of council, have effectually
prevented the plantation of new vineyards, by reducing the profits of
this species of cultivation below their natural proportion to those of
corn and pasture. With regard to the supposed scarcity of corn
occasioned by the multiplication of vineyards, corn is nowhere in
France more carefully cultivated than in the wine provinces, where the
land is fit for producing it: as in Burgundy, Guienne, and the Upper
Languedoc. The numerous hands employed in the one species of
cultivation necessarily encourage the other, by affording a ready
market for its produce. To diminish the number of those who are
capable of paying it, is surely a most unpromising expedient for
encouraging the cultivation of corn. It is like the policy which would
promote agriculture, by discouraging manufactures.

The rent and profit of those productions, therefore, which require
either a greater original expense of improvement in order to fit the
land for them, or a greater annual expense of cultivation, though
often much superior to those of corn and pasture, yet when they do no
more than compensate such extraordinary expense, are in reality
regulated by the rent and profit of those common crops.

It sometimes happens, indeed, that the quantity of land which can be
fitted for some particular produce, is too small to supply the
effectual demand. The whole produce can be disposed of to those who
are willing to give somewhat more than what is sufficient to pay the
whole rent, wages, and profit, necessary for raising and bringing it
to market, according to their natural rates, or according to the rates
at which they are paid in the greater part of other cultivated land.
The surplus part of the price which remains after defraying the whole
expense of improvement and cultivation, may commonly, in this case,
and in this case only, bear no regular proportion to the like surplus
in corn or pasture, but may exceed it in almost any degree; and the
greater part of this excess naturally goes to the rent of the
landlord.

The usual and natural proportion, for example, between the rent and
profit of wine, and those of corn and pasture, must be understood to
take place only with regard to those vineyards which produce nothing
but good common wine, such as can be raised almost anywhere, upon any
light, gravelly, or sandy soil, and which has nothing to recommend it
but its strength and wholesomeness. It is with such vineyards only,
that the common land of the country can be brought into competition;
for with those of a peculiar quality it is evident that it cannot.

The vine is more affected by the difference of soils than any other
fruit-tree. From some it derives a flavour which no culture or
management can equal, it is supposed, upon any other. This flavour,
real or imaginary, is sometimes peculiar to the produce of a few
vineyards; sometimes it extends through the greater part of a small
district, and sometimes through a considerable part of a large
province. The whole quantity of such wines that is brought to market
falls short of the effectual demand, or the demand of those who would
be willing to pay the whole rent, profit, and wages, necessary for
preparing and bringing them thither, according to the ordinary rate,
or according to the rate at which they are paid in common vineyards.
The whole quantity, therefore, can be disposed of to those who are
willing to pay more, which necessarily raises their price above that
of common wine. The difference is greater or less, according as the
fashionableness and scarcity of the wine render the competition of the
buyers more or less eager. Whatever it be, the greater part of it goes
to the rent of the landlord. For though such vineyards are in general
more carefully cultivated than most others, the high price of the wine
seems to be, not so much the effect, as the cause of this careful
cultivation. In so valuable a produce, the loss occasioned by
negligence is so great, as to force even the most careless to
attention. A small part of this high price, therefore, is sufficient
to pay the wages of the extraordinary labour bestowed upon their
cultivation, and the profits of the extraordinary stock which puts
that labour into motion.

The sugar colonies possessed by the European nations in the West
Indies may be compared to those precious vineyards. Their whole
produce falls short of the effectual demand of Europe, and can be
disposed of to those who are willing to give more than what is
sufficient to pay the whole rent, profit, and wages, necessary for
preparing and bringing it to market, according to the rate at which
they are commonly paid by any other produce. In Cochin China, the
finest white sugar generally sells for three piastres the quintal,
about thirteen shillings and sixpence of our money, as we are told by
Mr Poivre {Voyages d'un Philosophe.}, a very careful observer of the
agriculture of that country. What is there called the quintal, weighs
from a hundred and fifty to two hundred Paris pounds, or a hundred and
seventy-five Paris pounds at a medium, which reduces the price of the
hundred weight English to about eight shillings sterling; not a fourth
part of what is commonly paid for the brown or muscovada sugars
imported from our colonies, and not a sixth part of what is paid for
the finest white sugar. The greater part of the cultivated lands in
Cochin China are employed in producing corn and rice, the food of the
great body of the people. The respective prices of corn, rice, and
sugar, are there probably in the natural proportion, or in that which
naturally takes place in the different crops of the greater part of
cultivated land, and which recompenses the landlord and farmer, as
nearly as can be computed, according to what is usually the original
expense of improvement, and the annual expense of cultivation. But in
our sugar colonies, the price of sugar bears no such proportion to
that of the produce of a rice or corn field either in Europe or
America. It is commonly said that a sugar planter expects that the rum
and the molasses should defray the whole expense of his cultivation,
and that his sugar should be all clear profit. If this be true, for I
pretend not to affirm it, it is as if a corn farmer expected to defray
the expense of his cultivation with the chaff and the straw, and that
the grain should be all clear profit. We see frequently societies of
merchants in London, and other trading towns, purchase waste lands in
our sugar colonies, which they expect to improve and cultivate with
profit, by means of factors and agents, notwithstanding the great
distance and the uncertain returns, from the defective administration
of justice in those countries. Nobody will attempt to improve and
cultivate in the same manner the most fertile lands of Scotland,
Ireland, or the corn provinces of North America, though, from the more
exact administration of justice in these countries, more regular
returns might be expected.

In Virginia and Maryland, the cultivation of tobacco is preferred, as
most profitable, to that of corn. Tobacco might be cultivated with
advantage through the greater part of Europe; but, in almost every
part of Europe, it has become a principal subject of taxation; and to
collect a tax from every different farm in the country where this
plant might happen to be cultivated, would be more difficult, it has
been supposed, than to levy one upon its importation at the
custom-house. The cultivation of tobacco has, upon this account, been
most absurdly prohibited through the greater part of Europe, which
necessarily gives a sort of monopoly to the countries where it is
allowed; and as Virginia and Maryland produce the greatest quantity of
it, they share largely, though with some competitors, in the advantage
of this monopoly. The cultivation of tobacco, however, seems not to be
so advantageous as that of sugar. I have never even heard of any
tobacco plantation that was improved and cultivated by the capital of
merchants who resided in Great Britain; and our tobacco colonies send
us home no such wealthy planters as we see frequently arrive from our
sugar islands. Though, from the preference given in those colonies to
the cultivation of tobacco above that of corn, it would appear that
the effectual demand of Europe for tobacco is not completely supplied,
it probably is more nearly so than that for sugar; and though the
present price of tobacco is probably more than sufficient to pay the
whole rent, wages, and profit, necessary for preparing and bringing it
to market, according to the rate at which they are commonly paid in
corn land, it must not be so much more as the present price of sugar.
Our tobacco planters, accordingly, have shewn the same fear of the
superabundance of tobacco, which the proprietors of the old vineyards
in France have of the superabundance of wine. By act of assembly, they
have restrained its cultivation to six thousand plants, supposed to
yield a thousand weight of tobacco, for every negro between sixteen
and sixty years of age. Such a negro, over and above this quantity of
tobacco, can manage, they reckon, four acres of Indian corn. To
prevent the market from being overstocked, too, they have sometimes,
in plentiful years, we are told by Dr Douglas {Douglas's Summary,vol.
ii. p. 379, 373.} (I suspect he has been ill informed), burnt a
certain quantity of tobacco for every negro, in the same manner as the
Dutch are said to do of spices. If such violent methods are necessary
to keep up the present price of tobacco, the superior advantage of its
culture over that of corn, if it still has any, will not probably be
of long continuance.

It is in this manner that the rent of the cultivated land, of which
the produce is human food, regulates the rent of the greater part of
other cultivated land. No particular produce can long afford less,
because the land would immediately be turned to another use; and if
any particular produce commonly affords more, it is because the
quantity of land which can be fitted for it is too small to supply the
effectual demand.

In Europe, corn is the principal produce of land, which serves
immediately for human food. Except in particular situations,
therefore, the rent of corn land regulates in Europe that of all other
cultivated land. Britain need envy neither the vineyards of France,
nor the olive plantations of Italy. Except in particular situations,
the value of these is regulated by that of corn, in which the
fertility of Britain is not much inferior to that of either of those
two countries.

If, in any country, the common and favourite vegetable food of the
people should be drawn from a plant of which the most common land,
with the same, or nearly the same culture, produced a much greater
quantity than the most fertile does of corn; the rent of the landlord,
or the surplus quantity of food which would remain to him, after
paying the labour, and replacing the stock of the farmer, together
with its ordinary profits, would necessarily be much greater. Whatever
was the rate at which labour was commonly maintained in that country,
this greater surplus could always maintain a greater quantity of it,
and, consequently, enable the landlord to purchase or command a
greater quantity of it. The real value of his rent, his real power and
authority, his command of the necessaries and conveniencies of life
with which the labour of other people could supply him, would
necessarily be much greater.

A rice field produces a much greater quantity of food than the most
fertile corn field. Two crops in the year, from thirty to sixty
bushels each, are said to be the ordinary produce of an acre. Though
its cultivation, therefore, requires more labour, a much greater
surplus remains after maintaining all that labour. In those rice
countries, therefore, where rice is the common and favourite vegetable
food of the people, and where the cultivators are chiefly maintained
with it, a greater share of this greater surplus should belong to the
landlord than in corn countries. In Carolina, where the planters, as
in other British colonies, are generally both farmers and landlords,
and where rent, consequently, is confounded with profit, the
cultivation of rice is found to be more profitable than that of corn,
though their fields produce only one crop in the year, and though,
from the prevalence of the customs of Europe, rice is not there the
common and favourite vegetable food of the people.

A good rice field is a bog at all seasons, and at one season a bog
covered with water. It is unfit either for corn, or pasture, or
vineyard, or, indeed, for any other vegetable produce that is very
useful to men; and the lands which are fit for those purposes are not
fit for rice. Even in the rice countries, therefore, the rent of rice
lands cannot regulate the rent of the other cuitivated land which can
never be turned to that produce.

The food produced by a field of potatoes is not inferior in quantity
to that produced by a field of rice, and much superior to what is
produced by a field of wheat. Twelve thousand weight of potatoes from
an acre of land is not a greater produce than two thousand weight of
wheat. The food or solid nourishment, indeed, which can be drawn from
each of those two plants, is not altogether in proportion to their
weight, on account of the watery nature of potatoes. Allowing,
however, half the weight of this root to go to water, a very large
allowance, such an acre of potatoes will still produce six thousand
weight of solid nourishment, three times the quantity produced by the
acre of wheat. An acre of potatoes is cultivated with less expense
than an acre of wheat; the fallow, which generally precedes the sowing
of wheat, more than compensating the hoeing and other extraordinary
culture which is always given to potatoes. Should this root ever
become in any part of Europe, like rice in some rice countries, the
common and favourite vegetable food of the people, so as to occupy the
same proportion of the lands in tillage, which wheat and other sorts
of grain for human food do at present, the same quantity of cultivated
land would maintain a much greater number of people; and the labourers
being generally fed with potatoes, a greater surplus would remain
after replacing all the stock, and maintaining all the labour employed
in cultivation. A greater share of this surplus, too, would belong to
the landlord. Population would increase, and rents would rise much
beyond what they are at present.

The land which is fit for potatoes, is fit for almost every other
useful vegetable. If they occupied the same proportion of cultivated
land which corn does at present, they would regulate, in the same
manner, the rent of the greater part of other cultivated land.

In some parts of Lancashire, it is pretended, I have been told, that
bread of oatmeal is a heartier food for labouring people than wheaten
bread, and I have frequently heard the same doctrine held in Scotland.
I am, however, somewhat doubtful of the truth of it. The common people
in Scotland, who are fed with oatmeal, are in general neither so
strong nor so handsome as the same rank of people in England, who are
fed with wheaten bread. They neither work so well, nor look so well;
and as there is not the same difference between the people of fashion
in the two countries, experience would seem to shew, that the food of
the common people in Scotland is not so suitable to the human
constitution as that of their neighbours of the same rank in England.
But it seems to be otherwise with potatoes. The chairmen, porters, and
coal-heavers in London, and those unfortunate women who live by
prostitution, the strongest men and the most beautiful women perhaps
in the British dominions, are said to be, the greater part of them,
from the lowest rank of people in Ireland, who are generally fed with
this root. No food can afford a more decisive proof of its nourishing
quality, or of its being peculiarly suitable to the health of the
human constitution.

It is difficult to preserve potatoes through the year, and impossible
to store them like corn, for two or three years together. The fear of
not being able to sell them before they rot, discourages their
cultivation, and is, perhaps, the chief obstacle to their ever
becoming in any great country, like bread, the principal vegetable
food of all the different ranks of the people.


PART  II.  --  Of the Produce of Land, which sometimes does, and
sometimes does not, afford Rent.

Human food seems to be the only produce of land, which always and
necessarily affords some rent to the landlord. Other sorts of produce
sometimes may, and sometimes may not, according to different
circumstances.

After food, clothing and lodging are the two great wants of mankind.

Land, in its original rude state, can afford the materials of clothing
and lodging to a much greater number of people than it can feed. In
its improved state, it can sometimes feed a greater number of people
than it can supply with those materials; at least in the way in which
they require them, and are willing to pay for them. In the one state,
therefore, there is always a superabundance of these materials, which
are frequently, upon that account, of little or no value. In the
other, there is often a scarcity, which necessarily augments their
value. In the one state, a great part of them is thrown away as
useless and the price of what is used is considered as equal only to
the labour and expense of fitting it for use, and can, therefore,
afford no rent to the landlord. In the other, they are all made use
of, and there is frequently a demand for more than can be had.
Somebody is always willing to give more for every part of them, than
what is sufficient to pay the expense of bringing them to market.
Their price, therefore, can always afford some rent to the landlord.

The skins of the larger animals were the original materials of
clothing. Among nations of hunters and shepherds, therefore, whose
food consists chiefly in the flesh of those animals, everyman, by
providing himself with food, provides himself with the materials of
more clothing than he can wear. If there was no foreign commerce, the
greater part of them would be thrown away as things of no value. This
was probably the case among the hunting nations of North America,
before their country was discovered by the Europeans, with whom they
now exchange their surplus peltry, for blankets, fire-arms, and
brandy, which gives it some value. In the present commercial state of
the known world, the most barbarous nations, I believe, among whom
land property is established, have some foreign commerce of this kind,
and find among their wealthier neighbours such a demand for all the
materials of clothing, which their land produces, and which can
neither be wrought up nor consumed at home, as raises their price
above what it costs to send them to those wealthier neighbours. It
affords, therefore, some rent to the landlord. When the greater part
of the Highland cattle were consumed on their own hills, the
exportation of their hides made the most considerable article of the
commerce of that country, and what they were exchanged for afforded
some addition to the rent of the Highland estates. The wool of
England, which in old times, could neither be consumed nor wrought up
at home, found a market in the then wealthier and more industrious
country of Flanders, and its price afforded something to the rent of
the land which produced it. In countries not better cultivated than
England was then, or than the Highlands of Scotland are now, and which
had no foreign commerce, the materials of clothing would evidently be
so superabundant, that a great part of them would be thrown away as
useless, and no part could afford any rent to the landlord.

The materials of lodging cannot always be transported to so great a
distance as those of clothing, and do not so readily become an object
of foreign commerce. When they are superabundant in the country which
produces them, it frequently happens, even in the present commercial
state of the world, that they are of no value to the landlord. A good
stone quarry in the neighbourhood of London would afford a
considerable rent. In many parts of Scotland and Wales it affords
none. Barren timber for building is of great value in a populous and
well-cultivated country, and the land which produces it affords a
considerable rent. But in many parts of North America, the landlord
would be much obliged to any body who would carry away the greater
part of his large trees. In some parts of the Highlands of Scotland,
the bark is the only part of the wood which, for want of roads and
water-carriage, can be sent to market; the timber is left to rot upon
the ground. When the materials of lodging are so superabundant, the
part made use of is worth only the labour and expense of fitting it
for that use. It affords no rent to the landlord, who generally grants
the use of it to whoever takes the trouble of asking it. The demand of
wealthier nations, however, sometimes enables him to get a rent for
it. The paving of the streets of London has enabled the owners of some
barren rocks on the coast of Scotland to draw a rent from what never
afforded any before. The woods of Norway, and of the coasts of the
Baltic, find a market in many parts of Great Britain, which they could
not find at home, and thereby afford some rent to their proprietors.

Countries are populous, not in proportion to the number of people whom
their produce can clothe and lodge, but in proportion to that of those
whom it can feed. When food is provided, it is easy to find the
necessary clothing and lodging. But though these are at hand, it may
often be difficult to find food. In some parts of the British
dominions, what is called a house may be built by one day's labour of
one man. The simplest species of clothing, the skins of animals,
require somewhat more labour to dress and prepare them for use. They
do not, however, require a great deal. Among savage or barbarous
nations, a hundredth, or little more than a hundredth part of the
labour of the whole year, will be sufficient to provide them with such
clothing and lodging as satisfy the greater part of the people. All
the other ninety-nine parts are frequently no more than enough to
provide them with food.

But when, by the improvement and cultivation of land, the labour of
one family can provide food for two, the labour of half the society
becomes sufficient to provide food for the whole. The other half,
therefore, or at least the greater part of them, can be employed in
providing other things, or in satisfying the other wants and fancies
of mankind. Clothing and lodging, household furniture, and what is
called equipage, are the principal objects of the greater part of
those wants and fancies. The rich man consumes no more food than his
poor neighbour. In quality it may be very different, and to select and
prepare it may require more labour and art; but in quantity it is very
nearly the same. But compare the spacious palace and great wardrobe of
the one, with the hovel and the few rags of the other, and you will be
sensible that the difference between their clothing, lodging, and
household furniture, is almost as great in quantity as it is in
quality. The desire of food is limited in every man by the narrow
capacity of the human stomach; but the desire of the conveniencies and
ornaments of building, dress, equipage, and household furniture, seems
to have no limit or certain boundary. Those, therefore, who have the
command of more food than they themselves can consume, are always
willing to exchange the surplus, or, what is the same thing, the price
of it, for gratifications of this other kind. What is over and above
satisfying the limited desire, is given for the amusement of those
desires which cannot be satisfied, but seem to be altogether endless.
The poor, in order to obtain food, exert themselves to gratify those
fancies of the rich; and to obtain it more certainly, they vie with
one another in the cheapness and perfection of their work. The number
of workmen increases with the increasing quantity of food, or with the
growing improvement and cultivation of the lands; and as the nature of
their business admits of the utmost subdivisions of labour, the
quantity of materials which they can work up, increases in a much
greater proportion than their numbers. Hence arises a demand for every
sort of material which human invention can employ, either usefully or
ornamentally, in building, dress, equipage, or household furniture;
for the fossils and minerals contained in the bowels of the earth, the
precious metals, and the precious stones.

Food is, in this manner, not only the original source of rent, but
every other part of the produce of land which afterwards affords rent,
derives that part of its value from the improvement of the powers of
labour in producing food, by means of the improvement and cultivation
of land.

Those other parts of the produce of land, however, which afterwards
afford rent, do not afford it always. Even in improved and cultivated
countries, the demand for them is not always such as to afford a
greater price than what is sufficient to pay the labour, and replace,
together with its ordinary profits, the stock which must be employed
in bringing them to market. Whether it is or is not such, depends upon
different circumstances.

Whether a coal mine, for example, can afford any rent, depends partly
upon its fertility, and partly upon its situation.

A mine of any kind may be said to be either fertile or barren,
according as the quantity of mineral which can be brought from it by a
certain quantity of labour, is greater or less than what can be
brought by an equal quantity from the greater part of other mines of
the same kind.

Some coal mines, advantageously situated, cannot be wrought on account
of their barrenness. The produce does not pay the expense. They can
afford neither profit nor rent.

There are some, of which the produce is barely sufficient to pay the
labour, and replace, together with its ordinary profits, the stock
employed in working them. They afford some profit to the undertaker of
the work, but no rent to the landlord. They can be wrought
advantageously by nobody but the landlord, who, being himself the
undertaker of the work, gets the ordinary profit of the capital which
he employs in it. Many coal mines in Scotland are wrought in this
manner, and can be wrought in no other. The landlord will allow nobody
else to work them without paying some rent, and nobody can afford to
pay any.

Other coal mines in the same country, sufficiently fertile, cannot be
wrought on account of their situation. A quantity of mineral,
sufficient to defray the expense of working, could be brought from the
mine by the ordinary, or even less than the ordinary quantity of
labour: but in an inland country, thinly inhabited, and without either
good roads or water-carriage, this quantity could not be sold.

Coals are a less agreeable fuel than wood: they are said too to be
less wholesome. The expense of coals, therefore, at the place where
they are consumed, must generally be somewhat less than that of wood.

The price of wood, again, varies with the state of agriculture, nearly
in the same manner, and exactly for the same reason, as the price of
cattle. In its rude beginnings, the greater part of every country is
covered with wood, which is then a mere incumbrance, of no value to
the landlord, who would gladly give it to any body for the cutting. As
agriculture advances, the woods are partly cleared by the progress of
tillage, and partly go to decay in consequence of the increased number
of cattle. These, though they do not increase in the same proportion
as corn, which is altogether the acquisition of human industry, yet
multiply under the care and protection of men, who store up in the
season of plenty what may maintain them in that of scarcity; who,
through the whole year, furnish them with a greater quantity of food
than uncultivated nature provides for them; and who, by destroying and
extirpating their enemies, secure them in the free enjoyment of all
that she provides. Numerous herds of cattle, when allowed to wander
through the woods, though they do not destroy the old trees, hinder
any young ones from coming up; so that, in the course of a century or
two, the whole forest goes to ruin. The scarcity of wood then raises
its price. It affords a good rent; and the landlord sometimes finds
that he can scarce employ his best lands more advantageously than in
growing barren timber, of which the greatness of the profit often
compensates the lateness of the returns. This seems, in the present
times, to be nearly the state of things in several parts of Great
Britain, where the profit of planting is found to be equal to that of
either corn or pasture. The advantage which the landlord derives from
planting can nowhere exceed, at least for any considerable time, the
rent which these could afford him; and in an inland country, which is
highly cuitivated, it will frequently not fall much short of this
rent. Upon the sea-coast of a well-improved country, indeed, if coals
can conveniently be had for fuel, it may sometimes be cheaper to bring
barren timber for building from less cultivated foreign countries than
to raise it at home. In the new town of Edinburgh, built within these
few years, there is not, perhaps, a single stick of Scotch timber.

Whatever may be the price of wood, if that of coals is such that the
expense of a coal fire is nearly equal to that of a wood one we may be
assured, that at that place, and in these circumstances, the price of
coals is as high as it can be. It seems to be so in some of the inland
parts of England, particularly in Oxfordshire, where it is usual, even
in the fires of the common people, to mix coals and wood together, and
where the difference in the expense of those two sorts of fuel cannot,
therefore, be very great. Coals, in the coal countries, are everywhere
much below this highest price. If they were not, they could not bear
the expense of a distant carriage, either by land or by water. A small
quantity only could be sold; and the coal masters and the coal
proprietors find it more for their interest to sell a great quantity
at a price somewhat above the lowest, than a small quantity at the
highest. The most fertile coal mine, too, regulates the price of coals
at all the other mines in its neighbourhood. Both the proprietor and
the undertaker of the work find, the one that he can get a greater
rent, the other that he can get a greater profit, by somewhat
underselling all their neighbours. Their neighbours are soon obliged
to sell at the same price, though they cannot so well afford it, and
though it always diminishes, and sometimes takes away altogether, both
their rent and their profit. Some works are abandoned altogether;
others can afford no rent, and can be wrought only by the proprietor.

The lowest price at which coals can be sold for any considerable time,
is, like that of all other commodities, the price which is barely
sufficient to replace, together with its ordinary profits, the stock
which must be employed in bringing them to market. At a coal mine for
which the landlord can get no rent, but, which he must either work
himself or let it alone altogether, the price of coals must generally
be nearly about this price.

Rent, even where coals afford one, has generally a smaller share in
their price than in that of most other parts of the rude produce of
land. The rent of an estate above ground, commonly amounts to what is
supposed to be a third of the gross produce; and it is generally a
rent certain and independent of the occasional variations in the crop.
In coal mines, a fifth of the gross produce is a very great rent, a
tenth the common rent; and it is seldom a rent certain, but depends
upon the occasional variations in the produce. These are so great,
that in a country where thirty years purchase is considered as a
moderate price for the property of a landed estate, ten years purchase
is regarded as a good price for that of a coal mine.

The value of a coal mine to the proprietor, frequently depends as much
upon its situation as upon its fertility. That of a metallic mine
depends more upon its fertility, and less upon its situation. The
coarse, and still more the precious metals, when separated from the
ore, are so valuable, that they can generally bear the expense of a
very long land, and of the most distant sea carriage. Their market is
not confined to the countries in the neighbourhood of the mine, but
extends to the whole world. The copper of Japan makes an article of
commerce in Europe; the iron of Spain in that of Chili and Peru. The
silver of Peru finds its way, not only to Europe, but from Europe to
China.

The price of coals in Westmoreland or Shropshire can have little
effect on their price at Newcastle; and their price in the Lionnois
can have none at all. The productions of such distant coal mines can
never be brought into competition with one another. But the
productions of the most distant metallic mines frequently may, and in
fact commonly are.

The price, therefore, of the coarse, and still more that of the
precious metals, at the most fertile mines in the world, must
necessarily more or less affect their price at every other in it. The
price of copper in Japan must have some influence upon its price at
the copper mines in Europe. The price of silver in Peru, or the
quantity either of labour or of other goods which it will purchase
there, must have some influence on its price, not only at the silver
mines of Europe, but at those of China. After the discovery of the
mines of Peru, the silver mines of Europe were, the greater part of
them, abandoned. The value of silver was so much reduced, that their
produce could no longer pay the expense of working them, or replace,
with a profit, the food, clothes, lodging, and other necessaries which
were consumed in that operation. This was the case, too, with the
mines of Cuba and St. Domingo, and even with the ancient mines of
Peru, after the discovery of those of Potosi.

The price of every metal, at every mine, therefore, being regulated in
some measure by its price at the most fertile mine in the world that
is actually wrought, it can, at the greater part of mines, do very
little more than pay the expense of working, and can seldom afford a
very high rent to the landlord. Rent accordingly, seems at the greater
part of mines to have but a small share in the price of the coarse,
and a still smaller in that of the precious metals. Labour and profit
make up the greater part of both.

A sixth part of the gross produce may be reckoned the average rent of
the tin mines of Cornwall, the most fertile that are known in the
world, as we are told by the Rev. Mr. Borlace, vice-warden of the
stannaries. Some, he says, afford more, and some do not afford so
much. A sixth part of the gross produce is the rent, too, of several
very fertile lead mines in Scotland.

In the silver mines of Peru, we are told by Frezier and Ulloa, the
proprietor frequently exacts no other acknowledgment from the
undertaker of the mine, but that he will grind the ore at his mill,
paying him the ordinary multure or price of grinding. Till 1736,
indeed, the tax of the king of Spain amounted to one fifth of the
standard silver, which till then might be considered as the real rent
of the greater part of the silver mines of Peru, the richest which
have been known in the world. If there had been no tax, this fifth
would naturally have belonged to the landlord, and many mines might
have been wrought which could not then be wrought, because they could
not afford this tax. The tax of the duke of Cornwall upon tin is
supposed to amount to more than five per cent. or one twentieth part
of the value; and whatever may be his proportion, it would naturally,
too, belong to the proprietor of the mine, if tin was duty free. But
if you add one twentieth to one sixth, you will find that the whole
average rent of the tin mines of Cornwall, was to the whole average
rent of the silver mines of Peru, as thirteen to twelve. But the
silver mines of Peru are not now able to pay even this low rent; and
the tax upon silver was, in 1736, reduced from one fifth to one tenth.
Even this tax upon silver, too, gives more temptation to smuggling
than the tax of one twentieth upon tin; and smuggling must be much
easier in the precious than in the bulky commodity. The tax of the
king of Spain, accordingly, is said to be very ill paid, and that of
the duke of Cornwall very well. Rent, therefore, it is probable, makes
a greater part of the price of tin at the most fertile tin mines than
it does of silver at the most fertile silver mines in the world. After
replacing the stock employed in working those different mines,
together with its ordinary profits, the residue which remains to the
proprietor is greater, it seems, in the coarse, than in the precious
metal.

Neither are the profits of the undertakers of silver mines commonly
very great in Peru. The same most respectable and well-informed authors
acquaint us, that when any person undertakes to work a new mine in
Peru, he is universally looked upon as a man destined to bankruptcy
and ruin, and is upon that account shunned and avoided by every
body. Mining, it seems, is considered there in the same light as here,
as a lottery, in which the prizes do not compensate the blanks, though
the greatness of some tempts many adventurers to throw away their
fortunes in such unprosperous projects.

As the sovereign, however, derives a considerable part of his revenue
from the produce of silver mines, the law in Peru gives every possible
encouragement to the discovery and working of new ones. Whoever
discovers a new mine, is entitled to measure off two hundred and
forty-six feet in length, according to what he supposes to be the
direction of the vein, and half as much in breadth. He becomes
proprietor of this portion of the mine, and can work it without paving
any acknowledgment to the landlord. The interest of the duke of
Cornwall has given occasion to a regulation nearly of the same kind in
that ancient dutchy. In waste and uninclosed lands, any person who
discovers a tin mine may mark out its limits to a certain extent,
which is called bounding a mine. The bounder becomes the real
proprietor of the mine, and may either work it himself, or give it in
lease to another, without the consent of the owner of the land, to
whom, however, a very small acknowledgment must be paid upon working
it. In both regulations, the sacred rights of private property are
sacrificed to the supposed interests of public revenue.

The same encouragement is given in Peru to the discovery and working
of new gold mines; and in gold the king's tax amounts only to a
twentieth part of the standard rental. It was once a fifth, and
afterwards a tenth, as in silver; but it was found that the work could
not bear even the lowest of these two taxes. If it is rare, however,
say the same authors, Frezier and Ulloa, to find a person who has made
his fortune by a silver, it is still much rarer to find one who has
done so by a gold mine. This twentieth part seems to be the whole rent
which is paid by the greater part of the gold mines of Chili and Peru.
Gold, too, is much more liable to be smuggled than even silver; not
only on account of the superior value of the metal in proportion to
its bulk, but on account of the peculiar way in which nature produces
it. Silver is very seldom found virgin, but, like most other metals,
is generally mineralized with some other body, from which it is
impossible to separate it in such quantities as will pay for the
expense, but by a very laborious and tedious operation, which cannot
well be carried on but in work-houses erected for the purpose, and,
therefore, exposed to the inspection of the king's officers. Gold, on
the contrary, is almost always found virgin. It is sometimes found in
pieces of some bulk; and, even when mixed, in small and almost
insensible particles, with sand, earth, and other extraneous bodies,
it can be separated from them by a very short and simple operation,
which can be carried on in any private house by any body who is
possessed of a small quantity of mercury. If the king's tax,
therefore, is but ill paid upon silver, it is likely to be much worse
paid upon gold; and rent must make a much smaller part of the price of
gold than that of silver.

The lowest price at which the precious metals can be sold, or the
smallest quantity of other goods for which they can be exchanged,
during any considerable time, is regulated by the same principles
which fix the lowest ordinary price of all other goods. The stock
which must commonly be employed, the food, clothes, and lodging, which
must commonly be consumed in bringing them from the mine to the
market, determine it. It must at least be sufficient to replace that
stock, with the ordinary profits.

Their highest price, however, seems not to be necessarily determined
by any thing but the actual scarcity or plenty of these metals
themselves. It is not determined by that of any other commodity, in
the same manner as the price of coals is by that of wood, beyond which
no scarcity can ever raise it. Increase the scarcity of gold to a
certain degree, and the smallest bit of it may become more precious
than a diamond, and exchange for a greater quantity of other goods.

The demand for those metals arises partly from their utility, and
partly from their beauty. If you except iron, they are more useful
than, perhaps, any other metal. As they are less liable to rust and
impurity, they can more easily be kept clean; and the utensils, either
of the table or the kitchen, are often, upon that account, more
agreeable when made of them. A silver boiler is more cleanly than a
lead, copper, or tin one; and the same quality would render a gold
boiler still better than a silver one. Their principal merit, however,
arises from their beauty, which renders them peculiarly fit for the
ornaments of dress and furniture. No paint or dye can give so splendid
a colour as gilding. The merit of their beauty is greatly enhanced by
their scarcity. With the greater part of rich people, the chief
enjoyment of riches consists in the parade of riches; which, in their
eye, is never so complete as when they appear to possess those
decisive marks of opulence which nobody can possess but themselves. In
their eyes, the merit of an object, which is in any degree either
useful or beautiful, is greatly enhanced by its scarcity, or by the
great labour which it requires to collect any considerable quantity of
it; a labour which nobody can afford to pay but themselves. Such
objects they are willing to purchase at a higher price than things
much more beautiful and useful, but more common. These qualities of
utility, beauty, and scarcity, are the original foundation of the high
price of those metals, or of the great quantity of other goods for
which they can everywhere be exchanged. This value was antecedent to,
and independent of their being employed as coin, and was the quality
which fitted them for that employment. That employment, however, by
occasioning a new demand, and by diminishing the quantity which could
be employed in any other way, may have afterwards contributed to keep
up or increase their value.

The demand for the precious stones arises altogether from their
beauty. They are of no use but as ornaments; and the merit of their
beauty is greatly enhanced by their scarcity, or by the difficulty and
expense of getting them from the mine. Wages and profit accordingly
make up, upon most occasions, almost the whole of the high price. Rent
comes in but for a very small share, frequently for no share; and the
most fertile mines only afford any considerable rent. When Tavernier,
a jeweller, visited the diamond mines of Golconda and Visiapour, he
was informed that the sovereign of the country, for whose benefit they
were wrought, had ordered all of them to be shut up except those which
yielded the largest and finest stones. The other, it seems, were to
the proprietor not worth the working.

As the prices, both of the precious metals and of the precious stones,
is regulated all over the world by their price at the most fertile
mine in it, the rent which a mine of either can afford to its
proprietor is in proportion, not to its absolute, but to what may be
called its relative fertility, or to its superiority over other mines
of the same kind. If new mines were discovered, as much superior to
those of Potosi, as they were superior to those of Europe, the value
of silver might be so much degraded as to render even the mines of
Potosi not worth the working. Before the discovery of the Spanish West
Indies, the most fertile mines in Europe may have afforded as great a
rent to their proprietors as the richest mines in Peru do at present.
Though the quantity of silver was much less, it might have exchanged
for an equal quantity of other goods, and the proprietor's share might
have enabled him to purchase or command an equal quantity either of
labour or of commodities.

The value, both of the produce and of the rent, the real revenue which
they afforded, both to the public and to the proprietor, might have
been the same.

The most abundant mines, either of the precious metals, or of the
precious stones, could add little to the wealth of the world. A
produce, of which the value is principally derived from its scarcity,
is necessarily degraded by its abundance. A service of plate, and the
other frivolous ornaments of dress and furniture, could be purchased
for a smaller quantity of commodities; and in this would consist the
sole advantage which the world could derive from that abundance.

It is otherwise in estates above ground. The value, both of their
produce and of their rent, is in proportion to their absolute, and not
to their relative fertility. The land which produces a certain
quantity of food, clothes, and lodging, can always feed, clothe, and
lodge, a certain number of people; and whatever may be the proportion
of the landlord, it will always give him a proportionable command of
the labour of those people, and of the commodities with which that
labour can supply him. The value of the most barren land is not
diminished by the neighbourhood of the most fertile. On the contrary,
it is generally increased by it. The great number of people maintained
by the fertile lands afford a market to many parts of the produce of
the barren, which they could never have found among those whom their
own produce could maintain.

Whatever increases the fertility of land in producing food, increases
not only the value of the lands upon which the improvement is
bestowed, but contributes likewise to increase that of many other
lands, by creating a new demand for their produce. That abundance of
food, of which, in consequence of the improvement of land, many people
have the disposal beyond what they themselves can consume, is the
great cause of the demand, both for the precious metals and the
precious stones, as well as for every other conveniency and ornament
of dress, lodging, household furniture, and equipage. Food not only
constitutes the principal part of the riches of the world, but it is
the abundance of food which gives the principal part of their value to
many other sorts of riches. The poor inhabitants of Cuba and St.
Domingo, when they were first discovered by the Spaniards, used to
wear little bits of gold as ornaments in their hair and other parts of
their dress. They seemed to value them as we would do any little
pebbles of somewhat more than ordinary beauty, and to consider them as
just worth the picking up, but not worth the refusing to any body who
asked them, They gave them to their new guests at the first request,
without seeming to think that they had made them any very valuable
present. They were astonished to observe the rage of the Spaniards to
obtain them; and had no notion that there could anywhere be a country
in which many people had the disposal of so great a superfluity of
food; so scanty always among themselves, that, for a very small
quantity of those glittering baubles, they would willingly give as
much as might maintain a whole family for many years. Could they have
been made to understand this, the passion of the Spaniards would not
have surprised them.


PART III. --  Of the variations in the Proportion between the
respective Values of that sort of Produce which always affords Rent,
and of that which sometimes does, and sometimes does not, afford Rent.

The increasing abundance of food, in consequence of the increasing
improvement and cultivation, must necessarily increase the demand for
every part of the produce of land which is not food, and which can be
applied either to use or to ornament. In the whole progress of
improvement, it might, therefore, be expected there should be only one
variation in the comparative values of those two different sorts of
produce. The value of that sort which sometimes does, and sometimes
does not afford rent, should constantly rise in proportion to that
which always affords some rent. As art and industry advance, the
materials of clothing and lodging, the useful fossils and materials of
the earth, the precious metals and the precious stones, should
gradually come to be more and more in demand, should gradually
exchange for a greater and a greater quantity of food; or, in other
words, should gradually become dearer and dearer. This, accordingly,
has been the case with most of these things upon most occasions, and
would have been the case with all of them upon all occasions, if
particular accidents had not, upon some occasions, increased the
supply of some of them in a still greater proportion than the demand.

The value of a free-stone quarry, for example, will necessarily
increase with the increasing improvement and population of the country
round about it, especially if it should be the only one in the
neighbourhood. But the value of a silver mine, even though there
should not be another within a thousand miles of it, will not
necessarily increase with the improvement of the country in which it
is situated. The market for the produce of a free-stone quarry can
seldom extend more than a few miles round about it, and the demand
must generally be in proportion to the improvement and population of
that small district; but the market for the produce of a silver mine
may extend over the whole known world. Unless the world in general.
therefore, be advancing in improvement and population, the demand for
silver might not be at all increased by the improvement even of a
large country in the neighbourhood of the mine. Even though the world
in general were improving, yet if, in the course of its improvements,
new mines should be discovered, much more fertile than any which had
been known before, though the demand for silver would necessarily
increase, yet the supply might increase in so much a greater
proportion, that the real price of that metal might gradually fall;
that is, any given quantity, a pound weight of it, for example, might
gradually purchase or command a smaller and a smaller quantity of
labour, or exchange for a smaller and a smaller quantity of corn, the
principal part of the subsistence of the labourer.

The great market for silver is the commercial and civilized part of
the world.

If, by the general progress of improvement, the demand of this market
should increase, while, at the same time, the supply did not increase
in the same proportion, the value of silver would gradually rise in
proportion to that of corn. Any given quantity of silver would
exchange for a greater and a greater quantity of corn; or, in other
words, the average money price of corn would gradually become cheaper
and cheaper.

If, on the contrary, the supply, by some accident, should increase,
for many years together, in a greater proportion than the demand, that
metal would gradually become cheaper and cheaper; or, in other words,
the average money price of corn would, in spite of all improvements,
gradually become dearer and dearer.

But if, on the other hand, the supply of that metal should increase
nearly in the same proportion as the demand, it would continue to
purchase or exchange for nearly the same quantity of corn; and the
average money price of corn would, in spite of all improvements.
continue very nearly the same.

These three seem to exhaust all the possible combinations of events
which can happen in the progress of improvement; and during the course
of the four centuries preceding the present, if we may judge by what
has happened both in France and Great Britain, each of those three
different combinations seems to have taken place in the European
market, and nearly in the same order, too, in which I have here set
them down.

Digression concerning the Variations in the value of Silver during the
Course of the Four last Centuries.

First Period. --  In 1350, and for some time before, the average price
of the quarter of wheat in England seems not to have been estimated
lower than four ounces of silver, Tower weight, equal to about twenty
shillings of our present money. From this price it seems to have
fallen gradually to two ounces of silver, equal to about ten shillings
of our present money, the price at which we find it estimated in the
beginning of the sixteenth century, and at which it seems to have
continued to be estimated till about 1570.

In 1350, being the 25th of Edward III. was enacted what is called the
Statute of Labourers. In the preamble, it complains much of the
insolence of servants, who endeavoured to raise their wages upon their
masters. It therefore ordains, that all servants and labourers should,
for the future, be contented with the same wages and liveries
(liveries in those times signified not only clothes, but provisions)
which they had been accustomed to receive in the 20th year of the
king, and the four preceding years; that, upon this account, their
livery-wheat should nowhere be estimated higher than tenpence
a-bushel, and that it should always be in the option of the master to
deliver them either the wheat or the money. Tenpence: a-bushel,
therefore, had, in the 25th of Edward III. been reckoned a very
moderate price of wheat, since it required a particular statute to
oblige servants to accept of it in exchange for their usual livery of
provisions; and it had been reckoned a reasonable price ten years
before that, or in the 16th year of the king, the term to which the
statute refers. But in the 16th year of Edward III. tenpence contained
about half an ounce of silver, Tower weight, and was nearly equal to
half-a-crown of our present money. Four ounces of silver, Tower
weight, therefore, equal to six shillings and eightpence of the money
of those times, and to near twenty shillings of that of the present,
must have been reckoned a moderate price for the quarter of eight
bushels.

This statute is surely a better evidence of what was reckoned, in
those times, a moderate price of grain, than the prices of some
particular years, which have generally been recorded by historians and
other writers, on account of their extraordinary dearness or
cheapness, and from which, therefore, it is difficult to form any
judgment concerning what may have been the ordinary price. There are,
besides, other reasons for believing that, in the beginning of the
fourteenth century, and for some time before, the common price of
wheat was not less than four ounces of silver the quarter, and that of
other grain in proportion.

In 1309, Ralph de Born, prior of St Augustine's, Canterbury, gave a
feast upon his installation-day, of which William Thorn has preserved,
not only the bill of fare, but the prices of many particulars. In that
feast were consumed, 1st, fifty-three quarters of wheat, which cost
nineteen pounds, or seven shillings, and twopence a-quarter, equal to
about one-and-twenty shillings and sixpence of our present money;
2dly, fifty-eight quarters of malt, which cost seventeen pounds ten
shillings, or six shillings a-quarter, equal to about eighteen
shillings of our present money; 3dly, twenty quarters of oats, which
cost four pounds, or four shillings a-quarter, equal to about twelve
shillings of our present money. The prices of malt and oats seem here
to lie higher than their ordinary proportion to the price of wheat.

These prices are not recorded, on account of their extraordinary
dearness or cheapness, but are mentioned accidentally, as the prices
actually paid for large quantities of grain consumed at a feast, which
was famous for its magnificence.

In 1262, being the 51st of Henry III. was revived an ancient statute,
called the assize of bread and ale, which, the king says in the
preamble, had been made in the times of his progenitors, some time
kings of England. It is probably, therefore, as old at least as the
time of his grandfather, Henry II. and may have been as old as the
Conquest. It regulates the price of bread according as the prices of
wheat may happen to be, from one shilling to twenty shillings the
quarter of the money of those times. But statutes of this kind are
generally presumed to provide with equal care for all deviations from
the middle price, for those below it, as well as for those above it.
Ten shillings, therefore, containing six ounces of silver, Tower
weight, and equal to about thirty shillings of our present money,
must, upon this supposition, have been reckoned the middle price of
the quarter of wheat when this statute was first enacted, and must
have continued to be so in the 51st of Henry III. We cannot,
therefore, be very wrong in supposing that the middle price was not
less than one-third of the highest price at which this statute
regulates the price of bread, or than six shillings and eightpence of
the money of those times, containing four ounces of silver, Tower
weight.

From these different facts, therefore, we seem to have some reason to
conclude that, about the middle of the fourteenth century, and for a
considerable time before, the average or ordinary price of the quarter
of wheat was not supposed to be less than four ounces of silver, Tower
weight.

From about the middle of the fourteenth to the beginning of the
sixteenth century, what was reckoned the reasonable and moderate, that
is, the ordinary or average price of wheat, seems to have sunk
gradually to about one half of this price; so as at last to have
fallen to about two ounces of silver, Tower weight, equal to about ten
shillings of our present money. It continued to be estimated at this
price till about 1570.

In the household book of Henry, the fifth earl of Northumberland,
drawn up in 1512 there are two different estimations of wheat. In one
of them it is computed at six shilling and eightpence the quarter, in
the other at five shillings and eightpence only. In 1512, six
shillings and eightpence contained only two ounces of silver, Tower
weight, and were equal to about ten shillings of our present money.

From the 25th of Edward III. to the beginning of the reign of
Elizabeth, during the space of more than two hundred years, six
shillings and eightpence, it appears from several different statutes,
had continued to be considered as what is called the moderate and
reasonable, that is, the ordinary or average price of wheat. The
quantity of silver, however, contained in that nominal sum was, during
the course of this period, continually diminishing in consequence of
some alterations which were made in the coin. But the increase of the
value of silver had, it seems, so far compensated the diminution of
the quantity of it contained in the same nominal sum, that the
legislature did not think it worth while to attend to this
circumstance.

Thus, in 1436, it was enacted, that wheat might be exported without a
licence when the price was so low as six shillings and eightpence: and
in 1463, it was enacted, that no wheat should be imported if the price
was not above six shillings and eightpence the quarter: The
legislature had imagined, that when the price was so low, there could
be no inconveniency in exportation, but that when it rose higher, it
became prudent to allow of importation. Six shillings and eightpence,
therefore, containing about the same quantity of silver as thirteen
shillings and fourpence of our present money (one-third part less than
the same nominal sum contained in the time of Edward III), had, in
those times, been considered as what is called the moderate and
reasonable price of wheat.

In 1554, by the 1st and 2nd of Philip and Mary, and in 1558, by the
1st of Elizabeth, the exportation of wheat was in the same manner
prohibited, whenever the price of the quarter should exceed six
shillings and eightpence, which did not then contain two penny worth
more silver than the same nominal sum does at present. But it had soon
been found, that to restrain the exportation of wheat till the price
was so very low, was, in reality, to prohibit it altogether. In 1562,
therefore, by the 5th of Elizabeth, the exportation of wheat was
allowed from certain ports, whenever the price of the quarter should
not exceed ten shillings, containing nearly the same quantity of
silver as the like nominal sum does at present. This price had at this
time, therefore, been considered as what is called the moderate and
reasonable price of wheat. It agrees nearly with the estimation of the
Northumberland book in 1512.

That in France the average price of grain was, in the same manner,
much lower in the end of the fifteenth and beginning of the sixteenth
century, than in the two centuries preceding, has been observed both
by Mr Dupré de St Maur, and by the elegant author of the Essay on the
Policy of Grain. Its price, during the same period, had probably sunk
in the same manner through the greater part of Europe.

This rise in the value of silver, in proportion to that of corn, may
either have been owing altogether to the increase of the demand for
that metal, in consequence of increasing improvement and cultivation,
the supply, in the mean time, continuing the same as before; or, the
demand continuing the same as before, it may have been owing
altogether to the gradual diminution of the supply: the greater part
of the mines which were then known in the world being much exhausted,
and, consequently, the expense of working them much increased; or it
may have been owing partly to the one, and partly to the other of
those two circumstances. In the end of the fifteenth and beginning of
the sixteenth centuries, the greater part of Europe was approaching
towards a more settled from of government than it had enjoyed for
several ages before. The increase of security would naturally increase
industry and improvement; and the demand for the precious metals, as
well as for every other luxury and ornament, would naturally increase
with the increase of riches. A greater annual produce would require a
greater quantity of coin to circulate it; and a greater number of rich
people would require a greater quantity of plate and other ornaments
of silver. It is natural to suppose, too, that the greater part of the
mines which then supplied the European market with silver might be a
good deal exhausted, and have become more expensive in the working.
They had been wrought, many of them, from the time of the Romans.

It has been the opinion, however, of the greater part of those who
have written upon the prices of commodities in ancient times, that,
from the Conquest, perhaps from the invasion of Julius Caesar, till
the discovery of the mines of America, the value of silver was
continually diminishing. This opinion they seem to have been led into,
partly by the observations which they had occasion to make upon the
prices both of corn and of some other parts of the rude produce of
land, and partly by the popular notion, that as the quantity of silver
naturally increases in every country with the increase of wealth, so
its value diminishes as it quantity increases.

In their observations upon the prices of corn, three different
circumstances seem frequently to have misled them.

First, in ancient times, almost all rents were paid in kind; in a
certain quantity of corn, cattle, poultry, etc. It sometimes happened,
however, that the landlord would stipulate, that he should be at
liberty to demand of the tenant, either the annual payment in kind or
a certain sum of money instead of it. The price at which the payment
in kind was in this manner exchanged for a certain sum of money, is in
Scotland called the conversion price. As the option is always in the
landlord to take either the substance or the price, it is necessary,
for the safety of the tenant, that the conversion price should rather
be below than above the average market price. In many places,
accordingly, it is not much above one half of this price. Through the
greater part of Scotland this custom still continues with regard to
poultry, and in some places with regard to cattle. It might probably
have continued to take place, too, with regard to corn, had not the
institution of the public fiars put an end to it. These are annual
valuations, according to the judgment of an assize, of the average
price of all the different sorts of grain, and of all the different
qualities of each, according to the actual market price in every
different county. This institution rendered it sufficiently safe for
the tenant, and much more convenient for the landlord, to convert, as
they call it, the corn rent, rather at what should happen to be the
price of the fiars of each year, than at any certain fixed price. But
the writers who have collected the prices of corn in ancient times
seem frequently to have mistaken what is called in Scotland the
conversion price for the actual market price. Fleetwood acknowledges,
upon one occasion, that he had made this mistake. As he wrote his
book, however, for a particular purpose, he does not think proper to
make this acknowledgment till after transcribing this conversion price
fifteen times. The price is eight shillings the quarter of wheat. This
sum in 1423, the year at which he begins with it, contained the same
quantity of silver as sixteen shillings of our present money. But in
1562, the year at which he ends with it, it contained no more than the
same nominal sum does at present.

Secondly, they have been misled by the slovenly manner in which some
ancient statutes of assize had been sometimes transcribed by lazy
copiers, and sometimes, perhaps, actually composed by the legislature.

The ancient statutes of assize seem to have begun always with
determining what ought to be the price of bread and ale when the price
of wheat and barley were at the lowest; and to have proceeded
gradually to determine what it ought to be, according as the prices of
those two sorts of grain should gradually rise above this lowest
price. But the transcribers of those statutes seem frequently to have
thought it sufficient to copy the regulation as far as the three or
four first and lowest prices; saving in this manner their own labour,
and judging, I suppose, that this was enough to show what proportion
ought to be observed in all higher prices.

Thus, in the assize of bread and ale, of the 51st of Henry III. the
price of bread was regulated according to the different prices of
wheat, from one shilling to twenty shillings the quarter of the money
of those times. But in the manuscripts from which all the different
editions of the statutes, preceding that of Mr Ruffhead, were printed,
the copiers had never transcribed this regulation beyond the price of
twelve shillings. Several writers, therefore, being misled by this
faulty transcription, very naturally conclude that the middle price,
or six shillings the quarter, equal to about eighteen shillings of our
present money, was the ordinary or average price of wheat at that
time.

In the statute of Tumbrel and Pillory, enacted nearly about the same
time, the price of ale is regulated according to every sixpence rise
in the price of barley, from two shillings, to four shillings the
quarter. That four shillings, however, was not considered as the
highest price to which barley might frequently rise in those times,
and that these prices were only given as an example of the proportion
which ought to be observed in all other prices, whether higher or
lower, we may infer from the last words of the statute: "Et sic
deinceps crescetur vel diminuetur per sex denarios." The expression is
very slovenly, but the meaning is plain enough, "that the price of ale
is in this manner to be increased or diminished according to every
sixpence rise or fall in the price of barley." In the composition of
this statute, the legislature itself seems to have been as negligent
as the copiers were in the transcription of the other.

In an ancient manuscript of the Regiam Majestatem, an old Scotch law
book, there is a statute of assize, in which the price of bread is
regulated according to all the different prices of wheat, from
tenpence to three shillings the Scotch boll, equal to about half an
English quarter. Three shillings Scotch, at the time when this assize
is supposed to have been enacted, were equal to about nine shillings
sterling of our present money Mr Ruddiman seems {See his Preface to
Anderson's Diplomata Scotiae.} to conclude from this, that three
shillings was the highest price to which wheat ever rose in those
times, and that tenpence, a shilling, or at most two shillings, were
the ordinary prices. Upon consulting the manuscript, however, it
appears evidently, that all these prices are only set down as examples
of the proportion which ought to be observed between the respective
prices of wheat and bread. The last words of the statute are "reliqua
judicabis secundum praescripta, habendo respectum ad pretium bladi." --
"You shall judge of the remaining cases, according to what is above
written, having respect to the price of corn."

Thirdly, they seem to have been misled too, by the very low price at
which wheat was sometimes sold in very ancient times; and to have
imagined, that as its lowest price was then much lower than in later
times its ordinary price must likewise have been much lower. They
might have found, however, that in those ancient times its highest
price was fully as much above, as its lowest price was below any thing
that had ever been known in later times. Thus, in 1270, Fleetwood
gives us two prices of the quarter of wheat. The one is four pounds
sixteen shillings of the money of those times, equal to fourteen
pounds eight shillings of that of the present; the other is six pounds
eight shillings, equal to nineteen pounds four shillings of our
present money. No price can be found in the end of the fifteenth, or
beginning of the sixteenth century, which approaches to the
extravagance of these. The price of corn, though at all times liable
to variation varies most in those turbulent and disorderly societies,
in which the interruption of all commerce and communication hinders
the plenty of one part of the country from relieving the scarcity of
another. In the disorderly state of England under the Plantagenets,
who governed it from about the middle of the twelfth till towards the
end of the fifteenth century, one district might be in plenty, while
another, at no great distance, by having its crop destroyed, either by
some accident of the seasons, or by the incursion of some neighbouring
baron, might be suffering all the horrors of a famine; and yet if the
lands of some hostile lord were interposed between them, the one might
not be able to give the least assistance to the other. Under the
vigorous administration of the Tudors, who governed England during the
latter part of the fifteenth, and through the whole of the sixteenth
century, no baron was powerful enough to dare to disturb the public
security.

The reader will find at the end of this chapter all the prices of
wheat which have been collected by Fleetwood, from 1202 to 1597, both
inclusive, reduced to the money of the present times, and digested,
according to the order of time, into seven divisions of twelve years
each. At the end of each division, too, he will find the average price
of the twelve years of which it consists. In that long period of time,
Fleetwood has been able to collect the prices of no more than eighty
years; so that four years are wanting to make out the last twelve
years. I have added, therefore, from the accounts of Eton college, the
prices of 1598, 1599, 1600, and 1601. It is the only addition which I
have made. The reader will see, that from the beginning of the
thirteenth till after the middle of the sixteenth century, the average
price of each twelve years grows gradually lower and lower; and that
towards the end of the sixteenth century it begins to rise again. The
prices, indeed, which Fleetwood has been able to collect, seem to have
been those chiefly which were remarkable for extraordinary dearness or
cheapness; and I do not pretend that any very certain conclusion can
be drawn from them. So far, however, as they prove any thing at all,
they confirm the account which I have been endeavouring to give.
Fleetwood himself, however, seems, with most other writers, to have
believed, that, during all this period, the value of silver, in
consequence of its increasing abundance, was continually diminishing.
The prices of corn, which he himself has collected, certainly do not
agree with this opinion. They agree perfectly with that of Mr Dupré de
St Maur, and with that which I have been endeavouring to explain.
Bishop Fleetwood and Mr Dupré de St Maur are the two authors who seem
to have collected, with the greatest diligence and fidelity, the
prices of things in ancient times. It is some what curious that,
though their opinions are so very different, their facts, so far as
they relate to the price of corn at least, should coincide so very
exactly.

It is not, however, so much from the low price of corn, as from that
of some other parts of the rude produce of land, that the most
judicious writers have inferred the great value of silver in those
very ancient times. Corn, it has been said, being a sort of
manufacture, was, in those rude ages, much dearer in proportion than
the greater part of other commodities; it is meant, I suppose, than
the greater part of unmanufactured commodities, such as cattle,
poultry, game of all kinds, etc. That in those times of poverty and
barbarism these were proportionably much cheaper than corn, is
undoubtedly true. But this cheapness was not the effect of the high
value of silver, but of the low value of those commodities. It was not
because silver would in such times purchase or represent a greater
quantity of labour, but because such commodities would purchase or
represent a much smaller quantity than in times of more opulence and
improvement. Silver must certainly be cheaper in Spanish America than
in Europe; in the country where it is produced, than in the country to
which it is brought, at the expense of a long carriage both by land
and by sea, of a freight, and an insurance. One-and-twenty pence
halfpenny sterling, however, we are told by Ulloa, was, not many years
ago, at Buenos Ayres, the price of an ox chosen from a herd of three
or four hundred. Sixteen shillings sterling, we are told by Mr Byron,
was the price of a good horse in the capital of Chili. In a country
naturally fertile, but of which the far greater part is altogether
uncultivated, cattle, poultry, game of all kinds, etc. as they can be
acquired with a very small quantity of labour, so they will purchase
or command but a very small quantity. The low money price for which
they may be sold, is no proof that the real value of silver is there
very high, but that the real value of those commodities is very low.

Labour, it must always be remembered, and not any particular
commodity, or set of commodities, is the real measure of the value
both of silver and of all other commodities.

But in countries almost waste, or but thinly inhabited, cattle,
poultry, game of all kinds, etc. as they are the spontaneous
productions of Nature, so she frequently produces them in much greater
quantities than the consumption of the inhabitants requires. In such a
state of things, the supply commonly exceeds the demand. In different
states of society, in different states of improvement, therefore, such
commodities will represent, or be equivalent, to very different
quantities of labour.

In every state of society, in every stage of improvement, corn is the
production of human industry. But the average produce of every sort of
industry is always suited, more or less exactly, to the average
consumption; the average supply to the average demand. In every
different stage of improvement, besides, the raising of equal
quantities of corn in the same soil and climate, will, at an average,
require nearly equal quantities of labour; or, what comes to the same
thing, the price of nearly equal quantities; the continual increase of
the productive powers of labour, in an improved state of cultivation,
being more or less counterbalanced by the continual increasing price
of cattle, the principal instruments of agriculture. Upon all these
accounts, therefore, we may rest assured, that equal quantities of
corn will, in every state of society, in every stage of improvement,
more nearly represent, or be equivalent to, equal quantities of
labour, than equal quantities of any other part of the rude produce of
land. Corn, accordingly, it has already been observed, is, in all the
different stages of wealth and improvement, a more accurate measure of
value than any other commodity or set of commodities. In all those
different stages, therefore, we can judge better of the real value of
silver, by comparing it with corn, than by comparing it with any other
commodity or set of commodities.

Corn, besides, or whatever else is the common and favourite vegetable
food of the people, constitutes, in every civilized country, the
principal part of the subsistence of the labourer. In consequence of
the extension of agriculture, the land of every country produces a
much greater quantity of vegetable than of animal food, and the
labourer everywhere lives chiefly upon the wholesome food that is
cheapest and most abundant. Butcher's meat, except in the most
thriving countries, or where labour is most highly rewarded, makes but
an insignificant part of his subsistence; poultry makes a still
smaller part of it, and game no part of it. In France, and even in
Scotland, where labour is somewhat better rewarded than in France, the
labouring poor seldom eat butcher's meat, except upon holidays, and
other extraordinary occasions. The money price of labour, therefore,
depends much more upon the average money price of corn, the
subsistence of the labourer, than upon that of butcher's meat, or of
any other part of the rude produce of land. The real value of gold and
silver, therefore, the real quantity of labour which they can purchase
or command, depends much more upon the quantity of corn which they can
purchase or command, than upon that of butcher's meat, or any other
part of the rude produce of land.

Such slight observations, however, upon the prices either of corn or
of other commodities, would not probably have misled so many
intelligent authors, had they not been influenced at the same time by
the popular notion, that as the quantity of silver naturally increases
in every country with the increase of wealth, so its value diminishes
as its quantity increases. This notion, however, seems to be
altogether groundless.

The quantity of the precious metals may increase in any country from
two different causes; either, first, from the increased abundance of
the mines which supply it; or, secondly, from the increased wealth of
the people, from the increased produce of their annual labour. The
first of these causes is no doubt necessarily connected with the
diminution of the value of the precious metals; but the second is not.

When more abundant mines are discovered, a greater quantity of the
precious metals is brought to market; and the quantity of the
necessaries and conveniencies of life for which they must be exchanged
being the same as before, equal quantities of the metals must be
exchanged for smaller quantities of commodities. So far, therefore, as
the increase of the quantity of the precious metals in any country
arises from the increased abundance of the mines, it is necessarily
connected with some diminution of their value.

When, on the contrary, the wealth of any country increases, when the
annual produce of its labour becomes gradually greater and greater, a
greater quantity of coin becomes necessary in order to circulate a
greater quantity of commodities: and the people, as they can afford
it, as they have more commodities to give for it, will naturally
purchase a greater and a greater quantity of plate. The quantity of
their coin will increase from necessity; the quantity of their plate
from vanity and ostentation, or from the same reason that the quantity
of fine statues, pictures, and of every other luxury and curiosity, is
likely to increase among them. But as statuaries and painters are not
likely to be worse rewarded in times of wealth and prosperity, than in
times of poverty and depression, so gold and silver are not likely to
be worse paid for.

The price of gold and silver, when the accidental discovery of more
abundant mines does not keep it down, as it naturally rises with the
wealth of every country; so, whatever be the state of the mines, it is
at all times naturally higher in a rich than in a poor country. Gold
and silver, like all other commodities, naturally seek the market
where the best price is given for them, and the best price is commonly
given for every thing in the country which can best afford it. Labour,
it must be remembered, is the ultimate price which is paid for every
thing; and in countries where labour is equally well rewarded, the
money price of labour will be in proportion to that of the subsistence
of the labourer. But gold and silver will naturally exchange for a
greater quantity of subsistence in a rich than in a poor country; in a
country which abounds with subsistence, than in one which is but
indifferently supplied with it. If the two countries are at a great
distance, the difference may be very great; because, though the metals
naturally fly from the worse to the better market, yet it may be
difficult to transport them in such quantities as to bring their price
nearly to a level in both. If the countries are near, the difference
will be smaller, and may sometimes be scarce perceptible; because in
this case the transportation will be easy. China is a much richer
country than any part of Europe, and the difference between the price
of subsistence in China and in Europe is very great. Rice in China is
much cheaper than wheat is any where in Europe. England is a much
richer country than Scotland, but the difference between the money
price of corn in those two countries is much smaller, and is but just
perceptible. In proportion to the quantity or measure, Scotch corn
generally appears to be a good deal cheaper than English; but, in
proportion to its quality, it is certainly somewhat dearer. Scotland
receives almost every year very large supplies from England, and every
commodity must commonly be somewhat dearer in the country to which it
is brought than in that from which it comes. English corn, therefore,
must be dearer in Scotland than in England; and yet in proportion to
its quality, or to the quantity and goodness of the flour or meal
which can be made from it, it cannot commonly be sold higher there
than the Scotch corn which comes to market in competition with it.

The difference between the money price of labour in China and in
Europe, is still greater than that between the money price of
subsistence; because the real recompence of labour is higher in Europe
than in China, the greater part of Europe being in an improving state,
while China seems to be standing still. The money price of labour is
lower in Scotland than in England, because the real recompence of
labour is much lower: Scotland, though advancing to greater wealth,
advances much more slowly than England. The frequency of emigration
from Scotland, and the rarity of it from England, sufficiently prove
that the demand for labour is very different in the two countries. The
proportion between the real recompence of labour in different
countries, it must be remembered, is naturally regulated, not by their
actual wealth or poverty, but by their advancing, stationary, or
declining condition.

Gold and silver, as they are naturally of the greatest value among the
richest, so they are naturally of the least value among the poorest
nations. Among savages, the poorest of all nations, they are scarce of
any value.

In great towns, corn is always dearer than in remote parts of the
country. This, however, is the effect, not of the real cheapness of
silver, but of the real dearness of corn. It does not cost less labour
to bring silver to the great town than to the remote parts of the
country; but it costs a great deal more to bring corn.

In some very rich and commercial countries, such as Holland and the
territory of Genoa, corn is dear for the same reason that it is dear
in great towns. They do not produce enough to maintain their
inhabitants. They are rich in the industry and skill of their
artificers and manufacturers, in every sort of machinery which can
facilitate and abridge labour; in shipping, and in all the other
instruments and means of carriage and commerce: but they are poor in
corn, which, as it must be brought to them from distant countries,
must, by an addition to its price, pay for the carriage from those
countries. It does not cost less labour to bring silver to Amsterdam
than to Dantzic; but it costs a great deal more to bring corn. The
real cost of silver must be nearly the same in both places; but that
of corn must be very different. Diminish the real opulence either of
Holland or of the territory of Genoa, while the number of their
inhabitants remains the same; diminish their power of supplying
themselves from distant countries; and the price of corn, instead of
sinking with that diminution in the quantity of their silver, which
must necessarily accompany this declension, either as its cause or as
its effect, will rise to the price of a famine. When we are in want of
necessaries, we must part with all superfluities, of which the value,
as it rises in times of opulence and prosperity, so it sinks in times
of poverty and distress. It is otherwise with necessaries. Their real
price, the quantity of labour which they can purchase or command,
rises in times of poverty and distress, and sinks in times of opulence
and prosperity, which are always times of great abundance; for they
could not otherwise be times of opulence and prosperity. Corn is a
necessary, silver is only a superfluity.

Whatever, therefore, may have been the increase in the quantity of the
precious metals, which, during the period between the middle of the
fourteenth and that of the sixteenth century, arose from the increase
of wealth and improvement, it could have no tendency to diminish their
value, either in Great Britain, or in my other part of Europe. If
those who have collected the prices of things in ancient times,
therefore, had, during this period, no reason to infer the diminution
of the value of silver from any observations which they had made upon
the prices either of corn, or of other commodities, they had still
less reason to infer it from any supposed increase of wealth and
improvement.

Second Period. -- But how various soever may have been the opinions of
the learned concerning the progress of the value of silver during the
first period, they are unanimous concerning it during the second.

From about 1570 to about 1640, during a period of about seventy years,
the variation in the proportion between the value of silver and that
of corn held a quite opposite course. Silver sunk in its real value,
or would exchange for a smaller quantity of labour than before; and
corn rose in its nominal price, and, instead of being commonly sold
for about two ounces of silver the quarter, or about ten shillings of
our present money, came to be sold for six and eight ounces of silver
the quarter, or about thirty and forty shillings of our present money.

The discovery of the abundant mines of America seems to have been the
sole cause of this diminution in the value of silver, in proportion to
that of corn. It is accounted for, accordingly, in the same manner by
every body; and there never has been any dispute, either about the
fact, or about the cause of it. The greater part of Europe was, during
this period, advancing in industry and improvement, and the demand for
silver must consequently have been increasing; but the increase of the
supply had, it seems, so far exceeded that of the demand, that the
value of that metal sunk considerably. The discovery of the mines of
America, it is to be observed, does not seem to have had any very
sensible effect upon the prices of things in England till after 1570;
though even the mines of Potosi had been discovered more than twenty
years before.

From 1595 to 1620, both inclusive, the average price of the quarter of
nine bushels of the best wheat, at Windsor market, appears, from the
accounts of Eton college, to have been £ 2:1:6 9/13. From which sum,
neglecting the fraction, and deducting a ninth, or 4s. 7 1/3d., the
price of the quarter of eight bushels comes out to have been £ 1:16:10
2/3. And from this sum, neglecting likewise the fraction, and
deducting a ninth, or 4s. 1 1/9d., for the difference between the
price of the best wheat and that of the middle wheat, the price of the
middle wheat comes out to have been about £ 1:12:8 8/9, or about six
ounces and one-third of an ounce of silver.

From 1621 to 1636, both inclusive, the average price of the same
measure of the best wheat, at the same market, appears, from the same
accounts, to have been £ 2:10s.; from which, making the like
deductions as in the foregoing case, the average price of the quarter
of eight bushels of middle wheat comes out to have been £ 1:19:6, or
about seven ounces and two-thirds of an ounce of silver.

Third Period. --Between 1630 and 1640, or about 1636, the effect of
the discovery of the mines of America, in reducing the value of
silver, appears to have been completed, and the value of that metal
seems never to have sunk lower in proportion to that of corn than it
was about that time. It seems to have risen somewhat in the course of
the present century, and it had probably begun to do so, even some
time before the end of the last.

From 1637 to 1700, both inclusive, being the sixty-four last years of
the last century the average price of the quarter of nine bushels of
the best wheat, at Windsor market, appears, from the same accounts, to
have been £ 2:11:0 1/3, which is only 1s. 0 1/3d. dearer than it had
been during the sixteen years before. But, in the course of these
sixty-four years, there happened two events, which must have produced
a much greater scarcity of corn than what the course of the season is
would otherwise have occasioned, and which, therefore, without
supposing any further reduction in the value of silver, will much more
than account for this very small enhancement of price.

The first of these events was the civil war, which, by discouraging
tillage and interrupting commerce, must have raised the price of corn
much above what the course of the seasons would otherwise have
occasioned. It must have had this effect, more or less, at all the
different markets in the kingdom, but particularly at those in the
neighbourhood of London, which require to be supplied from the
greatest distance. In 1648, accordingly, the price of the best wheat,
at Windsor market, appears, from the same accounts, to have been £
4:5s., and, in 1649, to have been £ 4, the quarter of nine bushels.
The excess of those two years above £ 2:10s. (the average price of the
sixteen years preceding 1637 is £ 3:5s., which, divided among the
sixty four last years of the last century, will alone very nearly
account for that small enhancement of price which seems to have taken
place in them.) These, however, though the highest, are by no means the
only high prices which seem to have been occasioned by the civil wars.

The second event was the bounty upon the exportation of corn, granted
in 1688. The bounty, it has been thought by many people, by
encouraging tillage, may, in a long course of years, have occasioned a
greater abundance, and, consequently, a greater cheapness of corn in
the home market, than what would otherwise have taken place there. How
far the bounty could produce this effect at any time I shall examine
hereafter: I shall only observe at present, that between 1688 and
1700, it had not time to produce any such effect. During this short
period, its only effect must have been, by encouraging the exportation
of the surplus produce of every year, and thereby hindering the
abundance of one year from compensating the scarcity of another, to
raise the price in the home market. The scarcity which prevailed in
England, from 1693 to 1699, both inclusive, though no doubt
principally owing to the badness of the seasons, and, therefore,
extending through a considerable part of Europe, must have been
somewhat enhanced by the bounty. In 1699, accordingly, the further
exportation of corn was prohibited for nine months.

There was a third event which occurred in the course of the same
period, and which, though it could not occasion any scarcity of corn,
nor, perhaps, any augmentation in the real quantity of silver which
was usually paid for it, must necessarily have occasioned some
augmentation in the nominal sum. This event was the great debasement of
the silver coin, by clipping and wearing. This evil had begun in the
reign of Charles II. and had gone on continually increasing till 1695;
at which time, as we may learn from Mr Lowndes, the current silver
coin was, at an average, near five-and-twenty per cent. below its
standard value. But the nominal sum which constitutes the market price
of every commodity is necessarily regulated, not so much by the
quantity of silver, which, according to the standard, ought to be
contained in it, as by that which, it is found by experience, actually
is contained in it. This nominal sum, therefore, is necessarily higher
when the coin is much debased by clipping and wearing, than when near
to its standard value.

In the course of the present century, the silver coin has not at any
time been more below its standard weight than it is at present. But
though very much defaced, its value has been kept up by that of the
gold coin, for which it is exchanged. For though, before the late
recoinage, the gold coin was a good deal defaced too, it was less so
than the silver. In 1695, on the contrary, the value of the silver
coin was not kept up by the gold coin; a guinea then commonly
exchanging for thirty shillings of the worn and clipt silver. Before
the late recoinage of the gold, the price of silver bullion was seldom
higher than five shillings and sevenpence an ounce, which is but
fivepence above the mint price. But in 1695, the common price of
silver bullion was six shillings and fivepence an ounce, {Lowndes's
Essay on the Silver Coin, 68.} which is fifteen pence above the mint
price. Even before the late recoinage of the gold, therefore, the
coin, gold and silver together, when compared with silver bullion, was
not supposed to be more than eight per cent. below its standard value,
In 1695, on the contrary, it had been supposed to be near
five-and-twenty per cent. below that value. But in the beginning of
the present century, that is, immediately after the great recoinage in
King William's time, the greater part of the current silver coin must
have been still nearer to its standard weight than it is at present.
In the course of the present century, too, there has been no great
public calamity, such as a civil war, which could either discourage
tillage, or interrupt the interior commerce of the country. And though
the bounty which has taken place through the greater part of this
century, must always raise the price of corn somewhat higher than it
otherwise would be in the actual state of tillage; yet, as in the
course of this century, the bounty has had full time to produce all
the good effects commonly imputed to it to encourage tillage, and
thereby to increase the quantity of corn in the home market, it may,
upon the principles of a system which I shall explain and examine
hereafter, be supposed to have done something to lower the price of
that commodity the one way, as well as to raise it the other. It is by
many people supposed to have done more. In the sixty-four years of the
present century, accordingly, the average price of the quarter of nine
bushels of the best wheat, at Windsor market, appears, by the accounts
of Eton college, to have been £ 2:0:6 10/32, which is about ten
shillings and sixpence, or more than five-and-twenty percent. cheaper
than it had been during the sixty-four last years of the last century;
and about nine shillings and sixpence cheaper than it had been during
the sixteen years preceding 1636, when the discovery of the abundant
mines of America may be supposed to have produced its full effect; and
about one shilling cheaper than it had been in the twenty-six years
preceding 1620, before that discovery can well be supposed to have
produced its full effect. According to this account, the average price
of middle wheat, during these sixty-four first years of the present
century, comes out to have been about thirty-two shillings the quarter
of eight bushels.

The value of silver, therefore, seems to have risen somewhat in
proportion to that of corn during the course of the present century,
and it had probably begun to do so even some time before the end of
the last.


In 1687, the price of the quarter of nine bushels of the best wheat,
at Windsor market, was £ 1:5:2, the lowest price at which it had ever
been from 1595.

In 1688, Mr Gregory King, a man famous for his knowledge in matters of
this kind, estimated the average price of wheat, in years of moderate
plenty, to be to the grower 3s. 6d. the bushel, or eight-and-twenty
shillings the quarter. The grower's price I understand to be the same
with what is sometimes called the contract price, or the price at
which a farmer contracts for a certain number of years to deliver a
certain quantity of corn to a dealer. As a contract of this kind saves
the farmer the expense and trouble of marketing, the contract price is
generally lower than what is supposed to be the average market price.
Mr King had judged eight-and-twenty shillings the quarter to be at
that time the ordinary contract price in years of moderate plenty.
Before the scarcity occasioned by the late extraordinary course of bad
seasons, it was, I have been assured, the ordinary contract price in
all common years.

In 1688 was granted the parliamentary bounty upon the exportation of
corn. The country gentlemen, who then composed a still greater
proportion of the legislature than they do at present, had felt that
the money price of corn was falling. The bounty was an expedient to
raise it artificially to the high price at which it had frequently
been sold in the times of Charles I. and II. It was to take place,
therefore, till wheat was so high as fortyeight shillings the quarter;
that is, twenty shillings, or 5-7ths dearer than Mr King had, in that
very year, estimated the grower's price to be in times of moderate
plenty. If his calculations deserve any part of the reputation which
they have obtained very universally, eight-and-forty shillings the
quarter was a price which, without some such expedient as the bounty,
could not at that time be expected, except in years of extraordinary
scarcity. But the government of King William was not then fully
settled. It was in no condition to refuse anything to the country
gentlemen, from whom it was, at that very time, soliciting the first
establishment of the annual land-tax,

The value of silver, therefore, in proportion to that of corn, had
probably risen somewhat before the end of the last century; and it
seems to have continued to do so during the course of the greater part
of the present, though the necessary operation of the bounty must have
hindered that rise from being so sensible as it otherwise would have
been in the actual state of tillage.

In plentiful years, the bounty, by occasioning an extraordinary
exportation, necessarily raises the price of corn above what it
otherwise would be in those years. To encourage tillage, by keeping up
the price of corn, even in the most plentiful years, was the avowed
end of the institution.

In years of great scarcity, indeed, the bounty has generally been
suspended. It must, however, have had some effect upon the prices of
many of those years. By the extraordinary exportation which it
occasions in years of plenty, it must frequently hinder the plenty of
one year from compensating the scarcity of another.

Both in years of plenty and in years of scarcity, therefore, the
bounty raises the price of corn above what it naturally would be in
the actual state of tillage. If during the sixty-four first years of
the present century, therefore, the average price has been lower than
during the sixty-four last years of the last century, it must, in the
same state of tillage, have been much more so, had it not been for
this operation of the bounty.

But, without the bounty, it may be said the state of tillage would not
have been the same. What may have been the effects of this institution
upon the agriculture of the country, I shall endeavour to explain
hereafter, when I come to treat particularly of bounties. I shall only
observe at present, that this rise in the value of silver, in
proportion to that of corn, has not been peculiar to England. It has
been observed to have taken place in France during the same period,
and nearly in the same proportion, too, by three very faithful,
diligent, and laborious collectors of the prices of corn, Mr Dupré de
St Maur, Mr Messance, and the author of the Essay on the Police of
Grain. But in France, till 1764, the exportation of grain was by law
prohibited; and it is somewhat difficult to suppose, that nearly the
same diminution of price which took place in one country,
notwithstanding this prohibition, should, in another, be owing to the
extraordinary encouragement given to exportation.

It would be more proper, perhaps, to consider this variation in the
average money price of corn as the effect rather of some gradual rise
in the real value of silver in the European market, than of any fall
in the real average value of corn. Corn, it has already been observed,
is, at distant periods of time, a more accurate measure of value than
either silver or, perhaps, any other commodity. When, after the
discovery of the abundant mines of America, corn rose to three and
four times its former money price, this change was universally
ascribed, not to any rise in the real value of corn, but to a fall in
the real value of silver. If, during the sixty-four first years of the
present century, therefore, the average money price of corn has fallen
somewhat below what it had been during the greater part of the last
century, we should, in the same manner, impute this change, not to any
fall in the real value of corn, but to some rise in the real value of
silver in the European market.

The high price of corn during these ten or twelve years past, indeed,
has occasioned a suspicion that the real value of silver still
continues to fall in the European market. This high price of corn,
however, seems evidently to have been the effect of the extraordinary
unfavourableness of the seasons, and ought, therefore, to be regarded,
not as a permanent, but as a transitory and occasional event. The
seasons, for these ten or twelve years past, have been unfavourable
through the greater part of Europe; and the disorders of Poland have
very much increased the scarcity in all those countries, which, in
dear years, used to be supplied from that market. So long a course of
bad seasons, though not a very common event, is by no means a singular
one; and whoever has inquired much into the history of the prices of
corn in former times, will be at no loss to recollect several other
examples of the same kind. Ten years of extraordinary scarcity,
besides, are not more wonderful than ten years of extraordinary
plenty. The low price of corn, from 1741 to 1750, both inclusive, may
very well be set in opposition to its high price during these last
eight or ten years. From 1741 to 1750, the average price of the
quarter of nine bushels of the best wheat, at Windsor market, it
appears from the accounts of Eton college, was only £ 1:13:9 4/5,
which is nearly 6s.3d. below the average price of the sixty-four first
years of the present century. The average price of the quarter of
eight bushels of middle wheat comes out, according to this account, to
have been, during these ten years, only £ 1:6:8.

Between 1741 and 1750, however, the bounty must have hindered the
price of corn from falling so low in the home market as it naturally
would have done. During these ten years, the quantity of all sorts of
grain exported, it appears from the custom-house books, amounted to no
less than 8,029,156 quarters, one bushel. The bounty paid for this
amounted to £ 1,514,962:17:4 1/2. In 1749, accordingly, Mr Pelham, at
that time prime minister, observed to the house of commons, that, for
the three years preceding, a very extraordinary sum had been paid as
bounty for the exportation of corn. He had good reason to make this
observation, and in the following year he might have had still better.
In that single year, the bounty paid amounted to no less than £
324,176:10:6. {See Tracts on the Corn Trade, Tract 3,} It is
unnecessary to observe how much this forced exportation must have
raised the price of corn above what it otherwise would have been in
the home market.

At the end of the accounts annexed to this chapter the reader will
find the particular account of those ten years separated from the
rest. He will find there, too, the particular account of the preceding
ten years, of which the average is likewise below, though not so much
below, the general average of the sixty-four first years of the
century. The year 1740, however, was a year of extraordinary scarcity.
These twenty years preceding 1750 may very well be set in opposition
to the twenty preceding 1770. As the former were a good deal below the
general average of the century, notwithstanding the intervention of
one or two dear years; so the latter have been a good deal above it,
notwithstanding the intervention of one or two cheap ones, of 1759,
for example. If the former have not been as much below the general
average as the latter have been above it, we ought probably to impute
it to the bounty. The change has evidently been too sudden to be
ascribed to any change in the value of silver, which is always slow
and gradual. The suddenness of the effect can be accounted for only by
a cause which can operate suddenly, the accidental variations of the
seasons.

The money price of labour in Great Britain has, indeed, risen during
the course of the present century. This, however, seems to be the
effect, not so much of any diminution in the value of silver in the
European market, as of an increase in the demand for labour in Great
Britain, arising from the great, and almost universal prosperity of
the country. In France, a country not altogether so prosperous, the
money price of labour has, since the middle of the last century, been
observed to sink gradually with the average money price of corn. Both
in the last century and in the present, the day wages of common labour
are there said to have been pretty uniformly about the twentieth part
of the average price of the septier of wheat; a measure which contains
a little more than four Winchester bushels. In Great Britain, the real
recompence of labour, it has already been shewn, the real quantities
of the necessaries and conveniencies of life which are given to the
labourer, has increased considerably during the course of the present
century. The rise in its money price seems to have been the effect,
not of any diminution of the value of silver in the general market of
Europe, but of a rise in the real price of labour, in the particular
market of Great Britain, owing to the peculiarly happy circumstances
of the country.

For some time after the first discovery of America, silver would
continue to sell at its former, or not much below its former price.
The profits of mining would for some time be very great, and much
above their natural rate. Those who imported that metal into Europe,
however, would soon find that the whole annual importation could not
be disposed of at this high price. Silver would gradually exchange for
a smaller and a smaller quantity of goods. Its price would sink
gradually lower and lower, till it fell to its natural price; or to
what was just sufficient to pay, according to their natural rates, the
wages of the labour, the profits of the stock, and the rent of the
land, which must be paid in order to bring it from the mine to the
market. In the greater part of the silver mines of Peru, the tax of
the king of Spain, amounting to a tenth of the gross produce, eats up,
it has already been observed, the whole rent of the land. This tax was
originally a half; it soon afterwards fell to a third, then to a
fifth, and at last to a tenth, at which late it still continues. In
the greater part of the silver mines of Peru, this, it seems, is all
that remains, after replacing the stock of the undertaker of the work,
together with its ordinary profits; and it seems to be universally
acknowledged that these profits, which were once very high, are now as
low as they can well be, consistently with carrying on the works.

The tax of the king of Spain was reduced to a fifth of the registered
silver in 1504 {Solorzano, vol, ii.}, one-and-forty years before 1545,
the date of the discovery of the mines of Potosi. In the course of
ninety years, or before 1636, these mines, the most fertile in all
America, had time sufficient to produce their full effect, or to
reduce the value of silver in the European market as low as it could
well fall, while it continued to pay this tax to the king of Spain.
Ninety years is time sufficient to reduce any commodity, of which
there is no monopoly, to its natural price, or to the lowest price at
which, while it pays a particular tax, it can continue to be sold for
any considerable time together.

The price of silver in the European market might, perhaps, have fallen
still lower, and it might have become necessary either to reduce the
tax upon it, not only to one-tenth, as in 1736, but to one twentieth,
in the same manner as that upon gold, or to give up working the
greater part of the American mines which are now wrought. The gradual
increase of the demand for silver, or the gradual enlargement of the
market for the produce of the silver mines of America, is probably the
cause which has prevented this from happening, and which has not only
kept up the value of silver in the European market, but has perhaps
even raised it somewhat higher than it was about the middle of the
last century.

Since the first discovery of America, the market for the produce of
its silver mines has been growing gradually more and more extensive.

First, the market of Europe has become gradually more and more
extensive. Since the discovery of America, the greater part of Europe
has been much improved. England, Holland, France, and Germany; even
Sweden, Denmark, and Russia, have all advanced considerably, both in
agriculture and in manufactures. Italy seems not to have gone
backwards. The fall of Italy preceded the conquest of Peru. Since that
time it seems rather to have recovered a little. Spain and Portugal,
indeed, are supposed to have gone backwards. Portugal, however, is but
a very small part of Europe, and the declension of Spain is not,
perhaps, so great as is commonly imagined. In the beginning of the
sixteenth century, Spain was a very poor country, even in comparison
with France, which has been so much improved since that time. It was
the well known remark of the emperor Charles V. who had travelled so
frequently through both countries, that every thing abounded in
France, but that every thing was wanting in Spain. The increasing
produce of the agriculture and manufactures of Europe must necessarily
have required a gradual increase in the quantity of silver coin to
circulate it; and the increasing number of wealthy individuals must
have required the like increase in the quantity of their plate and
other ornaments of silver.

Secondly, America is itself a new market, for the produce of its own
silver mines; and as its advances in agriculture, industry, and
population, are much more rapid than those of the most thriving
countries in Europe, its demand must increase much more rapidly. The
English colonies are altogether a new market, which, partly for coin,
and partly for plate, requires a continual augmenting supply of silver
through a great continent where there never was any demand before. The
greater part, too, of the Spanish and Portuguese colonies, are
altogether new markets. New Granada, the Yucatan, Paraguay, and the
Brazils, were, before discovered by the Europeans, inhabited by savage
nations, who had neither arts nor agriculture. A considerable degree
of both has now been introduced into all of them. Even Mexico and
Peru, though they cannot be considered as altogether new markets, are
certainly much more extensive ones than they ever were before. After
all the wonderful tales which have been published concerning the
splendid state of those countries in ancient times, whoever reads,
with any degree of sober judgment, the history of their first
discovery and conquest, will evidently discern that, in arts,
agriculture, and commerce, their inhabitants were much more ignorant
than the Tartars of the Ukraine are at present. Even the Peruvians,
the more civilized nation of the two, though they made use of gold and
silver as ornaments, had no coined money of any kind. Their whole
commerce was carried on by barter, and there was accordingly scarce
any division of labour among them. Those who cultivated the ground,
were obliged to build their own houses, to make their own household
furniture, their own clothes, shoes, and instruments of agriculture.
The few artificers among them are said to have been all maintained by
the sovereign, the nobles, and the priests, and were probably their
servants or slaves. All the ancient arts of Mexico and Peru have never
furnished one single manufacture to Europe. The Spanish armies, though
they scarce ever exceeded five hundred men, and frequently did not
amount to half that number, found almost everywhere great difficulty
in procuring subsistence. The famines which they are said to have
occasioned almost wherever they went, in countries, too, which at the
same time are represented as very populous and well cultivated,
sufficiently demonstrate that the story of this populousness and high
cultivation is in a great measure fabulous. The Spanish colonies are
under a government in many respects less favourable to agriculture,
improvement, and population, than that of the English colonies. They
seem, however, to be advancing in all those much more rapidly than any
country in Europe. In a fertile soil and happy climate, the great
abundance and cheapness of land, a circumstance common to all new
colonies, is, it seems, so great an advantage, as to compensate many
defects in civil government. Frezier, who visited Peru in 1713,
represents Lima as containing between twenty-five and twenty-eight
thousand inhabitants. Ulloa, who resided in the same country between
1740 and 1746, represents it as containing more than fifty thousand.
The difference in their accounts of the populousness of several other
principal towns of Chili and Peru is nearly the same; and as there
seems to be no reason to doubt of the good information of either, it
marks an increase which is scarce inferior to that of the English
colonies. America, therefore, is a new market for the produce of its
own silver mines, of which the demand must increase much more rapidly
than that of the most thriving country in Europe.

Thirdly, the East Indies is another market for the produce of the
silver mines of America, and a market which, from the time of the
first discovery of those mines, has been continually taking off a
greater and a greater quantity of silver. Since that time, the direct
trade between America and the East Indies, which is carried on by
means of the Acapulco ships, has been continually augmenting, and the
indirect intercourse by the way of Europe has been augmenting in a
still greater proportion. During the sixteenth century, the Portuguese
were the only European nation who carried on any regular trade to the
East Indies. In the last years of that century, the Dutch began to
encroach upon this monopoly, and in a few years expelled them from
their principal settlements in India. During the greater part of the
last century, those two nations divided the most considerable part of
the East India trade between them; the trade of the Dutch continually
augmenting in a still greater proportion than that of the Portuguese
declined. The English and French carried on some trade with India in
the last century, but it has been greatly augmented in the course of
the present. The East India trade of the Swedes and Danes began in the
course of the present century. Even the Muscovites now trade regularly
with China, by a sort of caravans which go over land through Siberia
and Tartary to Pekin. The East India trade of all these nations, if we
except that of the French, which the last war had well nigh
annihilated, has been almost continually augmenting. The increasing
consumptions of East India goods in Europe is, it seems, so great, as
to afford a gradual increase of employment to them all. Tea, for
example, was a drug very little used in Europe, before the middle of
the last century. At present, the value of the tea annually imported
by the English East India company, for the use of their own
countrymen, amounts to more than a million and a half a year; and even
this is not enough; a great deal more being constantly smuggled into
the country from the ports of Holland, from Gottenburgh in Sweden, and
from the coast of France, too, as long as the French East India
company was in prosperity. The consumption of the porcelain of China,
of the spiceries of the Moluccas, of the piece goods of Bengal, and of
innumerable other articles, has increased very nearly in a like
proportion. The tonnage, accordingly, of all the European shipping
employed in the East India trade, at any one time during the last
century, was not, perhaps, much greater than that of the English East
India company before the late reduction of their shipping.

But in the East Indies, particularly in China and Indostan, the value
of the precious metals, when the Europeans first began to trade to
those countries, was much higher than in Europe; and it still
continues to be so. In rice countries, which generally yield two,
sometimes three crops in the year, each of them more plentiful than
any common crop of corn, the abundance of food must be much greater
than in any corn country of equal extent. Such countries are
accordingly much more populous. In them, too, the rich, having a
greater superabundance of food to dispose of beyond what they
themselves can consume, have the means of purchasing a much greater
quantity of the labour of other people. The retinue of a grandee in
China or Indostan accordingly is, by all accounts, much more numerous
and splendid than that of the richest subjects in Europe. The same
superabundance of food, of which they have the disposal, enables them
to give a greater quantity of it for all those singular and rare
productions which nature furnishes but in very small quantities; such
as the precious metals and the precious stones, the great objects of
the competition of the rich. Though the mines, therefore, which
supplied the Indian market, had been as abundant as those which
supplied the European, such commodities would naturally exchange for a
greater quantity of food in India than in Europe. But the mines which
supplied the Indian market with the precious metals seem to have been
a good deal less abundant, and those which supplied it with the
precious stones a good deal more so, than the mines which supplied the
European. The precious metals, therefore, would naturally exchange in
India for a somewhat greater quantity of the precious stones, and for
a much greater quantity of food than in Europe. The money price of
diamonds, the greatest of all superfluities, would be somewhat lower,
and that of food, the first of all necessaries, a great deal lower in
the one country than in the other. But the real price of labour, the
real quantity of the necessaries of life which is given to the
labourer, it has already been observed, is lower both in China and
Indostan, the two great markets of India, than it is through the
greater part of Europe. The wages of the labourer will there purchase
a smaller quantity of food: and as the money price of food is much
lower in India than in Europe, the money price of labour is there
lower upon a double account; upon account both of the small quantity
of food which it will purchase, and of the low price of that food. But
in countries of equal art and industry, the money price of the greater
part of manufactures will be in proportion to the money price of
labour; and in manufacturing art and industry, China and Indostan,
though inferior, seem not to be much inferior to any part of Europe.
The money price of the greater part of manufactures, therefore, will
naturally be much lower in those great empires than it is anywhere in
Europe. Through the greater part of Europe, too, the expense of
land-carriage increases very much both the real and nominal price of
most manufactures. It costs more labour, and therefore more money, to
bring first the materials, and afterwards the complete manufacture to
market. In China and Indostan, the extent and variety of inland
navigations save the greater part of this labour, and consequently of
this money, and thereby reduce still lower both the real and the
nominal price of the greater part of their manufactures. Upon all
these accounts, the precious metals are a commodity which it always
has been, and still continues to be, extremely advantageous to carry
from Europe to India. There is scarce any commodity which brings a
better price there; or which, in proportion to the quantity of labour
and commodities which it costs in Europe, will purchase or command a
greater quantity of labour and commodities in India. It is more
advantageous, too, to carry silver thither than gold; because in
China, and the greater part of the other markets of India, the
proportion between fine silver and fine gold is but as ten, or at most
as twelve to one; whereas in Europe it is as fourteen or fifteen to
one. In China, and the greater part of the other markets of India,
ten, or at most twelve ounces of silver, will purchase an ounce of
gold; in Europe, it requires from fourteen to fifteen ounces. In the
cargoes, therefore, of the greater part of European ships which sail
to India, silver has generally been one of the most valuable articles.
It is the most valuable article in the Acapulco ships which sail to
Manilla. The silver of the new continent seems, in this manner, to be
one of the principal commodities by which the commerce between the two
extremities of the old one is carried on; and it is by means of it, in
a great measure, that those distant parts of the world are connected
with one another.

In order to supply so very widely extended a market, the quantity of
silver annually brought from the mines must not only be sufficient to
support that continued increase, both of coin and of plate, which is
required in all thriving countries; but to repair that continual waste
and consumption of silver which takes place in all countries where
that metal is used.

The continual consumption of the precious metals in coin by wearing,
and in plate both by wearing and cleaning, is very sensible; and in
commodities of which the use is so very widely extended, would alone
require a very great annual supply. The consumption of those metals in
some particular manufactures, though it may not perhaps be greater
upon the whole than this gradual consumption, is, however, much more
sensible, as it is much more rapid. In the manufactures of Birmingham
alone, the quantity of gold and silver annually employed in gilding
and plating, and thereby disqualified from ever afterwards appearing
in the shape of those metals, is said to amount to more than fifty
thousand pounds sterling. We may from thence form some notion how
great must be the annual consumption in all the different parts of the
world, either in manufactures of the same kind with those of
Birmingham, or in laces, embroideries, gold and silver stuffs, the
gilding of books, furniture, etc. A considerable quantity, too, must
be annually lost in transporting those metals from one place to
another both by sea and by land. In the greater part of the
governments of Asia, besides, the almost universal custom of
concealing treasures in the bowels of the earth, of which the
knowledge frequently dies with the person who makes the concealment,
must occasion the loss of a still greater quantity.

The quantity of gold and silver imported at both Cadiz and Lisbon
(including not only what comes under register, but what may be
supposed to be smuggled) amounts, according to the best accounts, to
about six millions sterling a-year.

According to Mr Meggens {Postscript to the Universal Merchant p. 15
and 16. This postscript was not printed till 1756, three years after
the publication of the book, which has never had a second edition. The
postscript is, therefore, to be found in few copies; it corrects
several errors in the book.}, the annual importation of the precious
metals into Spain, at an average of six years, viz. from 1748 to 1753,
both inclusive, and into Portugal, at an average of seven years, viz.
from 1747 to 1753, both inclusive, amounted in silver to 1,101,107
pounds weight, and in gold to 49,940 pounds weight. The silver, at
sixty two shillings the pound troy, amounts to £ 3,413,431:10s.
sterling. The gold, at forty-four guineas and a half the pound troy,
amounts to £ 2,333,446:14s. sterling. Both together amount to £
5,746,878:4s. sterling. The account of what was imported under
register, he assures us, is exact. He gives us the detail of the
particular places from which the gold and silver were brought, and of
the particular quantity of each metal, which, according to the
register, each of them afforded. He makes an allowance, too, for the
quantity of each metal which, he supposes, may have been smuggled. The
great experience of this judicious merchant renders his opinion of
considerable weight.

According to the eloquent, and sometimes well-informed, author of the
Philosophical and Political History of the Establishment of the
Europeans in the two Indies, the annual importation of registered gold
and silver into Spain, at an average of eleven years, viz. from 1754
to 1764, both inclusive, amounted to 13,984,185 3/5 piastres of ten
reals. On account of what may have been smuggled, however, the whole
annual importation, he supposes, may have amounted to seventeen
millions of piastres, which, at 4s. 6d. the piastre, is equal to £
3,825,000 sterling. He gives the detail, too, of the particular places
from which the gold and silver were brought, and of the particular
quantities of each metal, which according to the register, each of
them afforded. He informs us, too, that if we were to judge of the
quantity of gold annually imported from the Brazils to Lisbon, by the
amount of the tax paid to the king of Portugal, which it seems, is
one-fifth of the standard metal, we might value it at eighteen
millions of cruzadoes, or forty-five millions of French livres, equal
to about twenty millions sterling. On account of what may have been
smuggled, however, we may safely, he says, add to this sum an eighth
more, or £ 250,000 sterling, so that the whole will amount to £
2,250,000 sterling. According to this account, therefore, the whole
annual importation of the precious metals into both Spain and
Portugal, mounts to about £ 6,075,000 sterling.

Several other very well authenticated, though manuscript accounts, I
have been assured, agree in making this whole annual importation
amount, at an average, to about six millions sterling; sometimes a
little more, sometimes a little less.

The annual importation of the precious metals into Cadiz and Lisbon,
indeed, is not equal to the whole annual produce of the mines of
America. Some part is sent annually by the Acapulco ships to Manilla;
some part is employed in a contraband trade, which the Spanish
colonies carry on with those of other European nations; and some part,
no doubt, remains in the country. The mines of America, besides, are
by no means the only gold and silver mines in the world. They, are,
however, by far the most abundant. The produce of all the other mines
which are known is insignificant, it is acknowledged, in comparison
with their's; and the far greater part of their produce, it is
likewise acknowledged, is annually imported into Cadiz and Lisbon. But
the consumption of Birmingham alone, at the rate of fifty thousand
pounds a-year, is equal to the hundred-and-twentieth part of this
annual importation, at the rate of six millions a-year. The whole
annual consumption of gold and silver, therefore, in all the different
countries of the world where those metals are used, may, perhaps, be
nearly equal to the whole annual produce. The remainder may be no more
than sufficient to supply the increasing demand of all thriving
countries. It may even have fallen so far short of this demand, as
somewhat to raise the price of those metals in the European market.

The quantity of brass and iron annually brought from the mine to the
market, is out of all proportion greater than that of gold and silver.
We do not, however, upon this account, imagine that those coarse
metals are likely to multiply beyond the demand, or to become
gradually cheaper and cheaper. Why should we imagine that the precious
metals are likely to do so? The coarse metals, indeed, though harder,
are put to much harder uses, and, as they are of less value, less care
is employed in their preservation. The precious metals, however, are
not necessarily immortal any more than they, but are liable, too, to
be lost, wasted, and consumed, in a great variety of ways.

The price of all metals, though liable to slow and gradual variations,
varies less from year to year than that of almost any other part of
the rude produce of land: and the price of the precious metals is even
less liable to sudden variations than that of the coarse ones. The
durableness of metals is the foundation of this extraordinary
steadiness of price. The corn which was brought to market last year
will be all, or almost all, consumed, long before the end of this
year. But some part of the iron which was brought from: the mine two
or three hundred years ago, may be still in use, and, perhaps, some
part of the gold which was brought from it two or three thousand years
ago. The different masses of corn, which, in different years, must
supply the consumption of the world, will always be nearly in
proportion to the respective produce of those different years. But the
proportion between the different masses of iron which may be in use in
two different years, will be very little affected by any accidental
difference in the produce of the iron mines of those two years; and
the proportion between the masses of gold will be still less affected
by any such difference in the produce of the gold mines. Though the
produce of the greater part of metallic mines, therefore, varies,
perhaps, still more from year to year than that of the greater part of
corn fields, those variations have not the same effect upon the price
of the one species of commodities as upon that of the other.

Variations in the Proportion between the respective Values of Gold and
Silver.

Before the discovery of the mines of America, the value of fine gold
to fine silver was regulated in the different mines of Europe, between
the proportions of one to ten and one to twelve; that is, an ounce of
fine gold was supposed to be worth from ten to twelve ounces of fine
silver. About the middle of the last century, it came to be regulated,
between the proportions of one to fourteen and one to fifteen; that
is, an ounce of fine gold came to be supposed worth between fourteen
and fifteen ounces of fine silver. Gold rose in its nominal value, or
in the quantity of silver which was given for it. Both metals sunk in
their real value, or in the quantity of labour which they could
purchase; but silver sunk more than gold. Though both the gold and
silver mines of America exceeded in fertility all those which had ever
been known before, the fertility of the silver mines had, it seems,
been proportionally still greater than that of the gold ones.

The great quantities of silver carried annually from Europe to India,
have, in some of the English settlements, gradually reduced the value
of that metal in proportion to gold. In the mint of Calcutta, an ounce
of fine gold is supposed to be worth fifteen ounces of fine silver, in
the same manner as in Europe. It is in the mint, perhaps, rated too
high for the value which it bears in the market of Bengal. In China,
the proportion of gold to silver still continues as one to ten, or one
to twelve. In Japan, it is said to be as one to eight.

The proportion between the quantities of gold and silver annually
imported into Europe, according to Mr Meggens' account, is as one to
twenty-two nearly; that is, for one ounce of gold there are imported a
little more than twenty-two ounces of silver. The great quantity of
silver sent annually to the East Indies reduces, he supposes, the
quantities of those metals which remain in Europe to the proportion of
one to fourteen or fifteen, the proportion of their values. The
proportion between their values, he seems to think, must necessarily
be the same as that between their quantities, and would therefore be
as one to twenty-two, were it not for this greater exportation of
silver.

But the ordinary proportion between the respective values of two
commodities is not necessarily the same as that between the quantities
of them which are commonly in the market. The price of an ox, reckoned
at ten guineas, is about three score times the price of a lamb,
reckoned at 3s. 6d. It would be absurd, however, to infer from thence,
that there are commonly in the market three score lambs for one ox;
and it would be just as absurd to infer, because an ounce of gold will
commonly purchase from fourteen or fifteen ounces of silver, that
there are commonly in the market only fourteen or fifteen ounces of
silver for one ounce of gold.

The quantity of silver commonly in the market, it is probable, is much
greater in proportion to that of gold, than the value of a certain
quantity of gold is to that of an equal quantity of silver. The whole
quantity of a cheap commodity brought to market is commonly not only
greater, but of greater value, than the whole quantity of a dear one.
The whole quantity of bread annually brought to market, is not only
greater, but of greater value, than the whole quantity of butcher's
meat; the whole quantity of butcher's meat, than the whole quantity of
poultry; and the whole quantity of poultry, than the whole quantity of
wild fowl. There are so many more purchasers for the cheap than for
the dear commodity, that, not only a greater quantity of it, but a
greater value can commonly be disposed of. The whole quantity,
therefore, of the cheap commodity, must commonly be greater in
proportion to the whole quantity of the dear one, than the value of a
certain quantity of the dear one, is to the value of an equal quantity
of the cheap one. When we compare the precious metals with one
another, silver is a cheap, and gold a dear commodity. We ought
naturally to expect, therefore, that there should always be in the
market, not only a greater quantity, but a greater value of silver
than of gold. Let any man, who has a little of both, compare his own
silver with his gold plate, and he will probably find, that not only
the quantity, but the value of the former, greatly exceeds that of the
latter. Many people, besides, have a good deal of silver who have no
gold plate, which, even with those who have it, is generally confined
to watch-cases, snuff-boxes, and such like trinkets, of which the
whole amount is seldom of great value. In the British coin, indeed,
the value of the gold preponderates greatly, but it is not so in that
of all countries. In the coin of some countries, the value of the two
metals is nearly equal. In the Scotch coin, before the union with
England, the gold preponderated very little, though it did somewhat
{See Ruddiman's Preface to Anderson's Diplomata, etc. Scotiae.}, as it
appears by the accounts of the mint. In the coin of many countries the
silver preponderates. In France, the largest sums are commonly paid in
that metal, and it is there difficult to get more gold than what is
necessary to carry about in your pocket. The superior value, however,
of the silver plate above that of the gold, which takes place in all
countries, will much more than compensate the preponderancy of the
gold coin above the silver, which takes place only in some countries.

Though, in one sense of the word, silver always has been, and probably
always will be, much cheaper than gold; yet, in another sense, gold
may perhaps, in the present state of the Spanish market, be said to be
somewhat cheaper than silver. A commodity may be said to be dear or
cheap not only according to the absolute greatness or smallness of its
usual price, but according as that price is more or less above the
lowest for which it is possible to bring it to market for any
considerable time together. This lowest price is that which barely
replaces, with a moderate profit, the stock which must be employed in
bringing the commodity thither. It is the price which affords nothing
to the landlord, of which rent makes not any component part, but which
resolves itself altogether into wages and profit. But, in the present
state of the Spanish market, gold is certainly somewhat nearer to this
lowest price than silver. The tax of the king of Spain upon gold is
only one-twentieth part of the standard metal, or five per cent.;
whereas his tax upon silver amounts to one-tenth part of it, or to ten
per cent. In these taxes, too, it has already been observed, consists
the whole rent of the greater part of the gold and silver mines of
Spanish America; and that upon gold is still worse paid than that upon
silver. The profits of the undertakers of gold mines, too, as they
more rarely make a fortune, must, in general, be still more moderate
than those of the undertakers of silver mines. The price of Spanish
gold, therefore, as it affords both less rent and less profit, must,
in the Spanish market, be somewhat nearer to the lowest price for
which it is possible to bring it thither, than the price of Spanish
silver. When all expenses are computed, the whole quantity of the one
metal, it would seem, cannot, in the Spanish market, be disposed of so
advantageously as the whole quantity of the other. The tax, indeed, of
the king of Portugal upon the gold of the Brazils, is the same with
the ancient tax of the king of Spain upon the silver of Mexico and
Peru; or one-fifth part of the standard metal. It may therefore be
uncertain, whether, to the general market of Europe, the whole mass of
American gold comes at a price nearer to the lowest for which it is
possible to bring it thither, than the whole mass of American silver.

The price of diamonds and other precious stones may, perhaps, be still
nearer to the lowest price at which it is possible to bring them to
market, than even the price of gold.

Though it is not very probable that any part of a tax, which is not
only imposed upon one of the most proper subjects of taxation, a mere
luxury and superfluity, but which affords so very important a revenue
as the tax upon silver, will ever be given up as long as it is
possible to pay it; yet the same impossibility of paying it, which, in
1736. made it necessary to reduce it from one-fifth to one-tenth, may
in time make it necessary to reduce it still further; in the same
manner as it made it necessary to reduce the tax upon gold to
one-twentieth. That the silver mines of Spanish America, like all
other mines, become gradually more expensive in the working, on
account of the greater depths at which it is necessary to carry on the
works, and of the greater expense of drawing out the water, and of
supplying them with fresh air at those depths, is acknowledged by
everybody who has inquired into the state of those mines.

These causes, which are equivalent to a growing scarcity of silver
(for a commodity may be said to grow scarcer when it becomes more
difficult and expensive to collect a certain quantity of it), must, in
time, produce one or other of the three following events: The increase
of the expense must either, first, be compensated altogether by a
proportionable increase in the price of the metal; or, secondly, it
must be compensated altogether by a proportionable diminution of the
tax upon silver; or, thirdly, it must be compensated partly by the one
and partly by the other of those two expedients. This third event is
very possible. As gold rose in its price in proportion to silver,
notwithstanding a great diminution of the tax upon gold, so silver
might rise in its price in proportion to labour and commodities,
notwithstanding an equal diminution of the tax upon silver.

Such successive reductions of the tax, however, though they may not
prevent altogether, must certainly retard, more or less, the rise of
the value of silver in the European market. In consequence of such
reductions, many mines may be wrought which could not be wrought
before, because they could not afford to pay the old tax; and the
quantity of silver annually brought to market, must always be somewhat
greater, and, therefore, the value of any given quantity somewhat
less, than it otherwise would have been. In consequence of the
reduction in 1736, the value of silver in the European market, though
it may not at this day be lower than before that reduction, is,
probably, at least ten per cent. lower than it would have been, had
the court of Spain continued to exact the old tax.

That, notwithstanding this reduction, the value of silver has, during
the course of the present century, begun to rise somewhat in the
European market, the facts and arguments which have been alleged
above, dispose me to believe, or more properly to suspect and
conjecture; for the best opinion which I can form upon this subject,
scarce, perhaps, deserves the name of belief. The rise, indeed,
supposing there has been any, has hitherto been so very small, that
after all that has been said, it may, perhaps, appear to many people
uncertain, not only whether this event has actually taken place, but
whether the contrary may not have taken place, or whether the value of
silver may not still continue to fall in the European market.

It must be observed, however, that whatever may be the supposed annual
importation of gold and silver, there must be a certain period at
which the annual consumption of those metals will be equal to that
annual importation. Their consumption must increase as their mass
increases, or rather in a much greater proportion. As their mass
increases, their value diminishes. They are more used, and less cared
for, and their consumption consequently increases in a greater
proportion than their mass. After a certain period, therefore, the
annual consumption of those metals must, in this manner, become equal
to their annual importation, provided that importation is not
continually increasing; which, in the present times, is not supposed
to be the case.

If, when the annual consumption has become equal to the annual
importation, the annual importation should gradually diminish, the
annual consumption may, for some time, exceed the annual importation.
The mass of those metals may gradually and insensibly diminish, and
their value gradually and insensibly rise, till the annual importation
becoming again stationary, the annual consumption will gradually and
insensibly accommodate itself to what that annual importation can
maintain.

Grounds of the suspicion that the Value of Silver still continues to
decrease.

The increase of the wealth of Europe, and the popular notion, that as
the quantity of the precious metals naturally increases with the
increase of wealth, so their value diminishes as their quantity
increases, may, perhaps, dispose many people to believe that their
value still continues to fall in the European market; and the still
gradually increasing price of many parts of the rude produce of land
may confirm them still farther in this opinion.

That that increase in the quantity of the precious metals, which
arises in any country from the increase of wealth, has no tendency to
diminish their value, I have endeavoured to shew already. Gold and
silver naturally resort to a rich country, for the same reason that
all sorts of luxuries and curiosities resort to it; not because they
are cheaper there than in poorer countries, but because they are
dearer, or because a better price is given for them. It is the
superiority of price which attracts them; and as soon as that
superiority ceases, they necessarily cease to go thither.

If you except corn, and such other vegetables as are raised altogether
by human industry, that all other sorts of rude produce, cattle,
poultry, game of all kinds, the useful fossils and minerals of the
earth, etc. naturally grow dearer, as the society advances in wealth
and improvement, I have endeavoured to shew already. Though such
commodities, therefore, come to exchange for a greater quantity of
silver than before, it will not from thence follow that silver has
become really cheaper, or will purchase less labour than before; but
that such commodities have become really dearer, or will purchase more
labour than before. It is not their nominal price only, but their real
price, which rises in the progress of improvement. The rise of their
nominal price is the effect, not of any degradation of the value of
silver, but of the rise in their real price.

Different Effects of the Progress of Improvement upon three different
sorts of rude Produce.

These different sorts of rude produce may be divided into three
classes. The first comprehends those which it is scarce in the power
of human industry to multiply at all. The second, those which it can
multiply in proportion to the demand. The third, those in which the
efficacy of industry is either limited or uncertain. In the progress
of wealth and improvement, the real price of the first may rise to any
degree of extravagance, and seems not to be limited by any certain
boundary. That of the second, though it may rise greatly, has,
however, a certain boundary, beyond which it cannot well pass for any
considerable time together. That of the third, though its natural
tendency is to rise in the progress of improvement, yet in the same
degree of improvement it may sometimes happen even to fall, sometimes
to continue the same, and sometimes to rise more or less, according as
different accidents render the efforts of human industry, in
multiplying this sort of rude produce, more or less successful.

First Sort. -- The first sort of rude produce, of which the price
rises in the progress of improvement, is that which it is scarce in
the power of human industry to multiply at all. It consists in those
things which nature produces only in certain quantities, and which
being of a very perishable nature, it is impossible to accumulate
together the produce of many different seasons. Such are the greater
part of rare and singular birds and fishes, many different sorts of
game, almost all wild-fowl, all birds of passage in particular, as
well as many other things. When wealth, and the luxury which
accompanies it, increase, the demand for these is likely to increase
with them, and no effort of human industry may be able to increase the
supply much beyond what it was before this increase of the demand. The
quantity of such commodities, therefore, remaining the same, or nearly
the same, while the competition to purchase them is continually
increasing, their price may rise to any degree of extravagance, and
seems not to be limited by any certain boundary. If woodcocks should
become so fashionable as to sell for twenty guineas a-piece, no effort
of human industry could increase the number of those brought to
market, much beyond what it is at present. The high price paid by the
Romans, in the time of their greatest grandeur, for rare birds and
fishes, may in this manner easily be accounted for. These prices were
not the effects of the low value of silver in those times, but of the
high value of such rarities and curiosities as human industry could
not multiply at pleasure. The real value of silver was higher at Rome,
for sometime before, and after the fall of the republic, than it is
through the greater part of Europe at present. Three sestertii equal
to about sixpence sterling, was the price which the republic paid for
the modius or peck of the tithe wheat of Sicily. This price, however,
was probably below the average market price, the obligation to deliver
their wheat at this rate being considered as a tax upon the Sicilian
farmers. When the Romans, therefore, had occasion to order more corn
than the tithe of wheat amounted to, they were bound by capitulation
to pay for the surplus at the rate of four sestertii, or eightpence
sterling the peck; and this had probably been reckoned the moderate
and reasonable, that is, the ordinary or average contract price of
those times; it is equal to about one-and-twenty shillings the
quarter. Eight-and-twenty shillings the quarter was, before the late
years of scarcity, the ordinary contract price of English wheat, which
in quality is inferior to the Sicilian, and generally sells for a
lower price in the European market. The value of silver, therefore, in
those ancient times, must have been to its value in the present, as
three to four inversely; that is, three ounces of silver would then
have purchased the same quantity of labour and commodities which four
ounces will do at present. When we read in Pliny, therefore, that
Seius {Lib. X, c. 29.} bought a white nightingale, as a present for
the empress Agrippina, at the price of six thousand sestertii, equal
to about fifty pounds of our present money; and that Asinius Celer
{Lib. IX, c. 17.} purchased a surmullet at the price of eight thousand
sestertii, equal to about sixty-six pounds thirteen shillings and
fourpence of our present money; the extravagance of those prices, how
much soever it may surprise us, is apt, notwithstanding, to appear to
us about one third less than it really was. Their real price, the
quantity of labour and subsistence which was given away for them, was
about one-third more than their nominal price is apt to express to us
in the present times. Seius gave for the nightingale the command of a
quantity of labour and subsistence, equal to what £ 66:13: 4d. would
purchase in the present times; and Asinius Celer gave for a surmullet
the command of a quantity equal to what £ 88:17: 9d. would purchase.
What occasioned the extravagance of those high prices was, not so much
the abundance of silver, as the abundance of labour and subsistence,
of which those Romans had the disposal, beyond what was necessary for
their own use. The quantity of silver, of which they had the disposal,
was a good deal less than what the command of the same quantity of
labour and subsistence would have procured to them in the present
times.

Second sort. --The second sort of rude produce, of which the price
rises in the progress of improvement, is that which human industry can
multiply in proportion to the demand. It consists in those useful
plants and animals, which, in uncultivated countries, nature produces
with such profuse abundance, that they are of little or no value, and
which, as cultivation advances, are therefore forced to give place to
some more profitable produce. During a long period in the progress of
improvement, the quantity of these is continually diminishing, while,
at the same time, the demand for them is continually increasing. Their
real value, therefore, the real quantity of labour which they will
purchase or command, gradually rises, till at last it gets so high as
to render them as profitable a produce as any thing else which human
industry can raise upon the most fertile and best cultivated land.
When it has got so high, it cannot well go higher. If it did, more
land and more industry would soon be employed to increase their
quantity.

When the price of cattle, for example, rises so high, that it is as
profitable to cultivate land in order to raise food for them as in
order to raise food for man, it cannot well go higher. If it did, more
corn land would soon be turned into pasture. The extension of tillage,
by diminishing the quantity of wild pasture, diminishes the quantity
of butcher's meat, which the country naturally produces without labour
or cultivation; and, by increasing the number of those who have either
corn, or, what comes to the same thing, the price of corn, to give in
exchange for it, increases the demand. The price of butcher's meat,
therefore, and, consequently, of cattle, must gradually rise, till it
gets so high, that it becomes as profitable to employ the most fertile
and best cultivated lands in raising food for them as in raising corn.
But it must always be late in the progress of improvement before
tillage can be so far extended as to raise the price of cattle to this
height; and, till it has got to this height, if the country is
advancing at all, their price must be continually rising. There are,
perhaps, some parts of Europe in which the price of cattle has not yet
got to this height. It had not got to this height in any part of
Scotland before the Union. Had the Scotch cattle been always confined
to the market of Scotland, in a country in which the quantity of land,
which can be applied to no other purpose but the feeding of cattle, is
so great in proportion to what can be applied to other purposes, it is
scarce possible, perhaps, that their price could ever have risen so
high as to render it profitable to cultivate land for the sake of
feeding them. In England, the price of cattle, it has already been
observed, seems, in the neighbourhood of London, to have got to this
height about the beginning of the last century; but it was much later,
probably, before it got through the greater part of the remoter
counties, in some of which, perhaps, it may scarce yet have got to it.
Of all the different substances, however, which compose this second
sort of rude produce, cattle is, perhaps, that of which the price, in
the progress of improvement, rises first to this height.

Till the price of cattle, indeed, has got to this height, it seems
scarce possible that the greater part, even of those lands which are
capable of the highest cultivation, can be completely cultivated. In
all farms too distant from any town to carry manure from it, that is,
in the far greater part of those of every extensive country, the
quantity of well cultivated land must be in proportion to the quantity
of manure which the farm itself produces; and this, again, must be in
proportion to the stock of cattle which are maintained upon it. The
land is manured, either by pasturing the cattle upon it, or by feeding
them in the stable, and from thence carrying out their dung to it. But
unless the price of the cattle be sufficient to pay both the rent and
profit of cultivated land, the farmer cannot afford to pasture them
upon it; and he can still less afford to feed them in the stable. It
is with the produce of improved and cultivated land only that cattle
can be fed in the stable; because, to collect the scanty and scattered
produce of waste and unimproved lands, would require too much labour,
and be too expensive. It the price of the cattle, therefore, is not
sufficient to pay for the produce of improved and cuitivated land,
when they are allowed to pasture it, that price will be still less
sufficient to pay for that produce, when it must be collected with a
good deal of additional labour, and brought into the stable to them.
In these circumstances, therefore, no more cattle can with profit be
fed in the stable than what are necessary for tillage. But these can
never afford manure enough for keeping constantly in good condition
all the lands which they are capable of cultivating. What they afford,
being insufficient for the whole farm, will naturally be reserved for
the lands to which it can be most advantageously or conveniently
applied; the most fertile, or those, perhaps, in the neighbourhood of
the farm-yard. These, therefore, will be kept constantly in good
condition, and fit for tillage. The rest will, the greater part of
them, be allowed to lie waste, producing scarce any thing but some
miserable pasture, just sufficient to keep alive a few straggling,
half-starved cattle; the farm, though much overstocked in proportion
to what would be necessary for its complete cultivation, being very
frequently overstocked in proportion to its actual produce. A portion
of this waste land, however, after having been pastured in this
wretched manner for six or seven years together, may be ploughed up,
when it will yield, perhaps, a poor crop or two of bad oats, or of
some other coarse grain; and then, being entirely exhausted, it must
be rested and pastured again as before, and another portion ploughed
up, to be in the same manner exhausted and rested again in its turn.
Such, accordingly, was the general system of management all over the
low country of Scotland before the Union. The lands which were kept
constantly well manured and in good condition seldom exceeded a third
or fourth part of the whole farm, and sometimes did not amount to a
fifth or a sixth part of it. The rest were never manured, but a
certain portion of them was in its turn, notwithstanding, regularly
cultivated and exhausted. Under this system of management, it is
evident, even that part of the lands of Scotland which is capable of
good cultivation, could produce but little in comparison of what it
may be capable of producing. But how disadvantageous soever this
system may appear, yet, before the Union, the low price of cattle
seems to have rendered it almost unavoidable. If, notwithstanding a
great rise in the price, it still continues to prevail through a
considerable part of the country, it is owing in many places, no
doubt, to ignorance and attachment to old customs, but, in most
places, to the unavoidable obstructions which the natural course of
things opposes to the immediate or speedy establishment of a better
system: first, to the poverty of the tenants, to their not having yet
had time to acquire a stock of cattle sufficient to cultivate their
lands more completely, the same rise of price, which would render it
advantageous for them to maintain a greater stock, rendering it more
difficult for them to acquire it; and, secondly, to their not having
yet had time to put their lands in condition to maintain this greater
stock properly, supposing they were capable of acquiring it. The
increase of stock and the improvement of land are two events which
must go hand in hand, and of which the one can nowhere much outrun the
other. Without some increase of stock, there can be scarce any
improvement of land, but there can be no considerable increase of
stock, but in consequence of a considerable improvement of land;
because otherwise the land could not maintain it. These natural
obstructions to the establishment of a better system, cannot be
removed but by a long course of frugality and industry; and half a
century or a century more, perhaps, must pass away before the old
system, which is wearing out gradually, can be completely abolished
through all the different parts of the country. Of all the commercial
advantages, however, which Scotland has derived from the Union with
England, this rise in the price of cattle is, perhaps, the greatest.
It has not only raised the value of all highland estates, but it has,
perhaps, been the principal cause of the improvement of the low
country.

In all new colonies, the great quantity of waste land, which can for
many years be applied to no other purpose but the feeding of cattle,
soon renders them extremely abundant; and in every thing great
cheapness is the necessary consequence of great abundance. Though all
the cattle of the European colonies in America were originally carried
from Europe, they soon multiplied so much there, and became of so
little value, that even horses were allowed to run wild in the woods,
without any owner thinking it worth while to claim them. It must be a
long time after the first establishment of such colonies, before it
can become profitable to feed cattle upon the produce of cultivated
land. The same causes, therefore, the want of manure, and the
disproportion between the stock employed in cultivation and the land
which it is destined to cultivate, are likely to introduce there a
system of husbandry, not unlike that which still continues to take
place in so many parts of Scotland. Mr Kalm, the Swedish traveller,
when he gives an account of the husbandry of some of the English
colonies in North America, as he found it in 1749, observes,
accordingly, that he can with difficulty discover there the character
of the English nation, so well skilled in all the different branches
of agriculture. They make scarce any manure for their corn fields, he
says; but when one piece of ground has been exhausted by continual
cropping, they clear and cultivate another piece of fresh land; and
when that is exhausted, proceed to a third. Their cattle are allowed
to wander through the woods and other uncultivated grounds, where they
are half-starved; having long ago extirpated almost all the annual
grasses, by cropping them too early in the spring, before they had
time to form their flowers, or to shed their seeds. {Kalm's Travels,
vol 1, pp. 343, 344.} The annual grasses were, it seems, the best
natural grasses in that part of North America; and when the Europeans
first settled there, they used to grow very thick, and to rise three
or four feet high. A piece of ground which, when he wrote, could not
maintain one cow, would in former times, he was assured, have
maintained four, each of which would have given four times the
quantity of milk which that one was capable of giving. The poorness of
the pasture had, in his opinion, occasioned the degradation of their
cattle, which degenerated sensibly from me generation to another. They
were probably not unlike that stunted breed which was common all over
Scotland thirty or forty years ago, and which is now so much mended
through the greater part of the low country, not so much by a change
of the breed, though that expedient has been employed in some places,
as by a more plentiful method of feeding them.

Though it is late, therefore, in the progress of improvement, before
cattle can bring such a price as to render it profitable to cultivate
land for the sake of feeding them; yet of all the different parts
which compose this second sort of rude produce, they are perhaps the
first which bring this price; because, till they bring it, it seems
impossible that improvement can be brought near even to that degree of
perfection to which it has arrived in many parts of Europe.

As cattle are among the first, so perhaps venison is among the last
parts of this sort of rude produce which bring this price. The price
of venison in Great Britain, how extravagant soever it may appear, is
not near sufficient to compensate the expense of a deer park, as is
well known to all those who have had any experience in the feeding of
deer. If it was otherwise, the feeding of deer would soon become an
article of common farming, in the same manner as the feeding of those
small birds, called turdi, was among the ancient Romans. Varro and
Columella assure us, that it was a most profitable article. The
fattening of ortolans, birds of passage which arrive lean in the
country, is said to be so in some parts of France. If venison
continues in fashion, and the wealth and luxury of Great Britain
increase as they have done for some time past, its price may very
probably rise still higher than it is at present.

Between that period in the progress of improvement, which brings to
its height the price of so necessary an article as cattle, and that
which brings to it the price of such a superfluity as venison, there
is a very long interval, in the course of which many other sorts of
rude produce gradually arrive at their highest price, some sooner and
some later, according to different circumstances.

Thus, in every farm, the offals of the barn and stable will maintain a
certain number of poultry. These, as they are fed with what would
otherwise be lost, are a mere save-all; and as they cost the farmer
scarce any thing, so he can afford to sell them for very little.
Almost all that he gets is pure gain, and their price can scarce be so
low as to discourage him from feeding this number. But in countries
ill cultivated, and therefore but thinly inhabited, the poultry, which
are thus raised without expense, are often fully sufficient to supply
the whole demand. In this state of things, therefore, they are often
as cheap as butcher's meat, or any other sort of animal food. But the
whole quantity of poultry which the farm in this manner produces
without expense, must always be much smaller than the whole quantity
of butcher's meat which is reared upon it; and in times of wealth and
luxury, what is rare, with only nearly equal merit, is always
preferred to what is common. As wealth and luxury increase, therefore,
in consequence of improvement and cultivation, the price of poultry
gradually rises above that of butcher's meat, till at last it gets so
high, that it becomes profitable to cultivate land for the sake of
feeding them. When it has got to this height, it cannot well go
higher. If it did, more land would soon be turned to this purpose. In
several provinces of France, the feeding of poultry is considered as a
very important article in rural economy, and sufficiently profitable
to encourage the farmer to raise a considerable quantity of Indian
corn and buckwheat for this purpose. A middling farmer will there
sometimes have four hundred fowls in his yard. The feeding of poultry
seems scarce yet to be generally considered as a matter of so much
importance in England. They are certainly, however, dearer in England
than in France, as England receives considerable supplies from France.
In the progress of improvements, the period at which every particular
sort of animal food is dearest, must naturally be that which
immediately precedes the general practice of cultivating land for the
sake of raising it. For some time before this practice becomes
general, the scarcity must necessarily raise the price. After it has
become general, new methods of feeding are commonly fallen upon, which
enable the farmer to raise upon the same quantity of ground a much
greater quantity of that particular sort of animal food. The plenty
not only obliges him to sell cheaper, but, in consequence of these
improvements, he can afford to sell cheaper; for if he could not
afford it, the plenty would not be of long continuance. It has been
probably in this manner that the introduction of clover, turnips,
carrots, cabbages, etc. has contributed to sink the common price of
butcher's meat in the London market, somewhat below what it was about
the beginning of the last century.

The hog, that finds his food among ordure, and greedily devours many
things rejected by every other useful animal, is, like poultry,
originally kept as a save-all. As long as the number of such animals,
which can thus be reared at little or no expense, is fully sufficient
to supply the demand, this sort of butcher's meat comes to market at a
much lower price than any other. But when the demand rises beyond what
this quantity can supply, when it becomes necessary to raise food on
purpose for feeding and fattening hogs, in the same manner as for
feeding and fattening other cattle, the price necessarily rises, and
becomes proportionably either higher or lower than that of other
butcher's meat, according as the nature of the country, and the state
of its agriculture, happen to render the feeding of hogs more or less
expensive than that of other cattle. In France, according to Mr
Buffon, the price of pork is nearly equal to that of beef. In most
parts of Great Britain it is at present somewhat higher.

The great rise in the price both of hogs and poultry, has, in Great
Britain, been frequently imputed to the diminution of the number of
cottagers and other small occupiers of land; an event which has in
every part of Europe been the immediate forerunner of improvement and
better cultivation, but which at the same time may have contributed to
raise the price of those articles, both somewhat sooner and somewhat
faster than it would otherwise have risen. As the poorest family can
often maintain a cat or a dog without any expense, so the poorest
occupiers of land can commonly maintain a few poultry, or a sow and a
few pigs, at very little. The little offals of their own table, their
whey, skimmed milk, and butter milk, supply those animals with a part
of their food, and they find the rest in the neighbouring fields,
without doing any sensible damage to any body. By diminishing the
number of those small occupiers, therefore, the quantity of this sort
of provisions, which is thus produced at little or no expense, must
certainly have been a good deal diminished, and their price must
consequently have been raised both sooner and faster than it would
otherwise have risen. Sooner or later, however, in the progress of
improvement, it must at any rate have risen to the utmost height to
which it is capable of rising; or to the price which pays the labour
and expense of cultivating the land which furnishes them with food, as
well as these are paid upon the greater part of other cultivated land.

The business of the dairy, like the feeding of hogs and poultry, is
originally carried on as a save-all. The cattle necessarily kept upon
the farm produce more milk than either the rearing of their own young,
or the consumption of the farmer's family requires; and they produce
most at one particular season. But of all the productions of land,
milk is perhaps the most perishable. In the warm season, when it is
most abundant, it will scarce keep four-and-twenty hours. The farmer,
by making it into fresh butter, stores a small part of it for a week;
by making it into salt butter, for a year; and by making it into
cheese, he stores a much greater part of it for several years. Part of
all these is reserved for the use of his own family; the rest goes to
market, in order to find the best price which is to be had, and which
can scarce be so low is to discourage him from sending thither
whatever is over and above the use of his own family. If it is very
low indeed, he will be likely to manage his dairy in a very slovenly
and dirty manner, and will scarce, perhaps, think it worth while to
have a particular room or building on purpose for it, but will suffer
the business to be carried on amidst the smoke, filth, and nastiness
of his own kitchen, as was the case of almost all the farmers' dairies
in Scotland thirty or forty years ago, and as is the case of many of
them still. The same causes which gradually raise the price of
butcher's meat, the increase of the demand, and, in consequence of the
improvement of the country, the diminution of the quantity which can
be fed at little or no expense, raise, in the same manner, that of the
produce of the dairy, of which the price naturally connects with that
of butcher's meat, or with the expense of feeding cattle. The increase
of price pays for more labour, care, and cleanliness. The dairy
becomes more worthy of the farmer's attention, and the quality of its
produce gradually improves. The price at last gets so high, that it
becomes worth while to employ some of the most fertile and best
cultivated lands in feeding cattle merely for the purpose of the
dairy; and when it has got to this height, it cannot well go higher.
If it did, more land would soon be turned to this purpose. It seems to
have got to this height through the greater part of England, where
much good land is commonly employed in this manner. If you except the
neighbourhood of a few considerable towns, it seems not yet to have
got to this height anywhere in Scotland, where common farmers seldom
employ much good land in raising food for cattle, merely for the
purpose of the dairy. The price of the produce, though it has risen
very considerably within these few years, is probably still too low to
admit of it. The inferiority of the quality, indeed, compared with
that of the produce of English dairies, is fully equal to that of the
price. But this inferiority of quality is, perhaps, rather the effect
of this lowness of price, than the cause of it. Though the quality was
much better, the greater part of what is brought to market could not,
I apprehend, in the present circumstances of the country, be disposed
of at a much better price; and the present price, it is probable,
would not pay the expense of the land and labour necessary for
producing a much better quality. Through the greater part of England,
notwithstanding the superiority of price, the dairy is not reckoned a
more profitable employment of land than the raising of corn, or the
fattening of cattle, the two great objects of agriculture. Through the
greater part of Scotland, therefore, it cannot yet be even so
profitable.

The lands of no country, it is evident, can ever be completely
cultivated and improved, till once the price of every produce, which
human industry is obliged to raise upon them, has got so high as to
pay for the expense of complete improvement and cultivation. In order
to do this, the price of each particular produce must be sufficient,
first, to pay the rent of good corn land, as it is that which
regulates the rent of the greater part of other cultivated land; and,
secondly, to pay the labour and expense of the farmer, as well as they
are commonly paid upon good corn land; or, in other words, to replace
with the ordinary profits the stock which he employs about it. This
rise in the price of each particular produce; must evidently be
previous to the improvement and cultivation of the land which is
destined for raising it. Gain is the end of all improvement; and
nothing could deserve that name, of which loss was to be the necessary
consequence. But loss must be the necessary consequence of improving
land for the sake of a produce of which the price could never bring
back the expense. If the complete improvement and cultivation of the
country be, as it most certainly is, the greatest of all public
advantages, this rise in the price of all those different sorts of
rude produce, instead of being considered as a public calamity, ought
to be regarded as the necessary forerunner and attendant of the
greatest of all public advantages.

This rise, too, in the nominal or money price of all those different
sorts of rude produce, has been the effect, not of any degradation in
the value of silver, but of a rise in their real price. They have
become worth, not only a greater quantity of silver, but a greater
quantity of labour and subsistence than before. As it costs a greater
quantity of labour and subsistence to bring them to market, so, when
they are brought thither they represent, or are equivalent to a
greater quantity.

Third Sort. -- The third and last sort of rude produce, of which the
price naturally rises in the progress of improvement, is that in which
the efficacy of human industry, in augmenting the quantity, is either
limited or uncertain. Though the real price of this sort of rude
produce, therefore, naturally tends to rise in the progress of
improvement, yet, according as different accidents happen to render
the efforts of human industry more or less successful in augmenting
the quantity, it may happen sometimes even to fall, sometimes to
continue the same, in very different periods of improvement, and
sometimes to rise more or less in the same period.

There are some sorts of rude produce which nature has rendered a kind
of appendages to other sorts; so that the quantity of the one which
any country can afford, is necessarily limited by that of the other.
The quantity of wool or of raw hides, for example, which any country
can afford, is necessarily limited by the number of great and small
cattle that are kept in it. The state of its improvement, and the
nature of its agriculture, again necessarily determine this number.

The same causes which, in the progress of improvement, gradually raise
the price of butcher's meat, should have the same effect, it may be
thought, upon the prices of wool and raw hides, and raise them, too,
nearly in the same proportion. It probably would be so, if, in the
rude beginnings of improvement, the market for the latter commodities
was confined within as narrow bounds as that for the former. But the
extent of their respective markets is commonly extremely different.

The market for butcher's meat is almost everywhere confined to the
country which produces it. Ireland, and some part of British America,
indeed, carry on a considerable trade in salt provisions; but they
are, I believe, the only countries in the commercial world which do
so, or which export to other countries any considerable part of their
butcher's meat.

The market for wool and raw hides, on the contrary, is, in the rude
beginnings of improvement, very seldom confined to the country which
produces them. They can easily be transported to distant countries;
wool without any preparation, and raw hides with very little; and as
they are the materials of many manufactures, the industry of other
countries may occasion a demand for them, though that of the country
which produces them might not occasion any.

In countries ill cultivated, and therefore but thinly inhabited, the
price of the wool and the hide bears always a much greater proportion
to that of the whole beast, than in countries where, improvement and
population being further advanced, there is more demand for butcher's
meat. Mr Hume observes, that in the Saxon times, the fleece was
estimated at two-fifths of the value of the whole sheep and that this
was much above the proportion of its present estimation. In some
provinces of Spain, I have been assured, the sheep is frequently
killed merely for the sake of the fleece and the tallow. The carcase
is often left to rot upon the ground, or to be devoured by beasts and
birds of prey. If this sometimes happens even in Spain, it happens
almost constantly in Chili, at Buenos Ayres, and in many other parts
of Spanish America, where the horned cattle are almost constantly
killed merely for the sake of the hide and the tallow. This, too, used
to happen almost constantly in Hispaniola, while it was infested by
the buccaneers, and before the settlement, improvement, and
populousness of the French plantations ( which now extend round the
coast of almost the whole western half of the island) had given some
value to the cattle of the Spaniards, who still continue to possess,
not only the eastern part of the coast, but the whole inland
mountainous part of the country.

Though, in the progress of improvement and population, the price of
the whole beast necessarily rises, yet the price of the carcase is
likely to be much more affected by this rise than that of the wool and
the hide. The market for the carcase being in the rude state of
society confined always to the country which produces it, must
necessarily be extended in proportion to the improvement and
population of that country. But the market for the wool and the hides,
even of a barbarous country, often extending to the whole commercial
world, it can very seldom be enlarged in the same proportion. The
state of the whole commercial world can seldom be much affected by the
improvement of any particular country; and the market for such
commodities may remain the same, or very nearly the same, after such
improvements, as before. It should, however, in the natural course of
things, rather, upon the whole, be somewhat extended in consequence of
them. If the manufactures, especially, of which those commodities are
the materials, should ever come to flourish in the country, the
market, though it might not be much enlarged, would at least be
brought much nearer to the place of growth than before; and the price
of those materials might at least be increased by what had usually
been the expense of transporting them to distant countries. Though it
might not rise, therefore, in the same proportion as that of butcher's
meat, it ought naturally to rise somewhat, and it ought certainly not
to fall.

In England, however, notwithstanding the flourishing state of its
woollen manufacture, the price of English wool has fallen very
considerably since the time of Edward III. There are many authentic
records which demonstrate that, during the reign of that prince
(towards the middle of the fourteenth century, or about 1339), what
was reckoned the moderate and reasonable price of the tod, or
twenty-eight pounds of English wool, was not less than ten shillings
of the money of those times {See Smith's Memoirs of Wool, vol. i c.
5, 6, 7. also vol. ii.}, containing, at the rate of twenty-pence the
ounce, six ounces of silver, Tower weight, equal to about thirty
shillings of our present money. In the present times, one-and-twenty
shillings the tod may be reckoned a good price for very good English
wool. The money price of wool, therefore, in the time of Edward III.
was to its money price in the present times as ten to seven. The
superiority of its real price was still greater. At the rate of six
shillings and eightpence the quarter, ten shillings was in those
ancient times the price of twelve bushels of wheat. At the rate of
twenty-eight shillings the quarter, one-and-twenty shillings is in the
present times the price of six bushels only. The proportion between
the real price of ancient and modern times, therefore, is as twelve to
six, or as two to one. In those ancient times, a tod of wool would
have purchased twice the quantity of subsistence which it will
purchase at present, and consequently twice the quantity of labour, if
the real recompence of labour had been the same in both periods.

This degradation, both in the real and nominal value of wool, could
never have happened in consequence of the natural course of things. It
has accordingly been the effect of violence and artifice. First, of
the absolute prohibition of exporting wool from England: secondly, of
the permission of importing it from Spain, duty free: thirdly, of the
prohibition of exporting it from Ireland to another country but
England. In consequence of these regulations, the market for English
wool, instead of being somewhat extended, in consequence of the
improvement of England, has been confined to the home market, where
the wool of several other countries is allowed to come into
competition with it, and where that of Ireland is forced into
competition with it. As the woollen manufactures, too, of Ireland, are
fully as much discouraged as is consistent with justice and fair
dealing, the Irish can work up but a smaller part of their own wool at
home, and are therefore obliged to send a greater proportion of it to
Great Britain, the only market they are allowed.

I have not been able to find any such authentic records concerning the
price of raw hides in ancient times. Wool was commonly paid as a
subsidy to the king, and its valuation in that subsidy ascertains, at
least in some degree, what was its ordinary price. But this seems not
to have been the case with raw hides. Fleetwood, however, from an
account in 1425, between the prior of Burcester Oxford and one of his
canons, gives us their price, at least as it was stated upon that
particular occasion, viz. five ox hides at twelve shillings; five cow
hides at seven shillings and threepence; thirtysix sheep skins of two
years old at nine shillings; sixteen calf skins at two shillings. In
1425, twelve shillings contained about the same quantity of silver as
four-and-twenty shillings of our present money. An ox hide, therefore,
was in this account valued at the same quantity of silver as 4s.
4/5ths of our present money. Its nominal price was a good deal lower
than at present. But at the rate of six shillings and eightpence the
quarter, twelve shillings would in those times have purchased fourteen
bushels and four-fifths of a bushel of wheat, which, at three and
sixpence the bushel, would in the present times cost 51s. 4d. An ox
hide, therefore, would in those times have purchased as much corn as
ten shillings and threepence would purchase at present. Its real value
was equal to ten shillings and threepence of our present money. In
those ancient times, when the cattle were half starved during the
greater part of the winter, we cannot suppose that they were of a very
large size. An ox hide which weighs four stone of sixteen pounds of
avoirdupois, is not in the present times reckoned a bad one; and in
those ancient times would probably have been reckoned a very good one.
But at half-a-crown the stone, which at this moment (February 1773) I
understand to be the common price, such a hide would at present cost
only ten shillings. Through its nominal price, therefore, is higher in
the present than it was in those ancient times, its real price, the
real quantity of subsistence which it will purchase or command, is
rather somewhat lower. The price of cow hides, as stated in the above
account, is nearly in the common proportion to that of ox hides. That
of sheep skins is a good deal above it. They had probably been sold
with the wool. That of calves skins, on the contrary, is greatly below
it. In countries where the price of cattle is very low, the calves,
which are not intended to be reared in order to keep up the stock, are
generally killed very young, as was the case in Scotland twenty or
thirty years ago. It saves the milk, which their price would not pay
for. Their skins, therefore, are commonly good for little.

The price of raw hides is a good deal lower at present than it was a
few years ago; owing probably to the taking off the duty upon seal
skins, and to the allowing, for a limited time, the importation of raw
hides from Ireland, and from the plantations, duty free, which was
done in 1769. Take the whole of the present century at an average,
their real price has probably been somewhat higher than it was in
those ancient times. The nature of the commodity renders it not quite
so proper for being transported to distant markets as wool. It suffers
more by keeping. A salted hide is reckoned inferior to a fresh one,
and sells for a lower price. This circumstance must necessarily have
some tendency to sink the price of raw hides produced in a country
which does not manufacture them, but is obliged to export them, and
comparatively to raise that of those produced in a country which does
manufacture them. It must have some tendency to sink their price in a
barbarous, and to raise it in an improved and manufacturing country.
It must have had some tendency, therefore, to sink it in ancient, and
to raise it in modern times. Our tanners, besides, have not been quite
so successful as our clothiers, in convincing the wisdom of the
nation, that the safety of the commonwealth depends upon the
prosperity of their particular manufacture. They have accordingly been
much less favoured. The exportation of raw hides has, indeed, been
prohibited, and declared a nuisance; but their importation from
foreign countries has been subjected to a duty; and though this duty
has been taken off from those of Ireland and the plantations (for the
limited time of five years only), yet Ireland has not been confined to
the market of Great Britain for the sale of its surplus hides, or of
those which are not manufactured at home. The hides of common cattle
have, but within these few years, been put among the enumerated
commodities which the plantations can send nowhere but to the mother
country; neither has the commerce of Ireland been in this case
oppressed hitherto, in order to support the manufactures of Great
Britain.

Whatever regulations tend to sink the price, either of wool or of raw
hides, below what it naturally would he, must, in an improved and
cultivated country, have some tendency to raise the price of butcher's
meat. The price both of the great and small cattle, which are fed on
improved and cultivated land, must be sufficient to pay the rent which
the landlord, and the profit which the farmer, has reason to expect
from improved and cultivated land. If it is not, they will soon cease
to feed them. Whatever part of this price, therefore, is not paid by
the wool and the hide, must be paid by the carcase. The less there is
paid for the one, the more must be paid for the other. In what manner
this price is to be divided upon the different parts of the beast, is
indifferent to the landlords and farmers, provided it is all paid to
them. In an improved and cultivated country, therefore, their interest
as landlords and farmers cannot be much affected by such regulations,
though their interest as consumers may, by the rise in the price of
provisions. It would be quite otherwise, however, in an unimproved and
uncultivated country, where the greater part of the lands could be
applied to no other purpose but the feeding of cattle, and where the
wool and the hide made the principal part of the value of those
cattle. Their interest as landlords and farmers would in this case be
very deeply affected by such regulations, and their interest as
consumers very little. The fall in the price of the wool and the hide
would not in this case raise the price of the carcase; because the
greater part of the lands of the country being applicable to no other
purpose but the feeding of cattle, the same number would still
continue to be fed. The same quantity of butcher's meat would still
come to market. The demand for it would be no greater than before. Its
price, therefore, would be the same as before. The whole price of
cattle would fall, and along with it both the rent and the profit of
all those lands of which cattle was the principal produce, that is, of
the greater part of the lands of the country. The perpetual
prohibition of the exportation of wool, which is commonly, but very
falsely, ascribed to Edward III., would, in the then circumstances of
the country, have been the most destructive regulation which could
well have been thought of. It would not only have reduced the actual
value of the greater part of the lands in the kingdom, but by reducing
the price of the most important species of small cattle, it would have
retarded very much its subsequent improvement.

The wool of Scotland fell very considerably in its price in
consequence of the union with England, by which it was excluded from
the great market of Europe, and confined to the narrow one of Great
Britain. The value of the greater part of the lands in the southern
counties of Scotland, which are chiefly a sheep country, would have
been very deeply affected by this event, had not the rise in the price
of butcher's meat fully compensated the fall in the price of wool.

As the efficacy of human industry, in increasing the quantity either
of wool or of raw hides, is limited, so far as it depends upon the
produce of the country where it is exerted; so it is uncertain so far
as it depends upon the produce of other countries. It so far depends
not so much upon the quantity which they produce, as upon that which
they do not manufacture; and upon the restraints which they may or may
not think proper to impose upon the exportation of this sort of rude
produce. These circumstances, as they are altogether independent of
domestic industry, so they necessarily render the efficacy of its
efforts more or less uncertain. In multiplying this sort of rude
produce, therefore, the efficacy of human industry is not only
limited, but uncertain.

In multiplying another very important sort of rude produce, the
quantity of fish that is brought to market, it is likewise both
limited and uncertain. It is limited by the local situation of the
country, by the proximity or distance of its different provinces from
the sea, by the number of its lakes and rivers, and by what may be
called the fertility or barrenness of those seas, lakes, and rivers,
as to this sort of rude produce. As population increases, as the
annual produce of the land and labour of the country grows greater and
greater, there come to be more buyers of fish; and those buyers, too,
have a greater quantity and variety of other goods, or, what is the
same thing, the price of a greater quantity and variety of other
goods, to buy with. But it will generally be impossible to supply the
great and extended market, without employing a quantity of labour
greater than in proportion to what had been requisite for supplying
the narrow and confined one. A market which, from requiring only one
thousand, comes to require annually ten thousand ton of fish, can
seldom be supplied, without employing more than ten times the quantity
of labour which had before been sufficient to supply it. The fish must
generally be sought for at a greater distance, larger vessels must be
employed, and more expensive machinery of every kind made use of. The
real price of this commodity, therefore, naturally rises in the
progress of improvement. It has accordingly done so, I believe, more
or less in every country.

Though the success of a particular day's fishing maybe a very
uncertain matter, yet the local situation of the country being
supposed, the general efficacy of industry in bringing a certain
quantity of fish to market, taking the course of a year, or of several
years together, it may, perhaps, be thought is certain enough; and it,
no doubt, is so. As it depends more, however, upon the local situation
of the country, than upon the state of its wealth and industry; as
upon this account it may in different countries be the same in very
different periods of improvement, and very different in the same
period; its connection with the state of improvement is uncertain; and
it is of this sort of uncertainty that I am here speaking.

In increasing the quantity of the different minerals and metals which
are drawn from the bowels of the earth, that of the more precious ones
particularly, the efficacy of human industry seems not to be limited,
but to be altogether uncertain.

The quantity of the precious metals which is to be found in any
country, is not limited by any thing in its local situation, such as
the fertility or barrenness of its own mines. Those metals frequently
abound in countries which possess no mines. Their quantity, in every
particular country, seems to depend upon two different circumstances;
first, upon its power of purchasing, upon the state of its industry,
upon the annual produce of its land and labour, in consequence of
which it can afford to employ a greater or a smaller quantity of
labour and subsistence, in bringing or purchasing such superfluities
as gold and silver, either from its own mines, or from those of other
countries; and, secondly, upon the fertility or barrenness of the
mines which may happen at any particular time to supply the commercial
world with those metals. The quantity of those metals in the countries
most remote from the mines, must be more or less affected by this
fertility or barrenness, on account of the easy and cheap
transportation of those metals, of their small bulk and great value.
Their quantity in China and Indostan must have been more or less
affected by the abundance of the mines of America.

So far as their quantity in any particular country depends upon the
former of those two circumstances (the power of purchasing), their
real price, like that of all other luxuries and superfluities, is
likely to rise with the wealth and improvement of the country, and to
fall with its poverty and depression. Countries which have a great
quantity of labour and subsistence to spare, can afford to purchase
any particular quantity of those metals at the expense of a greater
quantity of labour and subsistence, than countries which have less to
spare.

So far as their quantity in any particular country depends upon the
latter of those two circumstances (the fertility or barrenness of the
mines which happen to supply the commercial world), their real price,
the real quantity of labour and subsistence which they will purchase
or exchange for, will, no doubt, sink more or less in proportion to
the fertility, and rise in proportion to the barrenness of those
mines.

The fertility or barrenness of the mines, however, which may happen at
any particular time to supply the commercial world, is a circumstance
which, it is evident, may have no sort of connection with the state of
industry in a particular country. It seems even to have no very
necessary connection with that of the world in general. As arts and
commerce, indeed, gradually spread themselves over a greater and a
greater part of the earth, the search for new mines, being extended
over a wider surface, may have somewhat a better chance for being
successful than when confined within narrower bounds. The discovery of
new mines, however, as the old ones come to be gradually exhausted, is
a matter of the greatest uncertainty, and such as no human skill or
industry can insure. All indications, it is acknowledged, are
doubtful; and the actual discovery and successful working of a new
mine can alone ascertain the reality of its value, or even of its
existence. In this search there seem to be no certain limits, either
to the possible success, or to the possible disappointment of human
industry. In the course of a century or two, it is possible that new
mines may be discovered, more fertile than any that have ever yet been
known; and it is just equally possible, that the most fertile mine
then known may be more barren than any that was wrought before the
discovery of the mines of America. Whether the one or the other of
those two events may happen to take place, is of very little
importance to the real wealth and prosperity of the world, to the real
value of the annual produce of the land and labour of mankind. Its
nominal value, the quantity of gold and silver by which this annual
produce could be expressed or represented, would, no doubt, be very
different; but its real value, the real quantity of labour which it
could purchase or command, would be precisely the same. A shilling
might, in the one case, represent no more labour than a penny does at
present; and a penny, in the other, might represent as much as a
shilling does now. But in the one case, he who had a shilling in his
pocket would be no richer than he who has a penny at present; and in
the other, he who had a penny would be just as rich as he who has a
shilling now. The cheapness and abundance of gold and silver plate
would be the sole advantage which the world could derive from the one
event; and the dearness and scarcity of those trifling superfluities,
the only inconveniency it could suffer from the other.

Conclusion of the Digression concerning the Variations in the Value of
Silver.

The greater part of the writers who have collected the money price of
things in ancient times, seem to have considered the low money price
of corn, and of goods in general, or, in other words, the high value
of gold and silver, as a proof, not only of the scarcity of those
metals, but of the poverty and barbarism of the country at the time
when it took place. This notion is connected with the system of
political economy, which represents national wealth as consisting in
the abundance and national poverty in the scarcity, of gold and
silver; a system which I shall endeavour to explain and examine at
great length in the fourth book of this Inquiry. I shall only observe
at present, that the high value of the precious metals can be no proof
of the poverty or barbarism of any particular country at the time when
it took place. It is a proof only of the barrenness of the mines which
happened at that time to supply the commercial world. A poor country,
as it cannot afford to buy more, so it can as little afford to pay
dearer for gold and silver than a rich one; and the value of those
metals, therefore, is not likely to be higher in the former than in
the latter. In China, a country much richer than any part of Europe,
the value of the precious metals is much higher than in any part of
Europe. As the wealth of Europe, indeed, has increased greatly since
the discovery of the mines of America, so the value of gold and silver
has gradually diminished. This diminution of their value, however, has
not been owing to the increase of the real wealth of Europe, of the
annual produce of its land and labour, but to the accidental discovery
of more abundant mines than any that were known before. The increase
of the quantity of gold and silver in Europe, and the increase of its
manufactures and agriculture, are two events which, though they have
happened nearly about the same time, yet have arisen from very
different causes, and have scarce any natural connection with one
another. The one has arisen from a mere accident, in which neither
prudence nor policy either had or could have any share; the other,
from the fall of the feudal system, and from the establishment of a
government which afforded to industry the only encouragement which it
requires, some tolerable security that it shall enjoy the fruits of
its own labour. Poland, where the feudal system still continues to
take place, is at this day as beggarly a country as it was before the
discovery of America. The money price of corn, however, has risen; the
real value of the precious metals has fallen in Poland, in the same
manner as in other parts of Europe. Their quantity, therefore, must
have increased there as in other places, and nearly in the same
proportion to the annual produce of its land and labour. This increase
of the quantity of those metals, however, has not, it seems, increased
that annual produce, has neither improved the manufactures and
agriculture of the country, nor mended the circumstances of its
inhabitants. Spain and Portugal, the countries which possess the
mines, are, after Poland, perhaps the two most beggarly countries in
Europe. The value of the precious metals, however, must be lower in
Spain and Portugal than in any other part of Europe, as they come from
those countries to all other parts of Europe, loaded, not only with a
freight and an insurance, but with the expense of smuggling, their
exportation being either prohibited or subjected to a duty. In
proportion to the annual produce of the land and labour, therefore,
their quantity must be greater in those countries than in any other
part of Europe; those countries, however, are poorer than the greater
part of Europe. Though the feudal system has been abolished in Spain
and Portugal, it has not been succeeded by a much better.

As the low value of gold and silver, therefore, is no proof of the
wealth and flourishing state of the country where it takes place; so
neither is their high value, or the low money price either of goods in
general, or of corn in particular, any proof of its poverty and
barbarism.

But though the low money price, either of goods in general, or of corn
in particular, be no proof of the poverty or barbarism of the times,
the low money price of some particular sorts of goods, such as cattle,
poultry, game of all kinds, etc. in proportion to that of corn, is a
most decisive one. It clearly demonstrates, first, their great
abundance in proportion to that of corn, and, consequently, the great
extent of the land which they occupied in proportion to what was
occupied by corn; and, secondly, the low value of this land in
proportion to that of corn land, and, consequently, the uncultivated
and unimproved state of the far greater part of the lands of the
country. It clearly demonstrates, that the stock and population of the
country did not bear the same proportion to the extent of its
territory, which they commonly do in civilized countries; and that
society was at that time, and in that country, but in its infancy.
From the high or low money price, either of goods in general, or of
corn in particular, we can infer only, that the mines, which at that
time happened to supply the commercial world with gold and silver,
were fertile or barren, not that the country was rich or poor. But
from the high or low money price of some sorts of goods in proportion
to that of others, we can infer, with a degree of probability that
approaches almost to certainty, that it was rich or poor, that the
greater part of its lands were improved or unimproved, and that it was
either in a more or less barbarous state, or in a more or less
civilized one.

Any rise in the money price of goods which proceeded altogether from
the degradation of the value of silver, would affect all sorts of
goods equally, and raise their price universally, a third, or a
fourth, or a fifth part higher, according as silver happened to lose a
third, or a fourth, or a fifth part of its former value. But the rise
in the price of provisions, which has been the subject of so much
reasoning and conversation, does not affect all sorts of provisions
equally. Taking the course of the present century at an average, the
price of corn, it is acknowledged, even by those who account for this
rise by the degradation of the value of silver, has risen much less
than that of some other sorts of provisions. The rise in the price of
those other sorts of provisions, therefore, cannot be owing altogether
to the degradation of the value of silver. Some other causes must be
taken into the account; and those which have been above assigned,
will, perhaps, without having recourse to the supposed degradation of
the value of silver, sufficiently explain this rise in those
particular sorts of provisions, of which the price has actually risen
in proportion to that of corn.

As to the price of corn itself, it has, during the sixty-four first
years of the present century, and before the late extraordinary course
of bad seasons, been somewhat lower than it was during the sixty-four
last years of the preceding century. This fact is attested, not only
by the accounts of Windsor market, but by the public fiars of all the
different counties of Scotland, and by the accounts of several
different markets in France, which have been collected with great
diligence and fidelity by Mr Messance, and by Mr Dupré de St Maur. The
evidence is more complete than could well have been expected in a
matter which is naturally so very difficult to be ascertained.

As to the high price of corn during these last ten or twelve years, it
can be sufficiently accounted for from the badness of the seasons,
without supposing any degradation in the value of silver.

The opinion, therefore, that silver is continually sinking in its
value, seems not to be founded upon any good observations, either upon
the prices of corn, or upon those of other provisions.

The same quantity of silver, it may perhaps be said, will, in the
present times, even according to the account which has been here
given, purchase a much smaller quantity of several sorts of provisions
than it would have done during some part of the last century; and to
ascertain whether this change be owing to a rise in the value of those
goods, or to a fall in the value of silver, is only to establish a
vain and useless distinction, which can be of no sort of service to
the man who has only a certain quantity of silver to go to market
with, or a certain fixed revenue in money. I certainly do not pretend
that the knowledge of this distinction will enable him to buy cheaper.
It may not, however, upon that account be altogether useless.

It may be of some use to the public, by affording an easy proof of the
prosperous condition of the country. If the rise in the price of some
sorts of provisions be owing altogether to a fall in the value of
silver, it is owing to a circumstance, from which nothing can be
inferred but the fertility of the American mines. The real wealth of
the country, the annual produce of its land and labour, may,
notwithstanding this circumstance, be either gradually declining, as
in Portugal and Poland; or gradually advancing, as in most other parts
of Europe. But if this rise in the price of some sorts of provisions
be owing to a rise in the real value of the land which produces them,
to its increased fertility, or, in consequence of more extended
improvement and good cultivation, to its having been rendered fit for
producing corn; it is owing to a circumstance which indicates, in the
clearest manner, the prosperous and advancing state of the country.
The land constitutes by far the greatest, the most important, and the
most durable part of the wealth of every extensive country. It may
surely be of some use, or, at least, it may give some satisfaction to
the public, to have so decisive a proof of the increasing value of by
far the greatest, the most important, and the most durable part of its
wealth.

It may, too, be of some use to the public, in regulating the pecuniary
reward of some of its inferior servants. If this rise in the price of
some sorts of provisions be owing to a fall in the value of silver,
their pecuniary reward, provided it was not too large before, ought
certainly to be augmented in proportion to the extent of this fall. If
it is not augmented, their real recompence will evidently be so much
diminished. But if this rise of price is owing to the increased value,
in consequence of the improved fertility of the land which produces
such provisions, it becomes a much nicer matter to judge, either in
what proportion any pecuniary reward ought to be augmented, or whether
it ought to be augmented at all. The extension of improvement and
cultivation, as it necessarily raises more or less, in proportion to
the price of corn, that of every sort of animal food, so it as
necessarily lowers that of, I believe, every sort of vegetable food.
It raises the price of animal food; because a great part of the land
which produces it, being rendered fit for producing corn, must afford
to the landlord anti farmer the rent and profit of corn land. It
lowers the price of vegetable food; because, by increasing the
fertility of the land, it increases its abundance. The improvements of
agriculture, too, introduce many sorts of vegetable food, which
requiring less land, and not more labour than corn, come much cheaper
to market. Such are potatoes and maize, or what is called Indian corn,
the two most important improvements which the agriculture of Europe,
perhaps, which Europe itself, has received from the great extension of
its commerce and navigation. Many sorts of vegetable food, besides,
which in the rude state of agriculture are confined to the
kitchen-garden, and raised only by the spade, come, in its improved
state, to be introduced into common fields, and to be raised by the
plough; such as turnips, carrots, cabbages, etc. If, in the progress
of improvement, therefore, the real price of one species of food
necessarily rises, that of another as necessarily falls; and it
becomes a matter of more nicety to judge how far the rise in the one
may be compensated by the fall in the other. When the real price of
butcher's meat has once got to its height (which, with regard to every
sort, except perhaps that of hogs flesh, it seems to have done through
a great part of England more than a century ago), any rise which can
afterwards happen in that of any other sort of animal food, cannot
much affect the circumstances of the inferior ranks of people. The
circumstances of the poor, through a great part of England, cannot
surely be so much distressed by any rise in the price of poultry,
fish, wild-fowl, or venison, as they must be relieved by the fall in
that of potatoes.

In the present season of scarcity, the high price of corn no doubt
distresses the poor. But in times of moderate plenty, when corn is at
its ordinary or average price, the natural rise in the price of any
other sort of rude produce cannot much affect them. They suffer more,
perhaps, by the artificial rise which has been occasioned by taxes in
the price of some manufactured commodities, as of salt, soap, leather,
candles, malt, beer, ale, etc.

Effects of the Progress of Improvement upon the real Price of
Manufactures.

It is the natural effect of improvement, however, to diminish
gradually the real price of almost all manufactures. That of the
manufacturing workmanship diminishes, perhaps, in all of them without
exception. In consequence of better machinery, of greater dexterity,
and of a more proper division and distribution of work, all of which
are the natural effects of improvement, a much smaller quantity of
labour becomes requisite for executing any particular piece of work;
and though, in consequence of the flourishing circumstances of the
society, the real price of labour should rise very considerably, yet
the great diminution of the quantity will generally much more than
compensate the greatest rise which can happen in the price.

There are, indeed, a few manufactures, in which the necessary rise in
the real price of the rude materials will more than compensate all the
advantages which improvement can introduce into the execution of the
work In carpenters' and joiners' work, and in the coarser sort of
cabinet work, the necessary rise in the real price of barren timber,
in consequence of the improvement of land, will more than compensate
all the advantages which can be derived from the best machinery, the
greatest dexterity, and the most proper division and distribution of
work.

But in all cases in which the real price of the rude material either
does not rise at all, or does not rise very much, that of the
manufactured commodity sinks very considerably.

This diminution of price has, in the course of the present and
preceding century, been most remarkable in those manufactures of which
the materials are the coarser metals. A better movement of a watch,
than about the middle of the last century could have been bought for
twenty pounds, may now perhaps be had for twenty shillings. In the
work of cutlers and locksmiths, in all the toys which are made of the
coarser metals, and in all those goods which are commonly known by the
name of Birmingham and Sheffield ware, there has been, during the same
period, a very great reduction of price, though not altogether so
great as in watch-work. It has, however, been sufficient to astonish
the workmen of every other part of Europe, who in many cases
acknowledge that they can produce no work of equal goodness for double
or even for triple the price. There are perhaps no manufactures, in
which the division of labour can be carried further, or in which the
machinery employed admits of' a greater variety of improvements, than
those of which the materials are the coarser metals.

In the clothing manufacture there has, during the same period, been no
such sensible reduction of price. The price of superfine cloth, I have
been assured, on the contrary, has, within these five-and-twenty or
thirty years, risen somewhat in proportion to its quality, owing, it
was said, to a considerable rise in the price of the material, which
consists altogether of Spanish wool. That of the Yorkshire cloth,
which is made altogether of English wool, is said, indeed, during the
course of the present century, to have fallen a good deal in
proportion to its quality. Quality, however, is so very disputable a
matter, that I look upon all information of this kind as somewhat
uncertain. In the clothing manufacture, the division of labour is
nearly the same now as it was a century ago, and the machinery
employed is not very different. There may, however, have been some
small improvements in both, which may have occasioned some reduction
of price.

But the reduction will appear much more sensible and undeniable, if we
compare the price of this manufacture in the present times with what
it was in a much remoter period, towards the end of the fifteenth
century, when the labour was probably much less subdivided, and the
machinery employed much more imperfect, than it is at present.

In 1487, being the 4th of Henry VII., it was enacted, that "whosoever
shall sell by retail a broad yard of the finest scarlet grained, or of
other grained cloth of the finest making, above sixteen shillings,
shall forfeit forty shillings for every yard so sold." Sixteen
shillings, therefore, containing about the same quantity of silver as
four-and-twenty shillings of our present money, was, at that time,
reckoned not an unreasonable price for a yard of the finest cloth; and
as this is a sumptuary law, such cloth, it is probable, had usually
been sold somewhat dearer. A guinea may be reckoned the highest price
in the present times. Even though the quality of the cloths,
therefore, should be supposed equal, and that of the present times is
most probably much superior, yet, even upon this supposition, the
money price of the finest cloth appears to have been considerably
reduced since the end of the fifteenth century. But its real price has
been much more reduced. Six shillings and eightpence was then, and
long afterwards, reckoned the average price of a quarter of wheat.
Sixteen shillings, therefore, was the price of two quarters and more
than three bushels of wheat. Valuing a quarter of wheat in the present
times at eight-and-twenty shillings, the real price of a yard of fine
cloth must, in those times, have been equal to at least three pounds
six shillings and sixpence of our present money. The man who bought it
must have parted with the command of a quantity of labour and
subsistence equal to what that sum would purchase in the present
times.

The reduction in the real price of the coarse manufacture, though
considerable, has not been so great as in that of the fine.

In 1463, being the 3rd of Edward IV. it was enacted, that "no servant
in husbandry nor common labourer, nor servant to any artificer
inhabiting out of a city or burgh, shall use or wear in their clothing
any cloth above two shillings the broad yard." In the 3rd of Edward
IV., two shillings contained very nearly the same quantity of silver
as four of our present money. But the Yorkshire cloth which is now
sold at four shillings the yard, is probably much superior to any that
was then made for the wearing of the very poorest order of common
servants. Even the money price of their clothing, therefore, may, in
proportion to the quality, be somewhat cheaper in the present than it
was in those ancient times. The real price is certainly a good deal
cheaper. Tenpence was then reckoned what is called the moderate and
reasonable price of a bushel of wheat. Two shillings, therefore, was
the price of two bushels and near two pecks of wheat, which in the
present times, at three shillings and sixpence the bushel, would be
worth eight shillings and ninepence. For a yard of this cloth the poor
servant must have parted with the power of purchasing a quantity of
subsistence equal to what eight shillings and ninepence would purchase
in the present times. This is a sumptuary law, too, restraining the
luxury and extravagance of the poor. Their clothing, therefore, had
commonly been much more expensive.

The same order of people are, by the same law, prohibited from wearing
hose, of which the price should exceed fourteen-pence the pair, equal
to about eight-and-twenty pence of our present money. But
fourteen-pence was in those times the price of a bushel and near two
pecks of wheat; which in the present times, at three and sixpence the
bushel, would cost five shillings and threepence. We should in the
present times consider this as a very high price for a pair of
stockings to a servant of the poorest and lowest order. He must
however, in those times, have paid what was really equivalent to this
price for them.

In the time of Edward IV. the art of knitting stockings was probably
not known in any part of Europe. Their hose were made of common cloth,
which may have been one of the causes of their dearness. The first
person that wore stockings in England is said to have been Queen
Elizabeth. She received them as a present from the Spanish ambassador.

Both in the coarse and in the fine woollen manufacture, the machinery
employed was much more imperfect in those ancient, than it is in the
present times. It has since received three very capital improvements,
besides, probably, many smaller ones, of which it may be difficult to
ascertain either the number or the importance. The three capital
improvements are, first, the exchange of the rock and spindle for the
spinning-wheel, which, with the same quantity of labour, will perform
more than double the quantity of work. Secondly, the use of several
very ingenious machines, which facilitate and abridge, in a still
greater proportion, the winding of the worsted and woollen yarn, or
the proper arrangement of the warp and woof before they are put into
the loom; an operation which, previous to the invention of those
machines, must have been extremely tedious and troublesome. Thirdly,
the employment of the fulling-mill for thickening the cloth, instead
of treading it in water. Neither wind nor water mills of any kind were
known in England so early as the beginning of the sixteenth century,
nor, so far as I know, in any other part of Europe north of the Alps.
They had been introduced into Italy some time before.

The consideration of these circumstances may, perhaps, in some
measure, explain to us why the real price both of the coarse and of
the fine manufacture was so much higher in those ancient than it is in
the present times. It cost a greater quantity of labour to bring the
goods to market. When they were brought thither, therefore, they must
have purchased, or exchanged for the price of, a greater quantity.

The coarse manufacture probably was, in those ancient times, carried
on in England in the same manner as it always has been in countries
where arts and manufactures are in their infancy. It was probably a
household manufacture, in which every different part of the work was
occasionally performed by all the different members of almost every
private family, but so as to be their work only when they had nothing
else to do, and not to be the principal business from which any of
them derived the greater part of their subsistence. The work which is
performed in this manner, it has already been observed, comes always
much cheaper to market than that which is the principal or sole fund
of the workman's subsistence. The fine manufacture, on the other hand,
was not, in those times, carried on in England, but in the rich and
commercial country of Flanders; and it was probably conducted then, in
the same manner as now, by people who derived the whole, or the
principal part of their subsistence from it. It was, besides, a
foreign manufacture, and must have paid some duty, the ancient custom
of tonnage and poundage at least, to the king. This duty, indeed,
would not probably be very great. It was not then the policy of Europe
to restrain, by high duties, the importation of foreign manufactures,
but rather to encourage it, in order that merchants might be enabled
to supply, at as easy a rate as possible, the great men with the
conveniencies and luxuries which they wanted, and which the industry
of their own country could not afford them.

The consideration of these circumstances may, perhaps, in some measure
explain to us why, in those ancient times, the real price of the
coarse manufacture was, in proportion to that of the fine, so much
lower than in the present times.

Conclusion of the Chapter.

I shall conclude this very long chapter with observing, that every
improvement in the circumstances of the society tends, either directly
or indirectly, to raise the real rent of land to increase the real
wealth of the landlord, his power of purchasing the labour, or the
produce of the labour of other people.

The extension of improvement and cultivation tends to raise it
directly. The landlord's share of the produce necessarily increases
with the increase of the produce.

That rise in the real price of those parts of the rude produce of
land, which is first the effect of the extended improvement and
cultivation, and afterwards the cause of their being still further
extended, the rise in the price of cattle, for example, tends, too, to
raise the rent of land directly, and in a still greater proportion.
The real value of the landlord's share, his real command of the labour
of other people, not only rises with the real value of the produce,
but the proportion of his share to the whole produce rises with it.

That produce, after the rise in its real price, requires no more
labour to collect it than before. A smaller proportion of it will,
therefore, be sufficient to replace, with the ordinary profit, the
stock which employs that labour. A greater proportion of it must
consequently belong to the landlord.

All those improvements in the productive powers of labour, which tend
directly to reduce the rent price of manufactures, tend indirectly to
raise the real rent of land. The landlord exchanges that part of his
rude produce, which is over and above his own consumption, or, what
comes to the same thing, the price of that part of it, for
manufactured produce. Whatever reduces the real price of the latter,
raises that of the former. An equal quantity of the former becomes
thereby equivalent to a greater quantity of the latter; and the
landlord is enabled to purchase a greater quantity of the
conveniencies, ornaments, or luxuries which he has occasion for.

Every increase in the real wealth of the society, every increase in
the quantity of useful labour employed within it, tends indirectly to
raise the real rent of land. A certain proportion of this labour
naturally goes to the land. A greater number of men and cattle are
employed in its cultivation, the produce increases with the increase
of the stock which is thus employed in raising it, and the rent
increases with the produce.

The contrary circumstances, the neglect of cultivation and
improvement, the fall in the real price of any part of the rude
produce of land, the rise in the real price of manufactures from the
decay of manufacturing art and industry, the declension of the real
wealth of the society, all tend, on the other hand, to lower the real
rent of land, to reduce the real wealth of the landlord, to diminish
his power of purchasing either the labour, or the produce of the
labour, of other people.

The whole annual produce of the land and labour of every country, or,
what comes to the same thing, the whole price of that annual produce,
naturally divides itself, it has already been observed, into three
parts; the rent of land, the wages of labour, and the profits of
stock; and constitutes a revenue to three different orders of people;
to those who live by rent, to those who live by wages, and to those
who live by profit. These are the three great, original, and
constituent, orders of every civilized society, from whose revenue
that of every other order is ultimately derived.

The interest of the first of those three great orders, it appears from
what has been just now said, is strictly and inseparably connected
with the general interest of the society. Whatever either promotes or
obstructs the one, necessarily promotes or obstructs the other. When
the public deliberates concerning any regulation of commerce or
police, the proprietors of land never can mislead it, with a view to
promote the interest of their own particular order; at least, if they
have any tolerable knowledge of that interest. They are, indeed, too
often defective in this tolerable knowledge. They are the only one of
the three orders whose revenue costs them neither labour nor care, but
comes to them, as it were, of its own accord, and independent of any
plan or project of their own. That indolence which is the natural
effect of the ease and security of their situation, renders them too
often, not only ignorant, but incapable of that application of mind,
which is necessary in order to foresee and understand the consequence
of any public regulation.

The interest of the second order, that of those who live by wages, is
as strictly connected with the interest of the society as that of the
first. The wages of the labourer, it has already been shewn, are never
so high as when the demand for labour is continually rising, or when
the quantity employed is every year increasing considerably. When this
real wealth of the society becomes stationary, his wages are soon
reduced to what is barely enough to enable him to bring up a family,
or to continue the race of labourers. When the society declines, they
fall even below this. The order of proprietors may perhaps gain more
by the prosperity of the society than that of labourers; but there is
no order that suffers so cruelly from its decline. But though the
interest of the labourer is strictly connected with that of the
society, he is incapable either of comprehending that interest, or of
understanding its connexion with his own. His condition leaves him no
time to receive the necessary information, and his education and
habits are commonly such as to render him unfit to judge, even though
he was fully informed. In the public deliberations, therefore, his
voice is little heard, and less regarded; except upon particular
occasions, when his clamour is animated, set on, and supported by his
employers, not for his, but their own particular purposes.

His employers constitute the third order, that of those who live by
profit. It is the stock that is employed for the sake of profit, which
puts into motion the greater part of the useful labour of every
society. The plans and projects of the employers of stock regulate and
direct all the most important operation of labour, and profit is the
end proposed by all those plans and projects. But the rate of profit
does not, like rent and wages, rise with the prosperity, and fall with
the declension of the society. On the contrary, it is naturally low in
rich, and high in poor countries, and it is always highest in the
countries which are going fastest to ruin. The interest of this third
order, therefore, has not the same connexion with the general interest
of the society, as that of the other two. Merchants and master
manufacturers are, in this order, the two classes of people who
commonly employ the largest capitals, and who by their wealth draw to
themselves the greatest share of the public consideration. As during
their whole lives they are engaged in plans and projects, they have
frequently more acuteness of understanding than the greater part of
country gentlemen. As their thoughts, however, are commonly exercised
rather about the interest of their own particular branch of business.
than about that of the society, their judgment, even when given with
the greatest candour (which it has not been upon every occasion), is
much more to be depended upon with regard to the former of those two
objects, than with regard to the latter. Their superiority over the
country gentleman is, not so much in their knowledge of the public
interest, as in their having a better knowledge of their own interest
than he has of his. It is by this superior knowledge of their own
interest that they have frequently imposed upon his generosity, and
persuaded him to give up both his own interest and that of the public,
from a very simple but honest conviction, that their interest, and not
his, was the interest of the public. The interest of the dealers,
however, in any particular branch of trade or manufactures, is always
in some respects different from, and even opposite to, that of the
public. To widen the market, and to narrow the competition, is always
the interest of the dealers. To widen the market may frequently be
agreeable enough to the interest of the public; but to narrow the
competition must always be against it, and can only serve to enable
the dealers, by raising their profits above what they naturally would
be, to levy, for their own benefit, an absurd tax upon the rest of
their fellow-citizens. The proposal of any new law or regulation of
commerce which comes from this order, ought always to be listened to
with great precaution, and ought never to be adopted till after having
been long and carefully examined, not only with the most scrupulous,
but with the most suspicious attention. It comes from an order of men,
whose interest is never exactly the same with that of the public, who
have generally an interest to deceive and even to oppress the public,
and who accordingly have, upon many occasions, both deceived and
oppressed it.



# PRICES OF WHEAT


Year    Prices/Quarter  Average of different   Average prices of
        in each year     prices in one year    each year in money
                                                  of 1776

          £   s   d         £   s   d             £   s   d
1202      0  12   0                               1  16   0
1205      0  12   0
          0  13   4         0  13   5             2   0   3
          0  15   0
1223      0  12   0                               1  16   0
1237      0   3   4                               0  10   0
1243      0   2   0                               0   6   0
1244      0   2   0                               0   6   0
1246      0  16   0                               2   8   0
1247      0  13   5                               2   0   0
1257      1   4   0                               3  12   0
1258      1   0   0
          0  15   0         0  17   0             2  11   0
          0  16   0
1270      4  16   0
          6   8   0         5  12   0            16  16   0
1286      0   2   8
          0  16   0         0   9   4             1   8   0
                                        Total    35   9   3
                                        Average   2  19   1¼

1287      0   3   4                               0  10   0
1288      0   0   8
          0   1   0
          0   1   4
          0   1   6
          0   1   8         0   3   0¼            0   9   1¾
          0   2   0
          0   3   4
          0   9   4
1289      0  12   0
          0   6   0
          0   2   0         0  10   1½            1  10   4½
          0  10   8
          1   0   0
1290      0  16   0                               2   8   0
1294      0  16   0                               2   8   0
1302      0   4   0                               0  12   0
1309      0   7   2                               1   1   6
1315      1   0   0                               3   0   0
1316      1   0   0
          1  10   0         1  10   6             4  11   6
          1  12   0
          2   0   0
1317      2   4   0
          0  14   0
          2  13   0         1  19   6             5  18   6
          4   0   0
          0   6   8
1336      0   2   0                               0   6   0
1338      0   3   4                               0  10   0
                                        Total    23   4  11¼
                                        Average   1  18   8

1339      0   9   0                               1   7   0
1349      0   2   0                               0   5   2
1359      1   6   8                               3   2   2
1361      0   2   0                               0   4   8
1363      0  15   0                               1  15   0
1369      1   0   0
          1   4   0         1   2   0             2   9   4
1379      0   4   0                               0   9   4
1387      0   2   0                               0   4   8
1390      0  13   4
          0  14   0         0  14   5             1  13   7
          0  16   0
1401      0  16   0                               1  17   6
1407      0   4   4¾
          0   3   4         0   3  10             0   8  10
1416      0  16   0                               1  12   0
                                       Total     15   9   4
                                       Average    1   5   9½

1423      0   8   0                                       0
1425      0   4   0                                       0
1434      1   6   8                                       4
1435      0   5   4                                       8
1439      1   0   0
          1   6   8         1   3   4             2   6   8
1440      1   4   0                               2   8   0
1444      0   4   4         0   4   2             0   4   8
          0   4   0
1445      0   4   6                               0   9   0
1447      0   8   0                               0  16   0
1448      0   6   8                               0  13   4
1449      0   5   0                               0  10   0
1451      0   8   0                               0  16   0
                                       Total     12  15   4
                                       Average    1   1   3¹/³

1453      0   5   4                               0  10   8
1455      0   1   2                               0   2   4
1457      0   7   8                               1  15   4
1459      0   5   0                               0  10   0
1460      0   8   0                               0  16   0
1463      0   2   0         0   1  10             0   3   8
          0   1   8
1464      0   6   8                               0  10   0
1486      1   4   0                               1  17   0
1491      0  14   8                               1   2   0
1494      0   4   0                               0   6   0
1495      0   3   4                               0   5   0
1497      1   0   0                               1  11   0
                                       Total      8   9   0
                                       Average    0  14   1

1499      0   4   0                               0   6   0
1504      0   5   8                               0   8   6
1521      1   0   0                               1  10   0
1551      0   8   0                               0   8   0
1553      0   8   0                               0   8   0
1554      0   8   0                               0   8   0
1555      0   8   0                               0   8   0
1556      0   8   0                               0   8   0
1557      0   8   0
          0   4   0         0  17   8½            0  17   8½
          0   5   0
          2  13   4
1558      0   8   0                               0   8   0
1559      0   8   0                               0   8   0
1560      0   8   0                               0   8   0
                                       Total      6   0   2½
                                       Average    0  10   0½

1561      0   8   0                               0   8   0
1562      0   8   0                               0   8   0
1574      2  16   0
          1   4   0         2   0   0             2   0   0
1587      3   4   0                               3   4   0
1594      2  16   0                               2  16   0
1595      2  13   0                               2  13   0
1596      4   0   0                               4   0   0
1597      5   4   0
          4   0   0         4  12   0             4  12   0
1598      2  16   8                               2  16   8
1599      1  19   2                               1  19   8
1600      1  17   8                               1  17   8
1601      1  14  10                               1  14  10
                                       Total     28   9   4
                                       Average    2   7   5½


PRICES OF THE QUARTER OF NINE BUSHELS OF THE BEST OR HIGHEST
PRICED WHEAT AT WINDSOR MARKET, ON LADY DAY AND MICHAELMAS,
FROM 1595 TO 1764 BOTH INCLUSIVE; THE PRICE OF EACH YEAR
BEING THE MEDIUM BETWEEN THE HIGHEST PRICES OF THESE TWO
MARKET DAYS.

          £   s   d
1595      2   0   0
1596      2   8   0
1597      3   9   6
1598      2  16   8
1599      1  19   2
1600      1  17   8
1601      1  14  10
1602      1   9   4
1603      1  15   4
1604      1  10   8
1605      1  15  10
1606      1  13   0
1607      1  16   8
1608      2  16   8
1609      2  10   0
1610      1  15  10
1611      1  18   8
1612      2   2   4
1613      2   8   8
1614      2   1   8½
1615      1  18   8
1616      2   0   4
1617      2   8   8
1618      2   6   8
1619      1  15   4
1620      1  10   4
      26)54   0   6½
  Average 2   1   6¾

1621      1  10    4
1622      2  18    8
1623      2  12    0
1624      2   8    0
1625      2  12    0
1626      2   9    4
1627      1  16    0
1628      1   8    0
1629      2   2    0
1630      2  15    8
1631      3   8    0
1632      2  13    4
1633      2  18    0
1634      2  16    0
1635      2  16    0
1636      2  16    8
      16)40   0    0
  Average 2  10    0

1637      2  13    0
1638      2  17    4
1639      2   4   10
1640      2   4    8
1641      2   8    0
1646      2   8    0
1647      3  13    0
1648      4   5    0
1649      4   0    0
1650      3  16    8
1651      3  13    4
1652      2   9    6
1653      1  15    6
1654      1   6    0
1655      1  13    4
1656      2   3    0
1657      2   6    8
1658      3   5    0
1659      3   6    0
1660      2  16    6
1661      3  10    0
1662      3  14    0
1663      2  17    0
1664      2   0    6
1665      2   9    4
1666      1  16    0
1667      1  16    0
1668      2   0    0
1669      2   4    4
1670      2   1    8
1671      2   2    0
1672      2   1    0
1673      2   6    8
1674      3   8    8
1675      3   4    8
1676      1  18    0
1677      2   2    0
1678      2  19    0
1679      3   0    0
1680      2   5    0
1681      2   6    8
1682      2   4    0
1683      2   0    0
1684      2   4    0
1685      2   6    8
1686      1  14    0
1687      1   5    2
1688      2   6    0
1689      1  10    0
1690      1  14    8
1691      1  14    0
1692      2   6    8
1693      3   7    8
1694      3   4    0
1695      2  13    0
1696      3  11    0
1697      3   0    0
1698      3   8    4
1699      3   4    0
1700      2   0    0
    60) 153   1    8
 Average  2  11    0¹/³

1701      1  17    8
1702      1   9    6
1703      1  16    0
1704      2   6    6
1705      1  10    0
1706      1   6    0
1707      1   8    6
1708      2   1    6
1709      3  18    6
1710      3  18    0
1711      2  14    0
1712      2   6    4
1713      2  11    0
1714      2  10    4
1715      2   3    0
1716      2   8    0
1717      2   5    8
1718      1  18   10
1719      1  15    0
1720      1  17    0
1721      1  17    6
1722      1  16    0
1723      1  14    8
1724      1  17    0
1725      2   8    6
1726      2   6    0
1727      2   2    0
1728      2  14    6
1729      2   6   10
1730      1  16    6
1731      1  12   10                     1  12   10
1732      1   6    8                     1   6    8
1733      1   8    4                     1   8    4
1734      1  18   10                     1  18   10
1735      2   3    0                     2   3    0
1736      2   0    4                     2   0    4
1737      1  18    0                     1  18    0
1738      1  15    6                     1  15    6
1739      1  18    6                     1  18    6
1740      2  10    8                     2  10    8
                                    10) 18  12    8
                                         1  17    3½

1741      2   6    8                     2   6    8
1742      1  14    0                     1  14    0
1743      1   4   10                     1   4   10
1744      1   4   10                     1   4   10
1745      1   7    6                     1   7    6
1746      1  19    0                     1  19    0
1747      1  14   10                     1  14   10
1748      1  17    0                     1  17    0
1749      1  17    0                     1  17    0
1750      1  12    6                     1  12    6
                                    10) 16  18    2
                                         1  13    9¾

1751      1  18    6
1752      2   1   10
1753      2   4    8
1754      1  13    8
1755      1  14   10
1756      2   5    3
1757      3   0    0
1758      2  10    0
1759      1  19   10
1760      1  16    6
1761      1  10    3
1762      1  19    0
1763      2   0    9
1764      2   6    9
    64) 129  13    6
 Average  2   0    6¾





BOOK II.

OF THE NATURE, ACCUMULATION, AND EMPLOYMENT OF STOCK.

INTRODUCTION.

In that rude state of society, in which there is no division of
labour, in which exchanges are seldom made, and in which every man
provides every thing for himself, it is not necessary that any stock
should be accumulated, or stored up before-hand, in order to carry on
the business of the society. Every man endeavours to supply, by his
own industry, his own occasional wants, as they occur. When he is
hungry, he goes to the forest to hunt; when his coat is worn out, he
clothes himself with the skin of the first large animal he kills: and
when his hut begins to go to ruin, he repairs it, as well as he can,
with the trees and the turf that are nearest it.

But when the division of labour has once been thoroughly introduced,
the produce of a man's own labour can supply but a very small part of
his occasional wants. The far greater part of them are supplied by the
produce of other men's labour, which he purchases with the produce,
or, what is the same thing, with the price of the produce, of his own.
But this purchase cannot be made till such time as the produce of his
own labour has not only been completed, but sold. A stock of goods of
different kinds, therefore, must be stored up somewhere, sufficient to
maintain him, and to supply him with the materials and tools of his
work, till such time at least as both these events can be brought
about. A weaver cannot apply himself entirely to his peculiar
business, unless there is before-hand stored up somewhere, either in
his own possession, or in that of some other person, a stock
sufficient to maintain him, and to supply him with the materials and
tools of his work, till he has not only completed, but sold his web.
This accumulation must evidently be previous to his applying his
industry for so long a time to such a peculiar business.

As the accumulation of stock must, in the nature of things, be
previous to the division of labour, so labour can be more and more
subdivided in proportion only as stock is previously more and more
accumulated. The quantity of materials which the same number of people
can work up, increases in a great proportion as labour comes to be
more and more subdivided; and as the operations of each workman are
gradually reduced to a greater degree of simplicity, a variety of new
machines come to be invented for facilitating and abridging those
operations. As the division of labour advances, therefore, in order to
give constant employment to an equal number of workmen, an equal stock
of provisions, and a greater stock of materials and tools than what
would have been necessary in a ruder state of things, must be
accumulated before-hand. But the number of workmen in every branch of
business generally increases with the division of labour in that
branch; or rather it is the increase of their number which enables
them to class and subdivide themselves in this manner.

As the accumulation of stock is previously necessary for carrying on
this great improvement in the productive powers of labour, so that
accumulation naturally leads to this improvement. The person who
employs his stock in maintaining labour, necessarily wishes to employ
it in such a manner as to produce as great a quantity of work as
possible. He endeavours, therefore, both to make among his workmen the
most proper distribution of employment, and to furnish them with the
best machines which he can either invent or afford to purchase. His
abilities, in both these respects, are generally in proportion to the
extent of his stock, or to the number of people whom it can employ.
The quantity of industry, therefore, not only increases in every
country with the increase of the stock which employs it, but, in
consequence of that increase, the same quantity of industry produces a
much greater quantity of work.

Such are in general the effects of the increase of stock upon industry
and its productive powers.

In the following book, I have endeavoured to explain the nature of
stock, the effects of its accumulation into capital of different
kinds, and the effects of the different employments of those capitals.
This book is divided into five chapters. In the first chapter, I have
endeavoured to shew what are the different parts or branches into
which the stock, either of an individual, or of a great society,
naturally divides itself. In the second, I have endeavoured to explain
the nature and operation of money, considered as a particular branch
of the general stock of the society. The stock which is accumulated
into a capital, may either be employed by the person to whom it
belongs, or it may be lent to some other person. In the third and
fourth chapters, I have endeavoured to examine the manner in which it
operates in both these situations. The fifth and last chapter treats
of the different effects which the different employments of capital
immediately produce upon the quantity, both of national industry, and
of the annual produce of land and labour.



CHAPTER I.

OF THE DIVISION OF STOCK.

When the stock which a man possesses is no more than sufficient to
maintain him for a few days or a few weeks, he seldom thinks of
deriving any revenue from it. He consumes it as sparingly as he can,
and endeavours, by his labour, to acquire something which may supply
its place before it be consumed altogether. His revenue is, in this
case, derived from his labour only. This is the state of the greater
part of the labouring poor in all countries.

But when he possesses stock sufficient to maintain him for months or
years, he naturally endeavours to derive a revenue from the greater
part of it, reserving only so much for his immediate consumption as
may maintain him till this revenue begins to come in. His whole stock,
therefore, is distinguished into two parts. That part which he expects
is to afford him this revenue is called his capital. The other is that
which supplies his immediate consumption, and which consists either,
first, in that portion of his whole stock which was originally
reserved for this purpose; or, secondly, in his revenue, from whatever
source derived, as it gradually comes in; or, thirdly, in such things
as had been purchased by either of these in former years, and which
are not yet entirely consumed, such as a stock of clothes, household
furniture, and the like. In one or other, or all of these three
articles, consists the stock which men commonly reserve for their own
immediate consumption.

There are two different ways in which a capital may be employed so as
to yield a revenue or profit to its employer.

First, it maybe employed in raising, manufacturing, or purchasing
goods, and selling them again with a profit. The capital employed in
this manner yields no revenue or profit to its employer, while it
either remains in his possession, or continues in the same shape. The
goods of the merchant yield him no revenue or profit till he sells
them for money, and the money yields him as little till it is again
exchanged for goods. His capital is continually going from him in one
shape, and returning to him in another; and it is only by means of
such circulation, or successive changes, that it can yield him any
profit. Such capitals, therefore, may very properly be called
circulating capitals.

Secondly, it may be employed in the improvement of land, in the
purchase of useful machines and instruments of trade, or in such like
things as yield a revenue or profit without changing masters, or
circulating any further. Such capitals, therefore, may very properly
be called fixed capitals.

Different occupations require very different proportions between the
fixed and circulating capitals employed in them.

The capital of a merchant, for example, is altogether a circulating
capital. He has occasion for no machines or instruments of trade,
unless his shop or warehouse be considered as such.

Some part of the capital of every master artificer or manufacturer
must be fixed in the instruments of his trade. This part, however, is
very small in some, and very great in others, A master tailor requires
no other instruments of trade but a parcel of needles. Those of the
master shoemaker are a little, though but a very little, more
expensive. Those of the weaver rise a good deal above those of the
shoemaker. The far greater part of the capital of all such master
artificers, however, is circulated either in the wages of their
workmen, or in the price of their materials, and repaid, with a
profit, by the price of the work.

In other works a much greater fixed capital is required. In a great
iron-work, for example, the furnace for melting the ore, the forge,
the slit-mill, are instruments of trade which cannot be erected
without a very great expense. In coal works, and mines of every kind,
the machinery necessary, both for drawing out the water, and for other
purposes, is frequently still more expensive.

That part of the capital of the farmer which is employed in the
instruments of agriculture is a fixed, that which is employed in the
wages and maintenance of his labouring servants is a circulating
capital. He makes a profit of the one by keeping it in his own
possession, and of the other by parting with it. The price or value of
his labouring cattle is a fixed capital, in the same manner as that of
the instruments of husbandry; their maintenance is a circulating
capital, in the same manner as that of the labouring servants. The
farmer makes his profit by keeping the labouring cattle, and by
parting with their maintenance. Both the price and the maintenance of
the cattle which are bought in and fattened, not for labour, but for
sale, are a circulating capital. The farmer makes his profit by
parting with them. A flock of sheep or a herd of cattle, that, in a
breeding country, is brought in neither for labour nor for sale, but
in order to make a profit by their wool, by their milk, and by their
increase, is a fixed capital. The profit is made by keeping them.
Their maintenance is a circulating capital. The profit is made by
parting with it; and it comes back with both its own profit and the
profit upon the whole price of the cattle, in the price of the wool,
the milk, and the increase. The whole value of the seed, too, is
properly a fixed capital. Though it goes backwards and forwards
between the ground and the granary, it never changes masters, and
therefore does not properly circulate. The farmer makes his profit,
not by its sale, but by its increase.

The general stock of any country or society is the same with that of
all its inhabitants or members; and, therefore, naturally divides
itself into the same three portions, each of which has a distinct
function or office.

The first is that portion which is reserved for immediate consumption,
and of which the characteristic is, that it affords no revenue or
profit. It consists in the stock of food, clothes, household
furniture, etc. which have been purchased by their proper consumers,
but which are not yet entirely consumed. The whole stock of mere
dwelling-houses, too, subsisting at anyone time in the country, make a
part of this first portion. The stock that is laid out in a house, if
it is to be the dwelling-house of the proprietor, ceases from that
moment to serve in the function of a capital, or to afford any revenue
to its owner. A dwelling-house, as such, contributes nothing to the
revenue of its inhabitant; and though it is, no doubt, extremely
useful to him, it is as his clothes and household furniture are useful
to him, which, however, make a part of his expense, and not of his
revenue. If it is to be let to a tenant for rent, as the house itself
can produce nothing, the tenant must always pay the rent out of some
other revenue, which he derives, either from labour, or stock, or
land. Though a house, therefore, may yield a revenue to its
proprietor, and thereby serve in the function of a capital to him, it
cannot yield any to the public, nor serve in the function of a capital
to it, and the revenue of the whole body of the people can never be in
the smallest degree increased by it. Clothes and household furniture,
in the same manner, sometimes yield a revenue, and thereby serve in
the function of a capital to particular persons. In countries where
masquerades are common, it is a trade to let out masquerade dresses
for a night. Upholsterers frequently let furniture by the month or by
the year. Undertakers let the furniture of funerals by the day and by
the week. Many people let furnished houses, and get a rent, not only
for the use of the house, but for that of the furniture. The revenue,
however, which is derived from such things, must always be ultimately
drawn from some other source of revenue. Of all parts of the stock,
either of an individual or of a society, reserved for immediate
consumption, what is laid out in houses is most slowly consumed. A
stock of clothes may last several years; a stock of furniture half a
century or a century; but a stock of houses, well built and properly
taken care of, may last many centuries. Though the period of their
total consumption, however, is more distant, they are still as really
a stock reserved for immediate consumption as either clothes or
household furniture.

The second of the three portions into which the general stock of the
society divides itself, is the fixed capital; of which the
characteristic is, that it affords a revenue or profit without
circulating or changing masters. It consists chiefly of the four
following articles.

First, of all useful machines and instruments of trade, which
facilitate and abridge labour.

Secondly, of all those profitable buildings which are the means of
procuring a revenue, not only to the proprietor who lets them for a
rent, but to the person who possesses them, and pays that rent for
them; such as shops, warehouses, work-houses, farm-houses, with all
their necessary buildings, stables, granaries, etc. These are very
different from mere dwelling-houses. They are a sort of instruments of
trade, and may be considered in the same light.

Thirdly, of the improvements of land, of what has been profitably laid
out in clearing, draining, inclosing, manuring, and reducing it into
the condition most proper for tillage and culture. An improved farm
may very justly be regarded in the same light as those useful machines
which facilitate and abridge labour, and by means of which an equal
circulating capital can afford a much greater revenue to its employer.
An improved farm is equally advantageous and more durable than any of
those machines, frequently requiring no other repairs than the most
profitable application of the farmer's capital employed in cultivating
it.

Fourthly, of the acquired and useful abilities of all the inhabitants
and members of the society. The acquisition of such talents, by the
maintenance of the acquirer during his education, study, or
apprenticeship, always costs a real expense, which is a capital fixed
and realized, as it were, in his person. Those talents, as they make a
part of his fortune, so do they likewise that of the society to which
he belongs. The improved dexterity of a workman may be considered in
the same light as a machine or instrument of trade which facilitates
and abridges labour, and which, though it costs a certain expense,
repays that expense with a profit.

The third and last of the three portions into which the general stock
of the society naturally divides itself, is the circulating capital,
of which the characteristic is, that it affords a revenue only by
circulating or changing masters. It is composed likewise of four
parts.

First, of the money, by means of which all the other three are
circulated and distributed to their proper consumers.

Secondly, of the stock of provisions which are in the possession of
the butcher, the grazier, the farmer, the corn-merchant, the brewer,
etc. and from the sale of which they expect to derive a profit.

Thirdly, of the materials, whether altogether rude, or more or less
manufactured, of clothes, furniture, and building which are not yet
made up into any of those three shapes, but which remain in the hands
of the growers, the manufacturers, the mercers, and drapers, the
timber-merchants, the carpenters and joiners, the brick-makers, etc.

Fourthly, and lastly, of the work which is made up and completed, but
which is still in the hands of the merchant and manufacturer, and not
yet disposed of or distributed to the proper consumers; such as the
finished work which we frequently find ready made in the shops of the
smith, the cabinet-maker, the goldsmith, the jeweller, the
china-merchant, etc. The circulating capital consists, in this manner,
of the provisions, materials, and finished work of all kinds that are
in the hands of their respective dealers, and of the money that is
necessary for circulating and distributing them to those who are
finally to use or to consume them.

Of these four parts, three--provisions, materials, and finished work,
are either annually or in a longer or shorter period, regularly
withdrawn from it, and placed either in the fixed capital, or in the
stock reserved for immediate consumption.

Every fixed capital is both originally derived from, and requires to
be continually supported by, a circulating capital. All useful
machines and instruments of trade are originally derived from a
circulating capital, which furnishes the materials of which they are
made, and the maintenance of the workmen who make them. They require,
too, a capital of the same kind to keep them in constant repair.

No fixed capital can yield any revenue but by means of a circulating
capital The most useful machines and instruments of trade will produce
nothing, without the circulating capital, which affords the materials
they are employed upon, and the maintenance of the workmen who employ
them. Land, however improved, will yield no revenue without a
circulating capital, which maintains the labourers who cultivate and
collect its produce.

To maintain and augment the stock which maybe reserved for immediate
consumption, is the sole end and purpose both of the fixed and
circulating capitals. It is this stock which feeds, clothes, and
lodges the people. Their riches or poverty depend upon the abundant or
sparing supplies which those two capitals can afford to the stock
reserved for immediate consumption.

So great a part of the circulating capital being continually withdrawn
from it, in order to be placed in the other two branches of the
general stock of the society, it must in its turn require continual
supplies without which it would soon cease to exist. These supplies
are principally drawn from three sources; the produce of land, of
mines, and of fisheries. These afford continual supplies of provisions
and materials, of which part is afterwards wrought up into finished
work and by which are replaced the provisions, materials, and finished
work, continually withdrawn from the circulating capital. From mines,
too, is drawn what is necessary for maintaining and augmenting that
part of it which consists in money. For though, in the ordinary course
of business, this part is not, like the other three, necessarily
withdrawn from it, in order to be placed in the other two branches of
the general stock of the society, it must, however, like all other
things, be wasted and worn out at last, and sometimes, too, be either
lost or sent abroad, and must, therefore, require continual, though no
doubt much smaller supplies.

Lands, mines, and fisheries, require all both a fixed and circulating
capital to cultivate them; and their produce replaces, with a profit
not only those capitals, but all the others in the society. Thus the
farmer annually replaces to the manufacturer the provisions which he
had consumed, and the materials which he had wrought up the year
before; and the manufacturer replaces to the farmer the finished work
which he had wasted and worn out in the same time. This is the real
exchange that is annually made between those two orders of people,
though it seldom happens that the rude produce of the one, and the
manufactured produce of the other, are directly bartered for one
another; because it seldom happens that the farmer sells his corn and
his cattle, his flax and his wool, to the very same person of whom he
chuses to purchase the clothes, furniture, and instruments of trade,
which he wants. He sells, therefore, his rude produce for money, with
which he can purchase, wherever it is to be had, the manufactured
produce he has occasion for. Land even replaces, in part at least, the
capitals with which fisheries and mines are cultivated. It is the
produce of land which draws the fish from the waters; and it is the
produce of the surface of the earth which extracts the minerals from
its bowels.

The produce of land, mines, and fisheries, when their natural
fertility is equal, is in proportion to the extent and proper
application of the capitals employed about them. When the capitals are
equal, and equally well applied, it is in proportion to their natural
fertility.

In all countries where there is a tolerable security, every man of
common understanding will endeavour to employ whatever stock he can
command, in procuring either present enjoyment or future profit. If it
is employed in procuring present enjoyment, it is a stock reserved for
immediate consumption. If it is employed in procuring future profit,
it must procure this profit either by staying with him, or by going
from him. In the one case it is a fixed, in the other it is a
circulating capital. A man must be perfectly crazy, who, where there
is a tolerable security, does not employ all the stock which he
commands, whether it be his own, or borrowed of other people, in some
one or other of those three ways.

In those unfortunate countries, indeed, where men are continually
afraid of the violence of their superiors, they frequently bury or
conceal a great part of their stock, in order to have it always at
hand to carry with them to some place of safety, in case of their
being threatened with any of those disasters to which they consider
themselves at all times exposed. This is said to be a common practice
in Turkey, in Indostan, and, I believe, in most other governments of
Asia. It seems to have been a common practice among our ancestors
during the violence of the feudal government. Treasure-trove was, in
these times, considered as no contemptible part of the revenue of the
greatest sovereigns in Europe. It consisted in such treasure as was
found concealed in the earth, and to which no particular person could
prove any right. This was regarded, in those times, as so important an
object, that it was always considered as belonging to the sovereign,
and neither to the finder nor to the proprietor of the land, unless
the right to it had been conveyed to the latter by an express clause
in his charter. It was put upon the same footing with gold and silver
mines, which, without a special clause in the charter, were never
supposed to be comprehended in the general grant of the lands, though
mines of lead, copper, tin, and coal were, as things of smaller
consequence.




CHAPTER II.

OF MONEY, CONSIDERED AS A PARTICULAR BRANCH OF THE GENERAL STOCK OF
THE SOCIETY, OR OF THE EXPENSE OF MAINTAINING THE NATIONAL CAPITAL.

It has been shown in the First Book, that the price of the greater
part of commodities resolves itself into three parts, of which one
pays the wages of the labour, another the profits of the stock, and a
third the rent of the land which had been employed in producing and
bringing them to market: that there are, indeed, some commodities of
which the price is made up of two of those parts only, the wages of
labour, and the profits of stock; and a very few in which it consists
altogether in one, the wages of labour; but that the price of every
commodity necessarily resolves itself into some one or other, or all,
of those three parts; every part of it which goes neither to rent nor
to wages, being necessarily profit to some body.

Since this is the case, it has been observed, with regard to every
particular commodity, taken separately, it must be so with regard to
all the commodities which compose the whole annual produce of the land
and labour of every country, taken complexly. The whole price or
exchangeable value of that annual produce must resolve itself into the
same three parts, and be parcelled out among the different inhabitants
of the country, either as the wages of their labour, the profits of
their stock, or the rent of their land.

But though the whole value of the annual produce of the land and
labour of every country, is thus divided among, and constitutes a
revenue to, its different inhabitants; yet, as in the rent of a
private estate, we distinguish between the gross rent and the neat
rent, so may we likewise in the revenue of all the inhabitants of a
great country.

The gross rent of a private estate comprehends whatever is paid by the
farmer; the neat rent, what remains free to the landlord, after
deducting the expense of management, of repairs, and all other
necessary charges; or what, without hurting his estate, he can afford
to place in his stock reserved for immediate consumption, or to spend
upon his table, equipage, the ornaments of his house and furniture,
his private enjoyments and amusements. His real wealth is in
proportion, not to his gross, but to his neat rent.

The gross revenue of all the inhabitants of a great country
comprehends the whole annual produce of their land and labour; the
neat revenue, what remains free to them, after deducting the expense
of maintaining first, their fixed, and, secondly, their circulating
capital, or what, without encroaching upon their capital, they can
place in their stock reserved for immediate consumption, or spend upon
their subsistence, conveniencies, and amusements. Their real wealth,
too, is in proportion, not to their gross, but to their neat revenue.

The whole expense of maintaining the fixed capital must evidently be
excluded from the neat revenue of the society. Neither the materials
necessary for supporting their useful machines and instruments of
trade, their profitable buildings, etc. nor the produce of the labour
necessary for fashioning those materials into the proper form, can
ever make any part of it. The price of that labour may indeed make a
part of it; as the workmen so employed may place the whole value of
their wages in their stock reserved for immediate consumption. But in
other sorts of labour, both the price and the produce go to this
stock; the price to that of the workmen, the produce to that of other
people, whose subsistence, conveniencies, and amusements, are
augmented by the labour of those workmen.

The intention of the fixed capital is to increase the productive
powers of labour, or to enable the same number of labourers to perform
a much greater quantity of work. In a farm where all the necessary
buildings, fences, drains, communications, etc. are in the most
perfect good order, the same number of labourers and labouring cattle
will raise a much greater produce, than in one of equal extent and
equally good ground, but not furnished with equal conveniencies. In
manufactures, the same number of hands, assisted with the best
machinery, will work up a much greater quantity of goods than with
more imperfect instruments of trade. The expense which is properly
laid out upon a fixed capital of any kind, is always repaid with great
profit, and increases the annual produce by a much greater value than
that of the support which such improvements require. This support,
however, still requires a certain portion of that produce. A certain
quantity of materials, and the labour of a certain number of workmen,
both of which might have been immediately employed to augment the
food, clothing, and lodging, the subsistence and conveniencies of the
society, are thus diverted to another employment, highly advantageous
indeed, but still different from this one. It is upon this account
that all such improvements in mechanics, as enable the same number of
workmen to perform an equal quantity of work with cheaper and simpler
machinery than had been usual before, are always regarded as
advantageous to every society. A certain quantity of materials, and
the labour of a certain number of workmen, which had before been
employed in supporting a more complex and expensive machinery, can
afterwards be applied to augment the quantity of work which that or
any other machinery is useful only for performing. The undertaker of
some great manufactory, who employs a thousand a-year in the
maintenance of his machinery, if he can reduce this expense to five
hundred, will naturally employ the other five hundred in purchasing an
additional quantity of materials, to be wrought up by an additional
number of workmen. The quantity of that work, therefore, which his
machinery was useful only for performing, will naturally be augmented,
and with it all the advantage and conveniency which the society can
derive from that work.

The expense of maintaining the fixed capital in a great country, may
very properly be compared to that of repairs in a private estate. The
expense of repairs may frequently be necessary for supporting the
produce of the estate, and consequently both the gross and the neat
rent of the landlord. When by a more proper direction, however, it can
be diminished without occasioning any diminution of produce, the gross
rent remains at least the same as before, and the neat rent is
necessarily augmented.

But though the whole expense of maintaining the fixed capital is thus
necessarily excluded from the neat revenue of the society, it is not
the same case with that of maintaining the circulating capital. Of the
four parts of which this latter capital is composed, money,
provisions, materials, and finished work, the three last, it has
already been observed, are regularly withdrawn from it, and placed
either in the fixed capital of the society, or in their stock reserved
for immediate consumption. Whatever portion of those consumable goods
is not employed in maintaining the former, goes all to the latter, and
makes a part of the neat revenue of the society. The maintenance of
those three parts of the circulating capital, therefore, withdraws no
portion of the annual produce from the neat revenue of the society,
besides what is necessary for maintaining the fixed capital.

The circulating capital of a society is in this respect different from
that of an individual. That of an individual is totally excluded from
making any part of his neat revenue, which must consist altogether in
his profits. But though the circulating capital of every individual
makes a part of that of the society to which he belongs, it is not
upon that account totally excluded from making a part likewise of
their neat revenue. Though the whole goods in a merchant's shop must
by no means be placed in his own stock reserved for immediate
consumption, they may in that of other people, who, from a revenue
derived from other funds, may regularly replace their value to him,
together with its profits, without occasioning any diminution either
of his capital or of theirs.

Money, therefore, is the only part of the circulating capital of a
society, of which the maintenance can occasion any diminution in their
neat revenue.

The fixed capital, and that part of the circulating capital which
consists in money, so far as they affect the revenue of the society,
bear a very great resemblance to one another.

First, as those machines and instruments of trade, etc. require a
certain expense, first to erect them, and afterwards to support them,
both which expenses, though they make a part of the gross, are
deductions from the neat revenue of the society; so the stock of money
which circulates in any country must require a certain expense, first
to collect it, and afterwards to support it; both which expenses,
though they make a part of the gross, are, in the same manner,
deductions from the neat revenue of the society. A certain quantity of
very valuable materials, gold and silver, and of very curious labour,
instead of augmenting the stock reserved for immediate consumption,
the subsistence, conveniencies, and amusements of individuals, is
employed in supporting that great but expensive instrument of
commerce, by means of which every individual in the society has his
subsistence, conveniencies, and amusements, regularly distributed to
him in their proper proportions.

Secondly, as the machines and instruments of trade, etc. which compose
the fixed capital either of an individual or of a society, make no
part either of the gross or of the neat revenue of either; so money,
by means of which the whole revenue of the society is regularly
distributed among all its different members, makes itself no part of
that revenue. The great wheel of circulation is altogether different
from the goods which are circulated by means of it. The revenue of the
society consists altogether in those goods, and not in the wheel which
circulates them. In computing either the gross or the neat revenue of
any society, we must always, from the whole annual circulation of
money and goods, deduct the whole value of the money, of which not a
single farthing can ever make any part of either.

It is the ambiguity of language only which can make this proposition
appear either doubtful or paradoxical. When properly explained and
understood, it is almost self-evident.

When we talk of any particular sum of money, we sometimes mean nothing
but the metal pieces of which it is composed, and sometimes we include
in our meaning some obscure reference to the goods which can be had in
exchange for it, or to the power of purchasing which the possession of
it conveys. Thus, when we say that the circulating money of England
has been computed at eighteen millions, we mean only to express the
amount of the metal pieces, which some writers have computed, or
rather have supposed, to circulate in that country. But when we say
that a man is worth fifty or a hundred pounds a-year, we mean commonly
to express, not only the amount of the metal pieces which are annually
paid to him, but the value of the goods which he can annually purchase
or consume; we mean commonly to ascertain what is or ought to be his
way of living, or the quantity and quality of the necessaries and
conveniencies of life in which he can with propriety indulge himself.

When, by any particular sum of money, we mean not only to express the
amount of the metal pieces of which it is composed, but to include in
its signification some obscure reference to the goods which can be had
in exchange for them, the wealth or revenue which it in this case
denotes, is equal only to one of the two values which are thus
intimated somewhat ambiguously by the same word, and to the latter
more properly than to the former, to the money's worth more properly
than to the money.

Thus, if a guinea be the weekly pension of a particular person, he can
in the course of the week purchase with it a certain quantity of
subsistence, conveniencies, and amusements. In proportion as this
quantity is great or small, so are his real riches, his real weekly
revenue. His weekly revenue is certainly not equal both to the guinea
and to what can be purchased with it, but only to one or other of
those two equal values, and to the latter more properly than to the
former, to the guinea's worth rather than to the guinea.

If the pension of such a person was paid to him, not in gold, but in a
weekly bill for a guinea, his revenue surely would not so properly
consist in the piece of paper, as in what he could get for it. A
guinea may be considered as a bill for a certain quantity of
necessaries and conveniencies upon all the tradesmen in the
neighbourhood The revenue of the person to whom it is paid, does not
so properly consist in the piece of gold, as in what he can get for
it, or in what he can exchange it for. If it could be exchanged for
nothing, it would, like a bill upon a bankrupt, be of no more value
than the most useless piece of paper.

Though the weekly or yearly revenue of all the different inhabitants
of any country, in the same manner, may be, and in reality frequently
is, paid to them in money, their real riches, however, the real weekly
or yearly revenue of all of them taken together, must always be great
or small, in proportion to the quantity of consumable goods which they
can all of them purchase with this money. The whole revenue of all of
them taken together is evidently not equal to both the money and the
consumable goods, but only to one or other of those two values, and to
the latter more properly than to the former.

Though we frequently, therefore, express a person's revenue by the
metal pieces which are annually paid to him, it is because the amount
of those pieces regulates the extent of his power of purchasing, or
the value of the goods which he can annually afford to consume. We
still consider his revenue as consisting in this power of purchasing
or consuming, and not in the pieces which convey it.

But if this is sufficiently evident, even with regard to an
individual, it is still more so with regard to a society. The amount
of the metal pieces which are annually paid to an individual, is often
precisely equal to his revenue, and is upon that account the shortest
and best expression of its value. But the amount of the metal pieces
which circulate in a society, can never be equal to the revenue of all
its members. As the same guinea which pays the weekly pension of one
man to-day, may pay that of another to-morrow, and that of a third the
day thereafter, the amount of the metal pieces which annually
circulate in any country, must always be of much less value than the
whole money pensions annually paid with them. But the power of
purchasing, or the goods which can successively be bought with the
whole of those money pensions, as they are successively paid, must
always be precisely of the same value with those pensions; as must
likewise be the revenue of the different persons to whom they are
paid. That revenue, therefore, cannot consist in those metal pieces,
of which the amount is so much inferior to its value, but in the power
of purchasing, in the goods which can successively be bought with them
as they circulate from hand to hand.

Money, therefore, the great wheel of circulation, the great instrument
of commerce, like all other instruments of trade, though it makes a
part, and a very valuable part, of the capital, makes no part of the
revenue of the society to which it belongs; and though the metal
pieces of which it is composed, in the course of their annual
circulation, distribute to every man the revenue which properly
belongs to him, they make themselves no part of that revenue.

Thirdly, and lastly, the machines and instruments of trade, etc. which
compose the fixed capital, bear this further resemblance to that part
of the circulating capital which consists in money; that as every
saving in the expense of erecting and supporting those machines, which
does not diminish the introductive powers of labour, is an improvement
of the neat revenue of the society; so every saving in the expense of
collecting and supporting that part of the circulating capital which
consists in money is an improvement of exactly the same kind.

It is sufficiently obvious, and it has partly, too, been explained
already, in what manner every saving in the expense of supporting the
fixed capital is an improvement of the neat revenue of the society.
The whole capital of the undertaker of every work is necessarily
divided between his fixed and his circulating capital. While his whole
capital remains the same, the smaller the one part, the greater must
necessarily be the other. It is the circulating capital which
furnishes the materials and wages of labour, and puts industry into
motion. Every saving, therefore, in the expense of maintaining the
fixed capital, which does not diminish the productive powers of
labour, must increase the fund which puts industry into motion, and
consequently the annual produce of land and labour, the real revenue
of every society.

The substitution of paper in the room of gold and silver money,
replaces a very expensive instrument of commerce with one much less
costly, and sometimes equally convenient. Circulation comes to be
carried on by a new wheel, which it costs less both to erect and to
maintain than the old one. But in what manner this operation is
performed, and in what manner it tends to increase either the gross or
the neat revenue of the society, is not altogether so obvious, and may
therefore require some further explication.

There are several different sorts of paper money; but the circulating
notes of banks and bankers are the species which is best known, and
which seems best adapted for this purpose.

When the people of any particular country have such confidence in the
fortune, probity and prudence of a particular banker, as to believe
that he is always ready to pay upon demand such of his promissory
notes as are likely to be at any time presented to him, those notes
come to have the same currency as gold and silver money, from the
confidence that such money can at any time be had for them.

A particular banker lends among his customers his own promissory
notes, to the extent, we shall suppose, of a hundred thousand pounds.
As those notes serve all the purposes of money, his debtors pay him
the same interest as if he had lent them so much money. This interest
is the source of his gain. Though some of those notes are continually
coming back upon him for payment, part of them continue to circulate
for months and years together. Though he has generally in circulation,
therefore, notes to the extent of a hundred thousand pounds, twenty
thousand pounds in gold and silver may, frequently, be a sufficient
provision for answering occasional demands. By this operation,
therefore, twenty thousand pounds in gold and silver perform all the
functions which a hundred thousand could otherwise have performed. The
same exchanges may be made, the same quantity of consumable goods may
be circulated and distributed to their proper consumers, by means of
his promissory notes, to the value of a hundred thousand pounds, as by
an equal value of gold and silver money. Eighty thousand pounds of
gold and silver, therefore, can in this manner be spared from the
circulation of the country; and if different operations of the the
same kind should, at the same time, be carried on by many different
banks and bankers, the whole circulation may thus be conducted with a
fifth part only of the gold and silver which would otherwise have been
requisite.

Let us suppose, for example, that the whole circulating money of some
particular country amounted, at a particular time, to one million
sterling, that sum being then sufficient for circulating the whole
annual produce of their land and labour; let us suppose, too, that
some time thereafter, different banks and bankers issued promissory
notes payable to the bearer, to the extent of one million, reserving
in their different coffers two hundred thousand pounds for answering
occasional demands; there would remain, therefore, in circulation,
eight hundred thousand pounds in gold and silver, and a million of
bank notes, or eighteen hundred thousand pounds of paper and money
together. But the annual produce of the land and labour of the country
had before required only one million to circulate and distribute it to
its proper consumers, and that annual produce cannot be immediately
augmented by those operations of banking. One million, therefore, will
be sufficient to circulate it after them. The goods to be bought and
sold being precisely the same as before, the same quantity of money
will be sufficient for buying and selling them. The channel of
circulation, if I may be allowed such an expression, will remain
precisely the same as before. One million we have supposed sufficient
to fill that channel. Whatever, therefore, is poured into it beyond
this sum, cannot run into it, but must overflow. One million eight
hundred thousand pounds are poured into it. Eight hundred thousand
pounds, therefore, must overflow, that sum being over and above what
can be employed in the circulation of the country. But though this sum
cannot be employed at home, it is too valuable to be allowed to lie
idle. It will, therefore, be sent abroad, in order to seek that
profitable employment which it cannot find at home. But the paper
cannot go abroad; because at a distance from the banks which issue it,
and from the country in which payment of it can be exacted by law, it
will not be received in common payments. Gold and silver, therefore,
to the amount of eight hundred thousand pounds, will be sent abroad,
and the channel of home circulation will remain filled with a million
of paper instead of a million of those metals which filled it before.

But though so great a quantity of gold and silver is thus sent abroad,
we must not imagine that it is sent abroad for nothing, or that its
proprietors make a present of it to foreign nations. They will
exchange it for foreign goods of some kind or another, in order to
supply the consumption either of some other foreign country, or of
their own.

If they employ it in purchasing goods in  one foreign country, in
order to supply the consumption of another, or in what is called the
carrying trade, whatever profit they make will be in addition to the
neat revenue of their own country. It is like a new fund, created for
carrying on a new trade; domestic business being now transacted by
paper, and the gold and silver being converted into a fund for this
new trade.

If they employ it in purchasing foreign goods for home consumption,
they may either, first, purchase such goods as are likely to be
consumed by idle people, who produce nothing, such as foreign wines,
foreign silks, etc.; or, secondly, they may purchase an additional
stock of materials, tools, and provisions, in order to maintain and
employ an additional number of industrious people, who reproduce, with
a profit, the value of their annual consumption.

So far as it is employed in the first way, it promotes prodigality,
increases expense and consumption, without increasing production, or
establishing any permanent fund for supporting that expense, and is in
every respect hurtful to the society.

So far as it is employed in the second way, it promotes industry; and
though it increases the consumption of the society, it provides a
permanent fund for supporting that consumption; the people who consume
reproducing, with a profit, the whole value of their annual
consumption. The gross revenue of the society, the annual produce of
their land and labour, is increased by the whole value which the
labour of those workmen adds to the materials upon which they are
employed, and their neat revenue by what remains of this value, after
deducting what is necessary for supporting the tools and instruments
of their trade.

That the greater part of the gold and silver which being forced abroad
by those operations of banking, is employed in purchasing foreign
goods for home consumption, is, and must be, employed in purchasing
those of this second kind, seems not only probable, but almost
unavoidable. Though some particular men may sometimes increase their
expense very considerably, though their revenue does not increase at
all, we maybe assured that no class or order of men ever does so;
because, though the principles of common prudence do not always govern
the conduct of every individual, they always influence that of the
majority of every class or order. But the revenue of idle people,
considered as a class or order, cannot, in the smallest degree, be
increased by those operations of banking. Their expense in general,
therefore, cannot be much increased by them, though that of a few
individuals among them may, and in reality sometimes is. The demand of
idle people, therefore, for foreign goods, being the same, or very
nearly the same as before, a very small part of the money which, being
forced abroad by those operations of banking, is employed in
purchasing foreign goods for home consumption, is likely to be
employed in purchasing those for their use. The greater part of it
will naturally be destined for the employment of industry, and not for
the maintenance of idleness.

When we compute the quantity of industry which the circulating capital
of any society can employ, we must always have regard to those parts
of it only which consist in provisions, materials, and finished work;
the other, which consists in money, and which serves only to circulate
those three, must always be deducted. In order to put industry into
motion, three things are requisite; materials to work upon, tools to
work with, and the wages or recompence for the sake of which the work
is done. Money is neither a material to work upon, nor a tool to work
with; and though the wages of the workman are commonly paid to him in
money, his real revenue, like that of all other men, consists, not in
the money, but in the money's worth; not in the metal pieces, but in
what can be got for them.

The quantity of industry which any capital can employ, must evidently
be equal to the number of workmen whom it can supply with materials,
tools, and a maintenance suitable to the nature of the work. Money may
be requisite for purchasing the materials and tools of the work, as
well as the maintenance of the workmen; but the quantity of industry
which the whole capital can employ, is certainly not equal both to the
money which purchases, and to the materials, tools, and maintenance,
which are purchased with it, but only to one or other of those two
values, and to the latter more properly than to the former.

When paper is substituted in the room of gold and silver money, the
quantity of the materials, tools, and maintenance, which the whole
circulating capital can supply, may be increased by the whole value of
gold and silver which used to be employed in purchasing them. The
whole value of the great wheel of circulation and distribution is
added to the goods which are circulated and distributed by means of
it. The operation, in some measure, resembles that of the undertaker
of some great work, who, in consequence of some improvement in
mechanics, takes down his old machinery, and adds the difference
between its price and that of the new to his circulating capital, to
the fund from which he furnishes materials and wages to his workmen.

What is the proportion which the circulating money of any country
bears to the whole value of the annual produce circulated by means of
it, it is perhaps impossible to determine. It has been computed by
different authors at a fifth, at a tenth, at a twentieth, and at a
thirtieth, part of that value. But how small soever the proportion
which the circulating money may bear to the whole value of the annual
produce, as but a part, and frequently but a small part, of that
produce, is ever destined for the maintenance of industry, it must
always bear a very considerable proportion to that part. When,
therefore, by the substitution of paper, the gold and silver necessary
for circulation is reduced to, perhaps, a fifth part of the former
quantity, if the value of only the greater part of the other
four-fifths be added to the funds which are destined for the
maintenance of industry, it must make a very considerable addition to
the quantity of that industry, and, consequently, to the value of the
annual produce of land and labour.

An operation of this kind has, within these five-and-twenty or thirty
years, been performed in Scotland, by the erection of new banking
companies in almost every considerable town, and even in some country
villages. The effects of it have been precisely those above described.
The business of the country is almost entirely carried on by means of
the paper of those different banking companies, with which purchases
and payments of all kinds are commonly made. Silver very seldom
appears, except in the change of a twenty shilling bank note, and gold
still seldomer. But though the conduct of all those different
companies has not been unexceptionable, and has accordingly required
an act of parliament to regulate it, the country, notwithstanding, has
evidently derived great benefit from their trade. I have heard it
asserted, that the trade of the city of Glasgow doubled in about
fifteen years after the first erection of the banks there; and that
the trade of Scotland has more than quadrupled since the first
erection of the two public banks at Edinburgh; of which the one,
called the Bank of Scotland, was established by act of parliament in
1695, and the other, called the Royal Bank, by royal charter in 1727.
Whether the trade, either of Scotland in general, or of the city of
Glasgow in particular, has really increased in so great a proportion,
during so short a period, I do not pretend to know. If either of them
has increased in this proportion, it seems to be an effect too great
to be accounted for by the sole operation of this cause. That the
trade and industry of Scotland, however, have increased very
considerably during this period, and that the banks have contributed a
good deal to this increase, cannot be doubted.

The value of the silver money which circulated in Scotland before the
Union in 1707, and which, immediately after it, was brought into the
Bank of Scotland, in order to be recoined, amounted to £411,117: 10: 9
sterling. No account has been got of the gold coin; but it appears
from the ancient accounts of the mint of Scotland, that the value of
the gold annually coined somewhat exceeded that of the silver. There
were a good many people, too, upon this occasion, who, from a
diffidence of repayment, did not bring their silver into the Bank of
Scotland; and there was, besides, some English coin, which was not
called in. The whole value of the gold and silver, therefore, which
circulated in Scotland before the Union, cannot be estimated at less
than a million sterling. It seems to have constituted almost the whole
circulation of that country; for though the circulation of the Bank of
Scotland, which had then no rival, was considerable, it seems to have
made but a very small part of the whole. In the present times, the
whole circulation of Scotland cannot be estimated at less than two
millions, of which that part which consists in gold and silver, most
probably, does not amount to half a million. But though the
circulating gold and silver of Scotland have suffered so great a
diminution during this period, its real riches and prosperity do not
appear to have suffered any. Its agriculture, manufactures, and trade,
on the contrary, the annual produce of its land and labour, have
evidently been augmented.

It is chiefly by discounting bills of exchange, that is, by advancing
money upon them before they are due, that the greater part of banks
and bankers issue their promissory notes. They deduct always, upon
whatever sum they advance, the legal interest till the bill shall
become due. The payment of the bill, when it becomes due, replaces to
the bank the value of what had been advanced, together with a clear
profit of the interest. The banker, who advances to the merchant whose
bill he discounts, not gold and silver, but his own promissory notes,
has the advantage of being able to discount to a greater amount by the
whole value of his promissory notes, which he finds, by experience,
are commonly in circulation. He is thereby enabled to make his clear
gain of interest on so much a larger sum.

The commerce of Scotland, which at present is not very great, was
still more inconsiderable when the two first banking companies were
established; and those companies would have had but little trade, had
they confined their business to the discounting of bills of exchange.
They invented, therefore, another method of issuing their promissory
notes; by granting what they call cash accounts, that is, by giving
credit, to the extent of a certain sum (two or three thousand pounds
for example), to any individual who could procure two persons of
undoubted credit and good landed estate to become surety for him, that
whatever money should be advanced to him, within the sum for which the
credit had been given, should be repaid upon demand, together with the
legal interest. Credits of this kind are, I believe, commonly granted
by banks and bankers in all different parts of the world. But the easy
terms upon which the Scotch banking companies accept of repayment are,
so far as I know, peculiar to them, and have perhaps been the
principal cause, both of the great trade of those companies,and of the
benefit which the country has received from it.

Whoever has a credit of this kind with one of those companies, and
borrows a thousand pounds upon it, for example, may repay this sum
piece-meal, by twenty and thirty pounds at a time, the company
discounting a proportionable part of the interest of the great sum,
from the day on which each of those small sums is paid in, till the
whole be in this manner repaid. All merchants, therefore, and almost
all men of business, find it convenient to keep such cash accounts
with them, and are thereby interested to promote the trade of those
companies, by readily receiving their notes in all payments, and by
encouraging all those with whom they have any influence to do the
same. The banks, when their customers apply to them for money,
generally advance it to them in their own promissory notes. These the
merchants pay away to the manufacturers for goods, the manufacturers
to the farmers for materials and provisions, the farmers to their
landlords for rent; the landlords repay them to the merchants for the
conveniencies and luxuries with which they supply them, and the
merchants again return them to the banks, in order to balance their
cash accounts, or to replace what they my have borrowed of them; and
thus almost the whole money business of the country is transacted by
means of them. Hence the great trade of those companies.

By means of those cash accounts, every merchant can, without
imprudence, carry on a greater trade than he otherwise could do. If
there are two merchants, one in London and the other in Edinburgh, who
employ equal stocks in the same branch of trade, the Edinburgh
merchant can, without imprudence, carry on a greater trade, and give
employment to a greater number of people, than the London merchant.
The London merchant must always keep by him a considerable sum of
money, either in his own coffers, or in those of his banker, who gives
him no interest for it, in order to answer the demands continually
coming upon him for payment of the goods which he purchases upon
credit. Let the ordinary amount of this sum be supposed five hundred
pounds; the value of the goods in his warehouse must always be less,
by five hundred pounds, than it would have been, had he not been
obliged to keep such a sum unemployed. Let us suppose that he
generally disposes of his whole stock upon hand, or of goods to the
value of his whole stock upon hand, once in the year. By being obliged
to keep so great a sum unemployed, he must sell in a year five hundred
pounds worth less goods than he might otherwise have done. His annual
profits must be less by all that he could have made by the sale of
five hundred pounds worth more goods; and the number of people
employed in preparing his goods for the market must be less by all
those that five hundred pounds more stock could have employed. The
merchant in Edinburgh, on the other hand, keeps no money unemployed
for answering such occasional demands. When they actually come upon
him, he satisfies them from his cash account with the bank, and
gradually replaces the sum borrowed with the money or paper which
comes in from the occasional sales of his goods. With the same stock,
therefore, he can, without imprudence, have at all times in his
warehouse a larger quantity of goods than the London merchant; and can
thereby both make a greater profit himself, and give constant
employment to a greater number of industrious people who prepare those
goods for the market. Hence the great benefit which the country has
derived from this trade.

The facility of discounting bills of exchange, it may be thought,
indeed, gives the English merchants a conveniency equivalent to the
cash accounts of the Scotch merchants. But the Scotch merchants, it
must be remembered, can discount their bills of exchange as easily as
the English merchants; and have, besides, the additional conveniency
of their cash accounts.

The whole paper money of every kind which can easily circulate in any
country, never can exceed the value of the gold and silver, of which
it supplies the place, or which (the commerce being supposed the same)
would circulate there, if there was no paper money. If twenty shilling
notes, for example, are the lowest paper money current in Scotland,
the whole of that currency which can easily circulate there, cannot
exceed the sum of gold and silver which would be necessary for
transacting the annual exchanges of twenty shillings value and upwards
usually transacted within that country. Should the circulating paper
at any time exceed that sum, as the excess could neither be sent
abroad nor be employed in the circulation of the country, it must
immediately return upon the banks, to be exchanged for gold and
silver. Many people would immediately perceive that they had more of
this paper than was necessary for transacting their business at home;
and as they could not send it abroad, they would immediately demand
payment for it from the banks. When this superfluous paper was
converted into gold and silver, they could easily find a use for it,
by sending it abroad; but they could find none while it remained in
the shape of paper. There would immediately, therefore, be a run upon
the banks to the whole extent of this superfluous paper, and if they
showed any difficulty or backwardness in payment, to a much greater
extent; the alarm which this would occasion necessarily increasing the
run.

Over and above the expenses which are common to every branch of trade,
such as the expense of house-rent, the wages of servants, clerks,
accountants, etc. the expenses peculiar to a bank consist chiefly in
two articles: first, in the expense of keeping at all times in its
coffers, for answering the occasional demands of the holders of its
notes, a large sum of money, of which it loses the interest; and,
secondly, in the expense of replenishing those coffers as fast as they
are emptied by answering such occasional demands.

A banking company which issues more paper than can be employed in the
circulation of the country, and of which the excess is continually
returning upon them for payment, ought to increase the quantity of
gold and silver which they keep at all times in their coffers, not
only in proportion to this excessive increase of their circulation,
but in a much greater proportion; their notes returning upon them much
faster than in proportion to the excess of their quantity. Such a
company, therefore, ought to increase the first article of their
expense, not only in proportion to this forced increase of their
business, but in a much greater proportion.

The coffers of such a company, too, though they ought to be filled
much fuller, yet must empty themselves much faster than if their
business was confined within more reasonable bounds, and must require
not only a more violent, but a more constant and uninterrupted
exertion of expense, in order to replenish them, The coin, too, which
is thus continually drawn in such large quantities from their coffers,
cannot be employed in the circulation of the country. It comes in
place of a paper which is over and above what can be employed in that
circulation, and is, therefore, over and above what can be employed in
it too. But as that coin will not be allowed to lie idle, it must, in
one shape or another, be sent abroad, in order to find that profitable
employment which it cannot find at home; and this continual
exportation of gold and silver, by enhancing the difficulty, must
necessarily enhance still farther the expense of the bank, in finding
new gold and silver in order to replenish those coffers, which empty
themselves so very rapidly. Such a company, therefore, must in
proportion to this forced increase of their business, increase the
second article of their expense still more than the first.

Let us suppose that all the paper of a particular bank, which the
circulation of the country can easily absorb and employ, amounts
exactly to forty thousand pounds, and that, for answering occasional
demands, this bank is obliged to keep at all times in its coffers ten
thousand pounds in gold and silver. Should this bank attempt to
circulate forty-four thousand pounds, the four thousand pounds which
are over and above what the circulation can easily absorb and employ,
will return upon it almost as fast as they are issued. For answering
occasional demands, therefore, this bank ought to keep at all times in
its coffers, not eleven thousand pounds only, but fourteen thousand
pounds. It will thus gain nothing by the interest of the four thousand
pounds excessive circulation; and it will lose the whole expense of
continually collecting four thousand pounds in gold and silver, which
will be continually going out of its coffers as fast as they are
brought into them.

Had every particular banking company always understood and attended to
its own particular interest, the circulation never could have been
overstocked with paper money. But every particular banking company has
not always understood or attended to its own particular interest, and
the circulation has frequently been overstocked with paper money.

By issuing too great a quantity of paper, of which the excess was
continually returning, in order to be exchanged for gold and silver,
the Bank of England was for many years together obliged to coin gold
to the extent of between eight hundred thousand pounds and a million
a-year; or, at an average, about eight hundred and fifty thousand
pounds. For this great coinage, the bank (inconsequence of the worn
and degraded state into which the gold coin had fallen a few years
ago) was frequently obliged to purchase gold bullion at the high price
of four pounds an ounce, which it soon after issued in coin at
£3:17:10 1/2 an ounce, losing in this manner between two and a half
and three per cent. upon the coinage of so very large a sum. Though
the bank, therefore, paid no seignorage, though the government was
properly at the expense of this coinage, this liberality of government
did not prevent altogether the expense of the bank.

The Scotch banks, in consequence of an excess of the same kind, were
all obliged to employ constantly agents at London to collect money for
them, at an expense which was seldom below one and a half or two per
cent. This money was sent down by the waggon, and insured by the
carriers at an additional expense of three quarters per cent. or
fifteen shillings on the hundred pounds. Those agents were not always
able to replenish the coffers of their employers so fast as they were
emptied. In this case, the resource of the banks was, to draw upon
their correspondents in London bills of exchange, to the extent of the
sum which they wanted. When those correspondents afterwards drew upon
them for the payment of this sum, together with the interest and
commission, some of those banks, from the distress into which their
excessive circulation had thrown them, had sometimes no other means of
satisfying this draught, but by drawing a second set of bills, either
upon the same, or upon some other correspondents in London; and the
same sum, or rather bills for the same sum, would in this manner make
sometimes more than two or three journeys; the debtor bank paying
always the interest and commission upon the whole accumulated sum.
Even those Scotch banks which never distinguished themselves by their
extreme imprudence, were sometimes obliged to employ this ruinous
resource.

The gold coin which was paid out, either by the Bank of England or by
the Scotch banks, in exchange for that part of their paper which was
over and above what could be employed in the circulation of the
country, being likewise over and above what could be employed in that
circulation, was sometimes sent abroad in the shape of coin, sometimes
melted down and sent abroad in the shape of bullion, and sometimes
melted down and sold to the Bank of England at the high price of four
pounds an ounce. It was the newest, the heaviest, and the best pieces
only, which were carefully picked out of the whole coin, and either
sent abroad or melted down. At home, and while they remained in the
shape of coin, those heavy pieces were of no more value than the
light; but they were of more value abroad, or when melted down into
bullion at home. The Bank of England, notwithstanding their great
annual coinage, found, to their astonishment, that there was every
year the same scarcity of coin as there had been the year before; and
that, notwithstanding the great quantity of good and new coin which
was every year issued from the bank, the state of the coin, instead of
growing better and better, became every year worse and worse. Every
year they found themselves under the necessity of coining nearly the
same quantity of gold as they had coined the year before; and from the
continual rise in the price of gold bullion, in consequence of the
continual wearing and clipping of the coin, the expense of this great
annual coinage became, every year, greater and greater. The Bank of
England, it is to be observed, by supplying its own coffers with coin,
is indirectly obliged to supply the whole kingdom, into which coin is
continually flowing from those coffers in a great variety of ways.
Whatever coin, therefore, was wanted to support this excessive
circulation both of Scotch and English paper money, whatever vacuities
this excessive circulation occasioned in the necessary coin of the
kingdom, the Bank of England was obliged to supply them. The Scotch
banks, no doubt, paid all of them very dearly for their own imprudence
and inattention: but the Bank of England paid very dearly, not only
for its own imprudence, but for the much greater imprudence of almost
all the Scotch banks.

The over-trading of some bold projectors in both parts of the united
kingdom, was the original cause of this excessive circulation of paper
money.

What a bank can with propriety advance to a merchant or undertaker of
any kind, is not either the whole capital with which he trades, or
even any considerable part of that capital; but that part of it only
which he would otherwise be obliged to keep by him unemployed and in
ready money, for answering occasional demands. If the paper money
which the bank advances never exceeds this value, it can never exceed
the value of the gold and silver which would necessarily circulate in
the country if there was no paper money; it can never exceed the
quantity which the circulation of the country can easily absorb and
employ.

When a bank discounts to a merchant a real bill of exchange, drawn by
a real creditor upon a real debtor, and which, as soon as it becomes
due, is really paid by that debtor; it only advances to him a part of
the value which he would otherwise be obliged to keep by him
unemployed and in ready money, for answering occasional demands. The
payment of the bill, when it becomes due, replaces to the bank the
value of what it had advanced, together with the interest. The coffers
of the bank, so far as its dealings are confined to such customers,
resemble a water-pond, from which, though a stream is continually
running out, yet another is continually running in, fully equal to
that which runs out; so that, without any further care or attention,
the pond keeps always equally, or very near equally full. Little or no
expense can ever be necessary for replenishing the coffers of such a
bank.

A merchant, without over-trading, may frequently have occasion for a
sum of ready money, even when he has no bills to discount. When a
bank, besides discounting his bills, advances him likewise, upon such
occasions, such sums upon his cash account, and accepts of a
piece-meal repayment, as the money comes in from the occasional sale
of his goods, upon the easy terms of the banking companies of
Scotland; it dispenses him entirely from the necessity of keeping any
part of his stock by him unemployed and in ready money for answering
occasional demands. When such demands actually come upon him, he can
answer them sufficiently from his cash account. The bank, however, in
dealing with such customers, ought to observe with great attention,
whether, in the course of some short period (of four, five, six, or
eight months, for example), the sum of the repayments which it
commonly receives from them, is, or is not, fully equal to that of the
advances which it commonly makes to them. If, within the course of
such short periods, the sum of the repayments from certain customers
is, upon most occasions, fully equal to that of the advances, it may
safely continue to deal with such customers. Though the stream which
is in this case continually running out from its coffers may be very
large, that which is continually running into them must be at least
equally large, so that, without any further care or attention, those
coffers are likely to be always equally or very near equally full, and
scarce ever to require any extraordinary expense to replenish them.
If, on the contrary, the sum of the repayments from certain other
customers, falls commonly very much short of the advances which it
makes to them, it cannot with any safety continue to deal with such
customers, at least if they continue to deal with it in this manner.
The stream which is in this case continually running out from its
coffers, is necessarily much larger than that which is continually
running in; so that, unless they are replenished by some great and
continual effort of expense, those coffers must soon be exhausted
altogether.

The banking companies of Scotland, accordingly, were for a long time
very careful to require frequent and regular repayments from all their
customers, and did not care to deal with any person, whatever might be
his fortune or credit, who did not make, what they called, frequent
and regular operations with them. By this attention, besides saving
almost entirely the extraordinary expense of replenishing their
coffers, they gained two other very considerable advantages.

First, by this attention they were enabled to make some tolerable
judgment concerning the thriving or declining circumstances of their
debtors, without being obliged to look out for any other evidence
besides what their own books afforded them; men being, for the most
part, either regular or irregular in their repayments, according as
their circumstances are either thriving or declining. A private man
who lends out his money to perhaps half a dozen or a dozen of debtors,
may, either by himself or his agents, observe and inquire both
constantly and carefully into the conduct and situation of each of
them. But a banking company, which lends money to perhaps five hundred
different people, and of which the attention is continually occupied
by objects of a very different kind, can have no regular information
concerning the conduct and circumstances of the greater part of its
debtors, beyond what its own books afford it. In requiring frequent
and regular repayments from all their customers, the banking companies
of Scotland had probably this advantage in view.

Secondly, by this attention they secured themselves from the
possibility of issuing more paper money than what the circulation of
the country could easily absorb and employ. When they observed, that
within moderate periods of time, the repayments of a particular
customer were, upon most occasions, fully equal to the advances which
they had made to him, they might be assured that the paper money which
they had advanced to him had not, at any time, exceeded the quantity
of gold and silver which he would otherwise have been obliged to keep
by him for answering occasional demands; and that, consequently, the
paper money, which they had circulated by his means, had not at any
time exceeded the quantity of gold and silver which would have
circulated in the country, had there been no paper money. The
frequency, regularity, and amount of his repayments, would
sufficiently demonstrate that the amount of their advances had at no
time exceeded that part of his capital which he would otherwise have
been obliged to keep by him unemployed, and in ready money, for
answering occasional demands; that is, for the purpose of keeping the
rest of his capital in constant employment. It is this part of his
capital only which, within moderate periods of time, is continually
returning to every dealer in the shape of money, whether paper or
coin, and continually going from him in the same shape. If the
advances of the bank had commonly exceeded this part of his capital,
the ordinary amount of his repayments could not, within moderate
periods of time, have equalled the ordinary amount of its advances.
The stream which, by means of his dealings, was continually running
into the coffers of the bank, could not have been equal to the stream
which, by means of the same dealings was continually running out. The
advances of the bank paper, by exceeding the quantity of gold and
silver which, had there been no such advances, he would have been
obliged to keep by him for answering occasional demands, might soon
come to exceed the whole quantity of gold and silver which ( the
commerce being supposed the same ) would have circulated in the
country, had there been no paper money; and, consequently, to exceed
the quantity which the circulation of the country could easily absorb
and employ; and the excess of this paper money would immediately have
returned upon the bank, in order to be exchanged for gold and silver.
This second advantage, though equally real, was not, perhaps, so well
understood by all the different banking companies in Scotland as the
first.

When, partly by the conveniency of discounting bills, and partly by
that of cash accounts, the creditable traders of any country can be
dispensed from the necessity of keeping any part of their stock by
them unemployed, and in ready money, for answering occasional demands,
they can reasonably expect no farther assistance from hanks and
bankers, who, when they have gone thus far, cannot, consistently with
their own interest and safety, go farther. A bank cannot, consistently
with its own interest, advance to a trader the whole, or even the
greater part of the circulating capital with which he trades; because,
though that capital is continually returning to him in the shape of
money, and going from him in the same shape, yet the whole of the
returns is too distant from the whole of the outgoings, and the sum of
his repayments could not equal the sum of his advances within such
moderate periods of time as suit the conveniency of a bank. Still less
could a bank afford to advance him any considerable part of his fixed
capital; of the capital which the undertaker of an iron forge, for
example, employs in erecting his forge and smelting-houses, his
work-houses, and warehouses, the dwelling-houses of his workmen, etc.;
of the capital which the undertaker of a mine employs in sinking his
shafts, in erecting engines for drawing out the water, in making roads
and waggon-ways, etc.; of the capital which the person who undertakes
to improve land employs in clearing, draining, inclosing, manuring,
and ploughing waste and uncultivated fields; in building farmhouses,
with all their necessary appendages of stables, granaries, etc. The
returns of the fixed capital are, in almost all cases, much slower
than those of the circulating capital: and such expenses, even when
laid out with the greatest prudence and judgment, very seldom return
to the undertaker till after a period of many years, a period by far
too distant to suit the conveniency of a bank. Traders and other
undertakers may, no doubt with great propriety, carry on a very
considerable part of their projects with borrowed money. In justice to
their creditors, however, their own capital ought in this case to be
sufficient to insure, if I may say so, the capital of those creditors;
or to render it extremely improbable that those creditors should incur
any loss, even though the success of the project should fall very much
short of the expectation of the projectors. Even with this precaution,
too, the money which is borrowed, and which it is meant should not be
repaid till after a period of several years, ought not to be borrowed
of a bank, but ought to be borrowed upon bond or mortgage, of such
private people as propose to live upon the interest of their money,
without taking the trouble themselves to employ the capital, and who
are, upon that account, willing to lend that capital to such people of
good credit as are likely to keep it for several years. A bank,
indeed, which lends its money without the expense of stamped paper, or
of attorneys' fees for drawing bonds and mortgages, and which accepts
of repayment upon the easy terms of the banking companies of Scotland,
would, no doubt, be a very convenient creditor to such traders and
undertakers. But such traders and undertakers would surely be most
inconvenient debtors to such a bank.

It is now more than five and twenty years since the paper money issued
by the different banking companies of Scotland was fully equal, or
rather was somewhat more than fully equal, to what the circulation of
the country could easily absorb and employ. Those companies,
therefore, had so long ago given all the assistance to the traders and
other undertakers of Scotland which it is possible for banks and
bankers, consistently with their own interest, to give. They had even
done somewhat more. They had over-traded a little, and had brought
upon themselves that loss, or at least that diminution of profit,
which, in this particular business, never fails to attend the smallest
degree of over-trading. Those traders and other undertakers, having
got so much assistance from banks and bankers, wished to get still
more. The banks, they seem to have thought, could extend their credits
to whatever sum might be wanted, without incurring any other expense
besides that of a few reams of paper. They complained of the
contracted views and dastardly spirit of the directors of those banks,
which did not, they said, extend their credits in proportion to the
extension of the trade of the country; meaning, no doubt, by the
extension of that trade, the extension of their own projects beyond
what they could carry on either with their own capital, or with what
they had credit to borrow of private people in the usual way of bond
or mortgage. The banks, they seem to have thought, were in honour
bound to supply the deficiency, and to provide them with all the
capital which they wanted to trade with. The banks, however, were of a
different opinion; and upon their refusing to extend their credits,
some of those traders had recourse to an expedient which, for a time,
served their purpose, though at a much greater expense, yet as
effectually as the utmost extension of bank credits could have done.
This expedient was no other than the well known shift of drawing and
redrawing; the shift to which unfortunate traders have sometimes
recourse, when they are upon the brink of bankruptcy. The practice of
raising money in this manner had been long known in England; and,
during the course of the late war, when the high profits of trade
afforded a great temptation to over-trading, is said to have been
carried on to a very great extent. From England it was brought into
Scotland, where, in proportion to the very limited commerce, and to
the very moderate capital of the country, it was soon carried on to a
much greater extent than it ever had been in England.

The practice of drawing and redrawing is so well known to all men of
business, that it may, perhaps, be thought unnecessary to give any
account of it. But as this book may come into the hands of many people
who are not men of business, and as the effects of this practice upon
the banking trade are not, perhaps, generally understood, even by men
of business themselves, I shall endeavour to explain it as distinctly
as I can.

The customs of merchants, which were established when the barbarous
laws of Europe did not enforce the performance of their contracts, and
which, during the course of the two last centuries, have been adopted
into the laws of all European nations, have given such extraordinary
privileges to bills of exchange, that money is more readily advanced
upon them than upon any other species of obligation; especially when
they are made payable within so short a period as two or three months
after their date. If, when the bill becomes due, the acceptor does not
pay it as soon as it is presented, he becomes from that moment a
bankrupt. The bill is protested, and returns upon the drawer, who, if
he does not immediately pay it, becomes likewise a bankrupt. If,
before it came to the person who presents it to the acceptor for
payment, it had passed through the hands of several other persons, who
had successively advanced to one another the contents of it, either in
money or goods, and who, to express that each of them had in his turn
received those contents, had all of them in their order indorsed, that
is, written their names upon the back of the bill; each indorser
becomes in his turn liable to the owner of the bill for those
contents, and, if he fails to pay, he becomes too, from that moment, a
bankrupt. Though the drawer, acceptor, and indorsers of the bill,
should all of them be persons of doubtful credit; yet, still the
shortness of the date gives some security to the owner of the bill.
Though all of them may be very likely to become bankrupts, it is a
chance if they all become so in so short a time. The house is crazy,
says a weary traveller to himself, and will not stand very long; but
it is a chance if it falls to-night, and I will venture, therefore, to
sleep in it to-night.

The trader A in Edinburgh, we shall suppose, draws a bill upon B in
London, payable two months after date. In reality B in London owes
nothing to A in Edinburgh; but he agrees to accept of A 's bill, upon
condition, that before the term of payment he shall redraw upon A in
Edinburgh for the same sum, together with the interest and a
commission, another bill, payable likewise two months after date. B
accordingly, before the expiration of the first two months, redraws
this bill upon A in Edinburgh; who, again before the expiration of the
second two months, draws a second bill upon B in London, payable
likewise two months after date; and before the expiration of the third
two months, B in London redraws upon A in Edinburgh another bill
payable also two months after date. This practice has sometimes gone
on, not only for several months, but for several years together, the
bill always returning upon A in Edinburgh with the accumulated
interest and commission of all the former bills. The interest was five
per cent. in the year, and the commission was never less than one half
per cent. on each draught. This commission being repeated more than
six times in the year, whatever money A might raise by this expedient
might necessarily have cost him something more than eight per cent. in
the year and sometimes a great deal more, when either the price of the
commission happened to rise, or when he was obliged to pay compound
interest upon the interest and commission of former bills. This
practice was called raising money by circulation.

In a country where the ordinary profits of stock, in the greater part
of mercantile projects, are supposed to run between six and ten per
cent. it must have been a very fortunate speculation, of which the
returns could not only repay the enormous expense at which the money
was thus borrowed for carrying it on, but afford, besides, a good
surplus profit to the projector. Many vast and extensive projects,
however, were undertaken, and for several years carried on, without
any other fund to support them besides what was raised at this
enormous expense. The projectors, no doubt, had in their golden dreams
the most distinct vision of this great profit. Upon their awakening,
however, either at the end of their projects, or when they were no
longer able to carry them on, they very seldom, I believe, had the
good fortune to find it.

{The method described in the text was by no means either the most
common or the most expensive one in which those adventurers sometimes
raised money by circulation. It frequently happened, that A in
Edinburgh would enable B in London to pay the first bill of exchange,
by drawing, a few days before it became due, a second bill at three
months date upon the same B in London. This bill, being payable to his
own order, A sold in Edinburgh at par; and with its contents purchased
bills upon London, payable at sight to the order of B, to whom he sent
them by the post. Towards the end of the late war, the exchange
between Edinburgh and London was frequently three per cent. against
Edinburgh, and those bills at sight must frequently have cost A that
premium. This transaction, therefore, being repeated at least four
times in the year, and being loaded with a commission of at least one
half per cent. upon each repetition, must at that period have cost A,
at least, fourteen per cent. in the year. At other times A would
enable to discharge the first bill of exchange, by drawing, a few days
before it became due, a second bill at two months date, not upon B,
but upon some third person, C, for example, in London. This other bill
was made payable to the order of B, who, upon its being accepted by C,
discounted it with some banker in London; and A enabled C to discharge
it, by drawing, a few day's before it became due, a third bill
likewise at two months date, sometimes upon his first correspondent B,
and sometimes upon some fourth or fifth person, D or E, for example.
This third bill was made payable to the order of C, who, as soon as it
was accepted, discounted it in the same manner with some banker in
London. Such operations being repeated at least six times in the year,
and being loaded with a commission of at least one half per cent. upon
each repetition, together with the legal interest of five per cent.
this method of raising money, in the same manner as that described in
the text, must have cost A something more than eight per cent. By
saving, however, the exchange between Edinburgh and London, it was
less expensive than that mentioned in the foregoing part of this note;
but then it required an established credit with more houses than one
in London, an advantage which many of these adventurers could not
always find it easy to procure.}

The bills which A in Edinburgh drew upon B in London, he regularly
discounted two months before they were due, with some bank or banker
in Edinburgh; and the bills which B in London redrew upon A in
Edinburgh, he as regularly discounted, either with the Bank of
England, or with some other banker in London. Whatever was advanced
upon such circulating bills was in Edinburgh advanced in the paper of
the Scotch banks; and in London, when they were discounted at the Bank
of England in the paper of that bank. Though the bills upon which this
paper had been advanced were all of them repaid in their turn as soon
as they became due, yet the value which had been really advanced upon
the first bill was never really returned to the banks which advanced
it; because, before each bill became due, another bill was always
drawn to somewhat a greater amount than the bill which was soon to be
paid: and the discounting of this other bill was essentially necessary
towards the payment of that which was soon to be due. This payment,
therefore, was altogether fictitious. The stream which, by means of
those circulating bills of exchange, had once been made to run out
from the coffers of the banks, was never replaced by any stream which
really ran into them.

The paper which was issued upon those circulating bills of exchange
amounted, upon many occasions, to the whole fund destined for carrying
on some vast and extensive project of agriculture, commerce, or
manufactures; and not merely to that part of it which, had there been
no paper money, the projector would have been obliged to keep by him
unemployed, and in ready money, for answering occasional demands. The
greater part of this paper was, consequently, over and above the value
of the gold and silver which would have circulated in the country, had
there been no paper money. It was over and above, therefore, what the
circulation of the country could easily absorb and employ, and upon
that account, immediately returned upon the banks, in order to be
exchanged for gold and silver, which they were to find as they could.
It was a capital which those projectors had very artfully contrived to
draw from those banks, not only without their knowledge or deliberate
consent, but for some time, perhaps, without their having the most
distant suspicion that they had really advanced it.

When two people, who are continually drawing and redrawing upon one
another, discount their bills always with the same banker, he must
immediately discover what they are about, and see clearly that they
are trading, not with any capital of their own, but with the capital
which he advances to them. But this discovery is not altogether so
easy when they discount their bills sometimes with one banker, and
sometimes with another, and when the two same persons do not
constantly draw and redraw upon one another, but occasionally run the
round of a great circle of projectors, who find it for their interest
to assist one another in this method of raising money and to render
it, upon that account, as difficult as possible to distinguish between
a real and a fictitious bill of exchange, between a bill drawn by a
real creditor upon a real debtor, and a bill for which there was
properly no real creditor but the bank which discounted it, nor any
real debtor but the projector who made use of the money. When a banker
had even made this discovery, he might sometimes make it too late, and
might find that he had already discounted the bills of those
projectors to so great an extent, that, by refusing to discount any
more, he would necessarily make them all bankrupts; and thus by
ruining them, might perhaps ruin himself. For his own interest and
safety, therefore, he might find it necessary, in this very perilous
situation, to go on for some time, endeavouring, however, to withdraw
gradually, and, upon that account, making every day greater and
greater difficulties about discounting, in order to force these
projectors by degrees to have recourse, either to other bankers, or to
other methods of raising money: so as that he himself might, as soon
as possible, get out of the circle. The difficulties, accordingly,
which the Bank of England, which the principal bankers in London, and
which even the more prudent Scotch banks began, after a certain time,
and when all of them had already gone too far, to make about
discounting, not only alarmed, but enraged, in the highest degree,
those projectors. Their own distress, of which this prudent and
necessary reserve of the banks was, no doubt, the immediate occasion,
they called the distress of the country; and this distress of the
country, they said, was altogether owing to the ignorance,
pusillanimity, and bad conduct of the banks, which did not give a
sufficiently liberal aid to the spirited undertakings of those who
exerted themselves in order to beautify, improve, and enrich the
country. It was the duty of the banks, they seemed to think, to lend
for as long a time, and to as great an extent, as they might wish to
borrow. The banks, however, by refusing in this manner to give more
credit to those to whom they had already given a great deal too much,
took the only method by which it was now possible to save either their
own credit, or the public credit of the country.

In the midst of this clamour and distress, a new bank was established
in Scotland, for the express purpose of relieving the distress of the
country. The design was generous; but the execution was imprudent, and
the nature and causes of the distress which it meant to relieve, were
not, perhaps, well understood. This bank was more liberal than any
other had ever been, both in granting cash-accounts, and in
discounting bills of exchange. With regard to the latter, it seems to
have made scarce any distinction between real and circulating bills,
but to have discounted all equally. It was the avowed principle of
this bank to advance upon any reasonable security, the whole capital
which was to be employed in those improvements of which the returns
are the most slow and distant, such as the improvements of land. To
promote such improvements was even said to be the chief of the
public-spirited purposes for which it was instituted. By its
liberality in granting cash-accounts, and in discounting bills of
exchange, it, no doubt, issued great quantities of its bank notes. But
those bank notes being, the greater part of them, over and above what
the circulation of the country could easily absorb and employ,
returned upon it, in order to be exchanged for gold and silver, as
fast as they were issued. Its coffers were never well filled. The
capital which had been subscribed to this bank, at two different
subscriptions, amounted to one hundred and sixty thousand pounds, of
which eighty per cent. only was paid up. This sum ought to have been
paid in at several different instalments. A great part of the
proprietors, when they paid in their first instalment, opened a
cash-account with the bank; and the directors, thinking themselves
obliged to treat their own proprietors with the same liberality with
which they treated all other men, allowed many of them to borrow upon
this cash-account what they paid in upon all their subsequent
instalments. Such payments, therefore, only put into one coffer what
had the moment before been taken out of another. But had the coffers
of this bank been filled ever so well, its excessive circulation must
have emptied them faster than they could have been replenished by any
other expedient but the ruinous one of drawing upon London; and when
the bill became due, paying it, together with interest and commission,
by another draught upon the same place. Its coffers having been filled
so very ill, it is said to have been driven to this resource within a
very few months after it began to do business. The estates of the
proprietors of this bank were worth several millions, and, by their
subscription to the original bond or contract of the bank, were really
pledged for answering all its engagements. By means of the great
credit which so great a pledge necessarily gave it, it was,
notwithstanding its too liberal conduct, enabled to carry on business
for more than two years. When it was obliged to stop, it had in the
circulation about two hundred thousand pounds in bank notes. In order
to support the circulation of those notes, which were continually
returning upon it as fast as they were issued, it had been constantly
in the practice of drawing bills of exchange upon London, of which the
number and value were continually increasing, and, when it stopt,
amounted to upwards of six hundred thousand pounds. This bank,
therefore, had, in little more than the course of two years, advanced
to different people upwards of eight hundred thousand pounds at five
per cent. Upon the two hundred thousand pounds which it circulated in
bank notes, this five per cent. might perhaps be considered as a clear
gain, without any other deduction besides the expense of management.
But upon upwards of six hundred thousand pounds, for which it was
continually drawing bills of exchange upon London, it was paying, in
the way of interest and commission, upwards of eight per cent. and was
consequently losing more than three per cent. upon more than three
fourths of all its dealings.

The operations of this bank seem to have produced effects quite
opposite to those which were intended by the particular persons who
planned and directed it. They seem to have intended to support the
spirited undertakings, for as such they considered them, which were at
that time carrying on in different parts of the country; and, at the
same time, by drawing the whole banking business to themselves, to
supplant all the other Scotch banks, particularly those established at
Edinburgh, whose backwardness in discounting bills of exchange had
given some offence. This bank, no doubt, gave some temporary relief to
those projectors, and enabled them to carry on their projects for
about two years longer than they could otherwise have done. But it
thereby only enabled them to get so much deeper into debt; so that,
when ruin came, it fell so much the heavier both upon them and upon
their creditors. The operations of this bank, therefore, instead of
relieving, in reality aggravated in the long-run the distress which
those projectors had brought both upon themselves and upon their
country. It would have been much better for themselves, their
creditors, and their country, had the greater part of them been
obliged to stop two years sooner than they actually did. The temporary
relief, however, which this bank afforded to those projectors, proved
a real and permanent relief to the other Scotch banks. All the dealers
in circulating bills of exchange, which those other banks had become
so backward in discounting, had recourse to this new bank, where they
were received with open arms. Those other banks, therefore, were
enabled to get very easily out of that fatal circle, from which they
could not otherwise have disengaged themselves without incurring a
considerable loss, and perhaps, too, even some degree of discredit.

In the long-run, therefore, the operations of this bank increased the
real distress of the country, which it meant to relieve; and
effectually relieved, from a very great distress, those rivals whom it
meant to supplant.

At the first setting out of this bank, it was the opinion of some
people, that how fast soever its coffers might be emptied, it might
easily replenish them, by raising money upon the securities of those
to whom it had advanced its paper. Experience, I believe, soon
convinced them that this method of raising money was by much too slow
to answer their purpose; and that coffers which originally were so ill
filled, and which emptied themselves so very fast, could be
replenished by no other expedient but the ruinous one of drawing bills
upon London, and when they became due, paying them by other draughts
on the same place, with accumulated interest and commission. But
though they had been able by this method to raise money as fast as
they wanted it, yet, instead of making a profit, they must have
suffered a loss of every such operation; so that in the long-run they
must have ruined themselves as a mercantile company, though perhaps
not so soon as by the more expensive practice of drawing and
redrawing. They could still have made nothing by the interest of the
paper, which, being over and above what the circulation of the country
could absorb and employ, returned upon them in order to be exchanged
for gold and silver, as fast as they issued it; and for the payment of
which they were themselves continually obliged to borrow money. On the
contrary, the whole expense of this borrowing, of employing agents to
look out for people who had money to lend, of negotiating with those
people, and of drawing the proper bond or assignment, must have fallen
upon them, and have been so much clear loss upon the balance of their
accounts. The project of replenishing their coffers in this manner may
be compared to that of a man who had a water-pond from which a stream
was continually running out, and into which no stream was continually
running, but who proposed to keep it always equally full, by employing
a number of people to go continually with buckets to a well at some
miles distance, in order to bring water to replenish it.

But though this operation had proved not only practicable, but
profitable to the bank, as a mercantile company; yet the country could
have derived no benefit front it, but, on the contrary, must have
suffered a very considerable loss by it. This operation could not
augment, in the smallest degree, the quantity of money to be lent. It
could only have erected this bank into a sort of general loan office
for the whole country. Those who wanted to borrow must have applied to
this bank, instead of applying to the private persons who had lent it
their money. But a bank which lends money, perhaps to five hundred
different people, the greater part of whom its directors can know very
little about, is not likely to be more judicious in the choice of its
debtors than a private person who lends out his money among a few
people whom he knows, and in whose sober and frugal conduct he thinks
he has good reason to confide. The debtors of such a bank as that
whose conduct I have been giving some account of were likely, the
greater part of them, to be chimerical projectors, the drawers and
redrawers of circulating bills of exchange, who would employ the money
in extravagant undertakings, which, with all the assistance that could
be given them, they would probably never be able to complete, and
which, if they should be completed, would never repay the expense
which they had really cost, would never afford a fund capable of
maintaining a quantity of labour equal to that which had been employed
about them. The sober and frugal debtors of private persons, on the
contrary, would be more likely to employ the money borrowed in sober
undertakings which were proportioned to their capitals, and which,
though they might have less of the grand and the marvellous, would
have more of the solid and the profitable; which would repay with a
large profit whatever had been laid out upon them, and which would
thus afford a fund capable of maintaining a much greater quantity of
labour than that which had been employed about them. The success of
this operation, therefore, without increasing in the smallest degree
the capital of the country, would only have transferred a great part
of it from prudent and profitable to imprudent and unprofitable
undertakings.

That the industry of Scotland languished for want of money to employ
it, was the opinion of the famous Mr Law. By establishing a bank of a
particular kind, which he seems to have imagined might issue paper to
the amount of the whole value of all the lands in the country, he
proposed to remedy this want of money. The parliament of Scotland,
when he first proposed his project, did not think proper to adopt it.
It was afterwards adopted, with some variations, by the Duke of
Orleans, at that time regent of France. The idea of the possibility of
multiplying paper money to almost any extent was the real foundation
of what is called the Mississippi scheme, the most extravagant
project, both of banking and stock-jobbing, that perhaps the world
ever saw. The different operations of this scheme are explained so
fully, so clearly, and with so much order and distinctness, by Mr Du
Verney, in his Examination of the Political Reflections upon commerce
and finances of Mr Du Tot, that I shall not give any account of them.
The principles upon which it was founded are explained by Mr Law
himself, in a discourse concerning money and trade, which he published
in Scotland when he first proposed his project. The splendid but
visionary ideas which are set forth in that and some other works upon
the same principles, still continue to make an impression upon many
people, and have, perhaps, in part, contributed to that excess of
banking, which has of late been complained of, both in Scotland and in
other places.

The Bank of England is the greatest bank of circulation in Europe. It
was incorporated, in pursuance of an act of parliament, by a charter
under the great seal, dated the 27th of July 1694. It at that time
advanced to government the sum of £1,200,000 for an annuity of
£100,000, or for £ 96,000 a-year, interest at the rate of eight per
cent. and £4,000 year for the expense of management. The credit of the
new government, established by the Revolution, we may believe, must
have been very low, when it was obliged to borrow at so high an
interest.

In 1697, the bank was allowed to enlarge its capital stock, by an
ingraftment of £1,001,171:10s. Its whole capital stock, therefore,
amounted at this time to £2,201,171: 10s. This ingraftment is said to
have been for the support of public credit. In 1696, tallies had been
at forty, and fifty, and sixty, per cent. discount, and bank notes at
twenty per cent. {James Postlethwaite's History of the Public Revenue,
p.301.} During the great re-coinage of the silver, which was going on
at this time, the bank had thought proper to discontinue the payment
of its notes, which necessarily occasioned their discredit.

In pursuance of the 7th Anne, c. 7, the bank advanced and paid into
the exchequer the sum of £400,000; making in all the sum of
£1,600,000, which it had advanced upon its original annuity of £96,000
interest, and £4,000 for expense of management. In 1708, therefore,
the credit of government was as good as that of private persons, since
it could borrow at six per cent. interest, the common legal and market
rate of those times. In pursuance of the same act, the bank cancelled
exchequer bills to the amount of £ 1,775,027: 17s: 10½d. at six per
cent. interest, and was at the same time allowed to take in
subscriptions for doubling its capital. In 1703, therefore, the
capital of the bank amounted to £4,402,343; and it had advanced to
government the sum of £3,375,027:17:10½d.

By a call of fifteen per cent. in 1709, there was paid in, and made
stock, £ 656,204:1:9d.; and by another of ten per cent. in 1710,
£501,448:12:11d. In consequence of those two calls, therefore, the
bank capital amounted to £ 5,559,995:14:8d.

In pursuance of the 3rd George I. c.8, the bank delivered up two
millions of exchequer Bills to be cancelled. It had at this time,
therefore, advanced to government £5,375,027:17 10d. In pursuance of
the 8th George I. c.21, the bank purchased of the South-sea company,
stock to the amount of £4,000,000: and in 1722, in consequence of the
subscriptions which it had taken in for enabling it to make this
purchase, its capital stock was increased by £ 3,400,000. At this
time, therefore, the bank had advanced to the public £ 9,375,027 17s.
10½d.; and its capital stock amounted only to £ 8,959,995:14:8d. It
was upon this occasion that the sum which the bank had advanced to the
public, and for which it received interest, began first to exceed its
capital stock, or the sum for which it paid a dividend to the
proprietors of bank stock; or, in other words, that the bank began to
have an undivided capital, over and above its divided one. It has
continued to have an undivided capital of the same kind ever since. In
1746, the bank had, upon different occasions, advanced to the public
£11,686,800, and its divided capital had been raised by different
calls and subscriptions to £ 10,780,000. The state of those two sums
has continued to be the same ever since. In pursuance of the 4th of
George III. c.25, the bank agreed to pay to government for the renewal
of its charter £110,000, without interest or re-payment. This sum,
therefore did not increase either of those two other sums.

The dividend of the bank has varied according to the variations in the
rate of the interest which it has, at different times, received for
the money it had advanced to the public, as well as according to other
circumstances. This rate of interest has gradually been reduced from
eight to three per cent. For some years past, the bank dividend has
been at five and a half per cent.

The stability of the bank of England is equal to that of the British
government. All that it has advanced to the public must be lost before
its creditors can sustain any loss. No other banking company in
England can be established by act of parliament, or can consist of
more than six members. It acts, not only as an ordinary bank, but as a
great engine of state. It receives and pays the greater part of the
annuities which are due to the creditors of the public; it circulates
exchequer bills; and it advances to government the annual amount of
the land and malt taxes, which are frequently not paid up till some
years thereafter. In these different operations, its duty to the
public may sometimes have obliged it, without any fault of its
directors, to overstock the circulation with paper money. It likewise
discounts merchants' bills, and has, upon several different occasions,
supported the credit of the principal houses, not only of England, but
of Hamburgh and Holland. Upon one occasion, in 1763, it is said to
have advanced for this purpose, in one week, about £1,600,000, a great
part of it in bullion. I do not, however, pretend to warrant either
the greatness of the sum, or the shortness of the time. Upon other
occasions, this great company has been reduced to the necessity of
paying in sixpences.

It is not by augmenting the capital of the country, but by rendering a
greater part of that capital active and productive than would
otherwise be so, that the most judicious operations of banking can
increase the industry of the country. That part of his capital which a
dealer is obliged to keep by him unemployed and in ready money, for
answering occasional demands, is so much dead stock, which, so long as
it remains in this situation, produces nothing, either to him or to
his country. The judicious operations of banking enable him to convert
this dead stock into active and productive stock; into materials to
work upon; into tools to work with; and into provisions and
subsistence to work for; into stock which produces something both to
himself and to his country. The gold and silver money which circulates
in any country, and by means of which, the produce of its land and
labour is annually circulated and distributed to the proper consumers,
is, in the same manner as the ready money of the dealer, all dead
stock. It is a very valuable part of the capital of the country, which
produces nothing to the country. The judicious operations of banking,
by substituting paper in the room of a great part of this gold and
silver, enable the country to convert a great part of this dead stock
into active and productive stock; into stock which produces something
to the country. The gold and silver money which circulates in any
country may very properly be compared to a highway, which, while it
circulates and carries to market all the grass and corn of the
country, produces itself not a single pile of either. The judicious
operations of banking, by providing, if I may be allowed so violent a
metaphor, a sort of waggon-way through the air, enable the country to
convert, as it were, a great part of its highways into good pastures,
and corn fields, and thereby to increase, very considerably, the
annual produce of its land and labour. The commerce and industry of
the country, however, it must be acknowledged, though they may be
somewhat augmented, cannot be altogether so secure, when they are
thus, as it were, suspended upon the Daedalian wings of paper money,
as when they travel about upon the solid ground of gold and silver.
Over and above the accidents to which they are exposed from the
unskilfulness of the conductors of this paper money, they are liable
to several others, from which no prudence or skill of those conductors
can guard them.

An unsuccessful war, for example, in which the enemy got possession of
the capital, and consequently of that treasure which supported the
credit of the paper money, would occasion a much greater confusion in
a country where the whole circulation was carried on by paper, than in
one where the greater part of it was carried on by gold and silver.
The usual instrument of commerce having lost its value, no exchanges
could be made but either by barter or upon credit. All taxes having
been usually paid in paper money, the prince would not have
wherewithal either to pay his troops, or to furnish his magazines; and
the state of the country would be much more irretrievable than if the
greater part of its circulation had consisted in gold and silver. A
prince, anxious to maintain his dominions at all times in the state in
which he can most easily defend them, ought upon this account to guard
not only against that excessive multiplication of paper money which
ruins the very banks which issue it, but even against that
multiplication of it which enables them to fill the greater part of
the circulation of the country with it.

The circulation of every country may be considered as divided into two
different branches; the circulation of the dealers with one another,
and the circulation between the dealers and the consumers. Though the
same pieces of money, whether paper or metal, may be employed
sometimes in the one circulation and sometimes in the other; yet as
both are constantly going on at the same time, each requires a certain
stock of money, of one kind or another, to carry it on. The value of
the goods circulated between the different dealers never can exceed
the value of those circulated between the dealers and the consumers;
whatever is bought by the dealers being ultimately destined to be sold
to the consumers. The circulation between the dealers, as it is
carried on by wholesale, requires generally a pretty large sum for
every particular transaction. That between the dealers and the
consumers, on the contrary, as it is generally carried on by retail,
frequently requires but very small ones, a shilling, or even a
halfpenny, being often sufficient. But small sums circulate much
faster than large ones. A shilling changes masters more frequently
than a guinea, and a halfpenny more frequently than a shilling. Though
the annual purchases of all the consumers, therefore, are at least
equal in value to those of all the dealers, they can generally be
transacted with a much smaller quantity of money; the same pieces, by
a more rapid circulation, serving as the instrument of many more
purchases of the one kind than of the other.

Paper money may be so regulated as either to confine itself very much
to the circulation between the different dealers, or to extend itself
likewise to a great part of that between the dealers and the
consumers. Where no bank notes are circulated under £10 value, as in
London, paper money confines itself very much to the circulation
between the dealers. When a ten pound bank note comes into the hands
of a consumer, he is generally obliged to change it at the first shop
where he has occasion to purchase five shillings worth of goods; so
that it often returns into the hands of a dealer before the consumer
has spent the fortieth part of the money. Where bank notes are issued
for so small sums as 20s. as in Scotland, paper money extends itself
to a considerable part of the circulation between dealers and
consumers. Before the Act of parliament which put a stop to the
circulation of ten and five shilling notes, it filled a still greater
part of that circulation. In the currencies of North America, paper
was commonly issued for so small a sum as a shilling, and filled
almost the whole of that circulation. In some paper currencies of
Yorkshire, it was issued even for so small a sum as a sixpence.

Where the issuing of bank notes for such very small sums is allowed,
and commonly practised, many mean people are both enabled and
encouraged to become bankers. A person whose promissory note for £5,
or even for 20s. would be rejected by every body, will get it to be
received without scruple when it is issued for so small a sum as a
sixpence. But the frequent bankruptcies to which such beggarly bankers
must be liable, may occasion a very considerable inconveniency, and
sometimes even a very great calamity, to many poor people who had
received their notes in payment.

It were better, perhaps, that no bank notes were issued in any part of
the kingdom for a smaller sum than £5. Paper money would then,
probably, confine itself, in every part of the kingdom, to the
circulation between the different dealers, as much as it does at
present in London, where no bank notes are issued under £10 value; £5
being, in most part of the kingdom, a sum which, though it will
purchase, perhaps, little more than half the quantity of goods, is as
much considered, and is as seldom spent all at once, as £10 are amidst
the profuse expense of London.

Where paper money, it is to be observed, is pretty much confined to
the circulation between dealers and dealers, as at London, there is
always plenty of gold and silver. Where it extends itself to a
considerable part of the circulation between dealers and consumers, as
in Scotland, and still more in North America, it banishes gold and
silver almost entirely from the country; almost all the ordinary
transactions of its interior commerce being thus carried on by paper.
The suppression of ten and five shilling bank notes, somewhat relieved
the scarcity of gold and silver in Scotland; and the suppression of
twenty shilling notes will probably relieve it still more. Those
metals are said to have become more abundant in America, since the
suppression of some of their paper currencies. They are said,
likewise, to have been more abundant before the institution of those
currencies.

Though paper money should be pretty much confined to the circulation
between dealers and dealers, yet banks and bankers might still be able
to give nearly the same assistance to the industry and commerce of the
country, as they had done when paper money filled almost the whole
circulation. The ready money which a dealer is obliged to keep by him,
for answering occasional demands, is destined altogether for the
circulation between himself and other dealers of whom he buys goods.
He has no occasion to keep any by him for the circulation between
himself and the consumers, who are his customers, and who bring ready
money to him, instead of taking any from him. Though no paper money,
therefore, was allowed to be issued, but for such sums as would
confine it pretty much to the circulation between dealers and dealers;
yet partly by discounting real bills of exchange, and partly by
lending upon cash-accounts, banks and bankers might still be able to
relieve the greater part of those dealers from the necessity of
keeping any considerable part of their stock by them unemployed, and
in ready money, for answering occasional demands. They might still be
able to give the utmost assistance which banks and bankers can with
propriety give to traders of every kind.

To restrain private people, it may be said, from receiving in payment
the promissory notes of a banker for any sum, whether great or small,
when they themselves are willing to receive them; or, to restrain a
banker from issuing such notes, when all his neighbours are willing to
accept of them, is a manifest violation of that natural liberty, which
it is the proper business of law not to infringe, but to support. Such
regulations may, no doubt, be considered as in some respect a
violation of natural liberty. But those exertions of the natural
liberty of a few individuals, which might endanger the security of the
whole society, are, and ought to be, restrained by the laws of all
governments; of the most free, as well as or the most despotical. The
obligation of building party walls, in order to prevent the
communication of fire, is a violation of natural liberty, exactly of
the same kind with the regulations of the banking trade which are here
proposed.

A paper money, consisting in bank notes, issued by people of undoubted
credit, payable upon demand, without any condition, and, in fact,
always readily paid as soon as presented, is, in every respect, equal
in value to gold and silver money, since gold and silver money can at
anytime be had for it. Whatever is either bought or sold for such
paper, must necessarily be bought or sold as cheap as it could have
been for gold and silver.

The increase of paper money, it has been said, by augmenting the
quantity, and consequently diminishing the value, of the whole
currency, necessarily augments the money price of commodities. But as
the quantity of gold and silver, which is taken from the currency, is
always equal to the quantity of paper which is added to it, paper
money does not necessarily increase the quantity of the whole
currency. From the beginning of the last century to the present time,
provisions never were cheaper in Scotland than in 1759, though, from
the circulation of ten and five shilling bank notes, there was then
more paper money in the country than at present. The proportion
between the price of provisions in Scotland and that in England is the
same now as before the great multiplication of banking companies in
Scotland. Corn is, upon most occasions, fully as cheap in England as
in France, though there is a great deal of paper money in England, and
scarce any in France. In 1751 and 1752, when Mr Hume published his
Political Discourses, and soon after the great multiplication of paper
money in Scotland, there was a very sensible rise in the price of
provisions, owing, probably, to the badness of the seasons, and not to
the multiplication of paper money.

It would be otherwise, indeed, with a paper money, consisting in
promissory notes, of which the immediate payment depended, in any
respect, either upon the good will of those who issued them, or upon a
condition which the holder of the notes might not always have it in
his power to fulfil, or of which the payment was not exigible till
after a certain number of years, and which, in the mean time, bore no
interest. Such a paper money would, no doubt, fall more or less below
the value of gold and silver, according as the difficulty or
uncertainty of obtaining immediate payment was supposed to be greater
or less, or according to the greater or less distance of time at which
payment was exigible.

Some years ago the different banking companies of Scotland were in the
practice of inserting into their bank notes, what they called an
optional clause; by which they promised payment to the bearer, either
as soon as the note should be presented, or, in the option of the
directors, six months after such presentment, together with the legal
interest for the said six months. The directors of some of those banks
sometimes took advantage of this optional clause, and sometimes
threatened those who demanded gold and silver in exchange for a
considerable number of their notes, that they would take advantage of
it, unless such demanders would content themselves with a part of what
they demanded. The promissory notes of those banking companies
constituted, at that time, the far greater part of the currency of
Scotland, which this uncertainty of payment necessarily degraded below
value of gold and silver money. During the continuance of this abuse
(which prevailed chiefly in 1762, 1763, and 1764), while the exchange
between London and Carlisle was at par, that between London and
Dumfries would sometimes be four per cent. against Dumfries, though
this town is not thirty miles distant from Carlisle. But at Carlisle,
bills were paid in gold and silver; whereas at Dumfries they were paid
in Scotch bank notes; and the uncertainty of getting these bank notes
exchanged for gold and silver coin, had thus degraded them four per
cent. below the value of that coin. The same act of parliament which
suppressed ten and five shilling bank notes, suppressed likewise this
optional clause, and thereby restored the exchange between England and
Scotland to its natural rate, or to what the course of trade and
remittances might happen to make it.

In the paper currencies of Yorkshire, the payment of so small a sum as
6d. sometimes depended upon the condition, that the holder of the note
should bring the change of a guinea to the person who issued it; a
condition which the holders of such notes might frequently find it
very difficult to fulfil, and which must have degraded this currency
below the value of gold and silver money. An act of parliament,
accordingly, declared all such clauses unlawful, and suppressed, in
the same manner as in Scotland, all promissory notes, payable to the
bearer, under 20s. value.

The paper currencies of North America consisted, not in bank notes
payable to the bearer on demand, but in a government paper, of which
the payment was not exigible till several years after it was issued;
and though the colony governments paid no interest to the holders of
this paper, they declared it to be, and in fact rendered it, a legal
tender of payment for the full value for which it was issued. But
allowing the colony security to be perfectly good, £100, payable
fifteen years hence, for example, in a country where interest is at
six per cent., is worth little more than £40 ready money. To oblige
a creditor, therefore, to accept of this as full payment for a debt of
£100, actually paid down in ready money, was an act of such violent
injustice, as has scarce, perhaps, been attempted by the government of
any other country which pretended to be free. It bears the evident
marks of having originally been, what the honest and downright Doctor
Douglas assures us it was, a scheme of fraudulent debtors to cheat
their creditors. The government of Pennsylvania, indeed, pretended,
upon their first emission of paper money, in 1722, to render their
paper of equal value with gold and silver, by enacting penalties
against all those who made any difference in the price of their goods
when they sold them for a colony paper, and when they sold them for
gold and silver, a regulation equally tyrannical, but much less,
effectual, than that which it was meant to support. A positive law may
render a shilling a legal tender for a guinea, because it may direct
the courts of justice to discharge the debtor who has made that
tender; but no positive law can oblige a person who sells goods, and
who is at liberty to sell or not to sell as he pleases, to accept of a
shilling as equivalent to a guinea in the price of them.
Notwithstanding any regulation of this kind, it appeared, by the
course of exchange with Great Britain, that £100 sterling was
occasionally considered as equivalent, in some of the colonies, to
£130, and in others to so great a sum as £1100 currency; this
difference in the value arising from the difference in the quantity of
paper emitted in the different colonies, and in the distance and
probability of the term of its final discharge and redemption.

No law, therefore, could be more equitable than the act of parliament,
so unjustly complained of in the colonies, which declared, that no
paper currency to be emitted there in time coming, should be a legal
tender of payment.

Pennsylvania was always more moderate in its emissions of paper money
than any other of our colonies. Its paper currency, accordingly, is
said never to have sunk below the value of the gold and silver which
was current in the colony before the first emission of its paper
money. Before that emission, the colony had raised the denomination of
its coin, and had, by act of assembly, ordered 5s. sterling to pass in
the colonies for 6s:3d., and afterwards for 6s:8d. A pound, colony
currency, therefore, even when that currency was gold and silver, was
more than thirty per cent. below the value of £1 sterling; and when
that currency was turned into paper, it was seldom much more than
thirty per cent. below that value. The pretence for raising the
denomination of the coin was to prevent the exportation of gold and
silver, by making equal quantities of those metals pass for greater
sums in the colony than they did in the mother country. It was found,
however, that the price of all goods from the mother country rose
exactly in proportion as they raised the denomination of their coin,
so that their gold and silver were exported as fast as ever.

The paper of each colony being received in the payment of the
provincial taxes, for the full value for which it had been issued, it
necessarily derived from this use some additional value, over and
above what it would have had, from the real or supposed distance of
the term of its final discharge and redemption. This additional value
was greater or less, according as the quantity of paper issued was
more or less above what could be employed in the payment of the taxes
of the particular colony which issued it. It was in all the colonies
very much above what could be employed in this manner.

A prince, who should enact that a certain proportion of his taxes
should be paid in a paper money of a certain kind, might thereby give
a certain value to this paper money, even though the term of its final
discharge and redemption should depend altogether upon the will of the
prince. If the bank which issued this paper was careful to keep the
quantity of it always somewhat below what could easily be employed in
this manner, the demand for it might be such as to make it even bear a
premium, or sell for somewhat more in the market than the quantity of
gold or silver currency for which it was issued. Some people account
in this manner for what is called the agio of the bank of Amsterdam,
or for the superiority of bank money over current money, though this
bank money, as they pretend, cannot be taken out of the bank at the
will of the owner. The greater part of foreign bills of exchange must
be paid in bank money, that is, by a transfer in the books of the
bank; and the directors of the bank, they allege, are careful to keep
the whole quantity of bank money always below what this use occasions
a demand for. It is upon this account, they say, the bank money sells
for a premium, or bears an agio of four or five per cent. above the
same nominal sum of the gold and silver currency of the country. This
account of the bank of Amsterdam, however, it will appear hereafter,
is in a great measure chimerical.

A paper currency which falls below the value of gold and silver coin,
does not thereby sink the value of those metals, or occasion equal
quantities of them to exchange for a smaller quantity of goods of any
other kind. The proportion between the value of gold and silver and
that of goods of any other kind, depends in all cases, not upon the
nature and quantity of any particular paper money, which may be
current in any particular country, but upon the richness or poverty of
the mines, which happen at any particular time to supply the great
market of the commercial world with those metals. It depends upon the
proportion between the quantity of labour which is necessary in order
to bring a certain quantity of gold and silver to market, and that
which is necessary in order to bring thither a certain quantity of any
other sort of goods.

If bankers are restrained from issuing any circulating bank notes, or
notes payable to the bearer, for less than a certain sum; and if they
are subjected to the obligation of an immediate and unconditional
payment of such bank notes as soon as presented, their trade may, with
safety to the public, be rendered in all other respects perfectly
free. The late multiplication of banking companies in both parts of
the united kingdom, an event by which many people have been much
alarmed, instead of diminishing, increases the security of the public.
It obliges all of them to be more circumspect in their conduct, and,
by not extending their currency beyond its due proportion to their
cash, to guard themselves against those malicious runs, which the
rivalship of so many competitors is always ready to bring upon them.
It restrains the circulation of each particular company within a
narrower circle, and reduces their circulating notes to a smaller
number. By dividing the whole circulation into a greater number of
parts, the failure of any one company, an accident which, in the
course of things, must sometimes happen, becomes of less consequence
to the public. This free competition, too, obliges all bankers to be
more liberal in their dealings with their customers, lest their rivals
should carry them away. In general, if any branch of trade, or any
division of labour, be advantageous to the public, the freer and more
general the competition, it will always be the more so.




CHAPTER III.

OF THE ACCUMULATION OF CAPITAL, OR OF PRODUCTIVE AND UNPRODUCTIVE
LABOUR.

There is one sort of labour which adds to the value of the subject
upon which it is bestowed; there is another which has no such effect.
The former as it produces a value, may be called productive, the
latter, unproductive labour. {Some French authors of great learning
and ingenuity have used those words in a different sense. In the last
chapter of the fourth book, I shall endeavour to shew that their sense
is an improper one.} Thus the labour of a manufacturer adds generally
to the value of the materials which he works upon, that of his own
maintenance, and of his master's profit. The labour of a menial
servant, on the contrary, adds to the value of nothing. Though the
manufacturer has his wages advanced to him by his master, he in
reality costs him no expense, the value of those wages being generally
restored, together with a profit, in the improved value of the subject
upon which his labour is bestowed. But the maintenance of a menial
servant never is restored. A man grows rich by employing a multitude
of manufacturers; he grows poor by maintaining a multitude or menial
servants. The labour of the latter, however, has its value, and
deserves its reward as well as that of the former. But the labour of
the manufacturer fixes and realizes itself in some particular subject
or vendible commodity, which lasts for some time at least after that
labour is past. It is, as it were, a certain quantity of labour
stocked and stored up, to be employed, if necessary, upon some other
occasion. That subject, or, what is the same thing, the price of that
subject, can afterwards, if necessary, put into motion a quantity of
labour equal to that which had originally produced it. The labour of
the menial servant, on the contrary, does not fix or realize itself in
any particular subject or vendible commodity. His services generally
perish in the very instant of their performance, and seldom leave any
trace of value behind them, for which an equal quantity of service
could afterwards be procured.

The labour of some of the most respectable orders in the society is,
like that of menial servants, unproductive of any value, and does not
fix or realize itself in any permanent subject, or vendible commodity,
which endures after that labour is past, and for which an equal
quantity of labour could afterwards be procured. The sovereign, for
example, with all the officers both of justice and war who serve under
him, the whole army and navy, are unproductive labourers. They are the
servants of the public, and are maintained by a part of the annual
produce of the industry of other people. Their service, how
honourable, how useful, or how necessary soever, produces nothing for
which an equal quantity of service can afterwards be procured. The
protection, security, and defence, of the commonwealth, the effect of
their labour this year, will not purchase its protection, security,
and defence, for the year to come. In the same class must be ranked,
some both of the gravest and most important, and some of the most
frivolous professions; churchmen, lawyers, physicians, men of letters
of all kinds; players, buffoons, musicians, opera-singers,
opera-dancers, etc. The labour of the meanest of these has a certain
value, regulated by the very same principles which regulate that of
every other sort of labour; and that of the noblest and most useful,
produces nothing which could afterwards purchase or procure an equal
quantity of labour. Like the declamation of the actor, the harangue of
the orator, or the tune of the musician, the work of all of them
perishes in the very instant of its production.

Both productive and unproductive labourers, and those who do not
labour at all, are all equally maintained by the annual produce of the
land and labour of the country. This produce, how great soever, can
never be infinite, but must have certain limits. According, therefore,
as a smaller or greater proportion of it is in any one year employed
in maintaining unproductive hands, the more in the one case, and the
less in the other, will remain for the productive, and the next year's
produce will be greater or smaller accordingly; the whole annual
produce, if we except the spontaneous productions of the earth, being
the effect of productive labour.

Though the whole annual produce of the land and labour of every
country is no doubt ultimately destined for supplying the consumption
of its inhabitants, and for procuring a revenue to them; yet when it
first comes either from the ground, or from the hands of the
productive labourers, it naturally divides itself into two parts. One
of them, and frequently the largest, is, in the first place, destined
for replacing a capital, or for renewing the provisions, materials,
and finished work, which had been withdrawn from a capital; the other
for constituting a revenue either to the owner of this capital, as the
profit of his stock, or to some other person, as the rent of his land.
Thus, of the produce of land, one part replaces the capital of the
farmer; the other pays his profit and the rent of the landlord; and
thus constitutes a revenue both to the owner of this capital, as the
profits of his stock, and to some other person as the rent of his
land. Of the produce of a great manufactory, in the same manner, one
part, and that always the largest, replaces the capital of the
undertaker of the work; the other pays his profit, and thus
constitutes a revenue to the owner of this capital.

That part of the annual produce of the land and labour of any country
which replaces a capital, never is immediately employed to maintain
any but productive hands. It pays the wages of productive labour only.
That which is immediately destined for constituting a revenue, either
as profit or as rent, may maintain indifferently either productive or
unproductive hands.

Whatever part of his stock a man employs as a capital, he always
expects it to be replaced to him with a profit. He employs it,
therefore, in maintaining productive hands only; and after having
served in the function of a capital to him, it constitutes a revenue
to them. Whenever he employs any part of it in maintaining
unproductive hands of any kind, that part is from that moment
withdrawn from his capital, and placed in his stock reserved for
immediate consumption.

Unproductive labourers, and those who do not labour at all, are all
maintained by revenue; either, first, by that part of the annual
produce which is originally destined for constituting a revenue to
some particular persons, either as the rent of land, or as the profits
of stock; or, secondly, by that part which, though originally destined
for replacing a capital, and for maintaining productive labourers
only, yet when it comes into their hands, whatever part of it is over
and above their necessary subsistence, may be employed in maintaining
indifferently either productive or unproductive hands. Thus, not only
the great landlord or the rich merchant, but even the common workman,
if his wages are considerable, may maintain a menial servant; or he
may sometimes go to a play or a puppet-show, and so contribute his
share towards maintaining one set of unproductive labourers; or he may
pay some taxes, and thus help to maintain another set, more honourable
and useful, indeed, but equally unproductive. No part of the annual
produce, however, which had been originally destined to replace a
capital, is ever directed towards maintaining unproductive hands, till
after it has put into motion its full complement of productive labour,
or all that it could put into motion in the way in which it was
employed. The workman must have earned his wages by work done, before
he can employ any part of them in this manner. That part, too, is
generally but a small one. It is his spare revenue only, of which
productive labourers have seldom a great deal. They generally have
some, however; and in the payment of taxes, the greatness of their
number may compensate, in some measure, the smallness of their
contribution. The rent of land and the profits of stock are
everywhere, therefore, the principal sources from which unproductive
hands derive their subsistence. These are the two sorts of revenue of
which the owners have generally most to spare. They might both
maintain indifferently, either productive or unproductive hands. They
seem, however, to have some predilection for the latter. The expense
of a great lord feeds generally more idle than industrious people The
rich merchant, though with his capital he maintains industrious people
only, yet by his expense, that is, by the employment of his revenue,
he feeds commonly the very same sort as the great lord.

The proportion, therefore, between the productive and unproductive
hands, depends very much in every country upon the proportion between
that part of the annual produce, which, as soon as it comes either
from the ground, or from the hands of the productive labourers, is
destined for replacing a capital, and that which is destined for
constituting a revenue, either as rent or as profit. This proportion
is very different in rich from what it is in poor countries.

Thus, at present, in the opulent countries of Europe, a very large,
frequently the largest, portion of the produce of the land, is
destined for replacing the capital of the rich and independent farmer;
the other for paying his profits, and the rent of the landlord. But
anciently, during the prevalency of the feudal government, a very
small portion of the produce was sufficient to replace the capital
employed in cultivation. It consisted commonly in a few wretched
cattle, maintained altogether by the spontaneous produce of
uncultivated land, and which might, therefore, be considered as a part
of that spontaneous produce. It generally, too, belonged to the
landlord, and was by him advanced to the occupiers of the land. All
the rest of the produce properly belonged to him too, either as rent
for his land, or as profit upon this paltry capital. The occupiers of
land were generally bond-men, whose persons and effects were equally
his property. Those who were not bond-men were tenants at will; and
though the rent which they paid was often nominally little more than a
quit-rent, it really amounted to the whole produce of the land. Their
lord could at all times command their labour in peace and their
service in war. Though they lived at a distance from his house, they
were equally dependent upon him as his retainers who lived in it. But
the whole produce of the land undoubtedly belongs to him, who can
dispose of the labour and service of all those whom it maintains. In
the present state of Europe, the share of the landlord seldom exceeds
a third, sometimes not a fourth part of the whole produce of the land.
The rent of land, however, in all the improved parts of the country,
has been tripled and quadrupled since those ancient times; and this
third or fourth part of the annual produce is, it seems, three or four
times greater than the whole had been before. In the progress of
improvement, rent, though it increases in proportion to the extent,
diminishes in proportion to the produce of the land.

In the opulent countries of Europe, great capitals are at present
employed in trade and manufactures. In the ancient state, the little
trade that was stirring, and the few homely and coarse manufactures
that were carried on, required but very small capitals. These,
however, must have yielded very large profits. The rate of interest
was nowhere less than ten per cent. and their profits must have been
sufficient to afford this great interest. At present, the rate of
interest, in the improved parts of Europe, is nowhere higher than six
per cent.; and in some of the most improved, it is so low as four,
three, and two per cent. Though that part of the revenue of the
inhabitants which is derived from the profits of stock, is always much
greater in rich than in poor countries, it is because the stock is
much greater; in proportion to the stock, the profits are generally
much less.

That part of the annual produce, therefore, which, as soon as it comes
either from the ground, or from the hands of the productive labourers,
is destined for replacing a capital, is not only much greater in rich
than in poor countries, but bears a much greater proportion to that
which is immediately destined for constituting a revenue either as
rent or as profit. The funds destined for the maintenance of
productive labour are not only much greater in the former than in the
latter, but bear a much greater proportion to those which, though they
may be employed to maintain either productive or unproductive hands,
have generally a predilection for the latter.

The proportion between those different funds necessarily determines in
every country the general character of the inhabitants as to industry
or idleness. We are more industrious than our forefathers, because, in
the present times, the funds destined for the maintenance of industry
are much greater in proportion to those which are likely to be
employed in the maintenance of idleness, than they were two or three
centuries ago. Our ancestors were idle for want of a sufficient
encouragement to industry. It is better, says the proverb, to play for
nothing, than to work for nothing. In mercantile and manufacturing
towns, where the inferior ranks of people are chiefly maintained by
the employment of capital, they are in general industrious, sober, and
thriving; as in many English, and in most Dutch towns. In those towns
which are principally supported by the constant or occasional
residence of a court, and in which the inferior ranks of people are
chiefly maintained by the spending of revenue, they are in general
idle, dissolute, and poor; as at Rome, Versailles, Compeigne, and
Fontainbleau. If you except Rouen and Bourdeaux, there is little trade
or industry in any of the parliament towns of France; and the inferior
ranks of people, being chiefly maintained by the expense of the
members of the courts of justice, and of those who come to plead
before them, are in general idle and poor. The great trade of Rouen
and Bourdeaux seems to be altogether the effect of their situation.
Rouen is necessarily the entrepot of almost all the goods which are
brought either from foreign countries, or from the maritime provinces
of France, for the consumption of the great city of Paris. Bourdeaux
is, in the same manner, the entrepot of the wines which grow upon the
banks of the Garronne, and of the rivers which run into it, one of the
richest wine countries in the world, and which seems to produce the
wine fittest for exportation, or best suited to the taste of foreign
nations. Such advantageous situations necessarily attract a great
capital by the great employment which they afford it; and the
employment of this capital is the cause of the industry of those two
cities. In the other parliament towns of France, very little more
capital seems to be employed than what is necessary for supplying
their own consumption; that is, little more than the smallest capital
which can be employed in them. The same thing may be said of Paris,
Madrid, and Vienna. Of those three cities, Paris is by far the most
industrious, but Paris itself is the principal market of all the
manufactures established at Paris, and its own consumption is the
principal object of all the trade which it carries on. London, Lisbon,
and Copenhagen, are, perhaps, the only three cities in Europe, which
are both the constant residence of a court, and can at the same time
be considered as trading cities, or as cities which trade not only for
their own consumption, but for that of other cities and countries. The
situation of all the three is extremely advantageous, and naturally
fits them to be the entrepots of a great part of the goods destined
for the consumption of distant places. In a city where a great revenue
is spent, to employ with advantage a capital for any other purpose
than for supplying the consumption of that city, is probably more
difficult than in one in which the inferior ranks of people have no
other maintenance but what they derive from the employment of such a
capital. The idleness of the greater part of the people who are
maintained by the expense of revenue, corrupts, it is probable, the
industry of those who ought to be maintained by the employment of
capital, and renders it less advantageous to employ a capital there
than in other places. There was little trade or industry in Edinburgh
before the Union. When the Scotch parliament was no longer to be
assembled in it, when it ceased to be the necessary residence of the
principal nobility and gentry of Scotland, it became a city of some
trade and industry. It still continues, however, to be the residence
of the principal courts of justice in Scotland, of the boards of
customs and excise, etc. A considerable revenue, therefore, still
continues to be spent in it. In trade and industry, it is much
inferior to Glasgow, of which the inhabitants are chiefly maintained
by the employment of capital. The inhabitants of a large village, it
has sometimes been observed, after having made considerable progress
in manufactures, have become idle and poor, in consequence of a great
lord's having taken up his residence in their neighbourhood.

The proportion between capital and revenue, therefore, seems
everywhere to regulate the proportion between industry and idleness
Wherever capital predominates, industry prevails; wherever revenue,
idleness. Every increase or diminution of capital, therefore,
naturally tends to increase or diminish the real quantity of industry,
the number of productive hands, and consequently the exchangeable
value of the annual produce of the land and labour of the country, the
real wealth and revenue of all its inhabitants.

Capitals are increased by parsimony, and diminished by prodigality and
misconduct.

Whatever a person saves from his revenue he adds to his capital, and
either employs it himself in maintaining an additional number of
productive hands, or enables some other person to do so, by lending it
to him for an interest, that is, for a share of the profits. As the
capital of an individual can be increased only by what he saves from
his annual revenue or his annual gains, so the capital of a society,
which is the same with that of all the individuals who compose it, can
be increased only in the same manner.

Parsimony, and not industry, is the immediate cause of the increase of
capital. Industry, indeed, provides the subject which parsimony
accumulates; but whatever industry might acquire, if parsimony did not
save and store up, the capital would never be the greater.

Parsimony, by increasing the fund which is destined for the
maintenance of productive hands, tends to increase the number of those
hands whose labour adds to the value of the subject upon winch it is
bestowed. It tends, therefore, to increase the exchangeable value of
the annual produce of the land and labour of the country. It puts into
motion an additional quantity of industry, which gives an additional
value to the annual produce.

What is annually saved, is as regularly consumed as what is annually
spent, and nearly in the same time too: but it is consumed by a
different set of people. That portion of his revenue which a rich man
annually spends, is, in most cases, consumed by idle guests and menial
servants, who leave nothing behind them in return for their
consumption. That portion which he annually saves, as, for the sake of
the profit, it is immediately employed as a capital, is consumed in
the same manner, and nearly in the same time too, but by a different
set of people: by labourers, manufacturers, and artificers, who
reproduce, with a profit, the value of their annual consumption. His
revenue, we shall suppose, is paid him in money. Had he spent the
whole, the food, clothing, and lodging, which the whole could have
purchased, would have been distributed among the former set of people.
By saving a part of it, as that part is, for the sake of the profit,
immediately employed as a capital, either by himself or by some other
person, the food, clothing, and lodging, which may be purchased with
it, are necessarily reserved for the latter. The consumption is the
same, but the consumers are different.

By what a frugal man annually saves, he not only affords maintenance
to an additional number of productive hands, for that of the ensuing
year, but like the founder of a public work-house he establishes, as
it were, a perpetual fund for the maintenance of an equal number in
all times to come. The perpetual allotment and destination of this
fund, indeed, is not always guarded by any positive law, by any
trust-right or deed of mortmain. It is always guarded, however, by a
very powerful principle, the plain and evident interest of every
individual to whom any share of it shall ever belong. No part of it
can ever afterwards be employed to maintain any but productive hands,
without an evident loss to the person who thus perverts it from its
proper destination.

The prodigal perverts it in this manner: By not confining his expense
within his income, he encroaches upon his capital. Like him who
perverts the revenues of some pious foundation to profane purposes, he
pays the wages of idleness with those funds which the frugality of his
forefathers had, as it were, consecrated to the maintenance of
industry. By diminishing the funds destined for the employment of
productive labour, he necessarily diminishes, so far as it depends
upon him, the quantity of that labour which adds a value to the
subject upon which it is bestowed, and, consequently, the value of the
annual produce of the land and labour of the whole country, the real
wealth and revenue of its inhabitants. If the prodigality of some were
not compensated by the frugality of others, the conduct of every
prodigal, by feeding the idle with the bread of the industrious, would
tend not only to beggar himself, but to impoverish his country.

Though the expense of the prodigal should be altogether in home made,
and no part of it in foreign commodities, its effect upon the
productive funds of the society would still be the same. Every year
there would still be a certain quantity of food and clothing, which
ought to have maintained productive, employed in maintaining
unproductive hands. Every year, therefore, there would still be some
diminution in what would otherwise have been the value of the annual
produce of the land and labour of the country.

This expense, it may be said, indeed, not being in foreign goods, and
not occasioning any exportation of gold and silver, the same quantity
of money would remain in the country as before. But if the quantity of
food and clothing which were thus consumed by unproductive, had been
distributed among productive hands, they would have reproduced,
together with a profit, the full value of their consumption. The same
quantity of money would, in this case, equally have remained in the
country, and there would, besides, have been a reproduction of an
equal value of consumable goods. There would have been two values
instead of one.

The same quantity of money, besides, can not long remain in any
country in which the value of the annual produce diminishes. The sole
use of money is to circulate consumable goods. By means of it,
provisions, materials, and finished work, are bought and sold, and
distributed to their proper consumers. The quantity of money,
therefore, which can be annually employed in any country, must be
determined by the value of the consumable goods annually circulated
within it. These must consist, either in the immediate produce of the
land and labour of the country itself, or in something which had been
purchased with some part of that produce. Their value, therefore, must
diminish as the value of that produce diminishes, and along with it
the quantity of money which can be employed in circulating them. But
the money which, by this annual diminution of produce, is annually
thrown out of domestic circulation, will not be allowed to lie idle.
The interest of whoever possesses it requires that it should be
employed; but having no employment at home, it will, in spite of all
laws and prohibitions, be sent abroad, and employed in purchasing
consumable goods, which may be of some use at home. Its annual
exportation will, in this manner, continue for some time to add
something to the annual consumption of the country beyond the value of
its own annual produce. What in the days of its prosperity had been
saved from that annual produce, and employed in purchasing gold and
silver, will contribute, for some little time, to support its
consumption in adversity. The exportation of gold and silver is, in
this case, not the cause, but the effect of its declension, and may
even, for some little time, alleviate the misery of that declension.

The quantity of money, on the contrary, must in every country
naturally increase as the value of the annual produce increases. The
value of the consumable goods annually circulated within the society
being greater, will require a greater quantity of money to circulate
them. A part of the increased produce, therefore, will naturally be
employed in purchasing, wherever it is to be had, the additional
quantity of gold and silver necessary for circulating the rest. The
increase of those metals will, in this case, be the effect, not the
cause, of the public prosperity. Gold and silver are purchased
everywhere in the same manner. The food, clothing, and lodging, the
revenue and maintenance, of all those whose labour or stock is
employed in bringing them from the mine to the market, is the price
paid for them in Peru as well as in England. The country which has
this price to pay, will never belong without the quantity of those
metals which it has occasion for; and no country will ever long retain
a quantity which it has no occasion for.

Whatever, therefore, we may imagine the real wealth and revenue of a
country to consist in, whether in the value of the annual produce of
its land and labour, as plain reason seems to dictate, or in the
quantity of the precious metals which circulate within it, as vulgar
prejudices suppose; in either view of the matter, every prodigal
appears to be a public enemy, and every frugal man a public
benefactor.

The effects of misconduct are often the same as those of prodigality.
Every injudicious and unsuccessful project in agriculture, mines,
fisheries, trade, or manufactures, tends in the same manner to
diminish the funds destined for the maintenance of productive labour.
In every such project, though the capital is consumed by productive
hands only, yet as, by the injudicious manner in which they are
employed, they do not reproduce the full value of their consumption,
there must always be some diminution in what would otherwise have been
the productive funds of the society.

It can seldom happen, indeed, that the circumstances of a great nation
can be much affected either by the prodigality or misconduct of
individuals; the profusion or imprudence of some being always more
than compensated by the frugality and good conduct of others.

With regard to profusion, the principle which prompts to expense is
the passion for present enjoyment; which, though sometimes violent and
very difficult to be restrained, is in general only momentary and
occasional. But the principle which prompts to save, is the desire of
bettering our condition; a desire which, though generally calm and
dispassionate, comes with us from the womb, and never leaves us till
we go into the grave. In the whole interval which separates those two
moments, there is scarce, perhaps, a single instance, in which any man
is so perfectly and completely satisfied with his situation, as to be
without any wish of alteration or improvement of any kind. An
augmentation of fortune is the means by which the greater part of men
propose and wish to better their condition. It is the means the most
vulgar and the most obvious; and the most likely way of augmenting
their fortune, is to save and accumulate some part of what they
acquire, either regularly and annually, or upon some extraordinary
occasion. Though the principle of expense, therefore, prevails in
almost all men upon some occasions, and in some men upon almost all
occasions; yet in the greater part of men, taking the whole course of
their life at an average, the principle of frugality seems not only to
predominate, but to predominate very greatly.

With regard to misconduct, the number of prudent and successful
undertakings is everywhere much greater than that of injudicious and
unsuccessful ones. After all our complaints of the frequency of
bankruptcies, the unhappy men who fall into this misfortune, make but
a very small part of the whole number engaged in trade, and all other
sorts of business; not much more, perhaps, than one in a thousand.
Bankruptcy is, perhaps, the greatest and most humiliating calamity
which can befal an innocent man. The greater part of men, therefore,
are sufficiently careful to avoid it. Some, indeed, do not avoid it;
as some do not avoid the gallows.

Great nations are never impoverished by private, though they sometimes
are by public prodigality and misconduct. The whole, or almost the
whole public revenue is, in most countries, employed in maintaining
unproductive hands. Such are the people who compose a numerous and
splendid court, a great ecclesiastical establishment, great fleets and
armies, who in time of peace produce nothing, and in time of war
acquire nothing which can compensate the expense of maintaining them,
even while the war lasts. Such people, as they themselves produce
nothing, are all maintained by the produce of other men's labour. When
multiplied, therefore, to an unnecessary number, they may in a
particular year consume so great a share of this produce, as not to
leave a sufficiency for maintaining the productive labourers, who
should reproduce it next year. The next year's produce, therefore,
will be less than that of the foregoing; and if the same disorder
should continue, that of the third year will be still less than that
of the second. Those unproductive hands who should be maintained by a
part only of the spare revenue of the people, may consume so great a
share of their whole revenue, and thereby oblige so great a number to
encroach upon their capitals, upon the funds destined for the
maintenance of productive labour, that all the frugality and good
conduct of individuals may not be able to compensate the waste and
degradation of produce occasioned by this violent and forced
encroachment.

This frugality and good conduct, however, is, upon most occasions, it
appears from experience, sufficient to compensate, not only the
private prodigality and misconduct of individuals, but the public
extravagance of government. The uniform, constant, and uninterrupted
effort of every man to better his condition, the principle from which
public and national, as well as private opulence is originally
derived,is frequently powerful enough to maintain the natural progress
of things towards improvement, in spite both of the extravagance of
government, and of the greatest errors of administration. Like the
unknown principle of animal life, it frequently restores health and
vigour to the constitution, in spite not only of the disease, but of
the absurd prescriptions of the doctor.

The annual produce of the land and labour of any nation can be
increased in its value by no other means, but by increasing either the
number of its productive labourers, or the productive powers of those
labourers who had before been employed. The number of its productive
labourers, it is evident, can never be much increased, but in
consequence of an increase of capital, or of the funds destined for
maintaining them. The productive powers of the same number of
labourers cannot be increased, but in consequence either of some
addition and improvement to those machines and instruments which
facilitate and abridge labour, or of more proper division and
distribution of employment. In either case, an additional capital is
almost always required. It is by means of an additional capital only,
that the undertaker of any work can either provide his workmen with
better machinery, or make a more proper distribution of employment
among them. When the work to be done consists of a number of parts, to
keep every man constantly employed in one way, requires a much greater
capital than where every man is occasionally employed in every
different part of the work. When we compare, therefore, the state of a
nation at two different periods, and find that the annual produce of
its land and labour is evidently greater at the latter than at the
former, that its lands are better cultivated, its manufactures more
numerous and more flourishing, and its trade more extensive; we may be
assured that its capital must have increased during the interval
between those two periods, and that more must have been added to it by
the good conduct of some, than had been taken from it either by the
private misconduct of others, or by the public extravagance of
government. But we shall find this to have been the case of almost all
nations, in all tolerably quiet and peaceable times, even of those who
have not enjoyed the most prudent and parsimonious governments. To
form a right judgment of it, indeed, we must compare the state of the
country at periods somewhat distant from one another. The progress is
frequently so gradual, that, at near periods, the improvement is not
only not sensible, but, from the declension either of certain branches
of industry, or of certain districts of the country, things which
sometimes happen, though the country in general is in great
prosperity, there frequently arises a suspicion, that the riches and
industry of the whole are decaying.

The annual produce of the land and labour of England, for example, is
certainly much greater than it was a little more than a century ago,
at the restoration of Charles II. Though at present few people, I
believe, doubt of this, yet during this period five years have seldom
passed away, in which some book or pamphlet has not been published,
written, too, with such abilities as to gain some authority with the
public, and pretending to demonstrate that the wealth of the nation
was fast declining; that the country was depopulated, agriculture
neglected, manufactures decaying, and trade undone. Nor have these
publications been all party pamphlets, the wretched offspring of
falsehood and venality. Many of them have been written by very candid
and very intelligent people, who wrote nothing but what they believed,
and for no other reason but because they believed it.

The annual produce of the land and labour of England, again, was
certainly much greater at the Restoration than we can suppose it to
have been about a hundred years before, at the accession of Elizabeth.
At this period, too, we have all reason to believe, the country was
much more advanced in improvement, than it had been about a century
before, towards the close of the dissensions between the houses of
York and Lancaster. Even then it was, probably, in a better condition
than it had been at the Norman conquest: and at the Norman conquest,
than during the confusion of the Saxon heptarchy. Even at this early
period, it was certainly a more improved country than at the invasion
of Julius Caesar, when its inhabitants were nearly in the same state
with the savages in North America.

In each of those periods, however, there was not only much private and
public profusion, many expensive and unnecessary wars, great
perversion of the annual produce from maintaining productive to
maintain unproductive hands; but sometimes, in the confusion of civil
discord, such absolute waste and destruction of stock, as might be
supposed, not only to retard, as it certainly did, the natural
accumulation of riches, but to have left the country, at the end of
the period, poorer than at the beginning. Thus, in the happiest and
most fortunate period of them all, that which has passed since the
Restoration, how many disorders and misfortunes have occurred, which,
could they have been foreseen, not only the impoverishment, but the
total ruin of the country would have been expected from them? The fire
and the plague of London, the two Dutch wars, the disorders of the
revolution, the war in Ireland, the four expensive French wars of
1688, 1701, 1742, and 1756, together with the two rebellions of 1715
and 1745. In the course of the four French wars, the nation has
contracted more than £145,000,000 of debt, over and above all the
other extraordinary annual expense which they occasioned; so that the
whole cannot be computed at less than £200,000,000. So great a share
of the annual produce of the land and labour of the country, has,
since the Revolution, been employed upon different occasions, in
maintaining an extraordinary number of unproductive hands. But had not
those wars given this particular direction to so large a capital, the
greater part of it would naturally have been employed in maintaining
productive hands, whose labour would have replaced, with a profit, the
whole value of their consumption. The value of the annual produce of
the land and labour of the country would have been considerably
increased by it every year, and every years increase would have
augmented still more that of the following year. More houses would
have been built, more lands would have been improved, and those which
had been improved before would have been better cultivated; more
manufactures would have been established, and those which had been
established before would have been more extended; and to what height
the real wealth and revenue of the country might by this time have
been raised, it is not perhaps very easy even to imagine.

But though the profusion of government must undoubtedly have retarded
the natural progress of England towards wealth and improvement, it has
not been able to stop it. The annual produce of its land and labour is
undoubtedly much greater at present than it was either at the
Restoration or at the Revolution. The capital, therefore, annually
employed in cultivating this land, and in maintaining this labour,
must likewise be much greater. In the midst of all the exactions of
government, this capital has been silently and gradually accumulated
by the private frugality and good conduct of individuals, by their
universal, continual, and uninterrupted effort to better their own
condition. It is this effort, protected by law, and allowed by liberty
to exert itself in the manner that is most advantageous, which has
maintained the progress of England towards opulence and improvement in
almost all former times, and which, it is to be hoped, will do so in
all future times. England, however, as it has never been blessed with
a very parsimonious government, so parsimony has at no time been the
characteristic virtue of its inhabitants. It is the highest
impertinence and presumption, therefore, in kings and ministers to
pretend to watch over the economy of private people, and to restrain
their expense, either by sumptuary laws, or by prohibiting the
importation of foreign luxuries. They are themselves always, and
without any exception, the greatest spendthrifts in the society. Let
them look well after their own expense, and they may safely trust
private people with theirs. If their own extravagance does not ruin
the state, that of the subject never will.

As frugality increases, and prodigality diminishes, the public
capital, so the conduct of those whose expense just equals their
revenue, without either accumulating or encroaching, neither increases
nor diminishes it. Some modes of expense, however, seem to contribute
more to the growth of public opulence than others.

The revenue of an individual may be spent, either in things which are
consumed immediately, and in which one day's expense can neither
alleviate nor support that of another; or it may be spent in things
mere durable, which can therefore be accumulated, and in which every
day's expense may, as he chooses, either alleviate, or support and
heighten, the effect of that of the following day. A man of fortune,
for example, may either spend his revenue in a profuse and sumptuous
table, and in maintaining a great number of menial servants, and a
multitude of dogs and horses; or, contenting himself with a frugal
table, and few attendants, he may lay out the greater part of it in
adorning his house or his country villa, in useful or ornamental
buildings, in useful or ornamental furniture, in collecting books,
statues, pictures; or in things more frivolous, jewels, baubles,
ingenious trinkets of different kinds; or, what is most trifling of
all, in amassing a great wardrobe of fine clothes, like the favourite
and minister of a great prince who died a few years ago. Were two men
of equal fortune to spend their revenue, the one chiefly in the one
way, the other in the other, the magnificence of the person whose
expense had been chiefly in durable commodities, would be continually
increasing, every day's expense contributing something to support and
heighten the effect of that of the following day; that of the other,
on the contrary, would be no greater at the end of the period than at
the beginning. The former too would, at the end of the period, be the
richer man of the two. He would have a stock of goods of some kind or
other, which, though it might not be worth all that it cost, would
always be worth something. No trace or vestige of the expense of the
latter would remain, and the effects of ten or twenty years' profusion
would be as completely annihilated as if they had never existed.

As the one mode of expense is more favourable than the other to the
opulence of an individual, so is it likewise to that of a nation. The
houses, the furniture, the clothing of the rich, in a little time,
become useful to the inferior and middling ranks of people. They are
able to purchase them when their superiors grow weary of them; and the
general accommodation of the whole people is thus gradually improved,
when this mode of expense becomes universal among men of fortune. In
countries which have long been rich, you will frequently find the
inferior ranks of people in possession both of houses and furniture
perfectly good and entire, but of which neither the one could have
been built, nor the other have been made for their use. What was
formerly a seat of the family of Seymour, is now an inn upon the Bath
road. The marriage-bed of James I. of Great Britain, which his queen
brought with her from Denmark, as a present fit for a sovereign to
make to a sovereign, was, a few years ago, the ornament of an alehouse
at Dunfermline. In some ancient cities, which either have been long
stationary, or have gone somewhat to decay, you will sometimes scarce
find a single house which could have been built for its present
inhabitants. If you go into those houses, too, you will frequently
find many excellent, though antiquated pieces of furniture, which are
still very fit for use, and which could as little have been made for
them. Noble palaces, magnificent villas, great collections of books,
statues, pictures, and other curiosities, are frequently both an
ornament and an honour, not only to the neighbourhood, but to the
whole country to which they belong. Versailles is an ornament and an
honour to France, Stowe and Wilton to England. Italy still continues
to command some sort of veneration, by the number of monuments of this
kind which it possesses, though the wealth which produced them has
decayed, and though the genius which planned them seems to be
extinguished, perhaps from not having the same employment.

The expense, too, which is laid out in durable commodities, is
favourable not only to accumulation, but to frugality. If a person
should at any time exceed in it, he can easily reform without exposing
himself to the censure of the public. To reduce very much the number
of his servants, to reform his table from great profusion to great
frugality, to lay down his equipage after he has once set it up, are
changes which cannot escape the observation of his neighbours, and
which are supposed to imply some acknowledgment of preceding bad
conduct. Few, therefore, of those who have once been so unfortunate as
to launch out too far into this sort of expense, have afterwards the
courage to reform, till ruin and bankruptcy oblige them. But if a
person has, at any time, been at too great an expense in building, in
furniture, in books, or pictures, no imprudence can be inferred from
his changing his conduct. These are things in which further expense is
frequently rendered unnecessary by former expense; and when a person
stops short, he appears to do so, not because he has exceeded his
fortune, but because he has satisfied his fancy.

The expense, besides, that is laid out in durable commodities, gives
maintenance, commonly, to a greater number of people than that which
is employed in the most profuse hospitality. Of two or three hundred
weight of provisions, which may sometimes be served up at a great
festival, one half, perhaps, is thrown to the dunghill, and there is
always a great deal wasted and abused. But if the expense of this
entertainment had been employed in setting to work masons, carpenters,
upholsterers, mechanics, etc. a quantity of provisions of equal value
would have been distributed among a still greater number of people,
who would have bought them in pennyworths and pound weights, and not
have lost or thrown away a single ounce of them. In the one way,
besides, this expense maintains productive, in the other unproductive
hands. In the one way, therefore, it increases, in the other it does
not increase the exchangeable value of the annual produce of the land
and labour of the country.

I would not, however, by all this, be understood to mean, that the one
species of expense always betokens a more liberal or generous spirit
than the other. When a man of fortune spends his revenue chiefly in
hospitality, he shares the greater part of it with his friends and
companions; but when he employs it in purchasing such durable
commodities, he often spends the whole upon his own person, and gives
nothing to any body without an equivalent. The latter species of
expense, therefore, especially when directed towards frivolous
objects, the little ornaments of dress and furniture, jewels,
trinkets, gew-gaws, frequently indicates, not only a trifling, but a
base and selfish disposition. All that I mean is, that the one sort of
expense, as it always occasions some accumulation of valuable
commodities, as it is more favourable to private frugality, and,
consequently, to the increase of the public capital, and as it
maintains productive rather than unproductive hands, conduces more
than the other to the growth of public opulence.




CHAPTER IV.

OF STOCK LENT AT INTEREST.

The stock which is lent at interest is always considered as a capital
by the lender. He expects that in due time it is to be restored to
him, and that, in the mean time, the borrower is to pay him a certain
annual rent for the use of it. The borrower may use it either as a
capital, or as a stock reserved for immediate consumption. If he uses
it as a capital, he employs it in the maintenance of productive
labourers, who reproduce the value, with a profit. He can, in this
case, both restore the capital, and pay the interest, without
alienating or encroaching upon any other source of revenue. If he uses
it as a stock reserved for immediate consumption, he acts the part of
a prodigal, and dissipates, in the maintenance of the idle, what was
destined for the support of the industrious. He can, in this case,
neither restore the capital nor pay the interest, without either
alienating or encroaching upon some other source of revenue, such as
the property or the rent of land.

The stock which is lent at interest is, no doubt, occasionally
employed in both these ways, but in the former much more frequently
than in the latter. The man who borrows in order to spend will soon be
ruined, and he who lends to him will generally have occasion to repent
of his folly. To borrow or to lend for such a purpose, therefore, is,
in all cases, where gross usury is out of the question, contrary to
the interest of both parties; and though it no doubt happens
sometimes, that people do both the one and the other, yet, from the
regard that all men have for their own interest, we may be assured,
that it cannot happen so very frequently as we are sometimes apt to
imagine. Ask any rich man of common prudence, to which of the two
sorts of people he has lent the greater part of his stock, to those
who he thinks will employ it profitably, or to those who will spend it
idly, and he will laugh at you for proposing the question. Even among
borrowers, therefore, not the people in the world most famous for
frugality, the number of the frugal and industrious surpasses
considerably that of the prodigal and idle.

The only people to whom stock is commonly lent, without their being
expected to make any very profitable use of it, are country gentlemen,
who borrow upon mortgage. Even they scarce ever borrow merely to
spend. What they borrow, one may say, is commonly spent before they
borrow it. They have generally consumed so great a quantity of goods,
advanced to them upon credit by shop-keepers and tradesmen, that they
find it necessary to borrow at interest, in order to pay the debt. The
capital borrowed replaces the capitals of those shop-keepers and
tradesmen which the country gentlemen could not have replaced from the
rents of their estates. It is not properly borrowed in order to be
spent, but in order to replace a capital which had been spent before.

Almost all loans at interest are made in money, either of paper, or of
gold and silver; but what the borrower really wants, and what the
lender readily supplies him with, is not the money, but the money's
worth, or the goods which it can purchase. If he wants it as a stock
for immediate consumption, it is those goods only which he can place
in that stock. If he wants it as a capital for employing industry, it
is from those goods only that the industrious can be furnished with
the tools, materials, and maintenance necessary for carrying on their
work. By means of the loan, the lender, as it were, assigns to the
borrower his right to a certain portion of the annual produce of the
land and labour of the country, to be employed as the borrower
pleases.

The quantity of stock, therefore, or, as it is commonly expressed, of
money, which can be lent at interest in any country, is not regulated
by the value of the money, whether paper or coin, which serves as the
instrument of the different loans made in that country, but by the
value of that part of the annual produce, which, as soon as it comes
either from the ground, or from the hands of the productive labourers,
is destined, not only for replacing a capital, but such a capital as
the owner does not care to be at the trouble of employing himself. As
such capitals are commonly lent out and paid back in money, they
constitute what is called the monied interest. It is distinct, not
only from the landed, but from the trading and manufacturing
interests, as in these last the owners themselves employ their own
capitals. Even in the monied interest, however, the money is, as it
were, but the deed of assignment, which conveys from one hand to
another those capitals which the owners do not care to employ
themselves. Those capitals may be greater, in almost any proportion,
than the amount of the money which serves as the instrument of their
conveyance; the same pieces of money successively serving for many
different loans, as well as for many different purchases. A, for
example, lends to W £1000, with which W immediately purchases of B
£1000 worth of goods. B having no occasion for the money himself,
lends the identical pieces to X, with which X immediately purchases of
C another £1000 worth of goods. C, in the same manner, and for the
same reason, lends them to Y, who again purchases goods with them of
D. In this manner, the same pieces, either of coin or of paper, may,
in the course of a few days, serve as the Instrument of three
different loans, and of three different purchases, each of which is,
in value, equal to the whole amount of those pieces. What the three
monied men, A, B, and C, assigned to the three borrowers, W, X, and Y,
is the power of making those purchases. In this power consist both the
value and the use of the loans. The stock lent by the three monied men
is equal to the value of the goods which can be purchased with it, and
is three times greater than that of the money with which the purchases
are made. Those loans, however, may be all perfectly well secured, the
goods purchased by the different debtors being so employed as, in due
time, to bring back, with a profit, an equal value either of coin or
of paper. And as the same pieces of money can thus serve as the
instrument of different loans to three, or, for the same reason, to
thirty times their value, so they may likewise successively serve as
the instrument of repayment.

A capital lent at interest may, in this manner, be considered as an
assignment, from the lender to the borrower, of a certain considerable
portion of the annual produce, upon condition that the burrower in
return shall, during the continuance of the loan, annually assign to
the lender a small portion, called the interest; and, at the end of
it, a portion equally considerable with that which had originally been
assigned to him, called the repayment. Though money, either coin or
paper, serves generally as the deed of assignment, both to the smaller
and to the more considerable portion, it is itself altogether
different from what is assigned by it.

In proportion as that share of the annual produce which, as soon as it
comes either from the ground, or from the hands of the productive
labourers, is destined for replacing a capital, increases in any
country, what is called the monied interest naturally increases with
it. The increase of those particular capitals from which the owners
wish to derive a revenue, without being at the trouble of employing
them themselves, naturally accompanies the general increase of
capitals; or, in other words, as stock increases, the quantity of
stock to be lent at interest grows gradually greater and greater.

As the quantity of stock to be lent at interest increases, the
interest, or the price which must be paid for the use of that stock,
necessarily diminishes, not only from those general causes which make
the market price of things commonly diminish as their quantity
increases, but from other causes which are peculiar to this particular
case. As capitals increase in any country, the profits which can be
made by employing them necessarily diminish. It becomes gradually more
and more difficult to find within the country a profitable method of
employing any new capital. There arises, in consequence, a competition
between different capitals, the owner of one endeavouring to get
possession of that employment which is occupied by another; but, upon
most occasions, he can hope to justle that other out of this
employment by no other means but by dealing upon more reasonable
terms. He must not only sell what he deals in somewhat cheaper, but,
in order to get it to sell, he must sometimes, too, buy it dearer. The
demand for productive labour, by the increase of the funds which are
destined for maintaining it, grows every day greater and greater.
Labourers easily find employment; but the owners of capitals find it
difficult to get labourers to employ. Their competition raises the
wages of labour, and sinks the profits of stock. But when the profits
which can be made by the use of a capital are in this manner
diminished, as it were, at both ends, the price which can be paid for
the use of it, that is, the rate of interest, must necessarily be
diminished with them.

Mr Locke, Mr Lawe, and Mr Montesquieu, as well as many other writers,
seem to have imagined that the increase of the quantity of gold and
silver, in consequence of the discovery of the Spanish West Indies,
was the real cause of the lowering of the rate of interest through the
greater part of Europe. Those metals, they say, having become of less
value themselves, the use of any particular portion of them
necessarily became of less value too, and, consequently, the price
which could be paid for it. This notion, which at first sight seems so
plausible, has been so fully exposed by Mr Hume, that it is, perhaps,
unnecessary to say any thing more about it. The following very short
and plain argument, however, may serve to explain more distinctly the
fallacy which seems to have misled those gentlemen.

Before the discovery of the Spanish West Indies, ten per cent. seems
to have been the common rate of interest through the greater part of
Europe. It has since that time, in different countries, sunk to six,
five, four, and three per cent. Let us suppose, that in every
particular country the value of silver has sunk precisely in the same
proportion as the rate of interest; and that in those countries, for
example, where interest has been reduced from ten to five per cent.
the same quantity of silver can now purchase just half the quantity of
goods which it could have purchased before. This supposition will not,
I believe, be found anywhere agreeable to the truth; but it is the
most favourable to the opinion which we are going to examine; and,
even upon this supposition, it is utterly impossible that the lowering
of the value of silver could have the smallest tendency to lower the
rate of interest. If £100 are in those countries now of no more value
than £50 were then, £10 must now be of no more value than £5 were
then. Whatever were the causes which lowered the value of the capital,
the same must necessarily have lowered that of the interest, and
exactly in the same proportion. The proportion between the value of
the capital and that of the interest must have remained the same,
though the rate had never been altered. By altering the rate, on the
contrary, the proportion between those two values is necessarily
altered. If £100 now are worth no more than £50 were then, £5 now can
be worth no more than £2:10s. were then. By reducing the rate of
interest, therefore, from ten to five per cent. we give for the use of
a capital, which is supposed to be equal to one half of its former
value, an interest which is equal to one fourth only of the value of
the former interest.

An increase in the quantity of silver, while that of the commodities
circulated by means of it remained the same, could have no other
effect than to diminish the value of that metal. The nominal value of
all sorts of goods would be greater, but their real value would be
precisely the same as before. They would be exchanged for a greater
number of pieces of silver; but the quantity of labour which they
could command, the number of people whom they could maintain and
employ, would be precisely the same. The capital of the country would
be the same, though a greater number of pieces might be requisite for
conveying any equal portion of it from one hand to another. The deeds
of assignment, like the conveyances of a verbose attorney, would be
more cumbersome; but the thing assigned would be precisely the same as
before, and could produce only the same effects. The funds for
maintaining productive labour being the same, the demand for it would
be the same. Its price or wages, therefore, though nominally greater,
would really be the same. They would be paid in a greater number of
pieces of silver, but they would purchase only the same quantity of
goods. The profits of stock would be the same, both nominally and
really. The wages of labour are commonly computed by the quantity of
silver which is paid to the labourer. When that is increased,
therefore, his wages appear to be increased, though they may sometimes
be no greater than before. But the profits of stock are not computed
by the number of pieces of silver with which they are paid, but by the
proportion which those pieces bear to the whole capital employed.
Thus, in a particular country, 5s. a-week are said to be the common
wages of labour, and ten per cent. the common profits of stock; but
the whole capital of the country being the same as before, the
competition between the different capitals of individuals into which
it was divided would likewise be the same. They would all trade with
the same advantages and disadvantages. The common proportion between
capital and profit, therefore, would be the same, and consequently the
common interest of money; what can commonly be given for the use of
money being necessarily regulated by what can commonly be made by the
use of it.

Any increase in the quantity of commodities annually circulated within
the country, while that of the money which circulated them remained
the same, would, on the contrary, produce many other important
effects, besides that of raising the value of the money. The capital
of the country, though it might nominally be the same, would really be
augmented. It might continue to be expressed by the same quantity of
money, but it would command a greater quantity of labour. The quantity
of productive labour which it could maintain and employ would be
increased, and consequently the demand for that labour. Its wages
would naturally rise with the demand, and yet might appear to sink.
They might be paid with a smaller quantity of money, but that smaller
quantity might purchase a greater quantity of goods than a greater had
done before. The profits of stock would be diminished, both really and
in appearance. The whole capital of the country being augmented, the
competition between the different capitals of which it was composed
would naturally be augmented along with it. The owners of those
particular capitals would be obliged to content themselves with a
smaller proportion of the produce of that labour which their
respective capitals employed. The interest of money, keeping pace
always with the profits of stock, might, in this manner, be greatly
diminished, though the value of money, or the quantity of goods which
any particular sum could purchase, was greatly augmented.

In some countries the interest of money has been prohibited by law.
But as something can everywhere be made by the use of money, something
ought everywhere to be paid for the use of it. This regulation,
instead of preventing, has been found from experience to increase the
evil of usury. The debtor being obliged to pay, not only for the use
of the money, but for the risk which his creditor runs by accepting a
compensation for that use, he is obliged, if one may say so, to insure
his creditor from the penalties of usury.

In countries where interest is permitted, the law in order to prevent
the extortion of usury, generally fixes the highest rate which can be
taken without incurring a penalty. This rate ought always to be
somewhat above the lowest market price, or the price which is commonly
paid for the use of money by those who can give the most undoubted
security. If this legal rate should be fixed below the lowest market
rate, the effects of this fixation must be nearly the same as those of
a total prohibition of interest. The creditor will not lend his money
for less than the use of it is worth, and the debtor must pay him for
the risk which he runs by accepting the full value of that use. If it
is fixed precisely at the lowest market price, it ruins, with honest
people who respect the laws of their country, the credit of all those
who cannot give the very best security, and obliges them to have
recourse to exorbitant usurers. In a country such as Great Britain,
where money is lent to government at three per cent. and to private
people, upon good security, at four and four and a-half, the present
legal rate, five per cent. is perhaps as proper as any.

The legal rate, it is to be observed, though it ought to be somewhat
above, ought not to be much above the lowest market rate. If the legal
rate of interest in Great Britain, for example, was fixed so high as
eight or ten per cent. the greater part of the money which was to be
lent, would be lent to prodigals and projectors, who alone would be
willing to give this high interest. Sober people, who will give for
the use of money no more than a part of what they are likely to make
by the use of it, would not venture into the competition. A great part
of the capital of the country would thus be kept out of the hands
which were most likely to make a profitable and advantageous use of
it, and thrown into those which were most likely to waste and destroy
it. Where the legal rate of interest, on the contrary, is fixed but a
very little above the lowest market rate, sober people are universally
preferred, as borrowers, to prodigals and projectors. The person who
lends money gets nearly as much interest from the former as he dares
to take from the latter, and his money is much safer in the hands of
the one set of people than in those of the other. A great part of the
capital of the country is thus thrown into the hands in which it is
most likely to be employed with advantage.

No law can reduce the common rate of interest below the lowest
ordinary market rate at the time when that law is made.
Notwithstanding the edict of 1766, by which the French king attempted
to reduce the rate of interest from five to four per cent. money
continued to be lent in France at five per cent. the law being evaded
in several different ways.

The ordinary market price of land, it is to be observed, depends
everywhere upon the ordinary market rate of interest. The person who
has a capital from which he wishes to derive a revenue, without taking
the trouble to employ it himself, deliberates whether he should buy
land with it, or lend it out at interest. The superior security of
land, together with some other advantages which almost everywhere
attend upon this species of property, will generally dispose him to
content himself with a smaller revenue from land, than what he might
have by lending out his money at interest. These advantages are
sufficient to compensate a certain difference of revenue; but they
will compensate a certain difference only; and if the rent of land
should fall short of the interest of money by a greater difference,
nobody would buy land, which would soon reduce its ordinary price. On
the contrary, if the advantages should much more than compensate the
difference, everybody would buy land, which again would soon raise its
ordinary price. When interest was at ten per cent. land was commonly
sold for ten or twelve years purchase. As interest sunk to six, five,
and four per cent. the price of land rose to twenty, five-and-twenty,
and thirty years purchase. The market rate of interest is higher in
France than in England, and the common price of land is lower. In
England it commonly sells at thirty, in France at twenty years
purchase.




CHAPTER V.

OF THE DIFFERENT EMPLOYMENTS OF CAPITALS.

Though all capitals are destined for the maintenance of productive
labour only, yet the quantity of that labour which equal capitals are
capable of putting into motion, varies extremely according to the
diversity of their employment; as does likewise the value which that
employment adds to the annual produce of the land and labour of the
country.

A capital may be employed in four different ways; either, first, in
procuring the rude produce annually required for the use and
consumption of the society; or, secondly, in manufacturing and
preparing that rude produce for immediate use and consumption; or,
thirdly in transporting either the rude or manufactured produce from
the places where they abound to those where they are wanted; or,
lastly, in dividing particular portions of either into such small
parcels as suit the occasional demands of those who want them. In the
first way are employed the capitals of all those who undertake
improvement or cultivation of lands, mines, or fisheries; in the
second, those of all master manufacturers; in the third, those of all
wholesale merchants; and in the fourth, those of all retailers. It is
difficult to conceive that a capital should be employed in any way
which may not be classed under some one or other of those four.

Each of those four methods of employing a capital is essentially
necessary, either to the existence or extension of the other three, or
to the general conveniency of the society.

Unless a capital was employed in furnishing rude produce to a certain
degree of abundance, neither manufactures nor trade of any kind could
exist.

Unless a capital was employed in manufacturing that part of the rude
produce which requires a good deal of preparation before it can be fit
for use and consumption, it either would never be produced, because
there could be no demand for it; or if it was produced spontaneously,
it would be of no value in exchange, and could add nothing to the
wealth of the society.

Unless a capital was employed in transporting either the rude or
manufactured produce from the places where it abounds to those where
it is wanted, no more of either could be produced than was necessary
for the consumption of the neighbourhood. The capital of the merchant
exchanges the surplus produce of one place for that of another, and
thus encourages the industry, and increases the enjoyments of both.

Unless a capital was employed in breaking and dividing certain
portions either of the rude or manufactured produce into such small
parcels as suit the occasional demands of those who want them, every
man would be obliged to purchase a greater quantity of the goods he
wanted than his immediate occasions required. If there was no such
trade as a butcher, for example, every man would be obliged to
purchase a whole ox or a whole sheep at a time. This would generally
be inconvenient to the rich, and much more so to the poor. If a poor
workman was obliged to purchase a month's or six months' provisions at
a time, a great part of the stock which he employs as a capital in the
instruments of his trade, or in the furniture of his shop, and which
yields him a revenue, he would be forced to place in that part of his
stock which is reserved for immediate consumption, and which yields
him no revenue. Nothing can be more convenient for such a person than
to be able to purchase his subsistence from day to day, or even from
hour to hour, as he wants it. He is thereby enabled to employ almost
his whole stock as a capital. He is thus enabled to furnish work to a
greater value; and the profit which he makes by it in this way much
more than compensates the additional price which the profit of the
retailer imposes upon the goods. The prejudices of some political
writers against shopkeepers and tradesmen are altogether without
foundation. So far is it from being necessary either to tax them, or
to restrict their numbers, that they can never be multiplied so as to
hurt the public, though they may so as to hurt one another. The
quantity of grocery goods, for example, which can be sold in a
particular town, is limited by the demand of that town and its
neighbourhood. The capital, therefore, which can be employed in the
grocery trade, cannot exceed what is sufficient to purchase that
quantity. If this capital is divided between two different grocers,
their competition will tend to make both of them sell cheaper than if
it were in the hands of one only; and if it were divided among twenty,
their competition would be just so much the greater, and the chance of
their combining together, in order to raise the price, just so much
the less. Their competition might, perhaps, ruin some of themselves;
but to take care of this, is the business of the parties concerned,
and it may safely be trusted to their discretion. It can never hurt
either the consumer or the producer; on the contrary, it must tend to
make the retailers both sell cheaper and buy dearer, than if the whole
trade was monopolized by one or two persons. Some of them, perhaps,
may sometimes decoy a weak customer to buy what he has no occasion
for. This evil, however, is of too little importance to deserve the
public attention, nor would it necessarily be prevented by restricting
their numbers. It is not the multitude of alehouses, to give the must
suspicious example, that occasions a general disposition to
drunkenness among the common people; but that disposition, arising
from other causes, necessarily gives employment to a multitude of
alehouses.

The persons whose capitals are employed in any of those four ways, are
themselves productive labourers. Their labour, when properly directed,
fixes and realizes itself in the subject or vendible commodity upon
which it is bestowed, and generally adds to its price the value at
least of their own maintenance and consumption. The profits of the
farmer, of the manufacturer, of the merchant, and retailer, are all
drawn from the price of the goods which the two first produce, and the
two last buy and sell. Equal capitals, however, employed in each of
those four different ways, will immediately put into motion very
different quantities of productive labour; and augment, too, in very
different proportions, the value of the annual produce of the land and
labour of the society to which they belong.

The capital of the retailer replaces, together with its profits, that
of the merchant of whom he purchases goods, and thereby enables him to
continue his business. The retailer himself is the only productive
labourer whom it immediately employs. In his profit consists the whole
value which its employment adds to the annual produce of the land and
labour of the society.

The capital of the wholesale merchant replaces, together with their
profits, the capital's of the farmers and manufacturers of whom he
purchases the rude and manufactured produce which he deals in, and
thereby enables them to continue their respective trades. It is by
this service chiefly that he contributes indirectly to support the
productive labour of the society, and to increase the value of its
annual produce. His capital employs, too, the sailors and carriers who
transport his goods from one place to another; and it augments the
price of those goods by the value, not only of his profits, but of
their wages. This is all the productive labour which it immediately
puts into motion, and all the value which it immediately adds to the
annual produce. Its operation in both these respects is a good deal
superior to that of the capital of the retailer.

Part of the capital of the master manufacturer is employed as a fixed
capital in the instruments of his trade, and replaces, together with
its profits, that of some other artificer of whom he purchases them.
Part of his circulating capital is employed in purchasing materials,
and replaces, with their profits, the capitals of the farmers and
miners of whom he purchases them. But a great part of it is always,
either annually, or in a much shorter period, distributed among the
different workmen whom he employs. It augments the value of those
materials by their wages, and by their masters' profits upon the whole
stock of wages, materials, and instruments of trade employed in the
business. It puts immediately into motion, therefore, a much greater
quantity of productive labour, and adds a much greater value to the
annual produce of the land and labour of the society, than an equal
capital in the hands of any wholesale merchant.

No equal capital puts into motion a greater quantity of productive
labour than that of the farmer. Not only his labouring servants, but
his labouring cattle, are productive labourers. In agriculture, too,
Nature labours along with man; and though her labour costs no expense,
its produce has its value, as well as that of the most expensive
workmen. The most important operations of agriculture seem intended,
not so much to increase, though they do that too, as to direct the
fertility of Nature towards the production of the plants most
profitable to man. A field overgrown with briars and brambles, may
frequently produce as great a quantity of vegetables as the best
cultivated vineyard or corn field. Planting and tillage frequently
regulate more than they animate the active fertility of Nature; and
after all their labour, a great part of the work always remains to be
done by her. The labourers and labouring cattle, therefore, employed
in agriculture, not only occasion, like the workmen in manufactures,
the reproduction of a value equal to their own consumption, or to the
capital which employs them, together with its owner's profits, but of
a much greater value. Over and above the capital of the farmer, and
all its profits, they regularly occasion the reproduction of the rent
of the landlord. This rent may be considered as the produce of those
powers of Nature, the use of which the landlord lends to the farmer.
It is greater or smaller, according to the supposed extent of those
powers, or, in other words, according to the supposed natural or
improved fertility of the land. It is the work of Nature which
remains, after deducting or compensating every thing which can be
regarded as the work of man. It is seldom less than a fourth, and
frequently more than a third, of the whole produce. No equal quantity
of productive labour employed in manufactures, can ever occasion so
great reproduction. In them Nature does nothing; man does all; and the
reproduction must always be in proportion to the strength of the
agents that occasion it. The capital employed in agriculture,
therefore, not only puts into motion a greater quantity of productive
labour than any equal capital employed in manufactures; but in
proportion, too, to the quantity of productive labour which it
employs, it adds a much greater value to the annual produce of the
land and labour of the country, to the real wealth and revenue of its
inhabitants. Of all the ways in which a capital can be employed, it is
by far the most advantageous to society.

The capitals employed in the agriculture and in the retail trade of
any society, must always reside within that society. Their employment
is confined almost to a precise spot, to the farm, and to the shop of
the retailer. They must generally, too, though there are some
exceptions to this, belong to resident members of the society.

The capital of a wholesale merchant, on the contrary, seems to have no
fixed or necessary residence anywhere, but may wander about from place
to place, according as it can either buy cheap or sell dear.

The capital of the manufacturer must, no doubt, reside where the
manufacture is carried on; but where this shall be, is not always
necessarily determined. It may frequently be at a great distance, both
from the place where the materials grow, and from that where the
complete manufacture is consumed. Lyons is very distant, both from the
places which afford the materials of its manufactures, and from those
which consume them. The people of fashion in Sicily are clothed in
silks made in other countries, from the materials which their own
produces. Part of the wool of Spain is manufactured in Great Britain,
and some part of that cloth is afterwards sent back to Spain.

Whether the merchant whose capital exports the surplus produce of any
society, be a native or a foreigner, is of very little importance. If
he is a foreigner, the number of their productive labourers is
necessarily less than if he had been a native, by one man only; and
the value of their annual produce, by the profits of that one man. The
sailors or carriers whom he employs, may still belong indifferently
either to his country, or to their country, or to some third country,
in the same manner as if he had been a native. The capital of a
foreigner gives a value to their surplus produce equally with that of
a native, by exchanging it for something for which there is a demand
at home. It as effectually replaces the capital of the person who
produces that surplus, and as effectually enables him to continue his
business, the service by which the capital of a wholesale merchant
chiefly contributes to support the productive labour, and to augment
the value of the annual produce of the society to which he belongs.

It is of more consequence that the capital of the manufacturer should
reside within the country. It necessarily puts into motion a greater
quantity of productive labour, and adds a greater value to the annual
produce of the land and labour of the society. It may, however, be
very useful to the country, though it should not reside within it. The
capitals of the British manufacturers who work up the flax and hemp
annually imported from the coasts of the Baltic, are surely very
useful to the countries which produce them. Those materials are a part
of the surplus produce of those countries, which, unless it was
annually exchanged for something which is in demand here, would be of
no value, and would soon cease to be produced. The merchants who
export it, replace the capitals of the people who produce it, and
thereby encourage them to continue the production; and the British
manufacturers replace the capitals of those merchants.

A particular country, in the same manner as a particular person, may
frequently not have capital sufficient both to improve and cultivate
all its lands, to manufacture and prepare their whole rude produce for
immediate use and consumption, and to transport the surplus part
either of the rude or manufactured produce to those distant markets,
where it can be exchanged for something for which there is a demand at
home. The inhabitants of many different parts of Great Britain have
not capital sufficient to improve and cultivate all their lands. The
wool of the southern counties of Scotland is, a great part of it,
after a long land carriage through very bad roads, manufactured in
Yorkshire, for want of a capital to manufacture it at home. There are
many little manufacturing towns in Great Britain, of which the
inhabitants have not capital sufficient to transport the produce of
their own industry to those distant markets where there is demand and
consumption for it. If there are any merchants among them, they are,
properly, only the agents of wealthier merchants who reside in some of
the great commercial cities.

When the capital of any country is not sufficient for all those three
purposes, in proportion as a greater share of it is employed in
agriculture, the greater will be the quantity of productive labour
which it puts into motion within the country; as will likewise be the
value which its employment adds to the annual produce of the land and
labour of the society. After agriculture, the capital employed in
manufactures puts into motion the greatest quantity of productive
labour, and adds the greatest value to the annual produce. That which
is employed in the trade of exportation has the least effect of any of
the three.

The country, indeed, which has not capital sufficient for all those
three purposes, has not arrived at that degree of opulence for which
it seems naturally destined. To attempt, however, prematurely, and
with an insufficient capital, to do all the three, is certainly not
the shortest way for a society, no more than it would be for an
individual, to acquire a sufficient one. The capital of all the
individuals of a nation has its limits, in the same manner as that of
a single individual, and is capable of executing only certain
purposes. The capital of all the individuals of a nation is increased
in the same manner as that of a single individual, by their
continually accumulating and adding to it whatever they save out of
their revenue. It is likely to increase the fastest, therefore, when
it is employed in the way that affords the greatest revenue to all the
inhabitants or the country, as they will thus be enabled to make the
greatest savings. But the revenue of all the inhabitants of the
country is necessarily in proportion to the value of the annual
produce of their land and labour.

It has been the principal cause of the rapid progress of our American
colonies towards wealth and greatness, that almost their whole
capitals have hitherto been employed in agriculture. They have no
manufactures, those household and coarser manufactures excepted, which
necessarily accompany the progress of agriculture, and which are the
work of the women and children in every private family. The greater
part, both of the exportation and coasting trade of America, is
carried on by the capitals of merchants who reside in Great Britain.
Even the stores and warehouses from which goods are retailed in some
provinces, particularly in Virginia and Maryland, belong many of them
to merchants who reside in the mother country, and afford one of the
few instances of the retail trade of a society being carried on by the
capitals of those who are not resident members of it. Were the
Americans, either by combination, or by any other sort of violence, to
stop the importation of European manufactures, and, by thus giving a
monopoly to such of their own countrymen as could manufacture the like
goods, divert any considerable part of their capital into this
employment, they would retard, instead of accelerating, the further
increase in the value of their annual produce, and would obstruct,
instead of promoting, the progress of their country towards real
wealth and greatness. This would be still more the case, were they to
attempt, in the same manner, to monopolize to themselves their whole
exportation trade.

The course of human prosperity, indeed, seems scarce ever to have been
of so long continuance as to unable any great country to acquire
capital sufficient for all those three purposes; unless, perhaps, we
give credit to the wonderful accounts of the wealth and cultivation of
China, of those of ancient Egypt, and of the ancient state of
Indostan. Even those three countries, the wealthiest, according to all
accounts, that ever were in the world, are chiefly renowned for their
superiority in agriculture and manufactures. They do not appear to
have been eminent for foreign trade. The ancient Egyptians had a
superstitious antipathy to the sea; a superstition nearly of the same
kind prevails among the Indians; and the Chinese have never excelled
in foreign commerce. The greater part of the surplus produce of all
those three countries seems to have been always exported by
foreigners, who gave in exchange for it something else, for which they
found a demand there, frequently gold and silver.

It is thus that the same capital will in any country put into motion a
greater or smaller quantity of productive labour, and add a greater or
smaller value to the annual produce of its land and labour, according
to the different proportions in which it is employed in agriculture,
manufactures, and wholesale trade. The difference, too, is very great,
according to the different sorts of wholesale trade in which any part
of it is employed.

All wholesale trade, all buying in order to sell again by wholesale,
maybe reduced to three different sorts: the home trade, the foreign
trade of consumption, and the carrying trade. The home trade is
employed in purchasing in one part of the same country, and selling in
another, the produce of the industry of that country. It comprehends
both the inland and the coasting trade. The foreign trade of
consumption is employed in purchasing foreign goods for home
consumption. The carrying trade is employed in transacting the
commerce of foreign countries, or in carrying the surplus produce of
one to another.

The capital which is employed in purchasing in one part of the
country, in order to sell in another, the produce of the industry of
that country, generally replaces, by every such operation, two
distinct capitals, that had both been employed in the agriculture or
manufactures of that country, and thereby enables them to continue
that employment. When it sends out from the residence of the merchant
a certain value of commodities, it generally brings hack in return at
least an equal value of other commodities. When both are the produce
of domestic industry, it necessarily replaces, by every such
operation, two distinct capitals, which had both been employed in
Supporting productive labour, and thereby enables them to continue
that support. The capital which sends Scotch manufactures to London,
and brings back English corn and manufactures to Edinburgh,
necessarily replaces, by every such operation, two British capitals,
which had both been employed in the agriculture or manufactures of
Great Britain.

The capital employed in purchasing foreign goods for home consumption,
when this purchase is made with the produce of domestic industry,
replaces, too, by every such operation, two distinct capitals; but one
of them only is employed in supporting domestic industry. The capital
which sends British goods to Portugal, and brings back Portuguese
goods to Great Britain, replaces, by every such operation, only one
British capital. The other is a Portuguese one. Though the returns,
therefore, of the foreign trade of consumption, should be as quick as
those of the home trade, the capital employed in it will give but one
half of the encouragement to the industry or productive labour of the
country.

But the returns of the foreign trade of consumption are very seldom so
quick as those of the home trade. The returns of the home trade
generally come in before the end of the year, and sometimes three or
four times in the year. The returns of the foreign trade of
consumption seldom come in before the end of the year, and sometimes
not till after two or three years. A capital, therefore, employed in
the home trade, will sometimes make twelve operations, or be sent out
and returned twelve times, before a capital employed in the foreign
trade of consumption has made one. If the capitals are equal,
therefore, the one will give four-and-twenty times more encouragement
and support to the industry of the country than the other.

The foreign goods for home consumption may sometimes be purchased, not
with the produce of domestic industry but with some other foreign
goods. These last, however, must have been purchased, either
immediately with the produce of domestic industry, or with something
else that had been purchased with it; for, the case of war and
conquest excepted, foreign goods can never be acquired, but in
exchange for something that had been produced at home, either
immediately, or after two or more different exchanges. The effects,
therefore, of a capital employed in such a round-about foreign trade
of consumption, are, in every respect, the same as those of one
employed in the most direct trade of the same kind, except that the
final returns are likely to be still more distant, as they must depend
upon the returns of two or three distinct foreign trades. If the hemp
and flax of Riga are purchased with the tobacco of Virginia, which had
been purchased with British manufactures, the merchant must wait for
the returns of two distinct foreign trades, before he can employ the
same capital in repurchasing a like quantity of British manufactures.
If the tobacco of Virginia had been purchased, not with British
manufactures, but with the sugar and rum of Jamaica, which had been
purchased with those manufactures, he must wait for the returns of
three. If those two or three distinct foreign trades should happen to
be carried on by two or three distinct merchants, of whom the second
buys the goods imported by the first, and the third buys those
imported by the second, in order to export them again, each merchant,
indeed, will, in this case, receive the returns of his own capital
more quickly; but the final returns of the whole capital employed in
the trade will be just as slow as ever. Whether the whole capital
employed in such a round about trade belong to one merchant or to
three, can make no difference with regard to the country, though it
may with regard to the particular merchants. Three times a greater
capital must in both cases be employed, in order to exchange a certain
value of British manufactures for a certain quantity of flax and hemp,
than would have been necessary, had the manufactures and the flax and
hemp been directly exchanged for one another. The whole capital
employed, therefore, in such a round-about foreign trade of
consumption, will generally give less encouragement and support to the
productive labour of the country, than an equal capital employed in a
more direct trade of the same kind.

Whatever be the foreign commodity with which the foreign goods for
home consumption are purchased, it can occasion no essential
difference, either in the nature of the trade, or in the encouragement
and support which it can give to the productive labour of the country
from which it is carried on. If they are purchased with the gold of
Brazil, for example, or with the silver of Peru, this gold and silver,
like the tobacco of Virginia, must have been purchased with something
that either was the produce of the industry of the country, or that
had been purchased with something else that was so. So far, therefore,
as the productive labour of the country is concerned, the foreign
trade of consumption, which is carried on by means of gold and silver,
has all the advantages and all the inconveniencies of any other
equally round-about foreign trade of consumption; and will replace,
just as fast, or just as slow, the capital which is immediately
employed in supporting that productive labour. It seems even to have
one advantage over any other equally round-about foreign trade. The
transportation of those metals from one place to another, on account
of their small bulk and great value, is less expensive than that of
almost any other foreign goods of equal value. Their freight is much
less, and their insurance not greater; and no goods, besides, are less
liable to suffer by the carriage. An equal quantity of foreign goods,
therefore, may frequently be purchased with a smaller quantity of the
produce of domestic industry, by the intervention of gold and silver,
than by that of any other foreign goods. The demand of the country may
frequently, in this manner, be supplied more completely, and at a
smaller expense, than in any other. Whether, by the continual
exportation of those metals, a trade of this kind is likely to
impoverish the country from which it is carried on in any other way, I
shall have occasion to examine at great length hereafter.

That part of the capital of any country which is employed in the
carrying trade, is altogether withdrawn from supporting the productive
labour of that particular country, to support that of some foreign
countries. Though it may replace, by every operation, two distinct
capitals, yet neither of them belongs to that particular country. The
capital of the Dutch merchant, which carries the corn of Poland to
Portugal, and brings back the fruits and wines of Portugal to Poland,
replaces by every such operation two capitals, neither of which had
been employed in supporting the productive labour of Holland; but one
of them in supporting that of Poland, and the other that of Portugal.
The profits only return regularly to Holland, and constitute the whole
addition which this trade necessarily makes to the annual produce of
the land and labour of that country. When, indeed, the carrying trade
of any particular country is carried on with the ships and sailors of
that country, that part of the capital employed in it which pays the
freight is distributed among, and puts into motion, a certain number
of productive labourers of that country. Almost all nations that have
had any considerable share of the carrying trade have, in fact,
carried it on in this manner. The trade itself has probably derived
its name from it, the people of such countries being the carriers to
other countries. It does not, however, seem essential to the nature of
the trade that it should be so. A Dutch merchant may, for example,
employ his capital in transacting the commerce of Poland and Portugal,
by carrying part of the surplus produce of the one to the other, not
in Dutch, but in British bottoms. It maybe presumed, that he actually
does so upon some particular occasions. It is upon this account,
however, that the carrying trade has been supposed peculiarly
advantageous to such a country as Great Britain, of which the defence
and security depend upon the number of its sailors and shipping. But
the same capital may employ as many sailors and shipping, either in
the foreign trade of consumption, or even in the home trade, when
carried on by coasting vessels, as it could in the carrying trade. The
number of sailors and shipping which any particular capital can
employ, does not depend upon the nature of the trade, but partly upon
the bulk of the goods, in proportion to their value, and partly upon
the distance of the ports between which they are to be carried;
chiefly upon the former of those two circumstances. The coal trade
from Newcastle to London, for example, employs more shipping than all
the carrying trade of England, though the ports are at no great
distance. To force, therefore, by extraordinary encouragements, a
larger share of the capital of any country into the carrying trade,
than what would naturally go to it, will not always necessarily
increase the shipping of that country.

The capital, therefore, employed in the home trade of any country,
will generally give encouragement and support to a greater quantity of
productive labour in that country, and increase the value of its
annual produce, more than an equal capital employed in the foreign
trade of consumption; and the capital employed in this latter trade
has, in both these respects, a still greater advantage over an equal
capital employed in the carrying trade. The riches, and so far as
power depends upon riches, the power of every country must always be
in proportion to the value of its annual produce, the fund from which
all taxes must ultimately be paid. But the great object of the
political economy of every country, is to increase the riches and
power of that country. It ought, therefore, to give no preference nor
superior encouragement to the foreign trade of consumption above the
home trade, nor to the carrying trade above either of the other two.
It ought neither to force nor to allure into either of those two
channels a greater share of the capital of the country, than what
would naturally flow into them of its own accord.

Each of those different branches of trade, however, is not only
advantageous, but necessary and unavoidable, when the course of
things, without any constraint or violence, naturally introduces it.

When the produce of any particular branch of industry exceeds what the
demand of the country requires, the surplus must be sent abroad, and
exchanged for something for which there is a demand at home. Without
such exportation, a part of the productive labour of the country must
cease, and the value of its annual produce diminish. The land and
labour of Great Britain produce generally more corn, woollens, and
hardware, than the demand of the home market requires. The surplus
part of them, therefore, must be sent abroad, and exchanged for
something for which there is a demand at home. It is only by means of
such exportation, that this surplus can acquired value sufficient to
compensate the labour and expense of producing it. The neighbourhood
of the sea-coast, and the banks of all navigable rivers, are
advantageous situations for industry, only because they facilitate the
exportation and exchange of such surplus produce for something else
which is more in demand there.

When the foreign goods which are thus purchased with the surplus
produce of domestic industry exceed the demand of the home market, the
surplus part of them must be sent abroad again, and exchanged for
something more in demand at home. About 96,000 hogsheads of tobacco
are annually purchased in Virginia and Maryland with a part of the
surplus produce of British industry. But the demand of Great Britain
does not require, perhaps, more than 14,000. If the remaining 82,000,
therefore, could not be sent abroad, and exchanged for something more
in demand at home, the importation of them must cease immediately, and
with it the productive labour of all those inhabitants of Great
Britain who are at present employed in preparing the goods with which
these 82,000 hogsheads are annually purchased. Those goods, which are
part of the produce of the land and labour of Great Britain, having no
market at home, and being deprived of that which they had abroad, must
cease to be produced. The most round-about foreign trade of
consumption, therefore, may, upon some occasions, be as necessary for
supporting the productive labour of the country, and the value of its
annual produce, as the most direct.

When the capital stock of any country is increased to such a degree
that it cannot be all employed in supplying the consumption, and
supporting the productive labour of that particular country, the
surplus part of it naturally disgorges itself into the carrying trade,
and is employed in performing the same offices to other countries. The
carrying trade is the natural effect and symptom of great national
wealth; but it does not seem to be the natural cause of it. Those
statesmen who have been disposed to favour it with particular
encouragement, seem to have mistaken the effect and symptom for the
cause. Holland, in proportion to the extent of the land and the number
of it's inhabitants, by far the richest country in Europe, has
accordingly the greatest share of the carrying trade of Europe.
England, perhaps the second richest country of Europe, is likewise
supposed to have a considerable share in it; though what commonly
passes for the carrying trade of England will frequently, perhaps, be
found to be no more than a round-about foreign trade of consumption.
Such are, in a great measure, the trades which carry the goods of the
East and West Indies and of America to the different European markets.
Those goods are generally purchased, either immediately with the
produce of British industry, or with something else which had been
purchased with that produce, and the final returns of those trades are
generally used or consumed in Great Britain. The trade which is
carried on in British bottoms between the different ports of the
Mediterranean, and some trade of the same kind carried on by British
merchants between the different ports of India, make, perhaps, the
principal branches of what is properly the carrying trade of Great
Britain.

The extent of the home trade, and of the capital which can be employed
in it, is necessarily limited by the value of the surplus produce of
all those distant places within the country which have occasion to
exchange their respective productions with one another; that of the
foreign trade of consumption, by the value of the surplus produce of
the whole country, and of what can be purchased with it; that of the
carrying trade, by the value of the surplus produce of all the
different countries in the world. Its possible extent, therefore, is
in a manner infinite in comparison of that of the other two, and is
capable of absorbing the greatest capitals.

The consideration of his own private profit is the sole motive which
determines the owner of any capital to employ it either in
agriculture, in manufactures, or in some particular branch of the
wholesale or retail trade. The different quantities of productive
labour which it may put into motion, and the different values which it
may add to the annual produce of the land and labour of the society,
according as it is employed in one or other of those different ways,
never enter into his thoughts. In countries, therefore, where
agriculture is the most profitable of all employments, and farming and
improving the most direct roads to a splendid fortune, the capitals of
individuals will naturally be employed in the manner most advantageous
to the whole society. The profits of agriculture, however, seem to
have no superiority over those of other employments in any part of
Europe. Projectors, indeed, in every corner of it, have, within these
few years, amused the public with most magnificent accounts of the
profits to be made by the cultivation and improvement of land. Without
entering into any particular discussion of their calculations, a very
simple observation may satisfy us that the result of them must be
false. We see, every day, the most splendid fortunes, that have been
acquired in the course of a single life, by trade and manufactures,
frequently from a very small capital, sometimes from no capital. A
single instance of such a fortune, acquired by agriculture in the same
time, and from such a capital, has not, perhaps, occurred in Europe,
during the course of the present century. In all the great countries
of Europe, however, much good land still remains uncultivated; and the
greater part of what is cultivated, is far from being improved to the
degree of which it is capable. Agriculture, therefore, is almost
everywhere capable of absorbing a much greater capital than has ever
yet been employed in it. What circumstances in the policy of Europe
have given the trades which are carried on in towns so great an
advantage over that which is carried on in the country, that private
persons frequently find it more for their advantage to employ their
capitals in the most distant carrying trades of Asia and America than
in the improvement and cultivation of the most fertile fields in their
own neighbourhood, I shall endeavour to explain at full length in the
two following books.





BOOK III.

OF THE DIFFERENT PROGRESS OF OPULENCE IN DIFFERENT NATIONS

CHAPTER I.

OF THE NATURAL PROGRESS OF OPULENCE.

The great commerce of every civilized society is that carried on
between the inhabitants of the town and those of the country. It
consists in the exchange of rude for manufactured produce, either
immediately, or by the intervention of money, or of some sort of paper
which represents money. The country supplies the town with the means
of subsistence and the materials of manufacture. The town repays this
supply, by sending back a part of the manufactured produce to the
inhabitants of the country. The town, in which there neither is nor
can be any reproduction of substances, may very properly be said to
gain its whole wealth and subsistence from the country. We must not,
however, upon this account, imagine that the gain of the town is the
loss of the country. The gains of both are mutual and reciprocal, and
the division of labour is in this, as in all other cases, advantageous
to all the different persons employed in the various occupations into
which it is subdivided. The inhabitants of the country purchase of the
town a greater quantity of manufactured goods with the produce of a
much smaller quantity of their own labour, than they must have
employed had they attempted to prepare them themselves. The town
affords a market for the surplus produce of the country, or what is
over and above the maintenance of the cultivators; and it is there
that the inhabitants of the country exchange it for something else
which is in demand among them. The greater the number and revenue of
the inhabitants of the town, the more extensive is the market which it
affords to those of the country; and the more extensive that market,
it is always the more advantageous to a great number. The corn which
grows within a mile of the town, sells there for the same price with
that which comes from twenty miles distance. But the price of the
latter must, generally, not only pay the expense of raising it and
bringing it to market, but afford, too, the ordinary profits of
agriculture to the farmer. The proprietors and cultivators of the
country, therefore, which lies in the neighbourhood of the town, over
and above the ordinary profits of agriculture, gain, in the price of
what they sell, the whole value of the carriage of the like produce
that is brought from more distant parts; and they save, besides, the
whole value of this carriage in the price of what they buy. Compare
the cultivation of the lands in the neighbourhood of any considerable
town, with that of those which lie at some distance from it, and you
will easily satisfy yourself bow much the country is benefited by the
commerce of the town. Among all the absurd speculations that have been
propagated concerning the balance of trade, it has never been
pretended that either the country loses by its commerce with the town,
or the town by that with the country which maintains it.

As subsistence is, in the nature of things, prior to conveniency and
luxury, so the industry which procures the former, must necessarily be
prior to that which ministers to the latter. The cultivation and
improvement of the country, therefore, which affords subsistence,
must, necessarily, be prior to the increase of the town, which
furnishes only the means of conveniency and luxury. It is the surplus
produce of the country only, or what is over and above the maintenance
of the cultivators, that constitutes the subsistence of the town,
which can therefore increase only with the increase of the surplus
produce. The town, indeed, may not always derive its whole subsistence
from the country in its neighbourhood, or even from the territory to
which it belongs, but from very distant countries; and this, though it
forms no exception from the general rule, has occasioned considerable
variations in the progress of opulence in different ages and nations.

That order of things which necessity imposes, in general, though not
in every particular country, is in every particular country promoted
by the natural inclinations of man. If human institutions had never
thwarted those natural inclinations, the towns could nowhere have
increased beyond what the improvement and cultivation of the territory
in which they were situated could support; till such time, at least,
as the whole of that territory was completely cultivated and improved.
Upon equal, or nearly equal profits, most men will choose to employ
their capitals, rather in the improvement and cultivation of land,
than either in manufactures or in foreign trade. The man who employs
his capital in land, has it more under his view and command; and his
fortune is much less liable to accidents than that of the trader, who
is obliged frequently to commit it, not only to the winds and the
waves, but to the more uncertain elements of human folly and
injustice, by giving great credits, in distant countries, to men with
whose character and situation he can seldom be thoroughly acquainted.
The capital of the landlord, on the contrary, which is fixed in the
improvement of his land, seems to be as well secured as the nature of
human affairs can admit of. The beauty of the country, besides, the
pleasure of a country life, the tranquillity of mind which it
promises, and, wherever the injustice of human laws does not disturb
it, the independency which it really affords, have charms that, more
or less, attract everybody; and as to cultivate the ground was the
original destination of man, so, in every stage of his existence, he
seems to retain a predilection for this primitive employment.

Without the assistance of some artificers, indeed, the cultivation of
land cannot be carried on, but with great inconveniency and continual
interruption. Smiths, carpenters, wheelwrights and ploughwrights,
masons and bricklayers, tanners, shoemakers, and tailors, are people
whose service the farmer has frequent occasion for. Such artificers,
too, stand occasionally in need of the assistance of one another; and
as their residence is not, like that of the farmer, necessarily tied
down to a precise spot, they naturally settle in the neighbourhood of
one another, and thus form a small town or village. The butcher, the
brewer, and the baker, soon join them, together with many other
artificers and retailers, necessary or useful for supplying their
occasional wants, and who contribute still further to augment the
town. The inhabitants of the town, and those of the country, are
mutually the servants of one another. The town is a continual fair or
market, to which the inhabitants of the country resort, in order to
exchange their rude for manufactured produce. It is this commerce
which supplies the inhabitants of the town, both with the materials of
their work, and the means of their subsistence. The quantity of the
finished work which they sell to the inhabitants of the country,
necessarily regulates the quantity of the materials and provisions
which they buy. Neither their employment nor subsistence, therefore,
can augment, but in proportion to the augmentation of the demand from
the country for finished work; and this demand can augment only in
proportion to the extension of improvement and cultivation. Had human
institutions, therefore, never disturbed the natural course of things,
the progressive wealth and increase of the towns would, in every
political society, be consequential, and in proportion to the
improvement and cultivation of the territory of country.

In our North American colonies, where uncultivated land is still to be
had upon easy terms, no manufactures for distant sale have ever yet
been established in any of their towns. When an artificer has acquired
a little more stock than is necessary for carrying on his own business
in supplying the neighbouring country, he does not, in North America,
attempt to establish with it a manufacture for more distant sale, but
employs it in the purchase and improvement of uncultivated land. From
artificer he becomes planter; and neither the large wages nor the easy
subsistence which that country affords to artificers, can bribe him
rather to work for other people than for himself. He feels that an
artificer is the servant of his customers, from whom he derives his
subsistence; but that a planter who cultivates his own land, and
derives his necessary subsistence from the labour of his own family,
is really a master, and independent of all the world.

In countries, on the contrary, where there is either no uncultivated
land, or none that can be had upon easy terms, every artificer who has
acquired more stock than he can employ in the occasional jobs of the
neighbourhood, endeavours to prepare work for more distant sale. The
smith erects some sort of iron, the weaver some sort of linen or
woollen manufactory. Those different manufactures come, in process of
time, to be gradually subdivided, and thereby improved and refined in
a great variety of ways, which may easily be conceived, and which it
is therefore unnecessary to explain any farther.

In seeking for employment to a capital, manufactures are, upon equal
or nearly equal profits, naturally preferred to foreign commerce, for
the same reason that agriculture is naturally preferred to
manufactures. As the capital of the landlord or farmer is more secure
than that of the manufacturer, so the capital of the manufacturer,
being at all times more within his view and command, is more secure
than that of the foreign merchant. In every period, indeed, of every
society, the surplus part both of the rude and manufactured produce,
or that for which there is no demand at home, must be sent abroad, in
order to be exchanged for something for which there is some demand at
home. But whether the capital which carries this surplus produce
abroad be a foreign or a domestic one, is of very little importance.
If the society has not acquired sufficient capital, both to cultivate
all its lands, and to manufacture in the completest manner the whole
of its rude produce, there is even a considerable advantage that the
rude produce should be exported by a foreign capital, in order that
the whole stock of the society may be employed in more useful
purposes. The: wealth of ancient Egypt, that of China and Indostan,
sufficiently demonstrate that a nation may attain a very high degree
of opulence, though the greater part of its exportation trade be
carried on by foreigners. The progress of our North American and West
Indian colonies, would have been much less rapid, had no capital but
what belonged to themselves been employed in exporting their surplus
produce.

According to the natural course of things, therefore, the greater part
of the capital of every growing society is, first, directed to
agriculture, afterwards to manufactures, and, last of all, to foreign
commerce. This order of things is so very natural, that in every
society that had any territory, it has always, I believe, been in some
degree observed. Some of their lands must have been cultivated before
any considerable towns could be established, and some sort of coarse
industry of the manufacturing kind must have been carried on in those
towns, before they could well think of employing themselves in foreign
commerce.

But though this natural order of things must have taken place in some
degree in every such society, it has, in all the modern states of
Europe, been in many respects entirely inverted. The foreign commerce
of some of their cities has introduced all their finer manufactures,
or such as were fit for distant sale; and manufactures and foreign
commerce together have given birth to the principal improvements of
agriculture. The manners and customs which the nature of their
original government introduced, and which remained after that
government was greatly altered, necessarily forced them into this
unnatural and retrograde order.




CHAPTER II.

OF THE DISCOURAGEMENT OF AGRICULTURE IN THE ANCIENT STATE OF EUROPE,
AFTER THE FALL OF THE ROMAN EMPIRE.

When the German and Scythian nations overran the western provinces of
the Roman empire, the confusions which followed so great a revolution
lasted for several centuries. The rapine and violence which the
barbarians exercised against the ancient inhabitants, interrupted the
commerce between the towns and the country. The towns were deserted,
and the country was left uncultivated; and the western provinces of
Europe, which had enjoyed a considerable degree of opulence under the
Roman empire, sunk into the lowest state of poverty and barbarism.
During the continuance of those confusions, the chiefs and principal
leaders of those nations acquired, or usurped to themselves, the
greater part of the lands of those countries. A great part of them was
uncultivated; but no part of them, whether cultivated or uncultivated,
was left without a proprietor. All of them were engrossed, and the
greater part by a few great proprietors.

This original engrossing of uncultivated lands, though a great, might
have been but a transitory evil. They might soon have been divided
again, and broke into small parcels, either by succession or by
alienation. The law of primogeniture hindered them from being divided
by succession; the introduction of entails prevented their being broke
into small parcels by alienation.

When land, like moveables, is considered as the means only of
subsistence and enjoyment, the natural law of succession divides it,
like them, among all the children of the family; of all of whom the
subsistence and enjoyment may be supposed equally dear to the father.
This natural law of succession, accordingly, took place among the
Romans who made no more distinction between elder and younger, between
male and female, in the inheritance of lands, than we do in the
distribution of moveables. But when land was considered as the means,
not of subsistence merely, but of power and protection, it was thought
better that it should descend undivided to one. In those disorderly
times, every great landlord was a sort of petty prince. His tenants
were his subjects. He was their judge, and in some respects their
legislator in peace and their leader in war. He made war according to
his own discretion, frequently against his neighbours, and sometimes
against his sovereign. The security of a landed estate, therefore, the
protection which its owner could afford to those who dwelt on it,
depended upon its greatness. To divide it was to ruin it, and to
expose every part of it to be oppressed and swallowed up by the
incursions of its neighbours. The law of primogeniture, therefore,
came to take place, not immediately indeed, but in process of time, in
the succession of landed estates, for the same reason that it has
generally taken place in that of monarchies, though not always at
their first institution. That the power, and consequently the security
of the monarchy, may not be weakened by division, it must descend
entire to one of the children. To which of them so important a
preference shall be given, must be determined by some general rule,
founded not upon the doubtful distinctions of personal merit, but upon
some plain and evident difference which can admit of no dispute. Among
the children of the same family there can be no indisputable
difference but that of sex, and that of age. The male sex is
universally preferred to the female; and when all other things are
equal, the elder everywhere takes place of the younger. Hence the
origin of the right of primogeniture, and of what is called lineal
succession.

Laws frequently continue in force long after the circumstances which
first gave occasion to them, and which could alone render them
reasonable, are no more. In the present state of Europe, the
proprietor of a single acre of land is as perfectly secure in his
possession as the proprietor of 100,000. The right of primogeniture,
however, still continues to be respected; and as of all institutions
it is the fittest to support the pride of family distinctions, it is
still likely to endure for many centuries. In every other respect,
nothing can be more contrary to the real interest of a numerous
family, than a right which, in order to enrich one, beggars all the
rest of the children.

Entails are the natural consequences of the law of primogeniture. They
were introduced to preserve a certain lineal succession, of which the
law of primogeniture first gave the idea, and to hinder any part of
the original estate from being carried out of the proposed line,
either by gift, or device, or alienation; either by the folly, or by
the misfortune of any of its successive owners. They were altogether
unknown to the Romans. Neither their substitutions, nor fidei
commisses, bear any resemblance to entails, though some French lawyers
have thought proper to dress the modern institution in the language
and garb of those ancient ones.

When great landed estates were a sort of principalities, entails might
not be unreasonable. Like what are called the fundamental laws of some
monarchies, they might frequently hinder the security of thousands
from being endangered by the caprice or extravagance of one man. But
in the present state of Europe, when small as well as great estates
derive their security from the laws of their country, nothing can be
more completely absurd. They are founded upon the most absurd of all
suppositions, the supposition that every successive generation of men
have not an equal right to the earth, and to all that it possesses;
but that the property of the present generation should be restrained
and regulated according to the fancy of those who died, perhaps five
hundred years ago. Entails, however, are still respected, through the
greater part of Europe; In those countries, particularly, in which
noble birth is a necessary qualification for the enjoyment either of
civil or military honours. Entails are thought necessary for
maintaining this exclusive privilege of the nobility to the great
offices and honours of their country; and that order having usurped
one unjust advantage over the rest of their fellow-citizens, lest
their poverty should render it ridiculous, it is thought reasonable
that they should have another. The common law of England, indeed, is
said to abhor perpetuities, and they are accordingly more restricted
there than in any other European monarchy; though even England is not
altogether without them. In Scotland, more than one fifth, perhaps
more than one third part of the whole lands in the country, are at
present supposed to be under strict entail.

Great tracts of uncultivated land were in this manner not only
engrossed by particular families, but the possibility of their being
divided again was as much as possible precluded for ever. It seldom
happens, however, that a great proprietor is a great improver. In the
disorderly times which gave birth to those barbarous institutions, the
great proprietor was sufficiently employed in defending his own
territories, or in extending his jurisdiction and authority over those
of his neighbours. He had no leisure to attend to the cultivation and
improvement of land. When the establishment of law and order afforded
him this leisure, he often wanted the inclination, and almost always
the requisite abilities. If the expense of his house and person either
equalled or exceeded his revenue, as it did very frequently, he had no
stock to employ in this manner. If he was an economist, he generally
found it more profitable to employ his annual savings in new purchases
than in the improvement of his old estate. To improve land with
profit, like all other commercial projects, requires an exact
attention to small savings and small gains, of which a man born to a
great fortune, even though naturally frugal, is very seldom capable.
The situation of such a person naturally disposes him to attend rather
to ornament, which pleases his fancy, than to profit, for which he has
so little occasion. The elegance of his dress, of his equipage, of his
house and household furniture, are objects which, from his infancy, he
has been accustomed to have some anxiety about. The turn of mind which
this habit naturally forms, follows him when he comes to think of the
improvement of land. He embellishes, perhaps, four or five hundred
acres in the neighbourhood of his house, at ten times the expense
which the land is worth after all his improvements; and finds, that if
he was to improve his whole estate in the same manner, and he has
little taste for any other, he would be a bankrupt before he had
finished the tenth part of it. There still remain, in both parts of
the united kingdom, some great estates which have continued, without
interruption, in the hands of the same family since the times of
feudal anarchy. Compare the present condition of those estates with
the possessions of the small proprietors in their neighbourhood, and
you will require no other argument to convince you how unfavourable
such extensive property is to improvement.

If little improvement was to be expected from such great proprietors,
still less was to be hoped for from those who occupied the land under
them. In the ancient state of Europe, the occupiers of land were all
tenants at will. They were all, or almost all, slaves, but their
slavery was of a milder kind than that known among the ancient Greeks
and Romans, or even in our West Indian colonies. They were supposed to
belong more directly to the land than to their master. They could,
therefore, be sold with it, but not separately. They could marry,
provided it was with the consent of their master; and he could not
afterwards dissolve the marriage by selling the man and wife to
different persons. If he maimed or murdered any of them, he was liable
to some penalty, though generally but to a small one. They were not,
however, capable of acquiring property. Whatever they acquired was
acquired to their master, and he could take it from them at pleasure.
Whatever cultivation and improvement could be carried on by means of
such slaves, was properly carried on by their master. It was at his
expense. The seed, the cattle, and the instruments of husbandry, were
all his. It was for his benefit. Such slaves could acquire nothing but
their daily maintenance. It was properly the proprietor himself,
therefore, that in this case occupied his own lands, and cultivated
them by his own bondmen. This species of slavery still subsists in
Russia, Poland, Hungary, Bohemia, Moravia, and other parts of Germany.
It is only in the western and south-western provinces of Europe that
it has gradually been abolished altogether.

But if great improvements are seldom to be expected from great
proprietors, they are least of all to be expected when they employ
slaves for their workmen. The experience of all ages and nations, I
believe, demonstrates that the work done by slaves, though it appears
to cost only their maintenance, is in the end the dearest of any. A
person who can acquire no property can have no other interest but to
eat as much and to labour as little as possible. Whatever work he does
beyond what is sufficient to purchase his own maintenance, can be
squeezed out of him by violence only, and not by any interest of his
own. In ancient Italy, how much the cultivation of corn degenerated,
how unprofitable it became to the master, when it fell under the
management of slaves, is remarked both by Pliny and Columella. In the
time of Aristotle, it had not been much better in ancient Greece.
Speaking of the ideal republic described in the laws of Plato, to
maintain 5000 idle men (the number of warriors supposed necessary for
its defence), together with their women and servants, would require,
he says, a territory of boundless extent and fertility, like the
plains of Babylon.

The pride of man makes him love to domineer, and nothing mortifies him
so much as to be obliged to condescend to persuade his inferiors.
Wherever the law allows it, and the nature of the work can afford it,
therefore, he will generally prefer the service of slaves to that of
freemen. The planting of sugar and tobacco can afford the expense of
slave cultivation. The raising of corn, it seems, in the present
times, cannot. In the English colonies, of which the principal produce
is corn, the far greater part of the work is done by freemen. The late
resolution of the Quakers in Pennsylvania, to set at liberty all their
negro slaves, may satisfy us that their number cannot be very great.
Had they made any considerable part of their property, such a
resolution could never have been agreed to. In our sugar colonies., on
the contrary, the whole work is done by slaves, and in our tobacco
colonies a very great part of it. The profits of a sugar plantation in
any of our West Indian colonies, are generally much greater than those
of any other cultivation that is known either in Europe or America;
and the profits of a tobacco plantation, though inferior to those of
sugar, are superior to those of corn, as has already been observed.
Both can afford the expense of slave cultivation but sugar can afford
it still better than tobacco. The number of negroes, accordingly, is
much greater, in proportion to that of whites, in our sugar than in
our tobacco colonies.

To the slave cultivators of ancient times gradually succeeded a
species of farmers, known at present in France by the name of
metayers. They are called in Latin Coloni Partiarii. They have been so
long in disuse in England, that at present I know no English name for
them. The proprietor furnished them with the seed, cattle, and
instruments of husbandry, the whole stock, in short, necessary for
cultivating the farm. The produce was divided equally between the
proprietor and the farmer, after setting aside what was judged
necessary for keeping up the stock, which was restored to the
proprietor, when the farmer either quitted or was turned out of the
farm.

Land occupied by such tenants is properly cultivated at the expense of
the proprietors, as much as that occupied by slaves. There is,
however, one very essential difference between them. Such tenants,
being freemen, are capable of acquiring property; and having a certain
proportion of the produce of the land, they have a plain interest that
the whole produce should be as great as possible, in order that their
own proportion may be so. A slave, on the contrary, who can acquire
nothing but his maintenance, consults his own ease, by making the land
produce as little as possible over and above that maintenance. It is
probable that it was partly upon account of this advantage, and partly
upon account of the encroachments which the sovereigns, always jealous
of the great lords, gradually encouraged their villains to make upon
their authority, and which seem, at least, to have been such as
rendered this species of servitude altogether inconvenient, that
tenure in villanage gradually wore out through the greater part of
Europe. The time and manner, however, in which so important a
revolution was brought about, is one of the most obscure points in
modern history. The church of Rome claims great merit in it; and it is
certain, that so early as the twelfth century, Alexander III.
published a bull for the general emancipation of slaves. It seems,
however, to have been rather a pious exhortation, than a law to which
exact obedience was required from the faithful. Slavery continued to
take place almost universally for several centuries afterwards, till
it was gradually abolished by the joint operation of the two interests
above mentioned; that of the proprietor on the one hand, and that of
the sovereign on the other. A villain, enfranchised, and at the same
time allowed to continue in possession of the land, having no stock of
his own, could cultivate it only by means of what the landlord
advanced to him, and must therefore have been what the French call a
metayer.

It could never, however, be the interest even of this last species of
cultivators, to lay out, in the further improvement of the land, any
part of the little stock which they might save from their own share of
the produce; because the landlord, who laid out nothing, was to get
one half of whatever it produced. The tithe, which is but a tenth of
the produce, is found to be a very great hindrance to improvement. A
tax, therefore, which amounted to one half, must have been an
effectual bar to it. It might be the interest of a metayer to make the
land produce as much as could be brought out of it by means of the
stock furnished by the proprietor; but it could never be his interest
to mix any part of his own with it. In France, where five parts out of
six of the whole kingdom are said to be still occupied by this species
of cultivators, the proprietors complain, that their metayers take
every opportunity of employing their master's cattle rather in
carriage than in cultivation; because, in the one case, they get the
whole profits to themselves, in the other they share them with their
landlord. This species of tenants still subsists in some parts of
Scotland. They are called steel-bow tenants. Those ancient English
tenants, who are said by Chief-Baron Gilbert and Dr Blackstone to have
been rather bailiffs of the landlord than farmers, properly so called,
were probably of the same kind.

To this species of tenantry succeeded, though by very slow degrees,
farmers, properly so called, who cultivated the land with their own
stock, paying a rent certain to the landlord. When such farmers have a
lease for a term of years, they may sometimes find it for their
interest to lay out part of their capital in the further improvement
of the farm; because they may sometimes expect to recover it, with a
large profit, before the expiration of the lease. The possession, even
of such farmers, however, was long extremely precarious, and still is
so in many parts of Europe. They could, before the expiration of their
term, be legally ousted of their leases by a new purchaser; in
England, even, by the fictitious action of a common recovery. If they
were turned out illegally by the violence of their master, the action
by which they obtained redress was extremely imperfect. It did not
always reinstate them in the possession of the land, but gave them
damages, which never amounted to a real loss. Even in England, the
country, perhaps of Europe, where the yeomanry has always been most
respected, it was not till about the 14th of Henry VII. that the
action of ejectment was invented, by which the tenant recovers, not
damages only, but possession, and in which his claim is not
necessarily concluded by the uncertain decision of a single assize.
This action has been found so effectual a remedy, that, in the modern
practice, when the landlord has occasion to sue for the possession of
the land, he seldom makes use of the actions which properly belong to
him as a landlord, the writ of right or the writ of entry, but sues in
the name of his tenant, by the writ of ejectment. In England,
therefore the security of the tenant is equal to that of the
proprietor. In England, besides, a lease for life of forty shillings
a-year value is a freehold, and entitles the lessee to a vote for a
member of parliament; and as a great part of the yeomanry have
freeholds of this kind, the whole order becomes respectable to their
landlords, on account of the political consideration which this gives
them. There is, I believe, nowhere in Europe, except in England, any
instance of the tenant building upon the land of which he had no
lease, and trusting that the honour of his landlord would take no
advantage of so important an improvement. Those laws and customs, so
favourable to the yeomanry, have perhaps contributed more to the
present grandeur of England, than all their boasted regulations of
commerce taken together.

The law which secures the longest leases against successors of every
kind, is, so far as I know, peculiar to Great Britain. It was
introduced into Scotland so early as 1449, by a law of James II. Its
beneficial influence, however, has been much obstructed by entails;
the heirs of entail being generally restrained from letting leases for
any long term of years, frequently for more than one year. A late act
of parliament has, in this respect, somewhat slackened their fetters,
though they are still by much too strait. In Scotland, besides, as no
leasehold gives a vote for a member of parliament, the yeomanry are
upon this account less respectable to their landlords than in England.

In other parts of Europe, after it was found convenient to secure
tenants both against heirs and purchasers, the term of their security
was still limited to a very short period; in France, for example, to
nine years from the commencement of the lease. It has in that country,
indeed, been lately extended to twentyseven, a period still too short
to encourage the tenant to make the most important improvements. The
proprietors of land were anciently the legislators of every part of
Europe. The laws relating to land, therefore, were all calculated for
what they supposed the interest of the proprietor. It was for his
interest, they had imagined, that no lease granted by any of his
predecessors should hinder him from enjoying, during a long term of
years, the full value of his land. Avarice and injustice are always
short-sighted, and they did not foresee how much this regulation must
obstruct improvement, and thereby hurt, in the long-run, the real
interest of the landlord.

The farmers, too, besides paying the rent, were anciently, it was
supposed, bound to perform a great number of services to the landlord,
which were seldom either specified in the lease, or regulated by any
precise rule, but by the use and wont of the manor or barony. These
services, therefore, being almost entirely arbitrary, subjected the
tenant to many vexations. In Scotland the abolition of all services
not precisely stipulated in the lease, has, in the course of a few
years, very much altered for the better the condition of the yeomanry
of that country.

The public services to which the yeomanry were bound, were not less
arbitrary than the private ones. To make and maintain the high roads,
a servitude which still subsists, I believe, everywhere, though with
different degrees of oppression in different countries, was not the
only one. When the king's troops, when his household, or his officers
of any kind, passed through any part of the country, the yeomanry were
bound to provide them with horses, carriages, and provisions, at a
price regulated by the purveyor. Great Britain is, I believe, the only
monarchy in Europe where the oppression of purveyance has been
entirely abolished. It still subsists in France and Germany.

The public taxes, to which they were subject, were as irregular and
oppressive as the services The ancient lords, though extremely
unwilling to grant, themselves, any pecuniary aid to their sovereign,
easily allowed him to tallage, as they called it, their tenants, and
had not knowledge enough to foresee how much this must, in the end,
affect their own revenue. The taille, as it still subsists in France.
may serve as an example of those ancient tallages. It is a tax upon
the supposed profits of the farmer, which they estimate by the stock
that he has upon the farm. It is his interest, therefore, to appear to
have as little as possible, and consequently to employ as little as
possible in its cultivation, and none in its improvement. Should any
stock happen to accumulate in the hands of a French farmer, the taille
is almost equal to a prohibition of its ever being employed upon the
land. This tax, besides, is supposed to dishonour whoever is subject
to it, and to degrade him below, not only the rank of a gentleman, but
that of a burgher; and whoever rents the lands of another becomes
subject to it. No gentleman, nor even any burgher, who has stock, will
submit to this degradation. This tax, therefore, not only hinders the
stock which accumulates upon the land from being employed in its
improvement, but drives away all other stock from it. The ancient
tenths and fifteenths, so usual in England in former times, seem, so
far as they affected the land, to have been taxes of the same nature
with the taille.

Under all these discouragements, little improvement could be expected
from the occupiers of land. That order of people, with all the liberty
and security which law can give, must always improve under great
disadvantage. The farmer, compared with the proprietor, is as a
merchant who trades with burrowed money, compared with one who trades
with his own. The stock of both may improve; but that of the one, with
only equal good conduct, must always improve more slowly than that of
the other, on account of the large share of the profits which is
consumed by the interest of the loan. The lands cultivated by the
farmer must, in the same manner, with only equal good conduct, be
improved more slowly than those cultivated by the proprietor, on
account of the large share of the produce which is consumed in the
rent, and which, had the farmer been proprietor, he might have
employed in the further improvement of the land. The station of a
farmer, besides, is, from the nature of things, inferior to that of a
proprietor. Through the greater part of Europe, the yeomanry are
regarded as an inferior rank of people, even to the better sort of
tradesmen and mechanics, and in all parts of Europe to the great
merchants and master manufacturers. It can seldom happen, therefore,
that a man of any considerable stock should quit the superior, in
order to place himself in an inferior station. Even in the present
state of Europe, therefore, little stock is likely to go from any
other profession to the improvement of land in the way of farming.
More does, perhaps, in Great Britain than in any other country, though
even there the great stocks which are in some places employed in
farming, have generally been acquired by fanning, the trade, perhaps,
in which, of all others, stock is commonly acquired most slowly. After
small proprietors, however, rich and great farmers are in every
country the principal improvers. There are more such, perhaps, in
England than in any other European monarchy. In the republican
governments of Holland, and of Berne in Switzerland, the farmers are
said to be not inferior to those of England.

The ancient policy of Europe was, over and above all this,
unfavourable to the improvement and cultivation of land, whether
carried on by the proprietor or by the farmer; first, by the general
prohibition of the exportation of corn, without a special licence,
which seems to have been a very universal regulation; and, secondly,
by the restraints which were laid upon the inland commerce, not only
of corn, but of almost every other part of the produce of the farm, by
the absurd laws against engrossers, regraters, and forestallers, and
by the privileges of fairs and markets. It has already been observed
in what manner the prohibition of the exportation of corn, together
with some encouragement given to the importation of foreign corn,
obstructed the cultivation of ancient Italy, naturally the most
fertile country in Europe, and at that time the seat of the greatest
empire in the world. To what degree such restraints upon the inland
commerce of this commodity, joined to the general prohibition of
exportation, must have discouraged the cultivation of countries less
fertile, and less favourably circumstanced, it is not, perhaps, very
easy to imagine.




CHAPTER III.

OF THE RISE AND PROGRESS OF CITIES AND TOWNS, AFTER THE FALL OF THE
ROMAN EMPIRE.

The inhabitants of cities and towns were, after the fall of the Roman
empire, not more favoured than those of the country. They consisted,
indeed, of a very different order of people from the first inhabitants
of the ancient republics of Greece and Italy. These last were composed
chiefly of the proprietors of lands, among whom the public territory
was originally divided, and who found it convenient to build their
houses in the neighbourhood of one another, and to surround them with
a wall, for the sake of common defence. After the fall of the Roman
empire, on the contrary, the proprietors of land seem generally to
have lived in fortified castles on their own estates, and in the midst
of their own tenants and dependants. The towns were chiefly inhabited
by tradesmen and mechanics, who seem, in those days, to have been of
servile, or very nearly of servile condition. The privileges which we
find granted by ancient charters to the inhabitants of some of the
principal towns in Europe, sufficiently show what they were before
those grants. The people to whom it is granted as a privilege, that
they might give away their own daughters in marriage without the
consent of their lord, that upon their death their own children, and
not their lord, should succeed to their goods, and that they might
dispose of their own effects by will, must, before those grants, have
been either altogether, or very nearly, in the same state of villanage
with the occupiers of land in the country.

They seem, indeed, to have been a very poor, mean set of people, who
seemed to travel about with their goods from place to place, and from
fair to fair, like the hawkers and pedlars of the present times. In
all the different countries of Europe then, in the same manner as in
several of the Tartar governments of Asia at present, taxes used to be
levied upon the persons and goods of travellers, when they passed
through certain manors, when they went over certain bridges, when they
carried about their goods from place to place in a fair, when they
erected in it a booth or stall to sell them in. These different taxes
were known in England by the names of passage, pontage, lastage, and
stallage. Sometimes the king, sometimes a great lord, who had, it
seems, upon some occasions, authority to do this, would grant to
particular traders, to such particularly as lived in their own
demesnes, a general exemption from such taxes. Such traders, though in
other respects of servile, or very nearly of servile condition, were
upon this account called free traders. They, in return, usually paid
to their protector a sort of annual poll-tax. In those days protection
was seldom granted without a valuable consideration, and this tax
might perhaps be considered as compensation for what their patrons
might lose by their exemption from other taxes. At first, both those
poll-taxes and those exemptions seem to have been altogether personal,
and to have affected only particular individuals, during either their
lives, or the pleasure of their protectors. In the very imperfect
accounts which have been published from Doomsday-book, of several of
the towns of England, mention is frequently made, sometimes of the tax
which particular burghers paid, each of them, either to the king, or
to some other great lord, for this sort of protection, and sometimes
of the general amount only of all those taxes. {see Brady's Historical
Treatise of Cities and Boroughs, p. 3. etc.}

But how servile soever may have been originally the condition of the
inhabitants of the towns, it appears evidently, that they arrived at
liberty and independency much earlier than the occupiers of land in
the country. That part of the king's revenue which arose from such
poll-taxes in any particular town, used commonly to be let in farm,
during a term of years, for a rent certain, sometimes to the sheriff
of the county, and sometimes to other persons. The burghers themselves
frequently got credit enough to be admitted to farm the revenues of
this sort winch arose out of their own town, they becoming jointly and
severally answerable for the whole rent. {See Madox, Firma Burgi, p.
18; also History of the Exchequer, chap. 10, sect. v, p. 223, first
edition.} To let a farm in this manner, was quite agreeable to the
usual economy of, I believe, the sovereigns of all the different
countries of Europe, who used frequently to let whole manors to all
the tenants of those manors, they becoming jointly and severally
answerable for the whole rent; but in return being allowed to collect
it in their own way, and to pay it into the king's exchequer by the
hands of their own bailiff, and being thus altogether freed from the
insolence of the king's officers; a circumstance in those days
regarded as of the greatest importance.

At first, the farm of the town was probably let to the burghers, in
the same manner as it had been to other farmers, for a term of years
only. In process of time, however, it seems to have become the general
practice to grant it to them in fee, that is for ever, reserving a
rent certain, never afterwards to be augmented. The payment having
thus become perpetual, the exemptions, in return, for which it was
made, naturally became perpetual too. Those exemptions, therefore,
ceased to be personal, and could not afterwards be considered as
belonging to individuals, as individuals, but as burghers of a
particular burgh, which, upon this account, was called a free burgh,
for the same reason that they had been called free burghers or free
traders.

Along with this grant, the important privileges, above mentioned, that
they might give away their own daughters in marriage, that their
children should succeed to them, and that they might dispose of their
own effects by will, were generally bestowed upon the burghers of the
town to whom it was given. Whether such privileges had before been
usually granted, along with the freedom of trade, to particular
burghers, as individuals, I know not. I reckon it not improbable that
they were, though I cannot produce any direct evidence of it. But
however this may have been, the principal attributes of villanage and
slavery being thus taken away from them, they now at least became
really free, in our present sense of the word freedom.

Nor was this all. They were generally at the same time erected into a
commonalty or corporation, with the privilege of having magistrates
and a town-council of their own, of making bye-laws for their own
government, of building walls for their own defence, and of reducing
all their inhabitants under a sort of military discipline, by obliging
them to watch and ward; that is, as anciently understood, to guard and
defend those walls against all attacks and surprises, by night as well
as by day. In England they were generally exempted from suit to the
hundred and county courts: and all such pleas as should arise among
them, the pleas of the crown excepted, were left to the decision of
their own magistrates. In other countries, much greater and more
extensive jurisdictions were frequently granted to them. {See Madox,
Firma Burgi. See also Pfeffel in the Remarkable events under Frederick
II. and his Successors of the House of Suabia.}

It might, probably, be necessary to grant to such towns as were
admitted to farm their own revenues, some sort of compulsive
jurisdiction to oblige their own citizens to make payment. In those
disorderly times, it might have been extremely inconvenient to have
left them to seek this sort of justice from any other tribunal. But it
must seem extraordinary, that the sovereigns of all the different
countries of Europe should have exchanged in this manner for a rent
certain, never more to be augmented, that branch of their revenue,
which was, perhaps, of all others, the most likely to be improved by
the natural course of things, without either expense or attention of
their own; and that they should, besides, have in this manner
voluntarily erected a sort of independent republics in the heart of
their own dominions.

In order to understand this, it must be remembered, that, in those
days, the sovereign of perhaps no country in Europe was able to
protect, through the whole extent of his dominions, the weaker part of
his subjects from the oppression of the great lords. Those whom the
law could not protect, and who were not strong enough to defend
themselves, were obliged either to have recourse to the protection of
some great lord, and in order to obtain it, to become either his
slaves or vassals; or to enter into a league of mutual defence for the
common protection of one another. The inhabitants of cities and
burghs, considered as single individuals, had no power to defend
themselves; but by entering into a league of mutual defence with their
neighbours, they were capable of making no contemptible resistance.
The lords despised the burghers, whom they considered not only as a
different order, but as a parcel of emancipated slaves, almost of a
different species from themselves. The wealth of the burghers never
failed to provoke their envy and indignation, and they plundered them
upon every occasion without mercy or remorse. The burghers naturally
hated and feared the lords. The king hated and feared them too; but
though, perhaps, he might despise, he had no reason either to hate or
fear the burghers. Mutual interest, therefore, disposed them to
support the king, and the king to support them against the lords. They
were the enemies of his enemies, and it was his interest to render
them as secure and independent of those enemies as he could. By
granting them magistrates of their own, the privilege of making
bye-laws for their own government, that of building walls for their
own defence, and that of reducing all their inhabitants under a sort
of military discipline, he gave them all the means of security and
independency of the barons which it was in his power to bestow.
Without the establishment of some regular government of this kind,
without some authority to compel their inhabitants to act according to
some certain plan or system, no voluntary league of mutual defence
could either have afforded them any permanent security, or have
enabled them to give the king any considerable support. By granting
them the farm of their own town in fee, he took away from those whom
he wished to have for his friends, and, if one may say so, for his
allies, all ground of jealousy and suspicion, that he was ever
afterwards to oppress them, either by raising the farm-rent of their
town, or by granting it to some other farmer.

The princes who lived upon the worst terms with their barons, seem
accordingly to have been the most liberal in grants of this kind to
their burghs. King John of England, for example, appears to have been
a most munificent benefactor to his towns. {See Madox.} Philip I. of
France lost all authority over his barons. Towards the end of his
reign, his son Lewis, known afterwards by the name of Lewis the Fat,
consulted, according to Father Daniel, with the bishops of the royal
demesnes, concerning the most proper means of restraining the violence
of the great lords. Their advice consisted of two different proposals.
One was to erect a new order of jurisdiction, by establishing
magistrates and a town-council in every considerable town of his
demesnes. The other was to form a new militia, by making the
inhabitants of those towns, under the command of their own
magistrates, march out upon proper occasions to the assistance of the
king. It is from this period, according to the French antiquarians,
that we are to date the institution of the magistrates and councils of
cities in France. It was during the unprosperous reigns of the princes
of the house of Suabia, that the greater part of the free towns of
Germany received the first grants of their privileges, and that the
famous Hanseatic league first became formidable. {See Pfeffel.}

The militia of the cities seems, in those times, not to have been
inferior to that of the country; and as they could be more readily
assembled upon any sudden occasion, they frequently had the advantage
in their disputes with the neighbouring lords. In countries such as
Italy or Switzerland, in which, on account either of their distance
from the principal seat of government, of the natural strength of the
country itself, or of some other reason, the sovereign came to lose
the whole of his authority; the cities generally became independent
republics, and conquered all the nobility in their neighbourhood;
obliging them to pull down their castles in the country, and to live,
like other peaceable inhabitants, in the city. This is the short
history of the republic of Berne, as well as of several other cities
in Switzerland. If you except Venice, for of that city the history is
somewhat different, it is the history of all the considerable Italian
republics, of which so great a number arose and perished between the
end of the twelfth and the beginning of the sixteenth century.

In countries such as France and England, where the authority of the
sovereign, though frequently very low, never was destroyed altogether,
the cities had no opportunity of becoming entirely independent. They
became, however, so considerable, that the sovereign could impose no
tax upon them, besides the stated farm-rent of the town, without their
own consent. They were, therefore, called upon to send deputies to the
general assembly of the states of the kingdom, where they might join
with the clergy and the barons in granting, upon urgent occasions,
some extraordinary aid to the king. Being generally, too, more
favourable to his power, their deputies seem sometimes to have been
employed by him as a counterbalance in those assemblies to the
authority of the great lords. Hence the origin of the representation
of burghs in the states-general of all great monarchies in Europe.

Order and good government, and along with them the liberty and
security of individuals, were in this manner established in cities, at
a time when the occupiers of land in the country, were exposed to
every sort of violence. But men in this defenceless state naturally
content themselves with their necessary subsistence; because, to
acquire more, might only tempt the injustice of their oppressors. On
the contrary, when they are secure of enjoying the fruits of their
industry, they naturally exert it to better their condition, and to
acquire not only the necessaries, but the conveniencies and elegancies
of life. That industry, therefore, which aims at something more than
necessary subsistence, was established in cities long before it was
commonly practised by the occupiers of land in the country. If, in the
hands of a poor cultivator, oppressed with the servitude of villanage,
some little stock should accumulate, he would naturally conceal it
with great care from his master, to whom it would otherwise have
belonged, and take the first opportunity of running away to a town.
The law was at that time so indulgent to the inhabitants of towns, and
so desirous of diminishing the authority of the lords over those of
the country, that if he could conceal himself there from the pursuit
of his lord for a year, he was free for ever. Whatever stock,
therefore, accumulated in the hands of the industrious part of the
inhabitants of the country, naturally took refuge in cities, as the
only sanctuaries in which it could be secure to the person that
acquired it.

The inhabitants of a city, it is true, must always ultimately derive
their subsistence, and the whole materials and means of their
industry, from the country. But those of a city, situated near either
the sea-coast or the banks of a navigable river, are not necessarily
confined to derive them from the country in their neighbourhood. They
have a much wider range, and may draw them from the most remote
corners of the world, either in exchange for the manufactured produce
of their own industry, or by performing the office of carriers between
distant countries, and exchanging the produce of one for that of
another. A city might, in this manner, grow up to great wealth and
splendour, while not only the country in its neighbourhood, but all
those to which it traded, were in poverty and wretchedness. Each of
those countries, perhaps, taken singly, could afford it but a small
part, either of its subsistence or of its employment; but all of them
taken together, could afford it both a great subsistence and a great
employment. There were, however, within the narrow circle of the
commerce of those times, some countries that were opulent and
industrious. Such was the Greek empire as long as it subsisted, and
that of the Saracens during the reigns of the Abassides. Such, too,
was Egypt till it was conquered by the Turks, some part of the coast
of Barbary, and all those provinces of Spain which were under the
government of the Moors.

The cities of Italy seem to have been the first in Europe which were
raised by commerce to any considerable degree of opulence. Italy lay
in the centre of what was at that time the improved and civilized part
of the world. The crusades, too, though, by the great waste of stock
and destruction of inhabitants which they occasioned, they must
necessarily have retarded the progress of the greater part of Europe,
were extremely favourable to that of some Italian cities. The great
armies which marched from all parts to the conquest of the Holy Land,
gave extraordinary encouragement to the shipping of Venice, Genoa, and
Pisa, sometimes in transporting them thither, and always in supplying
them with provisions. They were the commissaries, if one may say so,
of those armies; and the most destructive frenzy that ever befel the
European nations, was a source of opulence to those republics.

The inhabitants of trading cities, by importing the improved
manufactures and expensive luxuries of richer countries, afforded some
food to the vanity of the great proprietors, who eagerly purchased
them with great quantities of the rude produce of their own lands. The
commerce of a great part of Europe in those times, accordingly,
consisted chiefly in the exchange of their own rude, for the
manufactured produce of more civilized nations. Thus the wool of
England used to be exchanged for the wines of France, and the fine
cloths of Flanders, in the same manner as the corn in Poland is at
this day, exchanged for the wines and brandies of France, and for the
silks and velvets of France and Italy.

A taste for the finer and more improved manufactures was, in this
manner, introduced by foreign commerce into countries where no such
works were carried on. But when this taste became so general as to
occasion a considerable demand, the merchants, in order to save the
expense of carriage, naturally endeavoured to establish some
manufactures of the same kind in their own country. Hence the origin
of the first manufactures for distant sale, that seem to have been
established in the western provinces of Europe, after the fall of the
Roman empire.

No large country, it must be observed, ever did or could subsist
without some sort of manufactures being carried on in it; and when it
is said of any such country that it has no manufactures, it must
always be understood of the finer and more improved, or of such as are
fit for distant sale. In every large country both the clothing and
household furniture or the far greater part of the people, are the
produce of their own industry. This is even more universally the case
in those poor countries which are commonly said to have no
manufactures, than in those rich ones that are said to abound in them.
In the latter you will generally find, both in the clothes and
household furniture of the lowest rank of people, a much greater
proportion of foreign productions than in the former.

Those manufactures which are fit for distant sale, seem to have been
introduced into different countries in two different ways.

Sometimes they have been introduced in the manner above mentioned, by
the violent operation, if one may say so, of the stocks of particular
merchants and undertakers, who established them in imitation of some
foreign manufactures of the same kind. Such manufactures, therefore,
are the offspring of foreign commerce; and such seem to have been the
ancient manufactures of silks, velvets, and brocades, which flourished
in Lucca during the thirteenth century. They were banished from thence
by the tyranny of one of Machiavel's heroes, Castruccio Castracani. In
1310, nine hundred families were driven out of Lucca, of whom
thirty-one retired to Venice, and offered to introduce there the silk
manufacture. {See Sandi Istoria civile de Vinezia, part 2 vol. i, page
247 and 256.} Their offer was accepted, many privileges were conferred
upon them, and they began the manufacture with three hundred workmen.
Such, too, seem to have been the manufactures of fine cloths that
anciently flourished in Flanders, and which were introduced into
England in the beginning of the reign of Elizabeth, and such are the
present silk manufactures of Lyons and Spitalfields. Manufactures
introduced in this manner are generally employed upon foreign
materials, being imitations of foreign manufactures. When the Venetian
manufacture was first established, the materials were all brought from
Sicily and the Levant. The more ancient manufacture of Lucca was
likewise carried on with foreign materials. The cultivation of
mulberry trees, and the breeding of silk-worms, seem not to have been
common in the northern parts of Italy before the sixteenth century.
Those arts were not introduced into France till the reign of Charles
IX. The manufactures of Flanders were carried on chiefly with Spanish
and English wool. Spanish wool was the material, not of the first
woollen manufacture of England, but of the first that was fit for
distant sale. More than one half the materials of the Lyons
manufacture is at this day foreign silk; when it was first
established, the whole, or very nearly the whole, was so. No part of
the materials of the Spitalfields manufacture is ever likely to be the
produce of England. The seat of such manufactures, as they are
generally introduced by the scheme and project of a few individuals,
is sometimes established in a maritime city, and sometimes in an
inland town, according as their interest, judgment, or caprice, happen
to determine.

At other times, manufactures for distant sale grow up naturally, and
as it were of their own accord, by the gradual refinement of those
household and coarser manufactures which must at all times be carried
on even in the poorest and rudest countries. Such manufactures are
generally employed upon the materials which the country produces, and
they seem frequently to have been first refined and improved In such
inland countries as were not, indeed, at a very great, but at a
considerable distance from the sea-coast, and sometimes even from all
water carriage. An inland country, naturally fertile and easily
cultivated, produces a great surplus of provisions beyond what is
necessary for maintaining the cultivators; and on account of the
expense of land carriage, and inconveniency of river navigation, it
may frequently be difficult to send this surplus abroad. Abundance,
therefore, renders provisions cheap, and encourages a great number of
workmen to settle in the neighbourhood, who find that their industry
can there procure them more of the necessaries and conveniencies of
life than in other places. They work up the materials of manufacture
which the land produces, and exchange their finished work, or, what is
the same thing, the price of it, for more materials and provisions.
They give a new value to the surplus part of the rude produce, by
saving the expense of carrying it to the water-side, or to some
distant market; and they furnish the cultivators with something in
exchange for it that is either useful or agreeable to them, upon
easier terms than they could have obtained it before. The cultivators
get a better price for their surplus produce, and can purchase cheaper
other conveniencies which they have occasion for. They are thus both
encouraged and enabled to increase this surplus produce by a further
improvement and better cultivation of the land; and as the fertility
of she land had given birth to the manufacture, so the progress of the
manufacture reacts upon the land, and increases still further it's
fertility. The manufacturers first supply the neighbourhood, and
afterwards, as their work improves and refines, more distant markets.
For though neither the rude produce, nor even the coarse manufacture,
could, without the greatest difficulty, support the expense of a
considerable land-carriage, the refined and improved manufacture
easily may. In a small bulk it frequently contains the price of a
great quantity of rude produce. A piece of fine cloth, for example
which weighs only eighty pounds, contains in it the price, not only of
eighty pounds weight of wool, but sometimes of several thousand weight
of corn, the maintenance of the different working people, and of their
immediate employers. The corn which could with difficulty have been
carried abroad in its own shape, is in this manner virtually exported
in that of the complete manufacture, and may easily be sent to the
remotest corners of the world. In this manner have grown up naturally,
and, as it were, of their own accord, the manufactures of Leeds,
Halifax, Sheffield, Birmingham, and Wolverhampton. Such manufactures
are the offspring of agriculture. In the modern history of Europe,
their extension and improvement have generally been posterior to those
which were the offspring of foreign commerce. England was noted for
the manufacture of fine cloths made of Spanish wool, more than a
century before any of those which now flourish in the places above
mentioned were fit for foreign sale. The extension and improvement of
these last could not take place but in consequence of the extension
and improvement of agriculture, the last and greatest effect of
foreign commerce, and of the manufactures immediately introduced by
it, and which I shall now proceed to explain.




CHAPTER IV.

HOW THE COMMERCE OF TOWNS CONTRIBUTED TO THE IMPROVEMENT OF THE
COUNTRY.

The increase and riches of commercial and manufacturing towns
contributed to the improvement and cultivation of the countries to
which they belonged, in three different ways:

First, by affording a great and ready market for the rude produce of
the country, they gave encouragement to its cultivation and further
improvement. This benefit was not even confined to the countries in
which they were situated, but extended more or less to all those with
which they had any dealings. To all of them they afforded a market for
some part either of their rude or manufactured produce, and,
consequently, gave some encouragement to the industry and improvement
of all. Their own country, however, on account of its neighbourhood,
necessarily derived the greatest benefit from this market. Its rude
produce being charged with less carriage, the traders could pay the
growers a better price for it, and yet afford it as cheap to the
consumers as that of more distant countries.

Secondly, the wealth acquired by the inhabitants of cities was
frequently employed in purchasing such lands as were to be sold, of
which a great part would frequently be uncultivated. Merchants are
commonly ambitious of becoming country gentlemen, and, when they do,
they are generally the best of all improvers. A merchant is accustomed
to employ his money chiefly in profitable projects; whereas a mere
country gentleman is accustomed to employ it chiefly in expense. The
one often sees his money go from him, and return to him again with a
profit; the other, when once he parts with it, very seldom expects to
see any more of it. Those different habits naturally affect their
temper and disposition in every sort of business. The merchant is
commonly a bold, a country gentleman a timid undertaker. The one is
not afraid to lay out at once a large capital upon the improvement of
his land, when he has a probable prospect of raising the value of it
in proportion to the expense; the other, if he has any capital, which
is not always the case, seldom ventures to employ it in this manner.
If he improves at all, it is commonly not with a capital, but with
what he can save out or his annual revenue. Whoever has had the
fortune to live in a mercantile town, situated in an unimproved
country, must have frequently observed how much more spirited the
operations of merchants were in this way, than those of mere country
gentlemen. The habits, besides, of order, economy, and attention, to
which mercantile business naturally forms a merchant, render him much
fitter to execute, with profit and success, any project of
improvement.

Thirdly, and lastly, commerce and manufactures gradually introduced
order and good government, and with them the liberty and security of
individuals, among the inhabitants of the country, who had before
lived almost in a continual state of war with their neighbours, and of
servile dependency upon their superiors. This, though it has been the
least observed, is by far the most important of all their effects. Mr
Hume is the only writer who, so far as I know, has hitherto taken
notice of it.

In a country which has neither foreign commerce nor any of the finer
manufactures, a great proprietor, having nothing for which he can
exchange the greater part of the produce of his lands which is over
and above the maintenance of the cultivators, consumes the whole in
rustic hospitality at home. If this surplus produce is sufficient to
maintain a hundred or a thousand men, he can make use of it in no
other way than by maintaining a hundred or a thousand men. He is at
all times, therefore, surrounded with a multitude of retainers and
dependants, who, having no equivalent to give in return for their
maintenance, but being fed entirely by his bounty, must obey him, for
the same reason that soldiers must obey the prince who pays them.
Before the extension of commerce and manufactures in Europe, the
hospitality of the rich and the great, from the sovereign down to the
smallest baron, exceeded every thing which, in the present times, we
can easily form a notion of Westminster-hall was the dining-room of
William Rufus, and might frequently, perhaps, not be too large for his
company. It was reckoned a piece of magnificence in Thomas Becket,
that he strewed the floor of his hall with clean hay or rushes in the
season, in order that the knights and squires, who could not get
seats, might not spoil their fine clothes when they sat down on the
floor to eat their dinner. The great Earl of Warwick is said to have
entertained every day, at his different manors, 30,000 people; and
though the number here may have been exaggerated, it must, however,
have been very great to admit of such exaggeration. A hospitality
nearly of the same kind was exercised not many years ago in many
different parts of the Highlands of Scotland. It seems to be common in
all nations to whom commerce and manufactures are little known. I have
seen, says Doctor Pocock, an Arabian chief dine in the streets of a
town where he had come to sell his cattle, and invite all passengers,
even common beggars, to sit down with him and partake of his banquet.

The occupiers of land were in every respect as dependent upon the
great proprietor as his retainers. Even such of them as were not in a
state of villanage, were tenants at will, who paid a rent in no
respect equivalent to the subsistence which the land afforded them. A
crown, half a crown, a sheep, a lamb, was some years ago, in the
Highlands of Scotland, a common rent for lands which maintained a
family. In some places it is so at this day; nor will money at present
purchase a greater quantity of commodities there than in other places.
In a country where the surplus produce of a large estate must be
consumed upon the estate itself, it will frequently be more convenient
for the proprietor, that part of it be consumed at a distance from his
own house, provided they who consume it are as dependent upon him as
either his retainers or his menial servants. He is thereby saved from
the embarrassment of either too large a company, or too large a
family. A tenant at will, who possesses land sufficient to maintain
his family for little more than a quit-rent, is as dependent upon the
proprietor as any servant or retainer whatever, and must obey him with
as little reserve. Such a proprietor, as he feeds his servants and
retainers at his own house, so he feeds his tenants at their houses.
The subsistence of both is derived from his bounty, and its
continuance depends upon his good pleasure.

Upon the authority which the great proprietors necessarily had, in
such a state of things, over their tenants and retainers, was founded
the power of the ancient barons. They necessarily became the judges in
peace, and the leaders in war, of all who dwelt upon their estates.
They could maintain order, and execute the law, within their
respective demesnes, because each of them could there turn the whole
force of all the inhabitants against the injustice of anyone. No other
person had sufficient authority to do this. The king, in particular,
had not. In those ancient times, he was little more than the greatest
proprietor in his dominions, to whom, for the sake of common defence
against their common enemies, the other great proprietors paid certain
respects. To have enforced payment of a small debt within the lands of
a great proprietor, where all the inhabitants were armed, and
accustomed to stand by one another, would have cost the king, had he
attempted it by his own authority, almost the same effort as to
extinguish a civil war. He was, therefore, obliged to abandon the
administration of justice, through the greater part of the country, to
those who were capable of administering it; and, for the same reason,
to leave the command of the country militia to those whom that militia
would obey.

It is a mistake to imagine that those territorial jurisdictions took
their origin from the feudal law. Not only the highest jurisdictions,
both civil and criminal, but the power of levying troops, of coining
money, and even that of making bye-laws for the government of their
own people, were all rights possessed allodially by the great
proprietors of land, several centuries before even the name of the
feudal law was known in Europe. The authority and jurisdiction of the
Saxon lords in England appear to have been as great before the
Conquest as that of any of the Norman lords after it. But the feudal
law is not supposed to have become the common law of England till
after the Conquest. That the most extensive authority and
jurisdictions were possessed by the great lords in France allodially,
long before the feudal law was introduced into that country, is a
matter of fact that admits of no doubt. That authority, and those
jurisdictions, all necessarily flowed from the state of property and
manners just now described. Without remounting to the remote
antiquities of either the French or English monarchies, we may find,
in much later times, many proofs that such effects must always flow
from such causes. It is not thirty years ago since Mr Cameron of
Lochiel, a gentleman of Lochaber in Scotland, without any legal
warrant whatever, not being what was then called a lord of regality,
nor even a tenant in chief, but a vassal of the Duke of Argyll, and
with out being so much as a justice of peace, used, notwithstanding,
to exercise the highest criminal jurisdictions over his own people. He
is said to have done so with great equity, though without any of the
formalities of justice; and it is not improbable that the state of
that part of the country at that time made it necessary for him to
assume this authority, in order to maintain the public peace. That
gentleman, whose rent never exceeded £500 a-year, carried, in 1745,
800 of his own people into the rebellion with him.

The introduction of the feudal law, so far from extending, may be
regarded as an attempt to moderate, the authority of the great
allodial lords. It established a regular subordination, accompanied
with a long train of services and duties, from the king down to the
smallest proprietor. During the minority of the proprietor, the rent,
together with the management of his lands, fell into the hands of his
immediate superior; and, consequently, those of all great proprietors
into the hands of the king, who was charged with the maintenance and
education of the pupil, and who, from his authority as guardian, was
supposed to have a right of disposing of him in marriage, provided it
was in a manner not unsuitable to his rank. But though this
institution necessarily tended to strengthen the authority of the
king, and to weaken that of the great proprietors, it could not do
either sufficiently for establishing order and good government among
the inhabitants of the country; because it could not alter
sufficiently that state of property and manners from which the
disorders arose. The authority of government still continued to be, as
before, too weak in the head, and too strong in the inferior members;
and the excessive strength of the inferior members was the cause of
the weakness of the head. After the institution of feudal
subordination, the king was as incapable of restraining the violence
of the great lords as before. They still continued to make war
according to their own discretion, almost continually upon one
another, and very frequently upon the king; and the open country still
continued to be a scene of violence, rapine, and disorder.

But what all the violence of the feudal institutions could never have
effected, the silent and insensible operation of foreign commerce and
manufactures gradually brought about. These gradually furnished the
great proprietors with something for which they could exchange the
whole surplus produce of their lands, and which they could consume
themselves, without sharing it either with tenants or retainers. All
for ourselves, and nothing for other people, seems, in every age of
the world, to have been the vile maxim of the masters of mankind. As
soon, therefore, as they could find a method of consuming the whole
value of their rents themselves, they had no disposition to share them
with any other persons. For a pair of diamond buckles, perhaps, or for
something as frivolous and useless, they exchanged the maintenance,
or, what is the same thing, the price of the maintenance of 1000 men
for a year, and with it the whole weight and authority which it could
give them. The buckles, however, were to be all their own, and no
other human creature was to have any share of them; whereas, in the
more ancient method of expense, they must have shared with at least
1000 people. With the judges that were to determine the preference,
this difference was perfectly decisive; and thus, for the
gratification of the most childish, the meanest, and the most sordid
of all vanities they gradually bartered their whole power and
authority.

In a country where there is no foreign commerce, nor any of the finer
manufactures, a man of £10,000 a-year cannot well employ his revenue
in any other way than in maintaining, perhaps, 1000 families, who are
all of them necessarily at his command. In the present state of
Europe, a man of £10,000 a-year can spend his whole revenue, and he
generally does so, without directly maintaining twenty people, or
being able to command more than ten footmen, not worth the commanding.
Indirectly, perhaps, he maintains as great, or even a greater number
of people, than he could have done by the ancient method of expense.
For though the quantity of precious productions for which he exchanges
his whole revenue be very small, the number of workmen employed in
collecting and preparing it must necessarily have been very great. Its
great price generally arises from the wages of their labour, and the
profits of all their immediate employers. By paying that price, he
indirectly pays all those wages and profits, and thus indirectly
contributes to the maintenance of all the workmen and their employers.
He generally contributes, however, but a very small proportion to that
of each; to a very few, perhaps, not a tenth, to many not a hundredth,
and to some not a thousandth, or even a ten thousandth part of their
whole annual maintenance. Though he contributes, therefore, to the
maintenance of them all, they are all more or less independent of him,
because generally they can all be maintained without him.

When the great proprietors of land spend their rents in maintaining
their tenants and retainers, each of them maintains entirely all his
own tenants and all his own retainers. But when they spend them in
maintaining tradesmen and artificers, they may, all of them taken
together, perhaps maintain as great, or, on account of the waste which
attends rustic hospitality, a greater number of people than before.
Each of them, however, taken singly, contributes often but a very
small share to the maintenance of any individual of this greater
number. Each tradesman or artificer derives his subsistence from the
employment, not of one, but of a hundred or a thousand different
customers. Though in some measure obliged to them all, therefore, he
is not absolutely dependent upon any one of them.

The personal expense of the great proprietors having in this manner
gradually increased, it was impossible that the number of their
retainers should not as gradually diminish, till they were at last
dismissed altogether. The same cause gradually led them to dismiss the
unnecessary part of their tenants. Farms were enlarged, and the
occupiers of land, notwithstanding the complaints of depopulation,
reduced to the number necessary for cultivating it, according to the
imperfect state of cultivation and improvement in those times. By the
removal of the unnecessary mouths, and by exacting from the farmer the
full value of the farm, a greater surplus, or, what is the same thing,
the price of a greater surplus, was obtained for the proprietor, which
the merchants and manufacturers soon furnished him with a method of
spending upon his own person, in the same manner as he had done the
rest. The cause continuing to operate, he was desirous to raise his
rents above what his lands, in the actual state of their improvement,
could afford. His tenants could agree to this upon one condition only,
that they should be secured in their possession for such a term of
years as might give them time to recover, with profit, whatever they
should lay not in the further improvement of the land. The expensive
vanity of the landlord made him willing to accept of this condition;
and hence the origin of long leases.

Even a tenant at will, who pays the full value of the land, is not
altogether dependent upon the landlord. The pecuniary advantages which
they receive from one another are mutual and equal, and such a tenant
will expose neither his life nor his fortune in the service of the
proprietor. But if he has a lease for along term of years, he is
altogether independent; and his landlord must not expect from him even
the most trifling service, beyond what is either expressly stipulated
in the lease, or imposed upon him by the common and known law of the
country.

The tenants having in this manner become independent, and the
retainers being dismissed, the great proprietors were no longer
capable of interrupting the regular execution of justice, or of
disturbing the peace of the country. Having sold their birth-right,
not like Esau, for a mess of pottage in time of hunger and necessity,
but, in the wantonness of plenty, for trinkets and baubles, fitter to
be the playthings of children than the serious pursuits of men, they
became as insignificant as any substantial burgher or tradesmen in a
city. A regular government was established in the country as well as
in the city, nobody having sufficient power to disturb its operations
in the one, any more than in the other.

It does not, perhaps, relate to the present subject, but I cannot help
remarking it, that very old families, such as have possessed some
considerable estate from father to son for many successive
generations, are very rare in commercial countries. In countries which
have little commerce, on the contrary, such as Wales, or the Highlands
of Scotland, they are very common. The Arabian histories seem to be
all full of genealogies; and there is a history written by a Tartar
Khan, which has been translated into several European languages, and
which contains scarce any thing else; a proof that ancient families
are very common among those nations. In countries where a rich man can
spend his revenue in no other way than by maintaining as many people
as it can maintain, he is apt to run out, and his benevolence, it
seems, is seldom so violent as to attempt to maintain more than he can
afford. But where he can spend the greatest revenue upon his own
person, he frequently has no bounds to his expense, because he
frequently has no bounds to his vanity, or to his affection for his
own person. In commercial countries, therefore, riches, in spite of
the most violent regulations of law to prevent their dissipation, very
seldom remain long in the same family. Among simple nations, on the
contrary, they frequently do, without any regulations of law; for
among nations of shepherds, such as the Tartars and Arabs, the
consumable nature of their property necessarily renders all such
regulations impossible.

A revolution of the greatest importance to the public happiness, was
in this manner brought about by two different orders of people, who
had not the least intention to serve the public. To gratify the most
childish vanity was the sole motive of the great proprietors. The
merchants and artificers, much less ridiculous, acted merely from a
view to their own interest, and in pursuit of their own pedlar
principle of turning a penny wherever a penny was to be got. Neither
of them had either knowledge or foresight of that great revolution
which the folly of the one, and the industry of the other, was
gradually bringing about.

It was thus, that, through the greater part of Europe, the commerce
and manufactures of cities, instead of being the effect, have been the
cause and occasion of the improvement and cultivation of the country.

This order, however, being contrary to the natural course of things,
is necessarily both slow and uncertain. Compare the slow progress of
those European countries of which the wealth depends very much upon
their commerce and manufactures, with the rapid advances of our North
American colonies, of which the wealth is founded altogether in
agriculture. Through the greater part of Europe, the number of
inhabitants is not supposed to double in less than five hundred years.
In several of our North American colonies, it is found to double in
twenty or five-and-twenty years. In Europe, the law of primogeniture,
and perpetuities of different kinds, prevent the division of great
estates, and thereby hinder the multiplication of small proprietors. A
small proprietor, however, who knows every part of his little
territory, views it with all the affection which property, especially
small property, naturally inspires, and who upon that account takes
pleasure, not only in cultivating, but in adorning it, is generally of
all improvers the most industrious, the most intelligent, and the most
successful. The same regulations, besides, keep so much land out of
the market, that there are always more capitals to buy than there is
land to sell, so that what is sold always sells at a monopoly price.
The rent never pays the interest of the purchase-money, and is,
besides, burdened with repairs and other occasional charges, to which
the interest of money is not liable. To purchase land, is, everywhere
in Europe, a most unprofitable employment of a small capital. For the
sake of the superior security, indeed, a man of moderate
circumstances, when he retires from business, will sometimes choose to
lay out his little capital in land. A man of profession, too whose
revenue is derived from another source often loves to secure his
savings in the same way. But a young man, who, instead of applying to
trade or to some profession, should employ a capital of two or three
thousand pounds in the purchase and cultivation of a small piece of
land, might indeed expect to live very happily and very independently,
but must bid adieu for ever to all hope of either great fortune or
great illustration, which, by a different employment of his stock, he
might have had the same chance of acquiring with other people. Such a
person, too, though he cannot aspire at being a proprietor, will often
disdain to be a farmer. The small quantity of land, therefore, which
is brought to market, and the high price of what is brought thither,
prevents a great number of capitals from being employed in its
cultivation and improvement, which would otherwise have taken that
direction. In North America, on the contrary, fifty or sixty pounds is
often found a sufficient stock to begin a plantation with. The
purchase and improvement of uncultivated land is there the most
profitable employment of the smallest as well as of the greatest
capitals, and the most direct road to all the fortune and illustration
which can be required in that country. Such land, indeed, is in North
America to be had almost for nothing, or at a price much below the
value of the natural produce; a thing impossible in Europe, or indeed
in any country where all lands have long been private property. If
landed estates, however, were divided equally among all the children,
upon the death of any proprietor who left a numerous family, the
estate would generally be sold. So much land would come to market,
that it could no longer sell at a monopoly price. The free rent of the
land would go no nearer to pay the interest of the purchase-money, and
a small capital might be employed in purchasing land as profitable as
in any other way.

England, on account of the natural fertility of the soil, of the great
extent of the sea-coast in proportion to that of the whole country,
and of the many navigable rivers which run through it, and afford the
conveniency of water carriage to some of the most inland parts of it,
is perhaps as well fitted by nature as any large country in Europe to
be the seat of foreign commerce, of manufactures for distant sale, and
of all the improvements which these can occasion. From the beginning
of the reign of Elizabeth, too, the English legislature has been
peculiarly attentive to the interest of commerce and manufactures, and
in reality there is no country in Europe, Holland itself not excepted,
of which the law is, upon the whole, more favourable to this sort of
industry. Commerce and manufactures have accordingly been continually
advancing during all this period. The cultivation and improvement of
the country has, no doubt, been gradually advancing too; but it seems
to have followed slowly, and at a distance, the more rapid progress of
commerce and manufactures. The greater part of the country must
probably have been cultivated before the reign of Elizabeth; and a
very great part of it still remains uncultivated, and the cultivation
of the far greater part much inferior to what it might be, The law of
England, however, favours agriculture, not only indirectly, by the
protection of commerce, but by several direct encouragements. Except
in times of scarcity, the exportation of corn is not only free, but
encouraged by a bounty. In times of moderate plenty, the importation
of foreign corn is loaded with duties that amount to a prohibition.
The importation of live cattle, except from Ireland, is prohibited at
all times; and it is but of late that it was permitted from thence.
Those who cultivate the land, therefore, have a monopoly against their
countrymen for the two greatest and most important articles of land
produce, bread and butcher's meat. These encouragements, although at
bottom, perhaps, as I shall endeavour to show hereafter, altogether
illusory, sufficiently demonstrate at least the good intention of the
legislature to favour agriculture. But what is of much more importance
than all of them, the yeomanry of England are rendered as secure, as
independent, and as respectable, as law can make them. No country,
therefore, which the right of primogeniture takes place, which pays
tithes, and where perpetuities, though contrary to the spirit of the
law, are admitted in some cases, can give more encouragement to
agriculture than England. Such, however, notwithstanding, is the state
of its cultivation. What would it have been, had the law given no
direct encouragement to agriculture besides what arises indirectly
from the progress of commerce, and had left the yeomanry in the same
condition as in most other countries of Europe? It is now more than
two hundred years since the beginning of the reign of Elizabeth, a
period as long as the course of human prosperity usually endures.

France seems to have had a considerable share of foreign commerce,
near a century before England was distinguished as a commercial
country. The marine of France was considerable, according to the
notions of the times, before the expedition of Charles VIII. to
Naples. The cultivation and improvement of France, however, is, upon
the whole, inferior to that of England. The law of the country has
never given the same direct encouragement to agriculture.

The foreign commerce of Spain and Portual to the other parts of
Europe, though chiefly carried on in foreign ships, is very
considerable. That to their colonies is carried on in their own, and
is much greater, on account of the great riches and extent of those
colonies. But it has never introduced any considerable manufactures
for distant sale into either of those countries, and the greater part
of both still remains uncultivated. The foreign commerce of Portugal
is of older standing than that of any great country in Europe, except
Italy.

Italy is the only great country of Europe which seems to have been
cultivated and improved in every part, by means of foreign commerce
and manufactures for distant sale. Before the invasion of Charles
VIII., Italy, according to Guicciardini, was cultivated not less in
the most mountainous and barren parts of the country, than in the
plainest and most fertile. The advantageous situation of the country,
and the great number of independent status which at that time
subsisted in it, probably contributed not a little to this general
cultivation. It is not impossible, too, notwithstanding this general
expression of one of the most judicious and reserved of modern
historians, that Italy was not at that time better cultivated than
England is at present.

The capital, however, that is acquired to any country by commerce and
manufactures, is always a very precarious and uncertain possession,
till some part of it has been secured and realized in the cultivation
and improvement of its lands. A merchant, it has been said very
properly, is not necessarily the citizen of any particular country. It
is in a great measure indifferent to him from what place he carries on
his trade; and a very trifling disgust will make him remove his
capital, and, together with it, all the industry which it supports,
from one country to another. No part of it can be said to belong to
any particular country, till it has been spread, as it were, over the
face of that country, either in buildings, or in the lasting
improvement of lands. No vestige now remains of the great wealth said
to have been possessed by the greater part of the Hanse Towns, except
in the obscure histories of the thirteenth and fourteenth centuries.
It is even uncertain where some of them were situated, or to what
towns in Europe the Latin names given to some of them belong. But
though the misfortunes of Italy, in the end of the fifteenth and
beginning of the sixteenth centuries, greatly diminished the commerce
and manufactures of the cities of Lombardy and Tuscany, those
countries still continue to be among the most populous and best
cultivated in Europe. The civil wars of Flanders, and the Spanish
government which succeeded them, chased away the great commerce of
Antwerp, Ghent, and Bruges. But Flanders still continues to be one of
the richest, best cultivated, and most populous provinces of Europe.
The ordinary revolutions of war and government easily dry up the
sources of that wealth which arises from commerce only. That which
arises from the more solid improvements of agriculture is much more
durable, and cannot be destroyed but by those more violent convulsions
occasioned by the depredations of hostile and barbarous nations
continued for a century or two together; such as those that happened
for some time before and after the fall of the Roman empire in the
western provinces of Europe.




BOOK IV.

OF SYSTEMS OF POLITICAL ECONOMY.



Political economy, considered as a branch of the science of a
statesman or legislator, proposes two distinct objects; first, to
provide a plentiful revenue or subsistence for the people, or, more
properly, to enable them to provide such a revenue or subsistence for
themselves; and, secondly, to supply the state or commonwealth with a
revenue sufficient for the public services. It proposes to enrich both
the people and the sovereign.

The different progress of opulence in different ages and nations, has
given occasion to two different systems of political economy, with
regard to enriching the people. The one may be called the system of
commerce, the other that of agriculture. I shall endeavour to explain
both as fully and distinctly as I can, and shall begin with the system
of commerce. It is the modern system, and is best understood in our
own country and in our own times.






CHAPTER I.

OF THE PRINCIPLE OF THE COMMERCIAL OR MERCANTILE SYSTEM.

That wealth consists in money, or in gold and silver, is a popular
notion which naturally arises from the double function of money, as
the instrument of commerce, and as the measure of value. In
consequence of its being the instrument of commerce, when we have
money we can more readily obtain whatever else we have occasion for,
than by means of any other commodity. The great affair, we always
find, is to get money. When that is obtained, there is no difficulty
in making any subsequent purchase. In consequence of its being the
measure of value, we estimate that of all other commodities by the
quantity of money which they will exchange for. We say of a rich man,
that he is worth a great deal, and of a poor man, that he is worth
very little money. A frugal man, or a man eager to be rich, is said to
love money; and a careless, a generous, or a profuse man, is said to
be indifferent about it. To grow rich is to get money; and wealth and
money, in short, are, in common language, considered as in every
respect synonymous.

A rich country, in the same manner as a rich man, is supposed to be a
country abounding in money; and to heap up gold and silver in any
country is supposed to be the readiest way to enrich it. For some time
after the discovery of America, the first inquiry of the Spaniards,
when they arrived upon any unknown coast, used to be, if there was any
gold or silver to be found in the neighbourhood? By the information
which they received, they judged whether it was worth while to make a
settlement there, or if the country was worth the conquering. Plano
Carpino, a monk sent ambassador from the king of France to one of the
sons of the famous Gengis Khan, says, that the Tartars used frequently
to ask him, if there was plenty of sheep and oxen in the kingdom of
France? Their inquiry had the same object with that of the Spaniards.
They wanted to know if the country was rich enough to be worth the
conquering. Among the Tartars, as among all other nations of
shepherds, who are generally ignorant of the use of money, cattle are
the instruments of commerce and the measures of value. Wealth,
therefore, according to them, consisted in cattle, as, according to
the Spaniards, it consisted in gold and silver. Of the two, the Tartar
notion, perhaps, was the nearest to the truth.

Mr Locke remarks a distinction between money and other moveable goods.
All other moveable goods, he says, are of so consumable a nature, that
the wealth which consists in them cannot be much depended on; and a
nation which abounds in them one year may, without any exportation,
but merely by their own waste and extravagance, be in great want of
them the next. Money, on the contrary, is a steady friend, which,
though it may travel about from hand to hand, yet if it can be kept
from going out of the country, is not very liable to be wasted and
consumed. Gold and silver, therefore, are, according to him, the must
solid and substantial part of the moveable wealth of a nation; and to
multiply those metals ought, he thinks, upon that account, to be the
great object of its political economy.

Others admit, that if a nation could be separated from all the world,
it would be of no consequence how much or how little money circulated
in it. The consumable goods, which were circulated by means of this
money, would only be exchanged for a greater or a smaller number of
pieces; but the real wealth or poverty of the country, they allow,
would depend altogether upon the abundance or scarcity of those
consumable goods. But it is otherwise, they think, with countries
which have connections with foreign nations, and which are obliged to
carry on foreign wars, and to maintain fleets and armies in distant
countries. This, they say, cannot be done, but by sending abroad money
to pay them with; and a nation cannot send much money abroad, unless
it has a good deal at home. Every such nation, therefore, must
endeavour, in time of peace, to accumulate gold and silver, that when
occasion requires, it may have wherewithal to carry on foreign wars.

In consequence of those popular notions, all the different nations of
Europe have studied, though to little purpose, every possible means of
accumulating gold and silver in their respective countries. Spain and
Portugal, the proprietors of the principal mines which supply Europe
with those metals, have either prohibited their exportation under the
severest penalties, or subjected it to a considerable duty. The like
prohibition seems anciently to have made a part of the policy of most
other European nations. It is even to be found, where we should least
of all expect to find it, in some old Scotch acts of Parliament, which
forbid, under heavy penalties, the carrying gold or silver forth of
the kingdom. The like policy anciently took place both in France and
England.

When those countries became commercial, the merchants found this
prohibition, upon many occasions, extremely inconvenient. They could
frequently buy more advantageously with gold and silver, than with any
other commodity, the foreign goods which they wanted, either to import
into their own, or to carry to some other foreign country. They
remonstrated, therefore, against this prohibition as hurtful to trade.

They represented, first, that the exportation of gold and silver, in
order to purchase foreign goods, did not always diminish the quantity
of those metals in the kingdom; that, on the contrary, it might
frequently increase the quantity; because, if the consumption of
foreign goods was not thereby increased in the country, those goods
might be re-exported to foreign countries, and being there sold for a
large profit, might bring back much more treasure than was originally
sent out to purchase them. Mr Mun compares this operation of foreign
trade to the seed-time and harvest of agriculture. "If we only
behold," says he, "the actions of the husbandman in the seed time,
when he casteth away much good corn into the ground, we shall account
him rather a madman than a husbandman. But when we consider his
labours in the harvest, which is the end of his endeavours, we shall
find the worth and plentiful increase of his actions."

They represented, secondly, that this prohibition could not hinder the
exportation of gold and silver, which, on account of the smallness of
their bulk in proportion to their value, could easily be smuggled
abroad. That this exportation could only be prevented by a proper
attention to what they called the balance of trade. That when the
country exported to a greater value than it imported, a balance became
due to it from foreign nations, which was necessarily paid to it in
gold and silver, and thereby increased the quantity of those metals in
the kingdom. But that when it imported to a greater value than it
exported, a contrary balance became due to foreign nations, which was
necessarily paid to them in the same manner, and thereby diminished
that quantity: that in this case, to prohibit the exportation of
those metals, could not prevent it, but only, by making it more
dangerous, render it more expensive: that the exchange was thereby
turned more against the country which owed the balance, than it
otherwise might have been; the merchant who purchased a bill upon the
foreign country being obliged to pay the banker who sold it, not only
for the natural risk, trouble, and expense of sending the money
thither, but for the extraordinary risk arising from the prohibition;
but that the more the exchange was against any country, the more the
balance of trade became necessarily against it; the money of that
country becoming necessarily of so much less value, in comparison with
that of the country to which the balance was due. That if the exchange
between England and Holland, for example, was five per cent. against
England, it would require 105 ounces of silver in England to purchase
a bill for 100 ounces of silver in Holland: that 105 ounces of silver
in England, therefore, would be worth only 100 ounces of silver in
Holland, and would purchase only a proportionable quantity of Dutch
goods; but that 100 ounces of silver in Holland, on the contrary,
would be worth 105 ounces in England, and would purchase a
proportionable quantity of English goods; that the English goods which
were sold to Holland would be sold so much cheaper, and the Dutch
goods which were sold to England so much dearer, by the difference of
the exchange: that the one would draw so much less Dutch money to
England, and the other so much more English money to Holland, as this
difference amounted to: and that the balance of trade, therefore,
would necessarily be so much more against England, and would require a
greater balance of gold and silver to be exported to Holland.

Those arguments were partly solid and partly sophistical. They were
solid, so far as they asserted that the exportation of gold and silver
in trade might frequently be advantageous to the country. They were
solid, too, in asserting that no prohibition could prevent their
exportation, when private people found any advantage in exporting
them. But they were sophistical, in supposing, that either to preserve
or to augment the quantity of those metals required more the attention
of government, than to preserve or to augment the quantity of any
other useful commodities, which the freedom of trade, without any such
attention, never fails to supply in the proper quantity. They were
sophistical, too, perhaps, in asserting that the high price of
exchange necessarily increased what they called the unfavourable
balance of trade, or occasioned the exportation of a greater quantity
of gold and silver. That high price, indeed, was extremely
disadvantageous to the merchants who had any money to pay in foreign
countries. They paid so much dearer for the bills which their bankers
granted them upon those countries. But though the risk arising from
the prohibition might occasion some extraordinary expense to the
bankers, it would not necessarily carry any more money out of the
country. This expense would generally be all laid out in the country,
in smuggling the money out of it, and could seldom occasion the
exportation of a single sixpence beyond the precise sum drawn for. The
high price of exchange, too, would naturally dispose the merchants to
endeavour to make their exports nearly balance their imports, in order
that they might have this high exchange to pay upon as small a sum as
possible. The high price of exchange, besides, must necessarily have
operated as a tax, in raising the price of foreign goods, and thereby
diminishing their consumption. It would tend, therefore, not to
increase, but to diminish, what they called the unfavourable balance
of trade, and consequently the exportation of gold and silver.

Such as they were, however, those arguments convinced the people to
whom they were addressed. They were addressed by merchants to
parliaments and to the councils of princes, to nobles, and to country
gentlemen; by those who were supposed to understand trade, to those
who were conscious to them selves that they knew nothing about the
matter. That foreign trade enriched the country, experience
demonstrated to the nobles and country gentlemen, as well as to the
merchants; but how, or in what manner, none of them well knew. The
merchants knew perfectly in what manner it enriched themselves, it was
their business to know it. But to know in what manner it enriched the
country, was no part of their business. The subject never came into
their consideration, but when they had occasion to apply to their
country for some change in the laws relating to foreign trade. It then
became necessary to say something about the beneficial effects of
foreign trade, and the manner in which those effects were obstructed
by the laws as they then stood. To the judges who were to decide the
business, it appeared a most satisfactory account of the matter, when
they were told that foreign trade brought money into the country, but
that the laws in question hindered it from bringing so much as it
otherwise would do. Those arguments, therefore, produced the
wished-for effect. The prohibition of exporting gold and silver was,
in France and England, confined to the coin of those respective
countries. The exportation of foreign coin and of bullion was made
free. In Holland, and in some other places, this liberty was extended
even to the coin of the country. The attention of government was
turned away from guarding against the exportation of gold and silver,
to watch over the balance of trade, as the only cause which could
occasion any augmentation or diminution of those metals. From one
fruitless care, it was turned away to another care much more
intricate, much more embarrassing, and just equally fruitless. The
title of Mun's book, England's Treasure in Foreign Trade, became a
fundamental maxim in the political economy, not of England only, but
of all other commercial countries. The inland or home trade, the most
important of all, the trade in which an equal capital affords the
greatest revenue, and creates the greatest employment to the people of
the country, was considered as subsidiary only to foreign trade. It
neither brought money into the country, it was said, nor carried any
out of it. The country, therefore, could never become either richer or
poorer by means of it, except so far as its prosperity or decay might
indirectly influence the state of foreign trade.

A country that has no mines of its own, must undoubtedly draw its gold
and silver from foreign countries, in the same manner as one that has
no vineyards of its own must draw its wines. It does not seem
necessary, however, that the attention of government should be more
turned towards the one than towards the other object. A country that
has wherewithal to buy wine, will always get the wine which it has
occasion for; and a country that has wherewithal to buy gold and
silver, will never be in want of those metals. They are to be bought
for a certain price, like all other commodities; and as they are the
price of all other commodities, so all other commodities are the price
of those metals. We trust, with perfect security, that the freedom of
trade, without any attention of government, will always supply us with
the wine which we have occasion for; and we may trust, with equal
security, that it will always supply us with all the gold and silver
which we can afford to purchase or to employ, either in circulating
our commodities or in other uses.

The quantity of every commodity which human industry can either
purchase or produce, naturally regulates itself in every country
according to the effectual demand, or according to the demand of those
who are willing to pay the whole rent, labour, and profits, which must
be paid in order to prepare and bring it to market. But no commodities
regulate themselves more easily or more exactly, according to this
effectual demand, than gold and silver; because, on account of the
small bulk and great value of those metals, no commodities can be more
easily transported from one place to another; from the places where
they are cheap, to those where they are dear; from the places where
they exceed, to those where they fall short of this effectual demand.
If there were in England, for example, an effectual demand for an
additional quantity of gold, a packet-boat could bring from Lisbon, or
from wherever else it was to be had, fifty tons of gold, which could
be coined into more than five millions of guineas. But if there were
an effectual demand for grain to the same value, to import it would
require, at five guineas a-ton, a million of tons of shipping, or a
thousand ships of a thousand tons each. The navy of England would not
be sufficient.

When the quantity of gold and silver imported into any country exceeds
the effectual demand, no vigilance of government can prevent their
exportation. All the sanguinary laws of Spain and Portugal are not
able to keep their gold and silver at home. The continual importations
from Peru and Brazil exceed the effectual demand of those countries,
and sink the price of those metals there below that in the
neighbouring countries. If, on the contrary, in any particular
country, their quantity fell short of the effectual demand, so as to
raise their price above that of the neighbouring countries, the
government would have no occasion to take any pains to import them. If
it were even to take pains to prevent their importation, it would not
be able to effectuate it. Those metals, when the Spartans had got
wherewithal to purchase them, broke through all the barriers which the
laws of Lycurgus opposed to their entrance into Lacedaemon. All the
sanguinary laws of the customs are not able to prevent the importation
of the teas of the Dutch and Gottenburg East India companies; because
somewhat cheaper than those of the British company. A pound of tea,
however, is about a hundred times the bulk of one of the highest
prices, sixteen shillings, that is commonly paid for it in silver, and
more than two thousand times the bulk of the same price in gold, and,
consequently, just so many times more difficult to smuggle.

It is partly owing to the easy transportation of gold and silver, from
the places where they abound to those where they are wanted, that the
price of those metals does not fluctuate continually, like that of the
greater part of other commodities, which are hindered by their bulk
from shifting their situation, when the market happens to be either
over or under-stocked with them. The price of those metals, indeed, is
not altogether exempted from variation; but the changes to which it is
liable are generally slow, gradual, and uniform. In Europe, for
example, it is supposed, without much foundation, perhaps, that during
the course of the present and preceding century, they have been
constantly, but gradually, sinking in their value, on account of the
continual importations from the Spanish West Indies. But to make any
sudden change in the price of gold and silver, so as to raise or lower
at once, sensibly and remarkably, the money price of all other
commodities, requires such a revolution in commerce as that occasioned
by the discovery of America.

If, not withstanding all this, gold and silver should at any time fall
short in a country which has wherewithal to purchase them, there are
more expedients for supplying their place, than that of almost any
other commodity. If the materials of manufacture are wanted, industry
must stop. If provisions are wanted, the people must starve. But if
money is wanted, barter will supply its place, though with a good deal
of inconveniency. Buying and selling upon credit, and the different
dealers compensating their credits with one another, once a-month, or
once a-year, will supply it with less inconveniency. A well-regulated
paper-money will supply it not only without any inconveniency, but, in
some cases, with some advantages. Upon every account, therefore, the
attention of government never was so unnecessarily employed, as when
directed to watch over the preservation or increase of the quantity of
money in any country.

No complaint, however, is more common than that of a scarcity of
money. Money, like wine, must always be scarce with those who have
neither wherewithal to buy it, nor credit to borrow it. Those who have
either, will seldom be in want either of the money, or of the wine
which they have occasion for. This complaint, however, of the scarcity
of money, is not always confined to improvident spendthrifts. It is
sometimes general through a whole mercantile town and the country in
its neighbourhood. Over-trading is the common cause of it. Sober men,
whose projects have been disproportioned to their capitals, are as
likely to have neither wherewithal to buy money, nor credit to borrow
it, as prodigals, whose expense has been disproportioned to their
revenue. Before their projects can be brought to bear, their stock is
gone, and their credit with it. They run about everywhere to borrow
money, and everybody tells them that they have none to lend. Even such
general complaints of the scarcity of money do not always prove that
the usual number of gold and silver pieces are not circulating in the
country, but that many people want those pieces who have nothing to
give for them. When the profits of trade happen to be greater than
ordinary over-trading becomes a general error, both among great and
small dealers. They do not always send more money abroad than usual,
but they buy upon credit, both at home and abroad, an unusual quantity
of goods, which they send to some distant market, in hopes that the
returns will come in before the demand for payment. The demand comes
before the returns, and they have nothing at hand with which they can
either purchase money or give solid security for borrowing. It is not
any scarcity of gold and silver, but the difficulty which such people
find in borrowing, and which their creditor find in getting payment,
that occasions the general complaint of the scarcity of money.

It would be too ridiculous to go about seriously to prove, that wealth
does not consist in money, or in gold and silver; but in what money
purchases, and is valuable only for purchasing. Money, no doubt, makes
always a part of the national capital; but it has already been shown
that it generally makes but a small part, and always the most
unprofitable part of it.

It is not because wealth consists more essentially in money than in
goods, that the merchant finds it generally more easy to buy goods
with money, than to buy money with goods; but because money is the
known and established instrument of commerce, for which every thing is
readily given in exchange, but which is not always with equal
readiness to be got in exchange for every thing. The greater part of
goods, besides, are more perishable than money, and he may frequently
sustain a much greater loss by keeping them. When his goods are upon
hand, too, he is more liable to such demands for money as he may not
be able to answer, than when he has got their price in his coffers.
Over and above all this, his profit arises more directly from selling
than from buying; and he is, upon all these accounts, generally much
more anxious to exchange his goods for money than his money for goods.
But though a particular merchant, with abundance of goods in his
warehouse, may sometimes be ruined by not being able to sell them in
time, a nation or country is not liable to the same accident, The
whole capital of a merchant frequently consists in perishable goods
destined for purchasing money. But it is but a very small part of the
annual produce of the land and labour of a country, which can ever be
destined for purchasing gold and silver from their neighbours. The far
greater part is circulated and consumed among themselves; and even of
the surplus which is sent abroad, the greater part is generally
destined for the purchase of other foreign goods. Though gold and
silver, therefore, could not be had in exchange for the goods destined
to purchase them, the nation would not be ruined. It might, indeed,
suffer some loss and inconveniency, and be forced upon some of those
expedients which are necessary for supplying the place of money. The
annual produce of its land and labour, however, would be the same, or
very nearly the same as usual; because the same, or very nearly the
same consumable capital would be employed in maintaining it. And
though goods do not always draw money so readily as money draws goods,
in the long-run they draw it more necessarily than even it draws them.
Goods can serve many other purposes besides purchasing money, but
money can serve no other purpose besides purchasing goods. Money,
therefore, necessarily runs after goods, but goods do not always or
necessarily run after money. The man who buys, does not always mean to
sell again, but frequently to use or to consume; whereas he who sells
always means to buy again. The one may frequently have done the whole,
but the other can never have done more than the one half of his
business. It is not for its own sake that men desire money, but for
the sake of what they can purchase with it.

Consumable commodities, it is said, are soon destroyed; whereas gold
and silver are of a more durable nature, and were it not for this
continual exportation, might be accumulated for ages together, to the
incredible augmentation of the real wealth of the country. Nothing,
therefore, it is pretended, can be more disadvantageous to any
country, than the trade which consists in the exchange of such lasting
for such perishable commodities. We do not, however, reckon that trade
disadvantageous, which consists in the exchange of the hardware of
England for the wines of France, and yet hardware is a very durable
commodity, and were it not for this continual exportation, might too
be accumulated for ages together, to the incredible augmentation of
the pots and pans of the country. But it readily occurs, that the
number of such utensils is in every country necessarily limited by the
use which there is for them; that it would be absurd to have more pots
and pans than were necessary for cooking the victuals usually consumed
there; and that, if the quantity of victuals were to increase, the
number of pots and pans would readily increase along with it; a part
of the increased quantity of victuals being employed in purchasing
them, or in maintaining an additional number of workmen whose business
it was to make them. It should as readily occur, that the quantity of
gold and silver is, in every country, limited by the use which there
is for those metals; that their use consists in circulating
commodities, as coin, and in affording a species of household
furniture, as plate; that the quantity of coin in every country is
regulated by the value of the commodities which are to be circulated
by it; increase that value, and immediately a part of it will be sent
abroad to purchase, wherever it is to be had, the additional quantity
of coin requisite for circulating them: that the quantity of plate is
regulated by the number and wealth of those private families who
choose to indulge themselves in that sort of magnificence; increase
the number and wealth of such families, and a part of this increased
wealth will most probably be employed in purchasing, wherever it is to
be found, an additional quantity of plate; that to attempt to increase
the wealth of any country, either by introducing or by detaining in it
an unnecessary quantity of gold and silver, is as absurd as it would
be to attempt to increase the good cheer of private families, by
obliging them to keep an unnecessary number of kitchen utensils. As
the expense of purchasing those unnecessary utensils would diminish,
instead of increasing, either the quantity or goodness of the family
provisions; so the expense of purchasing an unnecessary quantity of
gold and silver must, in every country, as necessarily diminish the
wealth which feeds, clothes, and lodges, which maintains and employs
the people. Gold and silver, whether in the shape of coin or of plate,
are utensils, it must be remembered, as much as the furniture of the
kitchen. Increase the use of them, increase the consumable commodities
which are to be circulated, managed, and prepared by means of them,
and you will infallibly increase the quantity; but if you attempt by
extraordinary means to increase the quantity, you will as infallibly
diminish the use, and even the quantity too, which in those metals can
never be greater than what the use requires. Were they ever to be
accumulated beyond this quantity, their transportation is so easy, and
the loss which attends their lying idle and unemployed so great, that
no law could prevent their being immediately sent out of the country.

It is not always necessary to accumulate gold and silver, in order to
enable a country to carry on foreign wars, and to maintain fleets and
armies in distant countries. Fleets and armies are maintained, not
with gold and silver, but with consumable goods. The nation which,
from the annual produce of its domestic industry, from the annual
revenue arising out of its lands, and labour, and consumable stock,
has wherewithal to purchase those consumable goods in distant
countries, can maintain foreign wars there.

A nation may purchase the pay and provisions of an army in a distant
country three different ways; by sending abroad either, first, some
part of its accumulated gold and silver; or, secondly, some part of
the annual produce of its manufactures; or, last of all, some part of
its annual rude produce.

The gold and silver which can properly be considered as accumulated,
or stored up in any country, may be distinguished into three parts;
first, the circulating money; secondly, the plate of private families;
and, last of all, the money which may have been collected by many
years parsimony, and laid up in the treasury of the prince.

It can seldom happen that much can be spared from the circulating
money of the country; because in that there can seldom be much
redundancy. The value of goods annually bought and sold in any country
requires a certain quantity of money to circulate and distribute them
to their proper consumers, and can give employment to no more. The
channel of circulation necessarily draws to itself a sum sufficient to
fill it, and never admits any more. Something, however, is generally
withdrawn from this channel in the case of foreign war. By the great
number of people who are maintained abroad, fewer are maintained at
home. Fewer goods are circulated there, and less money becomes
necessary to circulate them. An extraordinary quantity of paper money
of some sort or other, too, such as exchequer notes, navy bills, and
bank bills, in England, is generally issued upon such occasions, and,
by supplying the place of circulating gold and silver, gives an
opportunity of sending a greater quantity of it abroad. All this,
however, could afford but a poor resource for maintaining a foreign
war, of great expense, and several years duration.

The melting down of the plate of private families has, upon every
occasion, been found a still more insignificant one. The French, in
the beginning of the last war, did not derive so much advantage from
this expedient as to compensate the loss of the fashion.

The accumulated treasures of the prince have in former times afforded
a much greater and more lasting resource. In the present times, if you
except the king of Prussia, to accumulate treasure seems to be no part
of the policy of European princes.

The funds which maintained the foreign wars of the present century,
the most expensive perhaps which history records, seem to have had
little dependency upon the exportation either of the circulating
money, or of the plate of private families, or of the treasure of the
prince. The last French war cost Great Britain upwards of £90,000,000,
including not only the £75,000,000 of new debt that was contracted,
but the additional 2s. in the pound land-tax, and what was annually
borrowed of the sinking fund. More than two-thirds of this expense
were laid out in distant countries; in Germany, Portugal, America, in
the ports of the Mediterranean, in the East and West Indies. The kings
of England had no accumulated treasure. We never heard of any
extraordinary quantity of plate being melted down. The circulating
gold and silver of the country had not been supposed to exceed
£18,000,000. Since the late recoinage of the gold, however, it is
believed to have been a good deal under-rated. Let us suppose,
therefore, according to the most exaggerated computation which I
remember to have either seen or heard of, that, gold and silver
together, it amounted to £30,000,000. Had the war been carried on by
means of our money, the whole of it must, even according to this
computation, have been sent out and returned again, at least twice in
a period of between six and seven years. Should this be supposed, it
would afford the most decisive argument, to demonstrate how
unnecessary it is for government to watch over the preservation of
money, since, upon this supposition, the whole money of the country
must have gone from it, and returned to it again, two different times
in so short a period, without any body's knowing any thing of the
matter. The channel of circulation, however, never appeared more empty
than usual during any part of this period. Few people wanted money who
had wherewithal to pay for it. The profits of foreign trade, indeed,
were greater than usual during the whole war, but especially towards
the end of it. This occasioned, what it always occasions, a general
over-trading in all the ports of Great Britain; and this again
occasioned the usual complaint of the scarcity of money, which always
follows over-trading. Many people wanted it, who had neither
wherewithal to buy it, nor credit to borrow it; and because the
debtors found it difficult to borrow, the creditors found it difficult
to get payment. Gold and silver, however, were generally to be had for
their value, by those who had that value to give for them.

The enormous expense of the late war, therefore, must have been
chiefly defrayed, not by the exportation of gold and silver, but by
that of British commodities of some kind or other. When the
government, or those who acted under them, contracted with a merchant
for a remittance to some foreign country, he would naturally endeavour
to pay his foreign correspondent, upon whom he granted a bill, by
sending abroad rather commodities than gold and silver. If the
commodities of Great Britain were not in demand in that country, he
would endeavour to send them to some other country in which he could
purchase a bill upon that country. The transportation of commodities,
when properly suited to the market, is always attended with a
considerable profit; whereas that of gold and silver is scarce ever
attended with any. When those metals are sent abroad in order to
purchase foreign commodities, the merchant's profit arises, not from
the purchase, but from the sale of the returns. But when they are sent
abroad merely to pay a debt, he gets no returns, and consequently no
profit. He naturally, therefore, exerts his invention to find out a
way of paying his foreign debts, rather by the exportation of
commodities, than by that of gold and silver. The great quantity of
British goods, exported during the course of the late war, without
bringing back any returns, is accordingly remarked by the author of
the Present State of the Nation.

Besides the three sorts of gold and silver above mentioned, there is
in all great commercial countries a good deal of bullion alternately
imported and exported, for the purposes of foreign trade. This
bullion, as it circulates among different commercial countries, in the
same manner as the national coin circulates in every country, may be
considered as the money of the great mercantile republic. The national
coin receives its movement and direction from the commodities
circulated within the precincts of each particular country; the money
in the mercantile republic, from those circulated between different
countries. Both are employed in facilitating exchanges, the one
between different individuals of the same, the other between those of
different nations. Part of this money of the great mercantile republic
may have been, and probably was, employed in carrying on the late war.
In time of a general war, it is natural to suppose that a movement and
direction should be impressed upon it, different from what it usually
follows in profound peace, that it should circulate more about the
seat of the war, and be more employed in purchasing there, and in the
neighbouring countries, the pay and provisions of the different
armies. But whatever part of this money of the mercantile republic
Great Britain may have annually employed in this manner, it must have
been annually purchased, either with British commodities, or with
something else that had been purchased with them; which still brings
us back to commodities, to the annual produce of the land and labour
of the country, as the ultimate resources which enabled us to carry on
the war. It is natural, indeed, to suppose, that so great an annual
expense must have been defrayed from a great annual produce. The
expense of 1761, for example, amounted to more than £19,000,000. No
accumulation could have supported so great an annual profusion. There
is no annual produce, even of gold and silver, which could have
supported it. The whole gold and silver annually imported into both
Spain and Portugal, according to the best accounts, does not commonly
much exceed £6,000,000 sterling, which, in some years, would scarce
have paid four months expense of the late war.

The commodities most proper for being transported to distant
countries, in order to purchase there either the pay and provisions of
an army, or some part of the money of the mercantile republic to be
employed in purchasing them, seem to be the finer and more improved
manufactures; such as contain a great value in a small bulk, and can
therefore be exported to a great distance at little expense. A country
whose industry produces a great annual surplus of such manufactures,
which are usually exported to foreign countries, may carry on for many
years a very expensive foreign war, without either exporting any
considerable quantity of gold and silver, or even having any such
quantity to export. A considerable part of the annual surplus of its
manufactures must, indeed, in this case, be exported without bringing
back any returns to the country, though it does to the merchant; the
government purchasing of the merchant his bills upon foreign
countries, in order to purchase there the pay and provisions of an
army. Some part of this surplus, however, may still continue to bring
back a return. The manufacturers during; the war will have a double
demand upon them, and be called upon first to work up goods to be sent
abroad, for paying the bills drawn upon foreign countries for the pay
and provisions of the army: and, secondly, to work up such as are
necessary for purchasing the common returns that had usually been
consumed in the country. In the midst of the most destructive foreign
war, therefore, the greater part of manufactures may frequently
flourish greatly; and, on the contrary, they may decline on the return
of peace. They may flourish amidst the ruin of their country, and
begin to decay upon the return of its prosperity. The different state
of many different branches of the British manufactures during the late
war, and for some time after the peace, may serve as an illustration
of what has been just now said.

No foreign war, of great expense or duration, could conveniently be
carried on by the exportation of the rude produce of the soil. The
expense of sending such a quantity of it into a foreign country as
might purchase the pay and provisions of an army would be too great.
Few countries, too, produce much more rude produce than what is
sufficient for the subsistence of their own inhabitants. To send
abroad any great quantity of it, therefore, would be to send abroad a
part of the necessary subsistence of the people. It is otherwise with
the exportation of manufactures. The maintenance of the people
employed in them is kept at home, and only the surplus part of their
work is exported. Mr Hume frequently takes notice of the inability of
the ancient kings of England to carry on, without interruption, any
foreign war of long duration. The English in those days had nothing
wherewithal to purchase the pay and provisions of their armies in
foreign countries, but either the rude produce of the soil, of which
no considerable part could be spared from the home consumption, or a
few manufactures of the coarsest kind, of which, as well as of the
rude produce, the transportation was too expensive. This inability did
not arise from the want of money, but of the finer and more improved
manufactures. Buying and selling was transacted by means of money in
England then as well as now. The quantity of circulating money must
have borne the same proportion, to the number and value of purchases
and sales usually transacted at that time, which it does to those
transacted at present; or, rather, it must have borne a greater
proportion, because there was then no paper, which now occupies a
great part of the employment of gold and silver. Among nations to whom
commerce and manufactures are little known, the sovereign, upon
extraordinary occasions, can seldom draw any considerable aid from his
subjects, for reasons which shall be explained hereafter. It is in
such countries, therefore, that he generally endeavours to accumulate
a treasure, as the only resource against such emergencies. Independent
of this necessity, he is, in such a situation, naturally disposed to
the parsimony requisite for accumulation. In that simple state, the
expense even of a sovereign is not directed by the vanity which
delights in the gaudy finery of a court, but is employed in bounty to
his tenants, and hospitality to his retainers. But bounty and
hospitality very seldom lead to extravagance; though vanity almost
always does. Every Tartar chief, accordingly, has a treasure. The
treasures of Mazepa, chief of the Cossacks in the Ukraine, the famous
ally of Charles XII., are said to have been very great. The French
kings of the Merovingian race had all treasures. When they divided
their kingdom among their different children, they divided their
treasures too. The Saxon princes, and the first kings after the
Conquest, seem likewise to have accumulated treasures. The first
exploit of every new reign was commonly to seize the treasure of the
preceding king, as the most essential measure for securing the
succession. The sovereigns of improved and commercial countries are
not under the same necessity of accumulating treasures, because they
can generally draw from their subjects extraordinary aids upon
extraordinary occasions. They are likewise less disposed to do so.
They naturally, perhaps necessarily, follow the mode of the times; and
their expense comes to be regulated by the same extravagant vanity
which directs that of all the other great proprietors in their
dominions. The insignificant pageantry of their court becomes every
day more brilliant; and the expense of it not only prevents
accumulation, but frequently encroaches upon the funds destined for
more necessary expenses. What Dercyllidas said of the court of Persia,
may be applied to that of several European princes, that he saw there
much splendour, but little strength, and many servants, but few
soldiers.

The importation of gold and silver is not the principal, much less the
sole benefit, which a nation derives from its foreign trade. Between
whatever places foreign trade is carried on, they all of them derive
two distinct benefits from it. It carries out that surplus part of the
produce of their land and labour for which there is no demand among
them, and brings back in return for it something else for which there
is a demand. It gives a value to their superfluities, by exchanging
them for something else, which may satisfy a part of their wants and
increase their enjoyments. By means of it, the narrowness of the home
market does not hinder the division of labour in any particular branch
of art or manufacture from being carried to the highest perfection. By
opening a more extensive market for whatever part of the produce of
their labour may exceed the home consumption, it encourages them to
improve its productive power, and to augment its annual produce to the
utmost, and thereby to increase the real revenue and wealth of the
society. These great and important services foreign trade is
continually occupied in performing to all the different countries
between which it is carried on. They all derive great benefit from it,
though that in which the merchant resides generally derives the
greatest, as he is generally more employed in supplying the wants, and
carrying out the superfluities of his own, than of any other
particular country. To import the gold and silver which may be wanted
into the countries which have no mines, is, no doubt a part of the
business of foreign commerce. It is, however, a most insignificant
part of it. A country which carried on foreign trade merely upon this
account, could scarce have occasion to freight a ship in a century.

It is not by the importation of gold and silver that the discovery of
America has enriched Europe. By the abundance of the American mines,
those metals have become cheaper. A service of plate can now be
purchased for about a third part of the corn, or a third part of the
labour, which it would have cost in the fifteenth century. With the
same annual expense of labour and commodities, Europe can annually
purchase about three times the quantity of plate which it could have
purchased at that time. But when a commodity comes to be sold for a
third part of what bad been its usual price, not only those who
purchased it before can purchase three times their former quantity,
but it is brought down to the level of a much greater number of
purchasers, perhaps to more than ten, perhaps to more than twenty
times the former number. So that there may be in Europe at present,
not only more than three times, but more than twenty or thirty times
the quantity of plate which would have been in it, even in its present
state of improvement, had the discovery of the American mines never
been made. So far Europe has, no doubt, gained a real conveniency,
though surely a very trifling one. The cheapness of gold and silver
renders those metals rather less fit for the purposes of money than
they were before. In order to make the same purchases, we must load
ourselves with a greater quantity of them, and carry about a shilling
in our pocket, where a groat would have done before. It is difficult
to say which is most trifling, this inconveniency, or the opposite
conveniency. Neither the one nor the other could have made any very
essential change in the state of Europe. The discovery of America,
however, certainly made a most essential one. By opening a new and
inexhaustible market to all the commodities of Europe, it gave
occasion to new divisions of labour and improvements of art, which in
the narrow circle of the ancient commerce could never have taken
place, for want of a market to take off the greater part of their
produce. The productive powers of labour were improved, and its
produce increased in all the different countries of Europe, and
together with it the real revenue and wealth of the inhabitants. The
commodities of Europe were almost all new to America, and many of
those of America were new to Europe. A new set of exchanges,
therefore, began to take place, which had never been thought of
before, and which should naturally have proved as advantageous to the
new, as it certainly did to the old continent. The savage injustice of
the Europeans rendered an event, which ought to have been beneficial
to all, ruinous and destructive to several of those unfortunate
countries.

The discovery of a passage to the East Indies by the Cape of Good
Hope, which happened much about the same time, opened perhaps a still
more extensive range to foreign commerce, than even that of America,
notwithstanding the greater distance. There were but two nations in
America, in any respect, superior to the savages, and these were
destroyed almost as soon as discovered. The rest were mere savages.
But the empires of China, Indostan, Japan, as well as several others
in the East Indies, without having richer mines of gold or silver,
were, in every other respect, much richer, better cultivated, and more
advanced in all arts and manufactures, than either Mexico or Peru,
even though we should credit, what plainly deserves no credit, the
exaggerated accounts of the Spanish writers concerning the ancient
state of those empires. But rich and civilized nations can always
exchange to a much greater value with one another, than with savages
and barbarians. Europe, however, has hitherto derived much less
advantage from its commerce with the East Indies, than from that with
America. The Portuguese monopolized the East India trade to themselves
for about a century; and it was only indirectly, and through them,
that the other nations of Europe could either send out or receive any
goods from that country. When the Dutch, in the beginning of the last
century, began to encroach upon them, they vested their whole East
India commerce in an exclusive company. The English, French, Swedes,
and Danes, have all followed their example; so that no great nation of
Europe has ever yet had the benefit of a free commerce to the East
Indies. No other reason need be assigned why it has never been so
advantageous as the trade to America, which, between almost every
nation of Europe and its own colonies, is free to all its subjects.
The exclusive privileges of those East India companies, their great
riches, the great favour and protection which these have procured them
from their respective governments, have excited much envy against
them. This envy has frequently represented their trade as altogether
pernicious, on account of the great quantities of silver which it
every year exports from the countries from which it is carried on. The
parties concerned have replied, that their trade by this continual
exportation of silver, might indeed tend to impoverish Europe in
general, but not the particular country from which it was carried on;
because, by the exportation of a part of the returns to other European
countries, it annually brought home a much greater quantity of that
metal than it carried out. Both the objection and the reply are
founded in the popular notion which I have been just now examining. It
is therefore unnecessary to say any thing further about either. By the
annual exportation of silver to the East Indies, plate is probably
somewhat dearer in Europe than it otherwise might have been; and
coined silver probably purchases a larger quantity both of labour and
commodities. The former of these two effects is a very small loss, the
latter a very small advantage; both too insignificant to deserve any
part of the public attention. The trade to the East Indies, by opening
a market to the commodities of Europe, or, what comes nearly to the
same thing, to the gold and silver which is purchased with those
commodities, must necessarily tend to increase the annual production
of European commodities, and consequently the real wealth and revenue
of Europe. That it has hitherto increased them so little, is probably
owing to the restraints which it everywhere labours under.

I thought it necessary, though at the hazard of being tedious, to
examine at full length this popular notion, that wealth consists in
money or in gold and silver. Money, in common language, as I have
already observed, frequently signifies wealth; and this ambiguity of
expression has rendered this popular notion so familiar to us, that
even they who are convinced of its absurdity, are very apt to forget
their own principles, and, in the course of their reasonings, to take
it for granted as a certain and undeniable truth. Some of the best
English writers upon commerce set out with observing, that the wealth
of a country consists, not in its gold and silver only, but in its
lands, houses, and consumable goods of all different kinds. In the
course of their reasonings, however, the lands, houses, and consumable
goods, seem to slip out of their memory; and the strain of their
argument frequently supposes that all wealth consists in gold and
silver, and that to multiply those metals is the great object of
national industry and commerce.

The two principles being established, however, that wealth consisted
in gold and silver, and that those metals could be brought into a
country which had no mines, only by the balance of trade, or by
exporting to a greater value than it imported; it necessarily became
the great object of political economy to diminish as much as possible
the importation of foreign goods for home consumption, and to increase
as much as possible the exportation of the produce of domestic
industry. Its two great engines for enriching the country, therefore,
were restraints upon importation, and encouragement to exportation.

The restraints upon importation were of two kinds.

First, restraints upon the importation of such foreign goods for home
consumption as could be produced at home, from whatever country they
were imported.

Secondly, restraints upon the importation of goods of almost all
kinds, from those particular countries with which the balance of trade
was supposed to be disadvantageous.

Those different restraints consisted sometimes in high duties, and
sometimes in absolute prohibitions.

Exportation was encouraged sometimes by drawbacks, sometimes by
bounties, sometimes by advantageous treaties of commerce with foreign
states, and sometimes by the establishment of colonies in distant
countries.

Drawbacks were given upon two different occasions. When the home
manufactures were subject to any duty or excise, either the whole or a
part of it was frequently drawn back upon their exportation; and when
foreign goods liable to a duty were imported, in order to be exported
again, either the whole or a part of this duty was sometimes given
back upon such exportation.

Bounties were given for the encouragement, either of some beginning
manufactures, or of such sorts of industry of other kinds as were
supposed to deserve particular favour.

By advantageous treaties of commerce, particular privileges were
procured in some foreign state for the goods and merchants of the
country, beyond what were granted to those of other countries.

By the establishment of colonies in distant countries, not only
particular privileges, but a monopoly was frequently procured for the
goods and merchants of the country which established them.

The two sorts of restraints upon importation above mentioned, together
with these four encouragements to exportation, constitute the six
principal means by which the commercial system proposes to increase
the quantity of gold and silver in any country, by turning the balance
of trade in its favour. I shall consider each of them in a particular
chapter, and, without taking much farther notice of their supposed
tendency to bring money into the country, I shall examine chiefly what
are likely to be the effects of each of them upon the annual produce
of its industry. According as they tend either to increase or diminish
the value of this annual produce, they must evidently tend either to
increase or diminish the real wealth and revenue of the country.



CHAPTER II.

OF RESTRAINTS UPON IMPORTATION FROM FOREIGN COUNTRIES OF SUCH GOODS AS
CAN BE PRODUCED AT HOME.

By restraining, either by high duties, or by absolute prohibitions,
the importation of such goods from foreign countries as can be
produced at home, the monopoly of the home market is more or less
secured to the domestic industry employed in producing them. Thus the
prohibition of importing either live cattle or salt provisions from
foreign countries, secures to the graziers of Great Britain the
monopoly of the home market for butcher's meat. The high duties upon
the importation of corn, which, in times of moderate plenty, amount to
a prohibition, give a like advantage to the growers of that commodity.
The prohibition of the importation of foreign woollen is equally
favourable to the woollen manufacturers. The silk manufacture, though
altogether employed upon foreign materials, has lately obtained the
same advantage. The linen manufacture has not yet obtained it, but is
making great strides towards it. Many other sorts of manufactures
have, in the same manner obtained in Great Britain, either altogether,
or very nearly, a monopoly against their countrymen. The variety of
goods, of which the importation into Great Britain is prohibited,
either absolutely, or under certain circumstances, greatly exceeds
what can easily be suspected by those who are not well acquainted with
the laws of the customs.

That this monopoly of the home market frequently gives great
encouragement to that particular species of industry which enjoys it,
and frequently turns towards that employment a greater share of both
the labour and stock of the society than would otherwise have gone to
it, cannot be doubted. But whether it tends either to increase the
general industry of the society, or to give it the most advantageous
direction, is not, perhaps, altogether so evident.

The general industry of the society can never exceed what the capital
of the society can employ. As the number of workmen that can be kept
in employment by any particular person must bear a certain proportion
to his capital, so the number of those that can be continually
employed by all the members of a great society must bear a certain
proportion to the whole capital of the society, and never can exceed
that proportion. No regulation of commerce can increase the quantity
of industry in any society beyond what its capital can maintain. It
can only divert a part of it into a direction into which it might not
otherwise have gone; and it is by no means certain that this
artificial direction is likely to be more advantageous to the society,
than that into which it would have gone of its own accord.

Every individual is continually exerting himself to find out the most
advantageous employment for whatever capital he can command. It is his
own advantage, indeed, and not that of the society, which he has in
view. But the study of his own advantage naturally, or rather
necessarily, leads him to prefer that employment which is most
advantageous to the society.

First, every individual endeavours to employ his capital as near home
as he can, and consequently as much as he can in the support of
domestic industry, provided always that he can thereby obtain the
ordinary, or not a great deal less than the ordinary profits of stock.

Thus, upon equal, or nearly equal profits, every wholesale merchant
naturally prefers the home trade to the foreign trade of consumption,
and the foreign trade of consumption to the carrying trade. In the
home trade, his capital is never so long out of his sight as it
frequently is in the foreign trade of consumption. He can know better
the character and situation of the persons whom he trusts; and if he
should happen to be deceived, he knows better the laws of the country
from which he must seek redress. In the carrying trade, the capital of
the merchant is, as it were, divided between two foreign countries,
and no part of it is ever necessarily brought home, or placed under
his own immediate view and command. The capital which an Amsterdam
merchant employs in carrying corn from Koningsberg to Lisbon, and
fruit and wine from Lisbon to Koningsberg, must generally be the one
half of it at Koningsberg, and the other half at Lisbon. No part of it
need ever come to Amsterdam. The natural residence of such a merchant
should either be at Koningsberg or Lisbon; and it can only be some
very particular circumstances which can make him prefer the residence
of Amsterdam. The uneasiness, however, which he feels at being
separated so far from his capital, generally determines him to bring
part both of the Koningsberg goods which he destines for the market of
Lisbon, and of the Lisbon goods which he destines for that of
Koningsberg, to Amsterdam; and though this necessarily subjects him to
a double charge of loading and unloading as well as to the payment of
some duties and customs, yet, for the sake of having some part of his
capital always under his own view and command, he willingly submits to
this extraordinary charge; and it is in this manner that every country
which has any considerable share of the carrying trade, becomes always
the emporium, or general market, for the goods of all the different
countries whose trade it carries on. The merchant, in order to save a
second loading and unloading, endeavours always to sell in the home
market, as much of the goods of all those different countries as he
can; and thus, so far as he can, to convert his carrying trade into a
foreign trade of consumption. A merchant, in the same manner, who is
engaged in the foreign trade of consumption, when he collects goods
for foreign markets, will always be glad, upon equal or nearly equal
profits, to sell as great a part of them at home as he can. He saves
himself the risk and trouble of exportation, when, so far as he can,
he thus converts his foreign trade of consumption into a home trade.
Home is in this manner the centre, if I may say so, round which the
capitals of the inhabitants of every country are continually
circulating, and towards which they are always tending, though, by
particular causes, they may sometimes be driven off and repelled from
it towards more distant employments. But a capital employed in the
home trade, it has already been shown, necessarily puts into motion a
greater quantity of domestic industry, and gives revenue and
employment to a greater number of the inhabitants of the country, than
an equal capital employed in the foreign trade of consumption; and one
employed in the foreign trade of consumption has the same advantage
over an equal capital employed in the carrying trade. Upon equal, or
only nearly equal profits, therefore, every individual naturally
inclines to employ his capital in the manner in which it is likely to
afford the greatest support to domestic industry, and to give revenue
and employment to the greatest number of people of his own country.

Secondly, every individual who employs his capital in the support of
domestic industry, necessarily endeavours so to direct that industry,
that its produce may be of the greatest possible value.

The produce of industry is what it adds to the subject or materials
upon which it is employed. In proportion as the value of this produce
is great or small, so will likewise be the profits of the employer.
But it is only for the sake of profit that any man employs a capital
in the support of industry; and he will always, therefore, endeavour
to employ it in the support of that industry of which the produce is
likely to be of the greatest value, or to exchange for the greatest
quantity either of money or of other goods.

But the annual revenue of every society is always precisely equal to
the exchangeable value of the whole annual produce of its industry, or
rather is precisely the same thing with that exchangeable value. As
every individual, therefore, endeavours as much as he can, both to
employ his capital in the support of domestic industry, and so to
direct that industry that its produce maybe of the greatest value;
every individual necessarily labours to render the annual revenue of
the society as great as he can. He generally, indeed, neither intends
to promote the public interest, nor knows how much he is promoting it.
By preferring the support of domestic to that of foreign industry, he
intends only his own security; and by directing that industry in such
a manner as its produce may be of the greatest value, he intends only
his own gain; and he is in this, as in many other cases, led by an
invisible hand to promote an end which was no part of his intention.
Nor is it always the worse for the society that it was no part of it.
By pursuing his own interest, he frequently promotes that of the
society more effectually than when he really intends to promote it. I
have never known much good done by those who affected to trade for the
public good. It is an affectation, indeed, not very common among
merchants, and very few words need be employed in dissuading them from
it.

What is the species of domestic industry which his capital can employ,
and of which the produce is likely to be of the greatest value, every
individual, it is evident, can in his local situation judge much
better than any statesman or lawgiver can do for him. The statesman,
who should attempt to direct private people in what manner they ought
to employ their capitals, would not only load himself with a most
unnecessary attention, but assume an authority which could safely be
trusted, not only to no single person, but to no council or senate
whatever, and which would nowhere be so dangerous as in the hands of a
man who had folly and presumption enough to fancy himself fit to
exercise it.

To give the monopoly of the home market to the produce of domestic
industry, in any particular art or manufacture, is in some measure to
direct private people in what manner they ought to employ their
capitals, and must in almost all cases be either a useless or a
hurtful regulation. If the produce of domestic can be brought there as
cheap as that of foreign industry, the regulation is evidently
useless. If it cannot, it must generally be hurtful. It is the maxim
of every prudent master of a family, never to attempt to make at home
what it will cost him more to make than to buy. The tailor does not
attempt to make his own shoes, but buys them of the shoemaker. The
shoemaker does not attempt to make his own clothes, but employs a
tailor. The farmer attempts to make neither the one nor the other, but
employs those different artificers. All of them find it for their
interest to employ their whole industry in a way in which they have
some advantage over their neighbours, and to purchase with a part of
its produce, or, what is the same thing, with the price of a part of
it, whatever else they have occasion for.

What is prudence in the conduct of every private family, can scarce be
folly In that of a great kingdom. If a foreign country can supply us
with a commodity cheaper than we ourselves can make it, better buy it
of them with some part of the produce of our own industry, employed in
a way in which we have some advantage. The general industry of the
country being always in proportion to the capital which employs it,
will not thereby be diminished, no more than that of the
abovementioned artificers; but only left to find out the way in which
it can be employed with the greatest advantage. It is certainly not
employed to the greatest advantage, when it is thus directed towards
an object which it can buy cheaper than it can make. The value of its
annual produce is certainly more or less diminished, when it is thus
turned away from producing commodities evidently of more value than
the commodity which it is directed to produce. According to the
supposition, that commodity could be purchased from foreign countries
cheaper than it can be made at home; it could therefore have been
purchased with a part only of the commodities, or, what is the same
thing, with a part only of the price of the commodities, which the
industry employed by an equal capital would have produced at home, had
it been left to follow its natural course. The industry of the
country, therefore, is thus turned away from a more to a less
advantageous employment; and the exchangeable value of its annual
produce, instead of being increased, according to the intention of the
lawgiver, must necessarily be diminished by every such regulation.

By means of such regulations, indeed, a particular manufacture may
sometimes be acquired sooner than it could have been otherwise, and
after a certain time may be made at home as cheap, or cheaper, than in
the foreign country. But though the industry of the society may be
thus carried with advantage into a particular channel sooner than it
could have been otherwise, it will by no means follow that the
sum-total, either of its industry, or of its revenue, can ever be
augmented by any such regulation. The industry of the society can
augment only in proportion as its capital augments, and its capital
can augment only in proportion to what can be gradually saved out of
its revenue. But the immediate effect of every such regulation is to
diminish its revenue; and what diminishes its revenue is certainly not
very likely to augment its capital faster than it would have augmented
of its own accord, had both capital and industry been left to find out
their natural employments.

Though, for want of such regulations, the society should never acquire
the proposed manufacture, it would not upon that account necessarily
be the poorer in anyone period of its duration. In every period of its
duration its whole capital and industry might still have been
employed, though upon different objects, in the manner that was most
advantageous at the time. In every period its revenue might have been
the greatest which its capital could afford, and both capital and
revenue might have been augmented with the greatest possible rapidity.

The natural advantages which one country has over another, in
producing particular commodities, are sometimes so great, that it is
acknowledged by all the world to be in vain to struggle with them. By
means of glasses, hot-beds, and hot-walls, very good grapes can be
raised in Scotland, and very good wine, too, can be made of them, at
about thirty times the expense for which at least equally good can be
brought from foreign countries. Would it be a reasonable law to
prohibit the importation of all foreign wines, merely to encourage the
making of claret and Burgundy in Scotland? But if there would be a
manifest absurdity in turning towards any employment thirty times more
of the capital and industry of the country than would be necessary to
purchase from foreign countries an equal quantity of the commodities
wanted, there must be an absurdity, though not altogether so glaring,
yet exactly of the same kind, in turning towards any such employment a
thirtieth, or even a three hundredth part more of either. Whether the
advantages which one country has over another be natural or acquired,
is in this respect of no consequence. As long as the one country has
those advantages, and the other wants them, it will always be more
advantageous for the latter rather to buy of the former than to make.
It is an acquired advantage only, which one artificer has over his
neighbour, who exercises another trade; and yet they both find it more
advantageous to buy of one another, than to make what does not belong
to their particular trades.

Merchants and manufacturers are the people who derive the greatest
advantage from this monopoly of the home market The prohibition of the
importation of foreign cattle and of salt provisions, together with
the high duties upon foreign corn, which in times of moderate plenty
amount to a prohibition, are not near so advantageous to the graziers
and farmers of Great Britain, as other regulations of the same kind
are to its merchants and manufacturers. Manufactures, those of the
finer kind especially, are more easily transported from one country to
another than corn or cattle. It is in the fetching and carrying
manufactures, accordingly, that foreign trade is chiefly employed. In
manufactures, a very small advantage will enable foreigners to
undersell our own workmen, even in the home market. It will require a
very great one to enable them to do so in the rude produce of the
soil. If the free importation of foreign manufactures were permitted,
several of the home manufactures would probably suffer,and some of
them perhaps go to ruin altogether, and a considerable part of the
stock and industry at present employed in them, would be forced to
find out some other employment. But the freest importation of the rude
produce of the soil could have no such effect upon the agriculture of
the country.

If the importation of foreign cattle, for example, were made ever so
free, so few could be imported, that the grazing trade of Great
Britain could be little affected by it. Live cattle are, perhaps, the
only commodity of which the transportation is more expensive by sea
than by land. By land they carry themselves to market. By sea, not
only the cattle, but their food and their water too, must be carried
at no small expense and inconveniency. The short sea between Ireland
and Great Britain, indeed, renders the importation of Irish cattle
more easy. But though the free importation of them, which was lately
permitted only for a limited time, were rendered perpetual, it could
have no considerable effect upon the interest of the graziers of Great
Britain. Those parts of Great Britain which border upon the Irish sea
are all grazing countries. Irish cattle could never be imported for
their use, but must be drove through those very extensive countries,
at no small expense and inconveniency, before they could arrive at
their proper market. Fat cattle could not be drove so far. Lean
cattle, therefore, could only be imported; and such importation could
interfere not with the interest of the feeding or fattening countries,
to which, by reducing the price of lean cattle it would rather be
advantageous, but with that of the breeding countries only. The small
number of Irish cattle imported since their importation was permitted,
together with the good price at which lean cattle still continue to
sell, seem to demonstrate, that even the breeding countries of Great
Britain are never likely to be much affected by the free importation
of Irish cattle. The common people of Ireland, indeed, are said to
have sometimes opposed with violence the exportation of their cattle.
But if the exporters had found any great advantage in continuing the
trade, they could easily, when the law was on their side, have
conquered this mobbish opposition.

Feeding and fattening countries, besides, must always be highly
improved, whereas breeding countries are generally uncultivated. The
high price of lean cattle, by augmenting the value of uncultivated
land, is like a bounty against improvement. To any country which was
highly improved throughout, it would be more advantageous to import
its lean cattle than to breed them. The province of Holland,
accordingly, is said to follow this maxim at present. The mountains of
Scotland, Wales, and Northumberland, indeed, are countries not capable
of much improvement, and seem destined by nature to be the breeding
countries of Great Britain. The freest importation of foreign cattle
could have no other effect than to hinder those breeding countries
from taking advantage of the increasing population and improvement of
the rest of the kingdom, from raising their price to an exorbitant
height, and from laying a real tax upon all the more improved and
cultivated parts of the country.

The freest importation of salt provisions, in the same manner, could
have as little effect upon the interest of the graziers of Great
Britain as that of live cattle. Salt provisions are not only a very
bulky commodity, but when compared with fresh meat they are a
commodity both of worse quality, and, as they cost more labour and
expense, of higher price. They could never, therefore, come into
competition with the fresh meat, though they might with the salt
provisions of the country. They might be used for victualling ships
for distant voyages, and such like uses, but could never make any
considerable part of the food of the people. The small quantity of
salt provisions imported from Ireland since their importation was
rendered free, is an experimental proof that our graziers have nothing
to apprehend from it. It does not appear that the price of butcher's
meat has ever been sensibly affected by it.

Even the free importation of foreign corn could very little affect the
interest of the farmers of Great Britain. Corn is a much more bulky
commodity than butcher's meat. A pound of wheat at a penny is as dear
as a pound of butcher's meat at fourpence. The small quantity of
foreign corn imported even in times of the greatest scarcity, may
satisfy our farmers that they can have nothing to fear from the freest
importation. The average quantity imported, one year with another,
amounts only, according to the very well informed author of the Tracts
upon the Corn Trade, to 23,728 quarters of all sorts of grain, and
does not exceed the five hundredth and seventy-one part of the annual
consumption. But as the bounty upon corn occasions a greater
exportation in years of plenty, so it must, of consequence, occasion a
greater importation in years of scarcity, than in the actual state of
tillage would otherwise take place. By means of it, the plenty of one
year does not compensate the scarcity of another; and as the average
quantity exported is necessarily augmented by it, so must likewise, in
the actual state of tillage, the average quantity imported. If there
were no bounty, as less corn would be exported, suit is probable that,
one year with another, less would be imported than at present. The
corn-merchants, the fetchers and carriers of corn between Great
Britain and foreign countries, would have much less employment, and
might suffer considerably; but the country gentlemen and farmers could
suffer very little. It is in the corn-merchants, accordingly, rather
than the country gentlemen and farmers, that I have observed the
greatest anxiety for the renewal and continuation of the bounty.

Country gentlemen and farmers are, to their great honour, of all
people, the least subject to the wretched spirit of monopoly. The
undertaker of a great manufactory is sometimes alarmed if another work
of the same kind is established within twenty miles of him; the Dutch
undertaker of the woollen manufacture at Abbeville, stipulated that no
work of the same kind should be established within thirty leagues of
that city. Farmers and country gentlemen, on the contrary, are
generally disposed rather to promote, than to obstruct, the
cultivation and improvement of their neighbours farms and estates.
They have no secrets, such as those of the greater part of
manufacturers, but are generally rather fond of communicating to their
neighbours, and of extending as far as possible any new practice which
they may have found to be advantageous. "Pius quaestus", says old
Cato, "stabilissimusque, minimeque invidiosus; minimeque male
cogitantes sunt, qui in eo studio occupati sunt." Country gentlemen
and farmers, dispersed in different parts of the country, cannot so
easily combine as merchants and manufacturers, who being collected
into towns, and accustomed to that exclusive corporation spirit which
prevails in them, naturally endeavour to obtain, against all their
countrymen, the same exclusive privilege which they generally possess
against the inhabitants of their respective towns. They accordingly
seem to have been the original inventors of those restraints upon the
importation of foreign goods, which secure to them the monopoly of the
home market. It was probably in imitation of them, and to put
themselves upon a level with those who, they found, were disposed to
oppress them, that the country gentlemen and farmers of Great Britain
so far forgot the generosity which is natural to their station, as to
demand the exclusive privilege of supplying their countrymen with corn
and butcher's meat. They did not, perhaps, take time to consider how
much less their interest could be affected by the freedom of trade,
than that of the people whose example they followed.

To prohibit, by a perpetual law, the importation of foreign corn and
cattle, is in reality to enact, that the population and industry of
the country shall, at no time, exceed what the rude produce of its own
soil can maintain.

There seem, however, to be two cases, in which it will generally be
advantageous to lay some burden upon foreign, for the encouragement of
domestic industry.

The first is, when some particular sort of industry is necessary for
the defence of the country. The defence of Great Britain, for example,
depends very much upon the number of its sailors and shipping. The act
of navigation, therefore, very properly endeavours to give the sailors
and shipping of Great Britain the monopoly of the trade of their own
country, in some cases, by absolute prohibitions, and in others, by
heavy burdens upon the shipping of foreign countries. The following
are the principal dispositions of this act.

First, All ships, of which the owners, masters, and three-fourths of
the mariners, are not British subjects, are prohibited, upon pain of
forfeiting ship and cargo, from trading to the British settlements and
plantations, or from being employed in the coasting trade of Great
Britain.

Secondly, A great variety of the most bulky articles of importation
can be brought into Great Britain only, either in such ships as are
above described, or in ships of the country where those goods are
produced, and of which the owners, masters, and three-fourths of the
mariners, are of that particular country; and when imported even in
ships of this latter kind, they are subject to double aliens duty. If
imported in ships of any other country, the penalty is forfeiture of
ship and goods. When this act was made, the Dutch were, what they
still are, the great carriers of Europe; and by this regulation they
were entirely excluded from being the carriers to Great Britain, or
from importing to us the goods of any other European country.

Thirdly, A great variety of the most bulky articles of importation are
prohibited from being imported, even in British ships, from any
country but that in which they are produced, under pain of forfeiting
ship and cargo. This regulation, too, was probably intended against
the Dutch. Holland was then, as now, the great emporium for all
European goods; and by this regulation, British ships were hindered
from loading in Holland the goods of any other European country.

Fourthly, Salt fish of all kinds, whale fins, whalebone, oil, and
blubber, not caught by and cured on board British vessels, when
imported into Great Britain, are subject to double aliens duty. The
Dutch, as they are still the principal, were then the only fishers in
Europe that attempted to supply foreign nations with fish. By this
regulation, a very heavy burden was laid upon their supplying Great
Britain.

When the act of navigation was made, though England and Holland were
not actually at war, the most violent animosity subsisted between the
two nations. It had begun during the government of the long
parliament, which first framed this act, and it broke out soon after
in the Dutch wars, during that of the Protector and of Charles II. It
is not impossible, therefore, that some of the regulations of this
famous act may have proceeded from national animosity. They are as
wise, however, as if they had all been dictated by the most deliberate
wisdom. National animosity, at that particular time, aimed at the very
same object which the most deliberate wisdom would have recommended,
the diminution of the naval power of Holland, the only naval power
which could endanger the security of England.

The act of navigation is not favourable to foreign commerce, or to the
growth of that opulence which can arise from it. The interest of a
nation, in its commercial relations to foreign nations, is, like that
of a merchant with regard to the different people with whom he deals,
to buy as cheap, and to sell as dear as possible. But it will be most
likely to buy cheap, when, by the most perfect freedom of trade, it
encourages all nations to bring to it the goods which it has occasion
to purchase; and, for the same reason, it will be most likely to sell
dear, when its markets are thus filled with the greatest number of
buyers. The act of navigation, it is true, lays no burden upon foreign
ships that come to export the produce of British industry. Even the
ancient aliens duty, which used to be paid upon all goods, exported as
well as imported, has, by several subsequent acts, been taken off from
the greater part of the articles of exportation. But if foreigners,
either by prohibitions or high duties, are hindered from coming to
sell, they cannot always afford to come to buy; because, coming
without a cargo, they must lose the freight from their own country to
Great Britain. By diminishing the number of sellers, therefore, we
necessarily diminish that of buyers, and are thus likely not only to
buy foreign goods dearer, but to sell our own cheaper, than if there
was a more perfect freedom of trade. As defence, however, is of much
more importance than opulence, the act of navigation is, perhaps, the
wisest of all the commercial regulations of England.

The second case, in which it will generally be advantageous to lay
some burden upon foreign for the encouragement of domestic industry,
is when some tax is imposed at home upon the produce of the latter. In
this case, it seems reasonable that an equal tax should be imposed
upon the like produce of the former. This would not give the monopoly
of the borne market to domestic industry, nor turn towards a
particular employment a greater share of the stock and labour of the
country, than what would naturally go to it. It would only hinder any
part of what would naturally go to it from being turned away by the
tax into a less natural direction, and would leave the competition
between foreign and domestic industry, after the tax, as nearly as
possible upon the same footing as before it. In Great Britain, when
any such tax is laid upon the produce of domestic industry, it is
usual, at the same time, in order to stop the clamorous complaints of
our merchants and manufacturers, that they will be undersold at home,
to lay a much heavier duty upon the importation of all foreign goods
of the same kind.

This second limitation of the freedom of trade, according to some
people, should, upon most occasions, be extended much farther than to
the precise foreign commodities which could come into competition with
those which had been taxed at home. When the necessaries of life have
been taxed in any country, it becomes proper, they pretend, to tax not
only the like necessaries of life imported from other countries, but
all sorts of foreign goods which can come into competition with any
thing that is the produce of domestic industry. Subsistence, they say,
becomes necessarily dearer in consequence of such taxes; and the price
of labour must always rise with the price of the labourer's
subsistence. Every commodity, therefore, which is the produce of
domestic industry, though not immediately taxed itself, becomes dearer
in consequence of such taxes, because the labour which produces it
becomes so. Such taxes, therefore, are really equivalent, they say, to
a tax upon every particular commodity produced at home. In order to
put domestic upon the same footing with foreign industry, therefore,
it becomes necessary, they think, to lay some duty upon every foreign
commodity, equal to this enhancement of the price of the home
commodities with which it can come into competition.

Whether taxes upon the necessaries of life, such as those in Great
Britain upon soap, salt, leather, candles, etc. necessarily raise the
price of labour, and consequently that of all other commodities, I
shall consider hereafter, when I come to treat of taxes. Supposing,
however, in the mean time, that they have this effect, and they have
it undoubtedly, this general enhancement of the price of all
commodities, in consequence of that labour, is a case which differs in
the two following respects from that of a particular commodity, of
which the price was enhanced by a particular tax immediately imposed
upon it.

First, It might always be known with great exactness, how far the
price of such a commodity could be enhanced by such a tax; but how far
the general enhancement of the price of labour might affect that of
every different commodity about which labour was employed, could never
be known with any tolerable exactness. It would be impossible,
therefore, to proportion, with any tolerable exactness, the tax of
every foreign, to the enhancement of the price of every home
commodity.

Secondly, Taxes upon the necessaries of life have nearly the same
effect upon the circumstances of the people as a poor soil and a bad
climate. Provisions are thereby rendered dearer, in the same manner as
if it required extraordinary labour and expense to raise them. As, in
the natural scarcity arising from soil and climate, it would be absurd
to direct the people in what manner they ought to employ their
capitals and industry, so is it likewise in the artificial scarcity
arising from such taxes. To be left to accommodate, as well as they
could, their industry to their situation, and to find out those
employments in which, notwithstanding their unfavourable
circumstances, they might have some advantage either in the home or in
the foreign market, is what, in both cases, would evidently be most
for their advantage. To lay a new-tax upon them, because they are
already overburdened with taxes, and because they already pay too dear
for the necessaries of life, to make them likewise pay too dear for
the greater part of other commodities, is certainly a most absurd way
of making amends.

Such taxes, when they have grown up to a certain height, are a curse
equal to the barrenness of the earth, and the inclemency of the
heavens, and yet it is in the richest and most industrious countries
that they have been most generally imposed. No other countries could
support so great a disorder. As the strongest bodies only can live and
enjoy health under an unwholesome regimen, so the nations only, that
in every sort of industry have the greatest natural and acquired
advantages, can subsist and prosper under such taxes. Holland is the
country in Europe in which they abound most, and which, from peculiar
circumstances, continues to prosper, not by means of them, as has been
most absurdly supposed, but in spite of them.

As there are two cases in which it will generally be advantageous to
lay some burden upon foreign for the encouragement of domestic
industry, so there are two others in which it may sometimes be a
matter of deliberation, in the one, how far it is proper to continue
the free importation of certain foreign goods; and, in the other, how
far, or in what manner, it may be proper to restore that free
importation, after it has been for some time interrupted.

The case in which it may sometimes be a matter of deliberation how far
it is proper to continue the free importation of certain foreign
goods, is when some foreign nation restrains, by high duties or
prohibitions, the importation of some of our manufactures into their
country. Revenge, in this case, naturally dictates retaliation, and
that we should impose the like duties and prohibitions upon the
importation of some or all of their manufactures into ours. Nations,
accordingly, seldom fail to retaliate in this manner. The French have
been particularly forward to favour their own manufactures, by
restraining the importation of such foreign goods as could come into
competition with them. In this consisted a great part of the policy of
Mr Colbert, who, notwithstanding his great abilities, seems in this
case to have been imposed upon by the sophistry of merchants and
manufacturers, who are always demanding a monopoly against their
countrymen. It is at present the opinion of the most intelligent men
in France, that his operations of this kind have not been beneficial
to his country. That minister, by the tariff of 1667, imposed very
high duties upon a great number of foreign manufactures. Upon his
refusing to moderate them in favour of the Dutch, they, in 1671,
prohibited the importation of the wines, brandies, and manufactures of
France. The war of 1672 seems to have been in part occasioned by this
commercial dispute. The peace of Nimeguen put an end to it in 1678, by
moderating some of those duties in favour of the Dutch, who in
consequence took off their prohibition. It was about the same time
that the French and English began mutually to oppress each other's
industry, by the like duties and prohibitions, of which the French,
however, seem to have set the first example, The spirit of hostility
which has subsisted between the two nations ever since, has hitherto
hindered them from being moderated on either side. In 1697, the
Ehglish prohibited the importation of bone lace, the manufacture of
Flanders. The government of that country, at that time under the
dominion of Spain, prohibited, in return, the importation of English
woollens. In 1700, the prohibition of importing bone lace into England
was taken oft; upon condition that the importation of English woollens
into Flanders should be put on the same footing as before.

There may be good policy in retaliations of this kind, when there is a
probability that they will procure the repeal of the high duties or
prohibitions complained of. The recovery of a great foreign market
will generally more than compensate the transitory inconveniency of
paying dearer during a short time for some sorts of goods. To judge
whether such retaliations are likely to produce such an effect, does
not, perhaps, belong so much to the science of a legislator, whose
deliberations ought to be governed by general principles, which are
always the same, as to the skill of that insidious and crafty animal
vulgarly called a statesman or politician, whose councils are directed
by the momentary fluctuations of affairs. When there is no probability
that any such repeal can be procured, it seems a bad method of
compensating the injury done to certain classes of our people, to do
another injury ourselves, not only to those classes, but to almost all
the other classes of them. When our neighbours prohibit some
manufacture of ours, we generally prohibit, not only the same, for
that alone would seldom affect them considerably, but some other
manufacture of theirs. This may, no doubt, give encouragement to some
particular class of workmen among ourselves, and, by excluding some of
their rivals, may enable them to raise their price in the home market.
Those workmen however, who suffered by our neighbours prohibition,
will not be benefited by ours. On the contrary, they, and almost all
the other classes of our citizens, will thereby be obliged to pay
dearer than before for certain goods. Every such law, therefore,
imposes a real tax upon the whole country, not in favour of that
particular class of workmen who were injured by our neighbours
prohibitions, but of some other class.

The case in which it may sometimes be a matter of deliberation, how
far, or in what manner, it is proper to restore the free importation
of foreign goods, after it has been for some time interrupted, is when
particular manufactures, by means of high duties or prohibitions upon
all foreign goods which can come into competition with them, have been
so far extended as to employ a great multitude of hands. Humanity may
in this case require that the freedom of trade should be restored only
by slow gradations, and with a good deal of reserve and
circumspection. Were those high duties and prohibitions taken away all
at once, cheaper foreign goods of the same kind might be poured so
fast into the home market, as to deprive all at once many thousands of
our people of their ordinary employment and means of subsistence. The
disorder which this would occasion might no doubt be very
considerable. It would in all probability, however, be much less than
is commonly imagined, for the two following reasons.

First, All those manufactures of which any part is commonly exported
to other European countries without a bounty, could be very little
affected by the freest importation of foreign goods. Such manufactures
must be sold as cheap abroad as any other foreign goods of the same
quality and kind, and consequently must be sold cheaper at home. They
would still, therefore, keep possession of the home market; and though
a capricious man of fashion might sometimes prefer foreign wares,
merely because they were foreign, to cheaper and better goods of the
same kind that were made at home, this folly could, from the nature of
things, extend to so few, that it could make no sensible impression
upon the general employment of the people. But a great part of all the
different branches of our woollen manufacture, of our tanned leather,
and of our hardware, are annually exported to other European countries
without any bounty, and these are the manufactures which employ the
greatest number of hands. The silk, perhaps, is the manufacture which
would suffer the most by this freedom of trade, and after it the
linen, though the latter much less than the former.

Secondly, Though a great number of people should, by thus restoring
the freedom of trade, be thrown all at once out of their ordinary
employment and common method of subsistence, it would by no means
follow that they would thereby be deprived either of employment or
subsistence. By the reduction of the army and navy at the end of the
late war, more than 100,000 soldiers and seamen, a number equal to
what is employed in the greatest manufactures, were all at once thrown
out of their ordinary employment: but though they no doubt suffered
some inconveniency, they were not thereby deprived of all employment
and subsistence. The greater part of the seamen, it is probable,
gradually betook themselves to the merchant service as they could find
occasion, and in the mean time both they and the soldiers were
absorbed in the great mass of the people, and employed in a great
variety of occupations. Not only no great convulsion, but no sensible
disorder, arose from so great a change in the situation of more than
100,000 men, all accustomed to the use of arms, and many of them to
rapine and plunder. The number of vagrants was scarce anywhere
sensibly increased by it; even the wages of labour were not reduced by
it in any occupation, so far as I have been able to learn, except in
that of seamen in the merchant service. But if we compare together the
habits of a soldier and of any sort of manufacturer, we shall find
that those of the latter do not tend so much to disqualify him from
being employed in a new trade, as those of the former from being
employed in any. The manufacturer has always been accustomed to look
for his subsistence from his labour only; the soldier to expect it
from his pay. Application and industry have been familiar to the one;
idleness and dissipation to the other. But it is surely much easier to
change the direction of industry from one sort of labour to another,
than to turn idleness and dissipation to any. To the greater part of
manufactures, besides, it has already been observed, there are other
collateral manufactures of so similar a nature, that a workman can
easily transfer his industry from one of them to another. The greater
part of such workmen, too, are occasionally employed in country
labour. The stock which employed them in a particular manufacture
before, will still remain in the country, to employ an equal number of
people in some other way. The capital of the country remaining the
same, the demand for labour will likewise be the same, or very nearly
the same, though it may be exerted in different places, and for
different occupations. Soldiers and seamen, indeed, when discharged
from the king's service, are at liberty to exercise any trade within
any town or place of Great Britain or Ireland. Let the same natural
liberty of exercising what species of industry they please, be
restored to all his Majesty's subjects, in the same manner as to
soldiers and seamen; that is, break down the exclusive privileges of
corporations, and repeal the statute of apprenticeship, both which are
really encroachments upon natural Liberty, and add to those the repeal
of the law of settlements, so that a poor workman, when thrown out of
employment, either in one trade or in one place, may seek for it in
another trade or in another place, without the fear either of a
prosecution or of a removal; and neither the public nor the
individuals will suffer much more from the occasional disbanding some
particular classes of manufacturers, than from that of the soldiers.
Our manufacturers have no doubt great merit with their country, but
they cannot have more than those who defend it with their blood, nor
deserve to be treated with more delicacy.

To expect, indeed, that the freedom of trade should ever be entirely
restored in Great Britain, is as absurd as to expect that an Oceana or
Utopia should ever be established in it. Not only the prejudices of
the public, but, what is much more unconquerable, the private
interests of many individuals, irresistibly oppose it. Were the
officers of the army to oppose, with the same zeal and unanimity, any
reduction in the number of forces, with which master manufacturers set
themselves against every law that is likely to increase the number of
their rivals in the home market; were the former to animate their
soldiers. In the same manner as the latter inflame their workmen, to
attack with violence and outrage the proposers of any such regulation;
to attempt to reduce the army would be as dangerous as it has now
become to attempt to diminish, in any respect, the monopoly which our
manufacturers have obtained against us. This monopoly has so much
increased the number of some particular tribes of them, that, like an
overgrown standing army, they have become formidable to the
government, and, upon many occasions, intimidate the legislature. The
member of parliament who supports every proposal for strengthening
this monopoly, is sure to acquire not only the reputation of
understanding trade, but great popularity and influence with an order
of men whose numbers and wealth render them of great importance. If he
opposes them, on the contrary, and still more, if he has authority
enough to be able to thwart them, neither the most acknowledged
probity, nor the highest rank, nor the greatest public services, can
protect him from the most infamous abuse and detraction, from personal
insults, nor sometimes from real danger, arising from the insolent
outrage of furious and disappointed monopolists.

The undertaker of a great manufacture, who, by the home markets being
suddenly laid open to the competition of foreigners, should be obliged
to abandon his trade, would no doubt suffer very considerably. That
part of his capital which had usually been employed in purchasing
materials, and in paying his workmen, might, without much difficulty,
perhaps, find another employment; but that part of it which was fixed
in workhouses, and in the instruments of trade, could scarce be
disposed of without considerable loss. The equitable regard,
therefore, to his interest, requires that changes of this kind should
never be introduced suddenly, but slowly, gradually, and after a very
long warning. The legislature, were it possible that its deliberations
could be always directed, not by the clamorous importunity of partial
interests, but by an extensive view of the general good, ought, upon
this very account, perhaps, to be particularly careful, neither to
establish any new monopolies of this kind, nor to extend further those
which are already established. Every such regulation introduces some
degree of real disorder into the constitution of the state, which it
will be difficult afterwards to cure without occasioning another
disorder.

How far it may be proper to impose taxes upon the importation of
foreign goods, in order not to prevent their importation, but to raise
a revenue for government, I shall consider hereafter when I come to
treat of taxes. Taxes imposed with a view to prevent, or even to
diminish importation, are evidently as destructive of the revenue of
the customs as of the freedom of trade.


CHAPTER III.

OF THE EXTRAORDINARY RESTRAINTS UPON THE IMPORTATION OF GOODS OF
ALMOST ALL KINDS, FROM THOSE COUNTRIES WITH WHICH THE BALANCE IS
SUPPOSED TO BE DISADVANTAGEOUS.

Part I -- Of the Unreasonableness of those Restraints, even upon the-
Principles of the Commercial System.

To lay extraordinary restraints upon the importation of goods of
almost all kinds, from those particular countries with which the
balance of trade is supposed to be disadvantageous, is the second
expedient by which the commercial system proposes to increase the
quantity of gold and silver. Thus, in Great Britain, Silesia lawns may
be imported for home consumption, upon paying certain duties; but
French cambrics and lawns are prohibited to be imported, except into
the port of London, there to be warehoused for exportation. Higher
duties are imposed upon the wines of France than upon those of
Portugal, or indeed of any other country. By what is called the impost
1692, a duty of five and-twenty per cent. of the rate or value, was
laid upon all French goods; while the goods of other nations were, the
greater part of them, subjected to much lighter duties, seldom
exceeding five per cent. The wine, brandy, salt, and vinegar of
France, were indeed excepted; these commodities being subjected to
other heavy duties, either by other laws, or by particular clauses of
the same law. In 1696, a second duty of twenty-five per cent. the
first not having been thought a sufficient discouragement, was imposed
upon all French goods, except brandy; together with a new duty of
five-and-twenty pounds upon the ton of French wine, and another of
fifteen pounds upon the ton of French vinegar. French goods have never
been omitted in any of those general subsidies or duties of five per
cent. which have been imposed upon all, or the greater part, of the
goods enumerated in the book of rates. If we count the one-third and
two-third subsidies as making a complete subsidy between them, there
have been five of these general subsidies; so that, before the
commencement of the present war, seventy-five per cent. may be
considered as the lowest duty to which the greater part of the goods
of the growth, produce, or manufacture of France, were liable. But
upon the greater part of goods, those duties are equivalent to a
prohibition. The French, in their turn, have, I believe, treated our
goods and manufactures just as hardly; though I am not so well
acquainted with the particular hardships which they have imposed upon
them. Those mutual restraints have put an end to almost all fair
commerce between the two nations; and smugglers are now the principal
importers, either of British goods into France, or of French goods
into Great Britain. The principles which I have been examining, in the
foregoing chapter, took their origin from private interest and the
spirit of monopoly; those which I am going te examine in this, from
national prejudice and animosity. They are, accordingly, as might well
be expected, still more unreasonable. They are so, even upon the
principles of the commercial system.

First, Though it were certain that in the case of a free trade between
France and England, for example, the balance would be in favour of
France, it would by no means follow that such a trade would be
disadvantageous to England, or that the general balance of its whole
trade would thereby be turned more against it. If the wines of France
are better and cheaper than those of Portugal, or its linens than
those of Germany, it would be more advantageous for Great Britain to
purchase both the wine and the foreign linen which it had occasion for
of France, than of Portugal and Germany. Though the value of the
annual importations from France would thereby be greatly augmented,
the value of the whole annual importations would be diminished, in
proportion as the French goods of the same quality were cheaper than
those of the other two countries. This would be the case, even upon
the supposition that the whole French goods imported were to be
consumed in Great Britain.

But, Secondly, A great part of them might be re-exported to other
countries, where, being sold with profit, they might bring back a
return, equal in value, perhaps, to the prime cost of the whole French
goods imported. What has frequently been said of the East India trade,
might possibly be true of the French; that though the greater part of
East India goods were bought with gold and silver, the re-exportation
of a part of them to other countries brought back more gold and silver
to that which carried on the trade, than the prime cost of the whole
amounted to. One of the most important branches of the Dutch trade at
present, consists in the carriage of French goods to other European
countries. Some part even of the French wine drank in Great Britain,
is clandestinely imported from Holland and Zealand. If there was
either a free trade between France and England, or if French goods
could be imported upon paying only the same duties as those of other
European nations, to be drawn back upon exportation, England might
have some share of a trade which is found so advantageous to Holland.

Thirdly, and lastly, There is no certain criterion by which we can
determine on which side what is called the balance between any two
countries lies, or which of them exports to the greatest value.
National prejudice and animosity, prompted always by the private
interest of particular traders, are the principles which generally
direct our judgment upon all questions concerning it. There are two
criterions, however, which have frequently been appealed to upon such
occasions, the custom-house books and the course of exchange. The
custom-house books, I think, it is now generally acknowledged, are a
very uncertain criterion, on account of the inaccuracy of the
valuation at which the greater part of goods are rated in them. The
course of exchange is, perhaps, almost equally so.

When the exchange between two places, such as London and Paris, is at
par, it is said to be a sign that the debts due from London to Paris
are compensated by those due from Paris to London. On the contrary,
when a premium is paid at London for a bill upon Paris, it is said to
be a sign that the debts due from London to Paris are not compensated
by those due from Paris to London, but that a balance in money must be
sent out from the latter place; for the risk, trouble, and expense, of
exporting which, the premium is both demanded and given. But the
ordinary state of debt and credit between those two cities must
necessarily be regulated, it is said, by the ordinary course of their
dealings with one another. When neither of them imports from from
other to a greater amount than it exports to that other, the debts and
credits of each may compensate one another. But when one of them
imports from the other to a greater value than it exports to that
other, the former necessarily becomes indebted to the latter in a
greater sum than the latter becomes indebted to it: the debts and
credits of each do not compensate one another, and money must be sent
out from that place of which the debts overbalance the credits. The
ordinary course of exchange, therefore, being an indication of the
ordinary state of debt and credit between two places, must likewise be
an indication of the ordinary course of their exports and imports, as
these necessarily regulate that state.

But though the ordinary course of exchange shall be allowed to be a
sufficient indication of the ordinary state of debt and credit between
any two places, it would not from thence follow, that the balance of
trade was in favour of that place which had the ordinary state of debt
and credit in its favour. The ordinary state of debt and credit
between any two places is not always entirely regulated by the
ordinary course of their dealings with one another, but is often
influenced by that of the dealings of either with many other places.
If it is usual, for example, for the merchants of England to pay for
the goods which they buy of Hamburg, Dantzic, Riga, etc. by bills upon
Holland, the ordinary state of debt and credit between England and
Holland will not be regulated entirely by the ordinary course of the
dealings of those two countries with one another, but will be
influenced by that of the dealings in England with those other places.
England may be obliged to send out every year money to Holland, though
its annual exports to that country may exceed very much the annual
value of its imports from thence, and though what is called the
balance of trade may be very much in favour of England.

In the way, besides, in which the par of exchange has hitherto been
computed, the ordinary course of exchange can afford no sufficient
indication that the ordinary state of debt and credit is in favour of
that country which seems to have, or which is supposed to have, the
ordinary course of exchange in its favour; or, in other words, the
real exchange may be, and in fact often is, so very different from the
computed one, that, from the course of the latter, no certain
conclusion can, upon many occasions, be drawn concerning that of the
former.

When for a sum or money paid in England, containing, according to the
standard of the English mint, a certain number of ounces of pure
silver, you receive a bill for a sum of money to be paid in France,
containing, according to the standard of the French mint, an equal
number of ounces of pure silver, exchange is said to be at par between
England and France. When you pay more, you are supposed to give a
premium, and exchange is said to be against England, and in favour of
France. When you pay less, you are supposed to get a premium, and
exchange is said to be against France, and in favour of England.

But, first, We cannot always judge of the value of the current money
of different countries by the standard of their respective mints. In
some it is more, in others it is less worn, clipt, and otherwise
degenerated from that standard. But the value of the current coin of
every country, compared with that of any other country, is in
proportion, not to the quantity of pure silver which it ought to
contain, but to that which it actually does contain. Before the
reformation of the silver coin in King William's time, exchange
between England and Holland, computed in the usual manner, according
to the standard of their respective mints, was five-and twenty per
cent. against England. But the value of the current coin of England,
as we learn from Mr Lowndes, was at that time rather more than
five-and-twenty per cent. below its standard value. The real exchange,
therefore, may even at that time have been in favour of England,
notwithstanding the computed exchange was so much against it; a
smaller number or ounces of pure silver, actually paid in England, may
have purchased a bill for a greater number of ounces of pure silver to
be paid in Holland, and the man who was supposed to give, may in
reality have got the premium. The French coin was, before the late
reformation of the English gold coin, much less wore than the English,
and was perhaps two or three per cent. nearer its standard. If the
computed exchange with France, therefore, was not more than two or
three per cent. against England, the real exchange might have been in
its favour. Since the reformation of the gold coin, the exchange has
been constantly in favour of England, and against France.

Secondly, In some countries the expense of coinage is defrayed by the
government; in others, it is defrayed by the private people, who carry
their bullion to the mint, and the government even derives some
revenue from the coinage. In England it is defrayed by the government;
and if you carry a pound weight of standard silver to the mint, you
get back sixty-two shillings, containing a pound weight of the like
standard silver. In France a duty of eight per cent. is deducted for
the coinage, which not only defrays the expense of it, but affords a
small revenue to the government. In England, as the coinage costs
nothing, the current coin can never be much more valuable than the
quantity of bullion which it actually contains. In France, the
workmanship, as you pay for it, adds to the value, in the same manner
as to that of wrought plate. A sum of French money, therefore,
containing an equal weight of pure silver, is more valuable than a sum
of English money containing an equal weight of pure silver, and must
require more bullion, or other commodities, to purchase it. Though the
current coin of the two countries, therefore, were equally near the
standards of their respective mints, a sum of English money could not
well purchase a sum of French money containing an equal number of
ounces of pure silver, nor, consequently, a bill upon France for such
a sum. If, for such a bill, no more additional money was paid than
what was sufficient to compensate the expense of the French coinage,
the real exchange might be at par between the two countries; their
debts and credits might mutually compensate one another, while the
computed exchange was considerably in favour of France. If less than
this was paid, the real exchange might be in favour of England, while
the computed was in favour of France.

Thirdly, and lastly, In some places, as at Amsterdam, Hamburg, Venice,
etc. foreign bills of exchange are paid in what they call bank money;
while in others, as at London, Lisbon, Antwerp, Leghorn, etc. they are
paid in the common currency of the country. What is called bank money,
is always of more value than the same nominal sum of common currency.
A thousand guilders in the bank of Amsterdam, for example, are of more
value than a thousand guilders of Amsterdam currency. The difference
between them is called the agio of the bank, which at Amsterdam is
generally about five per cent. Supposing the current money of the two
countries equally near to the standard of their respective mints, and
that the one pays foreign bills in this common currency, while the
other pays them in bank money, it is evident that the computed
exchange may be in favour of that which pays in bank money, though the
real exchange should be in favour of that which pays in current money;
for the same reason that the computed exchange may be in favour of
that which pays in better money, or in money nearer to its own
standard, though the real exchange should be in favour of that which
pays in worse. The computed exchange, before the late reformation of
the gold coin, was generally against London with Amsterdam, Hamburg,
Venice, and, I believe, with all other places which pay in what is
called bank money. It will by no means follow, however, that the real
exchange was against it. Since the reformation of the gold coin, it
has been in favour of London, even with those places. The computed
exchange has generally been in favour of London with Lisbon, Antwerp,
Leghorn, and, if you except France, I believe with most other parts of
Europe that pay in common currency; and it is not improbable that the
real exchange was so too.

Digression concerning Banks of Deposit, particularly concerning that
of Amsterdam.

The currency of a great state, such as France or England, generally
consists almost entirely of its own coin. Should this currency,
therefore, be at any time worn, clipt, or otherwise degraded below its
standard value, the state, by a reformation of its coin, can
effectually re-establish its currency. But the currency of a small
state, such as Genoa or Hamburg, can seldom consist altogether in its
own coin, but must be made up, in a great measure, of the coins of all
the neighbouring states with which its inhabitants have a continual
intercourse. Such a state, therefore, by reforming its coin, will not
always be able to reform its currency. If foreign bills of exchange
are paid in this currency, the uncertain value of any sum, of what is
in its own nature so uncertain, must render the exchange always very
much against such a state, its currency being in all foreign states
necessarily valued even below what it is worth.

In order to remedy the inconvenience to which this disadvantageous
exchange must have subjected their merchants, such small states, when
they began to attend to the interest of trade, have frequently enacted
that foreign bills of exchange of a certain value should be paid, not
in common currency, but by an order upon, or by a transfer in the
books of a certain bank, established upon the credit, and under the
protection of the state, this bank being always obliged to pay, in
good and true money, exactly according to the standard of the state.
The banks of Venice, Genoa, Amsterdam, Hamburg, and Nuremberg, seem to
have been all originally established with this view, though some of
them may have afterwards been made subservient to other purposes. The
money of such banks, being better than the common currency of the
country, necessarily bore an agio, which was greater or smaller,
according as the currency was supposed to be more or less degraded
below the standard of the state. The agio of the bank of Hamburg, for
example, which is said to be commonly about fourteen per cent. is the
supposed difference between the good standard money of the state, and
the clipt, worn, and diminished currency, poured into it from all the
neighbouring states.

Before 1609, the great quantity of clipt and worn foreign coin which
the extensive trade of Amsterdam brought from all parts of Europe,
reduced the value of its currency about nine per cent. below that of
good money fresh from the mint. Such money no sooner appeared, than it
was melted down or carried away, as it always is in such
circumstances. The merchants, with plenty of currency, could not
always find a sufficient quantity of good money to pay their bills of
exchange; and the value of those bills, in spite of several
regulations which were made to prevent it, became in a great measure
uncertain.

In order to remedy these inconveniencies, a bank was established in
1609, under the guarantee of the city. This bank received both foreign
coin, and the light and worn coin of the country, at its real
intrinsic value in the good standard money of the country, deducting
only so much as was necessary for defraying the expense of coinage and
the other necessary expense of management. For the value which
remained after this small deduction was made, it gave a credit in its
books. This credit was called bank money, which, as it represented
money exactly according to the standard of the mint, was always of the
same real value, and intrinsically worth more than current money. It
was at the same time enacted, that all bills drawn upon or negotiated
at Amsterdam, of the value of 600 guilders and upwards, should be paid
in bank money, which at once took away all uncertainty in the value of
those bills. Every merchant, in consequence of this regulation, was
obliged to keep an account with the bank, in order to pay his foreign
bills of exchange, which necessarily occasioned a certain demand for
bank money.

Bank money, over and above both its intrinsic superiority to
currency, and the additional value which this demand necessarily gives
it, has likewise some other advantages, It is secure from fire,
robbery, and other accidents; the city of Amsterdam is bound for it;
it can be paid away by a simple transfer, without the trouble of
counting, or the risk of transporting it from one place to another. In
consequence of those different advantages, it seems from the beginning
to have borne an agio; and it is generally believed that all the money
originally deposited in the bank, was allowed to remain there, nobody
caring to demand payment of a debt which he could sell for a premium
in the market. By demanding payment of the bank, the owner of a bank
credit would lose this premium. As a shilling fresh from the mint will
buy no more goods in the market than one of our common worn shillings,
so the good and true money which might be brought from the coffers of
the bank into those of a private person, being mixed and confounded
with the common currency of the country, would be of no more value
than that currency, from which it could no longer be readily
distinguished. While it remained in the coffers of the bank, its
superiority was known and ascertained. When it had come into those of
a private person, its superiority could not well be ascertained
without more trouble than perhaps the difference was worth. By being
brought from the coffers of the bank, besides, it lost all the other
advantages of bank money; its security, its easy and safe
transferability, its use in paying foreign bills of exchange. Over and
above all this, it could not be brought from those coffers, as will
appear by and by, without previously paying for the keeping.

Those deposits of coin, or those deposits which the bank was bound to
restore in coin, constituted the original capital of the bank, or the
whole value of what was represented by what is called bank money. At
present they are supposed to constitute but a very small part of it.
In order to facilitate the trade in bullion, the bank has been for
these many years in the practice of giving credit in its books, upon
deposits of gold and silver bullion. This credit is generally about
five per cent. below the mint price of such bullion. The bank grants
at the same time what is called a recipice or receipt, entitling the
person who makes the deposit, or the bearer, to take out the bullion
again at any time within six months, upon transferring to the bank a
quantity of bank money equal to that for which credit had been given
in its books when the deposit was made, and upon paying one-fourth per
cent. for the keeping, if the deposit was in silver; and one-half per
cent. if it was in gold; but at the same time declaring, that in
default of such payment, and upon the expiration of this term, the
deposit should belong to the bank, at the price at which it had been
received, or for which credit had been given in the transfer books.
What is thus paid for the keeping of the deposit may be considered as
a sort of warehouse rent; and why this warehouse rent should be so
much dearer for gold than for silver, several different reasons have
been assigned. The fineness of gold, it has been said, is more
difficult to be ascertained than that of silver. Frauds are more
easily practised, and occasion a greater loss in the most precious
metal. Silver, besides, being the standard metal, the state, it has
been said, wishes to encourage more the making of deposits of silver
than those of gold.

Deposits of bullion are most commonly made when the price is somewhat
lower than ordinary, and they are taken out again when it happens to
rise. In Holland the market price of bullion is generally above the
mint price, for the same reason that it was so in England before the
late reformation of the gold coin. The difference is said to be
commonly from about six to sixteen stivers upon the mark, or eight
ounces of silver, of eleven parts of fine and one part alloy. The bank
price, or the credit which the bank gives for the deposits of such
silver (when made in foreign coin, of which the fineness is well known
and ascertained, such as Mexico dollars), is twenty-two guilders the
mark: the mint price is about twenty-three guilders, and the market
price is from twenty-three guilders six, to twenty-three guilders
sixteen stivers, or from two to three per cent. above the mint price.

The following are the prices at which the bank of Amsterdam at
present {September 1775} receives bullion and coin of different
kinds:

                              SILVER
     Mexico dollars  .................  22  Guilders / mark
     French crowns  ..................  22
     English silver coin .............  22
     Mexico dollars, new coin ........  21  10
     Ducatoons .......................   3   0
     Rix-dollars .....................   2   8

Bar silver, containing 11-12ths fine silver, 21 Guilders / mark,
and in this proportion down to 1-4th fine, on which 5 guilders
are given. Fine bars, ................. 28  Guilders / mark.

                              GOLD
     Portugal coin .................  310  Guilders / mark
     Guineas .......................  310
     Louis d'ors, new ..............  310
     Ditto        old ..............  300
     New ducats ....................    4  19  8  per ducat

Bar or ingot gold is received in proportion to its fineness, compared
with the above foreign gold coin. Upon fine bars the bank gives 340
per mark. In general, however, something more is given upon coin of a
known fineness, than upon gold and silver bars, of which the fineness
cannot be ascertained but by a process of melting and assaying.

The proportions between the bank price, the mint price, and the market
price of gold bullion, are nearly the same. A person can generally
sell his receipt for the difference between the mint price of bullion
and the market price. A receipt for bullion is almost always worth
something, and it very seldom happens, therefore, that anybody suffers
his receipts to expire, or allows his bullion to fall to the bank at
the price at which it had been received, either by not taking it out
before the end of the six months, or by neglecting to pay one fourth
or one half per cent. in order to obtain a new receipt for another six
months. This, however, though it happens seldom, is said to happen
sometimes, and more frequently with regard to gold than with regard to
silver, on account of the higher warehouse rent which is paid for the
keeping of the more precious metal.

The person who, by making a deposit of bullion, obtains both a bank
credit and a receipt, pays his bills of exchange as they become due,
with his bank credit; and either sells or keeps his receipt, according
as he judges that the price of bullion is likely to rise or to fall.
The receipt and the bank credit seldom keep long together, and there
is no occasion that they should. The person who has a receipt, and who
wants to take out bullion, finds always plenty of bank credits, or
bank money, to buy at the ordinary price, and the person who has bank
money, and wants to take out bullion, finds receipts always in equal
abundance.

The owners of bank credits, and the holders of receipts, constitute
two different sorts of creditors against the bank. The holder of a
receipt cannot draw out the bullion for which it is granted, without
re-assigning to the bank a sum of bank money equal to the price at
which the bullion had been received. If he has no bank money of his
own, he must purchase it of those who have it. The owner of bank money
cannot draw out bullion, without producing to the bank receipts for
the quantity which he wants. If he has none of his own, he must buy
them of those who have them. The holder of a receipt, when he
purchases bank money, purchases the power of taking out a quantity of
bullion, of which the mint price is five per cent. above the bank
price. The agio of five per cent. therefore, which he commonly pays
for it, is paid, not for an imaginary, but for a real value. The owner
of bank money, when he purchases a receipt, purchases the power of
taking out a quantity of bullion, of which the market price is
commonly from two to three per cent. above the mint price. The price
which he pays for it, therefore, is paid likewise for a real value.
The price of the receipt, and the price of the bank money, compound or
make up between them the full value or price of the bullion.

Upon deposits of the coin current in the country, the bank grant
receipts likewise, as well as bank credits; but those receipts are
frequently of no value and will bring no price in the market. Upon
ducatoons, for example, which in the currency pass for three guilders
three stivers each, the bank gives a credit of three guilders only, or
five per cent. below their current value. It grants a receipt
likewise, entitling the bearer to take out the number of ducatoons
deposited at any time within six months, upon paying one fourth per
cent. for the keeping. This receipt will frequently bring no price in
the market. Three guilders, bank money, generally sell in the market
for three guilders three stivers, the full value of the ducatoons, if
they were taken out of the bank; and before they can be taken out,
one-fourth per cent. must be paid for the keeping, which would be mere
loss to the holder of the receipt. If the agio of the bank, however,
should at any time fall to three per cent. such receipts might bring
some price in the market, and might sell for one and three-fourths per
cent. But the agio of the bank being now generally about five per
cent. such receipts are frequently allowed to expire, or, as they
express it, to fall to the bank. The receipts which are given for
deposits of gold ducats fall to it yet more frequently, because a
higher warehouse rent, or one half per cent. must be paid for the
keeping of them, before they can be taken out again. The five per
cent. which the bank gains, when deposits either of coin or bullion
are allowed to fall to it, maybe considered as the warehouse rent for
the perpetual keeping of such deposits.

The sum of bank money, for which the receipts are expired, must be
very considerable. It must comprehend the whole original capital of
the bank, which, it is generally supposed, has been allowed to remain
there from the time it was first deposited, nobody caring either to
renew his receipt, or to take out his deposit, as, for the reasons
already assigned, neither the one nor the other could be done without
loss. But whatever may be the amount of this sum, the proportion which
it bears to the whole mass of bank money is supposed to be very small.
The bank of Amsterdam has, for these many years past, been the great
warehouse of Europe for bullion, for which the receipts are very
seldom allowed to expire, or, as they express it, to fall to the bank.
The far greater part of the bank money, or of the credits upon the
books of the bank, is supposed to have been created, for these many
years past, by such deposits, which the dealers in bullion are
continually both making and withdrawing.

No demand can be made upon the bank, but by means of a recipice or
receipt. The smaller mass of bank money, for which the receipts are
expired, is mixed and confounded with the much greater mass for which
they are still in force; so that, though there may be a considerable
sum of bank money, for which there are no receipts, there is no
specific sum or portion of it which may not at any time be demanded by
one. The bank cannot be debtor to two persons for the same thing; and
the owner of bank money who has no receipt, cannot demand payment of
the bank till he buys one. In ordinary and quiet times, he can find no
difficulty in getting one to buy at the market price, which generally
corresponds with the price at which he can sell the coin or bullion it
entitles him to take out of the bank.

It might be otherwise during a public calamity; an invasion, for
example, such as that of the French in 1672. The owners of bank money
being then all eager to draw it out of the bank, in order to have it
in their own keeping, the demand for receipts might raise their price
to an exorbitant height. The holders of them might form extravagant
expectations, and, instead of two or three per cent. demand half the
bank money for which credit had been given upon the deposits that the
receipts had respectively been granted for. The enemy, informed of the
constitution of the bank, might even buy them up, in order to prevent
the carrying away of the treasure. In such emergencies, the bank, it
is supposed, would break through its ordinary rule of making payment
only to the holders of receipts. The holders of receipts, who had no
bank money, must have received within two or three per cent. of the
value of the deposit for which their respective receipts had been
granted. The bank, therefore, it is said, would in this case make no
scruple of paying, either with money or bullion, the full value of
what the owners of bank money, who could get no receipts, were
credited for in its books; paying, at the same time, two or three per
cent. to such holders of receipts as had no bank money, that being the
whole value which, in this state of things, could justly be supposed
due to them.

Even in ordinary and quiet times, it is the interest of the holders of
receipts to depress the agio, in order either to buy bank money (and
consequently the bullion which their receipts would then enable them
to take out of the bank ) so much cheaper, or to sell their receipts
to those who have bank money, and who want to take out bullion, so
much dearer; the price of a receipt being generally equal to the
difference between the market price of bank money and that of the coin
or bullion for which the receipt had been granted. It is the interest
of the owners of bank money, on the contrary, to raise the agio, in
order either to sell their bank money so much dearer, or to buy a
receipt so much cheaper. To prevent the stock-jobbing tricks which
those opposite interests might sometimes occasion, the bank has of
late years come to the resolution, to sell at all times bank money for
currency at five per cent. agio, and to buy it in again at four per
cent. agio. In consequence of this resolution, the agio can never
either rise above five, or sink below four per cent.; and the
proportion between the market price of bank and that of current money
is kept at all times very near the proportion between their intrinsic
values. Before this resolution was taken, the market price of bank
money used sometimes to rise so high as nine per cent. agio, and
sometimes to sink so low as par, according as opposite interests
happened to influence the market.

The bank of Amsterdam professes to lend out no part of what is
deposited with it, but for every guilder for which it gives credit in
its books, to keep in its repositories the value of a guilder either
in money or bullion. That it keeps in its repositories all the money
or bullion for which there are receipts in force for which it is at
all times liable to be called upon, and which in reality is
continually going from it, and returning to it again, cannot well be
doubted. But whether it does so likewise with regard to that part of
its capital for which the receipts are long ago expired, for which, in
ordinary and quiet times, it cannot be called upon, and which, in
reality, is very likely to remain with it for ever, or as long as the
states of the United Provinces subsist, may perhaps appear more
uncertain. At Amsterdam, however, no point of faith is better
established than that, for every guilder circulated as bank money,
there is a correspondent guilder in gold or silver to be found in the
treasures of the bank. The city is guarantee that it should be so. The
bank is under the direction of the four reigning burgomasters who are
changed every year. Each new set of burgomasters visits the treasure,
compares it with the books, receives it upon oath, and delivers it
over, with the same awful solemnity to the set which succeeds; and in
that sober and religious country, oaths are not yet disregarded. A
rotation of this kind seems alone a sufficient security against any
practices which cannot be avowed. Amidst all the revolutions which
faction has ever occasioned in the government of Amsterdam, the
prevailing party has at no time accused their predecessors of
infidelity in the administration of the bank. No accusation could have
affected more deeply the reputation and fortune of the disgraced
party; and if such an accusation could have been supported, we may be
assured that it would have been brought. In 1672, when the French king
was at Utrecht, the bank of Amsterdam paid so readily, as left no
doubt of the fidelity with which it had observed its engagements. Some
of the pieces which were then brought from its repositories, appeared
to have been scorched with the fire which happened in the town-house
soon after the bank was established. Those pieces, therefore, must
have lain there from that time.

What may be the amount of the treasure in the bank, is a question
which has long employed the speculations of the curious. Nothing but
conjecture can be offered concerning it. It is generally reckoned,
that there are about 2000 people who keep accounts with the bank; and
allowing them to have, one with another, the value of £1500 sterling
lying upon their respective accounts (a very large allowance), the
whole quantity of bank money, and consequently of treasure in the
bank, will amount to about £3,000,000 sterling, or, at eleven guilders
the pound sterling, 33,000,000 of guilders; a great sum, and
sufficient to carry on a very extensive circulation, but vastly below
the extravagant ideas which some people have formed of this treasure.

The city of Amsterdam derives a considerable revenue from the bank.
Besides what may be called the warehouse rent above mentioned, each
person, upon first opening an account with the bank, pays a fee of ten
guilders; and for every new account, three guilder's three stivers;
for every transfer, two stivers; and if the transfer is for less than
300 guilders, six stivers, in order to discourage the multiplicity of
small transactions. The person who neglects to balance his account
twice in the year, forfeits twenty-five guilders. The person who
orders a transfer for more than is upon his account, is obliged to pay
three per cent. for the sum overdrawn, and his order is set aside into
the bargain. The bank is supposed, too, to make a considerable profit
by the sale of the foreign coin or bullion which sometimes falls to it
by the expiring of receipts, and which is always kept till it can be
sold with advantage. It makes a profit, likewise, by selling bank
money at five per cent. agio, and buying it in at four. These
different emoluments amount to a good deal more than what is necessary
for paying the salaries of officers, and defraying the expense of
management. What is paid for the keeping of bullion upon receipts, is
alone supposed to amount to a neat annual revenue of between 150,000
and 200,000 guilders. Public utility, however, and not revenue, was
the original object of this institution. Its object was to relieve the
merchants from the inconvenience of a disadvantageous exchange. The
revenue which has arisen from it was unforeseen, and may be considered
as accidental. But it is now time to return from this long digression,
into which I have been insensibly led, in endeavouring to explain the
reasons why the exchange between the countries which pay in what is
called bank money, and those which pay in common currency, should
generally appear to be in favour of the former, and against the
latter. The former pay in a species of money, of which the intrinsic
value is always the same, and exactly agreeable to the standard of
their respective mints; the latter is a species of money, of which the
intrinsic value is continually varying, and is almost always more or
less below that standard.


PART  II. -- Of the Unreasonableness of those extraordinary Restraints,
upon other Principles.

In the foregoing part of this chapter, I have endeavoured to show,
even upon the principles of the commercial system, how unnecessary it
is to lay extraordinary restraints upon the importation of goods from
those countries with which the balance of trade is supposed to be
disadvantageous.

Nothing, however, can be more absurd than this whole doctrine of the
balance of trade, upon which, not only these restraints, but almost
all the other regulations of commerce, are founded. When two places
trade with one another, this doctrine supposes that, if the balance be
even, neither of them either loses or gains; but if it leans in any
degree to one side, that one of them loses, and the other gains, in
proportion to its declension from the exact equilibrium. Both
suppositions are false. A trade, which is forced by means of bounties
and monopolies, may be, and commonly is, disadvantageous to the
country in whose favour it is meant to be established, as I shall
endeavour to show hereafter. But that trade which, without force or
constraint, is naturally and regularly carried on between any two
places, is always advantageous, though not always equally so, to both.

By advantage or gain, I understand, not the increase of the quantity
of gold and silver, but that of the exchangeable value of the annual
produce of the land and labour of the country, or the increase of the
annual revenue of its inhabitants.

If the balance be even, and if the trade between the two places
consist altogether in the exchange of their native commodities, they
will, upon most occasions, not only both gain, but they will gain
equally, or very nearly equally; each will, in this case, afford a
market for a part of the surplus produce of the other; each will
replace a capital which had been employed in raising and preparing for
the market this part of the surplus produce of the other, and which
had been distributed among, and given revenue and maintenance to, a
certain number of its inhabitants. Some part of the inhabitants of
each, therefore, will directly derive their revenue and maintenance
from the other. As the commodities exchanged, too, are supposed to be
of equal value, so the two capitals employed in the trade will, upon
most occasions, be equal, or very nearly equal; and both being
employed in raising the native commodities of the two countries, the
revenue and maintenance which their distribution will afford to the
inhabitants of each will be equal, or very nearly equal. This revenue
and maintenance, thus mutually afforded, will be greater or smaller,
in proportion to the extent of their dealings. If these should
annually amount to £100,000, for example, or to £1,000,000, on each
side, each of them will afford an annual revenue, in the one case, of
£100,000, and, in the other, of £1,000,000, to the inhabitants of the
other.

If their trade should be of such a nature, that one of them exported
to the other nothing but native commodities, while the returns of that
other consisted altogether in foreign goods; the balance, in this
case, would still be supposed even, commodities being paid for with
commodities. They would, in this case too, both gain, but they would
not gain equally; and the inhabitants of the country which exported
nothing but native commodities, would derive the greatest revenue from
the trade. If England, for example, should import from France nothing
but the native commodities of that country, and not having such
commodities of its own as were in demand there, should annually repay
them by sending thither a large quantity of foreign goods, tobacco, we
shall suppose, and East India goods; this trade, though it would give
some revenue to the inhabitants of both countries, would give more to
those of France than to those of England. The whole French capital
annually employed in it would annually be distributed among the people
of France; but that part of the English capital only, which was
employed in producing the English commodities with which those foreign
goods were purchased, would be annually distributed among the people
of England. The greater part of it would replace the capitals which
had been employed in Virginia, Indostan, and China, and which had
given revenue and maintenance to the inhabitants of those distant
countries. If the capitals were equal, or nearly equal, therefore,
this employment of the French capital would augment much more the
revenue of the people of France, than that of the English capital
would the revenue of the people of England. France would, in this
case, carry on a direct foreign trade of consumption with England;
whereas England would carry on a round-about trade of the same kind
with France. The different effects of a capital employed in the
direct, and of one employed in the round-about foreign trade of
consumption, have already been fully explained.

There is not, probably, between any two countries, a trade which
consists altogether in the exchange, either of native commodities on
both sides, or of native commodities on one side, and of foreign goods
on the other. Almost all countries exchange with one another, partly
native and partly foreign goods That country, however, in whose
cargoes there is the greatest proportion of native, and the least of
foreign goods, will always be the principal gainer.

If it was not with tobacco and East India  goods, but with gold and
silver, that England paid for the commodities annually imported from
France, the balance, in this case, would be supposed uneven,
commodities not being paid for with commodities, but with gold and
silver. The trade, however, would in this case, as in the foregoing,
give some revenue to the inhabitants of both countries, but more to
those of France than to those of England. It would give some revenue
to those of England. The capital which had been employed in producing
the English goods that purchased this gold and silver, the capital
which had been distributed among, and given revenue to, certain
inhabitants of England, would thereby be replaced, and enabled to
continue that employment. The whole capital of England would no more
be diminished by this exportation of gold and silver, than by the
exportation of an equal value of any other goods. On the contrary, it
would, in most cases, be augmented. No goods are sent abroad but those
for which the demand is supposed to be greater abroad than at home,
and of which the returns, consequently, it is expected, will be of
more value at home than the commodities exported. If the tobacco which
in England is worth only £100,000, when sent to France, will purchase
wine which is in England worth £110,000, the exchange will augment the
capital of England by £10,000. If £100,000 of English gold, in the
same manner, purchase French wine, which in England is worth £110,000,
this exchange will equally augment the capital of England by £10,000.
As a merchant, who has £110,000 worth of wine in his cellar, is a
richer man than he who has only £100,000 worth of tobacco in his
warehouse, so is he likewise a richer man than he who has only
£100,000 worth of gold in his coffers. He can put into motion a
greater quantity of industry, and give revenue, maintenance, and
employment, to a greater number of people, than either of the other
two. But the capital of the country is equal to the capital of all its
different inhabitants; and the quantity of industry which can be
annually maintained in it is equal to what all those different
capitals can maintain. Both the capital of the country, therefore, and
the quantity of industry which can be annually maintained in it, must
generally be augmented by this exchange. It would, indeed, be more
advantageous for England that it could purchase the wines of France
with its own hardware and broad cloth, than with either the tobacco of
Virginia, or the gold and silver of Brazil and Peru. A direct foreign
trade of consumption is always more advantageous than a round-about
one. But a round-about foreign trade of consumption, which is carried
on with gold and silver, does not seem to be less advantageous than
any other equally round-about one. Neither is a country which has no
mines, more likely to be exhausted of gold and silver by this annual
exportation of those metals, than one which does not grow tobacco by
the like annual exportation of that plant. As a country which has
wherewithal to buy tobacco will never be long in want of it, so
neither will one be long in want of gold and silver which has
wherewithal to purchase those metals.

It is a losing trade, it is said, which a workman carries on with the
alehouse; and the trade which a manufacturing nation would naturally
carry on with a wine country, may be considered as a trade of the same
nature. I answer, that the trade with the alehouse is not necessarily
a losing trade. In its own nature it is just as advantageous as any
other, though, perhaps, somewhat more liable to be abused. The
employment of a brewer, and even that of a retailer of fermented
liquors, are as necessary division's of labour as any other. It will
generally be more advantageous for a workman to buy of the brewer the
quantity he has occasion for, than to brew it himself; and if he is a
poor workman, it will generally be more advantageous for him to buy it
by little and little of the retailer, than a large quantity of the
brewer. He may no doubt buy too much of either, as he may of any other
dealers in his neighbourhood; of the butcher, if he is a glutton; or
of the draper, if he affects to be a beau among his companions. It is
advantageous to the great body of workmen, notwithstanding, that all
these trades should be free, though this freedom may be abused in all
of them, and is more likely to be so, perhaps, in some than in others.
Though individuals, besides, may sometimes ruin their fortunes by an
excessive consumption of fermented liquors, there seems to be no risk
that a nation should do so. Though in every country there are many
people who spend upon such liquors more than they can afford, there
are always many more who spend less. It deserves to be remarked, too,
that if we consult experience, the cheapness of wine seems to be a
cause, not of drunkenness, but of sobriety. The inhabitants of the
wine countries are in general the soberest people of Europe; witness
the Spaniards, the Italians, and the inhabitants of the southern
provinces of France. People are seldom guilty of excess in what is
their daily fare. Nobody affects the character of liberality and good
fellowship, by being profuse of a liquor which is as cheap as small
beer. On the contrary, in the countries which, either from excessive
heat or cold, produce no grapes, and where wine consequently is dear
and a rarity, drunkenness is a common vice, as among the northern
nations, and all those who live between the tropics, the negroes, for
example on the coast of Guinea. When a French regiment comes from some
of the northern provinces of France, where wine is somewhat dear, to
be quartered in the southern, where it is very cheap, the soldiers, I
have frequently heard it observed, are at first debauched by the
cheapness and novelty of good wine; but after a few months residence,
the greater part of them become as sober as the rest of the
inhabitants. Were the duties upon foreign wines, and the excises upon
malt, beer, and ale, to be taken away all at once, it might, in the
same manner, occasion in Great Britain a pretty general and temporary
drunkenness among the middling and inferior ranks of people, which
would probably be soon followed by a permanent and almost universal
sobriety. At present, drunkenness is by no means the vice of people of
fashion, or of those who can easily afford the most expensive liquors.
A gentleman drunk with ale has scarce ever been seen among us. The
restraints upon the wine trade in Great Britain, besides, do not so
much seem calculated to hinder the people from going, if I may say so,
to the alehouse, as from going where they can buy the best and
cheapest liquor. They favour the wine trade of Portugal, and
discourage that of France. The Portuguese, it is said, indeed, are
better customers for our manufactures than the French, and should
therefore be encouraged in preference to them. As they give us their
custom, it is pretended we should give them ours. The sneaking arts of
underling tradesmen are thus erected into political maxims for the
conduct of a great empire; for it is the most underling tradesmen only
who make it a rule to employ chiefly their own customers. A great
trader purchases his goods always where they are cheapest and best,
without regard to any little interest of this kind.

By such maxims as these, however, nations have been taught that their
interest consisted in beggaring all their neighbours. Each nation has
been made to look with an invidious eye upon the prosperity of all the
nations with which it trades, and to consider their gain as its own
loss. Commerce, which ought naturally to be, among nations as among
individuals, a bond of union and friendship, has become the most
fertile source of discord and animosity. The capricious ambition of
kings and ministers has not, during the present and the preceding
century, been more fatal to the repose of Europe, than the impertinent
jealousy of merchants and manufacturers. The violence and injustice of
the rulers of mankind is an ancient evil, for which, I am afraid, the
nature of human affairs can scarce admit of a remedy: but the mean
rapacity, the monopolizing spirit, of merchants and manufacturers, who
neither are, nor ought to be, the rulers of mankind, though it cannot,
perhaps, be corrected, may very easily be prevented from disturbing
the tranquillity of anybody but themselves.

That it was the spirit of monopoly which originally both invented and
propagated this doctrine, cannot be doubted and they who first taught
it, were by no means such fools as they who believed it. In every
country it always is, and must be, the interest of the great body of
the people, to buy whatever they want of those who sell it cheapest.
The proposition is so very manifest, that it seems ridiculous to take
any pains to prove it; nor could it ever have been called in question,
had not the interested sophistry of merchants and manufacturers
confounded the common sense of mankind. Their interest is, in this
respect, directly opposite to that of the great body of the people. As
it is the interest of the freemen of a corporation to hinder the rest
of the inhabitants from employing any workmen but themselves; so it is
the interest of the merchants and manufacturers of every country to
secure to themselves the monopoly of the home market. Hence, in Great
Britain, and in most other European countries, the extraordinary
duties upon almost all goods imported by alien merchants. Hence the
high duties and prohibitions upon all those foreign manufactures which
can come into competition with our own. Hence, too, the extraordinary
restraints upon the importation of almost all sorts of goods from
those countries with which the balance of trade is supposed to be
disadvantageous; that is, from those against whom national animosity
happens ta be most violently inflamed.

The wealth of neighbouring nations, however, though dangerous in war
and politics, is certainly advantageous in trade. In a state of
hostility, it may enable our enemies to maintain fleets and armies
superior to our own; but in a state of peace and commerce it must
likewise enable them to exchange with us to a greater value, and to
afford a better market, either for the immediate produce of our own
industry, or for whatever is purchased with that produce. As a rich
man is likely to be a better customer to the industrious people in his
neighbourhood, than a poor, so is likewise a rich nation. A rich man,
indeed, who is himself a manufacturer, is a very dangerous neighbour
to all those who deal in the same way. All the rest of the
neighbourhood, however, by far the greatest number, profit by the good
market which his expense affords them. They even profit by his
underselling the poorer workmen who deal in the same way with him. The
manufacturers of a rich nation, in the same manner, may no doubt be
very dangerous rivals to those of their neighbours. This very
competition, however, is advantageous to the great body of the people,
who profit greatly, besides, by the good market which the great
expense of such a nation affords them in every other way. Private
people, who want to make a fortune, never think of retiring to the
remote and poor provinces of the country, but resort either to the
capital, or to some of the great commercial towns. They know, that
where little wealth circulates, there is little to be got; but that
where a great deal is in motion, some share of it may fall to them.
The same maxim which would in this manner direct the common sense of
one, or ten, or twenty individuals, should regulate the judgment of
one, or ten, or twenty millions, and should make a whole nation regard
the riches of its neighbours, as a probable cause and occasion for
itself to acquire riches. A nation that would enrich itself by foreign
trade, is certainly most likely to do so, when its neighbours are all
rich, industrious and commercial nations. A great nation, surrounded
on all sides by wandering savages and poor barbarians, might, no
doubt, acquire riches by the cultivation of its own lands, and by its
own interior commerce, but not by foreign trade. It seems to have been
in this manner that the ancient Egyptians and the modern Chinese
acquired their great wealth. The ancient Egyptians, it is said,
neglected foreign commerce, and the modern Chinese, it is known, hold
it in the utmost contempt, and scarce deign to afford it the decent
protection of the laws. The modern maxims of foreign commerce, by
aiming at the impoverishment of all our neighbours, so far as they are
capable of producing their intended effect, tend to render that very
commerce insignificant and contemptible.

It is in consequence of these maxims, that the commerce between France
and England has, in both countries, been subjected to so many
discouragements and restraints. If those two countries, however, were
to consider their real interest, without either mercantile jealousy or
national animosity, the commerce of France might be more advantageous
to Great Britain than that of any other country, and, for the same
reason, that of Great Britain to France. France is the nearest
neighbour to Great Britain. In the trade between the southern coast of
England and the northern and north-western coast of France, the
returns might be expected, in the same manner as in the inland trade,
four, five, or six times in the year. The capital, therefore, employed
in this trade could, in each of the two countries, keep in motion
four, five, or six times the quantity of industry, and afford
employment and subsistence to four, five, or six times the number of
people, which all equal capital could do in the greater part of the
other branches of foreign trade. Between the parts of France and Great
Britain most remote from one another, the returns might be expected,
at least, once in the year; and even this trade would so far be at
least equally advantageous, as the greater part of the other branches
of our foreign European trade. It would be, at least, three times more
advantageous than the boasted trade with our North American colonies,
in which the returns were seldom made in less than three years,
frequently not in less than four or five years. France, besides, is
supposed to contain 24,000,000 of inhabitants. Our North American
colonies were never supposed to contain more than 3,000,000; and
France is a much richer country than North America; though, on account
of the more unequal distribution of riches, there is much more poverty
and beggary in the one country than in the other. France, therefore,
could afford a market at least eight times more extensive, and, on
account of the superior frequency of the returns, four-and-twenty
times more advantageous than that which our North American colonies
ever afforded. The trade of Great Britain would be just as
advantageous to France, and, in proportion to the wealth, population,
and proximity of the respective countries, would have the same
superiority over that which France carries on with her own colonies.
Such is the very great difference between that trade which the wisdom
of both nations has thought proper to discourage, and that which it
has favoured the most.

But the very same circumstances which would have rendered an open and
free commerce between the two countries so advantageous to both, have
occasioned the principal obstructions to that commerce. Being
neighbours, they are necessarily enemies, and the wealth and power of
each becomes, upon that account, more formidable to the other; and
what would increase the advantage of national friendship, serves only
to inflame the violence of national animosity. They are both rich and
industrious nations; and the merchants and manufacturers of each dread
the competition of the skill and activity of those of the other.
Mercantile jealousy is excited, and both inflames, and is itself
inflamed, by the violence of national animosity, and the traders of
both countries have announced, with all the passionate confidence of
interested falsehood, the certain ruin of each, in consequence of that
unfavourable balance of trade, which, they pretend, would be the
infallible effect of an unrestrained commerce with the other.

There is no commercial country in Europe, of which the approaching
ruin has not frequently been foretold by the pretended doctors of this
system, from all unfavourably balance of trade. After all the anxiety,
however, which they have excited about this, after all the vain
attempts of almost all trading nations to turn that balance in their
own favour, and against their neighbours, it does not appear that any
one nation in Europe has been, in any respect, impoverished by this
cause. Every town and country, on the contrary, in proportion as they
have opened their ports to all nations, instead of being ruined by
this free trade, as the principles of the commercial system would lead
us to expect, have been enriched by it. Though there are in Europe
indeed, a few towns which, in same respects, deserve the name of free
ports, there is no country which does so. Holland, perhaps, approaches
the nearest to this character of any, though still very remote from
it; and Holland, it is acknowledged, not only derives its whole
wealth, but a great part of its necessary subsistence, from foreign
trade.

There is another balance, indeed, which has already been explained,
very different from the balance of trade, and which, according as it
happens to be either favourable or unfavourable, necessarily occasions
the prosperity or decay of every nation. This is the balance of the
annual produce and consumption. If the exchangeable value of the
annual produce, it has already been observed, exceeds that of the
annual consumption, the capital of the society must annually increase
in proportion to this excess. The society in this case lives within
its revenue; and what is annually saved out of its revenue, is
naturally added to its capital, and employed so as to increase still
further the annual produce. If the exchangeable value of the annual
produce, on the contrary, fall short of the annual consumption, the
capital of the society must annually decay in proportion to this
deficiency. The expense of the society, in this case, exceeds its
revenue, and necessarily encroaches upon its capital. Its capital,
therefore, must necessarily decay, and, together with it, the
exchangeable value of the annual produce of its industry.

This balance of produce and consumption is entirely different from
what is called the balance of trade. It might take place in a nation
which had no foreign trade, but which was entirely separated from all
the world. It may take place in the whole globe of the earth, of which
the wealth, population, and improvement, may be either gradually
increasing or gradually decaying.

The balance of produce and consumption may be constantly in favour of
a nation, though what is called the balance of trade be generally
against it. A nation may import to a greater value than it exports for
half a century, perhaps, together; the gold and silver which comes
into it during all this time, may be all immediately sent out of it;
its circulating coin may gradually decay, different sorts of paper
money being substituted in its place, and even the debts, too, which
it contracts in the principal nations with whom it deals, may be
gradually increasing; and yet its real wealth, the exchangeable value
of the annual produce of its lands and labour, may, during the same
period, have been increasing in a much greater proportion. The state
of our North American colonies, and of the trade which they carried on
with Great Britain, before the commencement of the present
disturbances, {This paragraph was written in the year 1775.} may serve
as a proof that this is by no means an impossible supposition.




CHAPTER IV.

OF DRAWBACKS.

Merchants and manufacturers are not contented with the monopoly of the
home market, but desire likewise the most extensive foreign sale for
their goods. Their country has no jurisdiction in foreign nations, and
therefore can seldom procure them any monopoly there. They are
generally obliged, therefore, to content themselves with petitioning
for certain encouragements to exportation.

Of these encouragements, what are called drawbacks seem to be the most
reasonable. To allow the merchant to draw back upon exportation,
either the whole, or a part of whatever excise or inland duty is
imposed upon domestic industry, can never occasion the exportation of
a greater quantity of goods than what would have been exported had no
duty been imposed. Such encouragements do not tend to turn towards any
particular employment a greater share of the capital of the country,
than what would go to that employment of its own accord, but only to
hinder the duty from driving away any part of that share to other
employments. They tend not to overturn that balance which naturally
establishes itself among all the various employments of the society,
but to hinder it from being overturned by the duty. They tend not to
destroy, but to preserve, what it is in most cases advantageous to
preserve, the natural division and distribution of labour in the
society.

The same thing may be said of the drawbacks upon the re-exportation of
foreign goods imported, which, in Great Britain, generally amount to
by much the largest part of the duty upon importation. By the second
of the rules, annexed to the act of parliament, which imposed what is
now called the old subsidy, every merchant, whether English or alien.
was allowed to draw back half that duty upon exportation; the English
merchant, provided the exportation took place within twelve months;
the alien, provided it took place within nine months. Wines, currants,
and wrought silks, were the only goods which did not fall within this
rule, having other and more advantageous allowances. The duties
imposed by this act of parliament were, at that time, the only duties
upon the importation of foreign goods. The term within which this, and
all other drawbacks could be claimed, was afterwards (by 7 Geo. I.
chap. 21. sect. 10.) extended to three years.

The duties which have been imposed since the old subsidy, are, the
greater part of them, wholly drawn back upon exportation. This general
rule, however, is liable to a great number of exceptions; and the
doctrine of drawbacks has become a much less simple matter than it was
at their first institution.

Upon the exportation of some foreign goods, of which it was expected
that the importation would greatly exceed what was necessary for the
home consumption, the whole duties are drawn back, without retaining
even half the old subsidy. Before the revolt of our North American
colonies, we had the monopoly of the tobacco of Maryland and Virginia.
We imported about ninety-six thousand hogsheads, and the home
consumption was not supposed to exceed fourteen thousand. To
facilitate the great exportation which was necessary, in order to rid
us of the rest, the whole duties were drawn back, provided the
exportation took place within three years.

We still have, though not altogether, yet very nearly, the monopoly of
the sugars of our West Indian islands. If sugars are exported within a
year, therefore, all the duties upon importation are drawn back; and
if exported within three years, all the duties, except half the old
subsidy, which still continues to be retained upon the exportation of
the greater part of goods. Though the importation of sugar exceeds a
good deal what is necessary for the home consumption, the excess is
inconsiderable, in comparison of what it used to be in tobacco.

Some goods, the particular objects of the jealousy of our own
manufacturers, are prohibited to be imported for home consumption.
They may, however, upon paying certain duties,be imported and
warehoused for exportation. But upon such exportation no part of these
duties is drawn back. Our manufacturers are unwilling, it seems, that
even this restricted importation should be encouraged, and are afraid
lest some part of these goods should be stolen out of the warehouse,
and thus come into competition with their own. It is under these
regulations only that we can import wrought silks, French cambrics and
lawns, calicoes, painted, printed, stained, or dyed, etc.

We are unwilling even to be the carriers of French goods, and choose
rather to forego a profit to ourselves than to suffer those whom we
consider as our enemies to make any profit by our means. Not only half
the old subsidy, but the second twenty-five per cent. is retained upon
the exportation of all French goods.

By the fourth of the rules annexed to the old subsidy, the drawback
allowed upon the exportation of all wines amounted to a great deal
more than half the duties which were at that time paid upon their
importation; and it seems at that time to have been the object of the
legislature to give somewhat more than ordinary encouragement to the
carrying trade in wine. Several of the other duties, too which were
imposed either at the same time or subsequent to the old subsidy, what
is called the additional duty, the new subsidy, the one-third and
two-thirds subsidies, the impost 1692, the tonnage on wine, were
allowed to be wholly drawn back upon exportation. All those duties,
however, except the additional duty and impost 1692, being paid down
in ready money upon importation, the interest of so large a sum
occasioned an expense, which made it unreasonable to expect any
profitable carrying trade in this article. Only a part, therefore of
the duty called the impost on wine, and no part of the twenty-five
pounds the ton upon French wines, or of the duties imposed in 1745, in
1763, and in 1778, were allowed to be drawn back upon exportation. The
two imposts of five per cent. imposed in 1779 and 1781, upon all the
former duties of customs, being allowed to be wholly drawn back upon
the exportation of all other goods, were likewise allowed to be drawn
back upon that of wine. The last duty that has been particularly
imposed upon wine, that of 1780, is allowed to be wholly drawn back;
an indulgence which, when so many heavy duties are retained, most
probably could never occasion the exportation of a single ton of wine.
These rules took place with regard to all places of lawful
exportation, except the British colonies in America.

The 15th Charles II, chap. 7, called an act for the encouragement of
trade, had given Great Britain the monopoly of supplying the colonies
with all the commodities of the growth or manufacture of Europe, and
consequently with wines. In a country of so extensive a coast as our
North American and West Indian colonies, where our authority was
always so very slender, and where the inhabitants were allowed to
carry out in their own ships their non-enumerated commodities, at
first to all parts of Europe, and afterwards to all parts of Europe
south of Cape Finisterre, it is not very probable that this monopoly
could ever be much respected; and they probably at all times found
means of bringing back some cargo from the countries to which they
were allowed to carry out one. They seem, however, to have found some
difficulty in importing European wines from the places of their
growth; and they could not well import them from Great Britain, where
they were loaded with many heavy duties, of which a considerable part
was not drawn back upon exportation. Madeira wine, not being an
European commodity, could be imported directly into America and the
West Indies, countries which, in all their non-enumerated commodities,
enjoyed a free trade to the island of Madeira. These circumstances had
probably introduced that general taste for Madeira wine, which our
officers found established in all our colonies at the commencement of
the war which began in 1755, and which they brought back with them to
the mother country, where that wine had not been much in fashion
before. Upon the conclusion of that war, in 1763 (by the 4th Geo. III,
chap. 15, sect. 12), all the duties except £3, 10s. were allowed to be
drawn back upon the exportation to the colonies of all wines, except
French wines, to the commerce and consumption of which national
prejudice would allow no sort of encouragement. The period between the
granting of this indulgence and the revolt of our North American
colonies, was probably too short to admit of any considerable change
in the customs of those countries.

The same act which, in the drawbacks upon all wines, except French
wines, thus favoured the colonies so much more than other countries,
in those upon the greater part of other commodities, favoured them
much less. Upon the exportation of the greater part of commodities to
other countries, half the old subsidy was drawn back. But this law
enacted, that no part of that duty should be drawn back upon the
exportation to the colonies of any commodities of the growth or
manufacture either of Europe or the East Indies, except wines, white
calicoes, and muslins.

Drawbacks were, perhaps, originally granted for the encouragement of
the carrying trade, which, as the freight of the ship is frequently
paid by foreigners in money, was supposed to be peculiarly fitted for
bringing gold and silver into the country. But though the carrying
trade certainly deserves no peculiar encouragement, though the motive
of the institution was, perhaps, abundantly foolish, the institution
itself seems reasonable enough. Such drawbacks cannot force into this
trade a greater share of the capital of the country than what would
have gone to it of its own accord, had there been no duties upon
importation; they only prevent its being excluded altogether by those
duties. The carrying trade, though it deserves no preference, ought
not to be precluded, but to be left free, like all other trades. It is
a necessary resource to those capitals which cannot find employment,
either in the agriculture or in the manufactures of the country,
either in its home trade, or in its foreign trade of consumption.

The revenue of the customs, instead of suffering, profits from such
drawbacks, by that part of the duty which is retained. If the whole
duties had been retained, the foreign goods upon which they are paid
could seldom have been exported, nor consequently imported, for want
of a market. The duties, therefore, of which a part is retained, would
never have been paid.

These reasons seem sufficiently to justify drawbacks, and would
justify them, though the whole duties, whether upon the produce of
domestic industry or upon foreign goods, were always drawn back upon
exportation. The revenue of excise would, in this case indeed, suffer
a little, and that of the customs a good deal more; but the natural
balance of industry, the natural division and distribution of labour,
which is always more or less disturbed by such duties, would be more
nearly re-established by such a regulation.

These reasons, however, will justify drawbacks only upon exporting
goods to those countries which are altogether foreign and independent,
not to those in which our merchants and manufacturers enjoy a
monopoly. A drawback, for example, upon the exportation of European
goods to our American colonies, will not always occasion a greater
exportation than what would have taken place without it. By means of
the monopoly which our merchants and manufacturers enjoy there, the
same quantity might frequently, perhaps, be sent thither, though the
whole duties were retained. The drawback, therefore, may frequently be
pure loss to the revenue of excise and customs, without altering the
state of the trade, or rendering it in any respect more extensive. How
far such drawbacks can be justified as a proper encouragement to the
industry of our colonies, or how far it is advantageous to the mother
country that they should be exempted from taxes which are paid by all
the rest of their fellow-subjects, will appear hereafter, when I come
to treat of colonies.

Drawbacks, however, it must always be understood, are useful only in
those cases in which the goods, for the exportation of which they are
given, are really exported to some foreign country, and not
clandestinely re-imported into our own. That some drawbacks,
particularly those upon tobacco, have frequently been abused in this
manner, and have given occasion to many frauds, equally hurtful both
to the revenue and to the fair trader, is well known.




CHAPTER V.

OF BOUNTIES.

Bounties upon exportation are, in Great Britain, frequently petitioned
for, and sometimes granted, to the produce of particular branches of
domestic industry. By means of them, our merchants and manufacturers,
it is pretended, will be enabled to sell their goods as cheap or
cheaper than their rivals in the foreign market. A greater quantity,
it is said, will thus be exported, and the balance of trade
consequently turned more in favour of our own country. We cannot give
our workmen a monopoly in the foreign, as we have done in the home
market. We cannot force foreigners to buy their goods, as we have done
our own countrymen. The next best expedient, it has been thought,
therefore, is to pay them for buying. It is in this manner that the
mercantile system proposes to enrich the whole country, and to put
money into all our pockets, by means of the balance of trade.

Bounties, it is allowed, ought to be given to those branches of trade
only which cannot be carried on without them. But every branch of
trade in which the merchant can sell his goods for a price which
replaces to him, with the ordinary profits of stock, the whole capital
employed in preparing and sending them to market, can be carried on
without a bounty. Every such branch is evidently upon a level with all
the other branches of trade which are carried on without bounties, and
cannot, therefore, require one more than they. Those trades only
require bounties, in which the merchant is obliged to sell his goods
for a price which does not replace to him his capital, together with
the ordinary profit, or in which he is obliged to sell them for less
than it really cost him to send them to market. The bounty is given in
order to make up this loss, and to encourage him to continue, or,
perhaps, to begin a trade, of which the expense is supposed to be
greater than the returns, of which every operation eats up a part of
the capital employed in it, and which is of such a nature, that if all
other trades resembled it, there would soon be no capital left in the
country.

The trades, it is to be observed, which are carried on by means of
bounties, are the only ones which can be carried on between two
nations for any considerable time together, in such a manner as that
one of them shall alway's and regularly lose, or sell its goods for
less than it really cost to send them to market. But if the bounty did
not repay to the merchant what he would otherwise lose upon the price
of his goods, his own interest would soon oblige him to employ his
stock in another way, or to find out a trade in which the price of the
goods would replace to him, with the ordinary profit, the capital
employed in sending them to market. The effect of bounties, like that
of all the other expedients of the mercantile system, can only be to
force the trade of a country into a channel much less advantageous
than that in which it would naturally run of its own accord.

The ingenious and well-informed author of the Tracts upon the Corn
Trade has shown very clearly, that since the bounty upon the
exportation of corn was first established, the price of the corn
exported, valued moderately enough, has exceeded that of the corn
imported, valued very high, by a much greater sum than the amount of
the whole bounties which have been paid during that period. This, he
imagines, upon the true principles of the mercantile system, is a
clear proof that this forced corn trade is beneficial to the nation,
the value of the exportation exceeding that of the importation by a
much greater sum than the whole extraordinary expense which the public
has been at in order to get it exported. He does not consider that
this extraordinary expense, or the bounty, is the smallest part of the
expense which the exportation of corn really costs the society. The
capital which the farmer employed in raising it must likewise be taken
into the account. Unless the price of the corn, when sold in the
foreign markets, replaces not only the bounty, but this capital,
together with the ordinary profits of stock, the society is a loser by
the difference, or the national stock is so much diminished. But the
very reason for which it has been thought necessary to grant a bounty,
is the supposed insufficiency of the price to do this.

The average price of corn, it has been said, has fallen considerably
since the establishment of the bounty. That the average price of corn
began to fall somewhat towards the end of the last century, and has
continued to do so during the course of the sixty-four first years of
the present, I have already endeavoured to show. But this event,
supposing it to be real, as I believe it to be, must have happened in
spite of the bounty, and cannot possibly have happened in consequence
of it. It has happened in France, as well as in England, though in
France there was not only no bounty, but, till 1764, the exportation
of corn was subjected to a general prohibition. This gradual fall in
the average price of grain, it is probable, therefore, is ultimately
owing neither to the one regulation nor to the other, but to that
gradual and insensible rise in the real value of silver, which, in the
first book of this discourse, I have endeavoured to show, has taken
place in the general market of Europe during the course of the present
century. It seems to be altogether impossible that the bounty could
ever contribute to lower the price of grain.

In years of plenty, it has already been observed, the bounty, by
occasioning an extraordinary exportation, necessarily keeps up the
price of corn in the home market above what it would naturally fall
to. To do so was the avowed purpose of the institution. In years of
scarcity, though the bounty is frequently suspended, yet the great
exportation which it occasions in years of plenty, must frequently
hinder, more or less, the plenty of one year from relieving the
scarcity of another. Both in years of plenty and in years of scarcity,
therefore, the bounty necessarily tends to raise the money price of
corn somewhat higher than it otherwise would be in the home market.

That in the actual state of tillage the bounty must necessarily have
this tendency, will not, I apprehend, be disputed by any reasonable
person. But it has been thought by many people, that it tends to
encourage tillage, and that in two different ways; first, by opening a
more extensive foreign market to the corn of the farmer, it tends,
they imagine, to increase the demand for, and consequently the
production of, that commodity; and, secondly by securing to him a
better price than he could otherwise expect in the actual state of
tillage, it tends, they suppose, to encourage tillage. This double
encouragement must they imagine, in a long period of years, occasion
such an increase in the production of corn, as may lower its price in
the home market, much more than the bounty can raise it in the actual
state which tillage may, at the end of that period, happen to be in.

I answer, that whatever extension of the foreign market can be
occasioned by the bounty must, in every particular year, be altogether
at the expense of the home market; as every bushel of corn, which is
exported by means of the bounty, and which would not have been
exported without the bounty, would have remained in the home market to
increase the consumption, and to lower the price of that commodity.
The corn bounty, it is to be observed, as well as every other bounty
upon exportation, imposes two different taxes upon the people; first,
the tax which they are obliged to contribute, in order to pay the
bounty; and, secondly, the tax which arises from the advanced price of
the commodity in the home market, and which, as the whole body of the
people are purchasers of corn, must, in this particular commodity, be
paid by the whole body of the people. In this particular commodity,
therefore, this second tax is by much the heaviest of the two. Let us
suppose that, taking one year with another, the bounty of 5s. upon the
exportation of the quarter of wheat raises the price of that commodity
in the home market only 6d. the bushel, or 4s. the quarter higher than
it otherwise would have been in the actual state of the crop. Even
upon this very moderate supposition, the great body of the people,
over and above contributing the tax which pays the bounty of 5s. upon
every quarter of wheat exported, must pay another of 4s. upon every
quarter which they themselves consume. But according to the very well
informed author of the Tracts upon the Corn Trade, the average
proportion of the corn exported to that consumed at home, is not more
than that of one to thirty-one. For every 5s. therefore, which they
contribute to the payment of the first tax, they must contribute
£6:4s. to the payment of the second. So very heavy a tax upon the
first necessary of life-must either reduce the subsistence of the
labouring poor, or it must occasion some augmentation in their
pecuniary wages, proportionable to that in the pecuniary price of
their subsistence. So far as it operates in the one way, it must
reduce the ability of the labouring poor to educate and bring up their
children, and must, so far, tend to restrain the population of the
country. So far as it operate's in the other, it must reduce the
ability of the employers of the poor, to employ so great a number as
they otherwise might do, and must so far tend to restrain the industry
of the country. The extraordinary exportation of corn, therefore
occasioned by the bounty, not only in every particular year diminishes
the home, just as much as it extends the foreign market and
consumption, but, by restraining the population and industry of the
country, its final tendency is to stint and restrain the gradual
extension of the home market; and thereby, in the long-run, rather to
diminish than to augment the whole market and consumption of corn.

This enhancement of the money price of corn, however, it has been
thought, by rendering that commodity more profitable to the farmer,
must necessarily encourage its production.

I answer, that this might be the case, if the effect of the bounty was
to raise the real price of corn, or to enable the farmer, with an
equal quantity of it, to maintain a greater number of labourers in the
same manner, whether liberal, moderate, or scanty, than other
labourers are commonly maintained in his neighbourhood. But neither
the bounty, it is evident, nor any other human institution, can have
any such effect. It is not the real, but the nominal price of corn,
which can in any considerable degree be affected by the bounty. And
though the tax, which that institution imposes upon the whole body of
the people, may be very burdensome to those who pay it, it is of very
little advantage to those who receive it.

The real effect of the bounty is not so much to raise the real value
of corn, as to degrade the real value of silver; or to make an equal
quantity of it exchange for a smaller quantity, not only of corn, but
of all other home made commodities; for the money price of corn
regulates that of all other home made commodities.

It regulates the money price of labour, which must always be such as
to enable the labourer to purchase a quantity of corn sufficient to
maintain him and his family, either in the liberal, moderate, or
scanty manner, in which the advancing, stationary, or declining,
circumstances of the society, oblige his employers to maintain him.

It regulates the money price of all the other parts of the rude
produce of land, which, in every period of improvement, must bear a
certain proportion to that of corn, though this proportion is
different in different periods. It regulates, for example, the money
price of grass and hay, of butcher's meat, of horses, and the
maintenance of horses, of land carriage consequently, or of the
greater part of the inland commerce of the country.

By regulating the money price of all the other parts of the rude
produce of land, it regulates that of the materials of almost all
manufactures; by regulating the money price of labour, it regulates
that of manufacturing art and industry; and by regulating both, it
regulates that of the complete manufacture. The money price of labour,
and of every thing that is the produce, either of land or labour, must
necessarily either rise or fall in proportion to the money price of
corn.

Though in consequence of the bounty, therefore, the farmer should be
enabled to sell his corn for 4s. the bushel, instead of 3s:6d. and to
pay his landlord a money rent proportionable to this rise in the money
price of his produce; yet if, in consequence of this rise in the price
of corn, 4s. will purchase no more home made goods of any other kind
than 3s. 6d. would have done before, neither the circumstances of the
farmer, nor those of the landlord, will be much mended by this change.
The farmer will not be able to cultivate much better; the landlord
will not be able to live much better. In the purchase of foreign
commodities, this enhancement in the price of corn may give them some
little advantage. In that of home made commodities, it can give them
none at all. And almost the whole expense of the farmer, and the far
greater part even of that of the landlord, is in home made
commodities.

That degradation in the value of silver, which is the effect of the
fertility of the mines, and which operates equally, or very nearly
equally, through the greater part of the commercial world, is a matter
of very little consequence to any particular country. The consequent
rise of all money prices, though it does not make those who receive
them really richer, does not make them really poorer. A service of
plate becomes really cheaper, and every thing else remains precisely
of the same real value as before.

But that degradation in the value of silver, which, being the effect
either of the peculiar situation or of the political institutions of a
particular country, takes place only in that country, is a matter of
very great consequence, which, far from tending to make anybody really
richer, tends to make every body really poorer. The rise in the money
price of all commodities, which is in this case peculiar to that
country, tends to discourage more or less every sort of industry which
is carried on within it, and to enable foreign nations, by furnishing
almost all sorts of goods for a smaller quantity of silver than its
own workmen can afford to do, to undersell them, not only in the
foreign, but even in the home market.

It is the peculiar situation of Spain and Portugal, as proprietors of
the mines, to be the distributers of gold and silver to all the other
countries of Europe. Those metals ought naturally, therefore, to be
somewhat cheaper in Spain and Portugal than in any other part of
Europe. The difference, however, should be no more than the amount
of the freight and insurance; and, on account of the great value and
small bulk of those metals, their freight is no great matter, and
their insurance is the same as that of any other goods of equal value.
Spain and Portugal, therefore, could suffer very little from their
peculiar situation, if they did not aggravate its disadvantages by
their political institutions.

Spain by taxing, and Portugal by prohibiting, the exportation of gold
and silver, load that exportation with the expense of smuggling, and
raise the value of those metals in other countries so much more above
what it is in their own, by the whole amount of this expense. When you
dam up a stream of water, as soon as the dam is full, as much water
must run over the dam-head as if there was no dam at all. The
prohibition of exportation cannot detain a greater quantity of gold
and silver in Spain and Portugal, than what they can afford to employ,
than what the annual produce of their land and labour will allow them
to employ, in coin, plate, gilding, and other ornaments of gold and
silver. When they have got this quantity, the dam is full, and the
whole stream which flows in afterwards must run over. The annual
exportation of gold and silver from Spain and Portugal, accordingly,
is, by all accounts, notwithstanding these restraints, very near equal
to the whole annual importation. As the water, however, must always be
deeper behind the dam-head than before it, so the quantity of gold and
silver which these restraints detain in Spain and Portugal, must, in
proportion to the annual produce of their land and labour, be greater
than what is to be found in other countries. The higher and stronger
the dam-head, the greater must be the difference in the depth of water
behind and before it. The higher the tax, the higher the penalties
with which the prohibition is guarded, the more vigilant and severe
the police which looks after the execution of the law, the greater
must be the difference in the proportion of gold and silver to the
annual produce of the land and labour of Spain and Portugal, and to
that of other countries. It is said, accordingly, to be very
considerable, and that you frequently find there a profusion of plate
in houses, where there is nothing else which would in other countries
be thought suitable or correspondent to this sort of magnificence. The
cheapness of gold and silver, or, what is the same thing, the dearness
of all commodities, which is the necessary effect of this redundancy
of the precious metals, discourages both the agriculture and
manufactures of Spain and Portugal, and enables foreign nations to
supply them with many sorts of rude, and with almost all sorts of
manufactured produce, for a smaller quantity of gold and silver than
what they themselves can either raise or make them for at home. The
tax and prohibition operate in two different ways. They not only lower
very much the value of the precious metals in Spain and Portugal, but
by detaining there a certain quantity of those metals which would
otherwise flow over other countries, they keep up their value in those
other countries somewhat above what it otherwise would be, and thereby
give those countries a double advantage in their commerce with Spain
and Portugal. Open the flood-gates, and there will presently be less
water above, and more below the dam-head, and it will soon come to a
level in both places. Remove the tax and the prohibition, and as the
quantity of gold and silver will diminish considerably in Spain and
Portugal, so it will increase somewhat in other countries; and the
value of those metals, their proportion to the annual produce of land
and labour, will soon come to a level, or very near to a level, in
all. The loss which Spain and Portugal could sustain by this
exportation of their gold and silver, would be altogether nominal and
imaginary. The nominal value of their goods, and of the annual produce
of their land and labour, would fall, and would be expressed or
represented by a smaller quantity of silver than before; but their
real value would be the same as before, and would be sufficient to
maintain, command, and employ the same quantity of labour. As the
nominal value of their goods would fall, the real value of what
remained of their gold and silver would rise, and a smaller quantity
of those metals would answer all the same purposes of commerce and
circulation which had employed a greater quantity before. The gold and
silver which would go abroad would not go abroad for nothing, but
would bring back an equal value of goods of some kind or other. Those
goods, too, would not be all matters of mere luxury and expense, to be
consumed by idle people, who produce nothing in return for their
consumption. As the real wealth and revenue of idle people would not
be augmented by this extraordinary exportation of gold and silver, so
neither would their consumption be much augmented by it. Those goods
would probably, the greater part of them, and certainly some part of
them, consist in materials, tools, and provisions, for the employment
and maintenance of industrious people, who would reproduce, with a
profit, the full value of their consumption. A part of the dead stock
of the society would thus be turned into active stock, and would put
into motion a greater quantity of industry than had been employed
before. The annual produce of their land and labour would immediately
be augmented a little, and in a few years would probably be augmented
a great deal; their industry being thus relieved from one of the most
oppressive burdens which it at present labours under.

The bounty upon the exportation of corn necessarily operates exactly
in the same way as this absurd policy of Spain and Portugal. Whatever
be the actual state of tillage, it renders our corn somewhat dearer in
the home market than it otherwise would be in that state, and somewhat
cheaper in the foreign; and as the average money price of corn
regulates, more or less, that of all other commodities, it lowers the
value of silver considerably in the one, and tends to raise it a
little in the other. It enables foreigners, the Dutch in particular,
not only to eat our corn cheaper than they otherwise could do, but
sometimes to eat it cheaper than even our own people can do upon the
same occasions; as we are assured by an excellent authority, that of
Sir Matthew Decker. It hinders our own workmen from furnishing their
goods for so small a quantity of silver as they otherwise might do,
and enables the Dutch to furnish theirs for a smaller. It tends to
render our manufactures somewhat dearer in every market, and theirs
somewhat cheaper, than they otherwise would be, and consequently to
give their industry a double advantage over our own.

The bounty, as it raises in the home market, not so much the real, as
the nominal price of our corn; as it augments, not the quantity of
labour which a certain quantity of corn can maintain and employ, but
only the quantity of silver which it will exchange for; it discourages
our manufactures, without rendering any considerable service, either
to our farmers or country gentlemen. It puts, indeed, a little more
money into the pockets of both, and it will perhaps be somewhat
difficult to persuade the greater part of them that this is not
rendering them a very considerable service. But if this money sinks in
its value, in the quantity of labour, provisions, and home-made
commodities of all different kinds which it is capable of purchasing,
as much as it rises in its quantity, the service will be little more
than nominal and imaginary.

There is, perhaps, but one set of men in the whole commonwealth to
whom the bounty either was or could be essentially serviceable. These
were the corn merchants, the exporters and importers of corn. In years
of plenty, the bounty necessarily occasioned a greater exportation
than would otherwise have taken place; and by hindering the plenty of
the one year from relieving the scarcity of another, it occasioned in
years of scarcity a greater importation than would otherwise have been
necessary. It increased the business of the corn merchant in both; and
in the years of scarcity, it not only enabled him to import a greater
quantity, but to sell it for a better price, and consequently with a
greater profit, than he could otherwise have made, if the plenty of
one year had not been more or less hindered from relieving the
scarcity of another. It is in this set of men, accordingly, that I
have observed the greatest zeal for the continuance or renewal of the
bounty.

Our country gentlemen, when they imposed the high duties upon the
exportation of foreign corn, which in times of moderate plenty amount
to a prohibition, and when they established the bounty, seem to have
imitated the conduct of our manufacturers. By the one institution,
they secured to themselves the monopoly of the home market, and by the
other they endeavoured to prevent that market from ever being
overstocked with their commodity. By both they endeavoured to raise
its real value, in the same manner as our manufacturers had, by the
like institutions, raised the real value of many different sorts of
manufactured goods. They did not, perhaps, attend to the great and
essential difference which nature has established between corn and
almost every other sort of goods. When, either by the monopoly of the
home market, or by a bounty upon exportation, you enable our woollen
or linen manufacturers to sell their goods for somewhat a better price
than they otherwise could get for them, you raise, not only the
nominal, but the real price of those goods; you render them equivalent
to a greater quantity of labour and subsistence; you increase not only
the nominal, but the real profit, the real wealth and revenue of those
manufacturers; and you enable them, either to live better themselves,
or to employ a greater quantity of labour in those particular
manufactures. You really encourage those manufactures, and direct
towards them a greater quantity of the industry of the country than
what would properly go to them of its own accord. But when, by the
like institutions, you raise the nominal or money price of corn, you
do not raise its real value; you do not increase the real wealth, the
real revenue, either of our farmers or country gentlemen; you do not
encourage the growth of corn, because you do not enable them to
maintain and employ more labourers in raising it. The nature of things
has stamped upon corn a real value, which cannot be altered by merely
altering its money price. No bounty upon exportation, no monopoly of
the home market, can raise that value. The freest competition cannot
lower it, Through the world in general, that value is equal to the
quantity of labour which it can maintain, and in every particular
place it is equal to the quantity of labour which it can maintain in
the way, whether liberal, moderate, or scanty, in which labour is
commonly maintained in that place. Woollen or linen cloth are not the
regulating commodities by which the real value of all other
commodities must be finally measured and determined; corn is. The real
value of every other commodity is finally measured and determined by
the proportion which its average money price bears to the average
money price of corn. The real value of corn does not vary with those
variations in its average money price, which sometimes occur from one
century to another; it is the real value of silver which varies with
them.

Bounties upon the exportation of any homemade commodity are liable,
first, to that general objection which may be made to all the
different expedients of the mercantile system; the objection of
forcing some part of the industry of the country into a channel less
advantageous than that in which it would run of its own accord; and,
secondly, to the particular objection of forcing it not only into a
channel that is less advantageous, but into one that is actually
disadvantageous; the trade which cannot be carried on but by means of
a bounty being necessarily a losing trade. The bounty upon the
exportation of corn is liable to this further objection, that it can
in no respect promote the raising of that particular commodity of
which it was meant to encourage the production. When our country
gentlemen, therefore, demanded the establishment of the bounty, though
they acted in imitation of our merchants and manufacturers, they did
not act with that complete comprehension of their own interest, which
commonly directs the conduct of those two other orders of people. They
loaded the public revenue with a very considerable expense: they
imposed a very heavy tax upon the whole body of the people; but they
did not, in any sensible degree, increase the real value of their own
commodity; and by lowering somewhat the real value of silver, they
discouraged, in some degree, the general industry of the country, and,
instead of advancing, retarded more or less the improvement of their
own lands, which necessarily depend upon the general industry of the
country.

To encourage the production of any commodity, a bounty upon
production, one should imagine, would have a more direct operation
than one upon exportation. It would, besides, impose only one tax upon
the people, that which they must contribute in order to pay the
bounty. Instead of raising, it would tend to lower the price of the
commodity in the home market; and thereby, instead of imposing a
second tax upon the people, it might, at least in part, repay them for
what they had contributed to the first. Bounties upon production,
however, have been very rarely granted. The prejudices established by
the commercial system have taught us to believe, that national wealth
arises more immediately from exportation than from production. It has
been more favoured, accordingly, as the more immediate means of
bringing money into the country. Bounties upon production, it has been
said too, have been found by experience more liable to frauds than
those upon exportation. How far this is true, I know not. That
bounties upon exportation have been abused, to many fraudulent
purposes, is very well known. But it is not the interest of merchants
and manufacturers, the great inventors of all these expedients, that
the home market should be overstocked with their goods; an event which
a bounty upon production might sometimes occasion. A bounty upon
exportation, by enabling them to send abroad their surplus part, and
to keep up the price of what remains in the home market, effectually
prevents this. Of all the expedients of the mercantile system,
accordingly, it is the one of which they are the fondest. I have known
the different undertakers of some particular works agree privately
among themselves to give a bounty out of their own pockets upon the
exportation of a certain proportion of the goods which they dealt in.
This expedient succeeded so well, that it more than doubled the price
of their goods in the home market, notwithstanding a very considerable
increase in the produce. The operation of the bounty upon corn must
have been wonderfully different, if it has lowered the money price of
that commodity.

Something like a bounty upon production, however, has been granted
upon some particular occasions. The tonnage bounties given to the
white herring and whale fisheries may, perhaps, be considered as
somewhat of this nature. They tend directly, it may be supposed, to
render the goods cheaper in the home market than they otherwise would
be. In other respects, their effects, it must be acknowledged, are the
same as those of bounties upon exportation. By means of them, a part
of the capital of the country is employed in bringing goods to market,
of which the price does not repay the cost, together with the ordinary
profits of stock.

But though the tonnage bounties to those fisheries do not contribute
to the opulence of the nation, it may, perhaps, be thought that they
contribute to its defence, by augmenting the number of its sailors and
shipping. This, it may be alleged, may sometimes be done by means of
such bounties, at a much smaller expense than by keeping up a great
standing navy, if I may use such an expression, in the same way as a
standing army.

Notwithstanding these favourable allegations, however, the following
considerations dispose me to believe, that in granting at least one of
these bounties, the legislature has been very grossly imposed upon:

First, The herring-buss bounty seems too large.

From the commencement of the winter fishing 1771, to the end of the
winter fishing 1781, the tonnage bounty upon the herring-buss fishery
has been at thirty shillings the ton. During these eleven years, the
whole number of barrels caught by the herring-buss fishery of Scotland
amounted to 378,347. The herrings caught and cured at sea are called
sea-sticks. In order to render them what are called merchantable
herrings, it is necessary to repack them with an additional quantity
of salt; and in this case, it is reckoned, that three barrels of
sea-sticks are usually repacked into two barrels of merchantable
herrings. The number of barrels of merchantable herrings, therefore,
caught during these eleven years, will amount only, according to this
account, to 252,231¼. During these eleven years, the tonnage bounties
paid amounted to £155,463:11s. or 8s:2¼d. upon every barrel of
sea-sticks, and to 12s:3¾d. upon every barrel of merchantable
herrings.

The salt with which these herrings are cured is sometimes Scotch, and
sometimes foreign salt; both which are delivered, free of all excise
duty, to the fish-curers. The excise duty upon Scotch salt is at
present 1s:6d., that upon foreign salt 10s. the bushel. A barrel of
herrings is supposed to require about one bushel and one-fourth of a
bushel foreign salt. Two bushels are the supposed average of Scotch
salt. If the herrings are entered for exportation, no part of this
duty is paid up; if entered for home consumption, whether the herrings
were cured with foreign or with Scotch salt, only one shilling the
barrel is paid up. It was the old Scotch duty upon a bushel of salt,
the quantity which, at a low estimation, had been supposed necessary
for curing a barrel of herrings. In Scotland, foreign salt is very
little used for any other purpose but the curing of fish. But from the
5th April 1771 to the 5th April 1782, the quantity of foreign salt
imported amounted to 936,974 bushels, at eighty-four pounds the
bushel; the quantity of Scotch salt delivered from the works to the
fish-curers, to no more than 168,226, at fifty-six pounds the bushel
only. It would appear, therefore, that it is principally foreign salt
that is used in the fisheries. Upon every barrel of herrings exported,
there is, besides, a bounty of 2s:8d. and more than two-thirds of the
buss-caught herrings are exported. Put all these things together, and
you will find that, during these eleven years, every barrel of
buss-caught herrings, cured with Scotch salt, when exported, has cost
government 17s:11¾d.; and, when entered for home consumption,
14s:3¾d.; and that every barrel cured with foreign salt, when
exported, has cost government £1:7:5¾d.; and, when entered for home
consumption, £1:3:9¾d. The price of a barrel of good merchantable
herrings runs from seventeen and eighteen to four and five-and-twenty
shillings; about a guinea at an average. {See the accounts at the end
of this Book.}

Secondly,   The bounty to the white-herring fishery is a tonnage
bounty, and is proportioned to the burden of the ship, not to her
diligence or success in the fishery; and it has, I am afraid, been
too common for the vessels to fit out for the sole purpose of
catching, not the fish but the bounty. In the year 1759, when the
bounty was at fifty shillings the ton, the whole buss fishery of
Scotland brought in only four barrels of sea-sticks. In that year,
each barrel of sea-sticks cost government, in bounties alone,
£113:15s.; each barrel of merchantable herrings £159:7:6.

Thirdly,     The mode of fishing, for which this tonnage bounty in the
white herring fishery has been given (by busses or decked vessels from
twenty to eighty tons burden ), seems not so well adapted to the
situation of Scotland, as to that of Holland, from the practice of
which country it appears to have been borrowed. Holland lies at a
great distance from the seas to which herrings are known principally
to resort, and can, therefore, carry on that fishery only in decked
vessels, which can carry water and provisions sufficient for a voyage
to a distant sea; but the Hebrides, or Western Islands, the islands of
Shetland, and the northern and north-western coasts of Scotland, the
countries in whose neighbourhood the herring fishery is principally
carried on, are everywhere intersected by arms of the sea, which run
up a considerable way into the land, and which, in the language of the
country, are called sea-lochs. It is to these sea-lochs that the
herrings principally resort during the seasons in which they visit
these seas; for the visits of this, and, I am assured, of many other
sorts of fish, are not quite regular and constant. A boat-fishery,
therefore, seems to be the mode of fishing best adapted to the
peculiar situation of Scotland, the fishers carrying the herrings on
shore as fast as they are taken, to be either cured or consumed fresh.
But the great encouragement which a bounty of 30s. the ton gives to
the buss-fishery, is necessarily a discouragement to the boat-fishery,
which, having no such bounty, cannot bring its cured fish to market
upon the same terms as the buss-fishery. The boat-fishery;
accordingly, which, before the establishment of the buss-bounty, was
very considerable, and is said to have employed a number of seamen,
not inferior to what the buss-fishery employs at present, is now gone
almost entirely to decay. Of the former extent, however, of this now
ruined and abandoned fishery, I must acknowledge that I cannot pretend
to speak with much precision. As no bounty was-paid upon the outfit of
the boat-fishery, no account was taken of it by the officers of the
customs or salt duties.

Fourthly,     In many parts of Scotland, during certain seasons of the
year, herrings make no inconsiderable part of the food of the common
people. A bounty which tended to lower their price in the home market,
might contribute a good deal to the relief of a great number of our
fellow-subjects, whose circumstances are by no means affluent. But the
herring-bus bounty contributes to no such good purpose. It has ruined
the boat fishery, which is by far the best adapted for the supply of
the home market; and the additional bounty of 2s:8d. the barrel upon
exportation, carries the greater part, more than two-thirds, of the
produce of the buss-fishery abroad. Between thirty and forty years
ago, before the establishment of the buss-bounty, 16s. the barrel, I
have been assured, was the common price of white herrings. Between ten
and fifteen years ago, before the boat-fishery was entirely ruined,
the price was said to have run from seventeen to twenty shillings the
barrel. For these last five years, it has, at an average, been at
twenty-five shillings the barrel. This high price, however, may have
been owing to the real scarcity of the herrings upon the coast of
Scotland. I must observe, too, that the cask or barrel, which is
usually sold with the herrings, and of which the price is included in
all the foregoing prices, has, since the commencement of the American
war, risen to about double its former price, or from about 3s. to
about 6s. I must likewise observe, that the accounts I have received
of the prices of former times, have been by no means quite uniform and
consistent, and an old man of great accuracy and experience has
assured me, that, more than fifty years ago, a guinea was the usual
price of a barrel of good merchantable herrings; and this, I imagine,
may still be looked upon as the average price. All accounts, however,
I think, agree that the price has not been lowered in the home market
in consequence of the buss-bounty.

When the undertakers of fisheries, after such liberal bounties have
been bestowed upon them, continue to sell their commodity at the same,
or even at a higher price than they were accustomed to do before, it
might be expected that their profits should be very great; and it is
not improbable that those of some individuals may have been so. In
general, however, I have every reason to believe they have been quite
otherwise. The usual effect of such bounties is, to encourage rash
undertakers to adventure in a business which they do not understand;
and what they lose by their own negligence and ignorance, more than
compensates all that they can gain by the utmost liberality of
government. In 1750, by the same act which first gave the bounty of
30s. the ton for the encouragement of the white herring fishery (the
23d Geo. II. chap. 24), a joint stock company was erected, with a
capital of £500,000, to which the subscribers (over and above all
other encouragements, the tonnage bounty just now mentioned, the
exportation bounty of 2s:8d. the barrel, the delivery of both British
and foreign salt duty free) were, during the space of fourteen years,
for every hundred pounds which they subscribed and paid into the stock
of the society, entitled to three pounds a-year, to be paid by the
receiver-general of the customs in equal half-yearly payments. Besides
this great company, the residence of whose governor and directors was
to be in London, it was declared lawful to erect different fishing
chambers in all the different out-ports of the kingdom, provided a sum
not less than £10,000 was subscribed into the capital of each, to be
managed at its own risk, and for its own profit and loss. The same
annuity, and the same encouragements of all kinds, were given to the
trade of those inferior chambers as to that of the great company. The
subscription of the great company was soon filled up, and several
different fishing chambers were erected in the different out-ports of
the kingdom. In spite of all these encouragements, almost all those
different companies, both great and small, lost either the whole or
the greater part of their capitals; scarce a vestige now remains of
any of them, and the white-herring fishery is now entirely, or almost
entirely, carried on by private adventurers.

If any particular manufacture was necessary, indeed, for the defence
of the society, it might not always be prudent to depend upon our
neighbours for the supply; and if such manufacture could not otherwise
be supported at home, it might not be unreasonable that all the other
branches of industry should be taxed in order to support it. The
bounties upon the exportation of British made sail-cloth, and British
made gunpowder, may, perhaps, both be vindicated upon this principle.

But though it can very seldom be reasonable to tax the industry of the
great body of the people, in order to support that of some particular
class of manufacturers; yet, in the wantonness of great prosperity,
when the public enjoys a greater revenue than it knows well what to do
with, to give such bounties to favourite manufactures, may, perhaps,
be as natural as to incur any other idle expense. In public, as well
as in private expenses, great wealth, may, perhaps, frequently be
admitted as an apology for great folly. But there must surely be
something more than ordinary absurdity in continuing such profusion in
times of general difficulty and distress.

What is called a bounty, is sometimes no more than a drawback, and,
consequently, is not liable to the same objections as what is properly
a bounty. The bounty, for example, upon refined sugar exported, may be
considered as a drawback of the duties upon the brown and Muscovado
sugars, from which it is made; the bounty upon wrought silk exported,
a drawback of the duties upon raw and thrown silk imported; the bounty
upon gunpowder exported, a drawback of the duties upon brimstone and
saltpetre imported. In the language of the customs, those allowances
only are called drawbacks which are given upon goods exported in the
same form in which they are imported. When that form has been so
altered by manufacture of any kind as to come under a new
denomination, they are called bounties.

Premiums given by the public to artists and manufacturers, who excel
in their particular occupations, are not liable to the same objections
as bounties. By encouraging extraordinary dexterity and ingenuity,
they serve to keep up the emulation of the workmen actually employed
in those respective occupations, and are not considerable enough to
turn towards any one of them a greater share of the capital of the
country than what would go to it of its own accord. Their tendency is
not to overturn the natural balance of employments, but to render the
work which is done in each as perfect and complete as possible. The
expense of premiums, besides, is very trifling, that of bounties very
great. The bounty upon corn alone has sometimes cost the public, in
one year, more than £300,000.

Bounties are sometimes called premiums, as drawbacks are sometimes
called bounties. But we must, in all cases, attend to the nature of
the thing, without paying any regard to the word.


Digression concerning the Corn Trade and Corn Laws.


I cannot conclude this chapter concerning bounties, without observing,
that the praises which have been bestowed upon the law which
establishes the bounty upon the exportation of corn, and upon that
system of regulations which is connected with it, are altogether
unmerited. A particular examination of the nature of the corn trade,
and of the principal British laws which relate to it, will
sufficiently demonstrate the truth of this assertion. The great
importance of this subject must justify the length of the digression.

The trade of the corn merchant is composed of four different branches,
which, though they may sometimes be all carried on by the same person,
are, in their own nature, four separate and distinct trades. These
are, first, the trade of the inland dealer; secondly, that of the
merchant-importer for home consumption; thirdly, that of the
merchant-exporter of home produce for foreign consumption; and,
fourthly, that of the merchant-carrier, or of the importer of corn, in
order to export it again.

I. The interest of the inland dealer, and that of the great body of
the people, how opposite soever they may at first appear, are, even in
years of the greatest scarcity, exactly the same. It is his interest
to raise the price of his corn as high as the real scarcity of the
season requires, and it can never be his interest to raise it higher.
By raising the price, he discourages the consumption, and puts every
body more or less, but particularly the inferior ranks of people, upon
thrift and good management If, by raising it too high, he discourages
the consumption so much that the supply of the season is likely to go
beyond the consumption of the season, and to last for some time after
the next crop begins to come in, he runs the hazard, not only of
losing a considerable part of his corn by natural causes, but of being
obliged to sell what remains of it for much less than what he might
have had for it several months before. If, by not raising the price
high enough, he discourages the consumption so little, that the supply
of the season is likely to fall short of the consumption of the
season, he not only loses a part of the profit which he might
otherwise have made, but he exposes the people to suffer before the
end of the season, instead of the hardships of a dearth, the dreadful
horrors of a famine. It is the interest of the people that their
daily, weekly, and monthly consumption should be proportioned as
exactly as possible to the supply of the season. The interest of the
inland corn dealer is the same. By supplying them, as nearly as he can
judge, in this proportion, he is likely to sell all his corn for the
highest price, and with the greatest profit; and his knowledge of the
state of the crop, and of his daily, weekly, and monthly sales,
enables him to judge, with more or less accuracy, how far they really
are supplied in this manner. Without intending the interest of the
people, he is necessarily led, by a regard to his own interest, to
treat them, even in years of scarcity, pretty much in the same manner
as the prudent master of a vessel is sometimes obliged to treat his
crew. When he foresees that provisions are likely to run short, he
puts them upon short allowance. Though from excess of caution he
should sometimes do this without any real necessity, yet all the
inconveniencies which his crew can thereby suffer are inconsiderable,
in comparison of the danger, misery, and ruin, to which they might
sometimes be exposed by a less provident conduct. Though, from excess
of avarice, in the same manner, the inland corn merchant should
sometimes raise the price of his corn somewhat higher than the
scarcity of the season requires, yet all the inconveniencies which the
people can suffer from this conduct, which effectually secures them
from a famine in the end of the season, are inconsiderable, in
comparison of what they might have been exposed to by a more liberal
way of dealing in the beginning of it the corn merchant himself is
likely to suffer the most by this excess of avarice; not only from the
indignation which it generally excites against him, but, though he
should escape the effects of this indignation, from the quantity of
corn which it necessarily leaves upon his hands in the end of the
season, and which, if the next season happens to prove favourable, he
must always sell for a much lower price than he might otherwise have
had.

Were it possible, indeed, for one great company of merchants to
possess themselves of the whole crop of an extensive country, it might
perhaps be their interest to deal with it, as the Dutch are said to do
with the spiceries of the Moluccas, to destroy or throw away a
considerable part of it, in order to keep up the price of the rest.
But it is scarce possible, even by the violence of law, to establish
such an extensive monopoly with regard to corn; and wherever the law
leaves the trade free, it is of all commodities the least liable to be
engrossed or monopolized by the forced a few large capitals, which buy
up the greater part of it. Not only its value far exceeds what the
capitals of a few private men are capable of purchasing; but,
supposing they were capable of purchasing it, the manner in which it
is produced renders this purchase altogether impracticable. As, in
every civilized country, it is the commodity of which the annual
consumption is the greatest; so a greater quantity of industry is
annually employed in producing corn than in producing any other
commodity. When it first comes from the ground, too, it is necessarily
divided among a greater number of owners than any other commodity; and
these owners can never be collected into one place, like a number of
independent manufacturers, but are necessarily scattered through all
the different corners of the country. These first owners either
immediately supply the consumers in their own neighbourhood, or they
supply other inland dealers, who supply those consumers. The inland
dealers in corn, therefore, including both the farmer and the baker,
are necessarily more numerous than the dealers in any other commodity;
and their dispersed situation renders it altogether impossible for
them to enter into any general combination. If, in a year of scarcity,
therefore, any of them should find that he had a good deal more corn
upon hand than, at the current price, he could hope to dispose of
before the end of the season, he would never think of keeping up this
price to his own loss, and to the sole benefit of his rivals and
competitors, but would immediately lower it, in order to get rid of
his corn before the new crop began to come in. The same motives, the
same interests, which would thus regulate the conduct of any one
dealer, would regulate that of every other, and oblige them all in
general to sell their corn at the price which, according to the best
of their judgment, was most suitable to the scarcity or plenty of the
season.

Whoever examines, with attention, the history of the dearths and
famines which have afflicted any part of Europe during either the
course of the present or that of the two preceding centuries, of
several of which we have pretty exact accounts, will find, I believe,
that a dearth never has arisen from any combination among the inland
dealers in corn, nor from any other cause but a real scarcity,
occasioned sometimes, perhaps, and in some particular places, by the
waste of war, but in by far the greatest number of cases by the fault
of the seasons; and that a famine has never arisen from any other
cause but the violence of government attempting, by improper means, to
remedy the inconveniencies of a dearth.

In an extensive corn country, between all the different parts of which
there is a free commerce and communication, the scarcity occasioned by
the most unfavourable seasons can never be so great as to produce a
famine; and the scantiest crop, if managed with frugality and economy,
will maintain, through the year, the same number of people that are
commonly fed in a more affluent manner by one of moderate plenty. The
seasons most unfavourable to the crop are those of excessive drought
or excessive rain. But as corn grows equally upon high and low lands,
upon grounds that are disposed to be too wet, and upon those that are
disposed to be too dry, either the drought or the rain, which is
hurtful to one part of the country, is favourable to another; and
though, both in the wet and in the dry season, the crop is a good deal
less than in one more properly tempered; yet, in both, what is lost in
one part of the country is in some measure compensated by what is
gained in the other. In rice countries, where the crop not only
requires a very moist soil, but where, in a certain period of its
growing, it must be laid under water, the effects of a drought are
much more dismal. Even in such countries, however, the drought is,
perhaps, scarce ever so universal as necessarily to occasion a famine,
if the government would allow a free trade. The drought in Bengal, a
few years ago, might probably have occasioned a very great dearth.
Some improper regulations, some injudicious restraints, imposed by the
servants of the East India Company upon the rice trade, contributed,
perhaps, to turn that dearth into a famine.

When the government, in order to remedy the inconveniencies of a
dearth, orders all the dealers to sell their corn at what it supposes
a reasonable price, it either hinders them from bringing it to market,
which may sometimes produce a famine even in the beginning of the
season; or, if they bring it thither, it enables the people, and
thereby encourages them to consume it so fast as must necessarily
produce a famine before the end of the season. The unlimited,
unrestrained freedom of the corn trade, as it is the only effectual
preventive of the miseries of a famine, so it is the best palliative
of the inconveniencies of a dearth; for the inconveniencies of a real
scarcity cannot be remedied; they can only be palliated. No trade
deserves more the full protection of the law, and no trade requires it
so much; because no trade is so much exposed to popular odium.

In years of scarcity, the inferior ranks of people impute their
distress to the avarice of the corn merchant, who becomes the object
of their hatred and indignation. Instead of making profit upon such
occasions, therefore, he is often in danger of being utterly ruined,
and of having his magazines plundered and destroyed by their violence.
It is in years of scarcity, however, when prices are high, that the
corn merchant expects to make his principal profit. He is generally in
contract with some farmers to furnish him, for a certain number of
years, with a certain quantity of corn, at a certain price. This
contract price is settled according to what is supposed to be the
moderate and reasonable, that is, the ordinary or average price,
which, before the late years of scarcity, was commonly about 28s. for
the quarter of wheat, and for that of other grain in proportion. In
years of scarcity, therefore, the corn merchant buys a great part of
his corn for the ordinary price, and sells it for a much higher. That
this extraordinary profit, however, is no more than sufficient to put
his trade upon a fair level with other trades, and to compensate the
many losses which he sustains upon other occasions, both from the
perishable nature of the commodity itself, and from the frequent and
unforeseen fluctuations of its price, seems evident enough, from this
single circumstance, that great fortunes are as seldom made in this as
in any other trade. The popular odium, however, which attends it in
years of scarcity, the only years in which it can be very profitable,
renders people of character and fortune averse to enter into it. It is
abandoned to an inferior set of dealers; and millers, bakers,
meal-men, and meal-factors, together with a number of wretched
hucksters, are almost the only middle people that, in the home market,
come between the grower and the consumer.

The ancient policy of Europe, instead of discountenancing this popular
odium against a trade so beneficial to the public, seems, on the
contrary, to have authorised and encouraged it.

By the 5th and 6th of Edward VI cap. 14, it was enacted, that whoever
should buy any corn or grain, with intent to sell it again, should be
reputed an unlawful engrosser, and should, for the first fault, suffer
two months imprisonment, and forfeit the value of the corn; for the
second, suffer six months imprisonment, and forfeit double the value;
and, for the third, be set in the pillory, suffer imprisonment during
the king's pleasure, and forfeit all his goods and chattels. The
ancient policy of most other parts of Europe was no better than that
of England.

Our ancestors seem to have imagined, that the people would buy their
corn cheaper of the farmer than of the corn merchant, who, they were
afraid, would require, over and above the price which he paid to the
farmer, an exorbitant profit to himself. They endeavoured, therefore,
to annihilate his trade altogether. They even endeavoured to hinder,
as much as possible, any middle man of any kind from coming in between
the grower and the consumer; and this was the meaning of the many
restraints which they imposed upon the trade of those whom they called
kidders, or carriers of corn; a trade which nobody was allowed to
exercise without a licence, ascertaining his qualifications as a man
of probity and fair dealing. The authority of three justices of the
peace was, by the statute of Edward VI. necessary in order to grant
this licence. But even this restraint was afterwards thought
insufficient, and, by a statute of Elizabeth, the privilege of
granting it was confined to the quarter-sessions.

The ancient policy of Europe endeavoured, in this manner, to regulate
agriculture, the great trade of the country, by maxims quite different
from those which it established with regard to manufactures, the great
trade of the towns. By leaving a farmer no other customers but either
the consumers or their immediate factors, the kidders and carriers of
corn, it endeavoured to force him to exercise the trade, not only of a
farmer, but of a corn merchant, or corn retailer. On the contrary, it,
in many cases, prohibited the manufacturer from exercising the trade
of a shopkeeper, or from selling his own goods by retail. It meant, by
the one law, to promote the general interest of the country, or to
render corn cheap, without, perhaps, its being well understood how
this was to be done. By the other, it meant to promote that of a
particular order of men, the shopkeepers, who would be so much
undersold by the manufacturer, it was supposed, that their trade would
be ruined, if he was allowed to retail at all.

The manufacturer, however, though he had been allowed to keep a shop,
and to sell his own goods by retail, could not have undersold the
common shopkeeper. Whatever part of his capital he might have placed
in his shop, he must have withdrawn it from his manufacture. In order
to carry on his business on a level with that of other people, as he
must have had the profit of a manufacturer on the one part, so he must
have had that of a shopkeeper upon the other. Let us suppose, for
example, that in the particular town where he lived, ten per cent. was
the ordinary profit both of manufacturing and shopkeeping stock; he
must in this case have charged upon every piece of his own goods,
which he sold in his shop, a profit of twenty per cent. When he
carried them from his workhouse to his shop, he must have valued them
at the price for which he could have sold them to a dealer or
shopkeeper, who would have bought them by wholesale. If he valued them
lower, he lost a part of the profit of his manufacturing capital.
When, again, he sold them from his shop, unless he got the same price
at which a shopkeeper would have sold them, he lost a part of the
profit of his shop-keeping capital. Though he might appear,
therefore, to make a double profit upon the same piece of goods, yet,
as these goods made successively a part of two distinct capitals, he
made but a single profit upon the whole capital employed about them;
and if he made less than his profit, he was a loser, and did not
employ his whole capital with the same advantage as the greater part
of his neighbours.

What the manufacturer was prohibited to do, the farmer was in some
measure enjoined to do; to divide his capital between two different
employments; to keep one part of it in his granaries and stack-yard,
for supplying the occasional demands of the market, and to employ the
other in the cultivation of his land. But as he could not afford to
employ the latter for less than the ordinary profits of farming stock,
so he could as little afford to employ the former for less than the
ordinary profits of mercantile stock. Whether the stock which really
carried on the business of a corn merchant belonged to the person who
was called a farmer, or to the person who was called a corn merchant,
an equal profit was in both cases requisite, in order to indemnify its
owner for employing it in this manner, in order to put his business on
a level with other trades, and in order to hinder him from having an
interest to change it as soon as possible for some other. The farmer,
therefore, who was thus forced to exercise the trade of a corn
merchant, could not afford to sell his corn cheaper than any other
corn merchant would have been obliged to do in the case of a free
competition.

The dealer who can employ his whole stock in one single branch of
business, has an advantage of the same kind with the workman who can
employ his whole labour in one single operation. As the latter
acquires a dexterity which enables him, with the same two hands, to
perform a much greater quantity of work, so the former acquires so
easy and ready a method of transacting his business, of buying and
disposing of his goods, that with the same capital he can transact a
much greater quantity of business. As the one can commonly afford his
work a good deal cheaper, so the other can commonly afford his goods
somewhat cheaper, than if his stock and attention were both employed
about a greater variety of objects. The greater part of manufacturers
could not afford to retail their own goods so cheap as a vigilant and
active shopkeeper, whose sole business it was to buy them by wholesale
and to retail them again. The greater part of farmers could still less
afford to retail their own corn, to supply the inhabitants of a town,
at perhaps four or five miles distance from the greater part of them,
so cheap as a vigilant and active corn merchant, whose sole business
it was to purchase corn by wholesale, to collect it into a great
magazine, and to retail it again.

The law which prohibited the manufacturer from exercising the trade of
a shopkeeper, endeavoured to force this division in the employment of
stock to go on faster than it might otherwise have done. The law which
obliged the farmer to exercise the trade of a corn merchant,
endeavoured to hinder it from going on so fast. Both laws were evident
violations of natural liberty, and therefore unjust; and they were
both, too, as impolitic as they were unjust. It is the interest of
every society, that things of this kind should never either he forced
or obstructed. The man who employs either his labour or his stock in a
greater variety of ways than his situation renders necessary, can
never hurt his neighbour by underselling him. He may hurt himself, and
he generally does so. Jack-of-all-trades will never be rich, says the
proverb. But the law ought always to trust people with the care of
their own interest, as in their local situations they must generally
be able to judge better of it than the legislature can do. The law,
however, which obliged the farmer to exercise the trade of a corn
merchant was by far the most pernicious of the two.

It obstructed not only that division in the employment of stock which
is so advantageous to every society, but it obstructed likewise the
improvement and cultivation of the land. By obliging the farmer to
carry on two trades instead of one, it forced him to divide his
capital into two parts, of which one only could be employed in
cultivation. But if he had been at liberty to sell his whole crop to a
corn merchant as fast as he could thresh it out, his whole capital
might have returned immediately to the land, and have been employed in
buying more cattle, and hiring more servants, in order to improve and
cultivate it better. But by being obliged to sell his corn by retail,
he was obliged to keep a great part of his capital in his granaries
and stack-yard through the year, and could not therefore cultivate so
well as with the same capital he might otherwise have done. This law,
therefore, necessarily obstructed the improvement of the land, and,
instead of tending to render corn cheaper, must have tended to render
it scarcer, and therefore dearer, than it would otherwise have been.

After the business of the farmer, that of the corn merchant is in
reality the trade which, if properly protected and encouraged, would
contribute the most to the raising of corn. It would support the trade
of the farmer, in the same manner as the trade of the wholesale dealer
supports that of the manufacturer.

The wholesale dealer, by affording a ready market to the manufacturer,
by taking his goods off his hand as fast as he can make them, and by
sometimes even advancing their price to him before he has made them,
enables him to keep his whole capital, and sometimes even more than
his whole capital, constantly employed in manufacturing, and
consequently to manufacture a much greater quantity of goods than if
he was obliged to dispose of them himself to the immediate consumers,
or even to the retailers. As the capital of the wholesale merchant,
too, is generally sufficient to replace that of many manufacturers,
this intercourse between him and them interests the owner of a large
capital to support the owners of a great number of small ones, and to
assist them in those losses and misfortunes which might otherwise
prove ruinous to them.

An intercourse of the same kind universally established between the
farmers and the corn merchants, would be attended with effects equally
beneficial to the farmers. They would be enabled to keep their whole
capitals, and even more than their whole capitals constantly employed
in cultivation. In case of any of those accidents to which no trade is
more liable than theirs, they would find in their ordinary customer,
the wealthy corn merchant, a person who had both an interest to
support them, and the ability to do it; and they would not, as at
present, be entirely dependent upon the forbearance of their landlord,
or the mercy of his steward. Were it possible, as perhaps it is not,
to establish this intercourse universally, and all at once; were it
possible to turn all at once the whole farming stock of the kingdom to
its proper business, the cultivation of land, withdrawing it from
every other employment into which any part of it may be at present
diverted; and were it possible, in order to support and assist, upon
occasion, the operations of this great stock, to provide all at once
another stock almost equally great; it is not, perhaps, very easy to
imagine how great, how extensive, and how sudden, would be the
improvement which this change of circumstances would alone produce
upon the whole face of the country.

The statute of Edward VI. therefore, by prohibiting as much as
possible any middle man from coming in between the grower and the
consumer, endeavoured to annihilate a trade, of which the free
exercise is not only the best palliative of the inconveniencies of a
dearth, but the best preventive of that calamity; after the trade of
the farmer, no trade contributing so much to the growing of corn as
that of the corn merchant.

The rigour of this law was afterwards softened by several subsequent
statutes, which successively permitted the engrossing of corn when the
price of wheat should not exceed 20s. and 24s. 32s. and 40s. the
quarter. At last, by the 15th of Charles II. c.7, the engrossing or
buying of corn, in order to sell it again, as long as the price of
wheat did not exceed 48s. the quarter, and that of other grain in
proportion, was declared lawful to all persons not being forestallers,
that is, not selling again in the same market within three months. All
the freedom which the trade of the inland corn dealer has ever yet
enjoyed was bestowed upon it by this statute. The statute of the
twelfth of the present king, which repeals almost all the other
ancient laws against engrossers and forestallers, does not repeal the
restrictions of this particular statute, which therefore still
continue in force.

This statute, however, authorises in some measure two very absurd
popular prejudices.

First,    It supposes, that when the price of wheat has risen so high
as 48s. the quarter, and that of other grain in proportion, corn is
likely to be so engrossed as to hurt the people. But, from what has
been already said, it seems evident enough, that corn can at no price
be so engrossed by the inland dealers as to hurt the people; and 48s.
the quarter, besides, though it may be considered as a very high
price, yet, in years of scarcity, it is a price which frequently takes
place immediately after harvest, when scarce any part of the new crop
can be sold off, and when it is impossible even for ignorance to
suppose that any part of it can be so engrossed as to hurt the people.

Secondly,    It supposes that there is a certain price at which corn
is likely to be forestalled, that is, bought up in order to be sold
again soon after in the same market, so as to hurt the people. But if
a merchant ever buys up corn, either going to a particular market, or
in a particular market, in order to sell it again soon after in the
same market, it must be because he judges that the market cannot be so
liberally supplied through the whole season as upon that particular
occasion, and that the price, therefore, must soon rise. If he judges
wrong in this, and if the price does not rise, he not only loses the
whole profit of the stock which he employs in this manner, but a part
of the stock itself, by the expense and loss which necessarily attend
the storing and keeping of corn. He hurts himself, therefore, much
more essentially than he can hurt even the particular people whom he
may hinder from supplying themselves upon that particular market day,
because they may afterwards supply themselves just as cheap upon any
other market day. If he judges right, instead of hurting the great
body of the people, he renders them a most important service. By
making them feel the inconveniencies of a dearth somewhat earlier than
they otherwise might do, he prevents their feeling them afterwards so
severely as they certainly would do, if the cheapness of price
encouraged them to consume faster than suited the real scarcity of the
season. When the scarcity is real, the best thing that can be done for
the people is, to divide the inconvenience of it as equally as
possible, through all the different months and weeks and days of the
year. The interest of the corn merchant makes him study to do this as
exactly as he can; and as no other person can have either the same
interest, or the same knowledge, or the same abilities, to do it so
exactly as he, this most important operation of commerce ought to be
trusted entirely to him; or, in other words, the corn trade, so far at
least as concerns the supply of the home market, ought to be left
perfectly free.

The popular fear of engrossing and forestalling may be compared to the
popular terrors and suspicions of witchcraft. The unfortunate wretches
accused of this latter crime were not more innocent of the misfortunes
imputed to them, than those who have been accused of the former. The
law which put an end to all prosecutions against witchcraft, which put
it out of any man's power to gratify his own malice by accusing his
neighbour of that imaginary crime, seems effectually to have put an
end to those fears and suspicions, by taking away the great cause
which encouraged and supported them. The law which would restore
entire freedom to the inland trade of corn, would probably prove as
effectual to put an end to the popular fears of engrossing and
forestalling.

The 15th of Charles II. c. 7, however, with all its imperfections,
has, perhaps, contributed more, both to the plentiful supply of the
home market, and to the increase of tillage, than any other law in the
statute book. It is from this law that the inland corn trade has
derived all the liberty and protection which it has ever yet enjoyed;
and both the supply of the home market and the interest of tillage are
much more effectually promoted by the inland, than either by the
importation or exportation trade.

The proportion of the average quantity of all sorts of grain imported
into Great Britain to that of all sorts of grain consumed, it has been
computed by the author of the Tracts upon the Corn Trade, does not
exceed that of one to five hundred and seventy. For supplying the home
market, therefore, the importance of the inland trade must be to that
of the importation trade as five hundred and seventy to one.

The average quantity of all sorts of grain exported from Great Britain
does not, according to the same author, exceed the one-and-thirtieth
part of the annual produce. For the encouragement of tillage,
therefore, by providing a market for the home produce, the importance
of the inland trade must be to that of the exportation trade as thirty
to one.

I have no great faith in political arithmetic, and I mean not to
warrant the exactness of either of these computations. I mention them
only in order to show of how much less consequence, in the opinion of
the most judicious and experienced persons, the foreign trade of corn
is than the home trade. The great cheapness of corn in the years
immediately preceding the establishment of the bounty may, perhaps
with reason, he ascribed in some measure to the operation of this
statute of Charles II. which had been enacted about five-and-twenty
years before, and which had, therefore, full time to produce its
effect.

A very few words will sufficiently explain all that I have to say
concerning the other three branches of the corn trade.

II. The trade of the merchant-importer of foreign corn for home
consumption, evidently contributes to the immediate supply of the home
market, and must so far be immediately beneficial to the great body of
the people. It tends, indeed, to lower somewhat the average money
price of corn, but not to diminish its real value, or the quantity of
labour which it is capable of maintaining. If importation was at all
times free, our farmers and country gentlemen would probably, one year
with another, get less money for their corn than they do at present,
when importation is at most times in effect prohibited; but the money
which they got would be of more value, would buy more goods of all
other kinds, and would employ more labour. Their real wealth, their
real revenue, therefore, would be the same as at present, though it
might be expressed by a smaller quantity of silver, and they would
neither be disabled nor discouraged from cultivating corn as much as
they do at present. On the contrary, as the rise in the real value of
silver, in consequence of lowering the money price of corn, lowers
somewhat the money price of all other commodities, it gives the
industry of the country where it takes place some advantage in all
foreign markets and thereby tends to encourage and increase that
industry. But the extent of the home market for corn must be in
proportion to the general industry of the country where it grows, or
to the number of those who produce something else, and therefore, have
something else, or, what comes to the same thing, the price of
something else, to give in exchange for corn. But in every country,
the home market, as it is the nearest and most convenient, so is it
likewise the greatest and most important market for corn. That rise in
the real value of silver, therefore, which is the effect of lowering
the average money price of corn, tends to enlarge the greatest and
most important market for corn, and thereby to encourage, instead of
discouraging its growth.

By the 22d of Charles II. c. 13, the importation of wheat, whenever
the price in the home market did not exceed 53s:4d. the quarter, was
subjected to a duty of 16s. the quarter; and to a duty of 8s. whenever
the price did not exceed £4. The former of these two prices has, for
more than a century past, taken place only in times of very great
scarcity; and the latter has, so far as I know, not taken place at
all. Yet, till wheat has risen above this latter price, it was, by
this statute, subjected to a very high duty; and, till it had risen
above the former, to a duty which amounted to a prohibition. The
importation of other sorts of grain was restrained at rates and by
duties, in proportion to the value of the grain, almost equally high.
Before the 13th of the present king, the following were the duties
payable upon the importation of the different sorts of grain:

     Grain.                     Duties.          Duties       Duties.
 Beans to 28s. per qr.  19s:10d. after till 40s. 16s:8d. then 12d.
 Barley to 28s.   -     19s:10d.         -  32s. 16s.     -   12d.
 Malt is prohibited by the annual malt-tax bill.
 Oats   to 16s.   -      5s:10d. after   -                    9½d.
 Pease   to 40s.  -     16s: 0d. after   -                    9¾d.
 Rye     to 36s.  -     19s:10d. till 40s.       16s:8d   -   12d.
 Wheat to 44s.    -     21s: 9d. till 53s:4d.    17s.     -    8s.
                          till £4, and after that about       1s:4d.
 Buck-wheat to 32s. per qr.     to pay 16s.

These different duties were imposed, partly by the 22d of Charles II.
in place of the old subsidy, partly by the new subsidy, by the
one-third and two-thirds subsidy, and by the subsidy 1747. Subsequent
laws still further increased those duties.

The distress which, in years of scarcity, the strict execution of
those laws might have brought upon the people, would probably have
been very great; but, upon such occasions, its execution was generally
suspended by temporary statutes, which permitted, for a limited time,
the importation of foreign corn. The necessity of these temporary
statutes sufficiently demonstrates the impropriety of this general
one.

These restraints upon importation, though prior to the establishment
of the bounty, were dictated by the same spirit, by the same
principles, which afterwards enacted that regulation. How hurtful
soever in themselves, these, or some other restraints upon
importation, became necessary in consequence of that regulation. If,
when wheat was either below 48s. the quarter, or not much above it,
foreign corn could have been imported, either duty free, or upon
paying only a small duty, it might have been exported again, with the
benefit of the bounty, to the great loss of the public revenue, and to
the entire perversion of the institution, of which the object was to
extend the market for the home growth, not that for the growth of
foreign countries.

III. The trade of the merchant-exporter of corn for foreign
consumption, certainly does not contribute directly to the plentiful
supply of the home market. It does so, however, indirectly. From
whatever source this supply maybe usually drawn, whether from home
growth, or from foreign importation, unless more corn is either
usually grown, or usually imported into the country, than what is
usually consumed in it, the supply of the home market can never be
very plentiful. But unless the surplus can, in all ordinary cases, be
exported, the growers will be careful never to grow more, and the
importers never to import more, than what the bare consumption of the
home market requires. That market will very seldom be overstocked; but
it will generally be understocked; the people, whose business it is to
supply it, being generally afraid lest their goods should be left upon
their hands. The prohibition of exportation limits the improvement and
cultivation of the country to what the supply of its own inhabitants
require. The freedom of exportation enables it to extend cultivation
for the supply of foreign nations.

By the 12th of Charles II. c.4, the exportation of corn was permitted
whenever the price of wheat did not exceed 40s. the quarter, and that
of other grain in proportion. By the 15th of the same prince, this
liberty was extended till the price of wheat exceeded 48s. the
quarter; and by the 22d, to all higher prices. A poundage, indeed, was
to be paid to the king upon such exportation; but all grain was rated
so low in the book of rates, that this poundage amounted only, upon
wheat to 1s., upon oats to 4d., and upon all other grain to 6d. the
quarter. By the 1st of William and Mary, the act which established
this bounty, this small duty was virtually taken off whenever the
price of wheat did not exceed 48s. the quarter; and by the 11th and
12th of William III. c. 20, it was expressly taken off at all higher
prices.

The trade of the merchant-exporter was, in this manner, not only
encouraged by a bounty, but rendered much more free than that of the
inland dealer. By the last of these statutes, corn could be engrossed
at any price for exportation; but it could not be engrossed for inland
sale, except when the price did not exceed 48s. the quarter. The
interest of the inland dealer, however, it has already been shown, can
never be opposite to that of the great body of the people. That of the
merchant-exporter may, and in fact sometimes is. If, while his own
country labours under a dearth, a neighbouring country should be
afflicted with a famine, it might be his interest to carry corn to the
latter country, in such quantities as might very much aggravate the
calamities of the dearth. The plentiful supply of the home market was
not the direct object of those statutes; but, under the pretence of
encouraging agriculture, to raise the money price of corn as high as
possible, and thereby to occasion, as much as possible, a constant
dearth in the home market. By the discouragement of importation, the
supply of that market; even in times of great scarcity, was confined
to the home growth; and by the encouragement of exportation, when the
price was so high as 48s. the quarter, that market was not, even in
times of considerable scarcity, allowed to enjoy the whole of that
growth. The temporary laws, prohibiting, for a limited time, the
exportation of corn, and taking off, for a limited time, the duties
upon its importation, expedients to which Great Britain has been
obliged so frequently to have recourse, sufficiently demonstrate the
impropriety of her general system. Had that system been good, she
would not so frequently have been reduced to the necessity of
departing from it.

Were all nations to follow the liberal system of free exportation and
free importation, the different states into which a great continent
was divided, would so far resemble the different provinces of a great
empire. As among the different provinces of a great empire, the
freedom of the inland trade appears, both from reason and experience,
not only the best palliative of a dearth, but the most effectual
preventive of a famine; so would the freedom of the exportation and
importation trade be among the different states into which a great
continent was divided. The larger the continent, the easier the
communication through all the different parts of it, both by land and
by water, the less would any one particular part of it ever be exposed
to either of these calamities, the scarcity of any one country being
more likely to be relieved by the plenty of some other. But very few
countries have entirely adopted this liberal system. The freedom of
the corn trade is almost everywhere more or less restrained, and in
many countries is confined by such absurd regulations, as frequently
aggravate the unavoidable misfortune of a dearth into the dreadful
calamity of a famine. The demand of such countries for corn may
frequently become so great and so urgent, that a small state in their
neighbourhood, which happened at the same time to be labouring under
some degree of dearth, could not venture to supply them without
exposing itself to the like dreadful calamity. The very bad policy of
one country may thus render it, in some measure, dangerous and
imprudent to establish what would otherwise be the best policy in
another. The unlimited freedom of exportation, however, would be much
less dangerous in great states, in which the growth being much
greater, the supply could seldom be much affected by any quantity or
corn that was likely to be exported. In a Swiss canton, or in some of
the little states in Italy, it may, perhaps, sometimes be necessary to
restrain the exportation of corn. In such great countries as France or
England, it scarce ever can. To hinder, besides, the farmer from
sending his goods at all times to the best market, is evidently to
sacrifice the ordinary laws of justice to an idea of public utility,
to a sort of reasons of state; an act or legislative authority which
ought to be exercised only, which can be pardoned only, in cases of
the most urgent necessity. The price at which exportation of corn is
prohibited, if it is ever to be prohibited, ought always to be a very
high price.

The laws concerning corn may everywhere be compared to the laws
concerning religion. The people feel themselves so much interested in
what relates either to their subsistence in this life, or to their
happiness in a life to come, that government must yield to their
prejudices, and, in order to preserve the public tranquillity,
establish that system which they approve of. It is upon this account,
perhaps, that we so seldom find a reasonable system established with
regard to either of those two capital objects.

IV. The trade of the merchant-carrier, or of the importer of foreign
corn, in order to export it again, contributes to the plentiful supply
of the home market. It is not, indeed, the direct purpose of his trade
to sell his corn there; but he will generally be willing to do so, and
even for a good deal less money than he might expect in a foreign
market; because he saves in this manner the expense of loading and
unloading, of freight and insurance. The inhabitants of the country
which, by means of the carrying trade, becomes the magazine and
storehouse for the supply of other countries, can very seldom be in
want themselves. Though the carrying trade must thus contribute to
reduce the average money price of corn in the home market, it would
not thereby lower its real value; it would only raise somewhat the
real value of silver.

The carrying trade was in effect prohibited in Great Britain, upon all
ordinary occasions, by the high duties upon the importation of foreign
corn, of the greater part of which there was no drawback; and upon
extraordinary occasions, when a scarcity made it necessary to suspend
those duties by temporary statutes, exportation was always prohibited.
By this system of laws, therefore, the carrying trade was in effect
prohibited.

That system of laws, therefore, which is connected with the
establishment of the bounty, seems to deserve no part of the praise
which has been bestowed upon it. The improvement and prosperity of
Great Britain, which has been so often ascribed to those laws, may
very easily be accounted for by other causes. That security which the
laws in Great Britain give to every man, that he shall enjoy the
fruits of his own labour, is alone sufficient to make any country
flourish, notwithstanding these and twenty other absurd regulations of
commerce; and this security was perfected by the Revolution, much
about the same time that the bounty was established. The natural
effort of every individual to better his own condition, when suffered
to exert itself with freedom and security, is so powerful a principle,
that it is alone, and without any assistance, not only capable of
carrying on the society to wealth and prosperity, but of surmounting a
hundred impertinent obstructions, with which the folly of human laws
too often encumbers its operations: though the effect of those
obstructions is always, more or less, either to encroach upon its
freedom, or to diminish its security. In Great Britain industry is
perfectly secure; and though it is far from being perfectly free, it
is as free or freer than in any other part of Europe.

Though the period of the greatest prosperity and improvement of Great
Britain has been posterior to that system of laws which is connected
with the bounty, we must not upon that account, impute it to those
laws. It has been posterior likewise to the national debt; but the
national debt has most assuredly not been the cause of it.

Though the system of laws which is connected with the bounty, has
exactly the same tendency with the practice of Spain and Portugal, to
lower somewhat the value of the precious metals in the country where
it takes place; yet Great Britain is certainly one of the richest
countries in Europe, while Spain and Portugal are perhaps amongst the
most beggarly. This difference of situation, however, may easily be
accounted for from two different causes. First, the tax in Spain, the
prohibition in Portugal of exporting gold and silver, and the vigilant
police which watches over the execution of those laws, must, in two
very poor countries, which between them import annually upwards of six
millions sterling, operate not only more directly, but much more
forcibly, in reducing the value of those metals there, than the corn
laws can do in Great Britain. And, secondly, this bad policy is not in
those countries counterbalanced by the general liberty and security of
the people. Industry is there neither free nor secure; and the civil
and ecclesiastical governments of both Spain and Portugal are such as
would alone be sufficient to perpetuate their present state of
poverty, even though their regulations of commerce were as wise as the
greatest part of them are absurd and foolish.

The 13th of the present king, c. 43, seems to have established a new
system with regard to the corn laws, in many respects better than the
ancient one, but in one or two respects perhaps not quite so good.

By this statute, the high duties upon importation for home consumption
are taken off, so soon as the price of middling wheat rises to 48s.
the quarter; that of middling rye, pease, or beans, to 32s.; that of
barley to 24s.; and that of oats to 16s.; and instead of them, a small
duty is imposed of only 6d upon the quarter of wheat, and upon that or
other grain in proportion. With regard to all those different sorts of
grain, but particularly with regard to wheat, the home market is thus
opened to foreign supplies, at prices considerably lower than before.

By the same statute, the old bounty of 5s. upon the exportation of
wheat, ceases so soon as the price rises to 44s. the quarter, instead
of 48s. the price at which it ceased before; that of 2s:6d. upon the
exportation of barley, ceases so soon as the price rises to 22s.
instead of 24s. the price at which it ceased before; that of 2s:6d.
upon the exportation of oatmeal, ceases so soon as the price rises to
14s. instead of 15s. the price at which it ceased before. The bounty
upon rye is reduced from 3s:6d. to 3s. and it ceases so soon as the
price rises to 28s. instead of 32s. the price at which it ceased
before. If bounties are as improper as I have endeavoured to prove
them to be, the sooner they cease, and the lower they are, so much the
better.

The same statute permits, at the lowest prices, the importation of
corn in order to be exported again, duty free, provided it is in the
mean time lodged in a warehouse under the joint locks of the king and
the importer. This liberty, indeed, extends to no more than
twenty-five of the different ports of Great Britain. They are,
however, the principal ones; and there may not, perhaps, be warehouses
proper for this purpose in the greater part of the others.

So far this law seems evidently an improvement upon the ancient
system.

But by the same law, a bounty of 2s. the quarter is given for the
exportation of oats, whenever the price does not exceed fourteen
shillings. No bounty had ever been given before for the exportation of
this grain, no more than for that of pease or beans.

By the same law, too, the exportation of wheat is prohibited so soon
as the price rises to forty-four shillings the quarter; that of rye so
soon as it rises to twenty-eight shillings; that of barley so soon as
it rises to twenty-two shillings; and that of oats so soon as they
rise to fourteen shillings. Those several prices seem all of them a
good deal too low; and there seems to be an impropriety, besides, in
prohibiting exportation altogether at those precise prices at which
that bounty, which was given in order to force it, is withdrawn. The
bounty ought certainly either to have been withdrawn at a much lower
price, or exportation ought to have been allowed at a much higher.

So far, therefore, this law seems to be inferior to the ancient
system. With all its imperfections, however, we may perhaps say of it
what was said of the laws of Solon, that though not the best in
itself, it is the best which the interest, prejudices, and temper of
the times, would admit of. It may perhaps in due time prepare the way
for a better.





CHAPTER VI.

OF TREATIES OF COMMERCE.

When a nation binds itself by treaty, either to permit the entry of
certain goods from one foreign country which it prohibits from all
others, or to exempt the goods of one country from duties to which it
subjects those of all others, the country, or at least the merchants
and manufacturers of the country, whose commerce is so favoured, must
necessarily derive great advantage from the treaty. Those merchants
and manufacturers enjoy a sort of monopoly in the country which is so
indulgent to them. That country becomes a market, both more extensive
and more advantageous for their goods: more extensive, because the
goods of other nations being either excluded or subjected to heavier
duties, it takes off a greater quantity of theirs; more advantageous,
because the merchants of the favoured country, enjoying a sort of
monopoly there, will often sell their goods for a better price than if
exposed to the free competition of all other nations.

Such treaties, however, though they may be advantageous to the
merchants and manufacturers of the favoured, are necessarily
disadvantageous to those of the favouring country. A monopoly is thus
granted against them to a foreign nation; and they must frequently buy
the foreign goods they have occasion for, dearer than if the free
competition of other nations was admitted. That part of its own
produce with which such a nation purchases foreign goods, must
consequently be sold cheaper; because, when two things are exchanged
for one another, the cheapness of the one is a necessary consequence,
or rather is the same thing, with the dearness of the other. The
exchangeable value of its annual produce, therefore, is likely to be
diminished by every such treaty. This diminution, however, can scarce
amount to any positive loss, but only to a lessening of the gain which
it might otherwise make. Though it sells its goods cheaper than it
otherwise might do, it will not probably sell them for less than they
cost; nor, as in the case of bounties, for a price which will not
replace the capital employed in bringing them to market, together with
the ordinary profits of stock. The trade could not go on long if it
did. Even the favouring country, therefore, may still gain by the
trade, though less than if there was a free competition.

Some treaties of commerce, however, have been supposed advantageous,
upon principles very different from these; and a commercial country
has sometimes granted a monopoly of this kind, against itself, to
certain goods of a foreign nation, because it expected, that in the
whole commerce between them, it would annually sell more than it would
buy, and that a balance in gold and silver would be annually returned
to it. It is upon this principle that the treaty of commerce between
England and Portugal, concluded in 1703 by Mr Methuen, has been so
much commended. The following is a literal translation of that treaty,
which consists of three articles only.

ART.  I.

His sacred royal majesty of Portugal promises, both in his own name
and that of his successors, to admit for ever hereafter, into
Portugal, the woollen cloths, and the rest of the woollen manufactures
of the British, as was accustomed, till they were prohibited by the
law; nevertheless upon this condition:

ART.  II.

That is to say, that her sacred royal majesty of Great Britain shall,
in her own name, and that of her successors, be obliged, for ever
hereafter, to admit the wines of the growth of Portugal into Britain;
so that at no time, whether there shall be peace or war between the
kingdoms of Britain and France, any thing more shall be demanded for
these wines by the name of custom or duty, or by whatsoever other
title, directly or indirectly, whether they shall be imported into
Great Britain in pipes or hogsheads, or other casks, than what shall
be demanded for the like quantity or measure of French wine, deducting
or abating a third part of the custom or duty. But if, at any time,
this deduction or abatement of customs, which is to be made as
aforesaid, shall in any manner be attempted and prejudiced, it shall
be just and lawful for his sacred royal majesty of Portugal, again to
prohibit the woollen cloths, and the rest of the British woollen
manufactures.

ART.   III.

The most excellent lords the plenipotentiaries promise and take upon
themselves, that their above named masters shall ratify this treaty;
and within the space of two months the ratification shall be
exchanged.

By this treaty, the crown of Portugal becomes bound to admit the
English woollens upon the same footing as before the prohibition; that
is, not to raise the duties which had been paid before that time. But
it does not become bound to admit them upon any better terms than
those of any other nation, of France or Holland, for example. The
crown of Great Britain, on the contrary, becomes bound to admit the
wines of Portugal, upon paying only two-thirds of the duty which is
paid for those of France, the wines most likely to come into
competition with them. So far this treaty, therefore, is evidently
advantageous to Portugal, and disadvantageous to Great Britain.

It has been celebrated, however, as a masterpiece of the commercial
policy of England. Portugal receives annually from the Brazils a
greater quantity of gold than can be employed in its domestic
commerce, whether in the shape of coin or of plate. The surplus is too
valuable to be allowed to lie idle and locked up in coffers; and as it
can find no advantageous market at home, it must, notwithstanding; any
prohibition, be sent abroad, and exchanged for something for which
there is a more advantageous market at home. A large share of it comes
annually to England, in return either for English goods, or for those
of other European nations that receive their returns through England.
Mr Barretti was informed, that the weekly packet-boat from Lisbon
brings, one week with another, more than £50,000 in gold to England.
The sum had probably been exaggerated. It would amount to more than
£2,600,000 a year, which is more than the Brazils are supposed to
afford.

Our merchants were, some years ago, out of humour with the crown of
Portugal. Some privileges which had been granted them, not by treaty,
but by the free grace of that crown, at the solicitation, indeed, it
is probable, and in return for much greater favours, defence and
protection from the crown of Great Britain, had been either infringed
or revoked. The people, therefore, usually most interested in
celebrating the Portugal trade, were then rather disposed to represent
it as less advantageous than it had commonly been imagined. The far
greater part, almost the whole, they pretended, of this annual
importation of gold, was not on account of Great Britain, but of other
European nations; the fruits and wines of Portugal annually imported
into Great Britain nearly compensating the value of the British goods
sent thither.

Let us suppose, however, that the whole was on account of Great
Britain, and that it amounted to a still greater sum than Mr Barretti
seems to imagine; this trade would not, upon that account, be more
advantageous than any other, in which, for the same value sent out, we
received an equal value of consumable goods in return.

It is but a very small part of this importation which, it can be
supposed, is employed as an annual addition, either to the plate or to
the coin of the kingdom. The rest must all be sent abroad, and
exchanged for consumable goods of some kind or other. But if those
consumable goods were purchased directly with the produce of English
industry, it would be more for the advantage of England, than first to
purchase with that produce the gold of Portugal, and afterwards to
purchase with that gold those consumable goods. A direct foreign trade
of consumption is always more advantageous than a round-about one; and
to bring the same value of foreign goods to the home market requires a
much smaller capital in the one way than in the ether. If a smaller
share of its industry, therefore, had been employed in producing goods
fit for the Portugal market, and a greater in producing those lit for
the other markets, where those consumable goods for which there is a
demand in Great Britain are to be had, it would have been more for the
advantage of England. To procure both the gold which it wants for its
own use, and the consumable goods, would, in this way, employ a much
smaller capital than at present. There would be a spare capital,
therefore, to be employed for other purposes, in exciting an
additional quantity of industry, and in raising a greater annual
produce.

Though Britain were entirely excluded from the Portugal trade, it
could find very little difficulty in procuring all the annual supplies
of gold which it wants, either for the purposes of plate, or of coin,
or of foreign trade. Gold, like every other commodity, is always
somewhere or another to be got for its value by those who have that
value to give for it. The annual surplus of gold in Portugal, besides,
would still be sent abroad, and though not carried away by Great
Britain, would be carried away by some other nation, which would be
glad to sell it again for its price, in the same manner as Great
Britain does at present. In buying gold of Portugal, indeed, we buy it
at the first hand; whereas, in buying it of any other nation, except
Spain, we should buy it at the second, and might pay somewhat dearer.
This difference, however, would surely be too insignificant to deserve
the public attention.

Almost all our gold, it is said, comes from Portugal. With other
nations, the balance of trade is either against as, or not much in our
favour. But we should remember, that the more gold we import from one
country, the less we must necessarily import from all others. The
effectual demand for gold, like that for every other commodity, is in
every country limited to a certain quantity. If nine-tenths of this
quantity are imported from one country, there remains a tenth only to
be imported from all others. The more gold, besides, that is annually
imported from some particular countries, over and above what is
requisite for plate and for coin, the more must necessarily be
exported to some others: and the more that most insignificant object
of modern policy, the balance of trade, appears to be in our favour
with some particular countries, the more it must necessarily appear to
be against us with many others.

It was upon this silly notion, however, that England could not subsist
without the Portugal trade, that, towards the end of the late war,
France and Spain, without pretending either offence or provocation,
required the king of Portugal to exclude all British ships from his
ports, and, for the security of this exclusion, to receive into them
French or Spanish garrisons. Had the king of Portugal submitted to
those ignominious terms which his brother-in-law the king of Spain
proposed to him, Britain would have been freed from a much greater
inconveniency than the loss of the Portugal trade, the burden of
supporting a very weak ally, so unprovided of every thing for his own
defence, that the whole power of England, had it been directed to that
single purpose, could scarce, perhaps, have defended him for another
campaign. The loss of the Portugal trade would, no doubt, have
occasioned a considerable embarrassment to the merchants at that time
engaged in it, who might not, perhaps, have found out, for a year or
two, any other equally advantageous method of employing their
capitals; and in this would probably have consisted all the
inconveniency which England could have suffered from this notable
piece of commercial policy.

The great annual importation of gold and silver is neither for the
purpose of plate nor of coin, but of foreign trade. A round-about
foreign trade of consumption can be carried on more advantageously by
means of these metals than of almost any other goods. As they are the
universal instruments of commerce, they are more readily received in
return for all commodities than any other goods; and, on account of
their small bulk and great value, it costs less to transport them
backward and forward from one place to another than almost any other
sort of merchandize, and they lose less of their value by being so
transported. Of all the commodities, therefore, which are bought in
one foreign country, for no other purpose but to be sold or exchanged
again for some other goods in another, there are none so convenient as
gold and silver. In facilitating all the different round-about foreign
trades of consumption which are carried on in Great Britain, consists
the principal advantage of the Portugal trade; and though it is not a
capital advantage, it is, no doubt, a considerable one.

That any annual addition which, it can reasonably be supposed, is made
either to the plate or to the coin of the kingdom, could require but a
very small annual importation of gold and silver, seems evident
enough; and though we had no direct trade with Portugal, this small
quantity could always, somewhere or another, be very easily got.

Though the goldsmiths trade be very considerable in Great Britain, the
far greater part of the new plate which they annually sell, is made
from other old plate melted down; so that the addition annually made
to the whole plate of the kingdom cannot be very great, and could
require but a very small annual importation.

It is the same case with the coin. Nobody imagines, I believe, that
even the greater part of the annual coinage, amounting, for ten years
together, before the late reformation of the gold coin, to upwards of
£800,000 a-year in gold, was an annual addition to the money before
current in the kingdom. In a country where the expense of the coinage
is defrayed by the government, the value of the coin, even when it
contains its full standard weight of gold and silver, can never be
much greater than that of an equal quantity of those metals uncoined,
because it requires only the trouble of going to the mint, and the
delay, perhaps, of a few weeks, to procure for any quantity of
uncoined gold and silver an equal quantity of those metals in coin;
but in every country the greater part of the current coin is almost
always more or less worn, or otherwise degenerated from its standard.
In Great Britain it was, before the late reformation, a good deal so,
the gold being more than two per cent., and the silver more than eight
per cent. below its standard weight. But if forty-four guineas and
a-half, containing their full standard weight, a pound weight of gold,
could purchase very little more than a pound weight of uncoined gold;
forty-four guineas and a-half, wanting a part of their weight, could
not purchase a pound weight, and something was to be added, in order
to make up the deficiency. The current price of gold bullion at
market, therefore, instead of being the same with the mint price, or
£46:14:6, was then about £47:14s., and sometimes about £48. When the
greater part of the coin, however, was in this degenerate condition,
forty four guineas and a-half, fresh from the mint, would purchase no
more goods in the market than any other ordinary guineas; because,
when they came into the coffers of the merchant, being confounded with
other money, they could not afterwards be distinguished without more
trouble than the difference was worth. Like other guineas, they were
worth no more than £46:14:6. If thrown into the melting pot, however,
they produced, without any sensible loss, a pound weight of standard
gold, which could be sold at any time for between £47:14s. and £48,
either in gold or silver, as fit for all the purposes of coin as that
which had been melted down. There was an evident profit, therefore, in
melting down new-coined money; and it was done so instantaneously,
that no precaution of government could prevent it. The operations of
the mint were, upon this account, somewhat like the web of Penelope;
the work that was done in the day was undone in the night. The mint
was employed, not so much in making daily additions to the coin, as in
replacing the very best part of it, which was daily melted down.

Were the private people who carry their gold and silver to the mint to
pay themselves for the coinage, it would add to the value of those
metals, in the same manner as the fashion does to that of plate.
Coined gold and silver would be more valuable than uncoined. The
seignorage, if it was not exorbitant, would add to the bullion the
whole value of the duty; because, the government having everywhere the
exclusive privilege of coining, no coin can come to market cheaper
than they think proper to afford it. If the duty was exorbitant,
indeed, that is, if it was very much above the real value of the
labour and expense requisite for coinage, false coiners, both at home
and abroad, might be encouraged, by the great difference between the
value of bullion and that of coin, to pour in so great a quantity of
counterfeit money as might reduce the value of the government money.
In France, however, though the seignorage is eight per cent., no
sensible inconveniency of this kind is found to arise from it. The
dangers to which a false coiner is everywhere exposed, if he lives in
the country of which he counterfeits the coin, and to which his agents
or correspondents are exposed, if he lives in a foreign country, are
by far too great to be incurred for the sake of a profit of six or
seven per cent.

The seignorage in France raises the value of the coin higher than in
proportion to the quantity of pure gold which it contains. Thus, by
the edict of January 1726, the mint price of fine gold of twenty-four
carats was fixed at seven hundred and forty livres nine sous and one
denier one-eleventh the mark of eight Paris ounces. {See Dictionnaire
des Monnoies, tom. ii. article Seigneurage, p. 439, par 81. Abbot de
Bazinghen, Conseiller-Commissaire en la Cour des Monnoies à Paris.}
The gold coin of France, making an allowance for the remedy of the
mint, contains twenty-one carats and three-fourths of fine gold, and
two carats one-fourth of alloy. The mark of standard gold, therefore,
is worth no more than about six hundred and seventy-one livres ten
deniers. But in France this mark of standard gold is coined into
thirty louis d'ors of twenty-four livres each, or into seven hundred
and twenty livres. The coinage, therefore, increases the value of a
mark of standard gold bullion, by the difference between six hundred
and seventy-one livres ten deniers and seven hundred and twenty
livres, or by forty-eight livres nineteen sous and two deniers.

A seignorage will, in many cases, take away altogether, and will in
all cases diminish, the profit of melting down the new coin. This
profit always arises from the difference between the quantity of
bullion which the common currency ought to contain and that which it
actually does contain. If this difference is less than the seignorage,
there will be loss instead of profit. If it is equal to the
seignorage, there will be neither profit nor loss. If it is greater
than the seignorage, there will, indeed, be some profit, but less than
if there was no seignorage. If, before the late reformation of the
gold coin, for example, there had been a seignorage of five per cent.
upon the coinage, there would have been a loss of three per cent. upon
the melting down of the gold coin. If the seignorage had been two per
cent., there would have been neither profit nor loss. If the
seignorage had been one per cent., there would have been a profit but
of one per cent. only, instead of two per cent. Wherever money is
received by tale, therefore, and not by weight, a seignorage is the
most effectual preventive of the melting down of the coin, and, for
the same reason, of its exportation. It is the best and heaviest
pieces that are commonly either melted down or exported, because it is
upon such that the largest profits are made.

The law for the encouragement of the coinage, by rendering it
duty-free, was first enacted during the reign of Charles II. for a
limited time, and afterwards continued, by different prolongations,
till 1769, when it was rendered perpetual. The bank of England, in
order to replenish their coffers with money, are frequently obliged to
carry bullion to the mint; and it was more for their interest, they
probably imagined, that the coinage should be at the expense of the
government than at their own. It was probably out of complaisance to
this great company, that the government agreed to render this law
perpetual. Should the custom of weighing gold, however, come to be
disused, as it is very likely to be on account of its inconveniency;
should the gold coin of England come to be received by tale, as it was
before the late recoinage this great company may, perhaps, find that
they have, upon this, as upon some other occasions, mistaken their own
interest not a little.

Before the late recoinage, when the gold currency of England was two
per cent. below its standard weight, as there was no seignorage, it
was two per cent. below the value of that quantity of standard gold
bullion which it ought to have contained. When this great company,
therefore, bought gold bullion in order to have it coined, they were
obliged to pay for it two per cent. more than it was worth after the
coinage. But if there had been a seignorage of two per cent. upon the
coinage, the common gold currency, though two per cent. below its
standard weight, would, notwithstanding, have been equal in value to
the quantity of standard gold which it ought to have contained; the
value of the fashion compensating in this case the diminution of the
weight. They would, indeed, have had the seignorage to pay, which
being two per cent., their loss upon the whole transaction would have
been two per cent., exactly the same, but no greater than it actually
was.

If the seignorage had been five per cent. and the gold currency only
two per cent. below its standard weight, the bank would, in this case,
have gained three per cent. upon the price of the bullion; but as they
would have had a seignorage of five per cent. to pay upon the coinage,
their loss upon the whole transaction would, in the same manner, have
been exactly two per cent.

If the seignorage had been only one per cent., and the gold currency
two per cent. below its standard weight, the bank would, in this case,
have lost only one per cent. upon the price of the bullion; but as
they would likewise have had a seignorage of one per cent. to pay,
their loss upon the whole transaction would have been exactly two per
cent., in the same manner as in all other cases.

If there was a reasonable seignorage, while at the same time the coin
contained its full standard weight, as it has done very nearly since
the late recoinage, whatever the bank might lose by the seignorage,
they would gain upon the price of the bullion; and whatever they might
gain upon the price of the bullion, they would lose by the seignorage.
They would neither lose nor gain, therefore, upon the whole
transaction, and they would in this, as in all the foregoing cases, be
exactly in the same situation as if there was no seignorage.

When the tax upon a commodity is so moderate as not to encourage
smuggling, the merchant who deals in it, though he advances, does not
properly pay the tax, as he gets it back in the price of the
commodity. The tax is finally paid by the last purchaser or consumer.
But money is a commodity, with regard to which every man is a
merchant. Nobody buys it but in order to sell it again; and with
regard to it there is, in ordinary cases, no last purchaser or
consumer. When the tax upon coinage, therefore, is so moderate as not
to encourage false coining, though every body advances the tax, nobody
finally pays it; because every body gets it back in the advanced value
of the coin.

A moderate seignorage, therefore, would not, in any case, augment the
expense of the bank, or of any other private persons who carry their
bullion to the mint in order to be coined; and the want of a moderate
seignorage does not in any case diminish it. Whether there is or is
not a seignorage, if the currency contains its full standard weight,
the coinage costs nothing to anybody; and if it is short of that
weight, the coinage must always cost the difference between the
quantity of bullion which ought to be contained in it, and that which
actually is contained in it.

The government, therefore, when it defrays the expense of coinage, not
only incurs some small expense, but loses some small revenue which it
might get by a proper duty; and neither the bank, nor any other
private persons, are in the smallest degree benefited by this useless
piece of public generosity.

The directors of the bank, however, would probably be unwilling to
agree to the imposition of a seignorage upon the authority of a
speculation which promises them no gain, but only pretends to insure
them from any loss. In the present state of the gold coin, and as long
as it continues to be received by weight, they certainly would gain
nothing by such a change. But if the custom of weighing the gold coin
should ever go into disuse, as it is very likely to do, and if the
gold coin should ever fall into the same state of degradation in which
it was before the late recoinage, the gain, or more properly the
savings, of the bank, inconsequence of the imposition of a seignorage,
would probably be very considerable. The bank of England is the only
company which sends any considerable quantity of bullion to the mint,
and the burden of the annual coinage falls entirely, or almost
entirely, upon it. If this annual coinage had nothing to do but to
repair the unavoidable losses and necessary wear and tear of the coin,
it could seldom exceed fifty thousand, or at most a hundred thousand
pounds. But when the coin is degraded below its standard weight, the
annual coinage must, besides this, fill up the large vacuities which
exportation and the melting pot are continually making in the current
coin. It was upon this account, that during the ten or twelve years
immediately preceding the late reformation of the gold coin, the
annual coinage amounted, at an average, to more than £850,000. But if
there had been a seignorage of four or five per cent. upon the gold
coin, it would probably, even in the state in which things then were,
have put an effectual stop to the business both of exportation and of
the melting pot. The bank, instead of losing every year about two and
a half per cent. upon the bullion which was to be coined into more
than eight hundred and fifty thousand pounds, or incurring an annual
loss of more than £21,250 pounds, would not probably have incurred the
tenth part of that loss.

The revenue allotted by parliament for defraying the expense of the
coinage is but fourteen thousand pounds a-year; and the real expense
which it costs the government, or the fees of the officers of the
mint, do not, upon ordinary occasions, I am assured, exceed the half
of that sum. The saving of so very small a sum, or even the gaining of
another, which could not well be much larger, are objects too
inconsiderable, it may be thought, to deserve the serious attention of
government. But the saving of eighteen or twenty thousand pounds
a-year, in case of an event which is not improbable, which has
frequently happened before, and which is very likely to happen again,
is surely an object which well deserves the serious attention, even of
so great a company as the bank of England.

Some of the foregoing reasonings and observations might, perhaps, have
been more properly placed in those chapters of the first book which
treat of the origin and use of money, and of the difference between
the real and the nominal price of commodities. But as the law for the
encouragement of coinage derives its origin from those vulgar
prejudices which have been introduced by the mercantile system, I
judged it more proper to reserve them for this chapter. Nothing could
be more agreeable to the spirit of that system than a sort of bounty
upon the production of money, the very thing which, it supposes,
constitutes the wealth of every nation. It is one of its many
admirable expedients for enriching the country.





CHAPTER VII.

OF COLONIES.

PART   I.

Of the Motives for Establishing New Colonies.

The interest which occasioned the first settlement of the different
European colonies in America and the West Indies, was not altogether
so plain and distinct as that which directed the establishment of
those of ancient Greece and Rome.

All the different states of ancient Greece possessed, each of them,
but a very small territory; and when the people in anyone of them
multiplied beyond what that territory could easily maintain, a part of
them were sent in quest of a new habitation, in some remote and
distant part of the world; the warlike neighbours who surrounded them
on all sides, rendering it difficult for any of them to enlarge very
much its territory at home. The colonies of the Dorians resorted
chiefly to Italy and Sicily, which, in the times preceding the
foundation of Rome, were inhabited by barbarous and uncivilized
nations; those of the Ionians and Aeolians, the two other great tribes
of the Greeks, to Asia Minor and the islands of the Aegean sea, of
which the inhabitants sewn at that time to have been pretty much in
the same state as those of Sicily and Italy. The mother city, though
she considered the colony as a child, at all times entitled to great
favour and assistance, and owing in return much gratitude and respect,
yet considered it as an emancipated child, over whom she pretended to
claim no direct authority or jurisdiction. The colony settled its own
form of government, enacted its own laws, elected its own magistrates,
and made peace or war with its neighbours, as an independent state,
which had no occasion to wait for the approbation or consent of the
mother city. Nothing can be more plain and distinct than the interest
which directed every such establishment.

Rome, like most of the other ancient republics, was originally founded
upon an agrarian law, which divided the public territory, in a certain
proportion, among the different citizens who composed the state. The
course of human affairs, by marriage, by succession, and by
alienation, necessarily deranged this original division, and
frequently threw the lands which had been allotted for the maintenance
of many different families, into the possession of a single person. To
remedy this disorder, for such it was supposed to be, a law was made,
restricting the quantity of land which any citizen could possess to
five hundred jugera; about 350 English acres. This law, however,
though we read of its having been executed upon one or two occasions,
was either neglected or evaded, and the inequality of fortunes went on
continually increasing. The greater part of the citizens had no land;
and without it the manners and customs of those times rendered it
difficult for a freeman to maintain his independency. In the present
times, though a poor man has no land of his own, if he has a little
stock, he may either farm the lands of another, or he may carry on
some little retail trade; and if he has no stock, he may find
employment either as a country labourer, or as an artificer. But among
the ancient Romans, the lands of the rich were all cultivated by
slaves, who wrought under an overseer, who was likewise a slave; so
that a poor freeman had little chance of being employed either as a
farmer or as a labourer. All trades and manufactures, too, even the
retail trade, were carried on by the slaves of the rich for the
benefit of their masters, whose wealth, authority, and protection,
made it difficult for a poor freeman to maintain the competition
against them. The citizens, therefore, who had no land, had scarce any
other means of subsistence but the bounties of the candidates at the
annual elections. The tribunes, when they had a mind to animate the
people against the rich and the great, put them in mind of the ancient
divisions of lands, and represented that law which restricted this
sort of private property as the fundamental law of the republic. The
people became clamorous to get land, and the rich and the great, we
may believe, were perfectly determined not to give them any part of
theirs. To satisfy them in some measure, therefore, they frequently
proposed to send out a new colony. But conquering Rome was, even upon
such occasions, under no necessity of turning out her citizens to seek
their fortune, if one may so, through the wide world, without knowing
where they were to settle. She assigned them lands generally in the
conquered provinces of Italy, where, being within the dominions of the
republic, they could never form any independent state, but were at
best but a sort of corporation, which, though it had the power of
enacting bye-laws for its own government, was at all times subject to
the correction, jurisdiction, and legislative authority of the mother
city. The sending out a colony of this kind not only gave some
satisfaction to the people, but often established a sort of garrison,
too, in a newly conquered province, of which the obedience might
otherwise have been doubtful. A Roman colony, therefore, whether we
consider the nature of the establishment itself, or the motives for
making it, was altogether different from a Greek one. The words,
accordingly, which in the original languages denote those different
establishments, have very different meanings. The Latin word (colonia)
signifies simply a plantation. The Greek word (apoixia), on the
contrary, signifies a separation of dwelling, a departure from home, a
going out of the house. But though the Roman colonies were, in many
respects, different from the Greek ones, the interest which prompted
to establish them was equally plain and distinct. Both institutions
derived their origin, either from irresistible necessity, or from
clear and evident utility.

The establishment of the European colonies in America and the West
Indies arose from no necessity; and though the utility which has
resulted from them has been very great, it is not altogether so clear
and evident. It was not understood at their first establishment, and
was not the motive, either of that establishment, or of the
discoveries which gave occasion to it; and the nature, extent, and
limits of that utility, are not, perhaps, well understood at this day.

The Venetians, during the fourteenth and fifteenth centuries, carried
on a very advantageous commerce in spiceries and other East India
goods, which they distributed among the other nations of Europe. They
purchased them chiefly in Egypt, at that time under the dominion of
the Mamelukes, the enemies of the Turks, of whom the Venetians were
the enemies; and this union of interest, assisted by the money of
Venice, formed such a connexion as gave the Venetians almost a
monopoly of the trade.

The great profits of the Venetians tempted the avidity of the
Portuguese. They had been endeavouring, during the course of the
fifteenth century, to find out by sea a way to the countries from
which the Moors brought them ivory and gold dust across the desert.
They discovered the Madeiras, the Canaries, the Azores, the Cape de
Verd islands, the coast of Guinea, that of Loango, Congo, Angola, and
Benguela, and, finally, the Cape of Good Hope. They had long wished to
share in the profitable traffic of the Venetians, and this last
discovery opened to them a probable prospect of doing so. In 1497,
Vasco de Gamo sailed from the port of Lisbon with a fleet of four
ships, and, after a navigation of eleven months, arrived upon the
coast of Indostan; and thus completed a course of discoveries which
had been pursued with great steadiness, and with very little
interruption, for near a century together.

Some years before this, while the expectations of Europe were in
suspense about the projects of the Portuguese, of which the success
appeared yet to be doubtful, a Genoese pilot formed the yet more
daring project of sailing to the East Indies by the west. The
situation of those countries was at that time very imperfectly known
in Europe. The few European travellers who had been there, had
magnified the distance, perhaps through simplicity and ignorance; what
was really very great, appearing almost infinite to those who could
not measure it; or, perhaps, in order to increase somewhat more the
marvellous of their own adventures in visiting regions so immensely
remote from Europe. The longer the way was by the east, Columbus very
justly concluded, the shorter it would be by the west. He proposed,
therefore, to take that way, as both the shortest and the surest, and
he had the good fortune to convince Isabella of Castile of the
probability of his project. He sailed from the port of Palos in August
1492, near five years before the expedition of Vasco de Gamo set out
from Portugal; and, after a voyage of between two and three months,
discovered first some of the small Bahama or Lucyan islands, and
afterwards the great island of St. Domingo.

But the countries which Columbus discovered, either in this or in any
of his subsequent voyages, had no resemblance to those which he had
gone in quest of. Instead of the wealth, cultivation, and populousness
of China and Indostan, he found, in St. Domingo, and in all the other
parts of the new world which he ever visited, nothing but a country
quite covered with wood, uncultivated, and inhabited only by some
tribes of naked and miserable savages. He was not very willing,
however, to believe that they were not the same with some of the
countries described by Marco Polo, the first European who had visited,
or at least had left behind him any description of China or the East
Indies; and a very slight resemblance, such as that which he found
between the name of Cibao, a mountain in St. Domingo, and that of
Cipange, mentioned by Marco Polo, was frequently sufficient to make
him return to this favourite prepossession, though contrary to the
clearest evidence. In his letters to Ferdinand and Isabella, he called
the countries which he had discovered the Indies. He entertained no
doubt but that they were the extremity of those which had been
described by Marco Polo, and that they were not very distant from the
Ganges, or from the countries which had been conquered by Alexander.
Even when at last convinced that they were different, he still
flattered himself that those rich countries were at no great distance;
and in a subsequent voyage, accordingly, went in quest of them along
the coast of Terra Firma, and towards the Isthmus of Darien.

In consequence of this mistake of Columbus, the name of the Indies has
stuck to those unfortunate countries ever since; and when it was at
last clearly discovered that the new were altogether different from
the old Indies, the former were called the West, in contradistinction
to the latter, which were called the East Indies.

It was of importance to Columbus, however, that the countries which he
had discovered, whatever they were, should be represented to the court
of Spain as of very great consequence; and, in what constitutes the
real riches of every country, the animal and vegetable productions of
the soil, there was at that time nothing which could well justify such
a representation of them.

The cori, something between a rat and a rabbit, and supposed by Mr
Buffon to be the same with the aperea of Brazil, was the largest
viviparous quadruped in St. Domingo. This species seems never to have
been very numerous; and the dogs and cats of the Spaniards are said
to have long ago almost entirely extirpated it, as well as some other
tribes of a still smaller size. These, however, together with a pretty
large lizard, called the ivana or iguana, constituted the principal
part of the animal food which the land afforded.

The vegetable food of the inhabitants, though, from their want of
industry, not very abundant, was not altogether so scanty. It
consisted in Indian corn, yams, potatoes, bananas, etc., plants which
were then altogether unknown in Europe, and which have never since
been very much esteemed in it, or supposed to yield a sustenance equal
to what is drawn from the common sorts of grain and pulse, which have
been cultivated in this part of the world time out of mind.

The cotton plant, indeed, afforded the material of a very important
manufacture, and was at that time, to Europeans, undoubtedly the most
valuable of all the vegetable productions of those islands. But
though, in the end of the fifteenth century, the muslins and other
cotton goods of the East Indies were much esteemed in every part of
Europe, the cotton manufacture itself was not cultivated in any part
of it. Even this production, therefore, could not at that time appear
in the eyes of Europeans to be of very great consequence.

Finding nothing, either in the animals or vegetables of the newly
discovered countries which could justify a very advantageous
representation of them, Columbus turned his view towards their
minerals; and in the richness of their productions of this third
kingdom, he flattered himself he had found a full compensation for the
insignificancy of those of the other two. The little bits of gold with
which the inhabitants ornamented their dress, and which, he was
informed, they frequently found in the rivulets and torrents which
fell from the mountains, were sufficient to satisfy him that those
mountains abounded with the richest gold mines. St. Domingo,
therefore, was represented as a country abounding with gold, and upon
that account (according to the prejudices not only of the present
times, but of those times), an inexhaustible source of real wealth to
the crown and kingdom of Spain. When Columbus, upon his return from
his first voyage, was introduced with a sort of triumphal honours to
the sovereigns of Castile and Arragon, the principal productions of
the countries which he had discovered were carried in solemn
procession before him. The only valuable part of them consisted in
some little fillets, bracelets, and other ornaments of gold, and in
some bales of cotton. The rest were mere objects of vulgar wonder and
curiosity; some reeds of an extraordinary size, some birds of a very
beautiful plumage, and some stuffed skins of the huge alligator and
manati; all of which were preceded by six or seven of the wretched
natives, whose singular colour and appearance added greatly to the
novelty of the show.

In consequence of the representations of Columbus, the council of
Castile determined to take possession of the countries of which the
inhabitants were plainly incapable of defending themselves. The pious
purpose of converting them to Christianity sanctified the injustice of
the project. But the hope of finding treasures of gold there was the
sole motive which prompted to undertake it; and to give this motive
the greater weight, it was proposed by Columbus, that the half of all
the gold and silver that should be found there, should belong to the
crown. This proposal was approved of by the council.

As long as the whole, or the greater part of the gold which the first
adventurers imported into Europe was got by so very easy a method as
the plundering of the defenceless natives, it was not perhaps very
difficult to pay even this heavy tax; but when the natives were once
fairly stript of all that they had, which, in St. Domingo, and in all
the other countries discovered by Columbus, was done completely in six
or eight years, and when, in order to find more, it had become
necessary to dig for it in the mines, there was no longer any
possibility of paying this tax. The rigorous exaction of it,
accordingly, first occasioned, it is said, the total abandoning of the
mines of St. Domingo, which have never been wrought since. It was soon
reduced, therefore, to a third; then to a fifth; afterwards to a
tenth; and at last to a twentieth part of the gross produce of the
gold mines. The tax upon silver continued for a long time to be a
fifth of the gross produce. It was reduced to a tenth only in the
course of the present century. But the first adventurers do not appear
to have been much interested about silver. Nothing less precious than
gold seemed worthy of their attention.

All the other enterprizes of the Spaniards in the New World,
subsequent to those of Columbus, seem to have been prompted by the
same motive. It was the sacred thirst of gold that carried Ovieda,
Nicuessa, and Vasco Nugnes de Balboa, to the Isthmus of Darien; that
carried Cortes to Mexico, Almagro and Pizarro to Chili and Peru. When
those adventurers arrived upon any unknown coast, their first inquiry
was always if there was any gold to be found there; and according to
the information which they received concerning this particular, they
determined either to quit the country or to settle in it.

Of all those expensive and uncertain projects, however, which bring
bankruptcy upon the greater part of the people who engage in them,
there is none, perhaps, more perfectly ruinous than the search after
new silver and gold mines. It is, perhaps, the most disadvantageous
lottery in the world, or the one in which the gain of those who draw
the prizes bears the least proportion to the loss of those who draw
the blanks; for though the prizes are few, and the blanks many, the
common price of a ticket is the whole fortune of a very rich man.
Projects of mining, instead of replacing the capital employed in them,
together with the ordinary profits of stock, commonly absorb both
capital and profit. They are the projects, therefore, to which, of all
others, a prudent lawgiver, who desired to increase the capital of his
nation, would least choose to give any extraordinary encouragement, or
to turn towards them a greater share of that capital than what would
go to them of its own accord. Such, in reality, is the absurd
confidence which almost all men have in their own good fortune, that
wherever there is the least probability of success, too great a share
of it is apt to go to them of its own accord.

But though the judgment of sober reason and experience concerning such
projects has always been extremely unfavourable, that of human avidity
has commonly been quite otherwise. The same passion which has
suggested to so many people the absurd idea of the philosopher's
stone, has suggested to others the equally absurd one of immense rich
mines of gold and silver. They did not consider that the value of
those metals has, in all ages and nations, arisen chiefly from their
scarcity, and that their scarcity has arisen from the very small
quantities of them which nature has anywhere deposited in one place,
from the hard and intractable substances with which she has almost
everywhere surrounded those small quantities, and consequently from
the labour and expense which are everywhere necessary in order to
penetrate, and get at them. They flattered themselves that veins of
those metals might in many places be found, as large and as abundant
as those which are commonly found of lead, or copper, or tin, or iron.
The dream of Sir Waiter Raleigh, concerning the golden city and
country of El Dorado, may satisfy us, that even wise men are not
always exempt from such strange delusions. More than a hundred years
after the death of that great man, the Jesuit Gumila was still
convinced of the reality of that wonderful country, and expressed,
with great warmth, and, I dare say, with great sincerity, how happy he
should be to carry the light of the gospel to a people who could so
well reward the pious labours of their missionary.

In the countries first discovered by the Spaniards, no gold and silver
mines are at present known which are supposed to be worth the working.
The quantities of those metals which the first adventurers are said to
have found there, had probably been very much magnified, as well as
the fertility of the mines which were wrought immediately after the
first discovery. What those adventurers were reported to have found,
however, was sufficient to inflame the avidity of all their
countrymen. Every Spaniard who sailed to America expected to find an
El Dorado. Fortune, too, did upon this what she has done upon very few
other occasions. She realized in some measure the extravagant hopes of
her votaries; and in the discovery and conquest of Mexico and Peru (of
which the one happened about thirty, and the other about forty, years
after the first expedition of Columbus), she presented them with
something not very unlike that profusion of the precious metals which
they sought for.

A project of commerce to the East Indies, therefore, gave occasion to
the first discovery of the West. A project of conquest gave occasion
to all the establishments of the Spaniards in those newly discovered
countries. The motive which excited them to this conquest was a
project of gold and silver mines; and a course of accidents which no
human wisdom could foresee, rendered this project much more successful
than the undertakers had any reasonable grounds for expecting.

The first adventurers of all the other nations of Europe who attempted
to make settlements in America, were animated by the like chimerical
views; but they were not equally successful. It was more than a
hundred years after the first settlement of the Brazils, before any
silver, gold, or diamond mines, were discovered there. In the English,
French, Dutch, and Danish colonies, none have ever yet been
discovered, at least none that are at present supposed to be worth the
working. The first English settlers in North America, however, offered
a fifth of all the gold and silver which should be found there to the
king, as a motive for granting them their patents. In the patents of
Sir Waiter Raleigh, to the London and Plymouth companies, to the
council of Plymouth, etc. this fifth was accordingly reserved to the
crown. To the expectation of finding gold and silver mines, those
first settlers, too, joined that of discovering a north-west passage
to the East Indies. They have hitherto been disappointed in both.


PART   II.

Causes of the Prosperity of New Colonies.

The colony of a civilized nation which takes possession either of a
waste country, or of one so thinly inhabited that the natives easily
give place to the new settlers, advances more rapidly to wealth and
greatness than any other human society.

The colonies carry out with them a knowledge of agriculture and of
other useful arts, superior to what can grow up of its own accord, in
the course of many centuries, among savage and barbarous nations. They
carry out with them, too, the habit of subordination, some notion of
the regular government which takes place in their own country, of the
system of laws which support it, and of a regular administration of
justice; and they naturally establish something of the same kind in
the new settlement. But among savage and barbarous nations, the
natural progress of law and government is still slower than the
natural progress of arts, after law and government have been so far
established as is necessary for their protection. Every colonist gets
more land than he can possibly cultivate. He has no rent, and scarce
any taxes, to pay. No landlord shares with him in its produce, and,
the share of the sovereign is commonly but a trifle. He has every
motive to render as great as possible a produce which is thus to be
almost entirely his own. But his land is commonly so extensive, that,
with all his own industry, and with all the industry of other people
whom he can get to employ, he can seldom make it produce the tenth
part of what it is capable of producing. He is eager, therefore, to
collect labourers from all quarters, and to reward them with the most
liberal wages. But those liberal wages, joined to the plenty and
cheapness of land, soon make those labourers leave him, in order to
become landlords themselves, and to reward with equal liberality other
labourers, who soon leave them for the same reason that they left
their first master. The liberal reward of labour encourages marriage.
The children, during the tender years of infancy, are well fed and
properly taken care of; and when they are grown up, the value of their
labour greatly overpays their maintenance. When arrived at maturity,
the high price of labour, and the low price of land, enable them to
establish themselves in the same manner as their fathers did before
them.

In other countries, rent and profit eat up wages, and the two superior
orders of people oppress the inferior one; but in new colonies, the
interest of the two superior orders obliges them to treat the inferior
one with more generosity and humanity, at least where that inferior
one is not in a state of slavery. Waste lands, of the greatest natural
fertility, are to be had for a trifle. The increase of revenue which
the proprietor, who is always the undertaker, expects from their
improvement, constitutes his profit, which, in these circumstances, is
commonly very great; but this great profit cannot be made, without
employing the labour of other people in clearing and cultivating the
land; and the disproportion between the great extent of the land and
the small number of the people, which commonly takes place in new
colonies, makes it difficult for him to get this labour. He does not,
therefore, dispute about wages, but is willing to employ labour at any
price. The high wages of labour encourage population. The cheapness
and plenty of good land encourage improvement, and enable the
proprietor to pay those high wages. In those wages consists almost the
whole price of the land; and though they are high, considered as the
wages of labour, they are low, considered as the price of what is so
very valuable. What encourages the progress of population and
improvement, encourages that of real wealth and greatness.

The progress of many of the ancient Greek colonies towards wealth and
greatness seems accordingly to have been very rapid. In the course of
a century or two, several of them appear to have rivalled, and even to
have surpassed, their mother cities. Syracuse and Agrigentum in
Sicily, Tarentum and Locri in Italy, Ephesus and Miletus in Lesser
Asia, appear, by all accounts, to have been at least equal to any of
the cities of ancient Greece. Though posterior in their establishment,
yet all the arts of refinement, philosophy, poetry, and eloquence,
seem to have been cultivated as early, and to have been improved as
highly in them as in any part of the mother country The schools of the
two oldest Greek philosophers, those of Thales and Pythagoras, were
established, it is remarkable, not in ancient Greece, but the one in
an Asiatic, the other in an Italian colony. All those colonies had
established themselves in countries inhabited by savage and barbarous
nations, who easily gave place to the new settlers. They had plenty of
good land; and as they were altogether independent of the mother city,
they were at liberty to manage their own affairs in the way that they
judged was most suitable to their own interest.

The history of the Roman colonies is by no means so brilliant. Some of
them, indeed, such as Florence, have, in the course of many ages, and
after the fall of the mother city, grown up to be considerable states.
But the progress of no one of them seems ever to have been very rapid.
They were all established in conquered provinces, which in most cases
had been fully inhabited before. The quantity of land assigned to each
colonist was seldom very considerable, and, as the colony was not
independent, they were not always at liberty to manage their own
affairs in the way that they judged was most suitable to their own
interest.

In the plenty of good land, the European colonies established in
America and the West Indies resemble, and even greatly surpass, those
of ancient Greece. In their dependency upon the mother state, they
resemble those of ancient Rome; but their great distance from Europe
has in all of them alleviated more or less the effects of this
dependency. Their situation has placed them less in the view, and less
in the power of their mother country. In pursuing their interest their
own way, their conduct has upon many occasions been overlooked, either
because not known or not understood in Europe; and upon some occasions
it has been fairly suffered and submitted to, because their distance
rendered it difficult to restrain it. Even the violent and arbitrary
government of Spain has, upon many occasions, been obliged to recall
or soften the orders which had been given for the government of her
colonies, for fear of a general insurrection. The progress of all the
European colonies in wealth, population, and improvement, has
accordingly been very great.

The crown of Spain, by its share of the gold and silver, derived some
revenue from its colonies from the moment of their first
establishment. It was a revenue, too, of a nature to excite in human
avidity the most extravagant expectation of still greater riches. The
Spanish colonies, therefore, from the moment of their first
establishment, attracted very much the attention of their mother
country; while those of the other European nations were for a long
time in a great measure neglected. The former did not, perhaps, thrive
the better in consequence of this attention, nor the latter the worse
in consequence of this neglect. In proportion to the extent of the
country which they in some measure possess, the Spanish colonies are
considered as less populous and thriving than those of almost any
other European nation. The progress even of the Spanish colonies,
however, in population and improvement, has certainly been very rapid
and very great. The city of Lima, founded since the conquest, is
represented by Ulloa as containing fifty thousand inhabitants near
thirty years ago. Quito, which had been but a miserable hamlet of
Indians, is represented by the same author as in his time equally
populous. Gemel i Carreri, a pretended traveller, it is said, indeed,
but who seems everywhere to have written upon extreme good
information, represents the city of Mexico as containing a hundred
thousand inhabitants; a number which, in spite of all the
exaggerations of the Spanish writers, is probably more than five times
greater than what it contained in the time of Montezuma. These numbers
exceed greatly those of Boston, New York, and Philadelphia, the three
greatest cities of the English colonies. Before the conquest of the
Spaniards, there were no cattle fit for draught, either in Mexico or
Peru. The lama was their only beast of burden, and its strength seems
to have been a good deal inferior to that of a common ass. The plough
was unknown among them. They were ignorant of the use of iron. They
had no coined money, nor any established instrument of commerce of any
kind. Their commerce was carried on by barter. A sort of wooden spade
was their principal instrument of agriculture. Sharp stones served
them for knives and hatchets to cut with; fish bones, and the hard
sinews of certain animals, served them with needles to sew with; and
these seem to have been their principal instruments of trade. In this
state of things, it seems impossible that either of those empires
could have been so much improved or so well cultivated as at present,
when they are plentifully furnished with all sorts of European cattle,
and when the use of iron, of the plough, and of many of the arts of
Europe, have been introduced among them. But the populousness of every
country must be in proportion to the degree of its improvement and
cultivation. In spite of the cruel destruction of the natives which
followed the conquest, these two great empires are probably more
populous now than they ever were before; and the people are surely
very different; for we must acknowledge, I apprehend, that the Spanish
creoles are in many respects superior to the ancient Indians.

After the settlements of the Spaniards, that of the Portuguese in
Brazil is the oldest of any European nation in America. But as for a
long time after the first discovery neither gold nor silver mines were
found in it, and as it afforded upon that account little or no revenue
to the crown, it was for a long time in a great measure neglected; and
during this state of neglect, it grew up to be a great and powerful
colony. While Portugal was under the dominion of Spain, Brazil was
attacked by the Dutch, who got possession of seven of the fourteen
provinces into which it is divided. They expected soon to conquer the
other seven, when Portugal recovered its independency by the elevation
of the family of Braganza to the throne. The Dutch, then, as enemies
to the Spaniards, became friends to the Portuguese, who were likewise
the enemies of the Spaniards. They agreed, therefore, to leave that
part of Brazil which they had not conquered to the king of Portugal,
who agreed to leave that part which they had conquered to them, as a
matter not worth disputing about, with such good allies. But the Dutch
government soon began to oppress the Portuguese colonists, who,
instead of amusing themselves with complaints, took arms against their
new masters, and by their own valour and resolution, with the
connivance, indeed, but without any avowed assistance from the mother
country, drove them out of Brazil. The Dutch, therefore, finding it
impossible to keep any part of the country to themselves, were
contented that it should be entirely restored to the crown of
Portugal. In this colony there are said to be more than six hundred
thousand people, either Portuguese or descended from Portuguese,
creoles, mulattoes, and a mixed race between Portuguese and
Brazilians. No one colony in America is supposed to contain so great a
number of people of European extraction.

Towards the end of the fifteenth, and during the greater part of the
sixteenth century, Spain and Portugal were the two great naval powers
upon the ocean; for though the commerce of Venice extended to every
part of Europe, its fleet had scarce ever sailed beyond the
Mediterranean. The Spaniards, in virtue of the first discovery,
claimed all America as their own; and though they could not hinder so
great a naval power as that of Portugal from settling in Brazil, such
was at that time the terror of their name, that the greater part of
the other nations of Europe were afraid to establish themselves in any
other part of that great continent. The French, who attempted to
settle in Florida, were all murdered by the Spaniards. But the
declension of the naval power of this latter nation, in consequence of
the defeat or miscarriage of what they called their invincible armada,
which happened towards the end of the sixteenth century, put it out of
their power to obstruct any longer the settlements of the other
European nations. In the course of the seventeenth century, therefore,
the English, French, Dutch, Danes, and Swedes, all the great nations
who had any ports upon the ocean, attempted to make some settlements
in the new world.

The Swedes established themselves in New Jersey; and the number of
Swedish families still to be found there sufficiently demonstrates,
that this colony was very likely to prosper, had it been protected by
the mother country. But being neglected by Sweden, it was soon
swallowed up by the Dutch colony of New York, which again, in 1674,
fell under the dominion of the English.

The small islands of St. Thomas and Santa Cruz, are the only countries
in the new world that have ever been possessed by the Danes. These
little settlements, too, were under the government of an exclusive
company, which had the sole right, both of purchasing the surplus
produce of the colonies, and of supplying them with such goods of
other countries as they wanted, and which, therefore, both in its
purchases and sales, had not only the power of oppressing them, but
the greatest temptation to do so. The government of an exclusive
company of merchants is, perhaps, the worst of all governments for any
country whatever. It was not, however, able to stop altogether the
progress of these colonies, though it rendered it more slow and
languid. The late king of Denmark dissolved this company, and since
that time the prosperity of these colonies has been very great.

The Dutch settlements in the West, as well as those in the East
Indies, were originally put under the government of an exclusive
company. The progress of some of them, therefore, though it has been
considerable in comparison with that of almost any country that has
been long peopled and established, has been languid and slow in
comparison with that of the greater part of new colonies. The colony
of Surinam, though very considerable, is still inferior to the greater
part of the sugar colonies of the other European nations. The colony
of Nova Belgia, now divided into the two provinces of New York and New
Jersey, would probably have soon become considerable too, even though
it had remained under the government of the Dutch. The plenty and
cheapness of good land are such powerful causes of prosperity, that
the very worst government is scarce capable of checking altogether the
efficacy of their operation. The great distance, too, from the mother
country, would enable the colonists to evade more or less, by
smuggling, the monopoly which the company enjoyed against them. At
present, the company allows all Dutch ships to trade to Surinam, upon
paying two and a-half per cent. upon the value of their cargo for a
license; and only reserves to itself exclusively, the direct trade
from Africa to America, which consists almost entirely in the slave
trade. This relaxation in the exclusive privileges of the company, is
probably the principal cause of that degree of prosperity which that
colony at present enjoys. Curacoa and Eustatia, the two principal
islands belonging to the Dutch, are free ports, open to the ships of
all nations; and this freedom, in the midst of better colonies, whose
ports are open to those of one nation only, has been the great cause
of the prosperity of those two barren islands.

The French colony of Canada was, during the greater part of the last
century, and some part of the present, under the government of an
exclusive company. Under so unfavourable an administration, its
progress was necessarily very slow, in comparison with that of other
new colonies; but it became much more rapid when this company was
dissolved, after the fall of what is called the Mississippi scheme.
When the English got possession of this country, they found in it near
double the number of inhabitants which father Charlevoix had assigned
to it between twenty and thirty years before. That jesuit had
travelled over the whole country, and had no inclination to represent
it as less inconsiderable than it really was.

The French colony of St. Domingo was established by pirates and
freebooters, who, for a long time, neither required the protection,
nor acknowledged the authority of France; and when that race of
banditti became so far citizens as to acknowledge this authority, it
was for a long time necessary to exercise it with very great
gentleness. During this period, the population and improvement of this
colony increased very fast. Even the oppression of the exclusive
company, to which it was for some time subjected with all the other
colonies of France, though it no doubt retarded, had not been able to
stop its progress altogether. The course of its prosperity returned as
soon as it was relieved from that oppression. It is now the most
important of the sugar colonies of the West Indies, and its produce is
said to be greater than that of all the English sugar colonies put
together. The other sugar colonies of France are in general all very
thriving.

But there are no colonies of which the progress has been more rapid
than that of the English in North America.

Plenty of good land, and liberty to manage their own affairs their own
way, seem to be the two great causes of the prosperity of all new
colonies.

In the plenty of good land, the English colonies of North America,
though no doubt very abundantly provided, are, however, inferior to
those of the Spaniards and Portuguese, and not superior to some of
those possessed by the French before the late war. But the political
institutions of the English colonies have been more favourable to the
improvement and cultivation of this land, than those of the other
three nations.

First,      The engrossing of uncultivated land, though it has by no
means been prevented altogether, has been more restrained in the
English colonies than in any other. The colony law, which imposes upon
every proprietor the obligation of improving and cultivating, within a
limited time, a certain proportion of his lands, and which, in case of
failure, declares those neglected lands grantable to any other person;
though it has not perhaps been very strictly executed, has, however,
had some effect.

Secondly,     In Pennsylvania there is no right of primogeniture, and
lands, like moveables, are divided equally among all the children of
the family. In three of the provinces of New England, the oldest has
only a double share, as in the Mosaical law. Though in those
provinces, therefore, too great a quantity of land should sometimes be
engrossed by a particular individual, it is likely, in the course of a
generation or two, to be sufficiently divided again. In the other
English colonies, indeed, the right of primogeniture takes place, as
in the law of England: But in all the English colonies, the tenure of
the lands, which are all held by free soccage, facilitates alienation;
and the grantee of an extensive tract of land generally finds it for
his interest to alienate, as fast as he can, the greater part of it,
reserving only a small quit-rent. In the Spanish and Portuguese
colonies, what is called the right of majorazzo takes place in the
succession of all those great estates to which any title of honour is
annexed. Such estates go all to one person, and are in effect entailed
and unalienable. The French colonies, indeed, are subject to the
custom of Paris, which, in the inheritance of land, is much more
favourable to the younger children than the law of England. But, in
the French colonies, if any part of an estate, held by the noble
tenure of chivalry and homage, is alienated, it is, for a limited
time, subject to the right of redemption, either by the heir of the
superior, or by the heir of the family; and all the largest estates of
the country are held by such noble tenures, which necessarily
embarrass alienation. But, in a new colony, a great uncultivated
estate is likely to be much more speedily divided by alienation than
by succession. The plenty and cheapness of good land, it has already
been observed, are the principal causes of the rapid prosperity of new
colonies. The engrossing of land, in effect, destroys this plenty and
cheapness. The engrossing of uncultivated land, besides, is the
greatest obstruction to its improvement; but the labour that is
employed in the improvement and cultivation of land affords the
greatest and most valuable produce to the society. The produce of
labour, in this case, pays not only its own wages and the profit of
the stock which employs it, but the rent of the land too upon which it
is employed. The labour of the English colonies, therefore, being more
employed in the improvement and cultivation of land, is likely to
afford a greater and more valuable produce than that of any of the
other three nations, which, by the engrossing of land, is more or less
diverted towards other employments.

Thirdly,    The labour of the English colonists is not only likely to
afford a greater and more valuable produce, but, in consequence of the
moderation of their taxes, a greater proportion of this produce
belongs to themselves, which they may store up and employ in putting
into motion a still greater quantity of labour. The English colonists
have never yet contributed any thing towards the defence of the mother
country, or towards the support of its civil government. They
themselves, on the contrary, have hitherto been defended almost
entirely at the expense of the mother country; but the expense of
fleets and armies is out of all proportion greater than the necessary
expense of civil government. The expense of their own civil government
has always been very moderate. It has generally been confined to what
was necessary for paying competent salaries to the governor, to the
judges, and to some other officers of police, and for maintaining a
few of the most useful public works. The expense of the civil
establishment of Massachusetts Bay, before the commencement of the
present disturbances, used to be but about £18;000 a-year; that of New
Hampshire and Rhode Island, £3500 each; that of Connecticut, £4000;
that of New York and Pennsylvania, £4500 each; that of New Jersey,
£1200; that of Virginia and South Carolina, £8000 each. The civil
establishments of Nova Scotia and Georgia are partly supported by an
annual grant of parliament; but Nova Scotia pays, besides, about £7000
a-year towards the public expenses of the colony, and Georgia about
£2500 a-year. All the different civil establishments in North America,
in short, exclusive of those of Maryland and North Carolina, of which
no exact account has been got, did not, before the commencement of the
present disturbances, cost the inhabitants about £64,700 a-year; an
ever memorable example, at how small an expense three millions of
people may not only be governed but well governed. The most important
part of the expense of government, indeed, that of defence and
protection, has constantly fallen upon the mother country. The
ceremonial, too, of the civil government in the colonies, upon the
reception of a new governor, upon the opening of a new assembly, etc.
though sufficiently decent, is not accompanied with any expensive pomp
or parade. Their ecclesiastical government is conducted upon a plan
equally frugal. Tithes are unknown among them; and their clergy, who
are far from being numerous, are maintained either by moderate
stipends, or by the voluntary contributions of the people. The power
of Spain and Portugal, on the contrary, derives some support from the
taxes levied upon their colonies. France, indeed, has never drawn any
considerable revenue from its colonies, the taxes which it levies upon
them being generally spent among them. But the colony government of
all these three nations is conducted upon a much more extensive plan,
and is accompanied with a much more expensive ceremonial. The sums
spent upon the reception of a new viceroy of Peru, for example, have
frequently been enormous. Such ceremonials are not only real taxes
paid by the rich colonists upon those particular occasions, but they
serve to introduce among them the habit of vanity and expense upon all
other occasions. They are not only very grievous occasional taxes, but
they contribute to establish perpetual taxes, of the same kind, still
more grievous; the ruinous taxes of private luxury and extravagance.
In the colonies of all those three nations, too, the ecclesiastical
government is extremely oppressive. Tithes take place in all of them,
and are levied with the utmost rigour in those of Spain and Portugal.
All of them, besides, are oppressed with a numerous race of mendicant
friars, whose beggary being not only licensed but consecrated by
religion, is a most grievous tax upon the poor people, who are most
carefully taught that it is a duty to give, and a very great sin to
refuse them their charity. Over and above all this, the clergy are, in
all of them, the greatest engrossers of land.

Fourthly,     In the disposal of their surplus produce, or of what is
over and above their own consumption, the English colonies have been
more favoured, and have been allowed a more extensive market, than
those of any other European nation. Every European nation has
endeavoured, more or less, to monopolize to itself the commerce of its
colonies, and, upon that account, has prohibited the ships of foreign
nations from trading to them, and has prohibited them from importing
European goods from any foreign nation. But the manner in which this
monopoly has been exercised in different nations, has been very
different.

Some nations have given up the whole commerce of their colonies to an
exclusive company, of whom the colonists were obliged to buy all such
European goods as they wanted, and to whom they were obliged to sell
the whole of their surplus produce. It was the interest of the
company, therefore, not only to sell the former as dear, and to buy
the latter as cheap as possible, but to buy no more of the latter,
even at this low price, than what they could dispose of for a very high
price in Europe. It was their interest not only to degrade in all
cases the value of the surplus produce of the colony, but in many
cases to discourage and keep down the natural increase of its
quantity. Of all the expedients that can well be contrived to stunt
the natural growth of a new colony, that of an exclusive company is
undoubtedly the most effectual. This, however, has been the policy of
Holland, though their company, in the course of the present century,
has given up in many respects the exertion of their exclusive
privilege. This, too, was the policy of Denmark, till the reign of the
late king. It has occasionally been the policy of France; and of late,
since 1755, after it had been abandoned by all other nations on
account of its absurdity, it has become the policy of Portugal, with
regard at least to two of the principal provinces of Brazil,
Pernambucco, and Marannon.

Other nations, without establishing an exclusive company, have
confined the whole commerce of their colonies to a particular port of
the mother country, from whence no ship was allowed to sail, but
either in a fleet and at a particular season, or, if single, in
consequence of a particular license, which in most cases was very well
paid for. This policy opened, indeed, the trade of the colonies to all
the natives of the mother country, provided they traded from the
proper port, at the proper season, and in the proper vessels. But as
all the different merchants, who joined their stocks in order to fit
out those licensed vessels, would find it for their interest to act in
concert, the trade which was carried on in this manner would
necessarily be conducted very nearly upon the same principles as that
of an exclusive company. The profit of those merchants would be almost
equally exorbitant and oppressive. The colonies would be ill supplied,
and would be obliged both to buy very dear, and to sell very cheap.
This, however, till within these few years, had always been the policy
of Spain; and the price of all European goods, accordingly, is said to
have been enormous in the Spanish West Indies. At Quito, we are told
by Ulloa, a pound of iron sold for about 4s:6d., and a pound of steel
for about 6s:9d. sterling. But it is chiefly in order to purchase
European goods that the colonies part with their own produce. The
more, therefore, they pay for the one, the less they really get for
the other, and the dearness of the one is the same thing with the
cheapness of the other. The policy of Portugal is, in this respect,
the same as the ancient policy of Spain, with regard to all its
colonies, except Pernambucco and Marannon; and with regard to these it
has lately adopted a still worse.

Other nations leave the trade of their colonies free to all their
subjects, who may carry it on from all the different ports of the
mother country, and who have occasion for no other license than the
common despatches of the custom-house. In this case the number and
dispersed situation of the different traders renders it impossible for
them to enter into any general combination, and their competition is
sufficient to hinder them from making very exorbitant profits. Under
so liberal a policy, the colonies are enabled both to sell their own
produce, and to buy the goods of Europe at a reasonable price; but
since the dissolution of the Plymouth company, when our colonies were
but in their infancy, this has always been the policy of England. It
has generally, too, been that of France, and has been uniformly so
since the dissolution of what in England is commonly called their
Mississippi company. The profits of the trade, therefore, which France
and England carry on with their colonies, though no doubt somewhat
higher than if the competition were free to all other nations, are,
however, by no means exorbitant; and the price of European goods,
accordingly, is not extravagantly high in the greater past of the
colonies of either of those nations.

In the exportation of their own surplus produce, too, it is only with
regard to certain commodities that the colonies of Great Britain are
confined to the market of the mother country. These commodities having
been enumerated in the act of navigation, and in some other subsequent
acts, have upon that account been called enumerated commodities. The
rest are called non-enumerated, and may be exported directly to other
countries, provided it is in British or plantation ships, of which the
owners and three fourths of the mariners are British subjects.

Among the non-enumerated commodities are some of the most important
productions of America and the West Indies, grain of all sorts,
lumber, salt provisions, fish, sugar, and rum.

Grain is naturally the first and principal object of the culture of
all new colonies. By allowing them a very extensive market for it, the
law encourages them to extend this culture much beyond the consumption
of a thinly inhabited country, and thus to provide beforehand an ample
subsistence for a continually increasing population.

In a country quite covered with wood, where timber consequently is of
little or no value, the expense of clearing the ground is the
principal obstacle to improvement. By allowing the colonies a very
extensive market for their lumber, the law endeavours to facilitate
improvement by raising the price of a commodity which would otherwise
be of little value, and thereby enabling them to make some profit of
what would otherwise be mere expense.

In a country neither half peopled nor half cultivated, cattle
naturally multiply beyond the consumption of the inhabitants, and are
often, upon that account, of little or no value. But it is necessary,
it has already been shown, that the price of cattle should bear a
certain proportion to that of corn, before the greater part of the
lands of any country can be improved. By allowing to American cattle,
in all shapes, dead and alive, a very extensive market, the law
endeavours to raise the value of a commodity, of which the high price
is so very essential to improvement. The good effects of this liberty,
however, must be somewhat diminished by the 4th of Geo. III. c. 15,
which puts hides and skins among the enumerated commodities, and
thereby tends to reduce the value of American cattle.

To increase the shipping and naval power of Great Britain by the
extension of the fisheries of our colonies, is an object which the
legislature seems to have had almost constantly in view. Those
fisheries, upon this account, have had all the encouragement which
freedom can give them, and they have flourished accordingly. The New
England fishery, in particular, was, before the late disturbances, one
of the most important, perhaps, in the world. The whale fishery which,
notwithstanding an extravagant bounty, is in Great Britain carried on
to so little purpose, that in the opinion of many people ( which I do
not, however, pretend to warrant), the whole produce does not much
exceed the value of the bounties which are annually paid for it, is in
New England carried on, without any bounty, to a very great extent.
Fish is one of the principal articles with which the North Americans
trade to Spain, Portugal, and the Mediterranean.

Sugar was originally an enumerated commodity, which could only be
exported to Great Britain; but in 1751, upon a representation of the
sugar-planters, its exportation was permitted to all parts of the
world. The restrictions, however, with which this liberty was granted,
joined to the high price of sugar in Great Britain, have rendered it
in a great measure ineffectual. Great Britain and her colonies still
continue to be almost the sole market for all sugar produced in the
British plantations. Their consumption increases so fast, that, though
in consequence of the increasing improvement of Jamaica, as well as of
the ceded islands, the importation of sugar has increased very greatly
within these twenty years, the exportation to foreign countries is
said to be not much greater than before.

Rum is a very important article in the trade which the Americans carry
on to the coast of Africa, from which they bring back negro slaves in
return.

If the whole surplus produce of America, in grain of all sorts, in
salt provisions, and in fish, had been put into the enumeration, and
thereby forced into the market of Great Britain, it would have
interfered too much with the produce of the industry of our own
people. It was probably not so much from any regard to the interest of
America, as from a jealousy of this interference, that those important
commodities have not only been kept out of the enumeration, but that
the importation into Great Britain of all grain, except rice, and of
all salt provisions, has, in the ordinary state of the law, been
prohibited.

The non-enumerated commodities could originally be exported to all
parts of the world. Lumber and rice having been once put into the
enumeration, when they were afterwards taken out of it, were confined,
as to the European market, to the countries that lie south of Cape
Finisterre. By the 6th of George III. c. 52, all non-enumerated
commodities were subjected to the like restriction. The parts of
Europe which lie south of Cape Finisterre are not manufacturing
countries, and we are less jealous of the colony ships carrying home
from them any manufactures which could interfere with our own.

The enumerated commodities are of two sorts; first, such as are either
the peculiar produce of America, or as cannot be produced, or at least
are not produced in the mother country. Of this kind are molasses,
coffee, cocoa-nuts, tobacco, pimento, ginger, whalefins, raw silk,
cotton, wool, beaver, and other peltry of America, indigo, fustick,
and other dyeing woods; secondly, such as are not the peculiar produce
of America, but which are, and may be produced in the mother country,
though not in such quantities as to supply the greater part of her
demand, which is principally supplied from foreign countries. Of this
kind are all naval stores, masts, yards, and bowsprits, tar, pitch,
and turpentine, pig and bar iron, copper ore, hides and skins, pot and
pearl ashes. The largest importation of commodities of the first kind
could not discourage the growth, or interfere with the sale, of any
part of the produce of the mother country. By confining them to the
home market, our merchants, it was expected, would not only be enabled
to buy them cheaper in the plantations, and consequently to sell them
with a better profit at home, but to establish between the plantations
and foreign countries an advantageous carrying trade, of which Great
Britain was necessarily to be the centre or emporium, as the European
country into which those commodities were first to be imported. The
importation of commodities of the second kind might be so managed too,
it was supposed, as to interfere, not with the sale of those of the
same kind which were produced at home, but with that of those which
were imported from foreign countries; because, by means of proper
duties, they might be rendered always somewhat dearer than the former,
and yet a good deal cheaper than the latter. By confining such
commodities to the home market, therefore, it was proposed to
discourage the produce, not of Great Britain, but of some foreign
countries with which the balance of trade was believed to be
unfavourable to Great Britain.

The prohibition of exporting from the colonies to any other country
but Great Britain, masts, yards, and bowsprits, tar, pitch, and
turpentine, naturally tended to lower the price of timber in the
colonies, and consequently to increase the expense of clearing their
lands, the principal obstacle to their improvement. But about the
beginning of the present century, in 1703, the pitch and tar company
of Sweden endeavoured to raise the price of their commodities to Great
Britain, by prohibiting their exportation, except in their own ships,
at their own price, and in such quantities as they thought proper. In
order to counteract this notable piece of mercantile policy, and to
render herself as much as possible independent, not only of Sweden,
but of all the other northern powers, Great Britain gave a bounty upon
the importation of naval stores from America; and the effect of this
bounty was to raise the price of timber in America much more than the
confinement to the home market could lower it; and as both regulations
were enacted at the same time, their joint effect was rather to
encourage than to discourage the clearing of land in America.

Though pig and bar iron, too, have been put among the enumerated
commodities, yet as, when imported from America, they are exempted
from considerable duties to which they are subject when imported front
any other country, the one part of the regulation contributes more to
encourage the erection of furnaces in America than the other to
discourage it. There is no manufacture which occasions so great a
consumption of wood as a furnace, or which can contribute so much to
the clearing of a country overgrown with it.

The tendency of some of these regulations to raise the value of timber
in America, and thereby to facilitate the clearing of the land, was
neither, perhaps, intended nor understood by the legislature. Though
their beneficial effects, however, have been in this respect
accidental, they have not upon that account been less real.

The most perfect freedom of trade is permitted between the British
colonies of America and the West Indies, both in the enumerated and in
the non-enumerated commodities Those colonies are now become so
populous and thriving, that each of them finds in some of the others a
great and extensive market for every part of its produce. All of them
taken together, they make a great internal market for the produce of
one another.

The liberality of England, however, towards the trade of her colonies,
has been confined chiefly to what concerns the market for their
produce, either in its rude state, or in what may be called the very
first stage of manufacture. The more advanced or more refined
manufactures, even of the colony produce, the merchants and
manufacturers of Great Britain chuse to reserve to themselves, and
have prevailed upon the legislature to prevent their establishment in
the colonies, sometimes by high duties, and sometimes by absolute
prohibitions.

While, for example, Muscovado sugars from the British plantations pay,
upon importation, only 6s:4d. the hundred weight, white sugars pay
£1:1:1; and refined, either double or single, in loaves, £4:2:5
8/20ths. When those high duties were imposed, Great Britain was the
sole, and she still continues to be, the principal market, to which
the sugars of the British colonies could be exported. They amounted,
therefore, to a prohibition, at first of claying or refining sugar for
any foreign market, and at present of claying or refining it for the
market which takes off, perhaps, more than nine-tenths of the whole
produce. The manufacture of claying or refining sugar, accordingly,
though it has flourished in all the sugar colonies of France, has been
little cultivated in any of those of England, except for the market of
the colonies themselves. While Grenada was in the hands of the French,
there was a refinery of sugar, by claying, at least upon almost every
plantation. Since it fell into those of the English, almost all works
of this kind have been given up; and there are at present (October
1773), I am assured, not above two or three remaining in the island.
At present, however, by an indulgence of the custom-house, clayed or
refined sugar, if reduced from loaves into powder, is commonly
imported as Muscovado.

While Great Britain encourages in America the manufacturing of pig and
bar iron, by exempting them from duties to which the like commodities
are subject when imported from any other country, she imposes an
absolute prohibition upon the erection of steel furnaces and
slit-mills in any of her American plantations. She will not suffer her
colonies to work in those more refined manufactures, even for their
own consumption; but insists upon their purchasing of her merchants
and manufacturers all goods of this kind which they have occasion for.

She prohibits the exportation from one province to another by water,
and even the carriage by land upon horseback, or in a cart, of hats,
of wools, and woollen goods, of the produce of America; a regulation
which effectually prevents the establishment of any manufacture of
such commodities for distant sale, and confines the industry of her
colonists in this way to such coarse and household manufactures as a
private family commonly makes for its own use, or for that of some of
its neighbours in the same province.

To prohibit a great people, however, from making all that they can of
every part of their own produce, or from employing their stock and
industry in the way that they judge most advantageous to themselves,
is a manifest violation of the most sacred rights of mankind. Unjust,
however, as such prohibitions may be, they have not hitherto been very
hurtful to the colonies. Land is still so cheap, and, consequently,
labour so dear among them, that they can import from the mother
country almost all the more refined or more advanced manufactures
cheaper than they could make them for themselves. Though they had not,
therefore, been prohibited from establishing such manufactures, yet,
in their present state of improvement, a regard to their own interest
would probably have prevented them from doing so. In their present
state of improvement, those prohibitions, perhaps, without cramping
their industry, or restraining it from any employment to which it
would have gone of its own accord, are only impertinent badges of
slavery imposed upon them, without any sufficient reason, by the
groundless jealousy of the merchants and manufacturers of the mother
country. In a more advanced state, they might be really oppressive and
insupportable.

Great Britain, too, as she confines to her own market some of the most
important productions of the colonies, so, in compensation, she gives
to some of them an advantage in that market, sometimes by imposing
higher duties upon the like productions when imported from other
countries, and sometimes by giving bounties upon their importation
from the colonies. In the first way, she gives an advantage in the
home market to the sugar, tobacco, and iron of her own colonies; and,
in the second, to their raw silk, to their hemp and flax, to their
indigo, to their naval stores, and to their building timber. This
second way of encouraging the colony produce, by bounties upon
importation, is, so far as I have been able to learn, peculiar to
Great Britain: the first is not. Portugal does not content herself
with imposing higher duties upon the importation of tobacco from any
other country, but prohibits it under the severest penalties.

With regard to the importation of goods from Europe, England has
likewise dealt more liberally with her colonies than any other nation.

Great Britain allows a part, almost always the half, generally a
larger portion, and sometimes the whole, of the duty which is paid
upon the importation of foreign goods, to be drawn back upon their
exportation to any foreign country. No independent foreign country, it
was easy to foresee, would receive them, if they came to it loaded
with the heavy duties to which almost all foreign goods are subjected
on their importation into Great Britain. Unless, therefore, some part
of those duties was drawn back upon exportation, there was an end of
the carrying trade; a trade so much favoured by the mercantile system.

Our colonies, however, are by no means independent foreign countries;
and Great Britain having assumed to herself the exclusive right of
supplying them with all goods from Europe, might have forced them (in
the same manner as other countries have done their colonies) to
receive such goods loaded with all the same duties which they paid in
the mother country. But, on the contrary, till 1763, the same
drawbacks were paid upon the exportation of the greater part of
foreign goods to our colonies, as to any independent foreign country.
In 1763, indeed, by the 4th of Geo. III. c. 15, this indulgence was a
good deal abated, and it was enacted, "That no part of the duty called
the old subsidy should be drawn back for any goods of the growth,
production, or manufacture of Europe or the East Indies, which should
be exported from this kingdom to any British colony or plantation in
America; wines, white calicoes, and muslins, excepted." Before this
law, many different sorts of foreign goods might have been bought
cheaper in the plantations than in the mother country, and some may
still.

Of the greater part of the regulations concerning the colony trade,
the merchants who carry it on, it must be observed, have been the
principal advisers. We must not wonder, therefore, if, in a great part
of them, their interest has been more considered than either that of
the colonies or that of the mother country. In their exclusive
privilege of supplying the colonies with all the goods which they
wanted from Europe, and of purchasing all such parts of their surplus
produce as could not interfere with any of the trades which they
themselves carried on at home, the interest of the colonies was
sacrificed to the interest of those merchants. In allowing the same
drawbacks upon the re-exportation of the greater part of European and
East India goods to the colonies, as upon their re-exportation to any
independent country, the interest of the mother country was sacrificed
to it, even according to the mercantile ideas of that interest. It was
for the interest of the merchants to pay as little as possible for the
foreign goods which they sent to the colonies, and, consequently, to
get back as much as possible of the duties which they advanced upon
their importation into Great Britain. They might thereby be enabled to
sell in the colonies, either the same quantity of goods with a greater
profit, or a greater quantity with the same profit, and, consequently,
to gain something either in the one way or the other. It was likewise
for the interest of the colonies to get all such goods as cheap, and
in as great abundance as possible. But this might not always be for
the interest of the mother country. She might frequently suffer, both
in her revenue, by giving back a great part of the duties which had
been paid upon the importation of such goods; and in her manufactures,
by being undersold in the colony market, in consequence of the easy
terms upon which foreign manufactures could be carried thither by
means of those drawbacks. The progress of the linen manufacture of
Great Britain, it is commonly said, has been a good deal retarded by
the drawbacks upon the re-exportation of German linen to the American
colonies.

But though the policy of Great Britain, with regard to the trade of
her colonies, has been dictated by the same mercantile spirit as that
of other nations, it has, however, upon the whole, been less illiberal
and oppressive than that of any of them.

In every thing except their foreign trade, the liberty of the English
colonists to manage their own affairs their own way, is complete. It
is in every respect equal to that of their fellow-citizens at home,
and is secured in the same manner, by an assembly of the
representatives of the people, who claim the sole right of imposing
taxes for the support of the colony government. The authority of this
assembly overawes the executive power; and neither the meanest nor the
most obnoxious colonist, as long as he obeys the law, has any thing to
fear from the resentment, either of the governor, or of any other
civil or military officer in the province. The colony assemblies,
though, like the house of commons in England, they are not always a
very equal representation of the people, yet they approach more nearly
to that character; and as the executive power either has not the means
to corrupt them, or, on account of the support which it receives from
the mother country, is not under the necessity of doing so, they are,
perhaps, in general more influenced by the inclinations of their
constituents. The councils, which, in the colony legislatures,
correspond to the house of lords in Great Britain, are not composed of
a hereditary nobility. In some of the colonies, as in three of the
governments of New England, those councils are not appointed by the
king, but chosen by the representatives of the people. In none of the
English colonies is there any hereditary nobility. In all of them,
indeed, as in all other free countries, the descendant of an old
colony family is more respected than an upstart of equal merit and
fortune; but he is only more respected, and he has no privileges by
which he can be troublesome to his neighbours. Before the commencement
of the present disturbances, the colony assemblies had not only the
legislative, but a part of the executive power. In Connecticut and
Rhode Island, they elected the governor. In the other colonies, they
appointed the revenue officers, who collected the taxes imposed by
those respective assemblies, to whom those officers were immediately
responsible. There is more equality, therefore, among the English
colonists than among the inhabitants of the mother country. Their
manners are more re publican; and their governments, those of three of
the provinces of New England in particular, have hitherto been more
republican too.

The absolute governments of Spain, Portugal, and France, on the
contrary, take place in their colonies; and the discretionary powers
which such governments commonly delegate to all their inferior
officers are, on account of the great distance, naturally exercised
there with more than ordinary violence. Under all absolute
governments, there is more liberty in the capital than in any other
part of the country. The sovereign himself can never have either
interest or inclination to pervert the order of justice, or to oppress
the great body of the people. In the capital, his presence overawes,
more or less, all his inferior officers, who, in the remoter
provinces, from whence the complaints of the people are less likely to
reach him, can exercise their tyranny with much more safety. But the
European colonies in America are more remote than the most distant
provinces of the greatest empires which had ever been known before.
The government of the English colonies is, perhaps, the only one
which, since the world began, could give perfect security to the
inhabitants of so very distant a province. The administration of the
French colonies, however, has always been conducted with much more
gentleness and moderation than that of the Spanish and Portuguese.
This superiority of conduct is suitable both to the character of the
French nation, and to what forms the character of every nation, the
nature of their government, which, though arbitrary and violent in
comparison with that of Great Britain, is legal and free in comparison
with those of Spain and Portugal.

It is in the progress of the North American colonies, however, that
the superiority of the English policy chiefly appears. The progress of
the sugar colonies of France has been at least equal, perhaps
superior, to that of the greater part of those of England; and yet the
sugar colonies of England enjoy a free government, nearly of the same
kind with that which takes place in her colonies of North America. But
the sugar colonies of France are not discouraged, like those of
England, from refining their own sugar; and what is still of greater
importance, the genius of their government naturally introduces a
better management of their negro slaves.

In all European colonies, the culture of the sugar-cane is carried on
by negro slaves. The constitution of those who have been born in the
temperate climate of Europe could not, it is supposed, support the
labour of digging the ground under the burning sun of the West Indies;
and the culture of the sugar-cane, as it is managed at present, is all
hand labour; though, in the opinion of many, the drill plough might be
introduced into it with great advantage. But, as the profit and
success of the cultivation which is carried on by means of cattle,
depend very much upon the good management of those cattle; so the
profit and success of that which is carried on by slaves must depend
equally upon the good management of those slaves; and in the good
management of their slaves the French planters, I think it is
generally allowed, are superior to the English. The law, so far as it
gives some weak protection to the slave against the violence of his
master, is likely to be better executed in a colony where the
government is in a great measure arbitrary, than in one where it is
altogether free. In ever country where the unfortunate law of slavery
is established, the magistrate, when he protects the slave,
intermeddles in some measure in the management of the private property
of the master; and, in a free country, where the master is, perhaps,
either a member of the colony assembly, or an elector of such a
member, he dares not do this but with the greatest caution and
circumspection. The respect which he is obliged to pay to the master,
renders it more difficult for him to protect the slave. But in a
country where the government is in a great measure arbitrary, where it
is usual for the magistrate to intermeddle even in the management of
the private property of individuals, and to send them, perhaps, a
lettre de cachet, if they do not manage it according to his liking, it
is much easier for him to give some protection to the slave; and
common humanity naturally disposes him to do so. The protection of the
magistrate renders the slave less contemptible in the eyes of his
master, who is thereby induced to consider him with more regard, and
to treat him with more gentleness. Gentle usage renders the slave not
only more faithful, but more intelligent, and, therefore, upon a
double account, more useful. He approaches more to the condition of a
free servant, and may possess some degree of integrity and attachment
to his master's interest; virtues which frequently belong to free
servants, but which never can belong to a slave, who is treated as
slaves commonly are in countries where the master is perfectly free
and secure.

That the condition of a slave is better under an arbitrary than under
a free government, is, I believe, supported by the history of all ages
and nations. In the Roman history, the first time we read of the
magistrate interposing to protect the slave from the violence of his
master, is under the emperors. When Vidius Pollio, in the presence of
Augustus, ordered one of his slaves, who had committed a slight fault,
to be cut into pieces and thrown into his fish-pond, in order to feed
his fishes, the emperor commanded him, with indignation, to emancipate
immediately, not only that slave, but all the others that belonged to
him. Under the republic no magistrate could have had authority enough
to protect the slave, much less to punish the master.

The stock, it is to be observed, which has improved the sugar colonies
of France, particularly the great colony of St Domingo, has been
raised almost entirely from the gradual improvement and cultivation of
those colonies. It has been almost altogether the produce of the soil
and of the industry of the colonists, or, what comes to the same
thing, the price of that produce, gradually accumulated by good
management, and employed in raising a still greater produce. But the
stock which has improved and cultivated the sugar colonies of England,
has, a great part of it, been sent out from England, and has by no
means been altogether the produce of the soil and industry of the
colonists. The prosperity of the English sugar colonies has been in a
great measure owing to the great riches of England, of which a part
has overflowed, if one may say so, upon these colonies. But the
prosperity of the sugar colonies of France has been entirely owing to
the good conduct of the colonists, which must therefore have had some
superiority over that of the English; and this superiority has been
remarked in nothing so much as in the good management of their slaves.

Such have been the general outlines of the policy of the different
European nations with regard to their colonies.

The policy of Europe, therefore, has very little to boast of, either
in the original establishment, or, so far as concerns their internal
government, in the subsequent prosperity of the colonies of America.

Folly and injustice seem to have been the principles which presided
over and directed the first project of establishing those colonies;
the folly of hunting after gold and silver mines, and the injustice of
coveting the possession of a country whose harmless natives, far from
having ever injured the people of Europe, had received the first
adventurers with every mark of kindness and hospitality.

The adventurers, indeed, who formed some of the latter establishments,
joined to the chimerical project of finding gold and silver mines,
other motives more reasonable and more laudable; but even these
motives do very little honour to the policy of Europe.

The English puritans, restrained at home, fled for freedom to America,
and established there the four governments of New England. The English
catholics, treated with much greater injustice, established that of
Maryland; the quakers, that of Pennsylvania. The Portuguese Jews,
persecuted by the inquisition, stript of their fortunes, and banished
to Brazil, introduced, by their example, some sort of order and
industry among the transported felons and strumpets by whom that
colony was originally peopled, and taught them the culture of the
sugar-cane. Upon all these different occasions, it was not the wisdom
and policy, but the disorder and injustice of the European
governments, which peopled and cultivated America.

In effectuation some of the most important of these establishments,
the different governments of Europe had as little merit as in
projecting them. The conquest of Mexico was the project, not of the
council of Spain, but of a governor of Cuba; and it was effectuated by
the spirit of the bold adventurer to whom it was entrusted, in spite
of every thing which that governor, who soon repented of having
trusted such a person, could do to thwart it. The conquerors of Chili
and Peru, and of almost all the other Spanish settlements upon the
continent of America, carried out with them no other public
encouragement, but a general permission to make settlements and
conquests in the name of the king of Spain. Those adventures were all
at the private risk and expense of the adventurers. The government of
Spain contributed scarce any thing to any of them. That of England
contributed as little towards effectuating the establishment of some
of its most important colonies in North America.

When those establishments were effectuated, and had become so
considerable as to attract the attention of the mother country, the
first regulations which she made with regard to them, had always in
view to secure to herself the monopoly of their commerce; to confine
their market, and to enlarge her own at their expense, and,
consequently, rather to damp and discourage, than to quicken and
forward the course of their prosperity. In the different ways in which
this monopoly has been exercised, consists one of the most essential
differences in the policy of the different European nations with
regard to their colonies. The best of them all, that of England, is
only somewhat less illiberal and oppressive than that of any of the
rest.

In what way, therefore, has the policy of Europe contributed either to
the first establishment, or to the present grandeur of the colonies of
America? In one way, and in one way only, it has contributed a good
deal. Magna virum mater! It bred and formed the men who were capable
of achieving such great actions, and of laying the foundation of so
great an empire; and there is no other quarter of the world; of which
the policy is capable of forming, or has ever actually, and in fact,
formed such men. The colonies owe to the policy of Europe the
education and great views of their active and enterprizing founders;
and some of the greatest and most important of them, so far as
concerns their internal government, owe to it scarce anything else.


PART     III.

Of the Advantages which Europe has derived From the Discovery of
America, and from that of a Passage to the East Indies by the Cape of
Good Hope.

Such are the advantages which the colonies of America have derived
from the policy of Europe.

What are those which Europe has derived from the discovery and
colonization of America?

Those advantages may be divided, first, into the general advantages
which Europe, considered as one great country, has derived from those
great events; and, secondly, into the particular advantages which each
colonizing country has derived from the colonies which particularly
belong to it, in consequence of the authority or dominion which it
exercises over them.

The general advantages which Europe, considered as one great country,
has derived from the discovery and colonization of America, consist,
first, in the increase of its enjoyments; and, secondly, in the
augmentation of its industry.

The surplus produce of America imported into Europe, furnishes the
inhabitants of this great continent with a variety of commodities
which they could not otherwise have possessed; some for conveniency
and use, some for pleasure, and some for ornament; and thereby
contributes to increase their enjoyments.

The discovery and colonization of America, it will readily be allowed,
have contributed to augment the industry, first, of all the countries
which trade to it directly, such as Spain, Portugal, France, and
England; and, secondly, of all those which, without trading to it
directly, send, through the medium of other countries, goods to it of
their own produce, such as Austrian Flanders, and some provinces of
Germany, which, through the medium of the countries before mentioned,
send to it a considerable quantity of linen and other goods. All such
countries have evidently gained a more extensive market for their
surplus produce, and must consequently have been encouraged to
increase its quantity.

But that those great events should likewise have contributed to
encourage the industry of countries such as Hungary and Poland, which
may never, perhaps, have sent a single commodity of their own produce
to America, is not, perhaps, altogether so evident. That those events
have done so, however, cannot be doubted. Some part of the produce of
America is consumed in Hungary and Poland, and there is some demand
there for the sugar, chocolate, and tobacco, of that new quarter of
the world. But those commodities must be purchased with something
which is either the produce of the industry of Hungary and Poland, or
with something which had been purchased with some part of that
produce. Those commodities of America are new values, new equivalents,
introduced into Hungary and Poland, to be exchanged there for the
surplus produce of these countries. By being carried thither, they
create a new and more extensive market for that surplus produce. They
raise its value, and thereby contribute to encourage its increase.
Though no part of it may ever be carried to America, it may be carried
to other countries, which purchase it with a part of their share of
the surplus produce of America, and it may find a market by means of
the circulation of that trade which was originally put into motion by
the surplus produce of America.

Those great events may even have contributed to increase the
enjoyments, and to augment the industry, of countries which not only
never sent any commodities to America, but never received any from it.
Even such countries may have received a greater abundance of other
commodities from countries, of which the surplus produce had been
augmented by means of the American trade. This greater abundance, as
it must necessarily have increased their enjoyments, so it must
likewise have augmented their industry. A greater number of new
equivalents, of some kind or other, must have been presented to them
to be exchanged for the surplus produce of that industry. A more
extensive market must have been created for that surplus produce, so
as to raise its value, and thereby encourage its increase. The mass of
commodities annually thrown into the great circle of European
commerce, and by its various revolutions annually distributed among
all the different nations comprehended within it, must have been
augmented by the whole surplus produce of America. A greater share of
this greater mass, therefore, is likely to have fallen to each of
those nations, to have increased their enjoyments, and augmented their
industry.

The exclusive trade of the mother countries tends to diminish, or at
least to keep down below what they would otherwise rise to, both the
enjoyments and industry of all those nations in general, and of the
American colonies in particular. It is a dead weight upon the action
of one of the great springs which puts into motion a great part of the
business of mankind. By rendering the colony produce dearer in all
other countries, it lessens its consumption, and thereby cramps the
industry of the colonies, and both the enjoyments and the industry of
all other countries, which both enjoy less when they pay more for what
they enjoy, and produce less when they get less for what they produce.
By rendering the produce of all other countries dearer in the
colonies, it cramps in the same manner the industry of all other
colonies, and both the enjoyments and the industry of the colonies. It
is a clog which, for the supposed benefit of some particular
countries, embarrasses the pleasures and encumbers the industry of all
other countries, but of the colonies more than of any other. It not
only excludes as much as possible all other countries from one
particular market, but it confines as much as possible the colonies to
one particular market; and the difference is very great between being
excluded from one particular market when all others are open, and
being confined to one particular market when all others are shut up.
The surplus produce of the colonies, however, is the original source
of all that increase of enjoyments and industry which Europe derives
from the discovery and colonization of America, and the exclusive
trade of the mother countries tends to render this source much less
abundant than it otherwise would be.

The particular advantages which each colonizing country derives from
the colonies which particularly belong to it, are of two different
kinds; first, those common advantages which every empire derives from
the provinces subject to its dominion; and, secondly, those peculiar
advantages which are supposed to result from provinces of so very
peculiar a nature as the European colonies of America.

The common advantages which every empire derives from the provinces
subject to its dominion consist, first, in the military force which
they furnish for its defence; and, secondly, in the revenue which they
furnish for the support of its civil government. The Roman colonies
furnished occasionally both the one and the other. The Greek colonies
sometimes furnished a military force, but seldom any revenue. They
seldom acknowledged themselves subject to the dominion of the mother
city. They were generally her allies in war, but very seldom her
subjects in peace.

The European colonies of America have never yet furnished any military
force for the defence of the mother country. The military force has
never yet been sufficient for their own defence; and in the different
wars in which the mother countries have been engaged, the defence of
their colonies has generally occasioned a very considerable
distraction of the military force of those countries. In this respect,
therefore, all the European colonies have, without exception, been a
cause rather of weakness than of strength to their respective mother
countries.

The colonies of Spain and Portugal only have contributed any revenue
towards the defence of the mother country, or the support of her civil
government. The taxes which have been levied upon those of other
European nations, upon those of England in particular, have seldom
been equal to the expense laid out upon them in time of peace, and
never sufficient to defray that which they occasioned in time of war.
Such colonies, therefore, have been a source of expense, and not of
revenue, to their respective mother countries.

The advantages of such colonies to their respective mother countries,
consist altogether in those peculiar advantages which are supposed to
result from provinces of so very peculiar a nature as the European
colonies of America; and the exclusive trade, it is acknowledged, is
the sole source of all those peculiar advantages.

In consequence of this exclusive trade, all that part of the surplus
produce of the English colonies, for example, which consists in what
are called enumerated commodities, can be sent to no other country but
England. Other countries must afterwards buy it of her. It must be
cheaper, therefore, in England than it can be in any other country,
and must contribute more to increase the enjoyments of England than
those of any other country. It must likewise contribute more to
encourage her industry. For all those parts of her own surplus produce
which England exchanges for those enumerated commodities, she must get
a better price than any other countries can get for the like parts of
theirs, when they exchange them for the same commodities. The
manufactures of England, for example, will purchase a greater quantity
of the sugar and tobacco of her own colonies than the like
manufactures of other countries can purchase of that sugar and
tobacco. So far, therefore, as the manufactures of England and those
of other countries are both to be exchanged for the sugar and tobacco
of the English colonies, this superiority of price gives an
encouragement to the former beyond what the latter can, in these
circumstances, enjoy. The exclusive trade of the colonies, therefore,
as it diminishes, or at least keeps down below what they would
otherwise rise to, both the enjoyments and the industry of the
countries which do not possess it, so it gives an evident advantage to
the countries which do possess it over those other countries.

This advantage, however, will, perhaps, be found to be rather what may
be called a relative than an absolute advantage, and to give a
superiority to the country which enjoys it, rather by depressing the
industry and produce of other countries, than by raising those of that
particular country above what they would naturally rise to in the case
of a free trade.

The tobacco of Maryland and Virginia, for example, by means of the
monopoly which England enjoys of it, certainly comes cheaper to
England than it can do to France to whom England commonly sells a
considerable part of it. But had France and all other European
countries been at all times allowed a free trade to Maryland and
Virginia, the tobacco of those colonies might by this time have come
cheaper than it actually does, not only to all those other countries,
but likewise to England. The produce of tobacco, in consequence of a
market so much more extensive than any which it has hitherto enjoyed,
might, and probably would, by this time have been so much increased as
to reduce the profits of a tobacco plantation to their natural level
with those of a corn plantation, which it is supposed they are still
somewhat above. The price of tobacco might, and probably would, by
this time have fallen somewhat lower than it is at present. An equal
quantity of the commodities, either of England or of those other
countries, might have purchased in Maryland and Virginia a greater
quantity of tobacco than it can do at present, and consequently have
been sold there for so much a better price. So far as that weed,
therefore, can, by its cheapness and abundance, increase the
enjoyments, or augment the industry, either of England or of any other
country, it would probably, in the case of a free trade, have produced
both these effects in somewhat a greater degree than it can do at
present. England, indeed, would not, in this case, have had any
advantage over other countries. She might have bought the tobacco of
her colonies somewhat cheaper, and consequently have sold some of her
own commodities somewhat dearer, than she actually does; but she could
neither have bought the one cheaper, nor sold the other dearer, than
any other country might have done. She might, perhaps, have gained an
absolute, but she would certainly have lost a relative advantage.

In order, however, to obtain this relative advantage in the colony
trade, in order to execute the invidious and malignant project of
excluding, as much as possible, other nations from any share in it,
England, there are very probable reasons for believing, has not only
sacrificed a part of the absolute advantage which she, as well as
every other nation, might have derived from that trade, but has
subjected herself both to an absolute and to a relative disadvantage
in almost every other branch of trade.

When, by the act of navigation, England assumed to herself the
monopoly of the colony trade, the foreign capitals which had before
been employed in it, were necessarily withdrawn from it. The English
capital, which had before carried on but a part of it, was now to
carry on the whole. The capital which had before supplied the colonies
with but a part of the goods which they wanted from Europe, was now
all that was employed to supply them with the whole. But it could not
supply them with the whole; and the goods with which it did supply
them were necessarily sold very dear. The capital which had before
bought but a part of the surplus produce of the colonies, was now all
that was employed to buy the whole. But it could not buy the whole at
any thing near the old price; and therefore, whatever it did buy, it
necessarily bought very cheap. But in an employment of capital, in
which the merchant sold very dear, and bought very cheap, the profit
must have been very great, and much above the ordinary level of profit
in other branches of trade. This superiority of profit in the colony
trade could not fail to draw from other branches of trade a part of
the capital which had before been employed in them. But this revulsion
of capital, as it must have gradually increased the competition of
capitals in the colony trade, so it must have gradually diminished
that competition in all those other branches of trade; as it must have
gradually lowered the profits of the one, so it must have gradually
raised those of the other, till the profits of all came to a new
level, different from, and somewhat higher, than that at which they
had been before.

This double effect of drawing capital from all other trades, and of
raising the rate of profit somewhat higher than it otherwise would
have been in all trades, was not only produced by this monopoly upon
its first establishment, but has continued to be produced by it ever
since.

First,    This monopoly has been continually drawing capital from all
other trades, to be employed in that of the colonies.

Though the wealth of Great Britain has increased very much since the
establishment of the act of navigation, it certainly has not increased
in the same proportion as that or the colonies. But the foreign trade
of every country naturally increases in proportion to its wealth, its
surplus produce in proportion to its whole produce; and Great Britain
having engrossed to herself almost the whole of what may be called the
foreign trade of the colonies, and her capital not having increased in
the same proportion as the extent of that trade, she could not carry
it on without continually withdrawing from other branches of trade
some part of the capital which had before been employed in them, as
well as withholding from them a great deal more which would otherwise
have gone to them. Since the establishment of the act of navigation,
accordingly, the colony trade has been continually increasing, while
many other branches of foreign trade, particularly of that to other
parts of Europe, have been continually decaying. Our manufactures for
foreign sale, instead of being suited, as before the act of
navigation, to the neighbouring market of Europe, or to the more
distant one of the countries which lie round the Mediterranean sea,
have the greater part of them, been accommodated to the still more
distant one of the colonies; to the market in which they have the
monopoly, rather than to that in which they have many competitors. The
causes of decay in other branches of foreign trade, which, by Sir
Matthew Decker and other writers, have been sought for in the excess
and improper mode of taxation, in the high price of labour, in the
increase of luxury, etc. may all be found in the overgrowth of the
colony trade. The mercantile capital of Great Britain, though very
great, yet not being infinite, and though greatly increased since the
act of navigation, yet not being increased in the same proportion as
the colony trade, that trade could not possibly be carried on without
withdrawing some part of that capital from other branches of trade,
nor consequently without some decay of those other branches.

England, it must be observed, was a great trading country, her
mercantile capital was very great, and likely to become still greater
and greater every day, not only before the act of navigation had
established the monopoly of the corn trade, but before that trade was
very considerable. In the Dutch war, during the government of
Cromwell, her navy was superior to that of Holland; and in that which
broke out in the beginning of the reign of Charles II., it was at
least equal, perhaps superior to the united navies of France and
Holland. Its superiority, perhaps, would scarce appear greater in the
present times, at least if the Dutch navy were to bear the same
proportion to the Dutch commerce now which it did then. But this great
naval power could not, in either of those wars, be owing to the act of
navigation. During the first of them, the plan of that act had been
but just formed; and though, before the breaking out of the second, it
had been fully enacted by legal authority, yet no part of it could
have had time to produce any considerable effect, and least of all
that part which established the exclusive trade to the colonies. Both
the colonies and their trade were inconsiderable then, in comparison
of what they are how. The island of Jamaica was an unwholesome desert,
little inhabited, and less cultivated. New York and New Jersey were in
the possession of the Dutch, the half of St. Christopher's in that of
the French. The island of Antigua, the two Carolinas, Pennsylvania,
Georgia, and Nova Scotia, were not planted. Virginia, Maryland, and
New England were planted; and though they were very thriving colonies,
yet there was not perhaps at that time, either in Europe or America, a
single person who foresaw, or even suspected, the rapid progress which
they have since made in wealth, population, and improvement. The
island of Barbadoes, in short, was the only British colony of any
consequence, of which the condition at that time bore any resemblance
to what it is at present. The trade of the colonies, of which England,
even for some time after the act of navigation, enjoyed but a part
(for the act of navigation was not very strictly executed till several
years after it was enacted), could not at that time be the cause of
the great trade of England, nor of the great naval power which was
supported by that trade. The trade which at that time supported that
great naval power was the trade of Europe, and of the countries which
lie round the Mediterranean sea. But the share which Great Britain at
present enjoys of that trade could not support any such great naval
power. Had the growing trade of the colonies been left free to all
nations, whatever share of it might have fallen to Great Britain, and
a very considerable share would probably have fallen to her, must have
been all an addition to this great trade of which she was before in
possession. In consequence of the monopoly, the increase of the colony
trade has not so much occasioned an addition to the trade which Great
Britain had before, as a total change in its direction.

Secondly, This monopoly has necessarily contributed to keep up the
rate of profit, in all the different branches of British trade, higher
than it naturally would have been, had all nations been allowed a free
trade to the British colonies.

The monopoly of the colony trade, as it necessarily drew towards that
trade a greater proportion of the capital of Great Britain than what
would have gone to it of its own accord, so, by the expulsion of all
foreign capitals, it necessarily reduced the whole quantity of capital
employed in that trade below what it naturally would have been in the
case of a free trade. But, by lessening the competition of capitals in
that branch of trade, it necessarily raised the rate of profit in that
branch. By lessening, too, the competition of British capitals in all
other branches of trade, it necessarily raised the rate of British
profit in all those other branches. Whatever may have been, at any
particular period since the establishment of the act of navigation,
the state or extent of the mercantile capital of Great Britain, the
monopoly of the colony trade must, during the continuance of that
state, have raised the ordinary rate of British profit higher than it
otherwise would have been, both in that and in all the other branches
of British trade. If, since the establishment of the act of
navigation, the ordinary rate of British profit has fallen
considerably, as it certainly has, it must have fallen still lower,
had not the monopoly established by that act contributed to keep it
up.

But whatever raises, in any country, the ordinary rate of profit
higher than it otherwise would be, necessarily subjects that country
both to an absolute, and to a relative disadvantage in every branch of
trade of which she has not the monopoly.

It subjects her to an absolute disadvantage; because, in such branches
of trade, her merchants cannot get this greater profit without selling
dearer than they otherwise would do, both the goods of foreign
countries which they import into their own, and the goods of their own
country which they export to foreign countries. Their own country must
both buy dearer and sell dearer; must both buy less, and sell less;
must both enjoy less and produce less, than she otherwise would do.

It subjects her to a relative disadvantage; because, in such branches
of trade, it sets other countries, which are not subject to the same
absolute disadvantage, either more above her or less below her, than
they otherwise would be. It enables them both to enjoy more and to
produce more, in proportion to what she enjoys and produces. It
renders their superiority greater, or their inferiority less, than it
otherwise would be. By raising the price of her produce above what it
otherwise would be, it enables the merchants of other countries to
undersell her in foreign markets, and thereby to justle her out of
almost all those branches of trade, of which she has not the monopoly.

Our merchants frequently complain of the high wages of British labour,
as the cause of their manufactures being undersold in foreign markets;
but they are silent about the high profits of stock. They complain of
the extravagant gain of other people; but they say nothing of their
own. The high profits of British stock, however, may contribute
towards raising the price of British manufactures, in many cases, as
much, and in some perhaps more, than the high wages of British labour.

It is in this manner that the capital of Great Britain, one may justly
say, has partly been drawn and partly been driven from the greater
part of the different branches of trade of which she has not the
monopoly; from the trade of Europe, in particular, and from that of
the countries which lie round the Mediterranean sea.

It has partly been drawn from those branches of trade, by the
attraction of superior profit in the colony trade, in consequence of
the continual increase of that trade, and of the continual
insufficiency of the capital which had carried it on one year to carry
it on the next.

It has partly been driven from them, by the advantage which the high
rate of profit established in Great Britain gives to other countries,
in all the different branches of trade of which Great Britain has not
the monopoly.

As the monopoly of the colony trade has drawn from those other
branches a part of the British capital, which would otherwise have
been employed in them, so it has forced into them many foreign
capitals which would never have gone to them, had they not been
expelled from the colony trade. In those other branches of trade, it
has diminished the competition of British capitals, and thereby raised
the rate of British profit higher than it otherwise would have been.
On the contrary, it has increased the competition of foreign capitals,
and thereby sunk the rate of foreign profit lower than it otherwise
would have been. Both in the one way and in the other, it must
evidently have subjected Great Britain to a relative disadvantage in
all those other branches of trade.

The colony trade, however, it may perhaps be said, is more
advantageous to Great Britain than any other; and the monopoly, by
forcing into that trade a greater proportion of the capital of Great
Britain than what would otherwise have gone to it, has turned that
capital into an employment, more advantageous to the country than any
other which it could have found.

The most advantageous employment of any capital to the country to
which it belongs, is that which maintains there the greatest quantity
of productive labour, and increases the most the annual produce of the
land and labour of that country. But the quantity of productive labour
which any capital employed in the foreign trade of consumption can
maintain, is exactly in proportion, it has been shown in the second
book, to the frequency of its returns. A capital of a thousand pounds,
for example, employed in a foreign trade of consumption, of which the
returns are made regularly once in the year, can keep in constant
employment, in the country to which it belongs, a quantity of
productive labour, equal to what a thousand pounds can maintain there
for a year. If the returns are made twice or thrice in the year, it
can keep in constant employment a quantity of productive labour, equal
to what two or three thousand pounds can maintain there for a year. A
foreign trade of consumption carried on with a neighbouring, is, upon
that account, in general, more advantageous than one carried on with a
distant country; and, for the same reason, a direct foreign trade of
consumption, as it has likewise been shown in the second book, is in
general more advantageous than a round-about one.

But the monopoly of the colony trade, so far as it has operated upon
the employment of the capital of Great Britain, has, in all cases,
forced some part of it from a foreign trade of consumption carried on
with a neighbouring, to one carried on with a more distant country,
and in many cases from a direct foreign trade of consumption to a
round-about one.

First,    The monopoly of the colony trade has, in all cases, forced
some part of the capital of Great Britain from a foreign trade of
consumption carried on with a neighbouring, to one carried on with a
more distant country.

It has, in all cases, forced some part of that capital from the trade
with Europe, and with the countries which lie round the Mediterranean
sea, to that with the more distant regions of America and the West
Indies; from which the returns are necessarily less frequent, not only
on account of the greater distance, but on account of the peculiar
circumstances of those countries. New colonies, it has already been
observed, are always understocked. Their capital is always much less
than what they could employ with great profit and advantage in the
improvement and cultivation of their land. They have a constant
demand, therefore, for more capital than they have of their own; and,
in order to supply the deficiency of their own, they endeavour to
borrow as much as they can of the mother country, to whom they are,
therefore, always in debt. The most common way in which the colonies
contract this debt, is not by borrowing upon bond of the rich people
of the mother country, though they sometimes do this too, but by
running as much in arrear to their correspondents, who supply them
with goods from Europe, as those correspondents will allow them. Their
annual returns frequently do not amount to more than a third, and
sometimes not to so great a proportion of what they owe. The whole
capital, therefore, which their correspondents advance to them, is
seldom returned to Britain in less than three, and sometimes not in
less than four or five years. But a British capital of a thousand
pounds, for example, which is returned to Great Britain only once in
five years, can keep in constant employment only one-fifth part of the
British industry which it could maintain, if the whole was returned
once in the year; and, instead of the quantity of industry which a
thousand pounds could maintain for a year, can keep in constant
employment the quantity only which two hundred pounds can maintain for
a year. The planter, no doubt, by the high price which he pays for the
goods from Europe, by the interest upon the bills which he grants at
distant dates, and by the commission upon the renewal of those which
he grants at near dates, makes up, and probably more than makes up,
all the loss which his correspondent can sustain by this delay. But,
though he make up the loss of his correspondent, he cannot make up
that of Great Britain. In a trade of which the returns are very
distant, the profit of the merchant may be as great or greater than in
one in which they are very frequent and near; but the advantage of the
country in which he resides, the quantity of productive labour
constantly maintained there, the annual produce of the land and
labour, must always be much less. That the returns of the trade to
America, and still more those of that to the West Indies, are, in
general, not only more distant, but more irregular and more uncertain,
too, than those of the trade to any part of Europe, or even of the
countries which lie round the Mediterranean sea, will readily be
allowed, I imagine, by everybody who has any experience of those
different branches of trade.

Secondly,     The monopoly of the colony trade, has, in many cases,
forced some part of the capital of Great Britain from a direct foreign
trade of consumption, into a round-about one.

Among the enumerated commodities which can be sent to no other market
but Great Britain, there are several of which the quantity exceeds
very much the consumption of Great Britain, and of which, a part,
therefore, must be exported to other countries. But this cannot be
done without forcing some part of the capital of Great Britain into a
round-about foreign trade of consumption. Maryland, and Virginia, for
example, send annually to Great Britain upwards of ninety-six thousand
hogsheads of tobacco, and the consumption of Great Britain is said not
to exceed fourteen thousand. Upwards of eighty-two thousand hogsheads,
therefore, must be exported to other countries, to France, to Holland,
and, to the countries which lie round the Baltic and Mediterranean
seas. But that part of the capital of Great Britain which brings those
eighty-two thousand hogsheads to Great Britain, which re-exports them
from thence to those other countries, and which brings back from those
other countries to Great Britain either goods or money in return, is
employed in a round-about foreign trade of consumption; and is
necessarily forced into this employment, in order to dispose of this
great surplus. If we would compute in how many years the whole of this
capital is likely to come back to Great Britain, we must add to the
distance of the American returns that of the returns from those other
countries. If, in the direct foreign trade of consumption which we
carry on with America, the whole capital employed frequently does not
come back in less than three or four years, the whole capital employed
in this round-about one is not likely to come back in less than four
or five. If the one can keep in constant employment but a third or a
fourth part of the domestic industry which could be maintained by a
capital returned once in the year, the other can keep in constant
employment but a fourth or a fifth part of that industry. At some of
the outports a credit is commonly given to those foreign
correspondents to whom they export them tobacco. At the port of
London, indeed, it is commonly sold for ready money: the rule is Weigh
and pay. At the port of London, therefore, the final returns of the
whole round-about trade are more distant than the returns from
America, by the time only which the goods may lie unsold in the
warehouse; where, however, they may sometimes lie long enough. But,
had not the colonies been confined to the market of Great Britain for
the sale of their tobacco, very little more of it would probably have
come to us than what was necessary for the home consumption. The goods
which Great Britain purchases at present for her own consumption with
the great surplus of tobacco which she exports to other countries, she
would, in this case, probably have purchased with the immediate
produce of her own industry, or with some part of her own
manufactures. That produce, those manufactures, instead of being
almost entirely suited to one great market, as at present, would
probably have been fitted to a great number of smaller markets.
Instead of one great round-about foreign trade of consumption, Great
Britain would probably have carried on a great number of small direct
foreign trades of the same kind. On account of the frequency of the
returns, a part, and probably but a small part, perhaps not above a
third or a fourth of the capital which at present carries on this
great round-about trade, might have been sufficient to carry on all
those small direct ones; might have kept inconstant employment an
equal quantity of British industry; and have equally supported the
annual produce of the land and labour of Great Britain. All the
purposes of this trade being, in this manner, answered by a much
smaller capital, there would have been a large spare capital to apply
to other purposes; to improve the lands, to increase the manufactures,
and to extend the commerce of Great Britain; to come into competition
at least with the other British capitals employed in all those
different ways, to reduce the rate of profit in them all, and thereby
to give to Great Britain, in all of them, a superiority over other
countries, still greater than what she at present enjoys.

The monopoly of the colony trade, too, has forced some part of the
capital of Great Britain from all foreign trade of consumption to a
carrying trade; and, consequently from supporting more or less the
industry of Great Britain, to be employed altogether in supporting
partly that of the colonies, and partly that of some other countries.

The goods, for example, which are annually purchased with the great
surplus of eighty-two thousand hogsheads of tobacco annually
re-exported from Great Britain, are not all consumed in Great Britain.
Part of them, linen from Germany and Holland, for example, is returned
to the colonies for their particular consumption. But that part of the
capital of Great Britain which buys the tobacco with which this linen
is afterwards bought, is necessarily withdrawn from supporting the
industry of Great Britain, to be employed altogether in supporting,
partly that of the colonies, and partly that of the particular
countries who pay for this tobacco with the produce of their own
industry.


The monopoly of the colony trade, besides, by forcing towards it a
much greater proportion of the capital of Great Britain than what
would naturally have gone to it, seems to have broken altogether that
natural balance which would otherwise have taken place among all the
different branches of British industry. The industry of Great Britain,
instead of being accommodated to a great number of small markets, has
been principally suited to one great market. Her commerce, instead of
running in a great number of small channels, has been taught to run
principally in one great channel. But the whole system of her industry
and commerce has thereby been rendered less secure; the whole state of
her body politic less healthful than it otherwise would have been. In
her present condition, Great Britain resembles one of those
unwholesome bodies in which some of the vital parts are overgrown, and
which, upon that account, are liable to many dangerous disorders,
scarce incident to those in which all the parts are more properly
proportioned. A small stop in that great blood-vessel, which has been
artificially swelled beyond its natural dimensions, and through which
an unnatural proportion of the industry and commerce of the country
has been forced to circulate, is very likely to bring on the most
dangerous disorders upon the whole body politic. The expectation of a
rupture with the colonies, accordingly, has struck the people of Great
Britain with more terror than they ever felt for a Spanish armada, or
a French invasion. It was this terror, whether well or ill grounded,
which rendered the repeal of the stamp act, among the merchants at
least, a popular measure. In the total exclusion from the colony
market, was it to last only for a few years, the greater part of our
merchants used to fancy that they foresaw an entire stop to their
trade; the greater part of our master manufacturers, the entire ruin
of their business; and the greater part of our workmen, an end of
their employment. A rupture with any of our neighbours upon the
continent, though likely, too, to occasion some stop or interruption
in the employments of some of all these different orders of people, is
foreseen, however, without any such general emotion. The blood, of
which the circulation is stopt in some of the smaller vessels, easily
disgorges itself into the greater, without occasioning any dangerous
disorder; but, when it is stopt in any of the greater vessels,
convulsions, apoplexy, or death, are the immediate and unavoidable
consequences. If but one of those overgrown manufactures, which, by
means either of bounties or of the monopoly of the home and colony
markets, have been artificially raised up to any unnatural height,
finds some small stop or interruption in its employment, it frequently
occasions a mutiny and disorder alarming to government, and
embarrassing even to the deliberations of the legislature. How great,
therefore, would be the disorder and confusion, it was thought, which
must necessarily be occasioned by a sudden and entire stop in the
employment of so great a proportion of our principal manufacturers?

Some moderate and gradual relaxation of the laws which give to Great
Britain the exclusive trade to the colonies, till it is rendered in a
great measure free, seems to be the only expedient which can, in all
future times, deliver her from this danger; which can enable her, or
even force her, to withdraw some part of her capital from this
overgrown employment, and to turn it, though with less profit, towards
other employments; and which, by gradually diminishing one branch of
her industry, and gradually increasing all the rest, can, by degrees,
restore all the different branches of it to that natural, healthful,
and proper proportion, which perfect liberty necessarily establishes,
and which perfect liberty can alone preserve. To open the colony trade
all at once to all nations, might not only occasion some transitory
inconveniency, but a great permanent loss, to the greater part of
those whose industry or capital is at present engaged in it. The
sudden loss of the employment, even of the ships which import the
eighty-two thousand hogsheads of tobacco, which are over and above the
consumption of Great Britain, might alone be felt very sensibly. Such
are the unfortunate effects of all the regulations of the mercantile
system. They not only introduce very dangerous disorders into the
state of the body politic, but disorders which it is often difficult
to remedy, without occasioning, for a time at least, still greater
disorders. In what manner, therefore, the colony trade ought gradually
to be opened; what are the restraints which ought first, and what are
those which ought last, to be taken away; or in what manner the
natural system of perfect liberty and justice ought gradually to be
restored, we must leave to the wisdom of future statesmen and
legislators to determine.

Five different events, unforeseen and unthought of, have very
fortunately concurred to hinder Great Britain from feeling, so
sensibly as it was generally expected she would, the total exclusion
which has now taken place for more than a year (from the first of
December 1774) from a very important branch of the colony trade, that
of the twelve associated provinces of North America. First, those
colonies, in preparing themselves for their non-importation agreement,
drained Great Britain completely of all the commodities which were fit
for their market; secondly, the extra ordinary demand of the Spanish
flota has, this year, drained Germany and the north of many
commodities, linen in particular, which used to come into competition,
even in the British market, with the manufactures of Great Britain;
thirdly, the peace between Russia and Turkey has occasioned an
extraordinary demand from the Turkey market, which, during the
distress of the country, and while a Russian fleet was cruizing in the
Archipelago, had been very poorly supplied; fourthly, the demand of
the north of Europe for the manufactures of Great Britain has been
increasing from year to year, for some time past; and, fifthly, the
late partition, and consequential pacification of Poland, by opening
the market of that great country, have, this year, added an
extraordinary demand from thence to the increasing demand of the
north. These events are all, except the fourth, in their nature
transitory and accidental; and the exclusion from so important a
branch of the colony trade, if unfortunately it should continue much
longer, may still occasion some degree of distress. This distress,
however, as it will come on gradually, will be felt much less severely
than if it had come on all at once; and, in the mean time, the
industry and capital of the country may find a new employment and
direction, so as to prevent this distress from ever rising to any
considerable height.

The monopoly of the colony trade, therefore, so far as it has turned
towards that trade a greater proportion of the capital of Great
Britain than what would otherwise have gone to it, has in all cases
turned it, from a foreign trade of consumption with a neighbouring,
into one with a more distant country; in many cases from a direct
foreign trade of consumption into a round-about one; and, in some
cases, from all foreign trade of consumption into a carrying trade. It
has, in all cases, therefore, turned it from a direction in which it
would have maintained a greater quantity of productive labour, into
one in which it can maintain a much smaller quantity. By suiting,
besides, to one particular market only, so great a part of the
industry and commerce of Great Britain, it has rendered the whole
state of that industry and commerce more precarious and less secure,
than if their produce had been accommodated to a greater variety of
markets.

We must carefully distinguish between the effects of the colony trade
and those of the monopoly of that trade. The former are always and
necessarily beneficial; the latter always and necessarily hurtful. But
the former are so beneficial, that the colony trade, though subject to
a monopoly, and, notwithstanding the hurtful effects of that monopoly,
is still, upon the whole, beneficial, and greatly beneficial, though a
good deal less so than it otherwise would be.

The effect of the colony trade, in its natural and free state, is to
open a great though distant market, for such parts of the produce of
British industry as may exceed the demand of the markets nearer home,
of those of Europe, and of the countries which lie round the
Mediterranean sea. In its natural and free state, the colony trade,
without drawing from those markets any part of the produce which had
ever been sent to them, encourages Great Britain to increase the
surplus continually, by continually presenting new equivalents to be
exchanged for it. In its natural and free state, the colony trade
tends to increase the quantity of productive labour in Great Britain,
but without altering in any respect the direction of that which had
been employed there before. In the natural and free state of the
colony trade, the competition of all other nations would hinder the
rate of profit from rising above the common level, either in the new
market, or in the new employment. The new market, without drawing any
thing from the old one, would create, if one may say so, a new produce
for its own supply; and that new produce would constitute a new
capital for carrying on the new employment, which, in the same manner,
would draw nothing from the old one.

The monopoly of the colony trade, on the contrary, by excluding the
competition of other nations, and thereby raising the rate of profit,
both in the new market and in the new employment, draws produce from
the old market, and capital from the old employment. To augment our
share of the colony trade beyond what it otherwise would be, is the
avowed purpose of the monopoly. If our share of that trade were to be
no greater with, than it would have been without the monopoly, there
could have been no reason for establishing the monopoly. But whatever
forces into a branch of trade, of which the returns are slower and
more distant than those of the greater part of other trades, a greater
proportion of the capital of any country, than what of its own accord
would go to that branch, necessarily renders the whole quantity of
productive labour annually maintained there, the whole annual produce
of the land and labour of that country, less than they otherwise would
be. It keeps down the revenue of the inhabitants of that country below
what it would naturally rise to, and thereby diminishes their power of
accumulation. It not only hinders, at all times, their capital from
maintaining so great a quantity of productive labour as it would
otherwise maintain, but it hinders it from increasing so fast as it
would otherwise increase, and, consequently, from maintaining a still
greater quantity of productive labour.

The natural good effects of the colony trade, however, more than
counterbalance to Great Britain the bad effects of the monopoly; so
that, monopoly and altogether, that trade, even as it is carried on at
present, is not only advantageous, but greatly advantageous. The new
market and the new employment which are opened by the colony trade,
are of much greater extent than that portion of the old market and of
the old employment which is lost by the monopoly. The new produce and
the new capital which has been created, if one may say so, by the
colony trade, maintain in Great Britain a greater quantity of
productive labour than what can have been thrown out of employment by
the revulsion of capital from other trades of which the returns are
more frequent. If the colony trade, however, even as it is carried on
at present, is advantageous to Great Britain, it is not by means of
the monopoly, but in spite of the monopoly.

It is rather for the manufactured than for the rude produce of Europe,
that the colony trade opens a new market. Agriculture is the proper
business of all new colonies; a business which the cheapness of land
renders more advantageous than any other. They abound, therefore, in
the rude produce of land; and instead of importing it from other
countries, they have generally a large surplus to export. In new
colonies, agriculture either draws hands from all other employments,
or keeps them from going to any other employment. There are few hands
to spare for the necessary, and none for the ornamental manufactures.
The greater part of the manufactures of both kinds they find it
cheaper to purchase of other countries than to make for themselves. It
is chiefly by encouraging the manufactures of Europe, that the colony
trade indirectly encourages its agriculture. The manufacturers of
Europe, to whom that trade gives employment, constitute a new market
for the produce of the land, and the most advantageous of all markets;
the home market for the corn and cattle, for the bread and butcher's
meat of Europe, is thus greatly extended by means of the trade to
America.

But that the monopoly of the trade of populous and thriving colonies
is not alone sufficient to establish, or even to maintain,
manufactures in any country, the examples of Spain and Portugal
sufficiently demonstrate. Spain and Portugal were manufacturing
countries before they had any considerable colonies. Since they had
the richest and most fertile in the world, they have both ceased to be
so.

In Spain and Portugal, the bad effects of the monopoly, aggravated by
other causes, have, perhaps, nearly overbalanced the natural good
effects of the colony trade. These causes seem to be other monopolies
of different kinds: the degradation of the value of gold and silver
below what it is in most other countries; the exclusion from foreign
markets by improper taxes upon exportation, and the narrowing of the
home market, by still more improper taxes upon the transportation of
goods from one part of the country to another; but above all, that
irregular and partial administration of justice which often protects
the rich and powerful debtor from the pursuit of his injured creditor,
and which makes the industrious part of the nation afraid to prepare
goods for the consumption of those haughty and great men, to whom they
dare not refuse to sell upon credit, and from whom they are altogether
uncertain of repayment.

In England, on the contrary, the natural good effects of the colony
trade, assisted by other causes, have in a great measure conquered the
bad effects of the monopoly. These causes seem to be, the general
liberty of trade, which, notwithstanding some restraints, is at least
equal, perhaps superior, to what it is in any other country; the
liberty of exporting, duty free, almost all sorts of goods which are
the produce of domestic industry, to almost any foreign country; and
what, perhaps, is of still greater importance, the unbounded liberty
of transporting them from one part of our own country to any other,
without being obliged to give any account to any public office,
without being liable to question or examination of any kind; but,
above all, that equal and impartial administration of justice, which
renders the rights of the meanest British subject respectable to the
greatest, and which, by securing to every man the fruits of his own
industry, gives the greatest and most effectual encouragement to every
sort of industry.

If the manufactures of Great Britain, however, have been advanced, as
they certainly have, by the colony trade, it has not been by means of
the monopoly of that trade, but in spite of the monopoly. The effect
of the monopoly has been, not to augment the quantity, but to alter
the quality and shape of a part of the manufactures of Great Britain,
and to accommodate to a market, from which the returns are slow and
distant, what would otherwise have been accommodated to one from which
the returns are frequent and near. Its effect has consequently been,
to turn a part of the capital of Great Britain from an employment in
which it would have maintained a greater quantity of manufacturing
industry, to one in which it maintains a much smaller, and thereby to
diminish, instead of increasing, the whole quantity of manufacturing
industry maintained in Great Britain.

The monopoly of the colony trade, therefore, like all the other mean
and malignant expedients of the mercantile system, depresses the
industry of all other countries, but chiefly that of the colonies,
without in the least increasing, but on the contrary diminishing, that
of the country in whose favour it is established.

The monopoly hinders the capital of that country, whatever may, at any
particular time, be the extent of that capital, from maintaining so
great a quantity of productive labour as it would otherwise maintain,
and from affording so great a revenue to the industrious inhabitants
as it would otherwise afford. But as capital can be increased only by
savings from revenue, the monopoly, by hindering it from affording so
great a revenue as it would otherwise afford, necessarily hinders it
from increasing so fast as it would otherwise increase, and
consequently from maintaining a still greater quantity of productive
labour, and affording a still greater revenue to the industrious
inhabitants of that country. One great original source of revenue,
therefore, the wages of labour, the monopoly must necessarily have
rendered, at all times, less abundant than it otherwise would have
been.

By raising the rate of mercantile profit, the monopoly discourages the
improvement of land. The profit of improvement depends upon the
difference between what the land actually produces, and what, by the
application of a certain capital, it can be made to produce. If this
difference affords a greater profit than what can be drawn from an
equal capital in any mercantile employment, the improvement of land
will draw capital from all mercantile employments. If the profit is
less, mercantile employments will draw capital from the improvement of
land. Whatever, therefore, raises the rate of mercantile profit,
either lessens the superiority, or increases the inferiority of the
profit of improvement: and, in the one case, hinders capital from
going to improvement, and in the other draws capital from it; but by
discouraging improvement, the monopoly necessarily retards the natural
increase of another great original source of revenue, the rent of
land. By raising the rate of profit, too, the monopoly necessarily
keeps up the market rate of interest higher than it otherwise would
be. But the price of land, in proportion to the rent which it affords,
the number of years purchase which is commonly paid for it,
necessarily falls as the rate of interest rises, and rises as the rate
of interest falls. The monopoly, therefore, hurts the interest of the
landlord two different ways, by retarding the natural increase, first,
of his rent, and, secondly, of the price which he would get for his
land, in proportion to the rent which it affords.

The monopoly, indeed, raises the rate of mercantile profit and thereby
augments somewhat the gain of our merchants. But as it obstructs the
natural increase of capital, it tends rather to diminish than to
increase the sum total of the revenue which the inhabitants of the
country derive from the profits of stock; a small profit upon a great
capital generally affording a greater revenue than a great profit upon
a small one. The monopoly raises the rate of profit, but it hinders
the sum of profit from rising so high as it otherwise would do.

All the original sources of revenue, the wages of labour, the rent of
land, and the profits of stock, the monopoly renders much less
abundant than they otherwise would be. To promote the little interest
of one little order of men in one country, it hurts the interest of
all other orders of men in that country, and of all the men in all
other countries.

It is solely by raising the ordinary rate of profit, that the monopoly
either has proved, or could prove, advantageous to any one particular
order of men. But besides all the bad effects to the country in
general, which have already been mentioned as necessarily resulting
from a higher rate of profit, there is one more fatal, perhaps, than
all these put together, but which, if we may judge from experience, is
inseparably connected with it. The high rate of profit seems
everywhere to destroy that parsimony which, in other circumstances, is
natural to the character of the merchant. When profits are high, that
sober virtue seems to be superfluous, and expensive luxury to suit
better the affluence of his situation. But the owners of the great
mercantile capitals are necessarily the leaders and conductors of the
whole industry of every nation; and their example has a much greater
influence upon the manners of the whole industrious part of it than
that of any other order of men. If his employer is attentive and
parsimonious, the workman is very likely to be so too; but if the
master is dissolute and disorderly, the servant, who shapes his work
according to the pattern which his master prescribes to him, will
shape his life, too, according to the example which he sets him.
Accumulation is thus prevented in the hands of all those who are
naturally the most disposed to accumulate; and the funds destined for
the maintenance of productive labour, receive no augmentation from the
revenue of those who ought naturally to augment them the most. The
capital of the country, instead of increasing, gradually dwindles
away, and the quantity of productive labour maintained in it grows
every day less and less. Have the exorbitant profits of the merchants
of Cadiz and Lisbon augmented the capital of Spain and Portugal? Have
they alleviated the poverty, have they promoted the industry, of those
two beggarly countries? Such has been the tone of mercantile expense
in those two trading cities, that those exorbitant profits, far from
augmenting the general capital of the country, seem scarce to have
been sufficient to keep up the capitals upon which they were made.
Foreign capitals are every day intruding themselves, if I may say so,
more and more into the trade of Cadiz and Lisbon. It is to expel those
foreign capitals from a trade which their own grows every day more and
more insufficient for carrying on, that the Spaniards and Portuguese
endeavour every day to straiten more and more the galling bands of
their absurd monopoly. Compare the mercantile manners of Cadiz and
Lisbon with those of Amsterdam, and you will be sensible how
differently the conduct and character of merchants are affected by the
high and by the low profits of stock. The merchants of London, indeed,
have not yet generally become such magnificent lords as those of Cadiz
and Lisbon; but neither are they in general such attetitive and
parsimonious burghers as those of Amsterdam. They are supposed,
however, many of them, to be a good deal richer than the greater part
of the former, and not quire so rich as many of the latter: but the
rate of their profit is commonly much lower than that of the former,
and a good deal higher than that of the latter. Light come, light go,
says the proverb; and the ordinary tone of expense seems everywhere to
be regulated, not so much according to the real ability of spending,
as to the supposed facility of getting money to spend.

It is thus that the single advantage which the monopoly procures to a
single order of men, is in many different ways hurtful to the general
interest of the country.

To found a great empire for the sole purpose of raising up a people of
customers, may at first sight, appear a project fit only for a nation
of shopkeepers. It is, however, a project altogether unfit for a
nation of shopkeepers, but extremely fit for a nation whose government
is influenced by shopkeepers. Such statesmen, and such statesmen only,
are capable of fancying that they will find some advantage in
employing the blood and treasure of their fellow-citizens, to found
and maintain such an empire. Say to a shopkeeper, Buy me a good
estate, and I shall always buy my clothes at your shop, even though I
should pay somewhat dearer than what I can have them for at other
shops; and you will not find him very forward to embrace your
proposal. But should any other person buy you such an estate, the
shopkeeper will be much obliged to your benefactor if he would enjoin
you to buy all your clothes at his shop. England purchased for some of
her subjects, who found themselves uneasy at home, a great estate in a
distant country. The price, indeed, was very small, and instead of
thirty years purchase, the ordinary price of land in the present
times, it amounted to little more than the expense of the different
equipments which made the first discovery, reconnoitered the coast, and
took a fictitious possession of the country. The land was good, and of
great extent; and the cultivators having plenty of good ground to work
upon, and being for some time at liberty to sell their produce where
they pleased, became, in the course of little more than thirty or
forty years (between 1620 and 1660), so numerous and thriving a
people, that the shopkeepers and other traders of England wished to
secure to themselves the monopoly of their custom. Without pretending,
therefore, that they had paid any part, either of the original
purchase money, or of the subsequent expense of improvement, they
petitioned the parliament, that the cultivators of America might for
the future be confined to their shop; first, for buying all the goods
which they wanted from Europe; and, secondly, for selling all such
parts of their own produce as those traders might find it convenient
to buy. For they did not find it convenient to buy every part of it.
Some parts of it imported into England, might have interfered with
some of the trades which they themselves carried on at home. Those
particular parts of it, therefore, they were willing that the
colonists should sell where they could; the farther off the better;
and upon that account proposed that their market should be confined to
the countries south of Cape Finisterre. A clause in the famous act of
navigation established this truly shopkeeper proposal into a law.

The maintenance of this monopoly has hitherto been the principal, or
more properly, perhaps, the sole end and purpose of the dominion which
Great Britain assumes over her colonies. In the exclusive trade, it is
supposed, consists the great advantage of provinces, which have never
yet afforded either revenue or military force for the support of the
civil government, or the defence of the mother country. The monopoly
is the principal badge of their dependency, and it is the sole fruit
which has hitherto been gathered from that dependency. Whatever
expense Great Britain has hitherto laid out in maintaining this
dependency, has really been laid out in order to support this
monopoly. The expense of the ordinary peace establishment of the
colonies amounted, before the commencement of the present disturbances
to the pay of twenty regiments of foot; to the expense of the
artillery, stores, and extraordinary provisions, with which it was
necessary to supply them; and to the expense of a very considerable
naval force, which was constantly kept up, in order to guard from the
smuggling vessels of other nations, the immense coast of North
America, and that of our West Indian islands. The whole expense of
this peace establishment was a charge upon the revenue of Great
Britain, and was, at the same time, the smallest part of what the
dominion of the colonies has cost the mother country. If we would know
the amount of the whole, we must add to the annual expense of this
peace establishment, the interest of the sums which, in consequence of
their considering her colonies as provinces subject to her dominion,
Great Britain has, upon different occasions, laid out upon their
defence. We must add to it, in particular, the whole expense of the
late war, and a great part of that of the war which preceded it. The
late war was altogether a colony quarrel; and the whole expense of it,
in whatever part of the world it might have been laid out, whether in
Germany or the East Indies, ought justly to be stated to the account
of the colonies. It amounted to more than ninety millions sterling,
including not only the new debt which was contracted, but the two
shillings in the pound additional land tax, and the sums which were
every year borrowed from the sinking fund. The Spanish war which began
in 1739 was principally a colony quarrel. Its principal object was to
prevent the search of the colony ships, which carried on a contraband
trade with the Spanish Main. This whole expense is, in reality, a
bounty which has been given in order to support a monopoly. The
pretended purpose of it was to encourage the manufactures, and to
increase the commerce of Great Britain. But its real effect has been
to raise the rate of mercantile profit, and to enable our merchants to
turn into a branch of trade, of which the returns are more slow and
distant than those of the greater part of other trades, a greater
proportion of their capital than they otherwise would have done; two
events which, if a bounty could have prevented, it might perhaps have
been very well worth while to give such a bounty.

Under the present system of management, therefore, Great Britain
derives nothing but loss from the dominion which she assumes over her
colonies.

To propose that Great Britain should voluntarily give up all authority
over her colonies, and leave them to elect their own magistrates, to
enact their own laws, and to make peace and war, as they might think
proper, would be to propose such a measure as never was, and never
will be, adopted by any nation in the world. No nation ever
voluntarily gave up the dominion of any province, how troublesome
soever it might be to govern it, and how small soever the revenue
which it afforded might be in proportion to the expense which it
occasioned. Such sacrifices, though they might frequently be agreeable
to the interest, are always mortifying to the pride of every nation;
and, what is perhaps of still greater consequence, they are always
contrary to the private interest of the governing part of it, who
would thereby be deprived of the disposal of many places of trust and
profit, of many opportunities of acquiring wealth and distinction,
which the possession of the most turbulent, and, to the great body of
the people, the most unprofitable province, seldom fails to afford.
The most visionary enthusiasts would scarce be capable of proposing
such a measure, with any serious hopes at least of its ever being
adopted. If it was adopted, however, Great Britain would not only be
immediately freed from the whole annual expense of the peace
establishment of the colonies, but might settle with them such a
treaty of commerce as would effectually secure to her a free trade,
more advantageous to the great body of the people, though less so to
the merchants, than the monopoly which she at present enjoys. By thus
parting good friends, the natural affection of the colonies to the
mother country, which, perhaps, our late dissensions have well nigh
extinguished, would quickly revive. It might dispose them not only to
respect, for whole centuries together, that treaty of commerce which
they had concluded with us at parting, but to favour us in war as well
as in trade, and instead of turbulent and factious subjects, to become
our most faithful, affectionate, and generous allies; and the same
sort of parental affection on the one side, and filial respect on the
other, might revive between Great Britain and her colonies, which used
to subsist between those of ancient Greece and the mother city from
which they descended.

In order to render any province advantageous to the empire to which it
belongs, it ought to afford, in time of peace, a revenue to the
public, sufficient not only for defraying the whole expense of its own
peace establishment, but for contributing its proportion to the
support of the general government of the empire. Every province
necessarily contributes, more or less, to increase the expense of that
general government. If any particular province, therefore, does not
contribute its share towards defraying this expense, an unequal burden
must be thrown upon some other part of the empire. The extraordinary
revenue, too, which every province affords to the public in time of
war, ought, from parity of reason, to bear the same proportion to the
extraordinary revenue of the whole empire, which its ordinary revenue
does in time of peace. That neither the ordinary nor extraordinary
revenue which Great Britain derives from her colonies, bears this
proportion to the whole revenue of the British empire, will readily be
allowed. The monopoly, it has been supposed, indeed, by increasing the
private revenue of the people of Great Britain, and thereby enabling
them to pay greater taxes, compensates the deficiency of the public
revenue of the colonies. But this monopoly, I have endeavoured to
show, though a very grievous tax upon the colonies, and though it may
increase the revenue of a particular order of men in Great Britain,
diminishes, instead of increasing, that of the great body of the
people, and consequently diminishes, instead of increasing, the
ability of the great body of the people to pay taxes. The men, too,
whose revenue the monopoly increases, constitute a particular order,
which it is both absolutely impossible to tax beyond the proportion of
other orders, and extremely impolitic even to attempt to tax beyond
that proportion, as I shall endeavour to show in the following book.
No particular resource, therefore, can be drawn from this particular
order.

The colonies may be taxed either by their own assemblies, or by the
parliament of Great Britain.

That the colony assemblies can never be so managed as to levy upon
their constituents a public revenue, sufficient, not only to maintain
at all times their own civil and military establishment, but to pay
their proper proportion of the expense of the general government of
the British empire, seems not very probable. It was a long time before
even the parliament of England, though placed immediately under the
eye of the sovereign, could be brought under such a system of
management, or could be rendered sufficiently liberal in their grants
for supporting the civil and military establishments even of their own
country. It was only by distributing among the particular members of
parliament a great part either of the offices, or of the disposal of
the offices arising from this civil and military establishment, that
such a system of management could be established, even with regard to
the parliament of England. But the distance of the colony assemblies
from the eye of the sovereign, their number, their dispersed
situation, and their various constitutions, would render it very
difficult to manage them in the same manner, even though the sovereign
had the same means of doing it; and those means are wanting. It would
be absolutely impossible to distribute among all the leading members
of all the colony assemblies such a share, either of the offices, or
of the disposal of the offices, arising from the general government of
the British empire, as to dispose them to give up their popularity at
home, and to tax their constituents for the support of that general
government, of which almost the whole emoluments were to be divided
among people who were strangers to them. The unavoidable ignorance of
administration, besides, concerning the relative importance of the
different members of those different assemblies, the offences which
must frequently be given, the blunders which must constantly be
committed, in attempting to manage them in this manner, seems to
render such a system of management altogether impracticable with
regard to them.

The colony assemblies, besides, cannot be supposed the proper judges
of what is necessary for the defence and support of the whole empire.
The care of that defence and support is not entrusted to them. It is
not their business, and they have no regular means of information
concerning it. The assembly of a province, like the vestry of a
parish, may judge very properly concerning the affairs of its own
particular district, but can have no proper means of judging
concerning those of the whole empire. It cannot even judge properly
concerning the proportion which its own province bears to the whole
empire, or concerning the relative degree of its wealth and
importance, compared with the other provinces; because those other
provinces are not under the inspection and superintendency of the
assembly of a particular province. What is necessary for the defence
and support of the whole empire, and in what proportion each part
ought to contribute, can be judged of only by that assembly which
inspects and super-intends the affairs of the whole empire.

It has been proposed, accordingly, that the colonies should be taxed
by requisition, the parliament of Great Britain determining the sum
which each colony ought to pay, and the provincial assembly assessing
and levying it in the way that suited best the circumstances of the
province. What concerned the whole empire would in this way be
determined by the assembly which inspects and superintends the affairs
of the whole empire; and the provincial affairs of each colony might
still be regulated by its own assembly. Though the colonies should, in
this case, have no representatives in the British parliament, yet, if
we may judge by experience, there is no probability that the
parliamentary requisition would be unreasonable. The parliament of
England has not, upon any occasion, shewn the smallest disposition to
overburden those parts of the empire which are not represented in
parliament. The islands of Guernsey and Jersey, without any means of
resisting the authority of parliament, are more lightly taxed than any
part of Great Britain. Parliament, in attempting to exercise its
supposed right, whether well or ill grounded, of taxing the colonies,
has never hitherto demanded of them anything which even approached to
a just proportion to what was paid by their fellow subjects at home.
If the contribution of the colonies, besides, was to rise or fall in
proportion to the rise or fall of the land-tax, parliament could not
tax them without taxing, at the same time, its own constituents, and
the colonies might, in this case, be considered as virtually
represented in parliament.

Examples are not wanting of empires in which all the different
provinces are not taxed, if I may be allowed the expression, in one
mass; but in which the sovereign regulates the sum which each province
ought to pay, and in some provinces assesses and levies it as he
thinks proper; while in others he leaves it to be assessed and levied
as the respective states of each province shall determine. In some
provinces of France, the king not only imposes what taxes he thinks
proper, but assesses and levies them in the way he thinks proper. From
others he demands a certain sum, but leaves it to the states of each
province to assess and levy that sum as they think proper. According
to the scheme of taxing by requisition, the parliament of Great
Britain would stand nearly in the same situation towards the colony
assemblies, as the king of France does towards the states of those
provinces which still enjoy the privilege of having states of their
own, the provinces of France which are supposed to be the best
governed.

But though, according to this scheme, the colonies could have no just
reason to fear that their share of the public burdens should ever
exceed the proper proportion to that of their fellow-citizens at home,
Great Britain might have just reason to fear that it never would
amount to that proper proportion. The parliament of Great Britain has
not, for some time past, had the same established authority in the
colonies, which the French king has in those provinces of France which
still enjoy the privilege of having states of their own. The colony
assemblies, if they were not very favourably disposed (and unless more
skilfully managed than they ever have been hitherto, they are not very
likely to be so), might still find many pretences for evading or
rejecting the most reasonable requisitions of parliament. A French war
breaks out, we shall suppose; ten millions must immediately be raised,
in order to defend the seat of the empire. This sum must be borrowed
upon the credit of some parliamentary fund mortgaged for paying the
interest. Part of this fund parliament proposes to raise by a tax to
be levied in Great Britain; and part of it by a requisition to all the
different colony assemblies of America and the West Indies. Would
people readily advance their money upon the credit of a fund which
partly depended upon the good humour of all those assemblies, far
distant from the seat of the war, and sometimes, perhaps, thinking
themselves not much concerned in the event of it? Upon such a fund, no
more money would probably be advanced than what the tax to be levied
in Great Britain might be supposed to answer for. The whole burden of
the debt contracted on account of the war would in this manner fall,
as it always has done hitherto, upon Great Britain; upon a part of the
empire, and not upon the whole empire. Great Britain is, perhaps,
since the world began, the only state which, as it has extended its
empire, has only increased its expense, without once augmenting its
resources. Other states have generally disburdened themselves, upon
their subject and subordinate provinces, of the most considerable part
of the expense of defending the empire. Great Britain has hitherto
suffered her subject and subordinate provinces to disburden themselves
upon her of almost this whole expense. In order to put Great Britain
upon a footing of equality with her own colonies, which the law has
hitherto supposed to be subject and subordinate, it seems necessary,
upon the scheme of taxing them by parliamentary requisition, that
parliament should have some means of rendering its requisitions
immediately effectual, in case the colony assemblies should attempt to
evade or reject them; and what those means are, it is not very easy to
conceive, and it has not yet been explained.

Should the parliament of Great Britain, at the same time, be ever
fully established in the right of taxing the colonies, even
independent of the consent of their own assemblies, the importance of
those assemblies would, from that moment, be at an end, and with it,
that of all the leading men of British America. Men desire to have
some share in the management of public affairs, chiefly on account of
the importance which it gives them. Upon the power which the greater
part of the leading men, the natural aristocracy of every country,
have of preserving or defending their respective importance, depends
the stability and duration of every system of free government. In the
attacks which those leading men are continually making upon the
importance of one another, and in the defence of their own, consists
the whole play of domestic faction and ambition. The leading men of
America, like those of all other countries, desire to preserve their
own importance. They feel, or imagine, that if their assemblies, which
they are fond of calling parliaments, and of considering as equal in
authority to the parliament of Great Britain, should be so far
degraded as to become the humble ministers and executive officers of
that parliament, the greater part of their own importance would be at
an end. They have rejected, therefore, the proposal of being taxed by
parliamentary requisition, and, like other ambitious and high-spirited
men, have rather chosen to draw the sword in defence of their own
importance.

Towards the declension of the Roman republic, the allies of Rome, who
had borne the principal burden of defending the state and extending
the empire, demanded to be admitted to all the privileges of Roman
citizens. Upon being refused, the social war broke out. During the
course of that war, Rome granted those privileges to the greater part
of them, one by one, and in proportion as they detached themselves
from the general confederacy. The parliament of Great Britain insists
upon taxing the colonies; and they refuse to be taxed by a parliament
in which they are not represented. If to each colony which should
detach itself from the general confederacy, Great Britain should allow
such a number of representatives as suited the proportion of what it
contributed to the public revenue of the empire, in consequence of its
being subjected to the same taxes, and in compensation admitted to the
same freedom of trade with its fellow-subjects at home; the number of
its representatives to be augmented as the proportion of its
contribution might afterwards augment; a new method of acquiring
importance, a new and more dazzling object of ambition, would be
presented to the leading men of each colony. Instead of piddling for
the little prizes which are to be found in what may be called the
paltry raffle of colony faction, they might then hope, from the
presumption which men naturally have in their own ability and good
fortune, to draw some of the great prizes which sometimes come from
the wheel of the great state lottery of British politics. Unless this
or some other method is fallen upon, and there seems to be none more
obvious than this, of preserving the importance and of gratifying the
ambition of the leading men of America, it is not very probable that
they will ever voluntarily submit to us; and we ought to consider,
that the blood which must be shed in forcing them to do so, is, every
drop of it, the blood either of those who are, or of those whom we
wish to have for our fellow citizens. They are very weak who flatter
themselves that, in the state to which things have come, our colonies
will be easily conquered by force alone. The persons who now govern
the resolutions of what they call their continental congress, feel in
themselves at this moment a degree of importance which, perhaps, the
greatest subjects in Europe scarce feel. From shopkeepers, trades men,
and attorneys, they are become statesmen and legislators, and are
employed in contriving a new form of government for an extensive
empire, which, they flatter themselves, will become, and which,
indeed, seems very likely to become, one of the greatest and most
formidable that ever was in the world. Five hundred different people,
perhaps, who, in different ways, act immediately under the continental
congress, and five hundred thousand, perhaps, who act under those five
hundred, all feel, in the same manner, a proportionable rise in their
own importance. Almost every individual of the governing party in
America fills, at present, in his own fancy, a station superior, not
only to what he had ever filled before, but to what he had ever
expected to fill; and unless some new object of ambition is presented
either to him or to his leaders, if he has the ordinary spirit of a
man, he will die in defence of that station.

It is a remark of the President Heynaut, that we now read with
pleasure the account of many little transactions of the Ligue, which,
when they happened, were not, perhaps, considered as very important
pieces of news. But everyman then, says he, fancied himself of some
importance; and the innumerable memoirs which have come down to us
from those times, were the greater part of them written by people who
took pleasure in recording and magnifying events, in which they
flattered themselves they had been considerable actors. How
obstinately the city of Paris, upon that occasion, defended itself,
what a dreadful famine it supported, rather than submit to the best,
and afterwards the most beloved of all the French kings, is well
known. The greater part of the citizens, or those who governed the
greater part of them, fought in defence of their own importance,
which, they foresaw, was to be at an end whenever the ancient
government should be re-established. Our colonies, unless they can be
induced to consent to a union, are very likely to defend themselves,
against the best of all mother countries, as obstinately as the city
of Paris did against one of the best of kings.

The idea of representation was unknown in ancient times. When the
people of one state were admitted to the right of citizenship in
another, they had no other means of exercising that right, but by
coming in a body to vote and deliberate with the people of that other
state. The admission of the greater part of the inhabitants of Italy
to the privileges of Roman citizens, completely ruined the Roman
republic. It was no longer possible to distinguish between who was,
and who was not, a Roman citizen. No tribe could know its own members.
A rabble of any kind could be introduced into the assemblies of the
people, could drive out the real citizens, and decide upon the affairs
of the republic, as if they themselves had been such. But though
America were to send fifty or sixty new representatives to parliament,
the door-keeper of the house of commons could not find any great
difficulty in distinguishing between who was and who was not a member.
Though the Roman constitution, therefore, was necessarily ruined by
the union of Rome with the allied states of Italy, there is not the
least probability that the British constitution would be hurt by the
union of Great Britain with her colonies. That constitution, on the
contrary, would be completed by it, and seems to be imperfect without
it. The assembly which deliberates and decides concerning the affairs
of every part of the empire, in order to be properly informed, ought
certainly to have representatives from every part of it. That this
union, however, could be easily effectuated, or that difficulties, and
great difficulties, might not occur in the execution, I do not
pretend. I have yet heard of none, however, which appear
insurmountable. The principal, perhaps, arise, not from the nature of
things, but from the prejudices and opinions of the people, both on
this and on the other side of the Atlantic.

We on this side the water are afraid lest the multitude of American
representatives should overturn the balance of the constitution, and
increase too much either the influence of the crown on the one hand,
or the force of the democracy on the other. But if the number of
American representatives were to be in proportion to the produce of
American taxation, the number of people to be managed would increase
exactly in proportion to the means of managing them, and the means of
managing to the number of people to be managed. The monarchical and
democratical parts of the constitution would, after the union, stand
exactly in the same degree of relative force with regard to one
another as they had done before.

The people on the other side of the water are afraid lest their
distance from the seat of government might expose them to many
oppressions; but their representatives in parliament, of which the
number ought from the first to be considerable, would easily be able
to protect them from all oppression. The distance could not much
weaken the dependency of the representative upon the constituent, and
the former would still feel that he owed his seat in parliament, and
all the consequence which he derived from it, to the good-will of the
latter. It would be the interest of the former, therefore, to
cultivate that good-will, by complaining, with all the authority of a
member of the legislature, of every outrage which any civil or
military officer might be guilty of in those remote parts of the
empire. The distance of America from the seat of government, besides,
the natives of that country might flatter themselves, with some
appearance of reason too, would not be of very long continuance. Such
has hitherto been the rapid progress of that country in wealth,
population, and improvement, that in the course of little more than a
century, perhaps, the produce of the American might exceed that of the
British taxation. The seat of the empire would then naturally remove
itself to that part of the empire which contributed most to the
general defence and support of the whole.

The discovery of America, and that of a passage to the East Indies by
the Cape of Good Hope, are the two greatest and most important events
recorded in the history of mankind. Their consequences have already
been great; but, in the short period of between two and three
centuries which has elapsed since these discoveries were made, it is
impossible that the whole extent of their consequences can have been
seen. What benefits or what misfortunes to mankind may hereafter
result from those great events, no human wisdom can foresee. By
uniting in some measure the most distant parts of the world, by
enabling them to relieve one another's wants, to increase one
another's enjoyments, and to encourage one another's industry, their
general tendency would seem to be beneficial. To the natives, however,
both of the East and West Indies, all the commercial benefits which
can have resulted from those events have been sunk and lost in the
dreadful misfortunes which they have occasioned. These misfortunes,
however, seem to have arisen rather from accident than from any thing
in the nature of those events themselves. At the particular time when
these discoveries were made, the superiority of force happened to be
so great on the side of the Europeans, that they were enabled to
commit with impunity every sort of injustice in those remote
countries. Hereafter, perhaps, the natives of those countries may grow
stronger, or those of Europe may grow weaker; and the inhabitants of
all the different quarters of the world may arrive at that equality of
courage and force which, by inspiring mutual fear, can alone overawe
the injustice of independent nations into some sort of respect for the
rights of one another. But nothing seems more likely to establish this
equality of force, than that mutual communication of knowledge, and of
all sorts of improvements, which an extensive commerce from all
countries to all countries naturally, or rather necessarily, carries
along with it.

In the mean time, one of the principal effects of those discoveries
has been, to raise the mercantile system to a degree of splendour and
glory which it could never otherwise have attained to. It is the
object of that system to enrich a great nation, rather by trade and
manufactures than by the improvement and cultivation of land, rather
by the industry of the towns than by that of the country. But in
consequence of those discoveries, the commercial towns of Europe,
instead of being the manufacturers and carriers for but a very small
part of the world (that part of Europe which is washed by the Atlantic
ocean, and the countries which lie round the Baltic and Mediterranean
seas), have now become the manufacturers for the numerous and thriving
cultivators of America, and the carriers, and in some respects the
manufacturers too, for almost all the different nations of Asia,
Africa, and America. Two new worlds have been opened to their
industry, each of them much greater and more extensive than the old
one, and the market of one of them growing still greater and greater
every day.

The countries which possess the colonies of America, and which trade
directly to the East Indies, enjoy indeed the whole show and splendour
of this great commerce. Other countries, however, notwithstanding all
the invidious restraints by which it is meant to exclude them,
frequently enjoy a greater share of the real benefit of it. The
colonies of Spain and. Portugal, for example, give more real
encouragement to the industry of other countries than to that of Spain
and Portugal. In the single article of linen alone, the consumption of
those colonies amounts, it is said (but I do not pretend to warrant
the quantity ), to more than three millions sterling a-year. But this
great consumption is almost entirely supplied by France, Flanders,
Holland, and Germany. Spain and Portugal furnish but a small part of
it. The capital which supplies the colonies with this great quantity
of linen, is annually distributed among, and furnishes a revenue to,
the inhabitants of those other countries. The profits of it only are
spent in Spain and Portugal, where they help to support the sumptuous
profusion of the merchants of Cadiz and Lisbon.

Even the regulations by which each nation endeavours to secure to
itself the exclusive trade of its own colonies, are frequently more
hurtful to the countries in favour of which they are established, than
to those against which they are established. The unjust oppression of
the industry of other countries falls back, if I may say so, upon the
heads of the oppressors, and crushes their industry more than it does
that of those other countries. By those regulations, for example, the
merchant of Hamburg must send the linen which he destines for the
American market to London, and he must bring back from thence the
tobacco which he destines for the German market; because he can
neither send the one directly to America, nor bring the other directly
from thence. By this restraint he is probably obliged to sell the one
somewhat cheaper, and to buy the other somewhat dearer, than he
otherwise might have done; and his profits are probably somewhat
abridged by means of it. In this trade, however, between Hamburg and
London, he certainly receives the returns of his capital much more
quickly than he could possibly have done in the direct trade to
America, even though we should suppose, what is by no means the case,
that the payments of America were as punctual as those of London. In
the trade, therefore, to which those regulations confine the merchant
of Hamburg, his capital can keep in constant employment a much greater
quantity of German industry than he possibly could have done in the
trade from which he is excluded. Though the one employment, therefore,
may to him perhaps be less profitable than the other, it cannot be
less advantageous to his country. It is quite otherwise with the
employment into which the monopoly naturally attracts, if I may say so,
the capital of the London merchant. That employment may, perhaps, be
more profitable to him than the greater part of other employments; but
on account of the slowness of the returns, it cannot be more
advantageous to his country.

After all the unjust attempts, therefore, of every country in Europe
to engross to itself the whole advantage of the trade of its own
colonies, no country has yet been able to engross to itself any thing
but the expense of supporting in time of peace, and of defending in
time of war, the oppressive authority which it assumes over them. The
inconveniencies resulting from the possession of its colonies, every
country has engrossed to itself completely. The advantages resulting
from their trade, it has been obliged to share with many other
countries.

At first sight, no doubt, the monopoly of the great commerce of
America naturally seems to be an acquisition of the highest value. To
the undiscerning eye of giddy ambition it naturally presents itself,
amidst the confused scramble of politics and war, as a very dazzling
object to fight for. The dazzling splendour of the object, however,
the immense greatness of the commerce, is the very quality which
renders the monopoly of it hurtful, or which makes one employment, in
its own nature necessarily less advantageous to the country than the
greater part of other employments, absorb a much greater proportion of
the capital of the country than what would otherwise have gone to it.

The mercantile stock of every country, it has been shown in the second
book, naturally seeks, if one may say so, the employment most
advantageous to that country. If it is employed in the carrying trade,
the country to which it belongs becomes the emporium of the goods of
all the countries whose trade that stock carries on. But the owner of
that stock necessarily wishes to dispose of as great a part of those
goods as he can at home. He thereby saves himself the trouble, risk,
and expense of exportation; and he will upon that account be glad to
sell them at home, not only for a much smaller price, but with
somewhat a smaller profit, than he might expect to make by sending
them abroad. He naturally, therefore, endeavours as much as he can to
turn his carrying trade into a foreign trade of consumption, If his
stock, again, is employed in a foreign trade of consumption, he will,
for the same reason, be glad to dispose of, at home, as great a part
as he can of the home goods which he collects in order to export to
some foreign market, and he will thus endeavour, as much as he can, to
turn his foreign trade of consumption into a home trade. The
mercantile stock of every country naturally courts in this manner the
near, and shuns the distant employment: naturally courts the
employment in which the returns are frequent, and shuns that in which
they are distant and slow; naturally courts the employment in which it
can maintain the greatest quantity of productive labour in the country
to which it belongs, or in which its owner resides, and shuns that in
which it can maintain there the smallest quantity. It naturally courts
the employment which in ordinary cases is most advantageous, and shuns
that which in ordinary cases is least advantageous to that country.

But if, in any one of those distant employments, which in ordinary
cases are less advantageous to the country, the profit should happen
to rise somewhat higher than what is sufficient to balance the natural
preference which is given to nearer employments, this superiority of
profit will draw stock from those nearer employments, till the profits
of all return to their proper level. This superiority of profit,
however, is a proof that, in the actual circumstances of the society,
those distant employments are somewhat understocked in proportion to
other employments, and that the stock of the society is not
distributed in the properest manner among all the different
employments carried on in it. It is a proof that something is either
bought cheaper or sold dearer than it ought to be, and that some
particular class of citizens is more or less oppressed, either by
paying more, or by getting less than what is suitable to that equality
which ought to take place, and which naturally does take place, among
all the different classes of them. Though the same capital never will
maintain the same quantity of productive labour in a distant as in a
near employment, yet a distant employment maybe as necessary for the
welfare of the society as a near one; the goods which the distant
employment deals in being necessary, perhaps, for carrying on many of
the nearer employments. But if the profits of those who deal in such
goods are above their proper level, those goods will be sold dearer
than they ought to be, or somewhat above their natural price, and all
those engaged in the nearer employments will be more or less oppressed
by this high price. Their interest, therefore, in this case, requires,
that some stock should be withdrawn from those nearer employments, and
turned towards that distant one, in order to reduce its profits to
their proper level, and the price of the goods which it deals in to
their natural price. In this extraordinary case, the public interest
requires that some stock should be withdrawn from those employments
which, in ordinary cases, are more advantageous, and turned towards
one which, in ordinary cases, is less advantageous to the public; and,
in this extraordinary case, the natural interests and inclinations of
men coincide as exactly with the public interests as in all other
ordinary cases, and lead them to withdraw stock from the near, and to
turn it towards the distant employments.

It is thus that the private interests and passions of individuals
naturally dispose them to turn their stock towards the employments
which in ordinary cases, are most advantageous to the society. But if
from this natural preference they should turn too much of it towards
those employments, the fall of profit in them, and the rise of it in
all others, immediately dispose them to alter this faulty
distribution. Without any intervention of law, therefore, the private
interests and passions of men naturally lead them to divide and
distribute the stock of every society among all the different
employments carried on in it; as nearly as possible in the proportion
which is most agreeable to the interest of the whole society.

All the different regulations of the mercantile system necessarily
derange more or less this natural and most advantageous distribution
of stock. But those which concern the trade to America and the East
Indies derange it, perhaps, more than any other; because the trade to
those two great continents absorbs a greater quantity of stock than
any two other branches of trade. The regulations, however, by which
this derangement is effected in those two different branches of trade,
are not altogether the same. Monopoly is the great engine of both; but
it is a different sort of monopoly. Monopoly of one kind or another,
indeed, seems to be the sole engine of the mercantile system.

In the trade to America, every nation endeavours to engross as much as
possible the whole market of its own colonies, by fairly excluding all
other nations from any direct trade to them. During the greater part
of the sixteenth century, the Portuguese endeavoured to manage the
trade to the East Indies in the same manner, by claiming the sole
right of sailing in the Indian seas, on account of the merit of having
first found out the road to them. The Dutch still continue to exclude
all other European nations from any direct trade to their spice
islands. Monopolies of this kind are evidently established against all
other European nations, who are thereby not only excluded from a trade
to which it might be convenient for them to turn some part of their
stock, but are obliged to buy the goods which that trade deals in,
somewhat dearer than if they could import them themselves directly
from the countries which produced them.

But since the fall of the power of Portugal, no European nation has
claimed the exclusive right of sailing in the Indian seas, of which
the principal ports are now open to the ships of all European nations.
Except in Portugal, however, and within these few years in France, the
trade to the East Indies has, in every European country, been
subjected to an exclusive company. Monopolies of this kind are
properly established against the very nation which erects them. The
greater part of that nation are thereby not only excluded from a trade
to which it might be convenient for them to turn some part of their
stock, but are obliged to buy the goods which that trade deals in
somewhat dearer than if it was open and free to all their countrymen.
Since the establishment of the English East India company, for
example, the other inhabitants of England, over and above being
excluded from the trade, must have paid, in the price of the East
India goods which they have consumed, not only for all the
extraordinary profits which the company may have made upon those goods
in consequence of their monopoly, but for all the extraordinary waste
which the fraud and abuse inseparable from the management of the
affairs of so great a company must necessarily have occasioned. The
absurdity of this second kind of monopoly, therefore, is much more
manifest than that of the first.

Both these kinds of monopolies derange more or less the natural
distribution of the stock of the society; but they do not always
derange it in the same way.

Monopolies of the first kind always attract to the particular trade in
which they are established a greater proportion of the stock of the
society than what would go to that trade of its own accord.

Monopolies of the second kind may sometimes attract stock towards the
particular trade in which they are established, and sometimes repel it
from that trade, according to different circumstances. In poor
countries, they naturally attract towards that trade more stock than
would otherwise go to it. In rich countries, they naturally repel from
it a good deal of stock which would otherwise go to it.

Such poor countries as Sweden and Denmark, for example, would probably
have never sent a single ship to the East Indies, had not the trade
been subjected to an exclusive company. The establishment of such a
company necessarily encourages adventurers. Their monopoly secures
them against all competitors in the home market, and they have the
same chance for foreign markets with the traders of other nations.
Their monopoly shows them the certainty of a great profit upon a
considerable quantity of goods, and the chance of a considerable
profit upon a great quantity. Without such extraordinary
encouragement, the poor traders of such poor countries would probably
never have thought of hazarding their small capitals in so very
distant and uncertain an adventure as the trade to the East Indies
must naturally have appeared to them.

Such a rich country as Holland, on the contrary, would probably, in
the case of a free trade, send many more ships to the East Indies than
it actually does. The limited stock of the Dutch East India company
probably repels from that trade many great mercantile capitals which
would otherwise go to it. The mercantile capital of Holland is so
great, that it is, as it were, continually overflowing, sometimes into
the public funds of foreign countries, sometimes into loans to private
traders and adventurers of foreign countries, sometimes into the most
round-about foreign trades of consumption, and sometimes into the
carrying trade. All near employments being completely filled up, all
the capital which can be placed in them with any tolerable profit
being already placed in them, the capital of Holland necessarily flows
towards the most distant employments. The trade to the East Indies, if
it were altogether free, would probably absorb the greater part of
this redundant capital. The East Indies offer a market both for the
manufactures of Europe, and for the gold and silver, as well as for
the several other productions of America, greater and more extensive
than both Europe and America put together.

Every derangement of the natural distribution of stock is necessarily
hurtful to the society in which it takes place; whether it be by
repelling from a particular trade the stock which would otherwise go
to it, or by attracting towards a particular trade that which would
not otherwise come to it. If, without any exclusive company, the trade
of Holland to the East Indies would be greater than it actually is,
that country must suffer a considerable loss, by part of its capital
being excluded from the employment most convenient for that port. And,
in the same manner, if, without an exclusive company, the trade of
Sweden and Denmark to the East Indies would be less than it actually
is, or, what perhaps is more probable, would not exist at all, those
two countries must likewise suffer a considerable loss, by part of
their capital being drawn into an employment which must be more or
less unsuitable to their present circumstances. Better for them,
perhaps, in the present circumstances, to buy East India goods of
other nations, even though they should pay somewhat dearer, than to
turn so great a part of their small capital to so very distant a
trade, in which the returns are so very slow, in which that capital
can maintain so small a quantity of productive labour at home, where
productive labour is so much wanted, where so little is done, and
where so much is to do.

Though without an exclusive company, therefore, a particular country
should not be able to carry on any direct trade to the East Indies, it
will not from thence follow, that such a company ought to be
established there, but only that such a country ought not, in these
circumstances, to trade directly to the East Indies. That such
companies are not in general necessary for carrying on the East India
trade, is sufficiently demonstrated by the experience of the
Portuguese, who enjoyed almost the whole of it for more than a century
together, without any exclusive company.

No private merchant, it has been said, could well have capital
sufficient to maintain factors and agents in the different ports of
the East Indies, in order to provide goods for the ships which he
might occasionally send thither; and yet, unless he was able to do
this, the difficulty of finding a cargo might frequently make his
ships lose the season for returning; and the expense of so long a
delay would not only eat up the whole profit of the adventure, but
frequently occasion a very considerable loss. This argument, however,
if it proved any thing at all, would prove that no one great branch of
trade could be carried on without an exclusive company, which is
contrary to the experience of all nations. There is no great branch of
trade, in which the capital of any one private merchant is sufficient
for carrying on all the subordinate branches which must be carried on,
in order to carry on the principal one. But when a nation is ripe for
any great branch of trade, some merchants naturally turn their
capitals towards the principal, and some towards the subordinate
branches of it; and though all the different branches of it are in
this manner carried on, yet it very seldom happens that they are all
carried on by the capital of one private merchant. If a nation,
therefore, is ripe for the East India trade, a certain portion of its
capital will naturally divide itself among all the different branches
of that trade. Some of its merchants will find it for their interest
to reside in the East Indies, and to employ their capitals there in
providing goods for the ships which are to be sent out by other
merchants who reside in Europe. The settlements which different
European nations have obtained in the East Indies, if they were taken
from the exclusive companies to which they at present belong, and put
under the immediate protection of the sovereign, would render this
residence both safe and easy, at least to the merchants of the
particular nations to whom those settlements belong. If, at any
particular time, that part of the capital of any country which of its
own accord tended and inclined, if I may say so, towards the East
India trade, was not sufficient for carrying on all those different
branches of it, it would be a proof that, at that particular time,
that country was not ripe for that trade, and that it would do better
to buy for some time, even at a higher price, from other European
nations, the East India goods it had occasion for, than to import them
itself directly from the East Indies. What it might lose by the high
price of those goods, could seldom be equal to the loss which it would
sustain by the distraction of a large portion of its capital from
other employments more necessary, or more useful, or more suitable to
its circumstances and situation, than a direct trade to the East
Indies.

Though the Europeans possess many considerable settlements both upon
the coast of Africa and in the East Indies, they have not yet
established, in either of those countries, such numerous and thriving
colonies as those in the islands and continent of America. Africa,
however, as well as several of the countries comprehended under the
general name of the East Indies, is inhabited by barbarous nations.
But those nations were by no means so weak and defenceless as the
miserable and helpless Americans; and in proportion to the natural
fertility of the countries which they inhabited, they were, besides,
much more populous. The most barbarous nations either of Africa or of
the East Indies, were shepherds; even the Hottentots were so. But the
natives of every part of America, except Mexico and Peru, were only
hunters and the difference is very great between the number of
shepherds and that of hunters whom the same extent of equally fertile
territory can maintain. In Africa and the East Indies, therefore, it
was more difficult to displace the natives, and to extend the European
plantations over the greater part of the lands of the original
inhabitants. The genius of exclusive companies, besides, is
unfavourable, it has already been observed, to the growth of new
colonies, and has probably been the principal cause of the little
progress which they have made in the East Indies. The Portuguese
carried on the trade both to Africa and the East Indies, without any
exclusive companies; and their settlements at Congo, Angola, and
Benguela, on the coast of Africa, and at Goa in the East Indies though
much depressed by superstition and every sort of bad government, yet
bear some resemblance to the colonies of America, and are partly
inhabited by Portuguese who have been established there for several
generations. The Dutch settlements at the Cape of Good Hope and at
Batavia, are at present the most considerable colonies which the
Europeans have established, either in Africa or in the East Indies;
and both those settlements an peculiarly fortunate in their situation.
The Cape of Good Hope was inhabited by a race of people almost as
barbarous, and quite as incapable of defending themselves, as the
natives of America. It is, besides, the half-way house, if one may say
so, between Europe and the East Indies, at which almost every European
ship makes some stay, both in going and returning. The supplying of
those ships with every sort of fresh provisions, with fruit, and
sometimes with wine, affords alone a very extensive market for the
surplus produce of the colonies. What the Cape of Good Hope is between
Europe and every part of the East Indies, Batavia is between the
principal countries of the East Indies. It lies upon the most
frequented road from Indostan to China and Japan, and is nearly about
mid-way upon that road. Almost all the ships too, that sail between
Europe and China, touch at Batavia; and it is, over and above all
this, the centre and principal mart of what is called the country
trade of the East Indies; not only of that part of it which is carried
on by Europeans, but of that which is carried on by the native
Indians; and vessels navigated by the inhabitants of China and Japan,
of Tonquin, Malacca, Cochin-China, and the island of Celebes, are
frequently to be seen in its port. Such advantageous situations have
enabled those two colonies to surmount all the obstacles which the
oppressive genius of an exclusive company may have occasionally
opposed to their growth. They have enabled Batavia to surmount the
additional disadvantage of perhaps the most unwholesome climate in the
world.

The English and Dutch companies, though they have established no
considerable colonies, except the two above mentioned, have both made
considerable conquests in the East Indies. But in the manner in which
they both govern their new subjects, the natural genius of an
exclusive company has shewn itself most distinctly. In the spice
islands, the Dutch are said to burn all the spiceries which a fertile
season produces, beyond what they expect to dispose of in Europe with
such a profit as they think sufficient. In the islands where they have
no settlements, they give a premium to those who collect the young
blossoms and green leaves of the clove and nutmeg trees, which
naturally grow there, but which this savage policy has now, it is
said, almost completely extirpated. Even in the islands where they
have settlements, they have very much reduced, it is said, the number
of those trees. If the produce even of their own islands was much
greater than what suited their market, the natives, they suspect,
might find means to convey some part of it to other nations; and the
best way, they imagine, to secure their own monopoly, is to take care
that no more shall grow than what they themselves carry to market. By
different arts of oppression, they have reduced the population of
several of the Moluccas nearly to the number which is sufficient to
supply with fresh provisions, and other necessaries of life, their own
insignificant garrisons, and such of their ships as occasionally come
there for a cargo of spices. Under the government even of the
Portuguese, however, those islands are said to have been tolerably
well inhabited. The English company have not yet had time to establish
in Bengal so perfectly destructive a system. The plan of their
government, however, has had exactly the same tendency. It has not
been uncommon, I am well assured, for the chief, that is, the first
clerk or a factory, to order a peasant to plough up a rich field of
poppies, and sow it with rice, or some other grain. The pretence was,
to prevent a scarcity of provisions; but the real reason, to give the
chief an opportunity of selling at a better price a large quantity of
opium which he happened then to have upon hand. Upon other occasions,
the order has been reversed; and a rich field of rice or other grain
has been ploughed up, in order to make room for a plantation of
poppies, when the chief foresaw that extraordinary profit was likely
to be made by opium. The servants of the company have, upon several
occasions, attempted to establish in their own favour the monopoly of
some of the most important branches, not only of the foreign, but of
the inland trade of the country. Had they been allowed to go on, it is
impossible that they should not, at some time or another, have
attempted to restrain the production of the particular articles of
which they had thus usurped the monopoly, not only to the quantity
which they themselves could purchase, but to that which they could
expect to sell with such a profit as they might think sufficient. In
the course of a century or two, the policy of the English company
would, in this manner, have probably proved as completely destructive
as that of the Dutch.

Nothing, however, can be more directly contrary to the real interest
of those companies, considered as the sovereigns of the countries
which they have conquered, than this destructive plan. In almost all
countries, the revenue of the sovereign is drawn from that of the
people. The greater the revenue of the people, therefore, the greater
the annual produce of their land and labour, the more they can afford
to the sovereign. It is his interest, therefore, to increase as much
as possible that annual produce. But if this is the interest of every
sovereign, it is peculiarly so of one whose revenue, like that of the
sovereign of Bengal, arises chiefly from a land-rent. That rent must
necessarily be in proportion to the quantity and value of the produce;
and both the one and the other must depend upon the extent of the
market. The quantity will always be suited, with more or less
exactness, to the consumption of those who can afford to pay for it;
and the price which they will pay will always be in proportion to the
eagerness of their competition. It is the interest of such a
sovereign, therefore, to open the most extensive market for the
produce of his country, to allow the most perfect freedom of commerce,
in order to increase as much as possible the number and competition of
buyers; and upon this account to abolish, not only all monopolies, but
all restraints upon the transportation of the home produce from one
part of the country to mother, upon its exportation to foreign
countries, or upon the importation of goods of' any kind for which it
can be exchanged. He is in this manner most likely to increase both
the quantity and value of that produce, and consequently of his own
share of it, or of his own revenue.

But a company of merchants, are, it seems, incapable of considering
themselves as sovereigns, even after they have become such. Trade, or
buying in order to sell again, they still consider as their principal
business, and by a strange absurdity, regard the character of the
sovereign as but an appendix to that of the merchant; as something
which ought to be made subservient to it, or by means of which they
may be enabled to buy cheaper in India, and thereby to sell with a
better profit in Europe. They endeavour, for this purpose, to keep out
as much as possible all competitors from the market of the countries
which are subject to their government, and consequently to reduce, at
least, some part of the surplus produce of those countries to what is
barely sufficient for supplying their own demand, or to what they can
expect to sell in Europe, with such a profit as they may think
reasonable. Their mercantile habits draw them in this manner, almost
necessarily, though perhaps insensibly, to prefer, upon all ordinary
occasions, the little and transitory profit of the monopolist to the
great and permanent revenue of the sovereign; and would gradually lead
them to treat the countries subject to their government nearly as the
Dutch treat the Moluccas. It is the interest of the East India
company, considered as sovereigns, that the European goods which are
carried to their Indian dominions should be sold there as cheap as
possible; and that the Indian goods which are brought from thence
should bring there as good a price, or should be sold there as dear as
possible. But the reverse of this is their interest as merchants. As
sovereigns, their interest is exactly the same with that of the
country which they govern. As merchants, their interest is directly
opposite to that interest.

But if the genius of such a government, even as to what concerns its
direction in Europe, is in this manner essentially, and perhaps
incurably faulty, that of its administration in India is still more
so. That administration is necessarily composed of a council of
merchants, a profession no doubt extremely respectable, but which in
no country in the world carries along with it that sort of authority
which naturally overawes the people, and without force commands their
willing obedience. Such a council can command obedience only by the
military force with which they are accompanied; and their government
is, therefore, necessarily military and despotical. Their proper
business, however, is that of merchants. It is to sell, upon their
master's account, the European goods consigned to them, and to buy, in
return, Indian goods for the European market. It is to sell the one as
dear, and to buy the other as cheap as possible, and consequently to
exclude, as much as possible, all rivals from the particular market
where they keep their shop. The genius of the administration,
therefore, so far as concerns the trade of the company, is the same as
that of the direction. It tends to make government subservient to the
interest of monopoly, and consequently to stunt the natural growth of
some parts, at least, of the surplus produce of the country, to what
is barely sufficient for answering the demand of the company,

All the members of the administration besides, trade more or less upon
their own account; and it is in vain to prohibit them from doing so.
Nothing can be more completely foolish than to expect that the clerk
of a great counting-house, at ten thousand miles distance, and
consequently almost quite out of sight, should, upon a simple order
from their master, give up at once doing any sort of business upon
their own account abandon for ever all hopes of making a fortune, of
which they have the means in their hands; and content themselves with
the moderate salaries which those masters allow them, and which,
moderate as they are, can seldom be augmented, being commonly as large
as the real profits of the company trade can afford. In such
circumstances, to prohibit the servants of the company from trading
upon their own account, can have scarce any other effect than to
enable its superior servants, under pretence of executing their
master's order, to oppress such of the inferior ones as have had the
misfortune to fall under their displeasure. The servants naturally
endeavour to establish the same monopoly in favour of their own
private trade as of the public trade of the company. If they are
suffered to act as they could wish, they will establish this monopoly
openly and directly, by fairly prohibiting all other people from
trading in the articles in which they choose to deal; and this,
perhaps, is the best and least oppressive way of establishing it. But
if, by an order from Europe, they are prohibited from doing this, they
will, notwithstanding, endeavour to establish a monopoly of the same
kind secretly and indirectly, in a way that is much more destructive
to the country. They will employ the whole authority of government,
and pervert the administration of Justice, in order to harass and ruin
those who interfere with them in any branch of commerce, which by
means of agents, either concealed, or at least not publicly avowed,
they may choose to carry on. But the private trade of the servants
will naturally extend to a much greater variety of articles than the
public trade of the company. The public trade of the company extends
no further than the trade with Europe, and comprehends a part only of
the foreign trade of the country. But the private trade of the
servants may extend to all the different branches both of its inland
and foreign trade. The monopoly of the company can tend only to stunt
the natural growth of that part of the surplus produce which, in the
case of a free trade, would be exported to Europe. That of the
servants tends to stunt the natural growth of every part of the
produce in which they choose to deal; of what is destined for home
consumption, as well as of what is destined for exportation; and
consequently to degrade the cultivation of the whole country, and to
reduce the number of its inhabitants. It tends to reduce the quantity
of every sort of produce, even that of the necessaries of life,
whenever the servants of the country choose to deal in them, to what
those servants can both afford to buy and expect to sell with such a
profit as pleases them.

From the nature of their situation, too, the servants must be more
disposed to support with rigourous severity their own interest,
against that of the country which they govern, than their masters can
be to support theirs. The country belongs to their masters, who cannot
avoid having some regard for the interest of what belongs to them; but
it does not belong to the servants. The real interest of their
masters, if they were capable of understanding it, is the same with
that of the country; {The interest of every proprietor of India stock,
however, is by no means the same with that of the country in the
government of which his vote gives him some influence. --See book v,
chap. 1, part ii.}and it is from ignorance chiefly, and the meanness
of mercantile prejudice, that they ever oppress it. But the real
interest of the servants is by no means the same with that of the
country, and the most perfect information would not necessarily put an
end to their oppressions. The regulations, accordingly, which have
been sent out from Europe, though they have been frequently weak, have
upon most occasions been well meaning. More intelligence, and perhaps
less good meaning, has sometimes appeared in those established by the
servants in India. It is a very singular government in which every
member of the administration wishes to get out of the country, and
consequently to have done with the government, as soon as he can, and
to whose interest, the day after he has left it, and carried his whole
fortune with him, it is perfectly indifferent though the whole country
was swallowed up by an earthquake.

I mean not, however, by any thing which I have here said, to throw any
odious imputation upon the general character of the servants of the
East India company, and touch less upon that of any particular
persons. It is the system of government, the situation in which they
are placed, that I mean to censure, not the character of those who
have acted in it. They acted as their situation naturally directed,
and they who have clamoured the loudest against them would probably
not have acted better themselves. In war and negotiation, the councils
of Madras and Calcutta, have upon several occasions, conducted
themselves with a resolution and decisive wisdom, which would have
done honour to the senate of Rome in the best days of that republic.
The members of those councils, however, had been bred to professions
very different from war and politics. But their situation alone,
without education, experience, or even example, seems to have formed
in them all at once the great qualities which it required, and to have
inspired them both with abilities and virtues which they themselves
could not well know that they possessed. If upon some occasions,
therefore, it has animated them to actions of magnanimity which could
not well have been expected from them, we should not wonder if, upon
others, it has prompted them to exploits of somewhat a different
nature.

Such exclusive companies, therefore, are nuisances in every respect;
always more or less inconvenient to the countries in which they are
established, and destructive to those which have the misfortune to
fall under their government.





CHAPTER VIII.


CONCLUSION OF THE MERCANTILE SYSTEM.

Though the encouragement of exportation, and the discouragement of
importation, are the two great engines by which the mercantile system
proposes to enrich every country, yet, with regard to some particular
commodities, it seems to follow an opposite plan: to discourage
exportation, and to encourage importation. Its ultimate object,
however, it pretends, is always the same, to enrich the country by an
advantageous balance of trade. It discourages the exportation of the
materials of manufacture, and of the instruments of trade, in order to
give our own workmen an advantage, and to enable them to undersell
those of other nations in all foreign markets; and by restraining, in
this manner, the exportation of a few commodities, of no great price,
it proposes to occasion a much greater and more valuable exportation
of others. It encourages the importation of the materials of
manufacture, in order that our own people may be enabled to work them
up more cheaply, and thereby prevent a greater and more valuable
importation of the manufactured commodities. I do not observe, at
least in our statute book, any encouragement given to the importation
of the instruments of trade. When manufactures have advanced to a
certain pitch of greatness, the fabrication of the instruments of
trade becomes itself the object of a great number of very important
manufactures. To give any particular encouragement to the importation
of such instruments, would interfere too much with the interest of
those manufactures. Such importation, therefore, instead of being
encouraged, has frequently been prohibited. Thus the importation of
wool cards, except from Ireland, or when brought in as wreck or prize
goods, was prohibited by the 3rd of Edward IV.; which prohibition was
renewed by the 39th of Elizabeth, and has been continued and rendered
perpetual by subsequent laws.

The importation of the materials of manufacture has sometimes been
encouraged by an exemption from the duties to which other goods are
subject, and sometimes by bounties.

The importation of sheep's wool from several different countries, of
cotton wool from all countries, of undressed flax, of the greater part
of dyeing drugs, of the greater part of undressed hides from Ireland,
or the British colonies, of seal skins from the British Greenland
fishery, of pig and bar iron from the British colonies, as well as of
several other materials of manufacture, has been encouraged by an
exemption from all duties, if properly entered at the custom-house.
The private interest of our merchants and manufacturers may, perhaps,
have extorted from the legislature these exemptions, as well as the
greater part of our other commercial regulations. They are, however,
perfectly just and reasonable; and if, consistently with the
necessities of the state, they could be extended to all the other
materials of manufacture, the public would certainly be a gainer.

The avidity of our great manufacturers, however, has in some cases
extended these exemptions a good deal beyond what can justly be
considered as the rude materials of their work. By the 24th Geo. II.
chap. 46, a small duty of only 1d. the pound was imposed upon the
importation of foreign brown linen yarn, instead of much higher
duties, to which it had been subjected before, viz. of 6d. the pound
upon sail yarn, of 1s. the pound upon all French and Dutch yarn, and
of £2:13:4 upon the hundred weight of all spruce or Muscovia yarn. But
our manufacturers were not long satisfied with this reduction: by the
29th of the same king, chap. 15, the same law which gave a bounty upon
the exportation of British and Irish linen, of which the price did not
exceed 18d. the yard, even this small duty upon the importation of
brown linen yarn was taken away. In the different operations, however,
which are necessary for the preparation of linen yarn, a good deal
more industry is employed, than in the subsequent operation of
preparing linen cloth from linen yarn. To say nothing of the industry
of the flax-growers and flaxdressers, three or four spinners at least
are necessary in order to keep one weaver in constant employment; and
more than four-fifths of the whole quantity of labour necessary for
the preparation of linen cloth, is employed in that of linen yarn; but
our spinners are poor people; women commonly scattered about in all
different parts of the country, without support or protection. It is
not by the sale of their work, but by that of the complete work of the
weavers, that our great master manufacturers make their profits. As it
is their interest to sell the complete manufacture as dear, so it is
to buy the materials as cheap as possible. By extorting from the
legislature bounties upon the exportation of their own linen, high
duties upon the importation of all foreign linen, and a total
prohibition of the home consumption of some sorts of French linen,
they endeavour to sell their own goods as dear as possible. By
encouraging the importation of foreign linen yarn, and thereby
bringing it into competition with that which is made by our own
people, they endeavour to buy the work of the poor spinners as cheap
as possible. They are as intent to keep down the wages of their own
weavers, as the earnings of the poor spinners; and it is by no means
for the benefit of the workmen that they endeavour either to raise the
price of the complete work, or to lower that of the rude materials. It
is the industry which is carried on for the benefit of the rich and
the powerful, that is principally encouraged by our mercantile system.
That which is carried on for the benefit of the poor and the indigent
is too often either neglected or oppressed.

Both the bounty upon the exportation of linen, and the exemption from
the duty upon the importation of foreign yarn, which were granted only
for fifteen years, but continued by two different prolongations,
expire with the end of the session of parliament which shall
immediately follow the 24th of June 1786.

The encouragement given to the importation of the materials of
manufacture by bounties, has been principally confined to such as were
imported from our American plantations.

The first bounties of this kind were those granted about the beginning
of the present century, upon the importation of naval stores from
America. Under this denomination were comprehended timber fit for
masts, yards, and bowsprits; hemp, tar, pitch, and turpentine. The
bounty, however, of £1 the ton upon masting-timber, and that of £6 the
ton upon hemp, were extended to such as should be imported into
England from Scotland. Both these bounties continued, without any
variation, at the same rate, till they were severally allowed to
expire; that upon hemp on the 1st of January 1741, and that upon
masting-timber at the end of the session of parliament immediately
following the 24th June 1781.

The bounties upon the importation of tar, pitch, and turpentine,
underwent, during their continuance, several alterations. Originally,
that upon tar was £4 the ton; that upon pitch the same; and that upon
turpentine £3 the ton. The bounty of £4 the ton upon tar was
afterwards confined to such as had been prepared in a particular
manner; that upon other good, clean, and merchantable tar was reduced
to £2:4s. the ton. The bounty upon pitch was likewise reduced to £1,
and that upon turpentine to £1:10s. the ton.

The second bounty upon the importation of any of the materials of
manufacture, according to the order of time, was that granted by the
21st Geo. II. chap.30, upon the importation of indigo from the British
plantations. When the plantation indigo was worth three-fourths of the
price of the best French indigo, it was, by this act, entitled to a
bounty of 6d. the pound. This bounty, which, like most others, was
granted only for a limited time, was continued by several
prolongations, but was reduced to 4d. the pound. It was allowed to
expire with the end of the session of parliament which followed the
25th March 1781.

The third bounty of this kind was that granted (much about the time
that we were beginning sometimes to court, and sometimes to quarrel
with our American colonies), by the 4th. Geo. III. chap. 26, upon the
importation of hemp, or undressed flax, from the British plantations.
This bounty was granted for twenty-one years, from the 24th June 1764
to the 24th June 1785. For the first seven years, it was to be at the
rate of £8 the ton; for the second at £6; and for the third at £4. It
was not extended to Scotland, of which the climate (although hemp is
sometimes raised there in small quantities, and of an inferior
quality) is not very fit for that produce. Such a bounty upon the
importation of Scotch flax in England would have been too great a
discouragement to the native produce of the southern part of the
united kingdom.

The fourth bounty of this kind was that granted by the 5th Geo. III.
chap. 45, upon the importation of wood from America. It was granted
for nine years from the 1st January 1766 to the 1st January 1775.
During the first three years, it was to be for every
hundred-and-twenty good deals, at the rate of £1, and for every load
containing fifty cubic feet of other square timber, at the rate of
12s. For the second three years, it was for deals, to be at the rate
of 15s., and for other squared timber at the rate of 8s.; and for the
third three years, it was for deals, to be at the rate of 10s.; and
for every other squared timber at the rate of 5s.

The fifth bounty of this kind was that granted by the 9th Geo. III.
chap. 38, upon the importation of raw silk from the British
plantations. It was granted for twenty-one years, from the 1st January
1770, to the 1st January 1791. For the first seven years, it was to be
at the rate of £25 for every hundred pounds value; for the second, at
£20; and for the third, at £15. The management of the silk-worm, and
the preparation of silk, requires so much hand-labour, and labour is
so very dear in America, that even this great bounty, I have been
informed, was not likely to produce any considerable effect.

The sixth Bounty of this kind was that granted by 11th Geo. III. chap.
50, for the importation of pipe, hogshead, and barrelstaves and
leading from the British plantations. It was granted for nine years,
from 1st January 1772 to the 1st January 1781. For the first three
years, it was, for a certain quantity of each, to be at the rate of
£6; for the second three years at £4; and for the third three years at
£2.

The seventh and last bounty of this kind was that granted by the 19th
Geo. III chap. 37, upon the importation of hemp from Ireland. It was
granted in the same manner as that for the importation of hemp and
undressed flax from America, for twenty-one years, from the 24th June
1779 to the 24th June 1800. The term is divided likewise into three
periods, of seven years each; and in each of those periods, the rate
of the Irish bounty is the same with that of the American. It does
not, however, like the American bounty, extend to the importation of
undressed flax. It would have been too great a discouragement to the
cultivation of that plant in Great Britain. When this last bounty was
granted, the British and Irish legislatures were not in much better
humour with one another, than the British and American had been
before. But this boon to Ireland, it is to be hoped, has been granted
under more fortunate auspices than all those to America. The same
commodities, upon which we thus gave bounties, when imported from
America, were subjected to considerable duties when imported from any
other country. The interest of our American colonies was regarded as
the same with that of the mother country. Their wealth was considered
as our wealth. Whatever money was sent out to them, it was said, came
all back to us by the balance of trade, and we could never become a
farthing the poorer by any expense which we could lay out upon them.
They were our own in every respect, and it was an expense laid out
upon the improvement of our own property, and for the profitable
employment of our own people. It is unnecessary, I apprehend, at
present to say anything further, in order to expose the folly of a
system which fatal experience has now sufficiently exposed. Had our
American colonies really been a part of Great Britain, those bounties
might have been considered as bounties upon production, and would
still have been liable to all the objections to which such bounties
are liable, but to no other.

The exportation of the materials of manufacture is sometimes
discouraged by absolute prohibitions, and sometimes by high duties.

Our woollen manufacturers have been more successful than any other
class of workmen, in persuading the legislature that the prosperity of
the nation depended upon the success and extension of their particular
business. They have not only obtained a monopoly against the
consumers, by an absolute prohibition of importing woollen cloths from
any foreign country; but they have likewise obtained another monopoly
against the sheep farmers and growers of wool, by a similar
prohibition of the exportation of live sheep and wool. The severity of
many of the laws which have been enacted for the security of the
revenue is very justly complained of, as imposing heavy penalties upon
actions which, antecedent to the statutes that declared them to be
crimes, had always been understood to be innocent. But the cruellest
of our revenue laws, I will venture to affirm, are mild and gentle, in
comparison to some of those which the clamour of our merchants and
manufacturers has extorted from the legislature, for the support of
their own absurd and oppressive monopolies. Like the laws of Draco,
these laws may be said to be all written in blood.

By the 8th of Elizabeth, chap. 3, the exporter of sheep, lambs, or
rams, was for the first offence, to forfeit all his goods for ever, to
suffer a year's imprisonment, and then to have his left hand cut off
in a market town, upon a market day, to be there nailed up; and for
the second offence, to be adjudged a felon, and to suffer death
accordingly. To prevent the breed of our sheep from being propagated
in foreign countries, seems to have been the object of this law. By
the 13th and 14th of Charles II. chap. 18, the exportation of wool was
made felony, and the exporter subjected to the same penalties and
forfeitures as a felon.

For the honour of the national humanity, it is to be hoped that
neither of these statutes was ever executed. The first of them,
however, so far as I know, has never been directly repealed, and
serjeant Hawkins seems to consider it as still in force. It may,
however, perhaps be considered as virtually repealed by the 12th of
Charles II. chap. 32, sect. 3, which, without expressly taking away
the penalties imposed by former statutes, imposes a new penalty, viz.
that of 20s. for every sheep exported, or attempted to be exported,
together with the forfeiture of the sheep, and of the owner's share of
the sheep. The second of them was expressly repealed by the 7th and
8th of William III. chap. 28, sect. 4, by which it is declared that
"Whereas the statute of the 13th and 14th of king Charles II. made
against the exportation of wool, among other things in the said act
mentioned, doth enact the same to be deemed felony, by the severity of
which penalty the prosecution of offenders hath not been so
effectually put in execution; be it therefore enacted, by the
authority aforesaid, that so much of the said act, which relates to
the making the said offence felony, be repealed and made void."

The penalties, however, which are either imposed by this milder
statute, or which, though imposed by former statutes, are not repealed
by this one, are still sufficiently severe. Besides the forfeiture of
the goods, the exporter incurs the penalty of 3s. for every pound
weight of wool, either exported or attempted to be exported, that is,
about four or five times the value. Any merchant, or other person
convicted of this offence, is disabled from requiring any debt or
account belonging to him from any factor or other person. Let his
fortune be what it will, whether he is or is not able to pay those
heavy penalties, the law means to ruin him completely. But, as the
morals of the great body of the people are not yet so corrupt as those
of the contrivers of this statute, I have not heard that any advantage
has ever been taken of this clause. If the person convicted of this
offence is not able to pay the penalties within three months after
judgment, he is to be transported for seven years; and if he returns
before the expiration of that term, he is liable to the pains of
felony, without benefit of clergy. The owner of the ship, knowing this
offence, forfeits all his interest in the ship and furniture. The
master and mariners, knowing this offence, forfeit all their goods and
chattels, and suffer three months imprisonment. By a subsequent
statute, the master suffers six months imprisonment.

In order to prevent exportation, the whole inland commerce of wool is
laid under very burdensome and oppressive restrictions. It cannot be
packed in any box, barrel, cask, case, chest, or any other package,
but only in packs of leather or pack-cloth, on which must be marked on
the outside the words WOOL or YARN, in large letters, not less than
three inches long, on pain of forfeiting the same and the package, and
8s. for every pound weight, to be paid by the owner or packer. It
cannot be loaden on any horse or cart, or carried by land within five
miles of the coast, but between sun-rising, and sun-setting, on pain
of forfeiting the same, the horses and carriages. The hundred next
adjoining to the sea coast, out of, or through which the wool is
carried or exported, forfeits £20, if the wool is under the value of
£10; and if of greater value, then treble that value, together with
treble costs, to be sued for within the year. The execution to be
against any two of the inhabitants, whom the sessions must reimburse,
by an assessment on the other inhabitants, as in the cases of robbery.
And if any person compounds with the hundred for less than this
penalty, he is to be imprisoned for five years; and any other person
may prosecute. These regulations take place through the whole kingdom.

But in the particular counties of Kent and Sussex, the restrictions
are still more troublesome. Every owner of wool within ten miles of
the sea coast must give an account in writing, three days after
shearing, to the next officer of the customs, of the number of his
fleeces, and of the places where they are lodged. And before he
removes any part of them, he must give the like notice of the number
and weight of the fleeces, and of the name and abode of the person to
whom they are sold, and of the place to which it is intended they
should be carried. No person within fifteen miles of the sea, in the
said counties, can buy any wool, before he enters into bond to the
king, that no part of the wool which he shall so buy shall be sold by
him to any other person within fifteen miles of the sea. If any wool
is found carrying towards the sea side in the said counties, unless it
has been entered and security given as aforesaid, it is forfeited, and
the offender also forfeits 3s. for every pound weight, if any person
lay any wool, not entered as aforesaid, within fifteen miles of the
sea, it must be seized and forfeited; and if, after such seizure, any
person shall claim the same, he must give security to the exchequer,
that if he is cast upon trial he shall pay treble costs, besides all
other penalties.

When such restrictions are imposed upon the inland trade, the coasting
trade, we may believe, cannot be left very free. Every owner of wool,
who carrieth, or causeth to be carried, any wool to any port or place
on the sea coast, in order to be from thence transported by sea to any
other place or port on the coast, must first cause an entry thereof to
be made at the port from whence it is intended to be conveyed,
containing the weight, marks, and number, of the packages, before he
brings the same within five miles of that port, on pain of forfeiting
the same, and also the horses, carts, and other carriages; and also of
suffering and forfeiting, as by the other laws in force against the
exportation of wool. This law, however (1st of William III. chap. 32),
is so very indulgent as to declare, that this shall not hinder any
person from carrying his wool home from the place of shearing, though
it be within five miles of the sea, provided that in ten days after
shearing, and before he remove the wool, he do under his hand certify
to the next officer of the customs the true number of fleeces, and
where it is housed; and do not remove the same, without certifying to
such officer, under his hand, his intention so to do, three days
before. Bond must be given that the wool to be carried coast-ways is
to be landed at the particular port for which it is entered outwards;
and if my part of it is landed without the presence of an officer, not
only the forfeiture of the wool is incurred, as in other goods, but
the usual additional penalty of 3s. for every pound weight is likewise
incurred.

Our woollen manufacturers, in order to justify their demand of such
extraordinary restrictions and regulations, confidently asserted, that
English wool was of a peculiar quality, superior to that of any other
country; that the wool of other countries could not, without some
mixture of it, be wrought up into any tolerable manufacture; that fine
cloth could not be made without it; that England, therefore, if the
exportation of it could be totally prevented, could monopolize to
herself almost the whole woollen trade of the world; and thus, having
no rivals, could sell at what price she pleased, and in a short time
acquire the most incredible degree of wealth by the most advantageous
balance of trade. This doctrine, like most other doctrines which are
confidently asserted by any considerable number of people, was, and
still continues to be, most implicitly believed by a much greater
number: by almost all those who are either unacquainted with the
woollen trade, or who have not made particular inquiries. It is,
however, so perfectly false, that English wool is in any respect
necessary for the making of fine cloth, that it is altogether unfit
for it. Fine cloth is made altogether of Spanish wool. English wool,
cannot be even so mixed with Spanish wool, as to enter into the
composition without spoiling and degrading, in some degree, the fabric
of the cloth.

It has been shown in the foregoing part of this work, that the effect
of these regulations has been to depress the price of English wool,
not only below what it naturally would be in the present times, but
very much below what it actually was in the time of Edward III. The
price of Scotch wool, when, in consequence of the Union, it became
subject to the same regulations, is said to have fallen about one
half. It is observed by the very accurate and intelligent author of
the Memoirs of Wool, the Reverend Mr. John Smith, that the price of
the best English wool in England, is generally below what wool of a
very inferior quality commonly sells for in the market of Amsterdam.
To depress the price of this commodity below what may be called its
natural and proper price, was the avowed purpose of those regulations;
and there seems to be no doubt of their having produced the effect
that was expected from them.

This reduction of price, it may perhaps be thought, by discouraging
the growing of wool, must have reduced very much the annual produce of
that commodity, though not below what it formerly was, yet below what,
in the present state of things, it would probably have been, had it,
in consequence of an open and free market, been allowed to rise to the
natural and proper price. I am, however, disposed to believe, that the
quantity of the annual produce cannot have been much, though it may,
perhaps, have been a little affected by these regulations. The growing
of wool is not the chief purpose for which the sheep farmer employs
his industry and stock. He expects his profit, not so much from the
price of the fleece, as from that of the carcase; and the average or
ordinary price of the latter must even, in many cases, make up to him
whatever deficiency there may be in the average or ordinary price of
the former. It has been observed, in the foregoing part of this work,
that 'whatever regulations tend to sink the price, either of wool or
of raw hides, below what it naturally would be, must, in an improved
and cultivated country, have some tendency to raise the price of
butcher's meat. The price, both of the great and small cattle which
are fed on improved and cultivated land, must be sufficient to pay the
rent which the landlord, and the profit which the farmer, has reason
to expect from improved and cultivated land. If it is not, they will
soon cease to feed them. Whatever part of this price, therefore, is
not paid by the wool and the hide, must be paid by the carcase. The
less there is paid for the one, the more must be paid for the other.
In what manner this price is to be divided upon the different parts of
the beast, is indifferent to the landlords and farmers, provided it is
all paid to them. In an improved and cultivated country, therefore,
their interest as landlords and farmers cannot be much affected by
such regulations, though their interest as consumers may, by the rise
in the price of provisions.' According to this reasoning, therefore,
this degradation in the price of wool is not likely, in an improved
and cultivated country, to occasion any diminution in the annual
produce of that commodity; except so far as, by raising the price of
mutton, it may somewhat diminish the demand for, and consequently the
production of, that particular species of butcher's meat, Its effect,
however, even in this way, it is probable, is not very considerable.

But though its effect upon the quantity of the annual produce may not
have been very considerable, its effect upon the quality, it may
perhaps be thought, must necessarily have been very great. The
degradation in the quality of English wool, if not below what it was
in former times, yet below what it naturally would have been in the
present state of improvement and cultivation, must have been, it may
perhaps be supposed, very nearly in proportion to the degradation of
price. As the quality depends upon the breed, upon the pasture, and
upon the management and cleanliness of the sheep, during the whole
progress of the growth of the fleece, the attention to these
circumstances, it may naturally enough be imagined, can never be
greater than in proportion to the recompence which the price of the
fleece is likely to make for the labour and expense which that
attention requires. It happens, however, that the goodness of the
fleece depends, in a great measure, upon the health, growth, and bulk
of the animal: the same attention which is necessary for the
improvement of the carcase is, in some respect, sufficient for that of
the fleece. Notwithstanding the degradation of price, English wool is
said to have been improved considerably during the course even of the
present century. The improvement, might, perhaps, have been greater if
the price had been better; but the lowness of price, though it may
have obstructed, yet certainly it has not altogether prevented that
improvement.

The violence of these regulations, therefore, seems to have affected
neither the quantity nor the quality of the annual produce of wool, so
much as it might have been expected to do (though I think it probable
that it may have affected the latter a good deal more than the
former); and the interest of the growers of wool, though it must have
been hurt in some degree, seems upon the whole, to have been much less
hurt than could well have been imagined.

These considerations, however, will not justify the absolute
prohibition of the exportation of wool; but they will fully justify
the imposition of a considerable tax upon that exportation.

To hurt, in any degree, the interest of any one order of citizens, for
no other purpose but to promote that of some other, is evidently
contrary to that justice and equality of treatment which the sovereign
owes to all the different orders of his subjects. But the prohibition
certainly hurts, in some degree, the interest of the growers of wool,
for no other purpose but to promote that of the manufacturers.

Every different order of citizens is bound to contribute to the
support of the sovereign or commonwealth. A tax of five, or even of
ten shillings, upon the exportation of every tod of wool, would
produce a very considerable revenue to the sovereign. It would hurt
the interest of the growers somewhat less than the prohibition,
because it would not probably lower the price of wool quite so much.
It would afford a sufficient advantage to the manufacturer, because,
though he might not buy his wool altogether so cheap as under the
prohibition, he would still buy it at least five or ten shillings
cheaper than any foreign manufacturer could buy it, besides saving the
freight and insurance which the other would be obliged to pay. It is
scarce possible to devise a tax which could produce any considerable
revenue to the sovereign, and at the same time occasion so little
inconveniency to anybody.


The prohibition, notwithstanding all the penalties which guard it,
does not prevent the exportation of wool. It is exported, it is well
known, in great quantities. The great difference between the price in
the home and that in the foreign market, presents such a temptation to
smuggling, that all the rigour of the law cannot prevent it. This
illegal exportation is advantageous to nobody but the smuggler. A
legal exportation, subject to a tax, by affording a revenue to the
sovereign, and thereby saving the imposition of some other, perhaps
more burdensome and inconvenient taxes, might prove advantageous to
all the different subjects of the state.

The exportation of fuller's earth, or fuller's clay, supposed to be
necessary for preparing and cleansing the woollen manufactures, has
been subjected to nearly the same penalties as the exportation of
wool. Even tobacco-pipe clay, though acknowledged to be different from
fuller's clay, yet, on account of their resemblance, and because
fuller's clay might sometimes be exported as tobacco-pipe clay, has
been laid under the same prohibitions and penalties.

By the 13th and 14th of Charles II. chap, 7, the exportation, not only
of raw hides, but of tanned leather, except in the shape of boots,
shoes, or slippers, was prohibited; and the law gave a monopoly to our
boot-makers and shoe-makers, not only against our graziers, but
against our tanners. By subsequent statutes, our tanners have got
themselves exempted from this monopoly, upon paying a small tax of
only one shilling on the hundred weight of tanned leather, weighing
one hundred and twelve pounds. They have obtained likewise the
drawback of two-thirds of the excise duties imposed upon their
commodity, even when exported without further manufacture. All
manufactures of leather may be exported duty free; and the exporter is
besides entitled to the drawback of the whole duties of excise. Our
graziers still continue subject to the old monopoly. Graziers,
separated from one another, and dispersed through all the different
corners of the country, cannot, without great difficulty, combine
together for the purpose either of imposing monopolies upon their
fellow-citizens, or of exempting themselves from such as may have been
imposed upon them by other people. Manufacturers of all kinds,
collected together in numerous bodies in all great cities, easily can.
Even the horns of cattle are prohibited to be exported; and the two
insignificant trades of the horner and comb-maker enjoy, in this
respect, a monopoly against the graziers.

Restraints, either by prohibitions, or by taxes, upon the exportation
of goods which are partially, but not completely manufactured, are not
peculiar to the manufacture of leather. As long as anything remains to
be done, in order to fit any commodity for immediate use and
consumption, our manufacturers think that they themselves ought to
have the doing of it. Woollen yarn and worsted are prohibited to be
exported, under the same penalties as wool even white cloths we
subject to a duty upon exportation; and our dyers have so far obtained
a monopoly against our clothiers. Our clothiers would probably have
been able to defend themselves against it; but it happens that the
greater part of our principal clothiers are themselves likewise dyers.
Watch-cases, clock-cases, and dial-plates for clocks and watches, have
been prohibited to be exported. Our clock-makers and watch-makers are,
it seems, unwilling that the price of this sort of workmanship should
be raised upon them by the competition of foreigners.

By some old statutes of Edward III, Henry VIII. and Edward VI. the
exportation of all metals was prohibited. Lead and tin were alone
excepted, probably on account of the great abundance of those metals;
in the exportation of which a considerable part of the trade of the
kingdom in those days consisted. For the encouragement of the mining
trade, the 5th of William and Mary, chap.17, exempted from this
prohibition iron, copper, and mundic metal made from British ore. The
exportation of all sorts of copper bars, foreign as well as British,
was afterwards permitted by the 9th and 10th of William III. chap 26.
The exportation of unmanufactured brass, of what is called gun-metal,
bell-metal, and shroff metal, still continues to be prohibited. Brass
manufactures of all sorts may be exported duty free.

The exportation of the materials of manufacture, where it is not
altogether prohibited, is, in many cases, subjected to considerable
duties.

By the 8th Geo. I. chap.15, the exportation of all goods, the produce
of manufacture of Great Britain, upon which any duties had been
imposed by former statutes, was rendered duty free. The following
goods, however, were excepted: alum, lead, lead-ore, tin, tanned
leather, copperas, coals, wool, cards, white woollen cloths, lapis
calaminaris, skins of all sorts, glue, coney hair or wool, hares wool,
hair of all sorts, horses, and litharge of lead. If you except horses,
all these are either materials of manufacture, or incomplete
manufactures (which may be considered as materials for still further
manufacture), or instruments of trade. This statute leaves them
subject to all the old duties which had ever been imposed upon them,
the old subsidy, and one per cent. outwards.

By the same statute, a great number of foreign drugs for dyers use are
exempted from all duties upon importation. Each of them, however, is
afterwards subjected to a certain duty, not indeed a very heavy one,
upon exportation. Our dyers, it seems, while they thought it for their
interest to encourage the importation of those drugs, by an exemption
from all duties, thought it likewise for their own interest to throw
some small discouragement upon their exportation. The avidity,
however, which suggested this notable piece of mercantile ingenuity,
most probably disappointed itself of its object. It necessarily taught
the importers to be more careful than they might otherwise have been,
that their importation should not exceed what was necessary for the
supply of the home market. The home market was at all times likely to
be more scantily supplied; the commodities were at all times likely to
be somewhat dearer there than they would have been, had the
exportation been rendered as free as the importation.

By the above-mentioned statute, gum senega, or gum arabic, being among
the enumerated dyeing drugs, might be imported duty free. They were
subjected, indeed, to a small poundage duty, amounting only to
threepence in the hundred weight, upon their re-exportation. France
enjoyed, at that time, an exclusive trade to the country most
productive of those drugs, that which lies in the neighbourhood of the
Senegal; and the British market could not be easily supplied by the
immediate importation of them from the place of growth. By the 25th
Geo. II. therefore, gum senega was allowed to be imported (contrary to
the general dispositions of the act of navigation) from any part of
Europe. As the law, however, did not mean to encourage this species of
trade, so contrary to the general principles of the mercantile policy
of England, it imposed a duty of ten shillings the hundred weight upon
such importation, and no part of this duty was to be afterwards drawn
back upon its exportation. The successful war which began in 1755 gave
Great Britain the same exclusive trade to those countries which France
had enjoyed before. Our manufactures, as soon as the peace was made,
endeavoured to avail themselves of this advantage, and to establish a
monopoly in their own favour both against the growers and against the
importers of this commodity. By the 5th of Geo. III. therefore, chap.
37, the exportation of gum senega, from his majesty's dominions in
Africa, was confined to Great Britain, and was subjected to all the
same restrictions, regulations, forfeitures, and penalties, as that of
the enumerated commodities of the British colonies in America and the
West Indies. Its importation, indeed, was subjected to a small duty of
sixpence the hundred weight; but its re-exportation was subjected to
the enormous duty of one pound ten shillings the hundred weight. It
was the intention of our manufacturers, that the whole produce of
those countries should be imported into Great Britain; and in order
that they themselves might be enabled to buy it at their own price,
that no part of it should be exported again, but at such an expense as
would sufficiently discourage that exportation. Their avidity,
however, upon this, as well as upon many other occasions, disappointed
itself of its object. This enormous duty presented such a temptation
to smuggling, that great quantities of this commodity were
clandestinely exported, probably to all the manufacturing countries of
Europe, but particularly to Holland, not only from Great Britain, but
from Africa. Upon this account, by the 14th Geo. III. chap.10, this
duty upon exportation was reduced to five shillings the hundred
weight.

In the book of rates, according to which the old subsidy was levied,
beaver skins were estimated at six shillings and eight pence a piece;
and the different subsidies and imposts which, before the year 1722,
had been laid upon their importation, amounted to one-fifth part of
the rate, or to sixteen pence upon each skin; all of which, except
half the old subsidy, amounting only to twopence, was drawn back upon
exportation. This duty, upon the importation of so important a
material of manufacture, had been thought too high; and, in the year
1722, the rate was reduced to two shillings and sixpence, which
reduced the duty upon importation to sixpence, and of this only
one-half was to be drawn back upon exportation. The same successful
war put the country most productive of beaver under the dominion of
Great Britain; and beaver skins being among the enumerated
commodities, the exportation from America was consequently confined to
the market of Great Britain. Our manufacturers soon bethought
themselves of the advantage which they might make of this
circumstance; and in the year 1764, the duty upon the importation of
beaver skin was reduced to one penny, but the duty upon exportation
was raised to sevenpence each skin, without any drawback of the duty
upon importation. By the same law, a duty of eighteen pence the pound
was imposed upon the exportation of beaver wool or woumbs, without
making any alteration in the duty upon the importation of that
commodity, which, when imported by British, and in British shipping,
amounted at that time to between fourpence and fivepence the piece.

Coals may be considered both as a material of manufacture, and as an
instrument of trade. Heavy duties, accordingly, have been imposed upon
their exportation, amounting at present (1783) to more than five
shillings the ton, or more than fifteen shillings the chaldron,
Newcastle measure; which is, in most cases, more than the original
value of the commodity at the coal-pit, or even at the shipping port
for exportation.

The exportation, however, of the instruments of trade, properly so
called, is commonly restrained, not by high duties, but by absolute
prohibitions. Thus, by the 7th and 8th of William III chap.20, sect.8,
the exportation of frames or engines for knitting gloves or stockings,
is prohibited, under the penalty, not only of the forfeiture of such
frames or engines, so exported, or attempted to be exported, but of
forty pounds, one half to the king, the other to the person who shall
inform or sue for the same. In the same manner, by the 14th Geo. III.
chap. 71, the exportation to foreign parts, of any utensils made use
of in the cotton, linen, woollen, and silk manufactures, is prohibited
under the penalty, not only of the forfeiture of such utensils, but of
two hundred pounds, to be paid by the person who shall offend in this
manner; and likewise of two hundred pounds, to be paid by the master
of the ship, who shall knowingly suffer such utensils to be loaded on
board his ship.

When such heavy penalties were imposed upon the exportation of the
dead instruments of trade, it could not well be expected that the
living instrument, the artificer, should be allowed to go free.
Accordingly, by the 5th Geo. I. chap. 27, the person who shall be
convicted of enticing any artificer, of or in any of the manufactures
of Great Britain, to go into any foreign parts, in order to practise
or teach his trade, is liable, for the first offence, to be fined in
any sum not exceeding one hundred pounds, and to three months
imprisonment, and until the fine shall be paid; and for the second
offence, to be fined in any sum, at the discretion of the court, and
to imprisonment for twelve months, and until the fine shall be paid.
By the 23d Geo. II. chap. 13, this penalty is increased, for the first
offence, to five hundred pounds for every artificer so enticed, and to
twelve months imprisonment, and until the fine shall be paid; and for
the second offence, to one thousand pounds, and to two years
imprisonment, and until the fine shall be paid.

By the former of these two statutes, upon proof that any person has
been enticing any artificer, or that any artificer has promised or
contracted to go into foreign parts, for the purposes aforesaid, such
artificer may be obliged to give security, at the discretion of the
court, that he shall not go beyond the seas, and may be committed to
prison until he give such security.

If any artificer has gone beyond the seas, and is exercising or
teaching his trade in any foreign country, upon warning being given to
him by any of his majesty's ministers or consuls abroad, or by one of
his majesty's secretaries of state, for the time being, if he does
not, within six months after such warning, return into this realm, and
from henceforth abide and inhabit continually within the same, he is
from thenceforth declared incapable of taking any legacy devised to
him within this kingdom, or of being executor or administrator to any
person, or of taking any lands within this kingdom, by descent,
devise, or purchase. He likewise forfeits to the king all his lands,
goods, and chattels; is declared an alien in every respect; and is put
out of the king's protection.

It is unnecessary, I imagine, to observe how contrary such regulations
are to the boasted liberty of the subject, of which we affect to be so
very jealous; but which, in this case, is so plainly sacrificed to the
futile interests of our merchants and manufacturers.

The laudable motive of all these regulations, is to extend our own
manufactures, not by their own improvement, but by the depression of
those of all our neighbours, and by putting an end, as much as
possible, to the troublesome competition of such odious and
disagreeable rivals. Our master manufacturers think it reasonable that
they themselves should have the monopoly of the ingenuity of all their
countrymen. Though by restraining, in some trades, the number of
apprentices which can be employed at one time, and by imposing the
necessity of a long apprenticeship in all trades, they endeavour, all
of them, to confine the knowledge of their respective employments to
as small a number as possible; they are unwilling, however, that any
part of this small number should go abroad to instruct foreigners.

Consumption is the sole end and purpose of all production; and the
interest of the producer ought to be attended to, only so far as it
may be necessary for promoting that of the consumer.

The maxim is so perfectly self-evident, that it would be absurd to
attempt to prove it. But in the mercantile system, the interest of the
consumer is almost constantly sacrificed to that of the producer; and
it seems to consider production, and not consumption, as the ultimate
end and object of all industry and commerce.

In the restraints upon the importation of all foreign commodities
which can come into competition with those of our own growth or
manufacture, the interest of the home consumer is evidently sacrificed
to that of the producer. It is altogether for the benefit of the
latter, that the former is obliged to pay that enhancement of price
which this monopoly almost always occasions.

It is altogether for the benefit of the producer, that bounties are
granted upon the exportation of some of his productions. The home
consumer is obliged to pay, first the tax which is necessary for
paying the bounty; and, secondly, the still greater tax which
necessarily arises from the enhancement of the price of the commodity
in the home market.

By the famous treaty of commerce with Portugal, the consumer is
prevented by duties from purchasing of a neighbouring country, a
commodity which our own climate does not produce; but is obliged to
purchase it of a distant country, though it is acknowledged, that the
commodity of the distant country is of a worse quality than that of
the near one. The home consumer is obliged to submit to this
inconvenience, in order that the producer may import into the distant
country some of his productions, upon more advantageous terms than he
otherwise would have been allowed to do. The consumer, too, is obliged
to pay whatever enhancement in the price of those very productions
this forced exportation may occasion in the home market.

But in the system of laws which has been established for the
management of our American and West Indian colonies, the interest of
the home consumer has been sacrificed to that of the producer, with a
more extravagant profusion than in all our other commercial
regulations. A great empire has been established for the sole purpose
of raising up a nation of customers, who should be obliged to buy,
from the shops of our different producers, all the goods with which
these could supply them. For the sake of that little enhancement of
price which this monopoly might afford our producers, the home
consumers have been burdened with the whole expense of maintaining and
defending that empire. For this purpose, and for this purpose only, in
the two last wars, more than two hundred millions have been spent, and
a new debt of more than a hundred and seventy millions has been
contracted, over and above all that had been expended for the same
purpose in former wars. The interest of this debt alone is not only
greater than the whole extraordinary profit which, it never could be
pretended, was made by the monopoly of the colony trade, but than the
whole value of that trade, or than the whole value of the goods which,
at an average, have been annually exported to the colonies.

It cannot be very difficult to determine who have been the contrivers
of this whole mercantile system; not the consumers, we may believe,
whose interest has been entirely neglected; but the producers, whose
interest has been so carefully attended to; and among this latter
class, our merchants and manufacturers have been by far the principal
architects. In the mercantile regulations which have been taken notice
of in this chapter, the interest of our manufacturers has been most
peculiarly attended to; and the interest, not so much of the
consumers, as that of some other sets of producers, has been
sacrificed to it.





CHAPTER IX.

OF THE AGRICULTURAL SYSTEMS, OR OF THOSE SYSTEMS OF POLITICAL ECONOMY
WHICH REPRESENT THE PRODUCE OF LAND, AS EITHER THE SOLE OR THE
PRINCIPAL SOURCE OF THE REVENUE AND WEALTH OF EVERY COUNTRY.

The agricultural systems of political economy will not require so long
an explanation as that which I have thought it necessary to bestow
upon the mercantile or commercial system.

That system which represents the produce of land as the sole source of
the revenue and wealth of every country, has so far as I know, never
been adopted by any nation, and it at present exists only in the
speculations of a few men of great learning and ingenuity in France.
It would not, surely, be worth while to examine at great length the
errors of a system which never has done, and probably never will do,
any harm in any part of the world. I shall endeavour to explain,
however, as distinctly as I can, the great outlines of this very
ingenious system.

Mr. Colbert, the famous minister of Lewis XIV. was a man of probity,
of great industry, and knowledge of detail; of great experience and
acuteness in the examination of public accounts; and of abilities, in
short, every way fitted for introducing method and good order into the
collection and expenditure of the public revenue. That minister had
unfortunately embraced all the prejudices of the mercantile system, in
its nature and essence a system of restraint and regulation, and such
as could scarce fail to be agreeable to a laborious and plodding man
of business, who had been accustomed to regulate the different
departments of public offices, and to establish the necessary checks
and controls for confining each to its proper sphere. The industry
and commerce of a great country, he endeavoured to regulate upon the
same model as the departments of a public office; and instead of
allowing every man to pursue his own interest his own way, upon the
liberal plan of equality, liberty, and justice, he bestowed upon
certain branches of industry extraordinary privileges, while he laid
others under as extraordinary restraints. He was not only disposed,
like other European ministers, to encourage more the industry of the
towns than that of the country; but, in order to support the industry
of the towns, he was willing even to depress and keep down that of the
country. In order to render provisions cheap to the inhabitants of the
towns, and thereby to encourage manufactures and foreign commerce, he
prohibited altogether the exportation of corn, and thus excluded the
inhabitants of the country from every foreign market, for by far the
most important part of the produce of their industry. This
prohibition, joined to the restraints imposed by the ancient
provincial laws of France upon the transportation of corn from one
province to another, and to the arbitrary and degrading taxes which are
levied upon the cultivators in almost all the provinces, discouraged
and kept down the agriculture of that country very much below the
state to which it would naturally have risen in so very fertile a
soil, and so very happy a climate. This state of discouragement and
depression was felt more or less in every different part of the
country, and many different inquiries were set on foot concerning the
causes of it. One of those causes appeared to be the preference given,
by the institutions of Mr. Colbert, to the industry of the towns above
that of the country.

If the rod be bent too much one way, says the proverb, in order to
make it straight, you must bend it as much the other. The French
philosophers, who have proposed the system which represents
agriculture as the sole source of the revenue and wealth of every
country, seem to have adopted this proverbial maxim; and, as in the
plan of Mr. Colbert, the industry of the towns was certainly
overvalued in comparison with that of the country, so in their system
it seems to be as certainly under-valued.

The different orders of people, who have ever been supposed to
contribute in any respect towards the annual produce of the land and
labour of the country, they divide into three classes. The first is
the class of the proprietors of land. The second is the class of the
cultivators, of farmers and country labourers, whom they honour with
the peculiar appellation of the productive class. The third is the
class of artificers, manufacturers, and merchants, whom they endeavour
to degrade by the humiliating appellation of the barren or
unproductive class.

The class of proprietors contributes to the annual produce, by the
expense which they may occasionally lay out upon the improvement of
the land, upon the buildings, drains, inclosures, and other
ameliorations, which they may either make or maintain upon it, and by
means of which the cultivators are enabled, with the same capital, to
raise a greater produce, and consequently to pay a greater rent. This
advanced rent may be considered as the interest or profit due to the
proprietor, upon the expense or capital which he thus employs in the
improvement of his land. Such expenses are in this system called
ground expenses (depenses foncieres).

The cultivators or farmers contribute to the annual produce, by what
are in this system called the original and annual expenses (depenses
primitives, et depenses annuelles), which they lay out upon the
cultivation of the land. The original expenses consist in the
instruments of husbandry, in the stock of cattle, in the seed, and in
the maintenance of the farmer's family, servants, and cattle, during
at least a great part of the first year of his occupancy, or till he
can receive some return from the land. The annual expenses consist in
the seed, in the wear and tear of instruments of husbandry, and in the
annual maintenance of the farmer's servants and cattle, and of his
family too, so far as any part of them can be considered as servants
employed in cultivation. That part of the produce of the land which
remains to him after paying the rent, ought to be sufficient, first,
to replace to him, within a reasonable time, at least during the term
of his occupancy, the whole of his original expenses, together with
the ordinary profits of stock; and, secondly, to replace to him
annually the whole of his annual expenses, together likewise with the
ordinary profits of stock. Those two sorts of expenses are two
capitals which the farmer employs in cultivation; and unless they are
regularly restored to him, together with a reasonable profit, he
cannot carry on his employment upon a level with other employments;
but, from a regard to his own interest, must desert it as soon as
possible, and seek some other. That part of the produce of the land
which is thus necessary for enabling the farmer to continue his
business, ought to be considered as a fund sacred to cultivation,
which, if the landlord violates, he necessarily reduces the produce of
his own land, and, in a few years, not only disables the farmer from
paying this racked rent, but from paying the reasonable rent which he
might otherwise have got for his land. The rent which properly belongs
to the landlord, is no more than the neat produce which remains after
paying, in the completest manner, all the necessary expenses which
must be previously laid out, in order to raise the gross or the whole
produce. It is because the labour of the cultivators, over and above
paying completely all those necessary expenses, affords a neat produce
of this kind, that this class of people are in this system peculiarly
distinguished by the honourable appellation of the productive class.
Their original and annual expenses are for the same reason called, In
this system, productive expenses, because, over and above replacing
their own value, they occasion the annual reproduction of this neat
produce.

The ground expenses, as they are called, or what the landlord lays out
upon the improvement of his land, are, in this system, too, honoured
with the appellation of productive expenses. Till the whole of those
expenses, together with the ordinary profits of stock, have been
completely repaid to him by the advanced rent which he gets from his
land, that advanced rent ought to be regarded as sacred and
inviolable, both by the church and by the king; ought to be subject
neither to tithe nor to taxation. If it is otherwise, by discouraging
the improvement of land, the church discourages the future increase of
her own tithes, and the king the future increase of his own taxes. As
in a well ordered state of things, therefore, those ground expenses,
over and above reproducing in the completest manner their own value,
occasion likewise, after a certain time, a reproduction of a neat
produce, they are in this system considered as productive expenses.

The ground expenses of the landlord, however, together with the
original and the annual expenses of the farmer, are the only three
sorts of expenses which in this system are considered as productive.
All other expenses, and all other orders of people, even those who, in
the common apprehensions of men, are regarded as the most productive,
are, in this account of things, represented as altogether barren and
unproductive.

Artificers and manufacturers, in particular, whose industry, in the
common apprehensions of men, increases so much the value of the rude
produce of land, are in this system represented as a class of people
altogether barren and unproductive. Their labour, it is said, replaces
only the stock which employs them, together with its ordinary profits.
That stock consists in the materials, tools, and wages, advanced to
them by their employer; and is the fund destined for their employment
and maintenance. Its profits are the fund destined for the maintenance
of their employer. Their employer, as he advances to them the stock of
materials, tools, and wages, necessary for their employment, so he
advances to himself what is necessary for his own maintenance; and
this maintenance he generally proportions to the profit which he
expects to make by the price of their work. Unless its price repays to
him the maintenance which he advances to himself, as well as the
materials, tools, and wages, which he advances to his workmen, it
evidently does not repay to him the whole expense which he lays out
upon it. The profits of manufacturing stock, therefore, are not, like
the rent of land, a neat produce which remains after completely
repaying the whole expense which must be laid out in order to obtain
them. The stock of the farmer yields him a profit, as well as that of
the master manufacturer; and it yields a rent likewise to another
person, which that of the master manufacturer does not. The expense,
therefore, laid out in employing and maintaining artificers and
manufacturers, does no more than continue, if one may say so, the
existence of its own value, and does not produce any new value. It is,
therefore, altogether a barren and unproductive expense. The expense,
on the contrary, laid out in employing farmers and country labourers,
over and above continuing the existence of its own value, produces a
new value the rent of the landlord. It is, therefore, a productive
expense.

Mercantile stock is equally barren and unproductive with manufacturing
stock. It only continues the existence of its own value, without
producing any new value. Its profits are only the repayment of the
maintenance which its employer advances to himself during the time
that he employs it, or till he receives the returns of it. They are
only the repayment of a part of the expense which must be laid out in
employing it.

The labour of artificers and manufacturers never adds any thing to the
value of the whole annual amount of the rude produce of the land. It
adds, indeed, greatly to the value of some particular parts of it. But
the consumption which, in the mean time, it occasions of other parts,
is precisely equal to the value which it adds to those parts; so that
the value of the whole amount is not, at any one moment of time, in
the least augmented by it. The person who works the lace of a pair of
fine ruffles for example, will sometimes raise the value of, perhaps,
a pennyworth of flax to £30 sterling. But though, at first sight, he
appears thereby to multiply the value of a part of the rude produce
about seven thousand and two hundred times, he in reality adds nothing
to the value of the whole annual amount of the rude produce. The
working of that lace costs him, perhaps, two years labour. The £30
which he gets for it when it is finished, is no more than the
repayment of the subsistence which he advances to himself during the
two years that he is employed about it. The value which, by every
day's, month's, or year's labour, he adds to the flax, does no more
than replace the value of his own consumption during that day, month,
or year. At no moment of time, therefore, does he add any thing to the
value of the whole annual amount of the rude produce of the land: the
portion of that produce which he is continually consuming, being
always equal to the value which he is continually producing. The
extreme poverty of the greater part of the persons employed in this
expensive, though trifling manufacture, may satisfy us that the price
of their work does not, in ordinary cases, exceed the value of their
subsistence. It is otherwise with the work of farmers and country
labourers. The rent of the landlord is a value which, in ordinary
cases, it is continually producing over and above replacing, in the
most complete manner, the whole consumption, the whole expense laid
out upon the employment and maintenance both of the workmen and of
their employer.

Artificers, manufacturers, and merchants, can augment the revenue and
wealth of their society by parsimony only; or, as it is expressed in
this system, by privation, that is, by depriving themselves of a part
of the funds destined for their own subsistence. They annually
reproduce nothing but those funds. Unless, therefore, they annually
save some part of them, unless they annually deprive themselves of the
enjoyment of some part of them, the revenue and wealth of their
society can never be, in the smallest degree, augmented by means of
their industry. Farmers and country labourers, on the contrary, may
enjoy completely the whole funds destined for their own subsistence,
and yet augment, at the same time, the revenue and wealth of their
society. Over and above what is destined for their own subsistence,
their industry annually affords a neat produce, of which the
augmentation necessarily augments the revenue and wealth of their
society. Nations, therefore, which, like France or England, consist in
a great measure, of proprietors and cultivators, can be enriched by
industry and enjoyment. Nations, on the contrary, which, like Holland
and Hamburgh, are composed chiefly of merchants, artificers, and
manufacturers, can grow rich only through parsimony and privation. As
the interest of nations so differently circumstanced is very
different, so is likewise the common character of the people. In those
of the former kind, liberality, frankness, and good fellowship,
naturally make a part of their common character; in the latter,
narrowness, meanness, and a selfish disposition, averse to all social
pleasure and enjoyment.

The unproductive class, that of merchants, artificers, and
manufacturers, is maintained and employed altogether at the expense of
the two other classes, of that of proprietors, and of that of
cultivators. They furnish it both with the materials of its work, and
with the fund of its subsistence, with the corn and cattle which it
consumes while it is employed about that work. The proprietors and
cultivators finally pay both the wages of all the workmen of the
unproductive class, and the profits of all their employers. Those
workmen and their employers are properly the servants of the
proprietors and cultivators. They are only servants who work without
doors, as menial servants work within. Both the one and the other,
however, are equally maintained at the expense of the same masters.
The labour of both is equally unproductive. It adds nothing to the
value of the sum total of the rude produce of the land. Instead of
increasing the value of that sum total, it is a charge and expense
which must be paid out of it.

The unproductive class, however, is not only useful, but greatly
useful, to the other two classes. By means of the industry of
merchants, artificers, and manufacturers, the proprietors and
cultivators can purchase both the foreign goods and the manufactured
produce of their own country, which they have occasion for, with the
produce of a much smaller quantity of their own labour, than what they
would be obliged to employ, if they were to attempt, in an awkward and
unskilful manner, either to import the one, or to make the other, for
their own use. By means of the unproductive class, the cultivators are
delivered from many cares, which would otherwise distract their
attention from the cultivation of land. The superiority of produce,
which in consequence of this undivided attention, they are enabled to
raise, is fully sufficient to pay the whole expense which the
maintenance and employment of the unproductive class costs either the
proprietors or themselves. The industry of merchants, artificers, and
manufacturers, though in its own nature altogether unproductive, yet
contributes in this manner indirectly to increase the produce of the
land. It increases the productive powers of productive labour, by
leaving it at liberty to confine itself to its proper employment, the
cultivation of land; and the plough goes frequently the easier and the
better, by means of the labour of the man whose business is most
remote from the plough.

It can never be the interest of the proprietors and cultivators, to
restrain or to discourage, in any respect, the industry of merchants,
artificers, and manufacturers. The greater the liberty which this
unproductive class enjoys, the greater will be the competition in all
the different trades which compose it, and the cheaper will the other
two classes be supplied, both with foreign goods and with the
manufactured produce of their own country.

It can never be the interest of the unproductive class to oppress the
other two classes. It is the surplus produce of the land, or what
remains after deducting the maintenance, first of the cultivators, and
afterwards of the proprietors, that maintains and employs the
unproductive class. The greater this surplus, the greater must
likewise be the maintenance and employment of that class. The
establishment of perfect justice, of perfect liberty, and of perfect
equality, is the very simple secret which most effectually secures the
highest degree of prosperity to all the three classes.

The merchants, artificers, and manufacturers of those mercantile
states, which, like Holland and Hamburgh, consist chiefly of this
unproductive class, are in the same manner maintained and employed
altogether at the expense of the proprietors and cultivators of land.
The only difference is, that those proprietors and cultivators are,
the greater part of them, placed at a most inconvenient distance from
the merchants, artificers, and manufacturers, whom they supply with
the materials of their work and the fund of their subsistence; are the
inhabitants of other countries, and the subjects of other governments.

Such mercantile states, however, are not only useful, but greatly
useful, to the inhabitants of those other countries. They fill up, in
some measure, a very important void; and supply the place of the
merchants, artificers, and manufacturers, whom the inhabitants of
those countries ought to find at home, but whom, from some defect in
their policy, they do not find at home.

It can never be the interest of those landed nations, if I may call
them so, to discourage or distress the industry of such mercantile
states, by imposing high duties upon their trade, or upon the
commodities which they furnish. Such duties, by rendering those
commodities dearer, could serve only to sink the real value of the
surplus produce of their own land, with which, or, what comes to the
same thing, with the price of which those commodities are purchased.
Such duties could only serve to discourage the increase of that
surplus produce, and consequently the improvement and cultivation of
their own land. The most effectual expedient, on the contrary, for
raising the value of that surplus produce, for encouraging its
increase, and consequently the improvement and cultivation of their
own land, would be to allow the most perfect freedom to the trade of
all such mercantile nations.

This perfect freedom of trade would even be the most effectual
expedient for supplying them, in due time, with all the artificers,
manufacturers, and merchants, whom they wanted at home; and for
filling up, in the properest and most advantageous manner, that very
important void which they felt there.

The continual increase of the surplus produce of their land would, in
due time, create a greater capital than what would be employed with
the ordinary rate of profit in the improvement and cultivation of
land; and the surplus part of it would naturally turn itself to the
employment of artificers and manufacturers, at home. But these
artificers and manufacturers, finding at home both the materials of
their work and the fund of their subsistence, might immediately, even
with much less art and skill be able to work as cheap as the little
artificers and manufacturers of such mercantile states, who had both
to bring from a greater distance. Even though, from want of art and
skill, they might not for some time be able to work as cheap, yet,
finding a market at home, they might be able to sell their work there
as cheap as that of the artificers and manufacturers of such
mercantile states, which could not be brought to that market but from
so great a distance; and as their art and skill improved, they would
soon be able to sell it cheaper. The artificers and manufacturers of
such mercantile states, therefore, would immediately be rivalled in
the market of those landed nations, and soon after undersold and
justled out of it altogether. The cheapness of the manufactures of
those landed nations, in consequence of the gradual improvements of
art and skill, would, in due time, extend their sale beyond the home
market, and carry them to many foreign markets, from which they would,
in the same manner, gradually justle out many of the manufacturers of
such mercantile nations.

This continual increase, both of the rude and manufactured produce of
those landed nations, would, in due time, create a greater capital
than could, with the ordinary rate of profit, be employed either in
agriculture or in manufactures. The surplus of this capital would
naturally turn itself to foreign trade and be employed in exporting,
to foreign countries, such parts of the rude and manufactured produce
of its own country, as exceeded the demand of the home market. In the
exportation of the produce of their own country, the merchants of a
landed nation would have an advantage of the same kind over those of
mercantile nations, which its artificers and manufacturers had over
the artificers and manufacturers of such nations; the advantage of
finding at home that cargo, and those stores and provisions, which the
others were obliged to seek for at a distance. With inferior art and
skill in navigation, therefore, they would be able to sell that cargo
as cheap in foreign markets as the merchants of such mercantile
nations; and with equal art and skill they would be able to sell it
cheaper. They would soon, therefore, rival those mercantile nations in
this branch of foreign trade, and, in due time, would justle them out
of it altogether.

According to this liberal and generous system, therefore, the most
advantageous method in which a landed nation can raise up artificers,
manufacturers, and merchants of its own, is to grant the most perfect
freedom of trade to the artificers, manufacturers, and merchants of
all other nations. It thereby raises the value of the surplus produce
of its own land, of which the continual increase gradually establishes
a fund, which, in due time, necessarily raises up all the artificers,
manufacturers, and merchants, whom it has occasion for.

When a landed nation on the contrary, oppresses, either by high duties
or by prohibitions, the trade of foreign nations, it necessarily hurts
its own interest in two different ways. First, by raising the price of
all foreign goods, and of all sorts of manufactures, it necessarily
sinks the real value of the surplus produce of its own land, with
which, or, what comes to the same thing, with the price of which, it
purchases those foreign goods and manufactures. Secondly, by giving a
sort of monopoly of the home market to its own merchants, artificers,
and manufacturers, it raises the rate of mercantile and manufacturing
profit, in proportion to that of agricultural profit; and,
consequently, either draws from agriculture a part of the capital
which had before been employed in it, or hinders from going to it a
part of what would otherwise have gone to it. This policy, therefore,
discourages agriculture in two different ways; first, by sinking the
real value of its produce, and thereby lowering the rate of its
profits; and, secondly, by raising the rate of profit in all other
employments. Agriculture is rendered less advantageous, and trade and
manufactures more advantageous, than they otherwise would be; and
every man is tempted by his own interest to turn, as much as he can,
both his capital and his industry from the former to the latter
employments.

Though, by this oppressive policy, a landed nation should be able to
raise up artificers, manufacturers, and merchants of its own, somewhat
sooner than it could do by the freedom of trade; a matter, however,
which is not a little doubtful; yet it would raise them up, if one may
say so, prematurely, and before it was perfectly ripe for them. By
raising up too hastily one species of industry, it would depress
another more valuable species of industry. By raising up too hastily a
species of industry which duly replaces the stock which employs it,
together with the ordinary profit, it would depress a species of
industry which, over and above replacing that stock, with its profit,
affords likewise a neat produce, a free rent to the landlord. It would
depress productive labour, by encouraging too hastily that labour
which is altogether barren and unproductive.

In what manner, according to this system, the sum total of the annual
produce of the land is distributed among the three classes above
mentioned, and in what manner the labour of the unproductive class
does no more than replace the value of its own consumption, without
increasing in any respect the value of that sum total, is represented
by Mr Quesnai, the very ingenious and profound author of this system,
in some arithmetical formularies. The first of these formularies,
which, by way of eminence, he peculiarly distinguishes by the name of
the Economical Table, represents the manner in which he supposes this
distribution takes place, in a state of the most perfect liberty, and,
therefore, of the highest prosperity; in a state where the annual
produce is such as to afford the greatest possible neat produce, and
where each class enjoys its proper share of the whole annual produce.
Some subsequent formularies represent the manner in which he supposes
this distribution is made in different states of restraint and
regulation; in which, either the class of proprietors, or the barren
and unproductive class, is more favoured than the class of
cultivators; and in which either the one or the other encroaches, more
or less, upon the share which ought properly to belong to this
productive class. Every such encroachment, every violation of that
natural distribution, which the most perfect liberty would establish,
must, according to this system, necessarily degrade, more or less,
from one year to another, the value and sum total of the annual
produce, and must necessarily occasion a gradual declension in the
real wealth and revenue of the society; a declension, of which the
progress must be quicker or slower, according to the degree of this
encroachment, according as that natural distribution, which the most
perfect liberty would establish, is more or less violated. Those
subsequent formularies represent the different degrees of declension
which, according to this system, correspond to the different degrees
in which this natural distribution of things is violated.

Some speculative physicians seem to have imagined that the health of
the human body could be preserved only by a certain precise regimen of
diet and exercise, of which every, the smallest violation, necessarily
occasioned some degree of disease or disorder proportionate to the
degree of the violation. Experience, however, would seem to shew, that
the human body frequently preserves, to all appearance at least, the
most perfect state of health under a vast variety of different
regimens; even under some which are generally believed to be very far
from being perfectly wholesome. But the healthful state of the human
body, it would seem, contains in itself some unknown principle of
preservation, capable either of preventing or of correcting, in many
respects, the bad effects even of a very faulty regimen. Mr Quesnai,
who was himself a physician, and a very speculative physician, seems
to have entertained a notion of the same kind concerning the political
body, and to have imagined that it would thrive and prosper only under
a certain precise regimen, the exact regimen of perfect liberty and
perfect justice. He seems not to have considered, that in the
political body, the natural effort which every man is continually
making to better his own condition, is a principle of preservation
capable of preventing and correcting, in many respects, the bad
effects of a political economy, in some degree both partial and
oppressive. Such a political economy, though it no doubt retards more
or less, is not always capable of stopping altogether, the natural
progress of a nation towards wealth and prosperity, and still less of
making it go backwards. If a nation could not prosper without the
enjoyment of perfect liberty and perfect justice, there is not in the
world a nation which could ever have prospered. In the political body,
however, the wisdom of nature has fortunately made ample provision for
remedying many of the bad effects of the folly and injustice of man;
it the same manner as it has done in the natural body, for remedying
those of his sloth and intemperance.

The capital error of this system, however, seems to lie in its
representing the class of artificers, manufacturers, and merchants, as
altogether barren and unproductive. The following observations may
serve to shew the impropriety of this representation: --

First,    this class, it is acknowledged, reproduces annually the
value of its own annual consmnption, and continues, at least, the
existence of the stock or capital which maintains and employs it. But,
upon this account alone, the denomination of barren or unproductive
should seem to be very improperly applied to it. We should not call a
marriage barren or unproductive, though it produced only a son and a
daughter, to replace the father and mother, and though it did not
increase the number of the human species, but only continued it as it
was before. Farmers and country labourers, indeed, over and above the
stock which maintains and employs them, reproduce annually a neat
produce, a free rent to the landlord. As a marriage which affords
three children is certainly more productive than one which affords
only two, so the labour of farmers and country labourers is certainly
more productive than that of merchants, artificers, and manufacturers.
The superior produce of the one class, however, does not, render the
other barren or unproductive.

Secondly,    it seems, on this account, altogether improper to
consider artificers, manufacturers, and merchants, in the same light
as menial servants. The labour of menial servants does not continue
the existence of the fund which maintains and employs them. Their
maintenance and employment is altogether at the expense of their
masters, and the work which they perform is not of a nature to repay
that expense. That work consists in services which perish generally in
the very instant of their performance, and does not fix or realize
itself in any vendible commodity, which can replace the value of their
wages and maintenance. The labour, on the contrary, of artificers,
manufacturers, and merchants, naturally does fix and realize itself in
some such vendible commodity. It is upon this account that, in the
chapter in which I treat of productive and unproductive labour, I have
classed artificers, manufacturers, and merchants among the productive
labourers, and menial servants among the barren or unproductive.

Thirdly,      it seems, upon every supposition, improper to say, that
the labour of artificers, manufacturers, and merchants, does not
increase the real revenue of the society. Though we should suppose,
for example, as it seems to be supposed in this system, that the value
of the daily, monthly, and yearly consumption of this class was
exactly equal to that of its daily, monthly, and yearly production;
yet it would not from thence follow, that its labour added nothing to
the real revenue, to the real value of the annual produce of the land
and labour of the society. An artificer, for example, who, in the
first six months after harvest, executes ten pounds worth of work,
though he should, in the same time, consume ten pounds worth of corn
and other necessaries, yet really adds the value of ten pounds to the
annual produce of the land and labour of the society. While he has
been consuming a half-yearly revenue of ten pounds worth of corn and
other necessaries, he has produced an equal value of work, capable of
purchasing, either to himself, or to some other person, an equal
half-yearly revenue. The value, therefore, of what has been consumed
and produced during these six months, is equal, not to ten, but to
twenty pounds. It is possible, indeed, that no more than ten pounds
worth of this value may ever have existed at any one moment of time.
But if the ten pounds worth of corn and other necessaries which were
consumed by the artificer, had been consumed by a soldier, or by a
menial servant, the value of that part of the annual produce which
existed at the end of the six months, would have been ten pounds less
than it actually is in consequence of the labour of the artificer.
Though the value of what the artificer produces, therefore, should
not, at any one moment of time, be supposed greater than the value he
consumes, yet, at every moment of time, the actually existing value of
goods in the market is, in consequence of what he produces, greater
than it otherwise would be.

When the patrons of this system assert, that the consumption of
artificers, manufacturer's, and merchants, is equal to the value of
what they produce, they probably mean no more than that their revenue,
or the fund destined for their consumption, is equal to it. But if
they had expressed themselves more accurately, and only asserted, that
the revenue of this class was equal to the value of what they
produced, it might readily have occurred to the reader, that what
would naturally be saved out of this revenue, must necessarily
increase more or less the real wealth of the society. In order,
therefore, to make out something like an argument, it was necessary
that they should express themselves as they have done; and this
argument, even supposing things actually were as it seems to presume
them to be, turns out to be a very inconclusive one.

Fourthly,     farmers and country labourers can no more augment,
without parsimony, the real revenue, the annual produce of the land
and labour of their society, than artificers, manufacturers, and
merchants. The annual produce of the land and labour of any society
can be augmented only in two ways; either, first, by some improvement
in the productive powers of the useful labour actually maintained
within it; or, secondly, by some increase in the quantity of that
labour.

The improvement in the productive powers of useful labour depends,
first, upon the improvement in the ability of the workman; and,
secondly, upon that of the machinery with which he works. But the
labour of artificers and manufacturers, as it is capable of being more
subdivided, and the labour of each workman reduced to a greater
simplicity of operation, than that of farmers and country labourers;
so it is likewise capable of both these sorts of improvement in a much
higher degree {See book i chap. 1.} In this respect, therefore, the
class of cultivators can have no sort of advantage over that of
artificers and manufacturers.

The increase in the quantity of useful labour actually employed within
any society must depend altogether upon the increase of the capital
which employs it; and the increase of that capital, again, must be
exactly equal to the amount of the savings from the revenue, either of
the particular persons who manage and direct the employment of that
capital, or of some other persons, who lend it to them. If merchants,
artificers, and manufacturers are, as this system seems to suppose,
naturally more inclined to parsimony and saving than proprietors and
cultivators, they are, so far, more likely to augment the quantity of
useful labour employed within their society, and consequently to
increase its real revenue, the annual produce of its land and labour.

Fifthly and lastly, though the revenue of the inhabitants of every
country was supposed to consist altogether, as this system seems to
suppose, in the quantity of subsistence which their industry could
procure to them; yet, even upon this supposition, the revenue of a
trading and manufacturing country must, other things being equal,
always be much greater than that of one without trade or manufactures.
By means of trade and manufactures, a greater quantity of subsistence
can be annually imported into a particular country, than what its own
lands, in the actual state of their cultivation, could afford. The
inhabitants of a town, though they frequently possess no lands of
their own, yet draw to themselves, by their industry, such a quantity
of the rude produce of the lands of other people, as supplies them,
not only with the materials of their work, but with the fund of their
subsistence. What a town always is with regard to the country in its
neighbourhood, one independent state or country may frequently be with
regard to other independent states or countries. It is thus that
Holland draws a great part of its subsistence from other countries;
live cattle from Holstein and Jutland, and corn from almost all the
different countries of Europe. A small quantity of manufactured
produce, purchases a great quantity of rude produce. A trading and
manufacturing country, therefore, naturally purchases, with a small
part of its manufactured produce, a great part of the rude produce of
other countries; while, on the contrary, a country without trade and
manufactures is generally obliged to purchase, at the expense of a
great part of its rude produce, a very small part of the manufactured
produce of other countries. The one exports what can subsist and
accommodate but a very few, and imports the subsistence and
accommodation of a great number. The other exports the accommodation
and subsistence of a great number, and imports that of a very few
only. The inhabitants of the one must always enjoy a much greater
quantity of subsistence than what their own lands, in the actual state
of their cultivation, could afford. The inhabitants of the other must
always enjoy a much smaller quantity.

This system, however, with all its imperfections, is perhaps the
nearest approximation to the truth that has yet been published upon
the subject of political economy; and is upon that account, well worth
the consideration of every man who wishes to examine with attention
the principles of that very important science. Though in representing
the labour which is employed upon land as the only productive labour,
the notions which it inculcates are, perhaps, too narrow and confined;
yet in representing the wealth of nations as consisting, not in the
unconsumable riches of money, but in the consumable goods annually
reproduced by the labour of the society, and in representing perfect
liberty as the only effectual expedient for rendering this annual
reproduction the greatest possible, its doctrine seems to be in every
respect as just as it is generous and liberal. Its followers are very
numerous; and as men are fond of paradoxes, and of appearing to
understand what surpasses the comprehensions of ordinary people, the
paradox which it maintains, concerning the unproductive nature of
manufacturing labour, has not, perhaps, contributed a little to
increase the number of its admirers. They have for some years past
made a pretty considerable sect, distinguished in the French republic
of letters by the name of the Economists. Their works have certainly
been of some service to their country; not only by bringing into
general discussion, many subjects which had never been well examined
before, but by influencing, in some measure, the public administration
in favour of agriculture. It has been in consequence of their
representations, accordingly, that the agriculture of France has been
delivered from several of the oppressions which it before laboured
under. The term, during which such a lease can be granted, as will be
valid against every future purchaser or proprietor of the land, has
been prolonged from nine to twenty-seven years. The ancient provincial
restraints upon the transportation of corn from one province of the
kingdom to another, have been entirely taken away; and the liberty of
exporting it to all foreign countries, has been established as the
common law of the kingdom in all ordinary cases. This sect, in their
works, which are very numerous, and which treat not only of what is
properly called Political Economy, or of the nature and causes or the
wealth of nations, but of every other branch of the system of civil
government, all follow implicitly, and without any sensible variation,
the doctrine of Mr. Qttesnai. There is, upon this account, little
variety in the greater part of their works. The most distinct and best
connected account of this doctrine is to be found in a little book
written by Mr. Mercier de la Riviere, some time intendant of
Martinico, entitled, The natural and essential Order of Political
Societies. The admiration of this whole sect for their master, who was
himself a man of the greatest modesty and simplicity, is not inferior
to that of any of the ancient philosophers for the founders of their
respective systems. 'There have been since the world began,' says a
very diligent and respectable author, the Marquis de Mirabeau, 'three
great inventions which have principally given stability to political
societies, independent of many other inventions which have enriched
and adorned them. The first is the invention of writing, which alone
gives human nature the power of transmitting, without alteration, its
laws, its contracts, its annals, and its discoveries. The second is
the invention of money, which binds together all the relations between
civilized societies. The third is the economical table, the result of
the other two, which completes them both by perfecting their object;
the great discovery of our age, but of which our posterity will reap
the benefit.'

As the political economy of the nations of modern Europe has been more
favourable to manufactures and foreign trade, the industry of the
towns, than to agriculture, the industry of the country; so that of
other nations has followed a different plan, and has been more
favourable to agriculture than to manufactures and foreign trade.

The policy of China favours agriculture more than all other
employments. In China, the condition of a labourer is said to be as
much superior to that of an artificer, as in most parts of Europe that
of an artificer is to that of a labourer. In China, the great ambition
of every man is to get possession of a little bit of land, either in
property or in lease; and leases are there said to be granted upon
very moderate terms, and to be sufficiently secured to the lessees.
The Chinese have little respect for foreign trade. Your beggarly
commerce! was the language in which the mandarins of Pekin used to
talk to Mr. De Lange, the Russian envoy, concerning it {See the
Journal of Mr. De Lange, in Bell's Travels, vol. ii. p. 258, 276,
293.}. Except with Japan, the Chinese carry on, themselves, and in
their own bottoms, little or no foreign trade; and it is only into one
or two ports of their kingdom that they even admit the ships of
foreign nations. Foreign trade, therefore, is, in China, every way
confined within a much narrower circle than that to which it would
naturally extend itself, if more freedom was allowed to it, either in
their own ships, or in those of foreign nations.

Manufactures, as in a small bulk they frequently contain a great
value, and can upon that account be transported at less expense from
one country to another than most parts of rude produce, are, in almost
all countries, the principal support of foreign trade. In countries,
besides, less extensive, and less favourably circumstanced for
inferior commerce than China, they generally require the support of
foreign trade. Without an extensive foreign market, they could not
well flourish, either in countries so moderately extensive as to
afford but a narrow home market, or in countries where the
communication between one province and another was so difficult, as to
render it impossible for the goods of any particular place to enjoy
the whole of that home market which the country could afford. The
perfection of manufacturing industry, it must be remembered, depends
altogether upon the division of labour; and the degree to which the
division of labour can be introduced into any manufacture, is
necessarily regulated, it has already been shewn, by the extent of the
market. But the great extent of the empire of China, the vast
multitude of its inhabitants, the variety of climate, and consequently
of productions in its different provinces, and the easy communication
by means of water-carriage between the greater part of them, render
the home market of that country of so great extent, as to be alone
sufficient to support very great manufactures, and to admit of very
considerable subdivisions of labour. The home market of China is,
perhaps, in extent, not much inferior to the market of all the
different countries of Europe put together. A more extensive foreign
trade, however, which to this great home market added the foreign
market of all the rest of the world, especially if any considerable
part of this trade was carried on in Chinese ships, could scarce fail
to increase very much the manufactures of China, and to improve very
much the productive powers of its manufacturing industry. By a more
extensive navigation, the Chinese would naturally learn the art of
using and constructing, themselves, all the different machines made
use of in other countries, as well as the other improvements of art
and industry which are practised in all the different parts of the
world. Upon their present plan, they have little opportunity of
improving themselves by the example of any other nation, except that
of the Japanese.

The policy of ancient Egypt, too, and that of the Gentoo government of
Indostan, seem to have favoured agriculture more than all other
employments.

Both in ancient Egypt and Indostan, the whole body of the people was
divided into different casts or tribes each of which was confined,
from father to son, to a particular employment, or class of
employments. The son of a priest was necessarily a priest; the son of
a soldier, a soldier; the son of a labourer, a labourer; the son of a
weaver, a weaver; the son of a tailor, a tailor, etc. In both
countries, the cast of the priests holds the highest rank, and that of
the soldiers the next; and in both countries the cast of the farmers
and labourers was superior to the casts of merchants and
manufacturers.

The government of both countries was particularly attentive to the
interest of agriculture. The works constructed by the ancient
sovereigns of Egypt, for the proper distribution of the waters of the
Nile, were famous in antiquity, and the ruined remains of some of them
are still the admiration of travellers. Those of the same kind which
were constructed by the ancient sovereigns of Indostan, for the proper
distribution of the waters of the Ganges, as well as of many other
rivers, though they have been less celebrated, seem to have been
equally great. Both countries, accordingly, though subject
occasionally to dearths, have been famous for their great fertility.
Though both were extremely populous, yet, in years of moderate plenty,
they were both able to export great quantities of grain to their
neighbours.

The ancient Egyptians had a superstitious aversion to the sea; and as
the Gentoo religion does not permit its followers to light a fire, nor
consequently to dress any victuals, upon the water, it, in effect,
prohibits them from all distant sea voyages. Both the Egyptians and
Indians must have depended almost altogether upon the navigation of
other nations for the exportation of their surplus produce; and this
dependency, as it must have confined the market, so it must have
discouraged the increase of this surplus produce. It must have
discouraged, too, the increase of the manufactured produce, more than
that of the rude produce. Manufactures require a much more extensive
market than the most important parts of the rude produce of the land.
A single shoemaker will make more than 300 pairs of shoes in the year;
and his own family will not, perhaps, wear out six pairs. Unless,
therefore, he has the custom of, at least, 50 such families as his
own, he cannot dispose of the whole product of his own labour. The
most numerous class of artificers will seldom, in a large country,
make more than one in 50, or one in a 100, of the whole number of
families contained in it. But in such large countries, as France and
England, the number of people employed in agriculture has, by some
authors been computed at a half, by others at a third and by no author
that I know of, at less that a fifth of the whole inhabitants of the
country. But as the produce of the agriculture of both France and
England is, the far greater part of it, consumed at home, each person
employed in it must, according to these computations, require little
more than the custom of one, two, or, at most, of four such families
as his own, in order to dispose of the whole produce of his own
labour. Agriculture, therefore, can support itself under the
discouragement of a confined market much better than manufactures. In
both ancient Egypt and Indostan, indeed, the confinement of the
foreign market was in some measure compensated by the conveniency of
many inland navigations, which opened, in the most advantageous
manner, the whole extent of the home market to every part of the
produce of every different district of those countries. The great
extent of Indostan, too, rendered the home market of that country very
great, and sufficient to support a great variety of manufactures. But
the small extent of ancient Egypt, which was never equal to England,
must at all times, have rendered the home market of that country too
narrow for supporting any great variety of manufactures. Bengal
accordingly, the province of Indostan which commonly exports the
greatest quantity of rice, has always been more remarkable for the
exportation of a great variety of manufactures, than for that of its
grain. Ancient Egypt, on the contrary, though it exported some
manufactures, fine linen in particular, as well as some other goods,
was always most distinguished for its great exportation of grain. It
was long the granary of the Roman empire.

The sovereigns of China, of ancient Egypt, and of the different
kingdoms into which Indostan has, at different times, been divided,
have always derived the whole, or by far the most considerable part,
of their revenue, from some sort of land tax or land rent. This land
tax, or land rent, like the tithe in Europe, consisted in a certain
proportion, a fifth, it is said, of the produce of the land, which was
either delivered in kind, or paid in money, according to a certain
valuation, and which, therefore, varied from year to year, according
to all the variations of the produce. It was natural, therefore, that
the sovereigns of those countries should be particularly attentive to
the interests of agriculture, upon the prosperity or declension of
which immediately depended the yearly increase or diminution of their
own revenue.

The policy of the ancient republics of Greece, and that of Rome,
though it honoured agriculture more than manufactures or foreign
trade, yet seems rather to have discouraged the latter employments,
than to have given any direct or intentional encouragement to the
former. In several of the ancient states of Greece, foreign trade was
prohibited altogether; and in several others, the employments of
artificers and manufacturers were considered as hurtful to the
strength and agility of the human body, as rendering it incapable of
those habits which their military and gymnastic exercises endeavoured
to form in it, and as thereby disqualifying it, more or less, for
undergoing the fatigues and encountering the dangers of war. Such
occupations were considered as fit only for slaves, and the free
citizens of the states were prohibited from exercising them. Even in
those states where no such prohibition took place, as in Rome and
Athens, the great body of the people were in effect excluded from all
the trades which are now commonly exercised by the lower sort of the
inhabitants of towns. Such trades were, at Athens and Rome, all
occupied by the slaves of the rich, who exercised them for the benefit
of their masters, whose wealth, power, and protection, made it almost
impossible for a poor freeman to find a market for his work, when it
came into competition with that of the slaves of the rich. Slaves,
however, are very seldom inventive; and all the most important
improvements, either in machinery, or in the arrangement and
distribution of work, which facilitate and abridge labour have been
the discoveries of freemen. Should a slave propose any improvement of
this kind, his master would be very apt to consider the proposal as
the suggestion of laziness, and of a desire to save his own labour at
the master's expense. The poor slave, instead of reward would probably
meet with much abuse, perhaps with some punishment. In the
manufactures carried on by slaves, therefore, more labour must
generally have been employed to execute the same quantity of work,
than in those carried on by freemen. The work of the farmer must, upon
that account, generally have been dearer than that of the latter. The
Hungarian mines, it is remarked by Mr. Montesquieu, though not richer,
have always been wrought with less expense, and therefore with more
profit, than the Turkish mines in their neighbourhood. The Turkish
mines are wrought by slaves; and the arms of those slaves are the only
machines which the Turks have ever thought of employing. The Hungarian
mines are wrought by freemen, who employ a great deal of machinery, by
which they facilitate and abridge their own labour. From the very
little that is known about the price of manufactures in the times of
the Greeks and Romans, it would appear that those of the finer sort
were excessively dear. Silk sold for its weight in gold. It was not,
indeed, in those times an European manufacture; and as it was all
brought from the East Indies, the distance of the carriage may in some
measure account for the greatness of the price. The price, however,
which a lady, it is said, would sometimes pay for a piece of very fine
linen, seems to have been equally extravagant; and as linen was always
either an European, or at farthest, an Egyptian manufacture, this high
price can be accounted for only by the great expense of the labour
which must have been employed about It, and the expense of this labour
again could arise from nothing but the awkwardness of the machinery
which is made use of. The price of fine woollens, too, though not
quite so extravagant, seems, however, to have been much above that of
the present times. Some cloths, we are told by Pliny {Plin. 1.
ix.c.39.}, dyed in a particular manner, cost a hundred denarii, or
£3:6s:8d. the pound weight. Others, dyed in another manner, cost a
thousand denarii the pound weight, or £33:6s:8d. The Roman pound, it
must be remembered, contained only twelve of our avoirdupois ounces.
This high price, indeed, seems to have been principally owing to the
dye. But had not the cloths themselves been much dearer than any which
are made in the present times, so very expensive a dye would not
probably have been bestowed upon them. The disproportion would have
been too great between the value of the accessory and that of the
principal. The price mentioned by the same author {Plin. 1.
viii.c.48.}, of some triclinaria, a sort of woollen pillows or
cushions made use of to lean upon as they reclined upon their couches
at table, passes all credibility; some of them being said to have cost
more than £30,000, others more than £300,000. This high price, too, is
not said to have arisen from the dye. In the dress of the people of
fashion of both sexes, there seems to have been much less variety, it
is observed by Dr. Arbuthnot, in ancient than in modern times; and the
very little variety which we find in that of the ancient statues,
confirms his observation. He infers from this, that their dress must,
upon the whole, have been cheaper than ours; but the conclusion does
not seem to follow. When the expense of fashionable dress is very
great, the variety must be very small. But when, by the improvements
in the productive powers of manufacturing art and industry, the
expense of any one dress comes to be very moderate, the variety will
naturally be very great. The rich, not being able to distinguish
themselves by the expense of any one dress, will naturally endeavour
to do so by the multitude and variety of their dresses.

The greatest and most important branch of the commerce of every
nation, it has already been observed, is that which is carried on
between the inhabitants of the town and those of the country. The
inhabitants of the town draw from the country the rude produce, which
constitutes both the materials of their work and the fund of their
subsistence; and they pay for this rude produce, by sending back to
the country a certain portion of it manufactured and prepared for
immediate use. The trade which is carried on between these two
different sets of people, consists ultimately in a certain quantity of
rude produce exchanged for a certain quantity of manufactured produce.
The dearer the latter, therefore, the cheaper the former; and whatever
tends in any country to raise the price of manufactured produce, tends
to lower that of the rude produce of the land, and thereby to
discourage agriculture. The smaller the quantity of manufactured
produce, which any given quantity of rude produce, or, what comes to
the same thing, which the price of any given quantity of rude produce,
is capable of purchasing, the smaller the exchangeable value of that
given quantity of rude produce; the smaller the encouragement which
either the landlord has to increase its quantity by improving, or the
farmer by cultivating the land. Whatever, besides, tends to diminish
in any country the number of artificers and manufacturers, tends to
diminish the home market, the most important of all markets, for the
rude produce of the land, and thereby still further to discourage
agriculture.

Those systems, therefore, which preferring agriculture to all other
employments, in order to promote it, impose restraints upon
manufactures and foreign trade, act contrary to the very end which
they propose, and indirectly discourage that very species of industry
which they mean to promote. They are so far, perhaps, more
inconsistent than even the mercantile system. That system, by
encouraging manufactures and foreign trade more than agriculture,
turns a certain portion of the capital of the society, from supporting
a more advantageous, to support a less advantageous species of
industry. But still it really, and in the end, encourages that species
of industry which it means to promote. Those agricultural systems, on
the contrary, really, and in the end, discourage their own favourite
species of industry.

It is thus that every system which endeavours, either, by
extraordinary encouragements to draw towards a particular species of
industry a greater share of the capital of the society than what would
naturally go to it, or, by extraordinary restraints, to force from a
particular species of industry some share of the capital which would
otherwise be employed in it, is, in reality, subversive of the great
purpose which it means to promote. It retards, instead of accelerating
the progress of the society towards real wealth and greatness; and
diminishes, instead of increasing, the real value of the annual
produce of its land and labour.

All systems, either of preference or of restraint, therefore, being
thus completely taken away, the obvious and simple system of natural
liberty establishes itself of its own accord. Every man, as long as he
does not violate the laws of justice, is left perfectly free to pursue
his own interest his own way, and to bring both his industry and
capital into competition with those of any other man, or order of men.
The sovereign is completely discharged from a duty, in the attempting
to perform which he must always be exposed to innumerable delusions,
and for the proper performance of which, no human wisdom or knowledge
could ever be sufficient; the duty of superintending the industry of
private people, and of directing it towards the employments most
suitable to the interests of the society. According to the system of
natural liberty, the sovereign has only three duties to attend to;
three duties of great importance, indeed, but plain and intelligible
to common understandings: first, the duty of protecting the society
from the violence and invasion of other independent societies;
secondly, the duty of protecting, as far as possible, every member of
the society from the injustice or oppression of every other member of
it, or the duty of establishing an exact administration of justice;
and, thirdly, the duty of erecting and maintaining certain public
works, and certain public institutions, which it can never be for the
interest of any individual, or small number of individuals to erect
and maintain; because the profit could never repay the expense to any
individual, or small number of individuals, though it may frequently
do much more than repay it to a great society.

The proper performance of those several duties of the sovereign
necessarily supposes a certain expense; and this expense again
necessarily requires a certain revenue to support it. In the following
book, therefore, I shall endeavour to explain, first, what are the
necessary expenses of the sovereign or commonwealth; and which of
those expenses ought to be defrayed by the general contribution of the
whole society; and which of them, by that of some particular part
only, or of some particular members of the society: secondly, what are
the different methods in which the whole society may be made to
contribute towards defraying the expenses incumbent on the whole
society; and what are the principal advantages and inconveniencies of
each of those methods: and thirdly, what are the reasons and causes
which have induced almost all modern governments to mortgage some part
of this revenue, or to contract debts; and what have been the effects
of those debts upon the real wealth, the annual produce of the land
and labour of the society. The following book, therefore, will
naturally be divided into three chapters.




APPENDIX  TO  BOOK IV

The two following accounts are subjoined, in order to illustrate and
confirm what is said in the fifth chapter of the fourth book,
concerning the Tonnage Bounty to the Whit-herring Fishery. The reader,
I believe, may depend upon the accuracy of both accounts.


An account of Busses fitted out in Scotland for eleven Years, with the
Number of empty Barrels carried out, and the Number of Barrels of
Herrings caught; also the Bounty, at a Medium, on each Barrel of
Sea-sricks, and on each Barrel when fully packed.

Years   Number of  Empty Barrels  Barrels of Her-  Bounty paid on
         Busses     carried out    rings caught      the Busses
                                                        £.  s.  d.
1771          29        5,948        2,832          2,885   0   0
1772         168       41,316       22,237         11,055   7   6
1773         190       42,333       42,055         12,510   8   6
1774         240       59,303       56,365         26,932   2   6
1775         275       69,144       52,879         19,315  15   0
1776         294       76,329       51,863         21,290   7   6
1777         240       62,679       43,313         17,592   2   6
1778         220       56,390       40,958         16,316   2   6
1779         206       55,194       29,367         15,287   0   0
1780         181       48,315       19,885         13,445  12   6
1781         135       33,992       16,593          9,613  15   6

    Totals 2,186      550,943      378,347       £165,463  14   0

Sea-sticks     378,347  Bounty, at a medium, for each
                        barrel of sea-sticks,         £ 0   8   2¼
                        But a barrel of sea-sticks
                        being only reckoned two thirds
                        of a barrel fully packed, one
                        third to be deducted, which
¹/³deducted    126,115  brings the bounty to          £ 0  12   3¾
Barrels fully
packed         252,231

And if the herrings are exported, there is besides a
                                         premium of   £ 0   2   8
So the bounty paid by government in money for each
                                         barrel is    £ 0  14  11¾

But if to this, the duty of the salt usually taken
credit for as expended in curing each barrel, which
at a medium, is, of foreign, one bushel and one-
fourth of a bushel, at 10s. a-bushel, be added, viz     0  12   6
the bounty on each barrel would amount to             £ 1   7   5¾

If the herrings are cured with British salt, it will
stand thus, viz.
Bounty as before                                      £ 0  14  11¾
But if to this bounty, the duty on two bushels of
Scotch salt, at 1s.6d. per bushel, supposed to be
the quantity, at a medium, used in curing each
barrel is added, viz.                                   0   3   0
The bounty on each barrel will amount to              £ 0  17  11¾

And when buss herrings are entered for home
consumption in Scotland, and pay the shilling a
barrel of duty, the bounty stands thus, to wit,
                                         as before    £ 0  12   3¾
From which the shilling a barrel is to be deducted      0   1   0
                                                      £ 0  11   3¾

But to that there is to be added again, the duty of
the foreign salt used curing a barrel of herring viz    0  12   6
So that the premium allowed for each barrel of her-
rings entered for home consumption is                 £ 1   3   9¾


If the herrings are cured in British salt, it will
stand as follows viz.
Bounty on each barrel brought in by the busses, as
above                                                 £ 0  12   3¾
From which deduct 1s. a-barrel, paid at the time
they are entered for home consumption                   0   1   0
                                                      £ 0  11   3¾

But if to the bounty, the the duty on two bushel
of Scotch salt, at 1s.6d. per bushel supposed to
be the quantity, at a medium, used in curing each
barrel, is added, viz                                   0   3   0
the premium for each barrel entered for home
consumption will be                                   £ 1  14   3¾

Though the loss of duties upon herrings exported cannot, perhaps,
properly be considered as bounty, that upon herrings entered for
home consumption certainly may.




An account of the Quantity of Foreign Salt imported into Scotland,
and of Scotch Salt delivered Duty-free from the Works there, for
the Fishery, from the 5th. of April 1771 to the 5th. of April 1782
with the Medium of both for one Year.


                                Foreign Salt      Scotch Salt delivered
           PERIOD                 imported        from the Works
                                  Bushels              Bushels

  From 5th. April 1771 to
      5th. April 1782             936,974              168,226
  Medium for one year              85,159½              15,293¼

It is to be observed, that the bushel of foreign salt weighs 48lbs.,
that of British weighs 56lbs. only.





BOOK V. 

OF THE REVENUE OF THE SOVEREIGN OR COMMONWEALTH



CHAPTER I.

OF THE EXPENSES OF THE SOVEREIGN OR COMMONWEALTH.


PART  I. Of the Expense of Defence.

The first duty of the sovereign, that of protecting the society from
the violence and invasion of other independent societies, can be
performed only by means of a military force. But the expense both of
preparing this military force in time of peace, and of employing it in
time of war, is very different in the different states of society, in
the different periods of improvement.

Among nations of hunters, the lowest and rudest state of society, such
as we find it among the native tribes of North America, every man is a
warrior, as well as a hunter. When he goes to war, either to defend
his society, or to revenge the injuries which have been done to it by
other societies, he maintains himself by his own labour, in the same
manner as when he lives at home. His society (for in this state of
things there is properly neither sovereign nor commonwealth) is at no
sort of expense, either to prepare him for the field, or to maintain
him while he is in it.

Among nations of shepherds, a more advanced state of society, such as
we find it among the Tartars and Arabs, every man is, in the same
manner, a warrior. Such nations have commonly no fixed habitation, but
live either in tents, or in a sort of covered waggons, which are
easily transported from place to place. The whole tribe, or nation,
changes its situation according to the different seasons of the year,
as well as according to other accidents. When its herds and flocks
have consumed the forage of one part of the country, it removes to
another, and from that to a third. In the dry season, it comes down to
the banks of the rivers; in the wet season, it retires to the upper
country. When such a nation goes to war, the warriors will not trust
their herds and flocks to the feeble defence of their old men, their
women and children; and their old men, their women and children, will
not be left behind without defence, and without subsistence. The whole
nation, besides, being accustomed to a wandering life, even in time of
peace, easily takes the field in time of war. Whether it marches as an
army, or moves about as a company of herdsmen, the way of life is
nearly the same, though the object proposed by it be very different.
They all go to war together, therefore, and everyone does as well as
he can. Among the Tartars, even the women have been frequently known
to engage in battle. If they conquer, whatever belongs to the hostile
tribe is the recompence of the victory; but if they are vanquished,
all is lost; and not only their herds and flocks, but their women and
children become the booty of the conqueror. Even the greater part of
those who survive the action are obliged to submit to him for the sake
of immediate subsistence. The rest are commonly dissipated and
dispersed in the desert.

The ordinary life, the ordinary exercise of a Tartar or Arab, prepares
him sufficiently for war. Running, wrestling, cudgel-playing, throwing
the javelin, drawing the bow, etc. are the common pastimes of those
who live in the open air, and are all of them the images of war. When
a Tartar or Arab actually goes to war, he is maintained by his own
herds and flocks, which he carries with him, in the same manner as in
peace. His chief or sovereign (for those nations have all chiefs or
sovereigns) is at no sort of expense in preparing him for the field;
and when he is in it, the chance of plunder is the only pay which he
either expects or requires.

An army of hunters can seldom exceed two or three hundred men. The
precarious subsistence which the chace affords, could seldom allow a
greater number to keep together for any considerable time. An army of
shepherds, on the contrary, may sometimes amount to two or three
hundred thousand. As long as nothing stops their progress, as long as
they can go on from one district, of which they have consumed the
forage, to another, which is yet entire; there seems to be scarce any
limit to the number who can march on together. A nation of hunters can
never be formidable to the civilized nations in their neighbourhood; a
nation of shepherds may. Nothing can be more contemptible than an
Indian war in North America; nothing, on the contrary, can be more
dreadful than a Tartar invasion has frequently been in Asia. The
judgment of Thucydides, that both Europe and Asia could not resist the
Scythians united, has been verified by the experience of all ages. The
inhabitants of the extensive, but defenceless plains of Scythia or
Tartary, have been frequently united under the dominion of the chief
of some conquering horde or clan; and the havock and devastation of
Asia have always signalized their union. The inhabitants of the
inhospitable deserts of Arabia, the other great nation of shepherds,
have never been united but once, under Mahomet and his immediate
successors. Their union, which was more the effect of religious
enthusiasm than of conquest, was signalized in the same manner. If the
hunting nations of America should ever become shepherds, their
neighbourhood would be much more dangerous to the European colonies
than it is at present.

In a yet more advanced state of society, among those nations of
husbandmen who have little foreign commerce, and no other manufactures
but those coarse and household ones, which almost every private family
prepares for its own use, every man, in the same manner, either is a
warrior, or easily becomes such. Those who live by agriculture
generally pass the whole day in the open air, exposed to all the
inclemencies of the seasons. The hardiness of their ordinary life
prepares them for the fatigues of war, to some of which their
necessary occupations bear a great analogy. The necessary occupation
of a ditcher prepares him to work in the trenches, and to fortify a
camp, as well as to inclose a field. The ordinary pastimes of such
husbandmen are the same as those of shepherds, and are in the same
manner the images of war. But as husbandmen have less leisure than
shepherds, they are not so frequently employed in those pastimes. They
are soldiers but soldiers not quite so much masters of their exercise.
Such as they are, however, it seldom costs the sovereign or
commonwealth any expense to prepare them for the field.

Agriculture, even in its rudest and lowest state, supposes a
settlement, some sort of fixed habitation, which cannot be abandoned
without great loss. When a nation of mere husbandmen, therefore, goes
to war, the whole people cannot take the field together. The old men,
the women and children, at least, must remain at home, to take care of
the habitation. All the men of the military age, however, may take the
field, and in small nations of this kind, have frequently done so. In
every nation, the men of the military age are supposed to amount to
about a fourth or a fifth part of the whole body of the people. If the
campaign, too, should begin after seedtime, and end before harvest,
both the husbandman and his principal labourers can be spared from the
farm without much loss. He trusts that the work which must be done in
the mean time, can be well enough executed by the old men, the women,
and the children. He is not unwilling, therefore, to serve without pay
during a short campaign; and it frequently costs the sovereign or
commonwealth as little to maintain him in the field as to prepare him
for it. The citizens of all the different states of ancient Greece
seem to have served in this manner till after the second Persian war;
and the people of Peloponnesus till after the Peloponnesian war. The
Peloponnesians, Thucydides observes, generally left the field in the
summer, and returned home to reap the harvest. The Roman people, under
their kings, and during the first ages of the republic, served in the
same manner. It was not till the seige of Veii, that they who staid at
home began to contribute something towards maintaining those who went
to war. In the European monarchies, which were founded upon the ruins
of the Roman empire, both before, and for some time after, the
establishment of what is properly called the feudal law, the great
lords, with all their immediate dependents, used to serve the crown at
their own expense. In the field, in the same manner as at home, they
maintained themselves by their own revenue, and not by any stipend or
pay which they received from the king upon that particular occasion.

In a more advanced state of society, two different causes contribute
to render it altogether impossible that they who take the field should
maintain themselves at their own expense. Those two causes are, the
progress of manufactures, and the improvement in the art of war.

Though a husbandman should be employed in an expedition, provided it
begins after seedtime, and ends before harvest, the interruption of
his business will not always occasion any considerable diminution of
his revenue. Without the intervention of his labour, Nature does
herself the greater part of the work which remains to be done. But the
moment that an artificer, a smith, a carpenter, or a weaver, for
example, quits his workhouse, the sole source of his revenue is
completely dried up. Nature does nothing for him; he does all for
himself. When he takes the field, therefore, in defence of the public,
as he has no revenue to maintain himself, he must necessarily be
maintained by the public. But in a country, of which a great part of
the inhabitants are artificers and manufacturers, a great part of the
people who go to war must be drawn from those classes, and must,
therefore, be maintained by the public as long as they are employed in
its service,

When the art of war, too, has gradually grown up to be a very
intricate and complicated science; when the event of war ceases to be
determined, as in the first ages of society, by a single irregular
skirmish or battle; but when the contest is generally spun out through
several different campaigns, each of which lasts during the greater
part of the year; it becomes universally necessary that the public
should maintain those who serve the public in war, at least while they
are employed in that service. Whatever, in time of peace, might be the
ordinary occupation of those who go to war, so very tedious and
expensive a service would otherwise be by far too heavy a burden upon
them. After the second Persian war, accordingly, the armies of Athens
seem to have been generally composed of mercenary troops, consisting,
indeed, partly of citizens, but partly, too, of foreigners; and all of
them equally hired and paid at the expense of the state. From the time
of the siege of Veii, the armies of Rome received pay for their
service during the time which they remained in the field. Under the
feudal governments, the military service, both of the great lords, and
of their immediate dependents, was, after a certain period,
universally exchanged for a payment in money, which was employed to
maintain those who served in their stead.

The number of those who can go to war, in proportion to the whole
number of the people, is necessarily much smaller in a civilized than
in a rude state of society. In a civilized society, as the soldiers
are maintained altogether by the labour of those who are not soldiers,
the number of the former can never exceed what the latter can
maintain, over and above maintaining, in a manner suitable to their
respective stations, both themselves and the other officers of
government and law, whom they are obliged to maintain. In the little
agrarian states of ancient Greece, a fourth or a fifth part of the
whole body of the people considered the themselves as soldiers, and
would sometimes, it is said, take the field. Among the civilized
nations of modern Europe, it is commonly computed, that not more than
the one hundredth part of the inhabitants of any country can be
employed as soldiers, without ruin to the country which pays the
expense of their service.

The expense of preparing the army for the field seems not to have
become considerable in any nation, till long after that of maintaining
it in the field had devolved entirely upon the sovereign or
commonwealth. In all the different republics of ancient Greece, to
learn his military exercises, was a necessary part of education
imposed by the state upon every free citizen. In every city there
seems to have been a public field, in which, under the protection of
the public magistrate, the young people were taught their different
exercises by different masters. In this very simple institution
consisted the whole expense which any Grecian state seems ever to have
been at, in preparing its citizens for war. In ancient Rome, the
exercises of the Campus Martius answered the same purpose with those
of the Gymnasium in ancient Greece. Under the feudal governments, the
many public ordinances, that the citizens of every district should
practise archery, as well as several other military exercises, were
intended for promoting the same purpose, but do not seem to have
promoted it so well. Either from want of interest in the officers
entrusted with the execution of those ordinances, or from some other
cause, they appear to have been universally neglected; and in the
progress of all those governments, military exercises seem to have
gone gradually into disuse among the great body of the people.

In the republics of ancient Greece and Rome, during the whole period
of their existence, and under the feudal governments, for a
considerable time after their first establishment, the trade of a
soldier was not a separate, distinct trade, which constituted the sole
or principal occupation of a particular class of citizens; every
subject of the state, whatever might be the ordinary trade or
occupation by which he gained his livelihood, considered himself, upon
all ordinary occasions, as fit likewise to exercise the trade of a
soldier, and, upon many extraordinary occasions, as bound to exercise
it.

The art of war, however, as it is certainly the noblest of all arts,
so, in the progress of improvement, it necessarily becomes one of the
most complicated among them. The state of the mechanical, as well as
some other arts, with which it is necessarily connected, determines
the degree of perfection to which it is capable of being carried at
any particular time. But in order to carry it to this degree of
perfection, it is necessary that it should become the sole or
principal occupation of a particular class of citizens; and the
division of labour is as necessary for the improvement of this, as of
every other art. Into other arts, the division of labour is naturally
introduced by the prudence of individuals, who find that they promote
their private interest better by confining themselves to a particular
trade, than by exercising a great number. But it is the wisdom of the
state only, which can render the trade of a soldier a particular
trade, separate and distinct from all others. A private citizen, who,
in time of profound peace, and without any particular encouragement
from the public, should spend the greater part of his time in military
exercises, might, no doubt, both improve himself very much in them,
and amuse himself very well; but he certainly would not promote his
own interest. It is the wisdom of the state only, which can render it
for his interest to give up the greater part of his time to this
peculiar occupation; and states have not always had this wisdom, even
when their circumstances had become such, that the preservation of
their existence required that they should have it.

A shepherd has a great deal of leisure; a husbandman, in the rude state
of husbandry, has some; an artificer or manufacturer has none at all.
The first may, without any loss, employ a great deal of his time in
martial exercises; the second may employ some part of it; but the last
cannot employ a single hour in them without some loss, and his
attention to his own interest naturally leads him to neglect them
altogether. Those improvements in husbandry, too, which the progress
of arts and manufactures necessarily introduces, leave the husbandman
as little leisure as the artificer. Military exercises come to be as
much neglected by the inhabitants of the country as by those of the
town, and the great body of the people becomes altogether unwarlike.
That wealth, at the same time, which always follows the improvements
of agriculture and manufactures, and which, in reality, is no more
than the accumulated produce of those improvements, provokes the
invasion of all their neighbours. An industrious, and, upon that
account, a wealthy nation, is of all nations the most likely to be
attacked; and unless the state takes some new measure for the public
defence, the natural habits of the people render them altogether
incapable of defending themselves.

In these circumstances, there seem to be but two methods by which the
state can make any tolerable provision for the public defence.

It may either, first, by means of a very rigorous police, and in spite
of the whole bent of the interest, genius, and inclinations of the
people, enforce the practice of military exercises, and oblige either
all the citizens of the military age, or a certain number of them, to
join in some measure the trade of a soldier to whatever other trade or
profession they may happen to carry on.

Or, secondly, by maintaining and employing a certain number of
citizens in the constant practice of military exercises, it may render
the trade of a soldier a particular trade, separate and distinct from
all others.

If the state has recourse to the first of those two expedients, its
military force is said to consist in a militia; if to the second, it
is said to consist in a standing army. The practice of military
exercises is the sole or principal occupation of the soldiers of a
standing army, and the maintenance or pay which the state affords them
is the principal and ordinary fund of their subsistence. The practice
of military exercises is only the occasional occupation of the
soldiers of a militia, and they derive the principal and ordinary fund
of their subsistence from some other occupation. In a militia, the
character of the labourer, artificer, or tradesman, predominates over
that of the soldier; in a standing army, that of the soldier
predominates over every other character; and in this distinction seems
to consist the essential difference between those two different
species of military force.

Militias have been of several different kinds. In some countries, the
citizens destined for defending the state seem to have been exercised
only, without being, if I may say so, regimented; that is, without
being divided into separate and distinct bodies of troops, each of
which performed its exercises under its own proper and permanent
officers. In the republics of ancient Greece and Rome, each citizen,
as long as he remained at home, seems to have practised his exercises,
either separately and independently, or with such of his equals as he
liked best; and not to have been attached to any particular body of
troops, till he was actually called upon to take the field. In other
countries, the militia has not only been exercised, but regimented. In
England, in Switzerland, and, I believe, in every other country of
modern Europe, where any imperfect military force of this kind has
been established, every militiaman is, even in time of peace, attached
to a particular body of troops, which performs its exercises under its
own proper and permanent officers.

Before the invention of fire-arms, that army was superior in which the
soldiers had, each individually, the greatest skill and dexterity in
the use of their arms. Strength and agility of body were of the
highest consequence, and commonly determined the fate of battles. But
this skill and dexterity in the use of their arms could be acquired
only, in the same manner as fencing is at present, by practising, not
in great bodies, but each man separately, in a particular school,
under a particular master, or with his own particular equals and
companions. Since the invention of fire-arms, strength and agility of
body, or even extraordinary dexterity and skill in the use of arms,
though they are far from being of no consequence, are, however, of
less consequence. The nature of the weapon, though it by no means puts
the awkward upon a level with the skilful, puts him more nearly so
than he ever was before. All the dexterity and skill, it is supposed,
which are necessary for using it, can be well enough acquired by
practising in great bodies.

Regularity, order, and prompt obedience to command, are qualities
which, in modern armies, are of more importance towards determining
the fate of battles, than the dexterity and skill of the soldiers in
the use of their arms. But the noise of fire-arms, the smoke, and the
invisible death to which every man feels himself every moment exposed,
as soon as he comes within cannon-shot, and frequently a long time
before the battle can be well said to be engaged, must render it very
difficult to maintain any considerable degree of this regularity,
order, and prompt obedience, even in the beginning of a modern battle.
In an ancient battle, there was no noise but what arose from the human
voice; there was no smoke, there was no invisible cause of wounds or
death. Every man, till some mortal weapon actually did approach him,
saw clearly that no such weapon was near him. In these circumstances,
and among troops who had some confidence in their own skill and
dexterity in the use of their arms, it must have been a good deal less
difficult to preserve some degree of regularity and order, not only in
the beginning, but through the whole progress of an ancient battle,
and till one of the two armies was fairly defeated. But the habits of
regularity, order, and prompt obedience to command, can be acquired
only by troops which are exercised in great bodies.

A militia, however, in whatever manner it may be either disciplined or
exercised, must always be much inferior to a well disciplined and well
exercised standing army.

The soldiers who are exercised only once a week, or once a-month, can
never be so expert in the use of their arms, as those who are
exercised every day, or every other day; and though this circumstance
may not be of so much consequence in modern, as it was in ancient
times, yet the acknowledged superiority of the Prussian troops, owing,
it is said, very much to their superior expertness in their exercise,
may satisfy us that it is, even at this day, of very considerable
consequence.

The soldiers, who are bound to obey their officer only once a-week, or
once a-month, and who are at all other times at liberty to manage
their own affairs their own way, without being, in any respect,
accountable to him, can never be under the same awe in his presence,
can never have the same disposition to ready obedience, with those
whose whole life and conduct are every day directed by him, and who
every day even rise and go to bed, or at least retire to their
quarters, according to his orders. In what is called discipline, or in
the habit of ready obedience, a militia must always be still more
inferior to a standing army, than it may sometimes be in what is
called the manual exercise, or in the management and use of its arms.
But, in modern war, the habit of ready and instant obedience is of
much greater consequence than a considerable superiority in the
management of arms.

Those militias which, like the Tartar or Arab militia, go to war under
the same chieftains whom they are accustomed to obey in peace, are by
far the best. In respect for their officers, in the habit of ready
obedience, they approach nearest to standing armies The Highland
militia, when it served under its own chieftains, had some advantage
of the same kind. As the Highlanders, however, were not wandering, but
stationary shepherds, as they had all a fixed habitation, and were
not, in peaceable times, accustomed to follow their chieftain from
place to place; so, in time of war, they were less willing to follow
him to any considerable distance, or to continue for any long time in
the field. When they had acquired any booty, they were eager to return
home, and his authority was seldom sufficient to detain them. In point
of obedience, they were always much inferior to what is reported of
the Tartars and Arabs. As the Highlanders, too, from their stationary
life, spend less of their time in the open air, they were always less
accustomed to military exercises, and were less expert in the use of
their arms than the Tartars and Arabs are said to be.

A militia of any kind, it must be observed, however, which has served
for several successive campaigns in the field, becomes in every
respect a standing army. The soldiers are every day exercised in the
use of their arms, and, being constantly under the command of their
officers, are habituated to the same prompt obedience which takes
place in standing armies. What they were before they took the field,
is of little importance. They necessarily become in every respect a
standing army, after they have passed a few campaigns in it. Should
the war in America drag out through another campaign, the American
militia may become, in every respect, a match for that standing army,
of which the valour appeared, in the last war at least, not inferior
to that of the hardiest veterans of France and Spain.

This distinction being well understood, the history of all ages, it
will be found, hears testimony to the irresistible superiority which a
well regulated standing army has over a militia.

One of the first standing armies, of which we have any distinct
account in any well authenticated history, is that of Philip of
Macedon. His frequent wars with the Thracians, Illyrians, Thessalians,
and some of the Greek cities in the neighbourhood of Macedon,
gradually formed his troops, which in the beginning were probably
militia, to the exact discipline of a standing army. When he was at
peace, which he was very seldom, and never for any long time together,
he was careful not to disband that army. It vanquished and subdued,
after a long and violent struggle, indeed, the gallant and well
exercised militias of the principal republics of ancient Greece; and
afterwards, with very little struggle, the effeminate and ill
exercised militia of the great Persian empire. The fall of the Greek
republics, and of the Persian empire was the effect of the
irresistible superiority which a standing arm has over every other
sort of militia. It is the first great revolution in the affairs of
mankind of which history has preserved any distinct and circumstantial
account.

The fall of Carthage, and the consequent elevation of Rome, is the
second. All the varieties in the fortune of those two famous republics
may very well be accounted for from the same cause.

From the end of the first to the beginning of the second Carthaginian
war, the armies of Carthage were continually in the field, and
employed under three great generals, who succeeded one another in the
command; Amilcar, his son-in-law Asdrubal, and his son Annibal: first
in chastising their own rebellious slaves, afterwards in subduing the
revolted nations of Africa; and lastly, in conquering the great
kingdom of Spain. The army which Annibal led from Spain into Italy
must necessarily, in those different wars, have been gradually formed
to the exact discipline of a standing army. The Romans, in the
meantime, though they had not been altogether at peace, yet they had
not, during this period, been engaged in any war of very great
consequence; and their military discipline, it is generally said, was
a good deal relaxed. The Roman armies which Annibal encountered at
Trebi, Thrasymenus, and Cannae, were militia opposed to a standing
army. This circumstance, it is probable, contributed more than any
other to determine the fate of those battles.

The standing army which Annibal left behind him in Spain had the like
superiority over the militia which the Romans sent to oppose it; and,
in a few years, under the command of his brother, the younger
Asdrubal, expelled them almost entirely from that country.

Annibal was ill supplied from home. The Roman militia, being
continually in the field, became, in the progress of the war, a well
disciplined and well exercised standing army; and the superiority of
Annibal grew every day less and less. Asdrubal judged it necessary to
lead the whole, or almost the whole, of the standing army which he
commanded in Spain, to the assistance of his brother in Italy. In this
march, he is said to have been misled by his guides; and in a country
which he did not know, was surprised and attacked, by another standing
army, in every respect equal or superior to his own, and was entirely
defeated.

When Asdrubal had left Spain, the great Scipio found nothing to oppose
him but a militia inferior to his own. He conquered and subdued that
militia, and, in the course of the war, his own militia necessarily
became a well disciplined and well exercised standing army. That
standing army was afterwards carried to Africa, where it found nothing
but a militia to oppose it. In order to defend Carthage, it became
necessary to recal the standing army of Annibal. The disheartened and
frequently defeated African militia joined it, and, at the battle of
Zama, composed the greater part of the troops of Annibal. The event of
that day determined the fate of the two rival republics.

From the end of the second Carthaginian war till the fall of the Roman
republic, the armies of Rome were in every respect standing armies.
The standing army of Macedon made some resistance to their arms. In
the height of their grandeur, it cost them two great wars, and three
great battles, to subdue that little kingdom, of which the conquest
would probably have been still more difficult, had it not been for the
cowardice of its last king. The militias of all the civilized nations
of the ancient world, of Greece, of Syria, and of Egypt, made but a
feeble resistance to the standing armies of Rome. The militias of some
barbarous nations defended themselves much better. The Scythian or
Tartar militia, which Mithridates drew from the countries north of the
Euxine and Caspian seas, were the most formidable enemies whom the
Romans had to encounter after the second Carthaginian war. The
Parthian and German militias, too, were always respectable, and upon
several occasions, gained very considerable advantages over the Roman
armies. In general, however, and when the Roman armies were well
commanded, they appear to have been very much superior; and if the
Romans did not pursue the final conquest either of Parthia or Germany,
it was probably because they judged that it was not worth while to add
those two barbarous countries to an empire which was already too
large. The ancient Parthians appear to have been a nation of Scythian
or Tartar extraction, and to have always retained a good deal of the
manners of their ancestors. The ancient Germans were, like the
Scythians or Tartars, a nation of wandering shepherds, who went to war
under the same chiefs whom they were accustomed to follow in peace.
'Their militia was exactly of the same kind with that of the Scythians
or Tartars, from whom, too, they were probably descended.

Many different causes contributed to relax the discipline of the Roman
armies. Its extreme severity was, perhaps, one of those causes. In the
days of their grandeur, when no enemy appeared capable of opposing
them, their heavy armour was laid aside as unnecessarily burdensome,
their laborious exercises were neglected, as unnecessarily toilsome.
Under the Roman emperors, besides, the standing armies of Rome, those
particularly which guarded the German and Pannonian frontiers, became
dangerous to their masters, against whom they used frequently to set
up their own generals. In order to render them less formidable,
according to some authors, Dioclesian, according to others,
Constantine, first withdrew them from the frontier, where they had
always before been encamped in great bodies, generally of two or three
legions each, and dispersed them in small bodies through the different
provincial towns, from whence they were scarce ever removed, but when
it became necessary to repel an invasion. Small bodies of soldiers,
quartered in trading and manufacturing towns, and seldom removed from
those quarters, became themselves trades men, artificers, and
manufacturers. The civil came to predominate over the military
character; and the standing armies of Rome gradually degenerated into
a corrupt, neglected, and undisciplined militia, incapable of
resisting the attack of the German and Scythian militias, which soon
afterwards invaded the western empire. It was only by hiring the
militia of some of those nations to oppose to that of others, that the
emperors were for some time able to defend themselves. The fall of the
western empire is the third great revolution in the affairs of
mankind, of which ancient history has preserved any distinct or
circumstantial account. It was brought about by the irresistible
superiority which the militia of a barbarous has over that of a
civilized nation; which the militia of a nation of shepherds has over
that of a nation of husbandmen, artificers, and manufacturers. The
victories which have been gained by militias have generally been, not
over standing armies, but over other militias, in exercise and
discipline inferior to themselves. Such were the victories which the
Greek militia gained over that of the Persian empire; and such, too,
were those which, in later times, the Swiss militia gained over that
of the Austrians and Burgundians.

The military force of the German and Scythian nations, who established
themselves upon ruins of the western empire, continued for some time
to be of the same kind in their new settlements, as it had been in
their original country. It was a militia of shepherds and husbandmen,
which, in time of war, took the field under the command of the same
chieftains whom it was accustomed to obey in peace. It was, therefore,
tolerably well exercised, and tolerably well disciplined. As arts and
industry advanced, however, the authority of the chieftains gradually
decayed, and the great body of the people had less time to spare for
military exercises. Both the discipline and the exercise of the feudal
militia, therefore, went gradually to ruin, and standing armies were
gradually introduced to supply the place of it. When the expedient of
a standing army, besides, had once been adopted by one civilized
nation, it became necessary that all its neighbours should follow the
example. They soon found that their safety depended upon their doing
so, and that their own militia was altogether incapable of resisting
the attack of such an army.

The soldiers of a standing army, though they may never have seen an
enemy, yet have frequently appeared to possess all the courage of
veteran troops, and, the very moment that they took the field, to have
been fit to face the hardiest and most experienced veterans. In 1756,
when the Russian army marched into Poland, the valour of the Russian
soldiers did not appear inferior to that of the Prussians, at that
time supposed to be the hardiest and most experienced veterans in
Europe. The Russian empire, however, had enjoyed a profound peace for
near twenty years before, and could at that time have very few
soldiers who had ever seen an enemy. When the Spanish war broke out in
1739, England had enjoyed a profound peace for about eight-and-twenty
years. The valour of her soldiers, however, far from being corrupted
by that long peace, was never more distinguished than in the attempt
upon Carthagena, the first unfortunate exploit of that unfortunate
war. In a long peace, the generals, perhaps, may sometimes forget
their skill; but where a well regulated standing army has been kept
up, the soldiers seem never to forget their valour.

When a civilized nation depends for its defence upon a militia, it is
at all times exposed to be conquered by any barbarous nation which
happens to be in its neighbourhood. The frequent conquests of all the
civilized countries in Asia by the Tartars, sufficiently demonstrates
the natural superiority which the militia of a barbarous has over that
of a civilized nation. A well regulated standing army is superior to
every militia. Such an army, as it can best be maintained by an
opulent and civilized nation, so it can alone defend such a nation
against the invasion of a poor and barbarous neighbour. It is only by
means of a standing army, therefore, that the civilization of any
country can be perpetuated, or even preserved, for any considerable
time.

As it is only by means of a well regulated standing army, that a
civilized country can be defended, so it is only by means of it that a
barbarous country can be suddenly and tolerably civilized. A standing
army establishes, with an irresistible force, the law of the sovereign
through the remotest provinces of the empire, and maintains some
degree of regular government in countries which could not otherwise
admit of any. Whoever examines with attention, the improvements which
Peter the Great introduced into the Russian empire, will find that
they almost all resolve themselves into the establishment of a well
regulated standing army. It is the instrument which executes and
maintains all his other regulations. That degree of order and internal
peace, which that empire has ever since enjoyed, is altogether owing
to the influence of that army.

Men of republican principles have been jealous of a standing army, as
dangerous to liberty. It certainly is so, wherever the interest of the
general, and that of the principal officers, are not necessarily
connected with the support of the constitution of the state. The
standing army of Caesar destroyed the Roman republic. The standing
army of Cromwell turned the long parliament out of doors. But where
the sovereign is himself the general, and the principal nobility and
gentry of the country the chief officers of the army; where the
military force is placed under the command of those who have the
greatest interest in the support of the civil authority, because they
have themselves the greatest share of that authority, a standing army
can never be dangerous to liberty. On the contrary, it may, in some
cases, be favourable to liberty. The security which it gives to the
sovereign renders unnecessary that troublesome jealousy, which, in
some modern republics, seems to watch over the minutest actions, and
to be at all times ready to disturb the peace of every citizen. Where
the security of the magistrate, though supported by the principal
people of the country, is endangered by every popular discontent;
where a small tumult is capable of bringing about in a few hours a
great revolution, the whole authority of government must be employed
to suppress and punish every murmur and complaint against it. To a
sovereign, on the contrary, who feels himself supported, not only by
the natural aristocracy of the country, but by a well regulated
standing army, the rudest, the most groundless, and the most
licentious remonstrances, can give little disturbance. He can safely
pardon or neglect them, and his consciousness of his own superiority
naturally disposes him to do so. That degree of liberty which
approaches to licentiousness, can be tolerated only in countries where
the sovereign is secured by a well regulated standing army. It is in
such countries only, that the public safety does not require that the
sovereign should be trusted with any discretionary power, for
suppressing even the impertinent wantonness of this licentious
liberty.

The first duty of the sovereign, therefore, that of defending the
society from the violence and injustice of other independent
societies, grows gradually more and more expensive, as the society
advances in civilization. The military force of the society, which
originally cost the sovereign no expense, either in time of peace, or
in time of war, must, in the progress of improvement, first be
maintained by him in time of war, and afterwards even in time of
peace.

The great change introduced into the art of war by the invention of
fire-arms, has enhanced still further both the expense of exercising
and disciplining any particular number of soldiers in time of peace,
and that of employing them in time of war. Both their arms and their
ammunition are become more expensive. A musket is a more expensive
machine than a javelin or a bow and arrows; a cannon or a mortar, than
a balista or a catapulta. The powder which is spent in a modern review
is lost irrecoverably, and occasions a very considerable expense. The
javelins and arrows which were thrown or shot in an ancient one, could
easily be picked up again, and were, besides, of very little value.
The cannon and the mortar are not only much dearer, but much heavier
machines than the balista or catapulta; and require a greater expense,
not only to prepare them for the field, but to carry them to it. As
the superiority of the modern artillery, too, over that of the
ancients, is very great; it has become much more difficult, and
consequently much more expensive, to fortify a town, so as to resist,
even for a few weeks, the attack of that superior artillery. In modern
times, many different causes contribute to render the defence of the
society more expensive. The unavoidable effects of the natural
progress of improvement have, in this respect, been a good deal
enhanced by a great revolution in the art of war, to which a mere
accident, the invention of gunpowder, seems to have given occasion.

In modern war, the great expense of firearms gives an evident
advantage to the nation which can best afford that expense; and,
consequently, to an opulent and civilized, over a poor and barbarous
nation. In ancient times, the opulent and civilized found it difficult
to defend themselves against the poor and barbarous nations. In modern
times, the poor and barbarous find it difficult to defend themselves
against the opulent and civilized. The invention of fire-arms, an
invention which at first sight appears to be so pernicious, is
certainly favourable, both to the permanency and to the extension of
civilization.


PART   II.

Of the Expense of Justice

The second duty of the sovereign, that of protecting, as far as
possible, every member of the society from the injustice or oppression
of every other member of it, or the duty of establishing an exact
administration of justice, requires two very different degrees of
expense in the different periods of society.

Among nations of hunters, as there is scarce any property, or at least
none that exceeds the value of two or three days labour; so there is
seldom any established magistrate, or any regular administration of
justice. Men who have no property, can injure one another only in
their persons or reputations. But when one man kills, wounds, beats,
or defames another, though he to whom the injury is done suffers, he
who does it receives no benefit. It is otherwise with the injuries to
property. The benefit of the person who does the injury is often equal
to the loss of him who suffers it. Envy, malice, or resentment, are
the only passions which can prompt one man to injure another in his
person or reputation. But the greater part of men are not very
frequently under the influence of those passions; and the very worst
men are so only occasionally. As their gratification, too, how
agreeable soever it may be to certain characters, is not attended with
any real or permanent advantage, it is, in the greater part of men,
commonly restrained by prudential considerations. Men may live
together in society with some tolerable degree of security, though
there is no civil magistrate to protect them from the injustice of
those passions. But avarice and ambition in the rich, in the poor the
hatred of labour and the love of present ease and enjoyment, are the
passions which prompt to invade property; passions much more steady in
their operation, and much more universal in their influence. Wherever
there is a great property, there is great inequality. For one very
rich man, there must be at least five hundred poor, and the affluence
of the few supposes the indigence of the many. The affluence of the
rich excites the indignation of the poor, who are often both driven by
want, and prompted by envy to invade his possessions. It is only under
the shelter of the civil magistrate, that the owner of that valuable
property, which is acquired by the labour of many years, or perhaps of
many successive generations, can sleep a single night in security. He
is at all times surrounded by unknown enemies, whom, though he never
provoked, he can never appease, and from whose injustice he can be
protected only by the powerful arm of the civil magistrate,
continually held up to chastise it. The acquisition of valuable and
extensive property, therefore, necessarily requires the establishment
of civil government. Where there is no property, or at least none that
exceeds the value of two or three days labour, civil government is not
so necessary.

Civil government supposes a certain subordination. But as the
necessity of civil government gradually grows up with the acquisition
of valuable property; so the principal causes, which naturally
introduce subordination, gradually grow up with the growth of that
valuable property.

The causes or circumstances which naturally introduce subordination,
or which naturally and antecedent to any civil institution, give some
men some superiority over the greater part of their brethren, seem to
be four in number.

The first of those causes or circumstances, is the superiority of
personal qualifications, of strength, beauty, and agility of body; of
wisdom and virtue; of prudence, justice, fortitude, and moderation of
mind. The qualifications of the body, unless supported by those of the
mind, can give little authority in any period of society. He is a very
strong man, who, by mere strength of body, can force two weak ones to
obey him. The qualifications of the mind can alone give very great
authority They are however, invisible qualities; always disputable,
and generally disputed. No society, whether barbarous or civilized,
has ever found it convenient to settle the rules of precedency of rank
and subordination, according to those invisible qualities; but
according to something that is more plain and palpable.

The second of those causes or circumstances, is the superiority of
age. An old man, provided his age is not so far advanced as to give
suspicion of dotage, is everywhere more respected than a young man of
equal rank, fortune, and abilities. Among nations of hunters, such as
the native tribes of North America, age is the sole foundation of rank
and precedency. Among them, father is the appellation of a superior;
brother, of an equal; and son, of an inferior. In the most opulent and
civilized nations, age regulates rank among those who are in every
other respect equal; and among whom, therefore, there is nothing else
to regulate it. Among brothers and among sisters, the eldest always
takes place; and in the succession of the paternal estate, every thing
which cannot be divided, but must go entire to one person, such as a
title of honour, is in most cases given to the eldest. Age is a plain
and palpable quality, which admits of no dispute.

The third of those causes or circumstances, is the superiority of
fortune. The authority of riches, however, though great in every age
of society, is, perhaps, greatest in the rudest ages of society, which
admits of any considerable inequality of fortune. A Tartar chief, the
increase of whose flocks and herds is sufficient to maintain a
thousand men, cannot well employ that increase in any other way than
in maintaining a thousand men. The rude state of his society does not
afford him any manufactured produce any trinkets or baubles of any
kind, for which he can exchange that part of his rude produce which is
over and above his own consumption. The thousand men whom he thus
maintains, depending entirely upon him for their subsistence, must
both obey his orders in war, and submit to his jurisdiction in peace.
He is necessarily both their general and their judge, and his
chieftainship is the necessary effect of the superiority of his
fortune. In an opulent and civilized society, a man may possess a much
greater fortune, and yet not be able to command a dozen of people.
Though the produce of his estate may be sufficient to maintain, and
may, perhaps, actually maintain, more than a thousand people, yet, as
those people pay for every thing which they get from him, as he gives
scarce any thing to any body but in exchange for an equivalent, there
is scarce anybody who considers himself as entirely dependent upon
him, and his authority extends only over a few menial servants. The
authority of fortune, however, is very great, even in an opulent and
civilized society. That it is much greater than that either of age or
of personal qualities, has been the constant complaint of every period
of society which admitted of any considerable inequality of fortune.
The first period of society, that of hunters, admits of no such
inequality. Universal poverty establishes their universal equality;
and the superiority, either of age or of personal qualities, are the
feeble, but the sole foundations of authority and subordination. There
is, therefore, little or no authority or subordination in this period
of society. The second period of society, that of shepherds, admits of
very great inequalities of fortune, and there is no period in which
the superiority of fortune gives so great authority to those who
possess it. There is no period, accordingly, in which authority and
subordination are more perfectly established. The authority of an
Arabian scherif is very great; that of a Tartar khan altogether
despotical.

The fourth of those causes or circumstances, is the superiority of
birth. Superiority of birth supposes an ancient superiority of fortune
in the family of the person who claims it. All families are equally
ancient; and the ancestors of the prince, though they may be better
known, cannot well be more numerous than those of the beggar.
Antiquity of family means everywhere the antiquity either of wealth,
or of that greatness which is commonly either founded upon wealth, or
accompanied with it. Upstart greatness is everywhere less respected
than ancient greatness. The hatred of usurpers, the love of the family
of an ancient monarch, are in a great measure founded upon the
contempt which men naturally have for the former, and upon their
veneration for the latter. As a military officer submits, without
reluctance, to the authority of a superior by whom he has always been
commanded, but cannot bear that his inferior should be set over his
head; so men easily submit to a family to whom they and their
ancestors have always submitted; but are fired with indignation when
another family, in whom they had never acknowledged any such
superiority, assumes a dominion over them.

The distinction of birth, being subsequent to the inequality of
fortune, can have no place in nations of hunters, among whom all men,
being equal in fortune, must likewise be very nearly equal in birth.
The son of a wise and brave man may, indeed, even among them, be
somewhat more respected than a man of equal merit, who has the
misfortune to be the son of a fool or a coward. The difference,
however will not be very great; and there never was, I believe, a
great family in the world, whose illustration was entirely derived
from the inheritance of wisdom and virtue.

The distinction of birth not only may, but always does, take place
among nations of shepherds. Such nations are always strangers to every
sort of luxury, and great wealth can scarce ever be dissipated among
them by improvident profusion. There are no nations, accordingly, who
abound more in families revered and honoured on account of their
descent from a long race of great and illustrious ancestors; because
there are no nations among whom wealth is likely to continue longer in
the same families.

Birth and fortune are evidently the two circumstances which
principally set one man above another. They are the two great sources
of personal distinction, and are, therefore, the principal causes
which naturally establish authority and subordination among men. Among
nations of shepherds, both those causes operate with their full force.
The great shepherd or herdsman, respected on account of his great
wealth, and of the great number of those who depend upon him for
subsistence, and revered on account of the nobleness of his birth, and
of the immemorial antiquity or his illustrious family, has a natural
authority over all the inferior shepherds or herdsmen of his horde or
clan. He can command the united force of a greater number of people
than any of them. His military power is greater than that of any of
them. In time of war, they are all of them naturally disposed to
muster themselves under his banner, rather than under that of any
other person; and his birth and fortune thus naturally procure to him
some sort of executive power. By commanding, too, the united force of
a greater number of people than any of them, he is best able to compel
any one of them, who may have injured another, to compensate the
wrong. He is the person, therefore, to whom all those who are too weak
to defend themselves naturally look up for protection. It is to him
that they naturally complain of the injuries which they imagine have
been done to them; and his interposition, in such cases, is more
easily submitted to, even by the person complained of, than that of
any other person would be. His birth and fortune thus naturally
procure him some sort of judicial authority.

It is in the age of shepherds, in the second period of society, that
the inequality of fortune first begins to take place, and introduces
among men a degree of authority and subordination, which could not
possibly exist before. It thereby introduces some degree of that civil
government which is indispensably necessary for its own preservation;
and it seems to do this naturally, and even independent of the
consideration of that necessity. The consideration of that necessity
comes, no doubt, afterwards, to contribute very much to maintain and
secure that authority and subordination. The rich, in particular, are
necessarily interested to support that order of things, which can alone
secure them in the possession of their own advantages. Men of inferior
wealth combine to defend those of superior wealth in the possession of
their property, in order that men of superior wealth may combine to
defend them in the possession of theirs. All the inferior shepherds
and herdsmen feel, that the security of their own herds and flocks
depends upon the security of those of the great shepherd or herdsman;
that the maintenance of their lesser authority depends upon that of
his greater authority; and that upon their subordination to him
depends his power of keeping their inferiors in subordination to them.
They constitute a sort of little nobility, who feel themselves
interested to defend the property, and to support the authority, of
their own little sovereign, in order that he may be able to defend
their property, and to support their authority. Civil government, so
far as it is instituted for the security of property, is, in reality,
instituted for the defence of the rich against the poor, or of those
who have some property against those who have none at all.

The judicial authority of such a sovereign, however, far from being a
cause of expense, was, for a long time, a source of revenue to him.
The persons who applied to him for justice were always willing to pay
for it, and a present never failed to accompany a petition. After the
authority of the sovereign, too, was thoroughly established, the
person found guilty, over and above the satisfaction which he was
obliged to make to the party, was like-wise forced to pay an
amercement to the sovereign. He had given trouble, he had disturbed,
he had broke the peace of his lord the king, and for those offences an
amercement was thought due. In the Tartar governments of Asia, in the
governments of Europe which were founded by the German and Scythian
nations who overturned the Roman empire, the administration of justice
was a considerable source of revenue, both to the sovereign, and to
all the lesser chiefs or lords who exercised under him any particular
jurisdiction, either over some particular tribe or clan, or over some
particular territory or district. Originally, both the sovereign and
the inferior chiefs used to exercise this jurisdiction in their own
persons. Afterwards, they universally found it convenient to delegate
it to some substitute, bailiff, or judge. This substitute, however,
was still obliged to account to his principal or constituent for the
profits of the jurisdiction. Whoever reads the instructions (They are
to be found in Tyrol's History of England) which were given to the
judges of the circuit in the time of Henry II will see clearly that
those judges were a sort of itinerant factors, sent round the country
for the purpose of levying certain branches of the king's revenue. In
those days, the administration of justice not only afforded a certain
revenue to the sovereign, but, to procure this revenue, seems to have
been one of the principal advantages which he proposed to obtain by
the administration of justice.

This scheme of making the administration of justice subservient to the
purposes of revenue, could scarce fail to be productive of several
very gross abuses. The person who applied for justice with a large
present in his hand, was likely to get something more than justice;
while he who applied for it with a small one was likely to get
something less. Justice, too, might frequently be delayed, in order
that this present might be repeated. The amercement, besides, of the
person complained of, might frequently suggest a very strong reason
for finding him in the wrong, even when he had not really been so.
That such abuses were far from being uncommon, the ancient history of
every country in Europe bears witness.

When the sovereign or chief exercises his judicial authority in his
own person, how much soever he might abuse it, it must have been
scarce possible to get any redress; because there could seldom be any
body powerful enough to call him to account. When he exercised it by a
bailiff, indeed, redress might sometimes be had. If it was for his own
benefit only, that the bailiff had been guilty of an act of injustice,
the sovereign himself might not always be unwilling to punish him, or
to oblige him to repair the wrong. But if it was for the benefit of
his sovereign; if it was in order to make court to the person who
appointed him, and who might prefer him, that he had committed any act
of oppression; redress would, upon most occasions, be as impossible as
if the sovereign had committed it himself. In all barbarous
governments, accordingly, in all those ancient governments of Europe
in particular, which were founded upon the ruins of the Roman empire,
the administration of justice appears for a long time to have been
extremely corrupt; far from being quite equal and impartial, even
under the best monarchs, and altogether profligate under the worst.

Among nations of shepherds, where the sovereign or chief is only the
greatest shepherd or herdsman of the horde or clan, he is maintained
in the same manner as any of his vassals or subjects, by the increase
of his own herds or flocks. Among those nations of husbandmen, who are
but just come out of the shepherd state, and who are not much advanced
beyond that state, such as the Greek tribes appear to have been about
the time of the Trojan war, and our German and Scythian ancestors,
when they first settled upon the ruins of the western empire; the
sovereign or chief is, in the same manner, only the greatest landlord
of the country, and is maintained in the same manner as any other
landlord, by a revenue derived from his own private estate, or from
what, in modern Europe, was called the demesne of the crown. His
subjects, upon ordinary occasions, contribute nothing to his support,
except when, in order to protect them from the oppression of some of
their fellow-subjects, they stand in need of his authority. The
presents which they make him upon such occasions constitute the whole
ordinary revenue, the whole of the emoluments which, except, perhaps,
upon some very extraordinary emergencies, he derives from his dominion
over them. When Agamemnon, in Homer, offers to Achilles, for his
friendship, the sovereignty of seven Greek cities, the sole advantage
which he mentions as likely to be derived from it was, that the people
would honour him with presents. As long as such presents, as long as
the emoluments of justice, or what may be called the fees of court,
constituted, in this manner, the whole ordinary revenue which the
sovereign derived from his sovereignty, it could not well be expected,
it could not even decently be proposed, that he should give them up
altogether. It might, and it frequently was proposed, that he should
regulate and ascertain them. But after they had been so regulated and
ascertained, how to hinder a person who was all-powerful from
extending them beyond those regulations, was still very difficult, not
to say impossible. During the continuance of this state of things,
therefore, the corruption of justice, naturally resulting from the
arbitrary and uncertain nature of those presents, scarce admitted of
any effectual remedy.

But when, from different causes, chiefly from the continually
increasing expense of defending the nation against the invasion of
other nations, the private estate of the sovereign had become
altogether insufficient for defraying the expense of the sovereignty;
and when it had become necessary that the people should, for their own
security, contribute towards this expense by taxes of different kinds;
it seems to have been very commonly stipulated, that no present for
the administration of justice should, under any pretence, be accepted
either by the sovereign, or by his bailiffs and substitutes, the
judges. Those presents, it seems to have been supposed, could more
easily be abolished altogether, than effectually regulated and
ascertained. Fixed salaries were appointed to the judges, which were
supposed to compensate to them the loss of whatever might have been
their share of the ancient emoluments of justice; as the taxes more
than compensated to the sovereign the loss of his. Justice was then
said to be administered gratis.

Justice, however, never was in reality administered gratis in any
country. Lawyers and attorneys, at least, must always be paid by the
parties; and if they were not, they would perform their duty still
worse than they actually perform it. The fees annually paid to lawyers
and attorneys, amount, in every court, to a much greater sum than the
salaries of the judges. The circumstance of those salaries being paid
by the crown, can nowhere much diminish the necessary expense of a
law-suit. But it was not so much to diminish the expense, as to
prevent the corruption of justice, that the judges were prohibited
from receiving my present or fee from the parties.

The office of judge is in itself so very honourable, that men are
willing to accept of it, though accompanied with very small
emoluments. The inferior office of justice of peace, though attended
with a good deal of trouble, and in most cases with no emoluments at
all, is an object of ambition to the greater part of our country
gentlemen. The salaries of all the different judges, high and low,
together with the whole expense of the administration and execution of
justice, even where it is not managed with very good economy, makes,
in any civilized country, but a very inconsiderable part of the whole
expense of government.

The whole expense of justice, too, might easily be defrayed by the
fees of court; and, without exposing the administration of justice to
any real hazard of corruption, the public revenue might thus be
entirely discharged from a certain, though perhaps but a small
incumbrance. It is difficult to regulate the fees of court
effectually, where a person so powerful as the sovereign is to share
in them and to derive any considerable part of his revenue from them.
It is very easy, where the judge is the principal person who can reap
any benefit from them. The law can very easily oblige the judge to
respect the regulation though it might not always be able to make the
sovereign respect it. Where the fees of court are precisely regulated
and ascertained where they are paid all at once, at a certain period
of every process, into the hands of a cashier or receiver, to be by
him distributed in certain known proportions among the different
judges after the process is decided and not till it is decided; there
seems to be no more danger of corruption than when such fees are
prohibited altogether. Those fees, without occasioning any
considerable increase in the expense of a law-suit, might be rendered
fully sufficient for defraying the whole expense of justice. But not
being paid to the judges till the process was determined, they might
be some incitement to the diligence of the court in examining and
deciding it. In courts which consisted of a considerable number of
judges, by proportioning the share of each judge to the number of
hours and days which he had employed in examining the process, either
in the court, or in a committee, by order of the court, those fees
might give some encouragement to the diligence of each particular
judge. Public services are never better performed, than when their
reward comes only in consequence of their being performed, and is
proportioned to the diligence employed in performing them. In the
different parliaments of France, the fees of court (called epices and
vacations) constitute the far greater part of the emoluments of the
judges. After all deductions are made, the neat salary paid by the
crown to a counsellor or judge in the parliament of Thoulouse, in rank
and dignity the second parliament of the kingdom, amounts only to 150
livres, about £6:11s. sterling a-year. About seven years ago, that sum
was in the same place the ordinary yearly wages of a common footman.
The distribution of these epices, too, is according to the diligence of
the judges. A diligent judge gains a comfortable, though moderate
revenue, by his office; an idle one gets little more than his salary.
Those parliaments are, perhaps, in many respects, not very convenient
courts of justice; but they have never been accused; they seem never
even to have been suspected of corruption.

The fees of court seem originally to have been the principal support
of the different courts of justice in England. Each court endeavoured
to draw to itself as much business as it could, and was, upon that
account, willing to take cognizance of many suits which were not
originally intended to fall under its jurisdiction. The court of
king's bench, instituted for the trial of criminal causes only, took
cognizance of civil suits; the plaintiff pretending that the
defendant, in not doing him justice, had been guilty of some trespass
or misdemeanour. The court of exchequer, instituted for the levying of
the king's revenue, and for enforcing the payment of such debts only
as were due to the king, took cognizance of all other contract debts;
the planitiff alleging that he could not pay the king, because the
defendant would not pay him. In consequence of such fictions, it came,
in many cases, to depend altogether upon the parties, before what
court they would choose to have their cause tried, and each court
endeavoured, by superior dispatch and impartiality, to draw to itself
as many causes as it could. The present admirable constitution of the
courts of justice in England was, perhaps, originally, in a great
measure, formed by this emulation, which anciently took place between
their respective judges: each judge endeavouring to give, in his own
court, the speediest and most effectual remedy which the law would
admit, for every sort of injustice. Originally, the courts of law gave
damages only for breach of contract. The court of chancery, as a court
of conscience, first took upon it to enforce the specific performance
of agreements. When the breach of contract consisted in the
non-payment of money, the damage sustained could be compensated in no
other way than by ordering payment, which was equivalent to a specific
performance of the agreement. In such cases, therefore, the remedy of
the courts of law was sufficient. It was not so in others. When the
tenant sued his lord for having unjustly outed him of his lease, the
damages which he recovered were by no means equivalent to the
possession of the land. Such causes, therefore, for some time, went
all to the court of chancery, to the no small loss of the courts of
law. It was to draw back such causes to themselves, that the courts of
law are said to have invented the artificial and fictitious writ of
ejectment, the most effectual remedy for an unjust outer or
dispossession of land.

A stamp-duty upon the law proceedings of each particular court, to be
levied by that court, and applied towards the maintenance of the
judges, and other officers belonging to it, might in the same manner,
afford a revenue sufficient for defraying the expense of the
administration of justice, without bringing any burden upon the
general revenue of the society. The judges, indeed, might in this
case, be under the temptation of multiplying unnecessarily the
proceedings upon every cause, in order to increase, as much as
possible, the produce of such a stamp-duty. It has been the custom in
modern Europe to regulate, upon most occasions, the payment of the
attorneys and clerks of court according to the number of pages which
they had occasion to write; the court, however, requiring that each
page should contain so many lines, and each line so many words. In
order to increase their payment, the attorneys and clerks have
contrived to multiply words beyond all necessity, to the corruption of
the law language of, I believe, every court of justice in Europe. A
like temptation might, perhaps, occasion a like corruption in the form
of law proceedings.

But whether the administration of justice be so contrived as to defray
its own expense, or whether the judges be maintained by fixed salaries
paid to them from some other fund, it does not seen necessary that the
person or persons entrusted with the executive power should be charged
with the management of that fund, or with the payment of those
salaries. That fund might arise from the rent of landed estates, the
management of each estate being entrusted to the particular court
which was to be maintained by it. That fund might arise even from the
interest of a sum of money, the lending out of which might, in the
same manner, be entrusted to the court which was to be maintained by
it. A part, though indeed but a small part of the salary of the judges
of the court of session in Scotland, arises from the interest of a sum
of money. The necessary instability of such a fund seems, however, to
render it an improper one for the maintenance of an institution which
ought to last for ever.

The separation of the judicial from the executive power, seems
originally to have arisen from the increasing business of the society,
in consequence of its increasing improvement. The administration of
justice became so laborious and so complicated a duty, as to require
the undivided attention of the person to whom it was entrusted. The
person entrusted with the executive power, not having leisure to
attend to the decision of private causes himself, a deputy was
appointed to decide them in his stead. In the progress of the Roman
greatness, the consul was too much occupied with the political affairs
of the state, to attend to the administration of justice. A praetor,
therefore, was appointed to administer it in his stead. In the
progress of the European monarchies, which were founded upon the ruins
of the Roman empire, the sovereigns and the great lords came
universally to consider the administration of justice as an office
both too laborious and too ignoble for them to execute in their own
persons. They universally, therefore, discharged themselves of it, by
appointing a deputy, bailiff or judge.

When the judicial is united to the executive power, it is scarce
possible that justice should not frequently be sacrificed to what is
vulgarly called politics. The persons entrusted with the great
interests of the state may even without any corrupt views, sometimes
imagine it necessary to sacrifice to those interests the rights of a
private man. But upon the impartial administration of justice depends
the liberty of every individual, the sense which he has of his own
security. In order to make every individual feel himself perfectly
secure in the possession of every right which belongs to him, it is
not only necessary that the judicial should be separated from the
executive power, but that it should be rendered as much as possible
independent of that power. The judge should not be liable to be
removed from his office according to the caprice of that power. The
regular payment of his salary should not depend upon the good will, or
even upon the good economy of that power.


PART    III.

Of the Expense of public Works and public Institutions.

The third and last duty of the sovereign or commonwealth, is that of
erecting and maintaining those public institutions and those public
works, which though they may be in the highest degree advantageous to
a great society, are, however, of such a nature, that the profit could
never repay the expense to any individual, or small number of
individuals; and which it, therefore, cannot be expected that any
individual, or small number of individuals, should erect or maintain.
The performance of this duty requires, too, very different degrees of
expense in the different periods of society.

After the public institutions and public works necessary for the
defence of the society, and for the administration of justice, both of
which have already been mentioned, the other works and institutions of
this kind are chiefly for facilitating the commerce of the society,
and those for promoting the instruction of the people. The
institutions for instruction are of two kinds: those for the education
of the youth, and those for the instruction of people of all ages. The
consideration of the manner in which the expense of those different
sorts of public works and institutions may be most properly defrayed
will divide this third part of the present chapter into three
different articles.

ARTICLE I. -- Of the public Works and Institutions for facilitating the
Commerce of the Society.

And, first, of those which are necessary for facilitating Commerce in
general.

That the erection and maintenance of the public works which facilitate
the commerce of any country, such as good roads, bridges, navigable
canals, harbours, etc. must require very different degrees of expense
in the different periods of society, is evident without any proof. The
expense of making and maintaining the public roads of any country must
evidently increase with the annual produce of the land and labour of
that country, or with the quantity and weight of the goods which it
becomes necessary to fetch and carry upon those roads. The strength of
a bridge must be suited to the number and weight of the carriages
which are likely to pass over it. The depth and the supply of water
for a navigable canal must be proportioned to the number and tonnage
of the lighters which are likely to carry goods upon it; the extent of
a harbour, to the number of the shipping which are likely to take
shelter in it.

It does not seem necessary that the expense of those public works
should be defrayed from that public revenue, as it is commonly called,
of which the collection and application are in most countries,
assigned to the executive power. The greater part of such public works
may easily be so managed, as to afford a particular revenue,
sufficient for defraying their own expense without bringing any burden
upon the general revenue of the society.

A highway, a bridge, a navigable canal, for example, may, in most
cases, be both made add maintained by a small toll upon the carriages
which make use of them; a harbour, by a moderate port-duty upon the
tonnage of the shipping which load or unload in it. The coinage,
another institution for facilitating commerce, in many countries, not
only defrays its own expense, but affords a small revenue or a
seignorage to the sovereign. The post-office, another institution for
the same purpose, over and above defraying its own expense, affords,
in almost all countries, a very considerable revenue to the sovereign.

When the carriages which pass over a highway or a bridge, and the
lighters which sail upon a navigable canal, pay toll in proportion to
their weight or their tonnage, they pay for the maintenance of those
public works exactly in proportion to the wear and tear which they
occasion of them. It seems scarce possible to invent a more equitable
way of maintaining such works. This tax or toll, too, though it is
advanced by the carrier, is finally paid by the consumer, to whom it
must always be charged in the price of the goods. As the expense of
carriage, however, is very much reduced by means of such public works,
the goods, notwithstanding the toll, come cheaper to the consumer than
they could otherwise have done, their price not being so much raised
by the toll, as it is lowered by the cheapness of the carriage. The
person who finally pays this tax, therefore, gains by the application
more than he loses by the payment of it. His payment is exactly in
proportion to his gain. It is, in reality, no more than a part of that
gain which he is obliged to give up, in order to get the rest. It
seems impossible to imagine a more equitable method of raising a tax.

When the toll upon carriages of luxury, upon coaches, post-chaises,
etc. is made somewhat higher in proportion to their weight, than upon
carriages of necessary use, such as carts, waggons, etc. the indolence
and vanity of the rich is made to contribute, in a very easy manner,
to the relief of the poor, by rendering cheaper the transportation of
heavy goods to all the different parts of the country.

When high-roads, bridges, canals, etc. are in this manner made and
supported by the commerce which is carried on by means of them, they
can be made only where that commerce requires them, and, consequently,
where it is proper to make them. Their expense, too, their grandeur
and magnificence, must be suited to what that commerce can afford to
pay. They must be made, consequently, as it is proper to make them. A
magnificent high-road cannot be made through a desert country, where
there is little or no commerce, or merely because it happens to lead
to the country villa of the intendant of the province, or to that of
some great lord, to whom the intendant finds it convenient to make his
court. A great bridge cannot be thrown over a river at a place where
nobody passes, or merely to embellish the view from the windows of a
neighbouring palace; things which sometimes happen in countries, where
works of this kind are carried on by any other revenue than that which
they themselves are capable of affording.

In several different parts of Europe, the toll or lock-duty upon a
canal is the property of private persons, whose private interest
obliges them to keep up the canal. If it is not kept in tolerable
order, the navigation necessarily ceases altogether, and, along with
it, the whole profit which they can make by the tolls. If those tolls
were put under the management of commissioners, who had themselves no
interest in them, they might be less attentive to the maintenance of
the works which produced them. The canal of Languedoc cost the king of
France and the province upwards of thirteen millions of livres, which
(at twenty-eight livres the mark of silver, the value of French money
in the end of the last century) amounted to upwards of nine hundred
thousand pounds sterling. When that great work was finished, the most
likely method, it was found, of keeping it in constant repair, was to
make a present of the tolls to Riquet, the engineer who planned and
conducted the work. Those tolls constitute, at present, a very large
estate to the different branches of the family of that gentleman, who
have, therefore, a great interest to keep the work in constant repair.
But had those tolls been put under the management of commissioners,
who had no such interest, they might perhaps, have been dissipated in
ornamental and unnecessary expenses, while the most essential parts of
the works were allowed to go to ruin.

The tolls for the maintenance of a highroad cannot, with any safety,
be made the property of private persons. A high-road, though entirely
neglected, does not become altogether impassable, though a canal does.
The proprietors of the tolls upon a high-road, therefore, might
neglect altogether the repair of the road, and yet continue to levy
very nearly the same tolls. It is proper, therefore, that the tolls
for the maintenance of such a work should be put under the management
of commissioners or trustees.

In Great Britain, the abuses which the trustees have committed in the
management of those tolls, have, in many cases, been very justly
complained of. At many turnpikes, it has been said, the money levied
is more than double of what is necessary for executing, in the
completest manner, the work, which is often executed in a very
slovenly manner, and sometimes not executed at all. The system of
repairing the high-roads by tolls of this kind, it must be observed,
is not of very long standing. We should not wonder, therefore, if it
has not yet been brought to that degree of perfection of which it
seems capable. If mean and improper persons are frequently appointed
trustees; and if proper courts of inspection and account have not yet
been established for controlling their conduct, and for reducing the
tolls to what is barely sufficient for executing the work to be done
by them; the recency of the institution both accounts and apologizes
for those defects, of which, by the wisdom of parliament, the greater
part may, in due time, be gradually remedied.

The money levied at the different turnpikes in Great Britain, is
supposed to exceed so much what is necessary for repairing the roads,
that the savings which, with proper economy, might be made from it,
have been considered, even by some ministers, as a very great
resource, which might, at some time or another, be applied to the
exigencies of the state. Government, it has been said, by taking the
management of the turnpikes into its own hands, and by employing the
soldiers, who would work for a very small addition to their pay, could
keep the roads in good order, at a much less expense than it can be
done by trustees, who have no other workmen to employ, but such as
derive their whole subsistence from their wages. A great revenue, half
a million, perhaps {Since publishing the two first editions of this
book, I have got good reasons to believe that all the turnpike tolls
levied in Great Britain do not produce a neat revenue that amounts to
half a million; a sum which, under the management of government, would
not be sufficient to keep, in repair five of the principal roads in
the kingdom}, it has been pretended, might in this manner be gained,
without laying any new burden upon the people; and the turnpike roads
might be made to contribute to the general expense of the state, in
the same manner as the post-office does at present.

That a considerable revenue might be gained in this manner, I have no
doubt, though probably not near so much as the projectors of this plan
have supposed. The plan itself, however, seems liable to several very
important objections.

First, If the tolls which are levied at the turnpikes should ever be
considered as one of the resources for supplying the exigencies of the
state, they would certainly be augmented as those exigencies were
supposed to require. According to the policy of Great Britain,
therefore, they would probably he augmented very fast. The facility
with which a great revenue could be drawn from them, would probably
encourage administration to recur very frequently te this resource.
Though it may, perhaps, be more than doubtful whether half a million
could by any economy be saved out of the present tolls, it can
scarcely be doubted, but that a million might be saved out of them, if
they were doubled; and perhaps two millions, if they were tripled {I
have now good reason to believe that all these conjectural sums are by
much too large.}. This great revenue, too, might be levied without the
appointment of a single new officer to collect and receive it. But the
turnpike tolls, being continually augmented in this manner, instead of
facilitating the inland commerce of the country, as at present, would
soon become a very great incumbrance upon it. The expense of
transporting all heavy goods from one part of the country to another,
would soon be so much increased, the market for all such goods,
consequently, would soon be so much narrowed, that their production
would be in a great measure discouraged, and the most important
branches of the domestic industry of the country annihilated
altogether.

Secondly, A tax upon carriages, in proportion to their weight, though
a very equal tax when applied to the sole purpose of repairing the
roads, is a very unequal one when applied to any other purpose, or to
supply the common exigencies of the state. When it is applied to the
sole purpose above mentioned, each carriage is supposed to pay exactly
for the wear and tear which that carriage occasions of the roads. But
when it is applied to any other purpose, each carriage is supposed to
pay for more than that wear and tear, and contributes to the supply of
some other exigency of the state. But as the turnpike toll raises the
price of goods in proportion to their weight and not to their value,
it is chiefly paid by the consumers of coarse and bulky, not by those
of precious and light commodities. Whatever exigency of the state,
therefore, this tax might be intended to supply, that exigency would
be chiefly supplied at the expense of the poor, not of the rich; at
the expense of those who are least able to supply it, not of those who
are most able.

Thirdly, If government should at any time neglect the reparation of
the high-roads, it would be still more difficult, than it is at
present, to compel the proper application of any part of the turnpike
tolls. A large revenue might thus be levied upon the people, without
any part of it being applied to the only purpose to which a revenue
levied in this manner ought ever to be applied. If the meanness and
poverty of the trustees of turnpike roads render it sometimes
difficult, at present, to oblige them to repair their wrong; their
wealth and greatness would render it ten times more so in the case
which is here supposed.

In France, the funds destined for the reparation of the high-roads are
under the immediate direction of the executive power. Those funds
consist, partly in a certain number of days labour, which the country
people are in most parts of Europe obliged to give to the reparation
of the highways; and partly in such a portion of the general revenue
of the state as the king chooses to spare from his other expenses.

By the ancient law of France, as well as by that of most other parts
of Europe, the labour of the country people was under the direction of
a local or provincial magistracy, which had no immediate dependency
upon the king's council. But, by the present practice, both the labour
of the country people, and whatever other fund the king may choose to
assign for the reparation of the high-roads in any particular province
or generality, are entirely under the management of the intendant; an
officer who is appointed and removed by the king's council who
receives his orders from it, and is in constant correspondence with
it. In the progress of despotism, the authority of the executive power
gradually absorbs that of every other power in the state, and assumes
to itself the management of every branch of revenue which is destined
for any public purpose. In France, however, the great post-roads, the
roads which make the communication between the principal towns of the
kingdom, are in general kept in good order; and, in some provinces,
are even a good deal superior to the greater part of the turnpike
roads of England. But what we call the cross roads, that is, the far
greater part of the roads in the country, are entirely neglected, and
are in many places absolutely impassable for any heavy carriage. In
some places it is even dangerous to travel on horseback, and mules are
the only conveyance which can safely be trusted. The proud minister of
an ostentatious court, may frequently take pleasure in executing a
work of splendour and magnificence, such as a great highway, which is
frequently seen by the principal nobility, whose applauses not only
flatter his vanity, but even contribute to support his interest at
court. But to execute a great number of little works, in which nothing
that can be done can make any great appearance, or excite the smallest
degree of admiration in any traveller, and which, in short, have
nothing to recommend them but their extreme utility, is a business
which appears, in every respect, too mean and paltry to merit the
attention of so great a magistrate. Under such an administration
therefore, such works are almost always entirely neglected.

In China, and in several other governments of Asia, the executive
power charges itself both with the reparation of the high-roads, and
with the maintenance of the navigable canals. In the instructions
which are given to the governor of each province, those objects, it is
said, are constantly recommended to him, and the judgment which the
court forms of his conduct is very much regulated by the attention
which he appears to have paid to this part of his instructions. This
branch of public police, accordingly, is said to be very much attended
to in all those countries, but particularly in China, where the
high-roads, and still more the navigable canals, it is pretended,
exceed very much every thing of the same kind which is known in
Europe. The accounts of those works, however, which have been
transmitted to Europe, have generally been drawn up by weak and
wondering travellers; frequently by stupid and lying missionaries. If
they had been examined by more intelligent eyes, and if the accounts
of them had been reported by more faithful witnesses, they would not,
perhaps, appear to be so wonderful. The account which Bernier gives of
some works of this kind in Indostan, falls very short of what had been
reported of them by other travellers, more disposed to the marvellous
than he was. It may too, perhaps, be in those countries, as it is in
France, where the great roads, the great communications, which are
likely to be the subjects of conversation at the court and in the
capital, are attended to, and all the rest neglected. In China,
besides, in Indostan, and in several other governments of Asia, the
revenue of the sovereign arises almost altogether from a land tax or
land rent, which rises or falls with the rise and fall of the annual
produce of the land. The great interest of the sovereign, therefore,
his revenue, is in such countries necessarily and immediately
connected with the cultivation of the land, with the greatness of its
produce, and with the value of its produce. But in order to render
that produce both as great and as valuable as possible, it is
necessary to procure to it as extensive a market as possible, and
consequently to establish the freest, the easiest, and the least
expensive communication between all the different parts of the
country; which can be done only by means of the best roads and the
best navigable canals. But the revenue of the sovereign does not, in
any part of Europe, arise chiefly from a land tax or land rent. In all
the great kingdoms of Europe, perhaps, the greater part of it may
ultimately depend upon the produce of the land: but that dependency is
neither so immediate nor so evident. In Europe, therefore, the
sovereign does not feel himself so directly called upon to promote the
increase, both in quantity and value of the produce of the land, or,
by maintaining good roads and canals, to provide the most extensive
market for that produce. Though it should be true, therefore, what I
apprehend is not a little doubtful, that in some parts of Asia this
department of the public police is very properly managed by the
executive power, there is not the least probability that, during the
present state of things, it could be tolerably managed by that power
in any part of Europe.

Even those public works, which are of such a nature that they cannot
afford any revenue for maintaining themselves, but of which the
conveniency is nearly confined to some particular place or district,
are always better maintained by a local or provincial revenue, under
the management of a local and provincial administration, than by the
general revenue of the state, of which the executive power must always
have the management. Were the streets of London to be lighted and
paved at the expense of the treasury, is there any probability that
they would be so well lighted and paved as they are at present, or
even at so small an expense? The expense, besides, instead of being
raised by a local tax upon the inhabitants of each particular street,
parish, or district in London, would, in this case, be defrayed out of
the general revenue of the state, and would consequently be raised by
a tax upon all the inhabitants of the kingdom, of whom the greater
part derive no sort of benefit from the lighting and paving of the
streets of London.

The abuses which sometimes creep into the local and provincial
administration of a local and provincial revenue, how enormous soever
they may appear, are in reality, however, almost always very trifling
in comparison of those which commonly take place in the administration
and expenditure of the revenue of a great empire. They are, besides,
much more easily corrected. Under the local or provincial
administration of the justices of the peace in Great Britain, the six
days labour which the country people are obliged to give to the
reparation of the highways, is not always, perhaps, very judiciously
applied, but it is scarce ever exacted with any circumstance of
cruelty or oppression. In France, under the administration of the
intendants, the application is not always more judicious, and the
exaction is frequently the most cruel and oppressive. Such corvees, as
they are called, make one of the principal instruments of tyranny by
which those officers chastise any parish or communeaute, which has had
the misfortune to fall under their displeasure.


Of the public Works and Institution which are necessary for
facilitating particular Branches of Commerce.

The object of the public works and institutions above mentioned, is to
facilitate commerce in general. But in order to facilitate some
particular branches of it, particular institutions are necessary,
which again require a particular and extraordinary expense.

Some particular branches of commerce which are carried on with
barbarous and uncivilized nations, require extraordinary protection.
An ordinary store or counting-house could give little security to the
goods of the merchants who trade to the western coast of Africa. To
defend them from the barbarous natives, it is necessary that the place
where they are deposited should be in some measure fortified. The
disorders in the government of Indostan have been supposed to render a
like precaution necessary, even among that mild and gentle people; and
it was under pretence of securing their persons and property from
violence, that both the English and French East India companies were
allowed to erect the first forts which they possessed in that country.
Among other nations, whose vigorous government will suffer no
strangers to possess any fortified place within their territory, it
may be necessary to maintain some ambassador, minister, or consul, who
may both decide, according to their own customs, the differences
arising among his own countrymen, and, in their disputes with the
natives, may by means of his public character, interfere with more
authority and afford them a more powerful protection than they could
expect from any private man. The interests of commerce have frequently
made it necessary to maintain ministers in foreign countries, where
the purposes either of war or alliance would not have required any.
The commerce of the Turkey company first occasioned the establishment
of an ordinary ambassador at Constantinople. The first English
embassies to Russia arose altogether from commercial interests. The
constant interference with those interests, necessarily occasioned
between the subjects of the different states of Europe, has probably
introduced the custom of keeping, in all neighbouring countries,
ambassadors or ministers constantly resident, even in the time of
peace. This custom, unknown to ancient times, seems not to be older
than the end of the fifteenth, or beginning of the sixteenth century;
that is, than the time when commerce first began to extend itself to
the greater part of the nations of Europe, and when they first began
to attend to its interests.

It seems not unreasonable, that the extraordinary expense which the
protection of any particular branch of commerce may occasion, should
be defrayed by a moderate tax upon that particular branch; by a
moderate fine, for example, to be paid by the traders when they first
enter into it; or, what is more equal, by a particular duty of so much
per cent. upon the goods which they either import into, or export out
of, the particular countries with which it is carried on. The
protection of trade, in general, from pirates and freebooters, is said
to have given occasion to the first institution of the duties of
customs. But, if it was thought reasonable to lay a general tax upon
trade, in order to defray the expense of protecting trade in general,
it should seem equally reasonable to lay a particular tax upon a
particular branch of trade, in order to defray the extraordinary
expense of protecting that branch.

The protection of trade, in general, has always been considered as
essential to the defence of the commonwealth, and, upon that account,
a necessary part of the duty of the executive power. The collection
and application of the general duties of customs, therefore, have
always been left to that power. But the protection of any particular
branch of trade is a part of the general protection of trade; a part,
therefore, of the duty of that power; and if nations always acted
consistently, the particular duties levied for the purposes of such
particular protection, should always have been left equally to its
disposal. But in this respect, as well as in many others, nations have
not always acted consistently; and in the greater part of the
commercial states of Europe, particular companies of merchants have
had the address to persuade the legislature to entrust to them the
performance of this part of the duty of the sovereign, together with
all the powers which are necessarily connected with it.

These companies, though they may, perhaps, have been useful for the
first introduction of some branches of commerce, by making, at their
own expense, an experiment which the state might not think it prudent
to make, have in the long-run proved, universally, either burdensome
or useless, and have either mismanaged or confined the trade.

When those companies do not trade upon a joint stock, but are obliged
to admit any person, properly qualified, upon paying a certain fine,
and agreeing to submit to the regulations of the company, each member
trading upon his own stock, and at his own risk, they are called
regulated companies. When they trade upon a joint stock, each member
sharing in the common profit or loss, in proportion to his share in
this stock, they are called joint-stock companies. Such companies,
whether regulated or joint-stock, sometimes have, and sometimes have
not, exclusive privileges.

Regulated companies resemble, in every respect, the corporation of
trades, so common in the cities and towns of all the different
countries of Europe; and are a sort of enlarged monopolies of the same
kind. As no inhabitant of a town can exercise an incorporated trade,
without first obtaining his freedom in the incorporation, so, in most
cases, no subject of the state can lawfully carry on any branch of
foreign trade, for which a regulated company is established, without
first becoming a member of that company. The monopoly is more or less
strict, according as the terms of admission are more or less
difficult, and according as the directors of the company have more or
less authority, or have it more or less in their power to manage in
such a manner as to confine the greater part of the trade to
themselves and their particular friends. In the most ancient regulated
companies, the privileges of apprenticeship were the same as in other
corporations, and entitled the person who had served his time to a
member of the company, to become himself a member, either without
paying any fine, or upon paying a much smaller one than what was
exacted of other people. The usual corporation spirit, wherever the
law does not restrain it, prevails in all regulated companies. When
they have been allowed to act according to their natural genius, they
have always, in order to confine the competition to as small a number
of persons as possible, endeavoured to subject the trade to many
burdensome regulations. When the law has restrained them from doing
this, they have become altogether useless and insignificant.

The regulated companies for foreign commerce which at present subsist
in Great Britain, are the ancient merchant-adventurers company, now
commonly called the Hamburgh company, the Russia company, the Eastland
company, the Turkey company, and the African company.

The terms of admission into the Hamburgh company are now said to be
quite easy; and the directors either have it not in their power to
subject the trade to any troublesome restraint or regulations, or, at
least, have not of late exercised that power. It has not always been
so. About the middle of the last century, the fine for admission was
fifty, and at one time one hundred pounds, and the conduct of the
company was said to be extremely oppressive. In 1643, in 1645, and in
1661, the clothiers and free traders of the west of England complained
of them to parliament, as of monopolists, who confined the trade, and
oppressed the manufactures of the country. Though those complaints
produced no act of parliament, they had probably intimidated the
company so far, as to oblige them to reform their conduct. Since that
time, at least, there have been no complaints against them. By the
10th and 11th of William III. c.6, the fine for admission into the
Russia company was reduced to five pounds; and by the 25th of Charles
II. c.7, that for admission into the Eastland company to forty
shillings; while, at the same time, Sweden, Denmark, and Norway, all
the countries on the north side of the Baltic, were exempted from
their exclusive charter. The conduct of those companies had probably
given occasion to those two acts of parliament. Before that time, Sir
Josiah Child had represented both these and the Hamburgh company as
extremely oppressive, and imputed to their bad management the low
state of the trade, which we at that time carried on to the countries
comprehended within their respective charters. But though such
companies may not, in the present times, be very oppressive, they are
certainly altogether useless. To be merely useless, indeed, is
perhaps, the highest eulogy which can ever justly be bestowed upon a
regulated company; and all the three companies above mentioned seem,
in their present state, to deserve this eulogy.

The fine for admission into the Turkey company was formerly
twenty-five pounds for all persons under twenty-six years of age, and
fifty pounds for all persons above that age. Nobody but mere merchants
could be admitted; a restriction which excluded all shop-keepers and
retailers. By a bye-law, no British manufactures could be exported to
Turkey but in the general ships of the company; and as those ships
sailed always from the port of London, this restriction confined the
trade to that expensive port, and the traders to those who lived in
London and in its neighbourhood. By another bye-law, no person living
within twenty miles of London, and not free of the city, could be
admitted a member; another restriction which, joined to the foregoing,
necessarily excluded all but the freemen of London. As the time for
the loading and sailing of those general ships depended altogether
upon the directors, they could easily fill them with their own goods,
and those of their particular friends, to the exclusion of others,
who, they might pretend, had made their proposals too late. In this
state of things, therefore, this company was, in every respect, a
strict and oppressive monopoly. Those abuses gave occasion to the act
of the 26th of George II. c. 18, reducing the fine for admission to
twenty pounds for all persons, without any distinction of ages, or any
restriction, either to mere merchants, or to the freemen of London;
and granting to all such persons the liberty of exporting, from all
the ports of Great Britain, to any port in Turkey, all British goods,
of which the exportation was not prohibited, upon paying both the
general duties of customs, and the particular duties assessed for
defraying the necessary expenses of the company; and submitting, at
the same time, to the lawful authority of the British ambassador and
consuls resident in Turkey, and to the bye-laws of the company duly
enacted. To prevent any oppression by those bye-laws, it was by the
same act ordained, that if any seven members of the company conceived
themselves aggrieved by any bye-law which should be enacted after the
passing of this act, they might appeal to the board of trade and
plantations (to the authority of which a committee of the privy
council has now succeeded), provided such appeal was brought within
twelve months after the bye-law was enacted; and that, if any seven
members conceived themselves aggrieved by any bye-law which had been
enacted before the passing of this act, they might bring a like
appeal, provided it was within twelve months after the day on which
this act was to take place. The experience of one year, however, may
not always be sufficient to discover to all the members of a great
company the pernicious tendency of a particular bye-law; and if
several of them should afterwards discover it, neither the board of
trade, nor the committee of council, can afford them any redress. The
object, besides, of the greater part of the bye-laws of all regulated
companies, as well as of all other corporations, is not so much to
oppress those who are already members, as to discourage others from
becoming so; which may be done, not only by a high fine, but by many
other contrivances. The constant view of such companies is always to
raise the rate of their own profit as high as they can; to keep the
market, both for the goods which they export, and for those which they
import, as much understocked as they can; which can be done only by
restraining the competition, or by discouraging new adventurers from
entering into the trade. A fine, even of twenty pounds, besides,
though it may not, perhaps, be sufficient to discourage any man from
entering into the Turkey trade, with an intention to continue in it,
may be enough to discourage a speculative merchant from hazarding a
single adventure in it. In all trades, the regular established
traders, even though not incorporated, naturally combine to raise
profits, which are noway so likely to be kept, at all times, down to
their proper level, as by the occasional competition of speculative
adventurers. The Turkey trade, though in some measure laid open by
this act of parliament, is still considered by many people as very far
from being altogether free. The Turkey company contribute to maintain
an ambassador and two or three consuls, who, like other public
ministers, ought to be maintained altogether by the state, and the
trade laid open to all his majesty's subjects. The different taxes
levied by the company, for this and other corporation purposes, might
afford a revenue much more than sufficient to enable a state to
maintain such ministers.

Regulated companies, it was observed by Sir Josiah Child, though they
had frequently supported public ministers, had never maintained any
forts or garrisons in the countries to which they traded; whereas
joint-stock companies frequently had. And, in reality, the former seem
to be much more unfit for this sort of service than the latter. First,
the directors of a regulated company have no particular interest in
the prosperity of the general trade of the company, for the sake of
which such forts and garrisons are maintained. The decay of that
general trade may even frequently contribute to the advantage of their
own private trade; as, by diminishing the number of their competitors,
it may enable them both to buy cheaper, and to sell dearer. The
directors of a joint-stock company, on the contrary, having only their
share in the profits which are made upon the common stock committed to
their management, have no private trade of their own, of which the
interest can be separated from that of the general trade of the
company. Their private interest is connected with the prosperity of
the general trade of the company, and with the maintenance of the
forts and garrisons which are necessary for its defence. They are more
likely, therefore, to have that continual and careful attention which
that maintenance necessarily requires. Secondly, The directors of a
joint-stock company have always the management of a large capital, the
joint stock of the company, a part of which they may frequently
employ, with propriety, in building, repairing, and maintaining such
necessary forts and garrisons. But the directors of a regulated
company, having the management of no common capital, have no other
fund to employ in this way, but the casual revenue arising from the
admission fines, and from the corporation duties imposed upon the
trade of the company. Though they had the same interest, therefore, to
attend to the maintenance of such forts and garrisons, they can seldom
have the same ability to render that attention effectual. The
maintenance of a public minister, requiring scarce any attention, and
but a moderate and limited expense, is a business much more suitable
both to the temper and abilities of a regulated company.

Long after the time of Sir Josiah Child, however, in 1750, a regulated
company was established, the present company of merchants trading to
Africa; which was expressly charged at first with the maintenance of
all the British forts and garrisons that lie between Cape Blanc and
the Cape of Good Hope, and afterwards with that of those only which
lie between Cape Rouge and the Cape of Good Hope. The act which
establishes this company (the 23rd of George II. c.51 ), seems to have
had two distinct objects in view; first, to restrain effectually the
oppressive and monopolizing spirit which is natural to the directors
of a regulated company; and, secondly, to force them, as much as
possible, to give an attention, which is not natural to them, towards
the maintenance of forts and garrisons.

For the first of these purposes, the fine for admission is limited to
forty shillings. The company is prohibited from trading in their
corporate capacity, or upon a joint stock; from borrowing money upon
common seal, or from laying any restraints upon the trade, which may
be carried on freely from all places, and by all persons being British
subjects, and paying the fine. The government is in a committee of
nine persons, who meet at London, but who are chosen annually by the
freemen of the company at London, Bristol, and Liverpool; three from
each place. No committeeman can be continued in office for more than
three years together. Any committee-man might be removed by the board
of trade and plantations, now by a committee of council, after being
heard in his own defence. The committee are forbid to export negroes
from Africa, or to import any African goods into Great Britain. But as
they are charged with the maintenance of forts and garrisons, they
may, for that purpose export from Great Britain to Africa goods and
stores of different kinds. Out of the moneys which they shall receive
from the company, they are allowed a sum, not exceeding eight hundred
pounds, for the salaries of their clerks and agents at London,
Bristol, and Liverpool, the house-rent of their offices at London, and
all other expenses of management, commission, and agency, in England.
What remains of this sum, after defraying these different expenses,
they may divide among themselves, as compensation for their trouble,
in what manner they think proper. By this constitution, it might have
been expected, that the spirit of monopoly would have been effectually
restrained, and the first of these purposes sufficiently answered. It
would seem, however, that it had not. Though by the 4th of George III.
c.20, the fort of Senegal, with all its dependencies, had been
invested in the company of merchants trading to Africa, yet, in the
year following (by the 5th of George III. c.44), not only Senegal and
its dependencies, but the whole coast, from the port of Sallee, in
South Barbary, to Cape Rouge, was exempted from the jurisdiction of
that company, was vested in the crown, and the trade to it declared
free to all his majesty's subjects. The company had been suspected of
restraining the trade and of establishing some sort of improper
monopoly. It is not, however, very easy to conceive how, under the
regulations of the 23d George II. they could do so. In the printed
debates of the house of commons, not always the most authentic records
of truth, I observe, however, that they have been accused of this. The
members of the committee of nine being all merchants, and the
governors and factors in their different forts and settlements being
all dependent upon them, it is not unlikely that the latter might have
given peculiar attention to the consignments and commissions of the
former, which would establish a real monopoly.

For the second of these purposes, the maintenance of the forts and
garrisons, an annual sum has been allotted to them by parliament,
generally about £13,000. For the proper application of this sum, the
committee is obliged to account annually to the cursitor baron of
exchequer; which account is afterwards to be laid before parliament.
But parliament, which gives so little attention to the application of
millions, is not likely to give much to that of £13,000 a-year; and
the cursitor baron of exchequer, from his profession and education, is
not likely to be profoundly skilled in the proper expense of forts and
garrisons. The captains of his majesty's navy, indeed, or any other
commissioned officers, appointed by the board of admiralty, may
inquire into the condition of the forts and garrisons, and report
their observations to that board. But that board seems to have no
direct jurisdiction over the committee, nor any authority to correct
those whose conduct it may thus inquire into; and the captains of his
majesty's navy, besides, are not supposed to be always deeply learned
in the science of fortification. Removal from an office, which can be
enjoyed only for the term of three years, and of which the lawful
emoluments, even during that term, are so very small, seems to be the
utmost punishment to which any committee-man is liable, for any fault,
except direct malversation, or embezzlement, either of the public
money, or of that of the company; and the fear of the punishment can
never be a motive of sufficient weight to force a continual and
careful attention to a business to which he has no other interest to
attend. The committee are accused of having sent out bricks and stones
from England for the reparation of Cape Coast Castle, on the coast of
Guinea; a business for which parliament had several times granted an
extraordinary sum of money. These bricks and stones, too, which had
thus been sent upon so long a voyage, were said to have been of so bad
a quality, that it was necessary to rebuild, from the foundation, the
walls which had been repaired with them. The forts and garrisons which
lie north of Cape Rouge, are not only maintained at the expense of the
state, but are under the immediate government of the executive power;
and why those which lie south of that cape, and which, too, are, in
part at least, maintained at the expense of the state, should be under
a different government, it seems not very easy even to imagine a good
reason. The protection of the Mediterranean trade was the original
purpose or pretence of the garrisons of Gibraltar and Minorca; and the
maintenance and government of those garrisons have always been, very
properly, committed, not to the Turkey company, but to the executive
power. In the extent of its dominion consists, in a great measure, the
pride and dignity of that power; and it is not very likely to fail in
attention to what is necessary for the defence of that dominion. The
garrisons at Gibraltar and Minorca, accordingly, have never been
neglected. Though Minorca has been twice taken, and is now probably
lost for ever, that disaster has never been imputed to any neglect in
the executive power. I would not, however, be understood to insinuate,
that either of those expensive garrisons was ever, even in the
smallest degree, necessary for the purpose for which they were
originally dismembered from the Spanish monarchy. That dismemberment,
perhaps, never served any other real purpose than to alienate from
England her natural ally the king of Spain, and to unite the two
principal branches of the house of Bourbon in a much stricter and more
permanent alliance than the ties of blood could ever have united them.

Joint-stock companies, established either by royal charter, or by act
of parliament, are different in several respects, not only from
regulated companies, but from private copartneries.

First, In a private copartnery, no partner without the consent of the
company, can transfer his share to another person, or introduce a new
member into the company. Each member, however, may, upon proper
warning, withdraw from the copartnery, and demand payment from them of
his share of the common stock. In a joint-stock company, on the
contrary, no member can demand payment of his share from the company;
but each member can, without their consent, transfer his share to
another person, and thereby introduce a new member. The value of a
share in a joint stock is always the price which it will bring in the
market; and this may be either greater or less in any proportion, than
the sum which its owner stands credited for in the stock of the
company.

Secondly, In a private copartnery, each partner is bound for the debts
contracted by the company, to the whole extent of his fortune. In a
joint-stock company, on the contrary, each partner is bound only to
the extent of his share.

The trade of a joint-stock company is always managed by a court of
directors. This court, indeed, is frequently subject, in many
respects, to the control of a general court of proprietors. But the
greater part of these proprietors seldom pretend to understand any
thing of the business of the company; and when the spirit of faction
happens not to prevail among them, give themselves no trouble about
it, but receive contentedly such halfyearly or yearly dividend as the
directors think proper to make to them. This total exemption front
trouble and front risk, beyond a limited sum, encourages many people
to become adventurers in joint-stock companies, who would, upon no
account, hazard their fortunes in any private copartnery. Such
companies, therefore, commonly draw to themselves much greater stocks,
than any private copartnery can boast of. The trading stock of the
South Sea company at one time amounted to upwards of thirty-three
millions eight hundred thousand pounds. The divided capital of the
Bank of England amounts, at present, to ten millions seven hundred and
eighty thousand pounds. The directors of such companies, however,
being the managers rather of other people's money than of their own,
it cannot well be expected that they should watch over it with the
same anxious vigilance with which the partners in a private copartnery
frequently watch over their own. Like the stewards of a rich man, they
are apt to consider attention to small matters as not for their
master's honour, and very easily give themselves a dispensation from
having it. Negligence and profusion, therefore, must always prevail,
more or less, in the management of the affairs of such a company. It
is upon this account, that joint-stock companies for foreign trade
have seldom been able to maintain the competition against private
adventurers. They have, accordingly, very seldom succeeded without an
exclusive privilege; and frequently have not succeeded with one.
Without an exclusive privilege, they have commonly mismanaged the
trade. With an exclusive privilege, they have both mismanaged and
confined it.

The Royal African company, the predecessors of the present African
company, had an exclusive privilege by charter; but as that charter
had not been confirmed by act of parliament, the trade, in consequence
of the declaration of rights, was, soon after the Revolution, laid
open to all his majesty's subjects. The Hudson's Bay company are, as
to their legal rights, in the same situation as the Royal African
company. Their exclusive charter has not been confirmed by act of
parliament. The South Sea company, as long as they continued to be a
trading company, had an exclusive privilege confirmed by act of
parliament; as have likewise the present united company of merchants
trading to the East Indies.

The Royal African company soon found that they could not maintain the
competition against private adventurers, whom, notwithstanding the
declaration of rights, they continued for some time to call
interlopers, and to persecute as such. In 1698, however, the private
adventurers were subjected to a duty of ten per cent. upon almost all
the different branches of their trade, to be employed by the company
in the maintenance of their forts and garrisons. But, notwithstanding
this heavy tax, the company were still unable to maintain the
competition. Their stock and credit gradually declined. In 1712, their
debts had become so great, that a particular act of parliament was
thought necessary, both for their security and for that of their
creditors. It was enacted, that the resolution of two-thirds of these
creditors in number and value should bind the rust, both with regard
to the time which should be allowed to the company for the payment of
their debts, and with regard to any other agreement which it might be
thought proper to make with them concerning those debts. In 1730,
their affairs were in so great disorder, that they were altogether
incapable of maintaining their forts and garrisons, the sole purpose
and pretext of their institution. From that year till their final
dissolution, the parliament judged it necessary to allow the annual
sum of £10,000 for that purpose. In 1732, after having been for many
years losers by the trade of carrying negroes to the West Indies, they
at last resolved to give it up altogether; to sell to the private
traders to America the negroes which they purchased upon the coast;
awl to employ their servants in a trade to the inland parts of Africa
for gold dust, elephants teeth, dyeing drugs, etc. But their success
in this more confined trade was not greater than in their former
extensive one. Their affairs continued to go gradually to decline,
till at last, being in every respect a bankrupt company, they were
dissolved by act of parliament, and their forts and garrisons vested
in the present regulated company of merchants trading to Africa.
Before the erection of the Royal African company, there had been three
other joint-stock companies successively established, one after
another, for the African trade. They were all equally unsuccessful.
They all, however, had exclusive charters, which, though not confirmed
by act of parliament, were in those days supposed to convey a real
exclusive privilege.

The Hudson's Bay company, before their misfortunes in the late war,
had been much more fortunate than the Royal African company. Their
necessary expense is much smaller. The whole number of people whom
they maintain in their different settlements and habitations, which
they have honoured with the name of forts, is said not to exceed a
hundred and twenty persons. This number, however, is sufficient to
prepare beforehand the cargo of furs and other goods necessary for
loading their ships, which, on account of the ice, can seldom remain
above six or eight weeks in those seas. This advantage of having a
cargo ready prepared, could not, for several years, be acquired by
private adventurers; and without it there seems to be no possibility
of trading to Hudson's Bay. The moderate capital of the company,
which, it is said, does not exceed one hundred and ten thousand
pounds, may, besides, be sufficient to enable them to engross the
whole, or almost the whole trade and surplus produce, of the miserable
though extensive country comprehended within their charter. No private
adventurers, accordingly, have ever attempted to trade to that country
in competition with them. This company, therefore, have always enjoyed
an exclusive trade, in fact, though they may have no right to it in
law. Over and above all this, the moderate capital of this company is
said to be divided among a very small number of proprietors. But a
joint-stock company, consisting of a small number of proprietors, with
a moderate capital, approaches very nearly to the nature of a private
copartnery, and may be capable of nearly the same degree of vigilance
and attention. It is not to be wondered at, therefore, if, in
consequence of these different advantages, the Hudson's Bay company
had, before the late war, been able to carry on their trade with a
considerable degree of success. It does not seem probable, however,
that their profits ever approached to what the late Mr Dobbs imagined
them. A much more sober and judicious writer, Mr Anderson, author of
the Historical and Chronological Deduction of Commerce, very justly
observes, that upon examining the accounts which Mr Dobbs himself has
given for several years together, of their exports and imports, and
upon making proper allowances for their extraordinary risk and
expense, it does not appear that their profits deserve to be envied,
or that they can much, if at all, exceed the ordinary profits of
trade.

The South Sea company never had any forts or garrisons to maintain,
and therefore were entirely exempted from one great expense, to which
other joint-stock companies for foreign trade are subject; but they
had an immense capital divided among an immense number of proprietors.
It was naturally to be expected, therefore, that folly, negligence,
and profusion, should prevail in the whole management of their
affairs. The knavery and extravagance of their stock-jobbing projects
are sufficiently known, and the explication of them would be foreign
to the present subject. Their mercantile projects were not much better
conducted. The first trade which they engaged in, was that of
supplying the Spanish West Indies with negroes, of which (in
consequence of what was called the Assiento Contract granted them by
the treaty of Utrecht) they had the exclusive privilege. But as it was
not expected that much profit could be made by this trade, both the
Portuguese and French companies, who had enjoyed it upon the same
terms before them, having been ruined by it, they were allowed, as
compensation, to send annually a ship of a certain burden, to trade
directly to the Spanish West Indies. Of the ten voyages which this
annual ship was allowed to make, they are said to have gained
considerably by one, that of the Royal Caroline, in 1731; and to have
been losers, more or less, by almost all the rest. Their ill success
was imputed, by their factors and agents, to the extortion and
oppression of the Spanish government; but was, perhaps, principally
owing to the profusion and depredations of those very factors and
agents; some of whom are said to have acquired great fortunes, even in
one year. In 1734, the company petitioned the king, that they might be
allowed to dispose of the trade and tonnage of their annual ship, on
account of the little profit which they made by it, and to accept of
such equivalent as they could obtain from the king of Spain.

In 1724, this company had undertaken the whale fishery. Of this,
indeed, they had no monopoly; but as long as they carried it on, no
other British subjects appear to have engaged in it. Of the eight
voyages which their ships made to Greenland, they were gainers by one,
and losers by all the rest. After their eighth and last voyage, when
they had sold their ships, stores, and utensils, they found that their
whole loss upon this branch, capital and interest included, amounted
to upwards of £237,000.

In 1722, this company petitioned the parliament to be allowed to
divide their immense capital of more than thirty-three millions eight
hundred thousand pounds, the whole of which had been lent to
government, into two equal parts; the one half, or upwards of
£16,900,000, to be put upon the same footing with other government
annuities, and not to be subject to the debts contracted, or losses
incurred, by the directors of the company, in the prosecution of their
mercantile projects; the other half to remain as before, a trading
stock, and to be subject to those debts and losses. The petition was
too reasonable not to be granted. In 1733, they again petitioned the
parliament, that three-fourths of their trading stock might be turned
into annuity stock, and only one-fourth remain as trading stock, or
exposed to the hazards arising from the bad management of their
directors. Both their annuity and trading stocks had, by this time,
been reduced more than two millions each, by several different
payments from government; so that this fourth amounted only to
£3,662,784:8:6. In 1748, all the demands of the company upon the king
of Spain, in consequence of the assiento contract, were, by the treaty
of Aix-la-Chapelle, given up for what was supposed an equivalent. An
end was put to their trade with the Spanish West Indies; the remainder
of their trading stock was turned into an annuity stock; and the
company ceased, in every respect, to be a trading company.

It ought to be observed, that in the trade which the South Sea company
carried on by means of their annual ship, the only trade by which it
ever was expected that they could make any considerable profit, they
were not without competitors, either in the foreign or in the home
market. At Carthagena, Porto Bello, and La Vera Cruz, they had to
encounter the competition of the Spanish merchants, who brought from
Cadiz to those markets European goods, of the same kind with the
outward cargo of their ship; and in England they had to encounter that
of the English merchants, who imported from Cadiz goods of the Spanish
West Indies, of the same kind with the inward cargo. The goods, both
of the Spanish and English merchants, indeed, were, perhaps, subject
to higher duties. But the loss occasioned by the negligence,
profusion, and malversation of the servants of the company, had
probably been a tax much heavier than all those duties. That a
joint-stock company should be able to carry on successfully any branch
of foreign trade, when private adventurers can come into any sort of
open and fair competition with them, seems contrary to all experience.

The old English East India company was established in 1600, by a
charter from Queen Elizabeth. In the first twelve voyages which they
fitted out for India, they appear to have traded as a regulated
company, with separate stocks, though only in the general ships of the
company. In 1612, they united into a joint stock. Their charter was
exclusive, and, though not confirmed by act of parliament, was in
those days supposed to convey a real exclusive privilege. For many
years, therefore, they were not much disturbed by interlopers. Their
capital, which never exceeded £744,000, and of which £50 was a share,
was not so exorbitant, nor their dealings so extensive, as to afford
either a pretext for gross negligence and profusion, or a cover to
gross malversation. Notwithstanding some extraordinary losses,
occassioned partly by the malice of the Dutch East India company, and
partly by other accidents, they carried on for many years a successful
trade. But in process of time, when the principles of liberty were
better understood, it became every day more and more doubtful, how far
a royal charter, not confirmed by act of parliament, could convey an
exclusive privilege. Upon this question the decisions of the courts of
justice were not uniform, but varied with the authority of government,
and the humours of the times. Interlopers multiplied upon them; and
towards the end of the reign of Charles II., through the whole of that
of James II., and during a part of that of William III., reduced them
to great distress. In 1698, a proposal was made to parliament, of
advancing two millions to government, at eight per cent. provided the
subscribers were erected into a new East India company, with exclusive
privileges. The old East India company offered seven hundred thousand
pounds, nearly the amount of their capital, at four per cent. upon the
same conditions. But such was at that time the state of public credit,
that it was more convenient for government to borrow two millions at
eight per cent. than seven hundred thousand pounds at four. The
proposal of the new subscribers was accepted, and a new East India
company established in consequence. The old East India company,
however, had a right to continue their trade till 1701. They had, at
the same time, in the name of their treasurer, subscribed very
artfully three hundred and fifteen thousand pounds into the stock of
the new. By a negligence in the expression of the act of parliament,
which vested the East India trade in the subscribers to this loan of
two millions, it did not appear evident that they were all obliged to
unite into a joint stock. A few private traders, whose subscriptions
amounted only to seven thousand two hundred pounds, insisted upon the
privilege of trading separately upon their own stocks, and at their
own risks. The old East India company had a right to a separate trade
upon their own stock till 1701; and they had likewise, both before and
after that period, a right, like that or other private traders, to a
separate trade upon the £315,000, which they had subscribed into the
stock of the new company. The competition of the two companies with
the private traders, and with one another, is said to have well nigh
ruined both. Upon a subsequent occasion, in 1750, when a proposal was
made to parliament for putting the trade under the management of a
regulated company, and thereby laying it in some measure open, the
East India company, in opposition to this proposal, represented, in
very strong terms, what had been, at this time, the miserable effects,
as they thought them, of this competition. In India, they said, it
raised the price of goods so high, that they were not worth the
buying; and in England, by overstocking the market, it sunk their
price so low, that no profit could be made by them. That by a more
plentiful supply, to the great advantage and conveniency of the
public, it must have reduced very much the price of India goods in the
English market, cannot well be doubted; but that it should have raised
very much their price in the Indian market, seems not very probable,
as all the extraordinary demand which that competition could occasion
must have been but as a drop of water in the immense ocean of Indian
commerce. The increase of demand, besides, though in the beginning it
may sometimes raise the price of goods, never fails to lower it in the
long-run. It encourages production, and thereby increases the
competition of the producers, who, in order to undersell one another,
have recourse to new divisions or labour and new improvements of art,
which might never otherwise have been thought of. The miserable
effects of which the company complained, were the cheapness of
consumption, and the encouragement given to production; precisely the
two effects which it is the great business of political economy to
promote. The competition, however, of which they gave this doleful
account, had not been allowed to be of long continuance. In 1702, the
two companies were, in some measure, united by an indenture
tripartite, to which the queen was the third party; and in 1708, they
were by act of parliament, perfectly consolidated into one company, by
their present name of the United Company of Merchants trading to the
East Indies. Into this act it was thought worth while to insert a
clause, allowing the separate traders to continue their trade till
Michaelmas 1711; but at the same time empowering the directors, upon
three years notice, to redeem their little capital of seven thousand
two hundred pounds, and thereby to convert the whole stock of the
company into a joint stock. By the same act, the capital of the
company, in consequence of a new loan to government, was augmented
from two millions to three millions two hundred thousand pounds. In
1743, the company advanced another million to government. But this
million being raised, not by a call upon the proprietors, but by
selling annuities and contracting bond-debts, it did not augment the
stock upon which the proprietors could claim a dividend. It augmented,
however, their trading stock, it being equally liable with the other
three millions two hundred thousand pounds, to the losses sustained,
and debts contracted by the company in prosecution of their mercantile
projects. From 1708, or at least from 1711, this company, being
delivered from all competitors, and fully established in the monopoly
of the English commerce to the East Indies, carried on a successful
trade, and from their profits, made annually a moderate dividend to
their proprietors. During the French war, which began in 1741, the
ambition of Mr. Dupleix, the French governor of Pondicherry, involved
them in the wars of the Carnatic, and in the politics of the Indian
princes. After many signal successes, and equally signal losses, they
at last lost Madras, at that time their principal settlement in India.
It was restored to them by the treaty of Aix-la-Chapelle; and, about
this time the spirit of war and conquest seems to have taken
possession of their servants in India, and never since to have left
them. During the French war, which began in 1755, their arms partook
of the general good fortune of those of Great Britain. They defended
Madras, took Pondicherry, recovered Calcutta, and acquired the
revenues of a rich and extensive territory, amounting, it was then
said, to upwards of three millions a-year. They remained for several
years in quiet possession of this revenue; but in 1767, administration
laid claim to their territorial acquisitions, and the revenue arising
from them, as of right belonging to the crown; and the company, in
compensation for this claim, agreed to pay to government £400,000
a-year. They had, before this, gradually augmented their dividend from
about six to ten per cent.; that is, upon their capital of three
millions two hundred thousand pounds, they had increased it by
£128,000, or had raised it from one hundred and ninety-two thousand to
three hundred and twenty thousand pounds a-year. They were attempting
about this time to raise it still further, to twelve and a-half per
cent., which would have made their annual payments to their
proprietors equal to what they had agreed to pay annually to
government, or to £400,000 a-year. But during the two years in which
their agreement with government was to take place, they were
restrained from any further increase of dividend by two successive
acts of parliament, of which the object was to enable them to make a
speedier progress in the payment of their debts, which were at this
time estimated at upwards of six or seven millions sterling. In 1769,
they renewed their agreement with government for five years more, and
stipulated, that during the course of that period, they should be
allowed gradually to increase their dividend to twelve and a-half per
cent; never increasing it, however, more than one per cent. in one
year. This increase of dividend, therefore, when it had risen to its
utmost height, could augment their annual payments, to their
proprietors and government together, but by £680,000, beyond what
they had been before their late territorial acquisitions. What the
gross revenue of those territorial acquisitions was supposed to amount
to, has already been mentioned; and by an account brought by the
Cruttenden East Indiaman in 1769, the neat revenue, clear of all
deductions and military charges, was stated at two millions
forty-eight thousand seven hundred and forty-seven pounds. They were
said, at the same time, to possess another revenue, arising partly
from lands, but chiefly from the customs established at their
different settlements, amounting to £439,000. The profits of their
trade, too, according to the evidence of their chairman before the
house of commons, amounted, at this time, to at least £400,000 a-year;
according to that of their accountant, to at least £500,000; according
to the lowest account, at least equal to the highest dividend that was
to be paid to their proprietors. So great a revenue might certainly
have afforded an augmentation of £680,000 in their annual payments;
and, at the same time, have left a large sinking fund, sufficient for
the speedy reduction of their debt. In 1773, however, their debts,
instead of being reduced, were augmented by an arrear to the treasury
in the payment of the four hundred thousand pounds; by another to the
custom-house for duties unpaid; by a large debt to the bank, for money
borrowed; and by a fourth, for bills drawn upon them from India, and
wantonly accepted, to the amount of upwards of twelve hundred thousand
pounds. The distress which these accumulated claims brought upon them,
obliged them not only to reduce all at once their dividend to six per
cent. but to throw themselves upon the mercy of govermnent, and to
supplicate, first, a release from the further payment of the
stipulated £400,000 a-year; and, secondly, a loan of fourteen hundred
thousand, to save them from immediate bankruptcy. The great increase
of their fortune had, it seems, only served to furnish their servants
with a pretext for greater profusion, and a cover for greater
malversation, than in proportion even to that increase of fortune. The
conduct of their servants in India, and the general state of their
affairs both in India and in Europe, became the subject of a
parliamentary inquiry: in consequence of which, several very important
alterations were made in the constitution of their government, both at
home and abroad. In India, their principal settlements or Madras,
Bombay, and Calcutta, which had before been altogether independent of
one another, were subjected to a governor-general, assisted by a
council of four assessors, parliament assuming to itself the first
nomination of this governor and council, who were to reside at
Calcutta; that city having now become, what Madras was before, the
most important of the English settlements in India. The court of the
Mayor of Calcutta, originally instituted for the trial of mercantile
causes, which arose in the city and neighbourhood, had gradually
extended its jurisdiction with the extension of the empire. It was now
reduced and confined to the original purpose of its institution.
Instead of it, a new supreme court of judicature was established,
consisting of a chief justice and three judges, to be appointed by the
crown. In Europe, the qualification necessary to entitle a proprietor
to vote at their general courts was raised, from five hundred pounds,
the original price of a share in the stock of the company, to a
thousand pounds. In order to vote upon this qualification, too, it was
declared necessary, that he should have possessed it, if acquired by
his own purchase, and not by inheritance, for at least one year,
instead of six months, the term requisite before. The court of
twenty-four directors had before been chosen annually; but it was now
enacted, that each director should, for the future, be chosen for four
years; six of them, however, to go out of office by rotation every
year, and not be capable of being re-chosen at the election of the six
new directors for the ensuing year. In consequence of these
alterations, the courts, both of the proprietors and directors, it was
expected, would be likely to act with more dignity and steadiness than
they had usually done before. But it seems impossible, by any
alterations, to render those courts, in any respect, fit to govern, or
even to share in the government of a great empire; because the greater
part of their members must always have too little interest in the
prosperity of that empire, to give any serious attention to what may
promote it. Frequently a man of great, sometimes even a man of small
fortune, is willing to purchase a thousand pounds share in India
stock, merely for the influence which he expects to aquire by a vote
in the court of proprietors. It gives him a share, though not in the
plunder, yet in the appointment of the plunderers of India; the court
of directors, though they make that appointment, being necessarily
more or less under the influence of the proprietors, who not only
elect those directors, but sometimes over-rule the appointments of
their servants in India. Provided he can enjoy this influence for a
few years, and thereby provide for a certain number of his friends, he
frequently cares little about the dividend, or even about the value of
the stock upon which his vote is founded. About the prosperity of the
great empire, in the government of which that vote gives him a share,
he seldom cares at all. No other sovereigns ever were, or, from the
nature of things, ever could be, so perfectly indifferent about the
happiness or misery of their subjects, the improvement or waste of
their dominions, the glory or disgrace of their administration, as,
from irresistible moral causes, the greater part of the proprietors of
such a mercantile company are, and necessarily must be. This
indifference, too, was more likely to be increased than diminished by
some of the new regulations which were made in consequence of the
parliamentary inquiry. By a resolution of the house of commons, for
example, it was declared, that when the £1,400,000 lent to the company
by government, should be paid, and their bond-debts be reduced to
£1,500,000, they might then, and not till then, divide eight per cent.
upon their capital; and that whatever remained of their revenues and
neat profits at home should be divided into four parts; three of them
to be paid into the exchequer for the use of the public, and the
fourth to be reserved as a fund, either for the further reduction of
their bond-debts, or for the discharge of other contingent exigencies
which the company might labour under. But if the company were bad
stewards and bad sovereigns, when the whole of their neat revenue and
profits belonged to themselves, and were at their own disposal, they
were surely not likely to be better when three-fourths of them were to
belong to other people, and the other fourth, though to be laid out
for the benefit of the company, yet to be so under the inspection and
with the approbation of other people.

It might be more agreeable to the company, that their own servants and
dependants should have either the pleasure of wasting, or the profit
of embezzling, whatever surplus might remain, after paying the
proposed dividend of eight per cent. than that it should come into the
hands of a set of people with whom those resolutions could scarce fail
to set them in some measure at variance. The interest of those
servants and dependants might so far predominate in the court of
proprietors, as sometimes to dispose it to support the authors of
depredations which had been committed in direct violation of its own
authority. With the majority of proprietors, the support even of the
authority of their own court might sometimes be a matter of less
consequence than the support of those who had set that authority at
defiance.

The regulations of 1773, accordingly, did not put an end to the
disorder of the company's government in India. Notwithstanding that,
during a momentary fit of good conduct, they had at one time collected
into the treasury of Calcutta more than £3,000,000 sterling;
notwithstanding that they had afterwards extended either their
dominion or their depredations over a vast accession of some of the
richest and most fertile countries in India, all was wasted and
destroyed. They found themselves altogether unprepared to stop or
resist the incursion of Hyder Ali; and in consequence of those
disorders, the company is now (1784) in greater distress than ever;
and, in order to prevent immediate bankruptcy, is once more reduced to
supplicate the assistance of government. Different plans have been
proposed by the different parties in parliament for the better
management of its affairs; and all those plans seem to agree in
supposing, what was indeed always abundantly evident, that it is
altogether unfit to govern its territorial possessions. Even the
company itself seems to be convinced of its own incapacity so far, and
seems, upon that account willing to give them up to government.

With the right of possessing forts and garrisons in distant and
barbarous countries is necessarily connected the right of making peace
and war in those countries. The joint-stock companies, which have had
the one right, have constantly exercised the other, and have
frequently had it expressly conferred upon them. How unjustly, how
capriciously, how cruelly, they have commonly exercised it, is too
well known from recent experience.

When a company of merchants undertake, at their own risk and expense,
to establish a new trade with some remote and barbarous nation, it may
not be unreasonable to incorporate them into a joint-stock company,
and to grant them, in case of their success, a monopoly of the trade
for a certain number of years. It is the easiest and most natural way
in which the state can recompense them for hazarding a dangerous and
expensive experiment, of which the public is afterwards to reap the
benefit. A temporary monopoly of this kind may be vindicated, upon the
same principles upon which a like monopoly of a new machine is granted
to its inventor, and that of a new book to its author. But upon the
expiration of the term, the monopoly ought certainly to determine; the
forts and garrisons, if it was found necessary to establish any, to be
taken into the hands of government, their value to be paid to the
company, and the trade to be laid open to all the subjects of the
state. By a perpetual monopoly, all the other subjects of the state
are taxed very absurdly in two different ways: first, by the high
price of goods, which, in the case of a free trade, they could buy
much cheaper; and, secondly, by their total exclusion from a branch of
business which it might be both convenient and profitable for many of
them to carry on. It is for the most worthless of all purposes, too,
that they are taxed in this manner. It is merely to enable the company
to support the negligence, profusion, and malversation of their own
servants, whose disorderly conduct seldom allows the dividend of the
company to exceed the ordinary rate of profit in trades which are
altogether free, and very frequently makes a fall even a good deal
short of that rate. Without a monopoly, however, a joint-stock
company, it would appear from experience, cannot long carry on any
branch of foreign trade. To buy in one market, in order to sell with
profit in another, when there are many competitors in both; to watch
over, not only the occasional variations in the demand, but the much
greater and more frequent variations in the competition, or in the
supply which that demand is likely to get from other people; and to
suit with dexterity and judgment both the quantity and quality of each
assortment of goods to all these circumstances, is a species of
warfare, of which the operations are continually changing, and which
can scarce ever be conducted successfully, without such an unremitting
exertion of vigilance and attention as cannot long be expected from
the directors of a joint-stock company. The East India company, upon
the redemption of their funds, and the expiration of their exclusive
privilege, have a right, by act of parliament, to continue a
corporation with a joint stock, and to trade in their corporate
capacity to the East Indies, in common with the rest of their fellow
subjects. But in this situation, the superior vigilance and attention
of a private adventurer would, in all probability, soon make them
weary of the trade.

An eminent French author, of great knowledge in matters of political
economy, the Abbe Morellet, gives a list of fifty-five joint-stock
companies for foreign trade, which have been established in different
parts of Europe since the year 1600, and which, according to him, have
all failed from mismanagement, notwithstanding they had exclusive
privileges. He has been misinformed with regard to the history of two
or three of them, which were not joint-stock companies and have not
failed. But, in compensation, there have been several joint-stock
companies which have failed, and which he has omitted.

The only trades which it seems possible for a joint-stock company to
carry on successfully, without an exclusive privilege, are those, of
which all the operations are capable of being reduced to what is
called a routine, or to such a uniformity of method as admits of
little or no variation. Of this kind is, first, the banking trade;
secondly, the trade of insurance from fire and from sea risk, and
capture in time of war; thirdly, the trade of making and maintaining a
navigable cut or canal; and, fourthly, the similar trade of bringing
water for the supply of a great city.

Though the principles of the banking trade may appear somewhat
abstruse, the practice is capable of being reduced to strict rules. To
depart upon any occasion from those rules, in consequence of some
flattering speculation of extraordinary gain, is almost always
extremely dangerous and frequently fatal to the banking company which
attempts it. But the constitution of joint-stock companies renders
them in general, more tenacious of established rules than any private
copartnery. Such companies, therefore, seem extremely well fitted for
this trade. The principal banking companies in Europe, accordingly,
are joint-stock companies, many of which manage their trade very
successfully without any exclusive privilege. The bank of England has
no other exclusive privilege, except that no other banking company in
England shall consist of more than six persons. The two banks of
Edinburgh are joint-stock companies, without any exclusive privilege.

The value of the risk, either from fire, or from loss by sea, or by
capture, though it cannot, perhaps, be calculated very exactly,
admits, however, of such a gross estimation, as renders it, in some
degree, reducible to strict rule and method. The trade of insurance,
therefore, may be carried on successfully by a joint-stock company,
without any exclusive privilege. Neither the London Assurance, nor the
Royal Exchange Assurance companies have any such privilege.

When a navigable cut or canal has been once made, the management of it
becomes quite simple and easy, and it is reducible to strict rule and
method. Even the making of it is so, as it may be contracted for with
undertakers, at so much a mile, and so much a lock. The same thing may
be said of a canal, an aqueduct, or a great pipe for bringing water to
supply a great city. Such under-takings, therefore, may be, and
accordingly frequently are, very successfully managed by joint-stock
companies, without any exclusive privilege.

To establish a joint-stock company, however, for any undertaking,
merely because such a company might be capable of managing it
successfully; or, to exempt a particular set of dealers from some of
the general laws which take place with regard to all their neighbours,
merely because they might be capable of thriving, if they had such an
exemption, would certainly not be reasonable. To render such an
establishment perfectly reasonable, with the circumstance of being
reducible to strict rule and method, two other circumstances ought to
concur. First, it ought to appear with the clearest evidence, that the
undertaking is of greater and more general utility than the greater
part of common trades; and, secondly, that it requires a greater
capital than can easily be collected into a private copartnery. If a
moderate capital were sufficient, the great utility of the undertaking
would not be a sufficient reason for establishing a joint-stock
company; because, in this case, the demand for what it was to produce,
would readily and easily be supplied by private adventurers. In the
four trades above mentioned, both those circumstances concur.

The great and general utility of the banking trade, when prudently
managed, has been fully explained in the second book of this Inquiry.
But a public bank, which is to support public credit, and, upon
particular emergencies, to advance to government the whole produce of
a tax, to the amount, perhaps, of several millions, a year or two
before it comes in, requires a greater capital than can easily be
collected into any private copartnery.

The trade of insurance gives great security to the fortunes of private
people, and, by dividing among a great many that loss which would ruin
an individual, makes it fall light and easy upon the whole society. In
order to give this security, however, it is necessary that the
insurers should have a very large capital. Before the establishment of
the two joint-stock companies for insurance in London, a list, it is
said, was laid before the attorney-general, of one hundred and fifty
private usurers, who had failed in the course of a few years.

That navigable cuts and canals, and the works which are sometimes
necessary for supplying a great city with water, are of great and
general utility, while, at the same time, they frequently require a
greater expense than suits the fortunes of private people, is
sufficiently obvious.

Except the four trades above mentioned, I have not been able to
recollect any other, in which all the three circumstances requisite
for rendering reasonable the establishment of a joint-stock company
concur. The English copper company of London, the lead-smelting
company, the glass-grinding company, have not even the pretext of any
great or singular utility in the object which they pursue; nor does
the pursuit of that object seem to require any expense unsuitable to
the fortunes of many private men. Whether the trade which those
companies carry on, is reducible to such strict rule and method as to
render it fit for the management of a joint-stock company, or whether
they have any reason to boast of their extraordinary profits, I do not
pretend to know. The mine-adventurers company has been long ago
bankrupt. A share in the stock of the British Linen company of
Edinburgh sells, at present, very much below par, though less so than
it did some years ago. The joint-stock companies, which are
established for the public-spirited purpose of promoting some
particular manufacture, over and above managing their own affairs ill,
to the diminution of the general stock of the society, can, in other
respects, scarce ever fail to do more harm than good. Notwithstanding
the most upright intentions, the unavoidable partiality of their
directors to particular branches of the manufacture, of which the
undertakers mislead and impose upon them, is a real discouragement to
the rest, and necessarily breaks, more or less, that natural
proportion which would otherwise establish itself between judicious
industry and profit, and which, to the general industry of the
country, is of all encouragements the greatest and the most effectual.

ART. II. -- Of the Expense of the Institution for the Education of
Youth.

The institutions for the education of the youth may, in the same
manner, furnish a revenue sufficient for defraying their own expense.
The fee or honorary, which the scholar pays to the master, naturally
constitutes a revenue of this kind.

Even where the reward of the master does not arise altogether from
this natural revenue, it still is not necessary that it should be
derived from that general revenue of the society, of which the
collection and application are, in most countries, assigned to the
executive power. Through the greater part of Europe, accordingly, the
endowment of schools and colleges makes either no charge upon that
general revenue, or but a very small one. It everywhere arises chiefly
from some local or provincial revenue, from the rent of some landed
estate, or from the interest of some sum of money, allotted and put
under the management of trustees for this particular purpose,
sometimes by the sovereign himself, and sometimes by some private
donor.

Have those public endowments contributed in general, to promote the
end of their institution? Have they contributed to encourage the
diligence, and to improve the abilities, of the teachers? Have they
directed the course of education towards objects more useful, both to
the individual and to the public, than those to which it would
naturally have gone of its own accord? It should not seem very
difficult to give at least a probable answer to each of those
questions.

In every profession, the exertion of the greater part of those who
exercise it, is always in proportion to the necessity they are under
of making that exertion. This necessity is greatest with those to whom
the emoluments of their profession are the only source from which they
expect their fortune, or even their ordinary revenue and subsistence.
In order to acquire this fortune, or even to get this subsistence,
they must, in the course of a year, execute a certain quantity of work
of a known value; and, where the competition is free, the rivalship of
competitors, who are all endeavouring to justle one another out of
employment, obliges every man to endeavour to execute his work with a
certain degree of exactness. The greatness of the objects which are to
be acquired by success in some particular professions may, no doubt,
sometimes animate the exertions of a few men of extraordinary spirit
and ambition. Great objects, however, are evidently not necessary, in
order to occasion the greatest exertions. Rivalship and emulation
render excellency, even in mean professions, an object of ambition,
and frequently occasion the very greatest exertions. Great objects, on
the contrary, alone and unsupported by the necessity of application,
have seldom been sufficient to occasion any considerable exertion. In
England, success in the profession of the law leads to some very great
objects of ambition; and yet how few men, born to easy fortunes, have
ever in this country been eminent in that profession?

The endowments of schools and colleges have necessarily diminished,
more or less, the necessity of application in the teachers. Their
subsistence, so far as it arises from their salaries, is evidently
derived from a fund, altogether independent of their success and
reputation in their particular professions.

In some universities, the salary makes but a part, and frequently but
a small part, of the emoluments of the teacher, of which the greater
part arises from the honoraries or fees of his pupils. The necessity
of application, though always more or less diminished, is not, in this
case, entirely taken away. Reputation in his profession is still of
some importance to him, and he still has some dependency upon the
affection, gratitude, and favourable report of those who have attended
upon his instructions; and these favourable sentiments he is likely to
gain in no way so well as by deserving them, that is, by the abilities
and diligence with which he discharges every part of his duty.

In other universities, the teacher is prohibited from receiving any
honorary or fee from his pupils, and his salary constitutes the whole
of the revenue which he derives from his office. His interest is, in
this case, set as directly in opposition to his duty as it is possible
to set it. It is the interest of every man to live as much at his ease
as he can; and if his emoluments are to be precisely the same, whether
he does or does not perform some very laborious duty, it is certainly
his interest, at least as interest is vulgarly understood, either to
neglect it altogether, or, if he is subject to some authority which
will not suffer him to do this, to perform it in as careless and
slovenly a manner as that authority will permit. If he is naturally
active and a lover of labour, it is his interest to employ that
activity in any way from which he can derive some advantage, rather
than in the performance of his duty, from which he can derive none.

If the authority to which he is subject resides in the body corporate,
the college, or university, of which he himself is a member, and in
which the greater part of the other members are, like himself, persons
who either are, or ought to be teachers, they are likely to make a
common cause, to be all very indulgent to one another, and every man
to consent that his neighbour may neglect his duty, provided he
himself is allowed to neglect his own. In the university of Oxford,
the greater part of the public professors have, for these many years,
given up altogether even the pretence of teaching.

If the authority to which he is subject resides, not so much in the
body corporate, of which he is a member, as in some other extraneous
persons, in the bishop of the diocese, for example, in the governor of
the province, or, perhaps, in some minister of state, it is not,
indeed, in this case, very likely that he will be suffered to neglect
his duty altogether. All that such superiors, however, can force him
to do, is to attend upon his pupils a certain number of hours, that
is, to give a certain number of lectures in the week, or in the year.
What those lectures shall be, must still depend upon the diligence of
the teacher; and that diligence is likely to be proportioned to the
motives which he has for exerting it. An extraneous jurisdiction of
this kind, besides, is liable to be exercised both ignorantly and
capriciously. In its nature, it is arbitrary and discretionary; and
the persons who exercise it, neither attending upon the lectures of
the teacher themselves, nor perhaps understanding the sciences which
it is his business to teach, are seldom capable of exercising it with
judgment. From the insolence of office, too, they are frequently
indifferent how they exercise it, and are very apt to censure or
deprive him of his office wantonly and without any just cause. The
person subject to such jurisdiction is necessarily degraded by it,
and, instead of being one of the most respectable, is rendered one of
the meanest and most contemptible persons in the society. It is by
powerful protection only, that he can effectually guard himself
against the bad usage to which he is at all times exposed; and this
protection he is most likely to gain, not by ability or diligence in
his profession, but by obsequiousness to the will of his superiors,
and by being ready, at all times, to sacrifice to that will the
rights, the interest, and the honour of the body corporate, of which
he is a member. Whoever has attended for any considerable time to the
administration of a French university, must have had occasion to
remark the effects which naturally result from an arbitrary and
extraneous jurisdiction of this kind.

Whatever forces a certain number of students to any college or
university, independent of the merit or reputation of the teachers,
tends more or less to diminish the necessity of that merit or
reputation.

The privileges of graduates in arts, in law, physic, and divinity,
when they can be obtained only by residing a certain number of years
in certain universities, necessarily force a certain number of
students to such universities, independent of the merit or reputation
of the teachers. The privileges of graduates are a sort of statutes of
apprenticeship, which have contributed to the improvement of education
just as the other statutes of apprenticeship have to that of arts and
manufactures.

The charitable foundations of scholarships, exhibitions, bursaries,
etc. necessarily attach a certain number of students to certain
colleges, independent altogether of the merit of those particular
colleges. Were the students upon such charitable foundations left free
to choose what college they liked best, such liberty might perhaps
contribute to excite some emulation among different colleges. A
regulation, on the contrary, which prohibited even the independent
members of every particular college from leaving it, and going to any
other, without leave first asked and obtained of that which they meant
to abandon, would tend very much to extinguish that emulation.

If in each college, the tutor or teacher, who was to instruct each
student in all arts and sciences, should not be voluntarily chosen by
the student, but appointed by the head of the college; and if, in case
of neglect, inability, or bad usage, the student should not be allowed
to change him for another, without leave first asked and obtained;
such a regulation would not only tend very much to extinguish all
emulation among the different tutors of the same college, but to
diminish very much, in all of them, the necessity of diligence and of
attention to their respective pupils. Such teachers, though very well
paid by their students, might be as much disposed to neglect them, as
those who are not paid by them at all or who have no other recompense
but their salary.

If the teacher happens to be a man of sense, it must be an unpleasant
thing to him to be conscious, while he is lecturing to his students,
that he is either speaking or reading nonsense, or what is very little
better than nonsense. It must, too, be unpleasant to him to observe,
that the greater part of his students desert his lectures; or perhaps,
attend upon them with plain enough marks of neglect, contempt, and
derision. If he is obliged, therefore, to give a certain number of
lectures, these motives alone, without any other interest, might
dispose him to take some pains to give tolerably good ones. Several
different expedients, however, may be fallen upon, which will
effectually blunt the edge of all those incitements to diligence. The
teacher, instead of explaining to his pupils himself the science in
which he proposes to instruct them, may read some book upon it; and if
this book is written in a foreign and dead language, by interpreting
it to them into their own, or, what would give him still less trouble,
by making them interpret it to him, and by now and then making an
occasional remark upon it, he may flatter himself that he is giving a
lecture. The slightest degree of knowledge and application will enable
him to do this, without exposing himself to contempt or derision, by
saying any thing that is really foolish, absurd, or ridiculous. The
discipline of the college, at the same time, may enable him to force
all his pupils to the most regular attendance upon his sham lecture,
and to maintain the most decent and respectful behaviour during the
whole time of the performance.

The discipline of colleges and universities is in general contrived,
not for the benefit of the students, but for the interest, or, more
properly speaking, for the ease of the masters. Its object is, in all
cases, to maintain the authority of the master, and, whether he
neglects or performs his duty, to oblige the students in all cases to
behave to him as if he performed it with the greatest diligence and
ability. It seems to presume perfect wisdom and virtue in the one
order, and the greatest weakness and folly in the other. Where the
masters, however, really perform their duty, there are no examples, I
believe, that the greater part of the students ever neglect theirs. No
discipline is ever requisite to force attendance upon lectures which
are really worth the attending, as is well known wherever any such
lectures are given. Force and restraint may, no doubt, be in some
degree requisite, in order to oblige children, or very young boys, to
attend to those parts of education, which it is thought necessary for
them to acquire during that early period of life; but after twelve or
thirteen years of age, provided the master does his duty, force or
restraint can scarce ever be necessary to carry on any part of
education. Such is the generosity of the greater part of young men,
that so far from being disposed to neglect or despise the instructions
of their master, provided he shews some serious intention of being of
use to them, they are generally inclined to pardon a great deal of
incorrectness in the performance of his duty, and sometimes even to
conceal from the public a good deal of gross negligence.

Those parts of education, it is to be observed, for the teaching of
which there are no public institutions, are generally the best taught.
When a young man goes to a fencing or a dancing school, he does not,
indeed, always learn to fence or to dance very well; but he seldom
fails of learning to fence or to dance. The good effects of the riding
school are not commonly so evident. The expense of a riding school is
so great, that in most places it is a public institution. The three
most essential parts of literary education, to read, write, and
account, it still continues to be more common to acquire in private
than in public schools; and it very seldom happens, that anybody fails
of acquiring them to the degree in which it is necessary to acquire
them.

In England, the public schools are much less corrupted than the
universities. In the schools, the youth are taught, or at least may be
taught, Greek and Latin; that is, everything which the masters pretend
to teach, or which it is expected they should teach. In the
universities, the youth neither are taught, nor always can find any
proper means of being taught the sciences, which it is the business of
those incorporated bodies to teach. The reward of the schoolmaster, in
most cases, depends principally, in some cases almost entirely, upon
the fees or honoraries of his scholars. Schools have no exclusive
privileges. In order to obtain the honours of graduation, it is not
necessary that a person should bring a certificate of his having
studied a certain number of years at a public school. If, upon
examination, he appears to understand what is taught there, no
questions are asked about the place where he learnt it.

The parts of education which are commonly taught in universities, it
may perhaps be said, are not very well taught. But had it not been for
those institutions, they would not have been commonly taught at all;
and both the individual and the public would have suffered a good deal
from the want of those important parts of education.

The present universities of Europe were originally, the greater part
of them, ecclesiastical corporations, instituted for the education of
churchmen. They were founded by the authority of the pope; and were so
entirely under his immediate protection, that their members, whether
masters or students, had all of them what was then called the benefit
of clergy, that is, were exempted from the civil jurisdiction of the
countries in which their respective universities were situated, and
were amenable only to the ecclesiastical tribunals. What was taught in
the greater part of those universities was suitable to the end of
their institution, either theology, or something that was merely
preparatory to theology.

When Christianity was first established by law, a corrupted Latin had
become the common language of all the western parts of Europe. The
service of the church, accordingly, and the translation of the Bible
which were read in churches, were both in that corrupted Latin; that
is, in the common language of the country, After the irruption of the
barbarous nations who overturned the Roman empire, Latin gradually
ceased to be the language of any part of Europe. But the reverence of
the people naturally preserves the established forms and ceremonies of
religion long after the circumstances which first introduced and
rendered them reasonable, are no more. Though Latin, therefore, was no
longer understood anywhere by the great body of the people, the whole
service of the church still continued to be performed in that
language. Two different languages were thus established in Europe, in
the same manner as in ancient Egypt: a language of the priests, and a
language of the people; a sacred and a profane, a learned and an
unlearned language. But it was necessary that the priests should
understand something of that sacred and learned language in which they
were to officiate; and the study of the Latin language therefore made,
from the beginning, an essential part of university education.

It was not so with that either of the Greek or of the Hebrew language.
The infallible decrees of the church had pronounced the Latin
translation of the Bible, commonly called the Latin Vulgate, to have
been equally dictated by divine inspiration, and therefore of equal
authority with the Greek and Hebrew originals. The knowledge of those
two languages, therefore, not being indispensably requisite to a
churchman, the study of them did not for along time make a necessary
part of the common course of university education. There are some
Spanish universities, I am assured, in which the study of the Greek
language has never yet made any part of that course. The first
reformers found the Greek text of the New Testament, and even the
Hebrew text of the Old, more favourable to their opinions than the
vulgate translation, which, as might naturally be supposed, had been
gradually accommodated to support the doctrines of the Catholic
Church. They set themselves, therefore, to expose the many errors of
that translation, which the Roman catholic clergy were thus put under
the necessity of defending or explaining. But this could not well be
done without some knowledge of the original languages, of which the
study was therefore gradually introduced into the greater part of
universities; both of those which embraced, and of those which
rejected, the doctrines of the reformation. The Greek language was
connected with every part of that classical learning, which, though at
first principally cultivated by catholics and Italians, happened to
come into fashion much about the same time that the doctrines of the
reformation were set on foot. In the greater part of universities,
therefore, that language was taught previous to the study of
philosophy, and as soon as the student had made some progress in the
Latin. The Hebrew language having no connection with classical
learning, and, except the Holy Scriptures, being the language of not a
single book in any esteem the study of it did not commonly commence
till after that of philosophy, and when the student had entered upon
the study of theology.

Originally, the first rudiments, both of the Greek and Latin
languages, were taught in universities; and in some universities they
still continue to be so. In others, it is expected that the student
should have previously acquired, at least, the rudiments of one or
both of those languages, of which the study continues to make
everywhere a very considerable part of university education.

The ancient Greek philosophy was divided into three great branches;
physics, or natural philosophy; ethics, or moral philosophy; and
logic. This general division seems perfectly agreeable to the nature
of things.

The great phenomena of nature, the revolutions of the heavenly bodies,
eclipses, comets; thunder and lightning, and other extraordinary
meteors; the generation, the life, growth, and dissolution of plants
and animals; are objects which, as they necessarily excite the wonder,
so they naturally call forth the curiosity of mankind to inquire into
their causes. Superstition first attempted to satisfy this curiosity,
by referring all those wonderful appearances to the immediate agency
of the gods. Philosophy afterwards endeavoured to account for them
from more familiar causes, or from such as mankind were better
acquainted with, than the agency of the gods. As those great phenomena
are the first objects of human curiosity, so the science which
pretends to explain them must naturally have been the first branch of
philosophy that was cuitivated. The first philosophers, accordingly,
of whom history has preserved any account, appear to have been natural
philosophers.

In every age and country of the world, men must have attended to the
characters, designs, and actions of one another; and many reputable
rules and maxims for the conduct of human life must have been laid
down and approved of by common consent. As soon as writing came into
fashion, wise men, or those who fancied themselves such, would
naturally endeavour to increase the number of those established and
respected maxims, and to express their own sense of what was either
proper or improper conduct, sometimes in the more artificial form of
apologues, like what are called the fables of Aesop; and sometimes in
the more simple one of apophthegms or wise sayings, like the proverbs
of Solmnon, the verses of Theognis and Phocyllides, and some part of
the works of Hesiod. They might continue in this manner, for a long
time, merely to multiply the number of those maxims of prudence and
morality, without even attempting to arrange them in any very distinct
or methodical order, much less to connect them together by one or more
general principles, from which they were all deducible, like effects
from their natural causes. The beauty of a systematical arrangement of
different observations, connected by a few common principles, was
first seen in the rude essays of those ancient times towards a system
of natural philosophy. Something of the same kind was afterwards
attempted in morals. The maxims of common life were arranged in some
methodical order, and connected together by a few common principles,
in the same manner as they had attempted to arrange and connect the
phenomena of nature. The science which pretends to investigate and
explain those connecting principles, is what is properly called Moral
Philosophy.

Different authors gave different systems, both of natural and moral
philosophy. But the arguments by which they supported those different
systems, far from being always demonstrations, were frequently at best
but very slender probabilities, and sometimes mere sophisms, which had
no other foundation but the inaccuracy and ambiguity of common
language. Speculative systems, have, in all ages of the world, been
adopted for reasons too frivolous to have determined the judgment of
any man of common sense, in a matter of the smallest pecuniary
interest. Gross sophistry has scarce ever had any influence upon the
opinions of mankind, except in matters of philosophy and speculation;
and in these it has frequently had the greatest. The patrons of each
system of natural and moral philosophy, naturally endeavoured to
expose the weakness of the arguments adduced to support the systems
which were opposite to their own. In examining those arguments, they
were necessarily led to consider the difference between a probable and
a demonstrative argument, between a fallacious and a conclusive one;
and logic, or the science of the general principles of good and bad
reasoning, necessarily arose out of the observations which a scrutiny
of this kind gave occasion to; though, in its origin, posterior both
to physics and to ethics, it was commonly taught, not indeed in all,
but in the greater part of the ancient schools of philosophy,
previously to either of those sciences. The student, it seems to have
been thought, ought to understand well the difference between good and
bad reasoning, before he was led to reason upon subjects of so great
importance.

This ancient division of philosophy into three parts was, in the
greater part of the universities of Europe, changed for another into
five.

In the ancient philosophy, whatever was taught concerning the nature
either of the human mind or of the Deity, made a part of the system of
physics. Those beings, in whatever their essence might be supposed to
consist, were parts of the great system of the universe, and parts,
too, productive of the most important effects. Whatever human reason
could either conclude or conjecture concerning them, made, as it were,
two chapters, though no doubt two very important ones, of the science
which pretended to give an account of the origin and revolutions of
the great system of the universe. But in the universities of Europe,
where philosophy was taught only as subservient to theology, it was
natural to dwell longer upon these two chapters than upon any other of
the science. They were gradually more and more extended, and were
divided into many inferior chapters; till at last the doctrine of
spirits, of which so little can be known, came to take up as much room
in the system of philosophy as the doctrine of bodies, of which so
much can be known. The doctrines concerning those two subjects were
considered as making two distinct sciences. What are called
metaphysics, or pneumatics, were set in opposition to physics, and
were cultivated not only as the more sublime, but, for the purposes of
a particular profession, as the more useful science of the two. The
proper subject of experiment and observation, a subject in which a
careful attention is capable of making so many useful discoveries, was
almost entirely neglected. The subject in which, after a very few
simple and almost obvious truths, the most careful attention can
discover nothing but obscurity and uncertainty, and can consequently
produce nothing but subtleties and sophisms, was greatly cultivated.

When those two sciences had thus been set in opposition to one
another, the comparison between them naturally gave birth to a third,
to what was called ontology, or the science which treated of the
qualities and attributes which were common to both the subjects of the
other two sciences. But if subtleties and sophisms composed the
greater part of the metaphysics or pneumatics of the schools, they
composed the whole of this cobweb science of ontology, which was
likewise sometimes called metaphysics.

Wherein consisted the happiness and perfection of a man, considered
not only as an individual, but as the member of a family, of a state,
and of the great society of mankind, was the object which the ancient
moral philosophy proposed to investigate. In that philosophy, the
duties of human life were treated of as subservient to the happiness
and perfection of human life, But when moral, as well as natural
philosophy, came to be taught only as subservient to theology, the
duties of human life were treated of as chiefly subservient to the
happiness of a life to come. In the ancient philosophy, the perfection
of virtue was represented as necessarily productive, to the person who
possessed it, of the most perfect happiness in this life. In the
modern philosophy, it was frequently represented as generally, or
rather as almost always, inconsistent with any degree of happiness in
this life; and heaven was to be earned only by penance and
mortification, by the austerities and abasement of a monk, not by the
liberal, generous, and spirited conduct of a man. Casuistry, and an
ascetic morality, made up, in most cases, the greater part of the
moral philosophy of the schools. By far the most important of all the
different branches of philosophy became in this manner by far the most
corrupted.

Such, therefore, was the common course of philosophical education in
the greater part of the universities in Europe. Logic was taught
first; ontology came in the second place; pneumatology, comprehending
the doctrine concerning the nature of the human soul and of the Deity,
in the third; in the fourth followed a debased system of moral
philosophy, which was considered as immediately connected with the
doctrines of pneumatology, with the immortality of the human soul, and
with the rewards and punishments which, from the justice of the Deity,
were to be expected in a life to come: a short and superficial system
of physics usually concluded the course.

The alterations which the universities of Europe thus introduced into
the ancient course of philosophy were all meant for the education of
ecclesiastics, and to render it a more proper introduction to the
study of theology But the additional quantity of subtlety and
sophistry, the casuistry and ascetic morality which those alterations
introduced into it, certainly did not render it more for the education
of gentlemen or men of the world, or more likely either to improve the
understanding or to mend the heart.

This course of philosophy is what still continues to be taught in the
greater part of the universities of Europe, with more or less
diligence, according as the constitution of each particular university
happens to render diligence more or less necessary to the teachers. In
some of the richest and best endowed universities, the tutors content
themselves with teaching a few unconnected shreds and parcels of this
corrupted course; and even these they commonly teach very negligently
and superficially.

The improvements which, in modern times have been made in several
different branches of philosophy, have not, the greater part of them,
been made in universities, though some, no doubt, have. The greater
part of universities have not even been very forward to adopt those
improvements after they were made; and several of those learned
societies have chosen to remain, for a long time, the sanctuaries in
which exploded systems and obsolete prejudices found shelter and
protection, after they had been hunted out of every other corner of
the world. In general, the richest and best endowed universities have
been slowest in adopting those improvements, and the most averse to
permit any considerable change in the established plan of education.
Those improvements were more easily introduced into some of the poorer
universities, in which the teachers, depending upon their reputation
for the greater part of their subsistence, were obliged to pay more
attention to the current opinions of the world.

But though the public schools and universities of Europe were
originally intended only for the education of a particular profession,
that of churchmen; and though they were not always very diligent in
instructing their pupils, even in the sciences which were supposed
necessary for that profession; yet they gradually drew to themselves
the education of almost all other people, particularly of almost all
gentlemen and men of fortune. No better method, it seems, could be
fallen upon, of spending, with any advantage, the long interval
between infancy and that period of life at which men begin to apply in
good earnest to the real business of the world, the business which is
to employ them during the remainder of their days. The greater part of
what is taught in schools and universities, however, does not seem to
be the most proper preparation for that business.

In England, it becomes every day more and more the custom to send
young people to travel in foreign countries immediately upon their
leaving school, and without sending them to any university. Our young
people, it is said, generally return home much improved by their
travels. A young man, who goes abroad at seventeen or eighteen, and
returns home at one-and-twenty, returns three or four years older than
he was when he went abroad; and at that age it is very difficult not
to improve a good deal in three or four years. In the course of his
travels, he generally acquires some knowledge of one or two foreign
languages; a knowledge, however, which is seldom sufficient to enable
him either to speak or write them with propriety. In other respects,
he commonly returns home more conceited, more unprincipled, more
dissipated, and more incapable of my serious application, either to
study or to business, than he could well have become in so short a
time had he lived at home. By travelling so very young, by spending in
the most frivolous dissipation the most previous years of his life, at
a distance from the inspection and control of his parents and
relations, every useful habit, which the earlier parts of his
education might have had some tendency to form in him, instead of
being riveted and confirmed, is almost necessarily either weakened or
effaced. Nothing but the discredit into which the universities are
allowing themselves to fall, could ever have brought into repute so
very absurd a practice as that of travelling at this early period of
life. By sending his son abroad, a father delivers himself, at least
for some time, from so disagreeable an object as that of a son
unemployed, neglected, and going to ruin before his eyes.

Such have been the effects of some of the modern institutions for
education.

Different plans and different institutions for education seem to have
taken place in other ages and nations.

In the republics of ancient Greece, every free citizen was instructed,
under the direction of the public magistrate, in gymnastic exercises
and in music. By gymnastic exercises, it was intended to harden his
body, to sharpen his courage, and to prepare him for the fatigues and
dangers of war; and as the Greek militia was, by all accounts, one of
the best that ever was in the world, this part of their public
education must have answered completely the purpose for which it was
intended. By the other part, music, it was proposed, at least by the
philosophers and historians, who have given us an account of those
institutions, to humanize the mind, to soften the temper, and to
dispose it for performing all the social and moral duties of public
and private life.

In ancient Rome, the exercises of the Campus Martius answered the same
purpose as those of the Gymnasium in ancient Greece, and they seem to
have answered it equally well. But among the Romans there was nothing
which corresponded to the musical education of the Greeks. The morals
of the Romans, however, both in private and public life, seem to have
been, not only equal, but, upon the whole, a good deal superior to
those of the Greeks. That they were superior in private life, we have
the express testimony of Polybius, and of Dionysius of Halicarnassus,
two authors well acquainted with both nations; and the whole tenor of
the Greek and Roman history bears witness to the superiority of the
public morals of the Romans. The good temper and moderation of
contending factions seem to be the most essential circumstances in the
public morals of a free people. But the factions of the Greeks were
almost always violent and sanguinary; whereas, till the time of the
Gracchi, no blood had ever been shed in any Roman faction; and from
the time of the Gracchi, the Roman republic may be considered as in
reality dissolved. Notwithstanding, therefore, the very respectable
authority of Plato, Aristotle, and Polybius, and notwithstanding the
very ingenious reasons by which Mr. Montesquieu endeavours to support
that authority, it seems probable that the musical education of the
Greeks had no great effect in mending their morals, since, without any
such education, those of the Romans were, upon the whole, superior.
The respect of those ancient sages for the institutions of their
ancestors had probably disposed them to find much political wisdom in
what was, perhaps, merely an ancient custom, continued, without
interruption, from the earliest period of those societies, to the
times in which they had arrived at a considerable degree of
refinement. Music and dancing are the great amusements of almost all
barbarous nations, and the great accomplishments which are supposed to
fit any man for entertaining his society. It is so at this day among
the negroes on the coast of Africa. It was so among the ancient
Celtes, among the ancient Scandinavians, and, as we may learn from
Homer, among the ancient Greeks, in the times preceding the Trojan
war. When the Greek tribes had formed themselves into little
republics, it was natural that the study of those accomplishments
should for a long time make a part of the public and common education
of the people.

The masters who instructed the young people, either in music or in
military exercises, do not seem to have been paid, or even appointed
by the state, either in Rome or even at Athens, the Greek republic of
whose laws and customs we are the best informed. The state required
that every free citizen should fit himself for defending it in war,
and should upon that account, learn his military exercises. But it
left him to learn them of such masters as he could find; and it seems
to have advanced nothing for this purpose, but a public field or place
of exercise, in which he should practise and perform them.

In the early ages, both of the Greek and Roman republics, the other
parts of education seem to have consisted in learning to read, write,
and account, according to the arithmetic of the times. These
accomplishments the richer citizens seem frequently to have acquired
at home, by the assistance of some domestic pedagogue, who was,
generally, either a slave or a freedman; and the poorer citizens in
the schools of such masters as made a trade of teaching for hire. Such
parts of education, however, were abandoned altogether to the care of
the parents or guardians of each individual. It does not appear that
the state ever assumed any inspection or direction of them. By a law
of Solon, indeed, the children were acquitted from maintaining those
parents who had neglected to instruct them in some profitable trade or
business.

In the progress of refinement, when philosophy and rhetoric came into
fashion, the better sort of people used to send their children to the
schools of philosophers and rhetoricians, in order to be instructed in
these fashionable sciences. But those schools were not supported by
the public. They were, for a long time, barely tolerated by it. The
demand for philosophy and rhetoric was, for a long time, so small,
that the first professed teachers of either could not find constant
employment in any one city, but were obliged to travel about from
place to place. In this manner lived Zeno of Elea, Protagoras,
Gorgias, Hippias, and many others. As the demand increased, the
school, both of philosophy and rhetoric, became stationary, first in
Athens, and afterwards in several other cities. The state, however,
seems never to have encouraged them further, than by assigning to some
of them a particular place to teach in, which was sometimes done, too,
by private donors. The state seems to have assigned the Academy to
Plato, the Lyceum to Aristotle, and the Portico to Zeno of Citta, the
founder of the Stoics. But Epicurus bequeathed his gardens to his own
school. Till about the time of Marcus Antoninus, however, no teacher
appears to have had any salary from the public, or to have had any
other emoluments, but what arose from the honorarius or fees of his
scholars. The bounty which that philosophical emperor, as we learn
from Lucian, bestowed upon one of the teachers of philosophy, probably
lasted no longer than his own life. There was nothing equivalent to
the privileges of graduation; and to have attended any of those
schools was not necessary, in order to be permitted to practise any
particular trade or profession. If the opinion of their own utility
could not draw scholars to them, the law neither forced anybody to go
to them, nor rewarded anybody for having gone to them. The teachers
had no jurisdiction over their pupils, nor any other authority besides
that natural authority which superior virtue and abilities never fail
to procure from young people towards those who are entrusted with any
part of their education.

At Rome, the study of the civil law made a part of the education, not
of the greater part of the citizens, but of some particular families.
The young people, however, who wished to acquire knowledge in the law,
had no public school to go to, and had no other method of studying it,
than by frequenting the company of such of their relations and friends
as were supposed to understand it. It is, perhaps, worth while to
remark, that though the laws of the twelve tables were many of them
copied from those of some ancient Greek republics, yet law never seems
to have grown up to be a science in any republic of ancient Greece. In
Rome it became a science very early, and gave a considerable degree of
illustration to those citizens who had the reputation of understanding
it. In the republics of ancient Greece, particularly in Athens, the
ordinary courts of justice consisted of numerous, and therefore
disorderly, bodies of people, who frequently decided almost at random,
or as clamour, faction, and party-spirit, happened to determine. The
ignominy of an unjust decision, when it was to be divided among five
hundred, a thousand, or fifteen hundred people (for some of their
courts were so very numerous), could not fall very heavy upon any
individual. At Rome, on the contrary, the principal courts of justice
consisted either of a single judge, or of a small number of judges,
whose characters, especially as they deliberated always in public,
could not fail to be very much affected by any rash or unjust
decision. In doubtful cases such courts, from their anxiety to avoid
blame, would naturally endeavour to shelter themselves under the
example or precedent of the judges who had sat before them, either in
the same or in some other court. This attention to practice and
precedent, necessarily formed the Roman law into that regular and
orderly system in which it has been delivered down to us; and the like
attention has had the like effects upon the laws of every other
country where such attention has taken place. The superiority of
character in the Romans over that of the Greeks, so much remarked by
Polybius and Dionysius of Halicarnassus, was probably more owing to
the better constitution of their courts of justice, than to any of the
circumstances to which those authors ascribe it. The Romans are said
to have been particularly distinguished for their superior respect to
an oath. But the people who were accustomed to make oath only before
some diligent and well informed court of justice, would naturally be
much more attentive to what they swore, than they who were accustomed
to do the same thing before mobbish and disorderly assemblies.

The abilities, both civil and military, of the Greeks and Romans, will
readily be allowed to have been at least equal to those of any modern
nation. Our prejudice is perhaps rather to overrate them. But except
in what related to military exercises, the state seems to have been at
no pains to form those great abilities; for I cannot be induced to
believe that the musical education of the Greeks could be of much
consequence in forming them. Masters, however, had been found, it
seems, for instructing the better sort of people among those nations,
in every art and science in which the circumstances of their society
rendered it necessary or convenient for them to be instructed. The
demand for such instruction produced, what it always produces, the
talent for giving it; and the emulation which an unrestrained
competition never fails to excite, appears to have brought that talent
to a very high degree of perfection. In the attention which the
ancient philosophers excited, in the empire which they acquired over
the opinions and principles of their auditors, in the faculty which
they possessed of giving a certain tone and character to the conduct
and conversation of those auditors, they appear to have been much
superior to any modern teachers. In modern times, the diligence of
public teachers is more or less corrupted by the circumstances which
render them more or less independent of their success and reputation
in their particular professions. Their salaries, too, put the private
teacher, who would pretend to come into competition with them, in the
same state with a merchant who attempts to trade without a bounty, in
competition with those who trade with a considerable one. If he sells
his goods at nearly the same price, he cannot have the same profit;
and poverty and beggary at least, if not bankruptcy and ruin, will
infallibly be his lot. If he attempts to sell them much dearer, he is
likely to have so few customers, that his circumstances will not be
much mended. The privileges of graduation, besides, are in many
countries necessary, or at least extremely convenient, to most men of
learned professions, that is, to the far greater part of those who
have occasion for a learned education. But those privileges can be
obtained only by attending the lectures of the public teachers. The
most careful attendance upon the ablest instructions of any private
teacher cannot always give any title to demand them. It is from these
different causes that the private teacher of any of the sciences,
which are commonly taught in universities, is, in modern times,
generally considered as in the very lowest order of men of letters. A
man of real abilities can scarce find out a more humiliating or a more
unprofitable employment to turn them to. The endowments of schools and
colleges have in this manner not only corrupted the diligence of
public teachers, but have rendered it almost impossible to have any
good private ones.

Were there no public institutions for education, no system, no
science, would be taught, for which there was not some demand, or
which the circumstances of the times did not render it either
necessary or convenient, or at least fashionable to learn. A private
teacher could never find his account in teaching either an exploded
and antiquated system of a science acknowledged to be useful, or a
science universally believed to be a mere useless and pedantic heap of
sophistry and nonsense. Such systems, such sciences, can subsist
nowhere but in those incorporated societies for education, whose
prosperity and revenue are in a great measure independent of their
industry. Were there no public institutions for education, a
gentleman, after going through, with application and abilities, the
most complete course of education which the circumstances of the times
were supposed to afford, could not come into the world completely
ignorant of everything which is the common subject of conversation
among gentlemen and men of the world.

There are no public institutions for the education of women, and there
is accordingly nothing useless, absurd, or fantastical, in the common
course of their education. They are taught what their parents or
guardians judge it necessary or useful for them to learn, and they are
taught nothing else. Every part of their education tends evidently to
some useful purpose; either to improve the natural attractions of
their person, or to form their mind to reserve, to modesty, to
chastity, and to economy; to render them both likely to became the
mistresses of a family, and to behave properly when they have become
such. In every part of her life, a woman feels some conveniency or
advantage from every part of her education. It seldom happens that a
man, in any part of his life, derives any conveniency or advantage
from some of the most laborious and troublesome parts of his
education.

Ought the public, therefore, to give no attention, it may be asked, to
the education of the people? Or, if it ought to give any, what are the
different parts of education which it ought to attend to in the
different orders of the people? and in what manner ought it to attend
to them?

In some cases, the state of society necessarily places the greater
part of individuals in such situations as naturally form in them,
without any attention of government, almost all the abilities and
virtues which that state requires, or perhaps can admit of. In other
cases, the state of the society does not place the greater part of
individuals in such situations; and some attention of government is
necessary, in order to prevent the almost entire corruption and
degeneracy of the great body of the people.

In the progress of the division of labour, the employment of the far
greater part of those who live by labour, that is, of the great body
of the people, comes to be confined to a few very simple operations;
frequently to one or two. But the understandings of the greater part
of men are necessarily formed by their ordinary employments. The man
whose whole life is spent in performing a few simple operations, of
which the effects, too, are perhaps always the same, or very nearly
the same, has no occasion to exert his understanding, or to exercise
his invention, in finding out expedients for removing difficulties
which never occur. He naturally loses, therefore, the habit of such
exertion, and generally becomes as stupid and ignorant as it is
possible for a human creature to become. The torpor of his mind
renders him not only incapable of relishing or bearing a part in any
rational conversation, but of conceiving any generous, noble, or
tender sentiment, and consequently of forming any just judgment
concerning many even of the ordinary duties of private life. Of the
great and extensive interests of his country he is altogether
incapable of judging; and unless very particular pains have been taken
to render him otherwise, he is equally incapable of defending his
country in war. The uniformity of his stationary life naturally
corrupts the courage of his mind, and makes him regard, with
abhorrence, the irregular, uncertain, and adventurous life of a
soldier. It corrupts even the activity of his body, and renders him
incapable of exerting his strength with vigour and perseverance in any
other employment, than that to which he has been bred. His dexterity
at his own particular trade seems, in this manner, to be acquired at
the expense of his intellectual, social, and martial virtues. But in
every improved and civilized society, this is the state into which the
labouring poor, that is, the great body of the people, must
necessarily fall, unless government takes some pains to prevent it.

It is otherwise in the barbarous societies, as they are commonly
called, of hunters, of shepherds, and even of husbandmen in that rude
state of husbandry which precedes the improvement of manufactures, and
the extension of foreign commerce. In such societies, the varied
occupations of every man oblige every man to exert his capacity, and
to invent expedients for removing difficulties which are continually
occurring. Invention is kept alive, and the mind is not suffered to
fall into that drowsy stupidity, which, in a civilized society, seems
to benumb the understanding of almost all the inferior ranks of
people. In those barbarous societies, as they are called, every man,
it has already been observed, is a warrior. Every man, too, is in some
measure a statesman, and can form a tolerable judgment concerning the
interest of the society, and the conduct of those who govern it. How
far their chiefs are good judges in peace, or good leaders in war, is
obvious to the observation of almost every single man among them. In
such a society, indeed, no man can well acquire that improved and
refined understanding which a few men sometimes possess in a more
civilized state. Though in a rude society there is a good deal of
variety in the occupations of every individual, there is not a great
deal in those of the whole society. Every man does, or is capable of
doing, almost every thing which any other man does, or is capable of
being. Every man has a considerable degree of knowledge, ingenuity,
and invention but scarce any man has a great degree. The degree,
however, which is commonly possessed, is generally sufficient for
conducting the whole simple business of the society. In a civilized
state, on the contrary, though there is little variety in the
occupations of the greater part of individuals, there is an almost
infinite variety in those of the whole society These varied
occupations present an almost infinite variety of objects to the
contemplation of those few, who, being attached to no particular
occupation themselves, have leisure and inclination to examine the
occupations of other people. The contemplation of so great a variety
of objects necessarily exercises their minds in endless comparisons
and combinations, and renders their understandings, in an
extraordinary degree, both acute anti comprehensive. Unless those few,
however, happen to be placed in some very particular situations, their
great abilities, though honourable to themselves, may contribute very
little to the good government or happiness of their society.
Notwithstanding the great abilities of those few, all the nobler parts
of the human character may be, in a great measure, obliterated and
extinguished in the great body of the people.

The education of the common people requires, perhaps, in a civilized
and commercial society, the attention of the public, more than that of
people of some rank and fortune. People of some rank and fortune are
generally eighteen or nineteen years of age before they enter upon
that particular business, profession, or trade, by which they propose
to distinguish themselves in the world. They have, before that, full
time to acquire, or at least to fit themselves for afterwards
acquiring, every accomplishment which can recommend them to the public
esteem, or render them worthy of it. Their parents or guardians are
generally sufficiently anxious that they should be so accomplished,
and are in most cases, willing enough to lay out the expense which is
necessary for that purpose. If they are not always properly educated,
it is seldom from the want of expense laid out upon their education,
but from the improper application of that expense. It is seldom from
the want of masters, but from the negligence and incapacity of the
masters who are to be had, and from the difficulty, or rather from the
impossibility, which there is, in the present state of things, of
finding any better. The employments, too, in which people of some rank
or fortune spend the greater part of their lives, are not, like those
of the common people, simple and uniform. They are almost all of them
extremely complicated, and such as exercise the head more than the
hands. The understandings of those who are engaged in such
employments, can seldom grow torpid for want of exercise. The
employments of people of some rank and fortune, besides, are seldom
such as harass them from morning to night. They generally have a good
deal of leisure, during which they may perfect themselves in every
branch, either of useful or ornamental knowledge, of which they may
have laid the foundation, or for which they may have acquired some
taste in the earlier part of life.

It is otherwise with the common people. They have little time to spare
for education. Their parents can scarce afford to maintain them, even
in infancy. As soon as they are able to work, they must apply to some
trade, by which they can earn their subsistence. That trade, too, is
generally so simple and uniform, as to give little exercise to the
understanding; while, at the same time, their labour is both so
constant and so severe, that it leaves them little leisure and less
inclination to apply to, or even to think of any thing else.

But though the common people cannot, in any civilized society, be so
well instructed as people of some rank and fortune; the most essential
parts of education, however, to read, write, and account, can be
acquired at so early a period of life, that the greater part, even of
those who are to be bred to the lowest occupations, have time to
acquire them before they can be employed in those occupations. For a
very small expense, the public can facilitate, can encourage and can
even impose upon almost the whole body of the people, the necessity of
acquiring those most essential parts of education.

The public can facilitate this acquisition, by establishing in every
parish or district a little school, where children maybe taught for a
reward so moderate, that even a common labourer may afford it; the
master being partly, but not wholly, paid by the public; because, if
he was wholly, or even principally, paid by it, he would soon learn to
neglect his business. In Scotland, the establishment of such parish
schools has taught almost the whole common people to read, and a very
great proportion of them to write and account. In England, the
establishment of charity schools has had an effect of the same kind,
though not so universally, because the establishment is not so
universal. If, in those little schools, the books by which the
children are taught to read, were a little more instructive than they
commonly are; and if, instead of a little smattering in Latin, which
the children of the common people are sometimes taught there, and
which can scarce ever be of any use to them, they were instructed in
the elementary parts of geometry and mechanics; the literary education
of this rank of people would, perhaps, be as complete as can be. There
is scarce a common trade, which does not afford some opportunities of
applying to it the principles of geometry and mechanics, and which
would not, therefore, gradually exercise and improve the common people
in those principles, the necessary introduction to the most sublime,
as well as to the most useful sciences.

The public can encourage the acquisition of those most essential parts
of education, by giving small premiums, and little badges of
distinction, to the children of the common people who excel in them.

The public can impose upon almost the whole body of the people the
necessity of acquiring the most essential parts of education, by
obliging every man to undergo an examination or probation in them,
before he can obtain the freedom in any corporation, or be allowed to
set up any trade, either in a village or town corporate.

It was in this manner, by facilitating the acquisition of their
military and gymnastic exercises, by encouraging it, and even by
imposing upon the whole body of the people the necessity of learning
those exercises, that the Greek and Roman republics maintained the
martial spirit of their respective citizens. They facilitated the
acquisition of those exercises, by appointing a certain place for
learning and practising them, and by granting to certain masters the
privilege of teaching in that place. Those masters do not appear to
have had either salaries or exclusive privileges of any kind. Their
reward consisted altogether in what they got from their scholars; and
a citizen, who had learnt his exercises in the public gymnasia, had no
sort of legal advantage over one who had learnt them privately,
provided the latter had learned them equally well. Those republics
encouraged the acquisition of those exercises, by bestowing little
premiums and badges of distinction upon those who excelled in them. To
have gained a prize in the Olympic, Isthmian, or Nemaean games, gave
illustration, not only to the person who gained it, but to his whole
family and kindred. The obligation which every citizen was under, to
serve a certain number of years, if called upon, in the armies of the
republic, sufficiently imposed the necessity of learning those
exercises, without which he could not be fit for that service.

That in the progress of improvement, the practice of military
exercises, unless government takes proper pains to support it, goes
gradually to decay, and, together with it, the martial spirit of the
great body of the people, the example of modern Europe sufficiently
demonstrates. But the security of every society must always depend,
more or less, upon the martial spirit of the great body of the people.
In the present times, indeed, that martial spirit alone, and
unsupported by a well-disciplined standing army, would not, perhaps,
be sufficient for the defence and security of any society. But where
every citizen had the spirit of a soldier, a smaller standing army
would surely be requisite. That spirit, besides, would necessarily
diminish very much the dangers to liberty, whether real or imaginary,
which are commonly apprehended from a standing army. As it would very
much facilitate the operations of that army against a foreign invader;
so it would obstruct them as much, if unfortunately they should ever
be directed against the constitution of the state.

The ancient institutions of Greece and Rome seem to have been much
more effectual for maintaining the martial spirit of the great body of
the people, than the establishment of what are called the militias of
modern times. They were much more simple. When they were once
established, they executed themselves, and it required little or no
attention from government to maintain them in the most perfect vigour.
Whereas to maintain, even in tolerable execution, the complex
regulations of any modern militia, requires the continual and painful
attention of government, without which they are constantly falling
into total neglect and disuse. The influence, besides, of the ancient
institutions, was much more universal. By means of them, the whole
body of the people was completely instructed in the use of arms;
whereas it is but a very small part of them who can ever be so
instructed by the regulations of any modern militia, except, perhaps,
that of Switzerland. But a coward, a man incapable either of defending
or of revenging himself, evidently wants one of the most essential
parts of the character of a man. He is as much mutilated and deformed
in his mind as another is in his body, who is either deprived of some
of its most essential members, or has lost the use of them. He is
evidently the more wretched and miserable of the two; because
happiness and misery, which reside altogether in the mind, must
necessarily depend more upon the healthful or unhealthful, the
mutilated or entire state of the mind, than upon that of the body.
Even though the martial spirit of the people were of no use towards
the defence of the society, yet, to prevent that sort of mental
mutilation, deformity, and wretchedness, which cowardice necessarily
involves in it, from spreading themselves through the great body of
the people, would still deserve the most serious attention of
government; in the same manner as it would deserve its most serious
attention to prevent a leprosy, or any other loathsome and offensive
disease, though neither mortal nor dangerous, from spreading itself
among them; though, perhaps, no other public good might result from
such attention, besides the prevention of so great a public evil.

The same thing may be said of the gross ignorance and stupidity which,
in a civilized society, seem so frequently to benumb the
understandings of all the inferior ranks of people. A man without the
proper use of the intellectual faculties of a man, is, if possible,
more contemptible than even a coward, and seems to be mutilated and
deformed in a still more essential part of the character of human
nature. Though the state was to derive no advantage from the
instruction of the inferior ranks of people, it would still deserve
its attention that they should not be altogether uninstructed. The
state, however, derives no inconsiderable advantage from their
instruction. The more they are instructed, the less liable they are to
the delusions of enthusiasm and superstition, which, among ignorant
nations frequently occasion the most dreadful disorders. An instructed
and intelligent people, besides, are always more decent and orderly
than an ignorant and stupid one. They feel themselves, each
individually, more respectable, and more likely to obtain the respect
of their lawful superiors, and they are, therefore, more disposed to
respect those superiors. They are more disposed to examine, and more
capable of seeing through, the interested complaints of faction and
sedition; and they are, upon that account, less apt to be misled into
any wanton or unnecessary opposition to the measures of government. In
free countries, where the safety of government depends very much upon
the favourable judgment which the people may form of its conduct, it
must surely be of the highest importance, that they should not be
disposed to judge rashly or capriciously concerning it.

Art. III. -- Of the Expense of the Institutions for the Instruction of
People of all Ages.

The institutions for the instruction of people of all ages, are
chiefly those for religious instruction. This is a species of
instruction, of which the object is not so much to render the people
good citizens in this world, as to prepare them for another and a
better world in the life to come. The teachers of the doctrine which
contains this instruction, in the same manner as other teachers, may
either depend altogether for their subsistence upon the voluntary
contributions of their hearers; or they may derive it from some other
fund, to which the law of their country may entitle them; such as a
landed estate, a tythe or land tax, an established salary or stipend.
Their exertion, their zeal and industry, are likely to be much greater
in the former situation than in the latter. In this respect, the
teachers of a new religion have always had a considerable advantage in
attacking those ancient and established systems, of which the clergy,
reposing themselves upon their benefices, had neglected to keep up the
fervour of faith and devotion in the great body of the people; and
having given themselves up to indolence, were become altogether
incapable of making any vigorous exertion in defence even of their own
establishment. The clergy of an established and well endowed religion
frequently become men of learning and elegance, who possess all the
virtues of gentlemen, or which can recommend them to the esteem of
gentlemen; but they are apt gradually to lose the qualities, both good
and bad, which gave them authority and influence with the inferior
ranks of people, and which had perhaps been the original causes of the
success and establishment of their religion. Such a clergy, when
attacked by a set of popular and bold, though perhaps stupid and
ignorant enthusiasts, feel themselves as perfectly defenceless as the
indolent, effeminate, and full fed nations of the southern parts of
Asia, when they were invaded by the active, hardy, and hungry Tartars
of the north. Such a clergy, upon such an emergency, have commonly no
other resource than to call upon the civil magistrate to persecute,
destroy, or drive out their adversaries, as disturbers of the public
peace. It was thus that the Roman catholic clergy called upon the
civil magistrate to persecute the protestants, and the church of
England to persecute the dissenters; and that in general every
religious sect, when it has once enjoyed, for a century or two, the
security of a legal establishment, has found itself incapable of
making any vigorous defence against any new sect which chose to attack
its doctrine or discipline. Upon such occasions, the advantage, in
point of learning and good writing, may sometimes be on the side of
the established church. But the arts of popularity, all the arts of
gaining proselytes, are constantly on the side of its adversaries. In
England, those arts have been long neglected by the well endowed
clergy of the established church, and are at present chiefly
cultivated by the dissenters and by the methodists. The independent
provisions, however, which in many places have been made for
dissenting teachers, by means of voluntary subscriptions, of trust
rights, and other evasions of the law, seem very much to have abated
the zeal and activity of those teachers. They have many of them become
very learned, ingenious, and respectable men; but they have in general
ceased to be very popular preachers. The methodists, without half the
learning of the dissenters, are much more in vogue.

In the church of Rome the industry and zeal of the inferior clergy are
kept more alive by the powerful motive of self-interest, than perhaps
in any established protestant church. The parochial clergy derive many
of them, a very considerable part of their subsistence from the
voluntary oblations of the people; a source of revenue, which
confession gives them many opportunities of improving. The mendicant
orders derive their whole subsistence from such oblations. It is with
them as with the hussars and light infantry of some armies; no
plunder, no pay. The parochial clergy are like those teachers whose
reward depends partly upon their salary, and partly upon the fees or
honoraries which they get from their pupils; and these must always
depend, more or less, upon their industry and reputation. The
mendicant orders are like those teachers whose subsistence depends
altogether upon their industry. They are obliged, therefore, to use
every art which can animate the devotion of the common people. The
establishment of the two great mendicant orders of St Dominic and St.
Francis, it is observed by Machiavel, revived, in the thirteenth and
fourteenth centuries, the languishing faith and devotion of the
catholic church. In Roman catholic countries, the spirit of devotion
is supported altogether by the monks, and by the poorer parochial
clergy. The great dignitaries of the church, with all the
accomplishments of gentlemen and men of the world, and sometimes with
those of men of learning, are careful to maintain the necessary
discipline over their inferiors, but seldom give themselves any
trouble about the instruction of the people.

"Most of the arts and professions in a state," says by far the most
illustrious philosopher and historian of the present age, "are of such
a nature, that, while they promote the interests of the society, they
are also useful or agreeable to some individuals; and, in that case,
the constant rule of the magistrate, except, perhaps, on the first
introduction of any art, is, to leave the profession to itself, and
trust its encouragement to the individuals who reap the benefit of it.
The artizans, finding their profits to rise by the favour of their
customers, increase, as much as possible, their skill and industry;
and as matters are not disturbed by any injudicious tampering, the
commodity is always sure to be at all times nearly proportioned to the
demand.

"But there are also some callings which, though useful and even
necessary in a state, bring no advantage or pleasure to any
individual; and the supreme power is obliged to alter its conduct with
regard to the retainers of those professions. It must give them public
encouragement in order to their subsistence; and it must provide
against that negligence to which they will naturally be subject,
either by annexing particular honours to profession, by establishing
a long subordination of ranks, and a strict dependence, or by some
other expedient. The persons employed in the finances, fleets, and
magistracy, are instances of this order of men.

"It may naturally be thought, at first sight, that the ecclesiastics
belong to the first class, and that their encouragement, as well as
that of lawyers and physicians, may safely be entrusted to the
liberality of individuals, who are attached to their doctrines, and
who find benefit or consolation from their spiritual ministry and
assistance. Their industry and vigilance will, no doubt, be whetted by
such an additional motive; and their skill in the profession, as well
as their address in governing the minds of the people, must receive
daily increase, from their increasing practice, study, and attention.

"But if we consider the matter more closely, we shall find that this
interested diligence of the clergy is what every wise legislator will
study to prevent; because, in every religion except the true, it is
highly pernicious, and it has even a natural tendency to pervert the
truth, by infusing into it a strong mixture of superstition, folly,
and delusion. Each ghostly practitioner, in order to render himself
more precious and sacred in the eyes of his retainers, will inspire
them with the most violent abhorrence of all other sects, and
continually endeavour, by some novelty, to excite the languid devotion
of his audience. No regard will be paid to truth, morals, or decency,
in the doctrines inculcated. Every tenet will be adopted that best
suits the disorderly affections of the human frame. Customers will be
drawn to each conventicle by new industry and address, in practising
on the passions and credulity of the populace. And, in the end, the
civil magistrate will find that he has dearly paid for his intended
frugality, in saving a fixed establishment for the priests; and that,
in reality, the most decent and advantageous composition, which he can
make with the spiritual guides, is to bribe their indolence, by
assigning stated salaries to their profession, and rendering it
superfluous for them to be farther active, than merely to prevent
their flock from straying in quest of new pastors. And in this manner
ecclesiastical establishments, though commonly they arose at first
from religious views, prove in the end advantageous to the political
interests of society."

But whatever may have been the good or bad effects of the independent
provision of the clergy, it has, perhaps, been very seldom bestowed
upon them from any view to those effects. Times of violent religious
controversy have generally been times of equally violent political
faction. Upon such occasions, each political party has either found
it, or imagined it, for his interest, to league itself with some one
or other of the contending religious sects. But this could be done
only by adopting, or, at least, by favouring the tenets of that
particular sect. The sect which had the good fortune to be leagued
with the conquering party necessarily shared in the victory of its
ally, by whose favour and protection it was soon enabled, in some
degree, to silence and subdue all its adversaries. Those adversaries
had generally leagued themselves with the enemies of the conquering
party, and were, therefore the enemies of that party. The clergy of
this particular sect having thus become complete masters of the field,
and their influence and authority with the great body of the people
being in its highest vigour, they were powerful enough to overawe the
chiefs and leaders of their own party, and to oblige the civil
magistrate to respect their opinions and inclinations. Their first
demand was generally that he should silence and subdue all their
adversaries; and their second, that he should bestow an independent
provision on themselves. As they had generally contributed a good deal
to the victory, it seemed not unreasonable that they should have some
share in the spoil. They were weary, besides, of humouring the people,
and of depending upon their caprice for a subsistence. In making this
demand, therefore, they consulted their own ease and comfort, without
troubling themselves about the effect which it might have, in future
times, upon the influence and authority of their order. The civil
magistrate, who could comply with their demand only by giving them
something which he would have chosen much rather to take, or to keep
to himself, was seldom very forward to grant it. Necessity, however,
always forced him to submit at last, though frequently not till after
many delays, evasions, and affected excuses.

But if politics had never called in the aid of religion, had the
conquering party never adopted the tenets of one sect more than those
of another, when it had gained the victory, it would probably have
dealt equally and impartially with all the different sects, and have
allowed every man to choose his own priest, and his own religion, as
he thought proper. There would, and, in this case, no doubt, have
been, a great multitude of religious sects. Almost every different
congregation might probably have had a little sect by itself, or have
entertained some peculiar tenets of its own. Each teacher, would, no
doubt, have felt himself under the necessity of making the utmost
exertion, and of using every art, both to preserve and to increase the
number of his disciples. But as every other teacher would have felt
himself under the same necessity, the success of no one teacher, or
sect of teachers, could have been very great. The interested and
active zeal of religious teachers can be dangerous and troublesome
only where there is either but one sect tolerated in the society, or
where the whole of a large society is divided into two or three great
sects; the teachers of each acting by concert, and under a regular
discipline and subordination. But that zeal must be altogether
innocent, where the society is divided into two or three hundred, or,
perhaps, into as many thousand small sects, of which no one could be
considerable enough to disturb the public tranquillity. The teachers
of each sect, seeing themselves surrounded on all sides with more
adversaries than friends, would be obliged to learn that candour and
moderation which are so seldom to be found among the teachers of those
great sects, whose tenets, being supported by the civil magistrate,
are held in veneration by almost all the inhabitants of extensive
kingdoms and empires, and who, therefore, see nothing round them but
followers, disciples, and humble admirers. The teachers of each little
sect, finding themselves almost alone, would be obliged to respect
those of almost every other sect; and the concessions which they would
mutually find in both convenient and agreeable to make one to another,
might in time, probably reduce the doctrine of the greater part of
them to that pure and rational religion, free from every mixture of
absurdity, imposture, or fanaticism, such as wise men have, in all
ages of the world, wished to see established; but such as positive law
has, perhaps, never yet established, and probably never will establish
in any country; because, with regard to religion, positive law always
has been, and probably always will be, more or less influenced by
popular superstition and enthusiasm. This plan of ecclesiastical
government, or, more properly, of no ecclesiastical government, was
what the sect called Independents (a sect, no doubt, of very wild
enthusiasts), proposed to establish in England towards the end of the
civil war. If it had been established, though of a very
unphilosophical origin, it would probably, by this time, have been
productive of the most philosophical good temper and moderation with
regard to every sort of religious principle. It has been established
in Pennsylvania, where, though the quakers happen to be the most
numerous, the law, in reality, favours no one sect more than another;
and it is there said to have been productive of this philosophical
good temper and moderation,

But though this equality of treatment should not be productive of this
good temper and moderation in all, or even in the greater part of the
religious sects of a particular country; yet, provided those sects
were sufficiently numerous, and each of them consequently too small to
disturb the public tranquillity, the excessive zeal of each for its
particular tenets could not well be productive of any very hurtful
effects, but, on the contrary, of several good ones; and if the
government was perfectly decided, both to let them all alone, and to
oblige them all to let alone one another, there is little danger that
they would not of their own accord, subdivide themselves fast enough,
so as soon to become sufficiently numerous.

In every civilized society, in every society where the distinction of
ranks has once been completely established, there have been always two
different schemes or systems of morality current at the same time; of
which the one may be called the strict or austere; the other the
liberal, or, if you will, the loose system. The former is generally
admired and revered by the common people; the latter is commonly more
esteemed and adopted by what are called the people of fashion. The
degree of disapprobation with which we ought to mark the vices of
levity, the vices which are apt to arise from great prosperity, and
from the excess of gaiety and good humour, seems to constitute the
principal distinction between those two opposite schemes or systems.
In the liberal or loose system, luxury, wanton, and even disorderly
mirth, the pursuit of pleasure to some degree of intemperance, the
breach of chastity, at least in one of the two sexes, etc. provided
they are not accompanied with gross indecency, and do not lead to
falsehood and injustice, are generally treated with a good deal of
indulgence, and are easily either excused or pardoned altogether. In
the austere system, on the contrary, those excesses are regarded with
the utmost abhorrence and detestation. The vices of levity are always
ruinous to the common people, and a single week's thoughtlessness and
dissipation is often sufficient to undo a poor workman for ever, and
to drive him, through despair, upon committing the most enormous
crimes. The wiser and better sort of the common people, therefore,
have always the utmost abhorrence and detestation of such excesses,
which their experience tells them are so immediately fatal to people
of their condition. The disorder and extravagance of several years, on
the contrary, will not always ruin a man of fashion; and people of
that rank are very apt to consider the power of indulging in some
degree of excess, as one of the advantages of their fortune; and the
liberty of doing so without censure or reproach, as one of the
privileges which belong to their station. In people of their own
station, therefore, they regard such excesses with but a small degree
of disapprobation, and censure them either very slightly or not at
all.

Almost all religious sects have begun among the common people, from
whom they have generally drawn their earliest, as well as their most
numerous proselytes. The austere system of morality has, accordingly,
been adopted by those sects almost constantly, or with very few
exceptions; for there have been some. It was the system by which they
could best recommend themselves to that order of people, to whom they
first proposed their plan of reformation upon what had been before
established. Many of them, perhaps the greater part of them, have even
endeavoured to gain credit by refining upon this austere system, and
by carrying it to some degree of folly and extravagance; and this
excessive rigour has frequently recommended them, more than any thing
else, to the respect and veneration of the common people.

A man of rank and fortune is, by his station, the distinguished member
of a great society, who attend to every part of his conduct, and who
thereby oblige him to attend to every part of it himself. His
authority and consideration depend very much upon the respect which
this society bears to him. He dares not do anything which would
disgrace or discredit him in it; and he is obliged to a very strict
observation of that species of morals, whether liberal or austere,
which the general consent of this society prescribes to persons of his
rank and fortune. A man of low condition, on the contrary, is far from
being a distinguished member of any great society. While he remains in
a country village, his conduct may be attended to, and he may be
obliged to attend to it himself. In this situation, and in this
situation only, he may have what is called a character to lose. But as
soon as he comes into a great city, he is sunk in obscurity and
darkness. His conduct is observed and attended to by nobody; and he
is, therefore, very likely to neglect it himself, and to abandon
himself to every sort of low profligacy and vice. He never emerges so
effectually from this obscurity, his conduct never excites so much the
attention of any respectable society, as by his becoming the member of
a small religious sect. He from that moment acquires a degree of
consideration which he never had before. All his brother sectaries
are, for the credit of the sect, interested to observe his conduct;
and, if he gives occasion to any scandal, if he deviates very much
from those austere morals which they almost always require of one
another, to punish him by what is always a very severe punishment,
even where no evil effects attend it, expulsion or excommunication
from the sect. In little religious sects, accordingly, the morals of
the common people have been almost always remarkably regular and
orderly; generally much more so than in the established church. The
morals of those little sects, indeed, have frequently been rather
disagreeably rigorous and unsocial.

There are two very easy and effectual remedies, however, by whose
joint operation the state might, without violence, correct whatever
was unsocial or disagreeably rigorous in the morals of all the little
sects into which the country was divided.

The first of those remedies is the study of science and philosophy,
which the state might render almost universal among all people of
middling or more than middling rank and fortune; not by giving
salaries to teachers in order to make them negligent and idle, but by
instituting some sort of probation, even in the higher and more
difficult sciences, to be undergone by every person before he was
permitted to exercise any liberal profession, or before he could be
received as a candidate for any honourable office, of trust or profit.
if the state imposed upon this order of men the necessity of learning,
it would have no occasion to give itself any trouble about providing
them with proper teachers. They would soon find better teachers for
themselves, than any whom the state could provide for them. Science is
the great antidote to the poison of enthusiasm and superstition; and
where all the superior ranks of people were secured from it, the
inferior ranks could not be much exposed to it.

The second of those remedies is the frequency and gaiety of public
diversions. The state, by encouraging, that is, by giving entire
liberty to all those who, from their own interest, would attempt,
without scandal or indecency, to amuse and divert the people by
painting, poetry, music, dancing; by all sorts of dramatic
representations and exhibitions; would easily dissipate, in the
greater part of them, that melancholy and gloomy humour which is
almost always the nurse of popular superstition and enthusiasm. Public
diversions have always been the objects of dread and hatred to all the
fanatical promoters of those popular frenzies. The gaiety and good
humour which those diversions inspire, were altogether inconsistent
with that temper of mind which was fittest for their purpose, or which
they could best work upon. Dramatic representations, besides,
frequently exposing their artifices to public ridicule, and sometimes
even to public execration, were, upon that account, more than all
other diversions, the objects of their peculiar abhorrence.

In a country where the law favoured the teachers of no one religion
more than those of another, it would not be necessary that any of them
should have any particular or immediate dependency upon the sovereign
or executive power; or that he should have anything to do either in
appointing or in dismissing them from their offices. In such a
situation, he would have no occasion to give himself any concern about
them, further than to keep the peace among them, in the same manner as
among the rest of his subjects, that is, to hinder them from
persecuting, abusing, or oppressing one another. But it is quite
otherwise in countries where there is an established or governing
religion. The sovereign can in this case never be secure, unless he
has the means of influencing in a considerable degree the greater part
of the teachers of that religion.

The clergy of every established church constitute a great
incorporation. They can act in concert, and pursue their interest upon
one plan, and with one spirit as much as if they were under the
direction of one man; and they are frequently, too, under such
direction. Their interest as an incorporated body is never the same
with that of the sovereign, and is sometimes directly opposite to it.
Their great interest is to maintain their authority with the people,
and this authority depends upon the supposed certainty and importance
of the whole doctrine which they inculcate, and upon the supposed
necessity of adopting every part of it with the most implicit faith,
in order to avoid eternal misery. Should the sovereign have the
imprudence to appear either to deride, or doubt himself of the most
trifling part of their doctrine, or from humanity, attempt to protect
those who did either the one or the other, the punctilious honour of a
clergy, who have no sort of dependency upon him, is immediately
provoked to proscribe him as a profane person, and to employ all the
terrors of religion, in order to oblige the people to transfer their
allegiance to some more orthodox and obedient prince. Should he oppose
any of their pretensions or usurpations, the danger is equally great.
The princes who have dared in this manner to rebel against the church,
over and above this crime of rebellion, have generally been charged,
too, with the additional crime of heresy, notwithstanding their solemn
protestations of their faith, and humble submission to every tenet
which she thought proper to prescribe to them. But the authority of
religion is superior to every other authority. The fears which it
suggests conquer all other fears. When the authorized teachers of
religion propagate through the great body of the people, doctrines
subversive of the authority of the sovereign, it is by violence only,
or by the force of a standing army, that he can maintain his
authority. Even a standing army cannot in this case give him any
lasting security; because if the soldiers are not foreigners, which
can seldom be the case, but drawn from the great body of the people,
which must almost always be the case, they are likely to be soon
corrupted by those very doctrines. The revolutions which the
turbulence of the Greek clergy was continually occasioning at
Constantinople, as long as the eastern empire subsisted; the
convulsions which, during the course of several centuries, the
turbulence of the Roman clergy was continually occasioning in every
part of Europe, sufficiently demonstrate how precarious and insecure
must always be the situation of the sovereign, who has no proper means
of influencing the clergy of the established and governing religion of
his country.

Articles of faith, as well as all other spiritual matters, it is
evident enough, are not within the proper department of a temporal
sovereign, who, though he may be very well qualified for protecting,
is seldom supposed to be so for instructing the people. With regard to
such matters, therefore, his authority can seldom be sufficient to
counterbalance the united authority of the clergy of the established
church. The public tranquillity, however, and his own security, may
frequently depend upon the doctrines which they may think proper to
propagate concerning such matters. As he can seldom directly oppose
their decision, therefore, with proper weight and authority, it is
necessary that he should be able to influence it; and he can influence
it only by the fears and expectations which he may excite in the
greater part of the individuals of the order. Those fears and
expectations may consist in the fear of deprivation or other
punishment, and in the expectation of further preferment.

In all Christian churches, the benefices of the clergy are a sort of
freeholds, which they enjoy, not during pleasure, but during life or
good behaviour. If they held them by a more precarious tenure, and
were liable to be turned out upon every slight disobligation either of
the sovereign or of his ministers, it would perhaps be impossible for
them to maintain their authority with the people, who would then
consider them as mercenary dependents upon the court, in the sincerity
of whose instructions they could no longer have any confidence. But
should the sovereign attempt irregularly, and by violence, to deprive
any number of clergymen of their freeholds, on account, perhaps, of
their having propagated, with more than ordinary zeal, some factious
or seditious doctrine, he would only render, by such persecution, both
them and their doctrine ten times more popular, and therefore ten
times more troublesome and dangerous, than they had been before. Fear
is in almost all cases a wretched instrument of govermnent, and ought
in particular never to be employed against any order of men who have
the smallest pretensions to independency. To attempt to terrify them,
serves only to irritate their bad humour, and to confirm them in an
opposition, which more gentle usage, perhaps, might easily induce them
either to soften, or to lay aside altogether. The violence which the
French government usually employed in order to oblige all their
parliaments, or sovereign courts of justice, to enregister any
unpopular edict, very seldom succeeded. The means commonly employed,
however, the imprisonment of all the refractory members, one would
think, were forcible enough. The princes of the house of Stuart
sometimes employed the like means in order to influence some of the
members of the parliament of England, and they generally found them
equally intractable. The parliament of England is now managed in
another manner; and a very small experiment, which the duke of
Choiseul made, about twelve years ago, upon the parliament of Paris,
demonstrated sufficiently that all the parliaments of France might
have been managed still more easily in the same manner. That
experiment was not pursued. For though management and persuasion are
always the easiest and safest instruments of government as force and
violence are the worst and the most dangerous; yet such, it seems, is
the natural insolence of man, that he almost always disdains to use
the good instrument, except when he cannot or dare not use the bad
one. The French government could and durst use force, and therefore
disdained to use management and persuasion. But there is no order of
men, it appears I believe, from the experience of all ages, upon whom
it is so dangerous or rather so perfectly ruinous, to employ force and
violence, as upon the respected clergy of an established church. The
rights, the privileges, the personal liberty of every individual
ecclesiastic, who is upon good terms with his own order, are, even in
the most despotic governments, more respected than those of any other
person of nearly equal rank and fortune. It is so in every gradation
of despotism, from that of the gentle and mild government of Paris, to
that of the violent and furious government of Constantinople. But
though this order of men can scarce ever be forced, they may be
managed as easily as any other; and the security of the sovereign, as
well as the public tranquillity, seems to depend very much upon the
means which he has of managing them; and those means seem to consist
altogether in the preferment which he has to bestow upon them.

In the ancient constitution of the Christian church, the bishop of
each diocese was elected by the joint votes of the clergy and of the
people of the episcopal city. The people did not long retain their
right of election; and while they did retain it, they almost always
acted under the influence of the clergy, who, in such spiritual
matters, appeared to be their natural guides. The clergy, however,
soon grew weary of the trouble of managing them, and found it easier
to elect their own bishops themselves. The abbot, in the same manner,
was elected by the monks of the monastery, at least in the greater
part of abbacies. All the inferior ecclesiastical benefices
comprehended within the diocese were collated by the bishop, who
bestowed them upon such ecclesiastics as he thought proper. All church
preferments were in this manner in the disposal of the church. The
sovereign, though he might have some indirect influence in those
elections, and though it was sometimes usual to ask both his consent
to elect, and his approbation of the election, yet had no direct or
sufficient means of managing the clergy. The ambition of every
clergyman naturally led him to pay court, not so much to his sovereign
as to his own order, from which only he could expect preferment.

Through the greater part of Europe, the pope gradually drew to
himself, first the collation of almost all bishoprics and abbacies, or
of what were called consistorial benefices, and afterwards, by various
machinations and pretences, of the greater part of inferior benefices
comprehended within each diocese, little more being left to the bishop
than what was barely necessary to give him a decent authority with his
own clergy. By this arrangement the condition of the sovereign was
still worse than it had been before. The clergy of all the different
countries of Europe were thus formed into a sort of spiritual army,
dispersed in different quarters indeed, but of which all the movements
and operations could now be directed by one head, and conducted upon
one uniform plan. The clergy of each particular country might be
considered as a particular detachment of that army, of which the
operations could easily be supported and seconded by all the other
detachments quartered in the different countries round about. Each
detachment was not only independent of the sovereign of the country in
which it was quartered, and by which it was maintained, but dependent
upon a foreign sovereign, who could at any time turn its arms against
the sovereign of that particular country, and support them by the arms
of all the other detachments.

Those arms were the most formidable that can well be imagined. In the
ancient state of Europe, before the establishment of arts and
manufactures, the wealth of the clergy gave them the same sort of
influence over the common people which that of the great barons gave
them over their respective vassals, tenants, and retainers. In the
great landed estates, which the mistaken piety both of princes and
private persons had bestowed upon the church, jurisdictions were
established, of the same kind with those of the great barons, and for
the same reason. In those great landed estates, the clergy, or their
bailiffs, could easily keep the peace, without the support or
assistance either of the king or of any other person; and neither the
king nor any other person could keep the peace there without the
support and assistance of the clergy. The jurisdictions of the clergy,
therefore, in their particular baronies or manors, were equally
independent, and equally exclusive of the authority of the king's
courts, as those of the great temporal lords. The tenants of the
clergy were, like those of the great barons, almost all tenants at
will, entirely dependent upon their immediate lords, and, therefore,
liable to be called out at pleasure, in order to fight in any quarrel
in which the clergy might think proper to engage them. Over and above
the rents of those estates, the clergy possessed in the tithes a very
large portion of the rents of all the other estates in every kingdom
of Europe. The revenues arising from both those species of rents were,
the greater part of them, paid in kind, in corn, wine, cattle,
poultry, etc. The quantity exceeded greatly what the clergy could
themselves consume; and there were neither arts nor manufactures, for
the produce of which they could exchange the surplus. The clergy could
derive advantage from this immense surplus in no other way than by
employing it, as the great barons employed the like surplus of their
revenues, in the most profuse hospitality, and in the most extensive
charity. Both the hospitality and the charity of the ancient clergy,
accordingly, are said to have been very great. They not only
maintained almost the whole poor of every kingdom, but many knights
and gentlemen had frequently no other means of subsistence than by
travelling about from monastery to monastery, under pretence of
devotion, but in reality to enjoy the hospitality of the clergy. The
retainers of some particular prelates were often as numerous as those
of the greatest lay-lords; and the retainers of all the clergy taken
together were, perhaps, more numerous than those of all the lay-lords.
There was always much more union among the clergy than among the
lay-lords. The former were under a regular discipline and
subordination to the papal authority. The latter were under no regular
discipline or subordination, but almost always equally jealous of one
another, and of the king. Though the tenants and retainers of the
clergy, therefore, had both together been less numerous than those of
the great lay-lords, and their tenants were probably much less
numerous, yet their union would have rendered them more formidable.
The hospitality and charity of the clergy, too, not only gave them the
command of a great temporal force, but increased very much the weight
of their spiritual weapons. Those virtues procured them the highest
respect and veneration among all the inferior ranks of people, of whom
many were constantly, and almost all occasionally, fed by them.
Everything belonging or related to so popular an order, its
possessions, its privileges, its doctrines, necessarily appeared
sacred in the eyes of the common people; and every violation of them,
whether real or pretended, the highest act of sacrilegious wickedness
and profaneness. In this state of things, if the sovereign frequently
found it difficult to resist the confederacy of a few of the great
nobility, we cannot wonder that he should find it still more so to
resist the united force of the clergy of his own dominions, supported
by that of the clergy of all the neighbouring dominions. In such
circumstances, the wonder is, not that he was sometimes obliged to
yield, but that he ever was able to resist.

The privileges of the clergy in those ancient times (which to us, who
live in the present times, appear the most absurd), their total
exemption from the secular jurisdiction, for example, or what in
England was called the benefit of clergy, were the natural, or rather
the necessary, consequences of this state of things. How dangerous
must it have been for the sovereign to attempt to punish a clergyman
for any crime whatever, if his order were disposed to protect him, and
to represent either the proof as insufficient for convicting so holy a
man, or the punishment as too severe to be inflicted upon one whose
person had been rendered sacred by religion? The sovereign could, in
such circumstances, do no better than leave him to be tried by the
ecclesiastical courts, who, for the honour of their own order, were
interested to restrain, as much as possible, every member of it from
committing enormous crimes, or even from giving occasion to such gross
scandal as might disgust the minds of the people.

In the state in which things were, through the greater part of Europe,
during the tenth, eleventh, twelfth, and thirteenth centuries, and for
some time both before and after that period, the constitution of the
church of Rome may be considered as the most formidable combination
that ever was formed against the authority and security of civil
government, as well as against the liberty, reason, and happiness of
mankind, which can flourish only where civil government is able to
protect them. In that constitution, the grossest delusions of
superstition were supported in such a manner by the private interests
of so great a number of people, as put them out of all danger from any
assault of human reason; because, though human reason might, perhaps,
have been able to unveil, even to the eyes of the common people, some
of the delusions of superstition, it could never have dissolved the
ties of private interest. Had this constitution been attacked by no
other enemies but the feeble efforts of human reason, it must have
endured for ever. But that immense and well-built fabric, which all
the wisdom and virtue of man could never have shaken, much less have
overturned, was, by the natural course of things, first weakened, and
afterwards in part destroyed; and is now likely, in the course of a
few centuries more, perhaps, to crumble into ruins altogether.

The gradual improvements of arts, manufactures, and commerce, the same
causes which destroyed the power of the great barons, destroyed, in
the same manner, through the greater part of Europe, the whole
temporal manufactures, and commerce, the clergy, like the great
barons, found something for which they could exchange their rude
produce, and thereby discovered the means of spending their whole
revenues upon their own persons, without giving any considerable share
of them to other people. Their charity became gradually less
extensive, their hospitality less liberal, or less profuse. Their
retainers became consequently less numerous, and, by degrees, dwindled
away altogether. The clergy, too, like the great barons, wished to get
a better rent from their landed estates, in order to spend it, in the
same manner, upon the gratification of their own private vanity and
folly. But this increase of rent could be got only by granting leases
to their tenants, who thereby became, in a great measure, independent
of them. The ties of interest, which bound the inferior ranks of
people to the clergy, were in this manner gradually broken and
dissolved. They were even broken and dissolved sooner than those which
bound the same ranks of people to the great barons; because the
benefices of the church being, the greater part of them, much smaller
than the estates of the great barons, the possessor of each benefice
was much sooner able to spend the whole of its revenue upon his own
person. During the greater part of the fourteenth and fifteenth
centuries, the power of the great barons was, through the greater part
of Europe, in full vigour. But the temporal power of the clergy, the
absolute command which they had once had over the great body of the
people was very much decayed. The power of the church was, by that
time, very nearly reduced, through the greater part of Europe, to what
arose from their spiritual authority; and even that spiritual
authority was much weakened, when it ceased to be supported by the
charity and hospitality of the clergy. The inferior ranks of people no
longer looked upon that order as they had done before; as the
comforters of their distress, and the relievers of their indigence. On
the contrary, they were provoked and disgusted by the vanity, luxury,
and expense of the richer clergy, who appeared to spend upon their own
pleasures what had always before been regarded as the patrimony of the
poor.

In this situation of things, the sovereigns in the different states of
Europe endeavoured to recover the influence which they had once had in
the disposal of the great benefices of the church; by procuring to the
deans and chapters of each diocese the restoration of their ancient
right of electing the bishop; and to the monks of each abbacy that of
electing the abbot. The re-establishing this ancient order was the
object of several statutes enacted in England during the course of the
fourteenth century, particularly of what is called the statute of
provisors; and of the pragmatic sanction, established in France in the
fifteenth century. In order to render the election valid, it was
necessary that the sovereign should both consent to it before hand,
and afterwards approve of the person elected; and though the election
was still supposed to be free, he had, however all the indirect means
which his situation necessarily afforded him, of influencing the
clergy in his own dominions. Other regulations, of a similar tendency,
were established in other parts of Europe. But the power of the pope,
in the collation of the great benefices of the church, seems, before
the reformation, to have been nowhere so effectually and so
universally restrained as in France and England. The concordat
afterwards, in the sixteenth century, gave to the kings of France the
absolute right of presenting to all the great, or what are called the
consistorial, benefices of the Gallican church.

Since the establishment of the pragmatic sanction and of the
concordat, the clergy of France have in general shewn less respect to
the decrees of the papal court, than the clergy of any other catholic
country. In all the disputes which their sovereign has had with the
pope, they have almost constantly taken part with the former. This
independency of the clergy of France upon the court of Rome seems to
be principally founded upon the pragmatic sanction and the concordat.
In the earlier periods of the monarchy, the clergy of France appear to
have been as much devoted to the pope as those of any other country.
When Robert, the second prince of the Capetian race, was most unjustly
excommunicated by the court of Rome, his own servants, it is said,
threw the victuals which came from his table to the dogs, and refused
to taste any thing themselves which had been polluted by the contact
of a person in his situation. They were taught to do so, it may very
safely be presumed, by the clergy of his own dominions.

The claim of collating to the great benefices of the church, a claim
in defence of which the court of Rome had frequently shaken, and
sometimes overturned, the thrones of some of the greatest sovereigns
in Christendom, was in this manner either restrained or modified, or
given up altogether, in many different parts of Europe, even before
the time of the reformation. As the clergy had now less influence over
the people, so the state had more influence over the clergy. The
clergy, therefore, had both less power, and less inclination, to
disturb the state.

The authority of the church of Rome was in this state of declension,
when the disputes which gave birth to the reformation began in
Germany, and soon spread themselves through every part of Europe. The
new doctrines were everywhere received with a high degree of popular
favour. They were propagated with all that enthusiastic zeal which
commonly animates the spirit of party, when it attacks established
authority. The teachers of those doctrines, though perhaps, in other
respects, not more learned than many of the divines who defended the
established church, seem in general to have been better acquainted
with ecclesiastical history, and with the origin and progress of that
system of opinions upon which the authority of the church was
established; and they had thereby the advantage in almost every
dispute. The austerity of their manners gave them authority with the
common people, who contrasted the strict regularity of their conduct
with the disorderly lives of the greater part of their own clergy.
They possessed, too, in a much higher degree than their adversaries,
all the arts of popularity and of gaining proselytes; arts which the
lofty and dignified sons of the church had long neglected, as being to
them in a great measure useless. The reason of the new doctrines
recommended them to some, their novelty to many; the hatred and
contempt of the established clergy to a still greater number: but the
zealous, passionate, and fanatical, though frequently coarse and
rustic eloquence, with which they were almost everywhere inculcated,
recommended them to by far the greatest number.

The success of the new doctrines was almost everywhere so great, that
the princes, who at that time happened to be on bad terms with the
court of Rome, were, by means of them, easily enabled, in their own
dominions, to overturn the church, which having lost the respect and
veneration of the inferior ranks of people, could make scarce any
resistance. The court of Rome had disobliged some of the smaller
princes in the northern parts of Germany, whom it had probably
considered as too insignificant to be worth the managing. They
universally, therefore, established the reformation in their own
dominions. The tyranny of Christiern II., and of Troll archbishop of
Upsal, enabled Gustavus Vasa to expel them both from Sweden. The pope
favoured the tyrant and the archbishop, and Gustavus Vasa found no
difficulty in establishing the reformation in Sweden. Christiern II.
was afterwards deposed from the throne of Denmark, where his conduct
had rendered him as odious as in Sweden. The pope, however, was still
disposed to favour him; and Frederic of Holstein, who had mounted the
throne in his stead, revenged himself, by following the example of
Gustavus Vasa. The magistrates of Berne and Zurich, who had no
particular quarrel with the pope, established with great ease the
reformation in their respective cantons, where just before some of the
clergy had, by an imposture somewhat grosser than ordinary, rendered
the whole order both odious and contemptible.

In this critical situation of its affairs the papal court was at
sufficient pains to cultivate the friendship of the powerful
sovereigns of France and Spain, of whom the latter was at that time
emperor of Germany. With their assistance, it was enabled, though not
without great difficulty, and much bloodshed, either to suppress
altogether, or to obstruct very much, the progress of the reformation
in their dominions. It was well enough inclined, too, to be
complaisant to the king of England. But from the circumstances of the
times, it could not be so without giving offence to a still greater
sovereign, Charles V., king of Spain and emperor of Germany. Henry
VIII., accordingly, though he did not embrace himself the greater part
of the doctrines of the reformation, was yet enabled, by their general
prevalence, to suppress all the monasteries, and to abolish the
authority of the church of Rome in his dominions. That he should go so
far, though he went no further, gave some satisfaction to the patrons
of the reformation, who, having got possession of the government in
the reign of his son and successor completed, without any difficulty,
the work which Henry VIII. had begun.

In some countries, as in Scotland, where the government was weak,
unpopular, and not very firmly established, the reformation was strong
enough to overturn, not only the church, but the state likewise, for
attempting to support the church.

Among the followers of the reformation, dispersed in all the different
countries of Europe, there was no general tribunal, which, like that
of the court of Rome, or an oecumenical council, could settle all
disputes among them, and, with irresistible authority, prescribe to
all of them the precise limits of orthodoxy. When the followers of the
reformation in one country, therefore, happened to differ from their
brethren in another, as they had no common judge to appeal to, the
dispute could never be decided; and many such disputes arose among
them. Those concerning the government of the church, and the right of
conferring ecclesiastical benefices, were perhaps the most interesting
to the peace and welfare of civil society. They gave birth,
accordingly, to the two principal parties or sects among the followers
of the reformation, the Lutheran and Calvinistic sects, the only sects
among them, of which the doctrine and discipline have ever yet been
established by law in any part of Europe.

The followers of Luther, together with what is called the church of
England, preserved more or less of the episcopal government,
established subordination among the clergy, gave the sovereign the
disposal of all the bishoprics, and other consistorial benefices
within his dominions, and thereby rendered him the real head of the
church; and without depriving the bishop of the right of collating to
the smaller benefices within his diocese, they, even to those
benefices, not only admitted, but favoured the right of presentation,
both in the sovereign and in all other lay patrons. This system of
church government was, from the beginning, favourable to peace and
good order, and to submission to the civil sovereign. It has never,
accordingly, been the occasion of any tumult or civil commotion in any
country in which it has once been established. The church of England,
in particular, has always valued herself, with great reason, upon the
unexceptionable loyalty of her principles. Under such a government,
the clergy naturally endeavour to recommend themselves to the
sovereign, to the court, and to the nobility and gentry of the
country, by whose influence they chiefly expect to obtain preferment.
They pay court to those patrons, sometimes, no doubt, by the vilest
flattery and assentation; but frequently, too, by cultivating all
those arts which best deserve, and which are therefore most likely to
gain them, the esteem of people of rank and fortune; by their
knowledge in all the different branches of useful and ornamental
learning, by the decent liberality of their manners, by the social
good humour of their conversation, and by their avowed contempt of
those absurd and hypocritical austerities which fanatics inculcate and
pretend to practise, in order to draw upon themselves the veneration,
and upon the greater part of men of rank and fortune, who avow that
they do not practise them, the abhorrence of the common people. Such a
clergy, however, while they pay their court in this manner to the
higher ranks of life, are very apt to neglect altogether the means of
maintaining their influence and authority with the lower. They are
listened to, esteemed, and respected by their superiors; but before
their inferiors they are frequently incapable of defending,
effectually, and to the conviction of such hearers, their own sober
and moderate doctrines, against the most ignorant enthusiast who
chooses to attack them.

The followers of Zuinglius, or more properly those of Calvin, on the
contrary, bestowed upon the people of each parish, whenever the church
became vacant, the right of electing their own pastor; and
established, at the same time, the most perfect equality among the
clergy. The former part of this institution, as long as it remained in
vigour, seems to have been productive of nothing but disorder and
confusion, and to have tended equally to corrupt the morals both of
the clergy and of the people. The latter part seems never to have had
any effects but what were perfectly agreeable.

As long as the people of each parish preserved the right of electing
their own pastors, they acted almost always under the influence of the
clergy, and generally of the most factious and fanatical of the order.
The clergy, in order to preserve their influence in those popular
elections, became, or affected to become, many of them, fanatics
themselves, encouraged fanaticism among the people, and gave the
preference almost always to the most fanatical candidate. So small a
matter as the appointment of a parish priest, occasioned almost always
a violent contest, not only in one parish, but in all the neighbouring
parishes who seldom failed to take part in the quarrel. When the
parish happened to be situated in a great city, it divided all the
inhabitants into two parties; and when that city happened, either to
constitute itself a little republic, or to be the head and capital of
a little republic, as in the case with many of the considerable cities
in Switzerland and Holland, every paltry dispute of this kind, over
and above exasperating the animosity of all their other factions,
threatened to leave behind it, both a new schism in the church, and a
new faction in the state. In those small republics, therefore, the
magistrate very soon found it necessary, for the sake of preserving
the public peace, to assume to himself the right of presenting to all
vacant benefices. In Scotland, the most extensive country in which
this presbyterian form of church government has ever been established,
the rights of patronage were in effect abolished by the act which
established presbytery in the beginning of the reign of William III.
That act, at least, put in the power of certain classes of people in
each parish to purchase, for a very small price, the right of electing
their own pastor. The constitution which this act established, was
allowed to subsist for about two-and-twenty years, but was abolished
by the 10th of queen Anne, ch.12, on account of the confusions and
disorders which this more popular mode of election had almost
everywhere occasioned. In so extensive a country as Scotland, however,
a tumult in a remote parish was not so likely to give disturbance to
government as in a smaller state. The 10th of queen Anne restored the
rights of patronage. But though, in Scotland, the law gives the
benefice, without any exception to the person presented by the patron;
yet the church requires sometimes (for she has not in this respect
been very uniform in her decisions) a certain concurrence of the
people, before she will confer upon the presentee what is called the
cure of souls, or the ecclesiastical jurisdiction in the parish. She
sometimes, at least, from an affected concern for the peace of the
parish, delays the settlement till this concurrence can be procured.
The private tampering of some of the neighbouring clergy, sometimes to
procure, but more frequently to prevent this concurrence, and the
popular arts which they cultivate, in order to enable them upon such
occasions to tamper more effectually, are perhaps the causes which
principally keep up whatever remains of the old fanatical spirit,
either in the clergy or in the people of Scotland.

The equality which the presbyterian form of church government
establishes among the clergy, consists, first, in the equality of
authority or ecclesiastical jurisdiction; and, secondly, in the
equality of benefice. In all presbyterian churches, the equality of
authority is perfect; that of benefice is not so. The difference,
however, between one benefice and another, is seldom so considerable,
as commonly to tempt the possessor even of the small one to pay court
to his patron, by the vile arts of flattery and assentation, in order
to get a better. In all the presbyterian churches, where the rights of
patronage are thoroughly established, it is by nobler and better arts,
that the established clergy in general endeavour to gain the favour of
their superiors; by their learning, by the irreproachable regularity
of their life, and by the faithful and diligent discharge of their
duty. Their patrons even frequently complain of the independency of
their spirit, which they are apt to construe into ingratitude for past
favours, but which, at worse, perhaps, is seldom anymore than that
indifference which naturally arises from the consciousness that no
further favours of the kind are ever to be expected. There is scarce,
perhaps, to be found anywhere in Europe, a more learned, decent,
independent, and respectable set of men, than the greater part of the
presbyterian clergy of Holland, Geneva, Switzerland, and Scotland.

Where the church benefices are all nearly equal, none of them can be
very great; and this mediocrity of benefice, though it may be, no
doubt, carried too far, has, however, some very agreeable effects.
Nothing but exemplary morals can give dignity to a man of small
fortune. The vices of levity and vanity necessarily render him
ridiculous, and are, besides, almost as ruinous to him as they are to
the common people. In his own conduct, therefore, he is obliged to
follow that system of morals which the common people respect the most.
He gains their esteem and affection, by that plan of life which his
own interest and situation would lead him to follow. The common people
look upon him with that kindness with which we naturally regard one
who approaches somewhat to our own condition, but who, we think, ought
to be in a higher. Their kindness naturally provokes his kindness. He
becomes careful to instruct them, and attentive to assist and relieve
them. He does not even despise the prejudices of people who are
disposed to be so favourable to him, and never treats them with those
contemptuous and arrogant airs, which we so often meet with in the
proud dignitaries of opulent and well endowed churches. The
presbyterian clergy, accordingly, have more influence over the minds
of the common people, than perhaps the clergy of any other established
church. It is, accordingly, in presbyterian countries only, that we
ever find the common people converted, without persecution completely,
and almost to a man, to the established church.

In countries where church benefices are, the greater part of them,
very moderate, a chair in a university is generally a better
establishment than a church benefice. The universities have, in this
case, the picking and chusing of their members from all the churchmen
of the country, who, in every country, constitute by far the most
numerous class of men of letters. Where church benefices, on the
contrary, are many of them very considerable, the church naturally
draws from the universities the greater part of their eminent men of
letters; who generally find some patron, who does himself honour by
procuring them church preferment. In the former situation, we are
likely to find the universities filled with the most eminent men of
letters that are to be found in the country. In the latter, we are
likely to find few eminent men among them, and those few among the
youngest members of the society, who are likely, too, to be drained
away from it, before they can have acquired experience and knowledge
enough to be of much use to it. It is observed by Mr. de Voltaire,
that father Porée, a jesuit of no great eminence in the republic of
letters, was the only professor they had ever had in France, whose
works were worth the reading. In a country which has produced so many
eminent men of letters, it must appear somewhat singular, that scarce
one of them should have been a professor in a university. The famous
Cassendi was, in the beginning of his life, a professor in the
university of Aix. Upon the first dawning of his genius, it was
represented to him, that by going into the church he could easily find
a much more quiet and comfortable subsistence, as well as a better
situation for pursuing his studies; and he immediately followed the
advice. The observation of Mr. de Voltaire may be applied, I believe,
not only to France, but to all other Roman Catholic countries. We very
rarely find in any of them an eminent man of letters, who is a
professor in a university, except, perhaps, in the professions of law
and physic; professions from which the church is not so likely to draw
them. After the church of Rome, that of England is by far the richest
and best endowed church in Christendom. In England, accordingly, the
church is continually draining the universities of all their best and
ablest members; and an old college tutor who is known and
distinguished in Europe as an eminent man of letters, is as rarely to
be found there as in any Roman catholic country, In Geneva, on the
contrary, in the protestant cantons of Switzerland, in the protestant
countries of Germany, in Holland, in Scotland, in Sweden, and Denmark,
the most eminent men of letters whom those countries have produced,
have, not all indeed, but the far greater part of them, been
professors in universities. In those countries, the universities are
continually draining the church of all its most eminent men of
letters.

It may, perhaps, be worth while to remark, that, if we except the
poets, a few orators, and a few historians, the far greater part of
the other eminent men of letters, both of Greece and Rome, appear to
have been either public or private teachers; generally either of
philosophy or of rhetoric. This remark will be found to hold true,
from the days of Lysias and Isocrates, of Plato and Aristotle, down to
those of Plutarch and Epictetus, Suetonius, and Quintilian. To impose
upon any man the necessity of teaching, year after year, in any
particular branch of science seems in reality to be the most effectual
method for rendering him completely master of it himself. By being
obliged to go every year over the same ground, if he is good for any
thing, he necessarily becomes, in a few years, well acquainted with
every part of it, and if, upon any particular point, he should form
too hasty an opinion one year, when he comes, in the course of his
lectures to reconsider the same subject the year thereafter, he is
very likely to correct it. As to be a teacher of science is certainly
the natural employment of a mere man of letters; so is it likewise,
perhaps, the education which is most likely to render him a man of
solid learning and knowledge. The mediocrity of church benefices
naturally tends to draw the greater part of men of letters in the
country where it takes place, to the employment in which they can be
the most useful to the public, and at the same time to give them the
best education, perhaps, they are capable of receiving. It tends to
render their learning both as solid as possible, and as useful as
possible.

The revenue of every established church, such parts of it excepted as
may arise from particular lands or manors, is a branch, it ought to be
observed, of the general revenue of the state, which is thus diverted
to a purpose very different from the defence of the state. The tithe,
for example, is a real land tax, which puts it out of the power of
the proprietors of land to contribute so largely towards the defence
of the state as they otherwise might be able to do. The rent of land,
however, is, according to some, the sole fund; and, according to
others, the principal fund, from which, in all great monarchies, the
exigencies of the state must be ultimately supplied. The more of this
fund that is given to the church, the less, it is evident, can be
spared to the state. It may be laid down as a certain maxim, that all
other things being supposed equal, the richer the church, the poorer
must necessarily be, either the sovereign on the one hand, or the
people on the other; and, in all cases, the less able must the state
be to defend itself. In several protestant countries, particularly in
all the protestant cantons of Switzerland, the revenue which anciently
belonged to the Roman catholic church, the tithes and church lands,
has been found a fund sufficient, not only to afford competent
salaries to the established clergy, but to defray, with little or no
addition, all the other expenses of the state. The magistrates of the
powerful canton of Berne, in particular, have accumulated, out of the
savings from this fund, a very large sum, supposed to amount to
several millions; part or which is deposited in a public treasure, and
part is placed at interest in what are called the public funds of the
different indebted nations of Europe; chiefly in those of France and
Great Britain. What may be the amount of the whole expense which the
church, either of Berne, or of any other protestant canton, costs the
state, I do not pretend to know. By a very exact account it appears,
that, in 1755, the whole revenue of the clergy of the church of
Scotland, including their glebe or church lands, and the rent of their
manses or dwelling-houses, estimated according to a reasonable
valuation, amounted only to £68,514:1:5 1/12d. This very moderate
revenue affords a decent subsistence to nine hundred and fortyfour
ministers. The whole expense of the church, including what is
occasionally laid out for the building and reparation of churches, and
of the manses of ministers, cannot well be supposed to exceed eighty
or eighty-five thousand pounds a-year. The most opulent church in
Christendom does not maintain better the uniformity of faith, the
fervour of devotion, the spirit of order, regularity, and austere
morals, in the great body of the people, than this very poorly endowed
church of Scotland. All the good effects, both civil and religious,
which an established church can be supposed to produce, are produced
by it as completely as by any other. The greater part of the
protestant churches of Switzerland, which, in general, are not better
endowed than the church of Scotland, produce those effects in a still
higher degree. In the greater part of the protestant cantons, there is
not a single person to be found, who does not profess himself to be of
the established church. If he professes himself to be of any other,
indeed, the law obliges him to leave the canton. But so severe, or,
rather, indeed, so oppressive a law, could never have been executed in
such free countries, had not the diligence of the clergy beforehand
converted to the established church the whole body of the people, with
the exception of, perhaps, a few individuals only. In some parts of
Switzerland, accordingly, where, from the accidental union of a
protestant and Roman catholic country, the conversion has not been so
complete, both religions are not only tolerated, but established by
law.

The proper performance of every service seems to require, that its pay
or recompence should be, as exactly as possible, proportioned to the
nature of the service. If any service is very much underpaid, it is
very apt to suffer by the meanness and incapacity of the greater part
of those who are employed in it. If it is very much overpaid, it is
apt to suffer, perhaps still more, by their negligence and idleness. A
man of a large revenue, whatever may be his profession, thinks he
ought to live like other men of large revenues; and to spend a great
part of his time in festivity, in vanity, and in dissipation. But in a
clergyman, this train of life not only consumes the time which ought
to be employed in the duties of his function, but in the eyes of the
common people, destroys almost entirely that sanctity of character,
which can alone enable him to perform those duties with proper weight
and authority.


PART IV.

Of the Expense of supporting the Dignity of the Sovereign.

Over and above the expenses necessary for enabling the sovereign to
perform his several duties, a certain expense is requisite for the
support of his dignity. This expense varies, both with the different
periods of improvement, and with the different forms of government.

In an opulent and improved society, where all the different orders of
people are growing every day more expensive in their houses, in their
furniture, in their tables, in their dress, and in their equipage; it
cannot well be expected that the sovereign should alone hold out
against the fashion. He naturally, therefore, or rather necessarily,
becomes more expensive in all those different articles too. His
dignity even seems to require that he should become so.

As, in point of dignity, a monarch is more raised above his subjects
than the chief magistrate of any republic is ever supposed to be above
his fellow-citizens; so a greater expense is necessary for supporting
that higher dignity. We naturally expect more splendour in the court
of a king, than in the mansion-house of a doge or burgo-master.

CONCLUSION.

The expense of defending the society, and that of supporting the
dignity of the chief magistrate, are both laid out for the general
benefit of the whole society. It is reasonable, therefore, that they
should be defrayed by the general contribution of the whole society;
all the different members contributing, as nearly as possible, in
proportion to their respective abilities.

The expense of the administration of justice, too, may no doubt be
considered as laid out for the benefit of the whole society. There is
no impropriety, therefore, in its being defrayed by the general
contribution of the whole society. The persons, however, who give
occasion to this expense, are those who, by their injustice in one way
or another, make it necessary to seek redress or protection from the
courts of justice. The persons, again, most immediately benefited by
this expense, are those whom the courts of justice either restore to
their rights, or maintain in their rights. The expense of the
administration of justice, therefore, may very properly be defrayed by
the particular contribution of one or other, or both, of those two
different sets of persons, according as different occasions may
require, that is, by the fees of court. It cannot be necessary to have
recourse to the general contribution of the whole society, except for
the conviction of those criminals who have not themselves any estate
or fund sufficient for paying those fees.

Those local or provincial expenses, of which the benefit is local or
provincial (what is laid out, for example, upon the police of a
particular town or district), ought to be defrayed by a local or
provincial revenue, and ought to be no burden upon the general revenue
of the society. It is unjust that the whole society should contribute
towards an expense, of which the benefit is confined to a part of the
society.

The expense of maintaining good roads and communications is, no doubt,
beneficial to the whole society, and may, therefore, without any
injustice, be defrayed by the general contributions of the whole
society. This expense, however, is most immediately and directly
beneficial to those who travel or carry goods from one place to
another, and to those who consume such goods. The turnpike tolls in
England, and the duties called peages in other countries, lay it
altogether upon those two different sets of people, and thereby
discharge the general revenue of the society from a very considerable
burden.

The expense of the institutions for education and religious
instruction, is likewise, no doubt, beneficial to the whole society,
and may, therefore, without injustice, be defrayed by the general
contribution of the whole society. This expense, however, might,
perhaps, with equal propriety, and even with some advantage, be
defrayed altogether by those who receive the immediate benefit of such
education and instruction, or by the voluntary contribution of those
who think they have occasion for either the one or the other.

When the institutions, or public works, which are beneficial to the
whole society, either cannot be maintained altogether, or are not
maintained altogether, by the contribution of such particular members
of the society as are most immediately benefited by them; the
deficiency must, in most cases, be made up by the general contribution
of the whole society. The general revenue of the society, over and
above defraying the expense of defending the society, and of
supporting the dignity of the chief magistrate, must make up for the
deficiency of many particular branches of revenue. The sources of this
general or public revenue, I shall endeavour to explain in the
following chapter.


CHAPTER II.

OF THE SOURCES OF THE GENERAL OR PUBLIC REVENUE OF THE SOCIETY.

The revenue which must defray, not only the expense of defending the
society and of supporting the dignity of the chief magistrate, but all
the other necessary expenses of government, for which the constitution
of the state has not provided any particular revenue may be drawn,
either, first, from some fund which peculiarly belongs to the
sovereign or commonwealth, and which is independent of the revenue of
the people; or, secondly, from the revenue of the people.


PART  I.

Of the Funds, or Sources, of Revenue, which may peculiarly belong to
the Sovereign or Commonwealth.

The funds, or sources, of revenue, which may peculiarly belong to the
sovereign or commonwealth, must consist, either in stock, or in land.

The sovereign, like, any other owner of stock, may derive a revenue
from it, either by employing it himself, or by lending it. His revenue
is, in the one case, profit, in the other interest.

The revenue of a Tartar or Arabian chief consists in profit. It arises
principally from the milk and increase of his own herds and flocks, of
which he himself superintends the management, and is the principal
shepherd or herdsman of his own horde or tribe. It is, however, in
this earliest and rudest state of civil government only, that profit
has ever made the principal part of the public revenue of a
monarchical state.

Small republics have sometimes derived a considerable revenue from the
profit of mercantile projects. The republic of Hamburgh is said to do
so from the profits of a public wine-cellar and apothecary's shop. {See
Memoires concernant les Droits et Impositions en Europe, tome i. page
73. This work was compiled by the order of the court, for the use of a
commission employed for some years past in considering the proper means
for reforming the finances of France. The account of the French taxes,
which takes up three volumes in quarto, may be regarded as perfectly
authentic. That of those of other European nations was compiled from
such information as the French ministers at the different courts could
procure. It is much shorter, and probably not quite so exact as that
of the French taxes.} That state cannot be very great, of which the
sovereign has leisure to carry on the trade of a wine-merchant or an
apothecary. The profit of a public bank has been a source of revenue
to more considerable states. It has been so, not only to Hamhurgh, but
to Venice and Amsterdam. A revenue of this kind has even by some
people been thought not below the attention of so great an empire as
that of Great Britain. Reckoning the ordinary dividend of the bank of
England at five and a-half per cent., and its capital at ten millions
seven hundred and eighty thousand pounds, the neat annual profit,
after paying the expense of management, must amount, it is said, to
five hundred and ninety-two thousand nine hundred pounds. Government,
it is pretended, could borrow this capital at three per cent.
interest, and, by taking the management of the bank into its own
hands, might make a clear profit of two hundred and sixty-nine
thousand five hundred pounds a-year. The orderly, vigilant, and
parsimonious administration of such aristocracies as those of Venice
and Amsterdam, is extremely proper, it appears from experience, for
the management of a mercantile project of this kind. But whether such
a government us that of England, which, whatever may be its virtues,
has never been famous for good economy; which, in time of peace, has
generally conducted itself with the slothful and negligent profusion
that is, perhaps, natural to monarchies; and, in time of war, has
constantly acted with all the thoughtless extravagance that
democracies are apt to fall into, could be safely trusted with the
management of such a project, must at least be a good deal more
doubtful.

The post-office is properly a mercantile project. The government
advances the expense of establishing the different offices, and of
buying or hiring the necessary horses or carriages, and is repaid,
with a large profit, by the duties upon what is carried. It is,
perhaps, the only mercantile project which has been successfully
managed by, I believe, every sort of government. The capital to be
advanced is not very considerable. There is no mystery in the
business. The returns are not only certain but immediate.

Princes, however, have frequently engaged in many other mercantile
projects, and have been willing, like private persons, to mend their
fortunes, by becoming adventurers in the common branches of trade.
They have scarce ever succeeded. The profusion with which the affairs
of princes are always managed, renders it almost impossible that they
should. The agents of a prince regard the wealth of their master as
inexhaustible; are careless at what price they buy, are careless at
what price they sell, are careless at what expense they transport his
goods from one place to another. Those agents frequently live with the
profusion of princes; and sometimes, too, in spite of that profusion,
and by a proper method of making up their accounts, acquire the
fortunes of princes. It was thus, as we are told by Machiavel, that
the agents of Lorenzo of Medicis, not a prince of mean abilities,
carried on his trade. The republic of Florence was several times
obliged to pay the debt into which their extravagance had involved
him. He found it convenient, accordingly to give up the business of
merchant, the business to which his family had originally owed their
fortune, and, in the latter part of his life, to employ both what
remained of that fortune, and the revenue of the state, of which he
had the disposal, in projects and expenses more suitable to his
station.

No two characters seem more inconsistent than those of trader and
sovereign. If the trading spirit of the English East India company
renders them very bad sovereigns, the spirit of sovereignty seems to
have rendered them equally bad traders. While they were traders only,
they managed their trade successfully, and were able to pay from their
profits a moderate dividend to the proprietors of their stock. Since
they became sovereigns, with a revenue which, it is said, was
originally more than three millions sterling, they have been obliged
to beg the ordinary assistance of government, in order to avoid
immediate bankruptcy. In their former situation, their servants in
India considered themselves as the clerks of merchants; in their
present situation, those servants consider themselves as the ministers
of sovereigns.

A state may sometimes derive some part of its public revenue from the
interest of money, as well as from the profits of stock. If it has
amassed a treasure, it may lend a part of that treasure, either to
foreign states, or to its own subjects.

The canton of Berne derives a considerable revenue by lending a part
of its treasure to foreign states, that is, by placing it in the
public funds of the different indebted nations of Europe, chiefly in
those of France and England. The security of this revenue must depend,
first, upon the security of the funds in which it is placed, or upon
the good faith of the government which has the management of them;
and, secondly, upon the certainty or probability of the continuance of
peace with the debtor nation. In the case of a war, the very first act
of hostility on the part of the debtor nation might be the forfeiture
of the funds of its credit or. This policy of lending money to foreign
states is, so far as I know peculiar to the canton of Berne.

The city of Hamburgh {See Memoire concernant les Droites et
Impositions en Europe tome i p. 73.}has established a sort of public
pawn-shop, which lends money to the subjects of the state, upon
pledges, at six per cent. interest. This pawn-shop, or lombard, as it
is called, affords a revenue, it is pretended, to the state, of a
hundred and fifty thousand crowns, which, at four and sixpence the
crown, amounts to £33,750 sterling.

The government of Pennsylvania, without amassing any treasure,
invented a method of lending, not money, indeed, but what is
equivalent to money, to its subjects. By advancing to private people,
at interest, and upon land security to double the value, paper bills
of credit, to be redeemed fifteen years after their date; and, in the
mean time, made transferable from hand to hand, like banknotes, and
declared by act of assembly to be a legal tender in all payments from
one inhabitant of the province to another, it raised a moderate
revenue, which went a considerable way towards defraying an annual
expense of about £4,500, the whole ordinary expense of that frugal and
orderly government. The success of an expedient of this kind must have
depended upon three different circumstances: first, upon the demand
for some other instrument of commerce, besides gold and silver money,
or upon the demand for such a quantity of consumable stock as could
not be had without sending abroad the greater part of their gold and
silver money, in order to purchase it; secondly, upon the good credit
of the government which made use of this expedient; and, thirdly, upon
the moderation with which it was used, the whole value of the paper
bills of credit never exceeding that of the gold and silver money
which would have been necessary for carrying on their circulation, had
there been no paper bills of credit. The same expedient was, upon
different occasions, adopted by several other American colonies; but,
from want of this moderation, it produced, in the greater part of
them, much more disorder than conveniency.

The unstable and perishable nature of stock and credit, however,
renders them unfit to be trusted to as the principal funds of that
sure, steady, and permanent revenue, which can alone give security and
dignity to government. The government of no great nation, that was
advanced beyond the shepherd state, seems ever to have derived the
greater part of its public revenue from such sources.

Land is a fund of more stable and permanent nature; and the rent of
public lands, accordingly, has been the principal source of the public
revenue of many a great nation that was much advanced beyond the
shepherd state. From the produce or rent of the public lands, the
ancient republics of Greece and Italy derived for a long the the
greater part of that revenue which defrayed the necessary expenses of
the commonwealth. The rent of the crown lands constituted for a long
time the greater part of the revenue of the ancient sovereigns of
Europe.

War, and the preparation for war, are the two circumstances which, in
modern times, occasion the greater part of the necessary expense or
all great states. But in the ancient republics of Greece and Italy,
every citizen was a soldier, and both served, and prepared himself for
service, at his own expense. Neither of those two circumstances,
therefore, could occasion any very considerable expense to the state.
The rent of a very moderate landed estate might be fully sufficient
for defraying all the other necessary expenses of government.

In the ancient monarchies of Europe, the manners and customs of the
time sufficiently prepared the great body of the people for war; and
when they took the field, they were, by the condition of their feudal
tenures, to be maintained either at their own expense, or at that of
their immediate lords, without bringing any new charge upon the
sovereign. The other expenses of government were, the greater part of
them, very moderate. The administration of justice, it has been shewn,
instead of being a cause of expense was a source of revenue. The
labour of the country people, for three days before, and for three
days after, harvest, was thought a fund sufficient for making and
maintaining all the bridges, highways, and other public works, which
the commerce of the country was supposed to require. In those days the
principal expense of the sovereign seems to have consisted in the
maintenance of his own family and household. The officers of his
household, accordingly, were then the great officers of state. The
lord treasurer received his rents. The lord steward and lord
chamberlain looked after the expense of his family. The care of his
stables was committed to the lord constable and the lord marshal. His
houses were all built in the form of castles, and seem to have been
the principal fortresses which he possessed. The keepers of those
houses or castles might be considered as a sort of military governors.
They seem to have been the only military officers whom it was
necessary to maintain in time of peace. In these circumstances, the
rent of a great landed estate might, upon ordinary occasions, very
well defray all the necessary expenses of government.

In the present state of the greater part of the civilized monarchies
of Europe, the rent of all the lands in the country, managed as they
probably would be, if they all belonged to one proprietor, would
scarce, perhaps, amount to the ordinary revenue which they levy upon
the people even in peaceable times. The ordinary revenue of Great
Britain, for example, including not only what is necessary for
defraying the current expense of the year, but for paying the interest
of the public debts, and for sinking a part of the capital of those
debts, amounts to upwards of ten millions a-year. But the land tax, at
four shillings in the pound, falls short of two millions a-year. This
land tax, as it is called however, is supposed to be one-fifth, not
only of the rent of all the land, but of that of all the houses, and
of the interest of all the capital stock of Great Britain, that part
of it only excepted which is either lent to the public, or employed as
farming stock in the cultivation of land. A very considerable part of
the produce of this tax arises from the rent of houses and the
interest of capital stock. The land tax of the city of London, for
example, at four shillings in the pound, amounts to £123,399: 6: 7;
that of the city of Westminster to £63,092: 1: 5; that of the palaces
of Whitehall and St. James's, to £30,754: 6: 3. A certain proportion
of the land tax is, in the same manner, assessed upon all the other
cities and towns corporate in the kingdom; and arises almost
altogether, either from the rent of houses, or from what is supposed
to be the interest of trading and capital stock. According to the
estimation, therefore, by which Great Britain is rated to the land
tax, the whole mass of revenue arising from the rent of all the lands,
from that of all the houses, and from the interest of all the capital
stock, that part of it only excepted which is either lent to the
public, or employed in the cultivation of land, does not exceed ten
millions sterling a-year, the ordinary revenue which government levies
upon the people, even in peaceable times. The estimation by which
Great Britain is rated to the land tax is, no doubt, taking the whole
kingdom at an average, very much below the real value; though in
several particular counties and districts it is said to be nearly
equal to that value. The rent of the lands alone, exclusive of that of
houses and of the interest of stock, has by many people been estimated
at twenty millions; an estimation made in a great measure at random,
and which, I apprehend, is as likely to be above as below the truth.
But if the lands of Great Britain, in the present state of their
cultivation, do not afford a rent of more than twenty millions a-year,
they could not well afford the half, most probably not the fourth part
of that rent, if they all belonged to a single proprietor, and were
put under the negligent, expensive, and oppressive management of his
factors and agents. The crown lands of Great Britain do not at present
afford the fourth part of the rent which could probably be drawn from
them if they were the property of private persons. If the crown lands
were more extensive, it is probable, they would be still worse
managed.

The revenue which the great body of the people derives from land is,
in proportion, not to the rent, but to the produce of the land. The
whole annual produce of the land of every country, if we except what
is reserved for seed, is either annually consumed by the great body of
the people, or exchanged for something else that is consumed by them.
Whatever keeps down the produce of the land below what it would
otherwise rise to, keeps down the revenue of the great body of the
people, still more than it does that of the proprietors of land. The
rent of land, that portion of the produce which belongs to the
proprietors, is scarce anywhere in Great Britain supposed to be more
than a third part of the whole produce. If the land which, in one
state of cultivation, affords a revenue of ten millions sterling
a-year, would in another afford a rent of twenty millions; the rent
being, in both cases, supposed a third part of the produce, the
revenue of the proprietors would be less than it otherwise might be,
by ten millions a-year only; but the revenue of the great hotly of the
people would be less than it otherwise might be, by thirty millions
a-year, deducting only what would be necessary for seed. The
population of the country would be less by the number of people which
thirty millions a-year, deducting always the seed, could maintain,
according to the particular mode of living, and expense which might
take place in the different ranks of men, among whom the remainder was
distributed.

Though there is not at present in Europe, any civilized state of any
kind which derives the greater part of its public revenue from the
rent of lands which are the property of the state; yet, in all the
great monarchies of Europe, there are still many large tracts of land
which belong to the crown. They are generally forest, and sometimes
forests where, after travelling several miles, you will scarce find a
single tree; a mere waste and loss of country, in respect both of
produce and population. In every great monarchy of Europe, the sale of
the crown lands would produce a very large sum of money, which, if
applied to the payment of the public debts, would deliver from
mortgage a much greater revenue than any which those lands have even
afforded to the crown. In countries where lands, improved and
cultivated very highly, and yielding, at the time of sale, as great a
rent as can easily be got from them, commonly sell at thirty years
purchase; the unimproved, uncultivated, and low-rented crown lands,
might well be expected to sell at forty, fifty, or sixty years
purchase. The crown might immediately enjoy the revenue which this
great price would redeem from mortgage. In the course of a few years,
it would probably enjoy another revenue. When the crown lands had
become private property, they would, in the course of a few years,
become well improved and well cultivated. The increase of their
produce would increase the population of the country, by augmenting
the revenue and consumption of the people. But the revenue which the
crown derives from the duties or custom and excise, would necessarily
increase with the revenue and consumption of the people.

The revenue which, in any civilized monarchy, the crown derives from
the crown lands, though it appears to cost nothing to individuals, in
reality costs more to the society than perhaps any other equal revenue
which the crown enjoys. It would, in all cases, be for the interest of
the society, to replace this revenue to the crown by some other equal
revenue, and to divide the lands among the people, which could not
well be done better, perhaps, than by exposing them to public sale.

Lands, for the purposes of pleasure and magnificence, parks, gardens,
public walks, etc. possessions which are everywhere considered as
causes of expense, not as sources of revenue, seem to be the only
lands which, in a great and civilized monarchy, ought to belong to the
crown.

Public stock and public lands, therefore, the two sources of revenue
which may peculiarly belong to the sovereign or commonwealth, being
both improper and insufficient funds for defraying the necessary
expense of any great and civilized state; it remains that this expense
must, the greater part of it, be defrayed by taxes of one kind or
another; the people contributing a part of their own private revenue,
in order to make up a public revenue to the sovereign or commonwealth.



PART  II.

                  Of Taxes.

The private revenue of individuals, it has been shown in the first
book of this Inquiry, arises, ultimately from three different sources;
rent, profit, and wages. Every tax must finally be paid from some one
or other of those three different sources of revenue, or from all of
them indifferently. I shall endeavour to give the best account I can,
first, of those taxes which, it is intended should fall upon rent;
secondly, of those which, it is intended should fall upon profit;
thirdly, of those which, it is intended should fall upon wages; and
fourthly, of those which, it is intended should fall indifferently
upon all those three different sources of private revenue. The
particular consideration of each of these four different sorts of
taxes will divide the second part of the present chapter into four
articles, three of which will require several other subdivisions. Many
of these taxes, it will appear from the following review, are not
finally paid from the fund, or source of revenue, upon which it is
intended they should fall.

Before I enter upon the examination of particular taxes,it is
necessary to premise the four following maximis with regard to taxes
in general.


1. The subjects of every state ought to contribute towards the support
of the government, as nearly as possible, in proportion to their
respective abilities; that is, in proportion to the revenue which they
respectively enjoy under the protection of the state. The expense of
government to the individuals of a great nation, is like the expense
of management to the joint tenants of a great estate, who are all
obliged to contribute in proportion to their respective interests in
the estate. In the observation or neglect of this maxim, consists what
is called the equality or inequality of taxation. Every tax, it must
be observed once for all, which falls finally upon one only of the
three sorts of revenue above mentioned, is necessarily unequal, in so
far as it does not affect the other two. In the following examination
of different taxes, I shall seldom take much farther notice of this
sort of inequality; but shall, in most cases, confine my observations
to that inequality which is occasioned by a particular tax falling
unequally upon that particular sort of private revenue which is
affected by it.

2. The tax which each individual is bound to pay, ought to be certain
and not arbitrary. The time of payment, the manner of payment, the
quantity to be paid, ought all to be clear and plain to the
contributor, and to every other person. Where it is otherwise, every
person subject to the tax is put more or less in the power of the
tax-gatherer, who can either aggravate the tax upon any obnoxious
contributor, or extort, by the terror of such aggravation, some
present or perquisite to himself. The uncertainty of taxation
encourages the insolence, and favours the corruption, of an order of
men who are naturally unpopular, even where they are neither insolent
nor corrupt. The certainty of what each individual ought to pay is, in
taxation, a matter of so great importance, that a very considerable
degree of inequality, it appears, I believe, from the experience of
all nations, is not near so great an evil as a very small degree of
uncertainty.

3. Every tax ought to be levied at the time, or in the manner, in
which it is most likely to be convenient for the contributor to pay
it. A tax upon the rent of land or of houses, payable at the same term
at which such rents are usually paid, is levied at the time when it is
most likely to be convenient for the contributor to pay; or when he is
most likely to have wherewithall to pay. Taxes upon such consumable
goods as are articles of luxury, are all finally paid by the consumer,
and generally in a manner that is very convenient for him. He pays
them by little and little, as he has occasion to buy the goods. As he
is at liberty too, either to buy or not to buy, as he pleases, it must
be his own fault if he ever suffers any considerable inconveniency from
such taxes.

4. Every tax ought to be so contrived, as both to take out and to keep
out of the pockets of the people as little as possible, over and above
what it brings into the public treasury of the state. A tax may either
take out or keep out of the pockets of the people a great deal more
than it brings into the public treasury, in the four following ways.
First, the levying of it may require a great number of officers, whose
salaries may eat up the greater part of the produce of the tax, and
whose perquisites may impose another additional tax upon the people.
Secondly, it may obstruct the industry of the people, and discourage
them from applying to certain branches of business which might give
maintenance and employment to great multitudes. While it obliges the
people to pay, it may thus diminish, or perhaps destroy, some of the
funds which might enable them more easily to do so. Thirdly, by the
forfeitures and other penalties which those unfortunate individuals
incur, who attempt unsuccessfully to evade the tax, it may frequently
ruin them, and thereby put an end to the benefit which the community
might have received from the employment of their capitals. An
injudicious tax offers a great temptation to smuggling. But the
penalties of smuggling must arise in proportion to the temptation. The
law, contrary to all the ordinary principles of justice, first creates
the temptation, and then punishes those who yield to it; and it
commonly enhances the punishment, too, in proportion to the very
circumstance which ought certainly to alleviate it, the temptation to
commit the crime. {See Sketches of the History of Man page 474, and
Seq.} Fourthly, by subjecting the people to the frequent visits and
the odious examination of the tax-gatherers, it may expose them to
much unnecessary trouble, vexation, and oppression; and though
vexation is not, strictly speaking, expense, it is certainly
equivalent to the expense at which every man would be willing to
redeem himself from it. It is in some one or other of these four
different ways, that taxes are frequently so much more burdensome to
the people than they are beneficial to the sovereign.

The evident justice and utility of the foregoing maxims have
recommended them, more or less, to the attention of all nations. All
nations have endeavoured, to the best of their judgment, to render
their taxes as equal as they could contrive; as certain, as convenient
to the contributor, both the time and the mode of payment, and in
proportion to the revenue which they brought to the prince, as little
burdensome to the people. The following short review of some of the
principal taxes which have taken place in different ages and
countries, will show, that the endeavours of all nations have not in
this respect been equally successful.


ARTICLE   I. -- Taxes upon Rent -- Taxes upon the Rent of Land.

A tax upon the rent of land may either be imposed according to a
certain canon, every district being valued at a curtain rent, which
valuation is not afterwards to be altered; or it may be imposed in
such a manner, as to vary with every variation in the real rent of the
land, and to rise or fall with the improvement or declension of its
cultivation.

A land tax which, like that of Great Britain, is assessed upon each
district according to a certain invariable canon, though it should be
equal at the time of its first establishment, necessarily becomes
unequal in process of time, according to the unequal degrees of
improvement or neglect in the cultivation of the different parts of
the country. In England, the valuation, according to which the
different counties and parishes were assessed to the land tax by the
4th of William and Mary, was very unequal even at its first
establishment. This tax, therefore, so far offends against the first
of the four maxims above mentioned. It is perfectly agreeable to the
other three. It is perfectly certain. The time of payment for the tax,
being the same as that for the rent, is as convenient as it can be to
the contributor. Though the landlord is, in all cases, the real
contributor, the tax is commonly advanced by the tenant, to whom the
landlord is obliged to allow it in the payment of the rent. This tax
is levied by a much smaller number of officers than any other which
affords nearly the same revenue. As the tax upon each district does
not rise with the rise of the rent, the sovereign does not share in
the profits of the landlord's improvements. Those improvements
sometimes contribute, indeed, to the discharge of the other landlords
of the district. But the aggravation of the tax, which this may
sometimes occasion upon a particular estate, is always so very small,
that it never can discourage those improvements, nor keep down the
produce of the land below what it would otherwise rise to. As it has
no tendency to diminish the quantity, it can have none to raise the
price of that produce. It does not obstruct the industry of the
people; it subjects the landlord to no other inconveniency besides the
unavoidable one of paying the tax.

The advantage, however, which the land-lord has derived from the
invariable constancy of the valuation, by which all the lands of Great
Britain are rated to the land-tax, has been principally owing to some
circumstances altogether extraneous to the nature of the tax

It has been owing in part, to the great prosperity of almost every
part of the country, the rents of almost all the estates of Great
Britain having, since the time when this valuation was first
established, been continually rising, and scarce any of them having
fallen. The landlords, therefore, have almost all gained the
difference between the tax which they would have paid, according to
the present rent of their estates, and that which they actually pay
according to the ancient valuation. Had the state of the country been
different, had rents been gradually falling in consequence of the
declension of cultivation, the landlords would almost all have lost
this difference. In the state of things which has happened to take
place since the revolution, the constancy of the valuation has been
advantageous to the landlord and hurtful to the sovereign. In a
different state of things it might have been advantageous to the
sovereign and hurtful to the landlord.

As the tax is made payable in money, so the valuation of the land is
expressed in money. Since the establishment of this valuation, the
value of silver has been pretty uniform, and there has been no
alteration in the standard of the coin, either as to weight or
fineness. Had silver risen considerably in its value, as it seems to
have done in the course of the two centuries which preceded the
discovery of the mines of America, the constancy of the valuation
might have proved very oppressive to the landlord. Had silver fallen
considerably in its value, as it certainly did for about a century at
least after the discovery of those mines, the same constancy of
valuation would have reduced very much this branch of the revenue of
the sovereign. Had any considerable alteration been made in the
standard of the money, either by sinking the same quantity of silver
to a lower denomination, or by raising it to a higher; had an ounce of
silver, for example, instead of being coined into five shillings and
two pence, been coined either into pieces which bore so low a
denomination as two shillings and seven pence, or into pieces which
bore so high a one as ten shillings and four pence, it would, in the
one case, have hurt the revenue of the proprietor, in the other that
of the sovereign.

In circumstances, therefore, somewhat different from those which have
actually taken place, this constancy of valuation might have been a
very great inconveniency, either to the contributors or to the
commonwealth. In the course of ages, such circumstances, however, must
at some time or other happen. But though empires, like all the other
works of men, have all hitherto proved mortal, yet every empire aims
at immortality. Every constitution, therefore, which it is meant
should be as permanent as the empire itself, ought to be convenient,
not in certain circumstances only, but in all circumstances; or ought
to be suited, not to those circumstances which are transitory,
occasional, or accidental, but to those which are necessary, and
therefore always the same.

A tax upon the rent of land, which varies with every variation of the
rent, or which rises and falls according to the improvement or neglect
of cultivation, is recommended by that sect of men of letters in
France, who call themselves the economists, as the most equitable of
all taxes. All taxes, they pretend, fall ultimately upon the rent of
land, and ought, therefore, to be imposed equally upon the fund which
must finally pay them. That all taxes ought to fall as equally as
possible upon the fund which must finally pay them, is certainly true.
But without entering into the disagreeable discussion of the
metaphysical arguments by which they support their very ingenious
theory, it will sufficiently appear, from the following review, what
are the taxes which fall finally upon the rent of the land, and what
are those which fall finally upon some other fund.

In the Venetian territory, all the arable lands which are given in
lease to farmers are taxed at a tenth of the rent. {Memoires
concernant les Droits, p. 240, 241.} The leases are recorded in a
public register, which is kept by the officers of revenue in each
province or district. When the proprietor cultivates his own lands,
they are valued according to an equitable estimation, and he is
allowed a deduction of one-fifth of the tax; so that for such land he
pays only eight instead of ten per cent. of the supposed rent.

A land-tax of this kind is certainly more equal than the land-tax of
England. It might not, perhaps, be altogether so certain, and the
assessment of the tax might frequently occasion a good deal more
trouble to the landlord. It might, too, be a good deal more expensive
in the levying.

Such a system of administration, however, might, perhaps, be
contrived, as would in a great measure both prevent this uncertainty,
and moderate this expense.

The landlord and tenant, for example, might jointly be obliged to
record their lease in a public register. Proper penalties might be
enacted against concealing or misrepresenting any of the conditions;
and if part of those penalties were to be paid to either of the two
parties who informed against and convicted the other of such
concealment or misrepresentation, it would effectually deter them from
combining together in order to defraud the public revenue. All the
conditions of the lease might be sufficiently known from such a
record.

Some landlords, instead of raising the rent, take a fine for the
renewal of the lease. This practice is, in most cases, the expedient
of a spendthrift, who, for a sum of ready money sells a future revenue
of much greater value. It is, in most cases, therefore, hurtful to the
landlord; it is frequently hurtful to the tenant; and it is always
hurtful to the community. It frequently takes from the tenant so great
a part of his capital, and thereby diminishes so much his ability to
cultivate the land, that he finds it more difficult to pay a small
rent than it would otherwise have been to pay a great one. Whatever
diminishes his ability to cultivate, necessarily keeps down, below
what it would otherwise have been, the most important part of the
revenue of the community. By rendering the tax upon such fines a good
deal heavier than upon the ordinary rent, this hurtful practice might
be discouraged, to the no small advantage of all the different parties
concerned, of the landlord, of the tenant, of the sovereign, and of
the whole community.

Some leases prescribe to the tenant a certain mode of cultivation, and
a certain succession of crops, during the whole continuance of the
lease. This condition, which is generally the effect of the landlord's
conceit of his own superior knowledge (a conceit in most cases very
ill-founded), ought always to be considered as an additional rent, as
a rent in service, instead of a rent in money. In order to discourage
the practice, which is generally a foolish one, this species of rent
might be valued rather high, and consequently taxed somewhat higher
than common money-rents.

Some landlords, instead of a rent in money, require a rent in kind, in
corn, cattle, poultry, wine, oil, etc.; others, again, require a rent
in service. Such rents are always more hurtful to the tenant than
beneficial to the landlord. They either take more, or keep more out of
the pocket of the former, than they put into that of the latter. In
every country where they take place, the tenants are poor and
beggarly, pretty much according to the degree in which they take
place. By valuing, in the same manner, such rents rather high, and
consequently taxing them somewhat higher than common money-rents, a
practice which is hurtful to the whole community, might, perhaps, be
sufficiently discouraged.

When the landlord chose to occupy himself a part of his own lands, the
rent might be valued according to an equitable arbitration of the
farmers and landlords in the neighbourhood, and a moderate abatement
of the tax might be granted to him, in the same manner as in the
Venetian territory, provided the rent of the lands which he occupied
did not exceed a certain sum. It is of importance that the landlord
should be encouraged to cultivate a part of his own land. His capital
is generally greater than that of the tenant, and, with less skill, he
can frequently raise a greater produce. The landlord can afford to try
experiments, and is generally disposed to do so. His unsuccessful
experiments occasion only a moderate loss to himself. His successful
ones contribute to the improvement and better cultivation of the whole
country. It might be of importance, however, that the abatement of the
tax should encourage him to cultivate to a certain extent only. If the
landlords should, the greater part of them, be tempted to farm the
whole of their own lands, the country (instead of sober and
industrious tenants, who are bound by their own interest to cultivate
as well as their capital and skill will allow them) would be filled
with idle and profligate bailiffs, whose abusive management would soon
degrade the cultivation, and reduce the annual produce of the land, to
the diminution, not only of the revenue of their masters, but of the
most important part of that of the whole society.

Such a system of administration might, perhaps, free a tax of this
kind from any degree of uncertainty, which could occasion either
oppression or inconveniency to the contributor; and might, at the same
time, serve to introduce into the common management of land such a
plan of policy as might contribute a good deal to the general
improvement and good cultivation of the country.

The expense of levying a land-tax, which varied with every variation
of the rent, would, no doubt, be somewhat greater than that of levying
one which was always rated according to a fixed valuation. Some
additional expense would necessarily be incurred, both by the
different register-offices which it would be proper to establish in
the different districts of the country, and by the different
valuations which might occasionally be made of the lands which the
proprietor chose to occupy himself. The expense of all this, however,
might be very moderate, and much below what is incurred in the levying
of many other taxes, which afford a very inconsiderable revenue in
comparison of what might easily be drawn from a tax of this kind.

The discouragement which a variable land-tax of this kind might give
to the improvement of land, seems to be the most important objection
which can be made to it. The landlord would certainly be less disposed
to improve, when the sovereign, who contributed nothing to the
expense, was to share in the profit of the improvement. Even this
objection might, perhaps, be obviated, by allowing the landlord,
before he began his improvement, to ascertain, in conjunction with the
officers of revenue, the actual value of his lands, according to the
equitable arbitration of a certain number of landlords and farmers in
the neighbourhood, equally chosen by both parties: and by rating him,
according to this valuation, for such a number of years as might be
fully sufficient for his complete indemnification. To draw the
attention of the sovereign towards the improvement of the land, from a
regard to the increase of his own revenue, is one or the principal
advantages proposed by this species of land-tax. The term, therefore,
allowed, for the indemnification of the landlord, ought not to be a
great deal longer than what was necessary for that purpose, lest the
remoteness of the interest should discourage too much this attention.
It had better, however, be somewhat too long, than in any respect too
short. No incitement to the attention of the sovereign can ever
counterbalance the smallest discouragement to that of the landlord.
The attention of the sovereign can be, at best, but a very general and
vague consideration of what is likely to contribute to the better
cultivation of the greater part of his dominions. The attention of the
landlord is a particular and minute consideration of what is likely to
be the most advantageous application of every inch of ground upon his
estate. The principal attention of the sovereign ought to be, to
encourage, by every means in his power, the attention both of the
landlord and of the farmer, by allowing both to pursue their own
interest in their own way, and according to their own judgment; by
giving to both the most perfect security that they shall enjoy the
full recompence of their own industry; and by procuring to both the
most extensive market for every part of their produce, in consequence
of establishing the easiest and safest communications, both by land
and by water, through every part of his own dominions, as well as the
most unbounded freedom of exportation to the dominions of all other
princes.

If, by such a system of administration, a tax of this kind could be so
managed as to give, not only no discouragement, but, on the contrary,
some encouragement to the improvement or land, it does not appear
likely to occasion any other inconveniency to the landlord, except
always the unavoidable one of being obliged to pay the tax.

In all the variations of the state of the society, in the improvement
and in the declension of agriculture; in all the variations in the
value of silver, and in all those in the standard of the coin, a tax
of this kind would, of its own accord, and without any attention of
government, readily suit itself to the actual situation of things, and
would be equally just and equitable in all those different changes. It
would, therefore, be much more proper to be established as a perpetual
and unalterable regulation, or as what is called a fundamental law of
the commonwealth, than any tax which was always to be levied according
to a certain valuation.

Some states, instead of the simple and obvious expedient of a register
of leases, have had recourse to the laborious and expensive one of an
actual survey and valuation of all the lands in the country. They have
suspected, probably, that the lessor and lessee, in order to defraud
the public revenue, might combine to conceal the real terms of the
lease. Doomsday-book seems to have been the result of a very accurate
survey of this kind.

In the ancient dominions of the king of Prussia, the land-tax is
assessed according to an actual survey and valuation, which is
reviewed and altered from time to time. {Memoires concurent les
Droits, etc. tom, i. p. 114, 115, 116, etc.} According to that
valuation, the lay proprietors pay from twenty to twenty-five per
cent. of their revenue; ecclesiastics from forty to forty-five per
cent. The survey and valuation of Silesia was made by order of the
present king, it is said, with great accuracy. According to that
valuation, the lands belonging to the bishop of Breslaw are taxed at
twenty-five per cent. of their rent. The other revenues of the
ecclesiastics of both religions at fifty per cent. The commanderies of
the Teutonic order, and of that of Malta, at forty per cent. Lands
held by a noble tenure, at thirty-eight and one-third per cent. Lands
held by a base tenure, at thirty-five and one-third per cent.

The survey and valuation of Bohemia is said to have been the work of
more than a hundred years. It was not perfected till after the peace
of 1748, by the orders of the present empress queen. {Id. tom i.
p.85, 84.} The survey of the duchy of Milan, which was begun in the
time of Charles VI., was not perfected till after 1760 It is esteemed
one of the most accurate that has ever been made. The survey of Savoy
and Piedmont was executed under the orders of the late king of
Sardinia. {Id. p. 280, etc.; also p, 287. etc. to 316.}

In the dominions of the king of Prussia, the revenue of the church is
taxed much higher than that of lay proprietors. The revenue of the
church is, the greater part of it, a burden upon the rent of land. It
seldom happens that any part of it is applied towards the improvement
of land; or is so employed as to contribute, in any respect, towards
increasing the revenue of the great body of the people. His Prussian
majesty had probably, upon that account, thought it reasonable that it
should contribute a good deal more towards relieving the exigencies of
the state. In some countries, the lands of the church are exempted
from all taxes. In others, they are taxed more lightly than other
lands. In the duchy of Milan, the lands which the church possessed
before 1575, are rated to the tax at a third only or their value.

In Silesia, lands held by a noble tenure are taxed three per cent.
higher than those held by a base tenure. The honours and privileges of
different kinds annexed to the former, his Prussian majesty had
probably imagined, would sufficiently compensate to the proprietor a
small aggravation of the tax; while, at the same time, the humiliating
inferiority of the latter would be in some measure alleviated, by
being taxed somewhat more lightly. In other countries, the system of
taxation, instead of alleviating, aggravates this inequality. In the
dominions of the king of Sardinia, and in those provinces of France
which are subject to what is called the real or predial taille, the
tax falls altogether upon the lands held by a base tenure. Those held
by a noble one are exempted.

A land tax assessed according to a general survey and valuation, how
equal soever it may be at first, must, in the course of a very
moderate period of time, become unequal. To prevent its becoming so
would require the continual and painful attention of government to all
the variations in the state and produce of every different farm in the
country. The governments of Prussia, of Bohemia, of Sardinia, and of
the duchy of Milan, actually exert an attention of this kind; an
attention so unsuitable to the nature of government, that it is not
likely to be of long continuance, and which, if it is continued, will
probably, in the long-run, occasion much more trouble and vexation
than it can possibly bring relief to the contributors.

In 1666, the generality of Montauban was assessed to the real or
predial taille, according, it is said, to a very exact survey and
valuation. {Memoires concernant les Droits, etc. tom. ii p. 139,
etc.} By 1727, this assessment had become altogether unequal. In order
to remedy this inconveniency, government has found no better
expedient, than to impose upon the whole generality an additional tax
of a hundred and twenty thousand livres. This additional tax is rated
upon all the different districts subject to the taille according to
the old assessment. But it is levied only upon those which, in the
actual state of things, are by that assessment under-taxed; and it is
applied to the relief of those which, by the same assessment, are
over-taxed. Two districts, for example, one of which ought, in the
actual state of things, to be taxed at nine hundred, the other at
eleven hundred livres, are, by the old assessment, both taxed at a
thousand livres. Both these districts are, by the additional tax,
rated at eleven hundred livres each. But this additional tax is levied
only upon the district under-charged, and it is applied altogether to
the relief of that overcharged, which consequently pays only nine
hundred livres. The government neither gains nor loses by the
additional tax, which is applied altogether to remedy the inequalities
arising from the old assessment. The application is pretty much
regulated according to the discretion of the intendant of the
generality, and must, therefore, be in a great measure arbitrary.


Taxes which are proportioned, not in the Rent, but to the Produce of
Land.

Taxes upon the produce of land are, In reality, taxes upon the rent;
and though they may be originally advanced by the farmer, are finally
paid by the landlord. When a certain portion of the produce is to be
paid away for a tax, the farmer computes as well as he can, what the
value of this portion is, one year with another, likely to amount to,
and he makes a proportionable abatement in the rent which he agrees to
pay to the landlord. There is no farmer who does not compute
beforehand what the church tythe, which is a land tax of this kind,
is, one year with another, likely to amount to.

The tythe, and every other land tax of this kind, under the appearance
of perfect equality, are very unequal taxes; a certain portion of the
produce being in differrent situations, equivalent to a very different
portion of the rent. In some very rich lands, the produce is so great,
that the one half of it is fully sufficient to replace to the farmer
his capital employed in cultivation, together with the ordinary
profits of farming stock in the neighbourhood. The other half, or,
what comes to the same thing, the value of the other half, he could
afford to pay as rent to the landlord, if there was no tythe. But if a
tenth of the produce is taken from him in the way of tythe, he must
require an abatement of the fifth part of his rent, otherwise he
cannot get back his capital with the ordinary profit. In this case,
the rent of the landlord, instead of amounting to a half, or
five-tenths of the whole produce, will amount only to four-tenths of
it. In poorer lands, on the contrary, the produce is sometimes so
small, and the expense of cultivation so great, that it requires
four-fifths of the whole produce, to replace to the farmer his capital
with the ordinary profit. In this case, though there was no tythe, the
rent of the landlord could amount to no more than one-fifth or
two-tenths of the whole produce. But if the farmer pays one-tenth of
the produce in the way of tythe, he must require an equal abatement of
the rent of the landlord, which will thus be reduced to one-tenth only
of the whole produce. Upon the rent of rich lands the tythe may
sometimes be a tax of no more than one-fifth part, or four shillings
in the pound; whereas upon that of poorer lands, it may sometimes be a
tax of one half, or of ten shillings in the pound.

The tythe, as it is frequently a very unequal tax upon the rent, so it
is always a great discouragement, both to the improvements of the
landlord, and to the cultivation of the farmer. The one cannot venture
to make the most important, which are generally the most expensive
improvements; nor the other to raise the most valuable, which are
generally, too, the most expensive crops; when the church, which lays
out no part of the expense, is to share so very largely in the profit.
The cultivation of madder was, for a long time, confined by the tythe
to the United Provinces, which, being presbyterian countries, and upon
that account exempted from this destructive tax, enjoyed a sort of
monopoly of that useful dyeing drug against the rest of Europe. The
late attempts to introduce the culture of this plant into England,
have been made only in consequence of the statute, which enacted that
five shillings an acre should be received in lieu of all manner of
tythe upon madder.

As through the greater part of Europe, the church, so in many
different countries of Asia, the state, is principally supported by a
land tax, proportioned not to the rent, but to the produce of the
land. In China, the principal revenue of the sovereign consists in a
tenth part of the produce of all the lands of the empire. This tenth
part, however, is estimated so very moderately, that, in many
provinces, it is said not to exceed a thirtieth part of the ordinary
produce. The land tax or land rent which used to be paid to the
Mahometan government of Bengal, before that country fell into the
hands of the English East India company, is said to have amounted to
about a fifth part of the produce. The land tax of ancient Egypt is
said likewise to have amounted to a fifth part.

In Asia, this sort of land tax is said to interest the sovereign in
the improvement and cultivation of land. The sovereigns of China,
those of Bengal while under the Mahometan govermnent, and those of
ancient Egypt, are said, accordingly, to have been extremely attentive
to the making and maintaining of good roads and navigable canals, in
order to increase, as much as possible, both the quantity and value of
every part of the produce of the land, by procuring to every part of
it the most extensive market which their own dominions could afford.
The tythe of the church is divided into such small portions that no
one of its proprietors can have any interest of this kind. The parson
of a parish could never find his account, in making a road or canal to
a distant part of the country, in order to extend the market for the
produce of his own particular parish. Such taxes, when destined for
the maintenance of the state, have some advantages, which may serve in
some measure to balance their inconveniency. When destined for the
maintenance of the church, they are attended with nothing but
inconveniency.

Taxes upon the produce of land may be levied, either in kind, or,
according to a certain valuation in money.

The parson of a parish, or a gentleman of small fortune who lives upon
his estate, may sometimes, perhaps find some advantage in receiving,
the one his tythe, and the other his rent, in kind. The quantity to be
collected, and the district within which it is to be collected, are so
small, that they both can oversee, with their own eyes, the collection
and disposal of every part of what is due to them. A gentleman of
great fortune, who lived in the capital, would be in danger of
suffering much by the neglect, and more by the fraud, of his factors
and agents, if the rents of an estate in a distant province were to be
paid to him in this manner. The loss of the sovereign, from the abuse
and depredation of his tax-gatherers, would necessarily be much
greater. The servants of the most careless private person are,
perhaps, more under the eye of their master than those of the most
careful prince; and a public revenue, which was paid in kind, would
suffer so much from the mismanagement of the collectors, that a very
small part of what was levied upon the people would ever arrive at the
treasury of the prince. Some part of the public revenue of China,
however, is said to be paid in this manner. The mandarins and other
tax-gatherers will, no doubt, find their advantage in continuing the
practice of a payment, which is so much more liable to abuse than any
payment in money.

A tax upon the produce of land, which is levied in money, may be
levied, either according to a valuation, which varies with all the
variations of the market price; or according to a fixed valuation, a
bushel of wheat, for example, being always valued at one and the same
money price, whatever may be the state of the market. The produce of a
tax levied in the former way will vary only according to the
variations in the real produce of the land, according to the
improvement or neglect of cultivation. The produce of a tax levied in
the latter way will vary, not only according to the variations in the
produce of the land, but according both to those in the value of the
precious metals, and those in the quantity of those metals which is at
different times contained in coin of the same denomination. The
produce of the former will always bear the same proportion to the
value of the real produce of the land. The produce of the latter may,
at different times, bear very different proportions to that value.

When, instead either of a certain portion of the produce of land, or
of the price of a certain portion, a certain sum of money is to be
paid in full compensation for all tax or tythe; the tax becomes, in
this case, exactly of the same nature with the land tax of England. It
neither rises nor falls with the rent of the land. It neither
encourages nor discourages improvement. The tythe in the greater part
of those parishes which pay what is called a modus, in lieu of all
other tythe is a tax of this kind. During the Mahometan government of
Bengal, instead of the payment in kind of the fifth part of the
produce, a modus, and, it is said, a very moderate one, was
established in the greater part of the districts or zemindaries of the
country. Some of the servants of the East India company, under
pretence of restoring the public revenue to its proper value, have, in
some provinces, exchanged this modus for a payment in kind. Under
their management, this change is likely both to discourage
cultivation, and to give new opportunities for abuse in the collection
of the public revenue, which has fallen very much below what it was
said to have been when it first fell under the management of the
company. The servants of the company may, perhaps, have profited by
the change, but at the expense, it is probable, both of their masters
and of the country.

Taxes upon the Rent of Houses.

The rent of a house may be distinguished into two parts, of which the
one may very properly be called the building-rent; the other is
commonly called the ground-rent.

The building-rent is the interest or profit of the capital expended in
building the house. In order to put the trade of a builder upon a
level with other trades, it is necessary that this rent should be
sufficient, first, to pay him the same interest which he would have
got for his capital, if he had lent it upon good security; and,
secondly, to keep the house in constant repair, or, what comes to the
same thing, to replace, within a certain term of years, the capital
which had been employed in building it. The building-rent, or the
ordinary profit of building, is, therefore, everywhere regulated by
the ordinary interest of money. Where the market rate of interest is
four per cent. the rent of a house, which, over and above paying the
ground-rent, affords six or six and a-half per cent. upon the whole
expense of building, may, perhaps, afford a sufficient profit to the
builder. Where the market rate of interest is five per cent. it may
perhaps require seven or seven and a half per cent. If, in proportion
to the interest of money, the trade of the builders affords at any
time much greater profit than this, it will soon draw so much capital
from other trades as will reduce the profit to its proper level. If it
affords at any time much less than this, other trades will soon draw
so much capital from it as will again raise that profit.

Whatever part of the whole rent of a house is over and above what is
sufficient for affording this reasonable profit, naturally goes to the
ground-rent; and, where the owner of the ground and the owner of the
building are two different persons, is, in most cases, completely paid
to the former. This surplus rent is the price which the inhabitant of
the house pays for some real or supposed advantage of the situation.
In country houses, at a distance from any great town, where there is
plenty of ground to chuse upon, the ground-rent is scarce anything, or
no more than what the ground which the house stands upon would pay, if
employed in agriculture. In country villas, in the neighbourhood of
some great town, it is sometimes a good deal higher; and the peculiar
conveniency or beauty of situation is there frequently very well paid
for. Ground-rents are generally highest in the capital, and in those
particular parts of it where there happens to be the greatest demand
for houses, whatever be the reason of that demand, whether for trade
and business, for pleasure and society, or for mere vanity and
fashion.

A tax upon house-rent, payable by the tenant, and proportioned to the
whole rent of each house, could not, for any considerable time at
least, affect the building-rent. If the builder did not get his
reasonable profit, he would be obliged to quit the trade; which, by
raising the demand for building, would, in a short time, bring back
his profit to its proper level with that of other trades. Neither
would such a tax fall altogether upon the ground-rent; but it would
divide itself in such a manner, as to fall partly upon the inhabitant
of the house, and partly upon the owner of the ground.

Let us suppose, for example, that a particular person judges that he
can afford for house-rent all expense of sixty pounds a-year; and let
us suppose, too, that a tax of four shillings in the pound, or of
one-fifth, payable by the inhabitant, is laid upon house-rent. A house
of sixty pounds rent will, in that case, cost him seventy-two pounds
a-year, which is twelve pounds more than he thinks he can afford. He
will, therefore, content himself with a worse house, or a house of
fifty pounds rent, which, with the additional ten pounds that he must
pay for the tax, will make up the sum of sixty pounds a-year, the
expense which he judges he can afford, and, in order to pay the tax,
he will give up a part of the additional conveniency which he might
have had from a house of ten pounds a-year more rent. He will give up,
I say, a part of this additional conveniency; for he will seldom be
obliged to give up the whole, but will, in consequence of the tax, get
a better house for fifty pounds a-year, than he could have got if
there had been no tax for as a tax of this kind, by taking away this
particular competitor, must diminish the competition for houses of
sixty pounds rent, so it must likewise diminish it for those of fifty
pounds rent, and in the same manner for those of all other rents,
except the lowest rent, for which it would for some time increase the
competition. But the rents of every class of houses for which the
competition was diminished, would necessarily be more or less reduced.
As no part of this reduction, however, could for any considerable time
at least, affect the building-rent, the whole of it must, in the
long-run, necessarily fall upon the ground-rent. The final payment of
this tax, therefore, would fall partly upon the inhabitant of the
house, who, in order to pay his share, would be obliged to give up a
part of his conveniency; and partly upon the owner of the ground, who,
in order to pay his share, would be obliged to give up a part of his
revenue. In what proportion this final payment would be divided
between them, it is not, perhaps, very easy to ascertain. The division
would probably be very different in different circumstances, and a tax
of this kind might, according to those different circumstances, affect
very unequally, both the inhabitant of the house and the owner of the
ground.

The inequality with which a tax of this kind might fall upon the
owners of different ground-rents, would arise altogether from the
accidental inequality of this division. But the inequality with which
it might fall upon the inhabitants of different houses, would arise,
not only from this, but from another cause. The proportion of the
expense of house-rent to the whole expense of living, is different in
the different degrees of fortune. It is, perhaps, highest in the
highest degree, and it diminishes gradually through the inferior
degrees, so as in general to be lowest in the lowest degree. The
necessaries of life occasion the great expense of the poor. They find
it difficult to get food, and the greater part of their little revenue
is spent in getting it. The luxuries and vanities of life occasion the
principal expense of the rich; and a magnificent house embellishes and
sets off to the best advantage all the other luxuries and vanities
which they possess. A tax upon house-rents, therefore, would in
general fall heaviest upon the rich; and in this sort of inequality
there would not, perhaps, be any thing very unreasonable It is not
very unreasonable that the rich should contribute to the public
expense, not only in proportion to their revenue, but something more
than in that proportion.

The rent of houses, though it in some respects resembles the rent of
land, is in one respect essentially different from it. The rent of
land is paid for the use of a productive subject. The land which pays
it produces it. The rent of houses is paid for the use of an
unproductive subject. Neither the house, nor the ground which it
stands upon, produce anything. The person who pays the rent,
therefore, must draw it from some other source of revenue, distinct
from and independent of this subject. A tax upon the rent of houses,
so far as it falls upon the inhabitants, must be drawn from the same
source as the rent itself, and must be paid from their revenue,
whether derived from the wages of labour, the profits of stock, or the
rent of land. So far as it falls upon the inhabitants, it is one of
those taxes which fall, not upon one only, but indifferently upon all
the three different sources of revenue; and is, in every respect, of
the same nature as a tax upon any other sort of consumable
commodities. In general, there is not perhaps, any one article of
expense or consumption by which the liberality or narrowness of a
man's whole expense can be better judged of than by his house-rent. A
proportional tax upon this particular article of expense might,
perhaps, produce a more considerable revenue than any which has
hitherto been drawn from it in any part of Europe. If the tax, indeed,
was very high, the greater part of people would endeavour to evade it
as much as they could, by contenting themselves with smaller houses,
and by turning the greater part of their expense into some other
channel.

The rent of houses might easily be ascertained with sufficient
accuracy, by a policy of the same kind with that which would be
necessary for ascertaining the ordinary rent of land. Houses not
inhabited ought to pay no tax. A tax upon them would fall altogether
upon the proprietor, who would thus be taxed for a subject which
afforded him neither conveniency nor revenue. Houses inhabited by the
proprietor ought to be rated, not according to the expense which they
might have cost in building, but according to the rent which an
equitable arbitration might judge them likely to bring if leased to a
tenant. If rated according to the expense which they might have cost
in building, a tax of three or four shillings in the pound, joined
with other taxes, would ruin almost all the rich and great families of
this, and, I believe, of every other civilized country. Whoever will
examine with attention the different town and country houses of some
of the richest and greatest families in this country, will find that,
at the rate of only six and a-half, or seven per cent. upon the
original expense of building, their house-rent is nearly equal to the
whole neat rent of their estates. It is the accumulated expense of
several successive generations, laid out upon objects of great beauty
and magnificence, indeed, but, in proportion to what they cost, of
very small exchangeable value. {Since the first publication of this
book, a tax nearly upon the above-mentioned principles has been
imposed.}

Ground-rents are a still more proper subject of taxation than the rent
of houses. A tax upon ground-rents would not raise the rent of houses;
it would fall altogether upon the owner of the ground-rent, who acts
always as a monopolist, and exacts the greatest rent which can be got
for the use of his ground. More or less can be got for it, according
as the competitors happen to be richer or poorer, or can afford to
gratify their fancy for a particular spot of ground at a greater or
smaller expense. In every country, the greatest number of rich
competitors is in the capital, and it is there accordingly that the
highest ground-rents are always to be found. As the wealth of those
competitors would in no respect be increased by a tax upon
ground-rents, they would not probably be disposed to pay more for the
use of the ground. Whether the tax was to be advanced by the
inhabitant or by the owner of the ground, would be of little
importance. The more the inhabitant was obliged to pay for the tax,
the less he would incline to pay for the ground; so that the final
payment of the tax would fall altogether upon the owner of the
ground-rent. The ground-rents of uninhabited houses ought to pay no
tax.

Both ground-rents, and the ordinary rent of land, are a species of
revenue which the owner, in many cases, enjoys without any care or
attention of his own. Though a part of this revenue should be taken
from him in order to defray the expenses of the state, no
discouragement will thereby be given to any sort of industry. The
annual produce of the land and labour of the society, the real wealth
and revenue of the great body of the people, might be the same after
such a tax as before. Ground-rents, and the ordinary rent of land, are
therefore, perhaps, the species of revenue which can best bear to have
a peculiar tax imposed upon them.

Ground-rents seem, in this respect, a more proper subject of peculiar
taxation, than even the ordinary rent of land. The ordinary rent of
land is, in many cases, owing partly, at least, to the attention and
good management of the landlord. A very heavy tax might discourage,
too much, this attention and good management. Ground-rents, so far as
they exceed the ordinary rent of land, are altogether owing to the
good government of the sovereign, which, by protecting the industry
either of the whole people or of the inhabitants of some particular
place, enables them to pay so much more than its real value for the
ground which they build their houses upon; or to make to its owner so
much more than compensation for the loss which he might sustain by
this use of it. Nothing can be more reasonable, than that a fund,
which owes its existence to the good government of the state, should
be taxed peculiarly, or should contribute something more than the
greater part of other funds, towards the support of that government.

Though, in many different countries of Europe, taxes have been imposed
upon the rent of houses, I do not know of any in which ground-rents
have been considered as a separate subject of taxation. The contrivers
of taxes have, probably, found some difficulty in ascertaining what
part of the rent ought to be considered as ground-rent, and what part
ought to be considered as building-rent. It should not, however, seem
very difficult to distinguish those two parts of the rent from one
another.

In Great Britain the rent of houses is supposed to be taxed in the
same proportion as the rent of land, by what is called the annual land
tax. The valuation, according to which each different parish and
district is assessed to this tax, is always the same. It was
originally extremely unequal, and it still continues to be so. Through
the greater part of the kingdom this tax falls still more lightly upon
the rent of houses than upon that of land. In some few districts only,
which were originally rated high, and in which the rents of houses
have fallen considerably, the land tax of three or four shillings in
the pound is said to amount to an equal proportion of the real rent of
houses. Untenanted houses, though by law subject to the tax, are, in
most districts, exempted from it by the favour of the assessors; and
this exemption sometimes occasions some little variation in the rate
of particular houses, though that of the district is always the same.
Improvements of rent, by new buildings, repairs, etc. go to the
discharge of the district, which occasions still further variations in
the rate of particular houses.

In the province of Holland, {Memoires concernant les Droits, etc. p.
223.} every house is taxed at two and a-half per cent. of its value,
without any regard, either to the rent which it actually pays, or to
the circumstance of its being tenanted or untenanted. There seems to
be a hardship in obliging the proprietor to pay a tax for an
untenanted house, from which he can derive no revenue, especially so
very heavy a tax. In Holland, where the market rate of interest does
not exceed three per cent., two and a-half per cent. upon the whole
value of the house must, in most cases, amount to more than a third of
the building-rent, perhaps of the whole rent. The valuation, indeed,
according to which the houses are rated, though very unequal, is said
to be always below the real value. When a house is rebuilt, improved,
or enlarged, there is a new valuation, and the tax is rated
accordingly.

The contrivers of the several taxes which in England have, at
different times, been imposed upon houses, seem to have imagined that
there was some great difficulty in ascertaining, with tolerable
exactness, what was the real rent of every house. They have regulated
their taxes, therefore, according to some more obvious circumstance,
such as they had probably imagined would, in most cases, bear some
proportion to the rent.

The first tax of this kind was hearth-money; or a tax of two shillings
upon every hearth. In order to ascertain how many hearths were in the
house, it was necessary that the tax-gatherer should enter every room
in it. This odious visit rendered the tax odious. Soon after the
Revolution, therefore, it was abolished as a badge of slavery.

The next tax of this kind was a tax of two shillings upon every
dwelling-house inhabited. A house with ten windows to pay four
shillings more. A house with twenty windows and upwards to pay eight
shillings. This tax was afterwards so far altered, that houses with
twenty windows, and with less than thirty, were ordered to pay ten
shillings, and those with thirty windows and upwards to pay twenty
shillings. The number of windows can, in most cases, be counted from
the outside, and, in all cases, without entering every room in the
house. The visit of the tax-gatherer, therefore, was less offensive in
this tax than in the hearth-money.

This tax was afterwards repealed, and in the room of it was
established the window-tax, which has undergone two several
alterations and augmentations. The window tax, as it stands at present
(January 1775), over and above the duty of three shillings upon every
house in England, and of one shilling upon every house in Scotland,
lays a duty upon every window, which in England augments gradually
from twopence, the lowest rate upon houses with not more than seven
windows, to two shillings, the highest rate upon houses with
twenty-five windows and upwards.

The principal objection to all such taxes is their inequality; an
inequality of the worst kind, as they must frequently fall much
heavier upon the poor than upon the rich. A house of ten pounds rent
in a country town, may sometimes have more windows than a house of
five hundred pounds rent in London; and though the inhabitant of the
former is likely to be a much poorer man than that of the latter, yet,
so far as his contribution is regulated by the window tax, he must
contribute more to the support of the state. Such taxes are,
therefore, directly contrary to the first of the four maxims above
mentioned. They do not seem to offend much against any of the other
three.

The natural tendency of the window tax, and of all other taxes upon
houses, is to lower rents. The more a man pays for the tax, the less,
it is evident, he can afford to pay for the rent. Since the imposition
of the window tax, however, the rents of houses have, upon the whole,
risen more or less, in almost every town and village of Great Britain,
with which I am acquainted. Such has been, almost everywhere, the
increase of the demand for houses, that it has raised the rents more
than the window tax could sink them; one of the many proofs of the
great prosperity of the country, and of the increasing revenue of its
inhabitants. Had it not been for the tax, rents would probably have
risen still higher.

ARTICLE   II. -- Taxes upon Profit, or upon the Revenue arising from
Stock.

The revenue or profit arising from stock naturally divides itself into
two parts; that which pays the interest, and which belongs to the
owner of the stock; and that surplus part which is over and above what
is necessary for paying the interest.

This latter part of profit is evidently a subject not taxable
directly. It is the compensation, and, in most cases, it is no more
than a very moderate compensation for the risk and trouble of
employing the stock. The employer must have this compensation,
otherwise he cannot, consistently with his own interest, continue the
employment. If he was taxed directly, therefore, in proportion to the
whole profit, he would be obliged either to raise the rate of his
profit, or to charge the tax upon the interest of money; that is, to
pay less interest. If he raised the rate of his profit in proportion
to the tax, the whole tax, though it might be advanced by him, would
be finally paid by one or other of two different sets of people,
according to the different ways in which he might employ the stock of
which he had the management. If he employed it as a farming stock, in
the cultivation of land, he could raise the rate of his profit only by
retaining a greater portion, or, what comes to the same thing, the
price of a greater portion, of the produce of the land; and as this
could be done only by a reduction of rent, the final payment of the
tax would fall upon the landlord. If he employed it as a mercantile or
manufacturing stock, he could raise the rate of his profit only by
raising the price of his goods; in which case, the final payment of
the tax would fall altogether upon the consumers of those goods. If he
did not raise the rate of his profit, he would be obliged to charge
the whole tax upon that part of it which was allotted for the interest
of money. He could afford less interest for whatever stock he
borrowed, and the whole weight of the tax would, in this case, fall
ultimately upon the interest of money. So far as he could not relieve
himself from the tax in the one way, he would be obliged to relieve
himself in the other.

The interest of money seems, at first sight, a subject equally capable
of being taxed directly as the rent of land. Like the rent of land, it
is a neat produce, which remains, after completely compensating the
whole risk and trouble of employing the stock. As a tax upon the rent
of land cannot raise rents, because the neat produce which remains,
after replacing the stock of the farmer, together with his reasonable
profit, cannot be greater after the tax than before it, so, for the
same reason, a tax upon the interest of money could not raise the rate
of interest; the quantity of stock or money in the country, like the
quantity of land, being supposed to remain the same after the tax as
before it. The ordinary rate of profit, it has been shewn, in the
first book, is everywhere regulated by the quantity of stock to be
employed, in proportion to the quantity of the employment, or of the
business which must be done by it. But the quantity of the employment,
or of the business to be done by stock, could neither be increased nor
diminished by any tax upon the interest of money. If the quantity of
the stock to be employed, therefore, was neither increased nor
diminished by it, the ordinary rate of profit would necessarily remain
the same. But the portion of this profit, necessary for compensating
the risk and trouble of the employer, would likewise remain the same;
that risk and trouble being in no respect altered. The residue,
therefore, that portion which belongs to the owner of the stock, and
which pays the interest of money, would necessarily remain the same
too. At first sight, therefore, the interest of money seems to be a
subject as fit to be taxed directly as the rent of land.

There are, however, two different circumstances, which render the
interest of money a much less proper subject of direct taxation than
the rent of land.

First, the quantity and value of the land which any man possesses, can
never be a secret, and can always be ascertained with great exactness.
But the whole amount of the capital stock which he possesses is almost
always a secret, and can scarce ever be ascertained with tolerable
exactness. It is liable, besides, to almost continual variations. A
year seldom passes away, frequently not a month, sometimes scarce a
single day, in which it does not rise or fall more or less. An
inquisition into every man's private circumstances, and an inquisition
which, in order to accommodate the tax to them, watched over all the
fluctuations of his fortune, would be a source of such continual and
endless vexation as no person could support.

Secondly, land is a subject which cannot be removed; whereas stock
easily may. The proprietor of land is necessarily a citizen of the
particular country in which his estate lies. The proprietor of stock
is properly a citizen of the world, and is not necessarily attached to
any particular country. He would be apt to abandon the country in
which he was exposed to a vexatious inquisition, in order to be
assessed to a burdensome tax; and would remove his stock to some other
country, where he could either carry on his business, or enjoy his
fortune more at his ease. By removing his stock, he would put an end
to all the industry which it had maintained in the country which he
left. Stock cultivates land; stock employs labour. A tax which tended
to drive away stock from any particular country, would so far tend to
dry up every source of revenue, both to the sovereign and to the
society. Not only the profits of stock, but the rent of land, and the
wages of labour, would necessarily be more or less diminished by its
removal.

The nations, accordingly, who have attempted to tax the revenue
arising from stock, instead of any severe inquisition of this kind,
have been obliged to content themselves with some very loose, and,
therefore, more or less arbitrary estimation. The extreme inequality
and uncertainty of a tax assessed in this manner, can be compensated
only by its extreme moderation; in consequence of which, every man
finds himself rated so very much below his real revenue, that he gives
himself little disturbance though his neighbour should be rated
somewhat lower.

By what is called the land tax in England, it was intended that the
stock should be taxed in the same proportion as land. When the tax
upon land was at four shillings in the pound, or at one-fifth of the
supposed rent, it was intended that stock should be taxed at one-fifth
of the supposed interest. When the present annual land tax was first
imposed, the legal rate of interest was six per cent. Every hundred
pounds stock, accordingly, was supposed to be taxed at twenty-four
shillings, the fifth part of six pounds. Since the legal rate of
interest has been reduced to five per cent. every hundred pounds stock
is supposed to be taxed at twenty shillings only. The sum to be
raised, by what is called the land tax, was divided between the
country and the principal towns. The greater part of it was laid upon
the country; and of what was laid upon the towns, the greater part was
assessed upon the houses. What remained to be assessed upon the stock
or trade of the towns (for the stock upon the land was not meant to be
taxed) was very much below the real value of that stock or trade.
Whatever inequalities, therefore, there might be in the original
assessment, gave little disturbance. Every parish and district still
continues to be rated for its land, its houses, and its stock,
according to the original assessment; and the almost universal
prosperity of the country, which, in most places, has raised very much
the value of all these, has rendered those inequalities of still less
importance now. The rate, too, upon each district, continuing always
the same, the uncertainty of this tax, so far as it might he assessed
upon the stock of any individual, has been very much diminished, as
well as rendered of much less consequence. If the greater part of the
lands of England are not rated to the land tax at half their actual
value, the greater part of the stock of England is, perhaps, scarce
rated at the fiftieth part of its actual value. In some towns, the
whole land tax is assessed upon houses; as in Westminster, where stock
and trade are free. It is otherwise in London.

In all countries, a severe inquisition into the circumstances of
private persons has been carefully avoided.

At Hamburg, {Memoires concernant les Droits, tom. i, p.74} every
inhabitant is obliged to pay to the state one fourth per cent. of all
that he possesses; and as the wealth of the people of Hamburg consists
principally in stock, this tax maybe considered as a tax upon stock.
Every man assesses himself, and, in the presence of the magistrate,
puts annually into the public coffer a certain sum of money, which he
declares upon oath, to be one fourth per cent. of all that he
possesses, but without declaring what it amounts to, or being liable
to any examination upon that subject. This tax is generally supposed
to be paid with great fidelity. In a small republic, where the people
have entire confidence in their magistrates, are convinced of the
necessity of the tax for the support of the state, and believe that it
will be faithfully applied to that purpose, such conscientious and
voluntary payment may sometimes be expected. It is not peculiar to the
people of Hamburg.

The canton of Underwald, in Switzerland, is frequently ravaged by
storms and inundations, and it is thereby exposed to extraordinary
expenses. Upon such occasions the people assemble, and every one is
said to declare with the greatest frankness what he is worth, in order
to be taxed accordingly. At Zurich, the law orders, that in cases of
necessity, every one should be taxed in proportion to his revenue; the
amount of which he is obliged to declare upon oath. They have no
suspicion, it is said, that any of their fellow citizens will deceive
them. At Basil, the principal revenue of the state arises from a small
custom upon goods exported. All the citizens make oath, that they will
pay every three months all the taxes imposed by law. All merchants,
and even all inn-keepers, are trusted with keeping themselves the
account of the goods which they sell, either within or without the
territory. At the end of every three months, they send this account to
the treasurer, with the amount of the tax computed at the bottom of
it. It is not suspected that the revenue suffers by this confidence.
{Memoires concernant les Droits, tom. i p. 163, 167,171.}

To oblige every citizen to declare publicly upon oath, the amount of
his fortune, must not, it seems, in those Swiss cantons, be reckoned a
hardship. At Hamburg it would be reckoned the greatest. Merchants
engaged in the hazardous projects of trade, all tremble at the
thoughts of being obliged, at all times, to expose the real state of
their circumstances. The ruin of their credit, and the miscarriage of
their projects, they foresee, would too often be the consequence. A
sober and parsimonious people, who are strangers to all such projects,
do not feel that they have occasion for any such concealment.

In Holland, soon after the exaltation of the late prince of Orange to
the stadtholdership, a tax of two per cent. or the fiftieth penny, as
it was called, was imposed upon the whole substance of every citizen.
Every citizen assesed himself, and paid his tax, in the same manner as
at Hamburg, and it was in general supposed to have been paid with
great fidelity. The people had at that time the greatest affection for
their new government, which they had just established by a general
insurrection. The tax was to be paid but once, in order to relieve the
state in a particular exigency. It was, indeed, too heavy to be
permanent. In a country where the market rate of interest seldom
exceeds three per cent., a tax of two per cent. amounts to thirteen
shillings and four pence in the pound, upon the highest neat revenue
which is commonly drawn from stock. It is a tax which very few people
could pay, without encroaching more or less upon their capitals. In a
particular exigency, the people may, from great public zeal, make a
great effort, and give up even a part of their capital, in order to
relieve the state. But it is impossible that they should continue to
do so for any considerable time; and if they did, the tax would soon
ruin them so completely, as to render them altogether incapable of
supporting the state.

The tax upon stock, imposed by the land tax bill in England, though it
is proportioned to the capital, is not intended to diminish or, take
away any part of that capital. It is meant only to be a tax upon the
interest of money, proportioned to that upon the rent of land; so that
when the latter is at four shillings in the pound, the former may be
at four shillings in the pound too. The tax at Hamburg, and the still
more moderate taxes of Underwald and Zurich, are meant, in the same
manner, to be taxes, not upon the capital, but upon the interest or
neat revenue of stock. That of Holland was meant to be a tax upon the
capital.

Taxes upon the Profit of particular Employments.

In some countries, extraordinary taxes are imposed upon the profits of
stock; sometimes when employed in particular branches of trade, and
sometimes when employed in agriculture.

Of the former kind, are in England, the tax upon hawkers and pedlars,
that upon hackney-coaches and chairs, and that which the keepers of
ale-houses pay for a licence to retail ale and spiritous liquors.
During the late war, another tax of the same kind was proposed upon
shops. The war having been undertaken, it was said, in defence of the
trade of the country, the merchants, who were to profit by it, ought
to contribute towards the support of it.

A tax, however, upon the profits of stock employed in any particular
branch of trade, can never fall finally upon the dealers (who must in
all ordinary cases have their reasonable profit, and, where the
competition is free, can seldom have more than that profit), but
always upon the consumers, who must be obliged to pay in the price of
the goods the tax which the dealer advances; and generally with some
overcharge.

A tax of this kind, when it is proportioned to the trade of the
dealer, is finally paid by the consumer, and occasions no oppression
to the dealer. When it is not so proportioned, but is the same upon
all dealers, though in this case, too, it is finally paid by the
consumer, yet it favours the great, and occasions some oppression to
the small dealer. The tax of five shillings a-week upon every hackney
coach, and that of ten shillings a-year upon every hackney chair, so
far as it is advanced by the different keepers of such coaches and
chairs, is exactly enough proportioned to the extent of their
respective dealings. It neither favours the great, nor oppresses the
smaller dealer. The tax of twenty shillings a-year for a licence to
sell ale; of forty shillings for a licence to sell spiritous liquors;
and of forty shillings more for a licence to sell wine, being the same
upon all retailers, must necessarily give some advantage to the great,
and occasion some oppression to the small dealers. The former must
find it more easy to get back the tax in the price of their goods than
the latter. The moderation of the tax, however, renders this
inequality of less importance; and it may to many people appear not
improper to give some discouragement to the multiplication of little
ale-houses. The tax upon shops, it was intended, should be the same
upon all shops. It could not well have been otherwise. It would have
been impossible to proportion, with tolerable exactness, the tax upon
a shop to the extent of the trade carried on in it, without such an
inquisition as would have been altogether insupportable in a free
country. If the tax had been considerable, it would have oppressed the
small, and forced almost the whole retail trade into the hands of the
great dealers. The competition of the former being taken away, the
latter would have enjoyed a monopoly of the trade; and, like all other
monopolists, would soon have combined to raise their profits much
beyond what was necessary for the payment of the tax. The final
payment, instead of falling upon the shop-keeper, would have fallen
upon the consumer, with a considerable overcharge to the profit of the
shop-keeper. For these reasons, the project of a tax upon shops was
laid aside, and in the room of it was substituted the subsidy, 1759.

What in France is called the personal taille, is perhaps, the most
important tax upon the profits of stock employed in agriculture, that
is levied in any part of Europe.

In the disorderly state of Europe, during the prevalence of the feudal
government, the sovereign was obliged to content himself with taxing
those who were too weak to refuse to pay taxes. The great lords,
though willing to assist him upon particular emergencies, refused to
subject themselves to any constant tax, and he was not strong enough
to force them. The occupiers of land all over Europe were, the greater
part of them, originally bond-men. Through the greater part of Europe,
they were gradually emancipated. Some of them acquired the property of
landed estates, which they held by some base or ignoble tenure,
sometimes under the king, and sometimes under some other great lord,
like the ancient copy-holders of England. Others, without acquiring
the property, obtained leases for terms of years, of the lands which
they occupied under their lord, and thus became less dependent upon
him. The great lords seem to have beheld the degree of prosperity and
independency, which this inferior order of men had thus come to enjoy,
with a malignant and contemptuous indignation, and willingly consented
that the sovereign should tax them. In some countries, this tax was
confined to the lands which were held in property by an ignoble
tenure; and, in this case, the taille was said to be real. The land
tax established by the late king of Sardinia, and the taille in the
provinces of Languedoc, Provence, Dauphine, and Britanny; in the
generality of Montauban, and in the elections of Agen and Condom, as
well as in some other districts of France; are taxes upon lands held
in property by an ignoble tenure. In other countries, the tax was laid
upon the supposed profits of all those who held, in farm or lease,
lands belonging to other people, whatever might be the tenure by which
the proprietor held them; and in this case, the taille was said to be
personal. In the greater part of those provinces of France, which are
called the countries of elections, the taille is of this kind. The
real taille, as it is imposed only upon a part of the lands of the
country, is necessarily an unequal, but it is not always an arbitrary
tax, though it is so upon some occasions. The personal taille, as it
is intended to be proportioned to the profits of a certain class of
people, which can only be guessed at, is necessarily both arbitrary
and unequal.

In France, the personal taille at present (1775) annually imposed upon
the twenty generalities, called the countries of elections, amounts to
40,107,239 livres, 16 sous. {Memoires concernant les Droits, etc tom.
ii, p.17.} the proportion in which this sum is assessed upon those
different provinces, varies from year to year, according to the
reports which are made to the king's council concerning the goodness
or badness of the crops, as well as other circumstances, which may
either increase or diminish their respective abilities to pay. Each
generality is divided into a certain number of elections; and the
proportion in which the sum imposed upon the whole generality is
divided among those different elections, varies likewise from year to
year, according to the reports made to the council concerning their
respective abilities. It seems impossible, that the council, with the
best intentions, can ever proportion, with tolerable exactness, either
of these two assessments to the real abilities of the province or
district upon which they are respectively laid. Ignorance and
misinformation must always, more or less, mislead the most upright
council. The proportion which each parish ought to support of what is
assessed upon the whole election, and that which each individual ought
to support of what is assessed upon his particular parish, are both in
the same manner varied from year to year, according as circumstances
are supposed to require. These circumstances are judged of, in the one
case, by the officers of the election, in the other, by those of the
parish; and both the one and the other are, more or less, under the
direction and influence of the intendant. Not only ignorance and
misinformation, but friendship, party animosity, and private
resentment, are said frequently to mislead such assessors. No man
subject to such a tax, it is evident, can ever be certain, before he
is assessed, of what he is to pay. He cannot even be certain after he
is assessed. If any person has been taxed who ought to have been
exempted, or if any person has been taxed beyond his proportion,
though both must pay in the mean time, yet if they complain, and make
good their complaints, the whole parish is reimposed next year, in
order to reimburse them. If any of the contributors become bankrupt or
insolvent, the collector is obliged to advance his tax; and the whole
parish is reimposed next year, in order to reimburse the collector. If
the collector himself should become bankrupt, the parish which elects
him must answer for his conduct to the receiver-general of the
election. But, as it might be troublesome for the receiver to
prosecute the whole parish, he takes at his choice five or six of the
richest contributors, and obliges them to make good what had been lost
by the insolvency of the collector. The parish is afterwards
reimposed, in order to reimburse those five or six. Such reimpositions
are always over and above the taille of the particular year in which
they are laid on.

When a tax is imposed upon the profits of stock in a particular branch
of trade, the traders are all careful to bring no more goods to market
than what they can sell at a price sufficient to reimburse them from
advancing the tax. Some of them withdraw a part of their stocks from
the trade, and the market is more sparingly supplied than before. The
price of the goods rises, and the final payment of the tax falls upon
the consumer. But when a tax is imposed upon the profits of stock
employed in agriculture, it is not the interest of the farmers to
withdraw any part of their stock from that employment. Each farmer
occupies a certain quantity of land, for which he pays rent. For the
proper cultivation of this land, a certain quantity of stock is
necessary; and by withdrawing any part of this necessary quantity, the
farmer is not likely to be more able to pay either the rent or the
tax. In order to pay the tax, it can never be his interest to diminish
the quantity of his produce, nor consequently to supply the market
more sparingly than before. The tax, therefore, will never enable him
to raise the price of his produce, so as to reimburse himself, by
throwing the final payment upon the consumer. The farmer, however,
must have his reasonable profit as well as every other dealer,
otherwise he must give up the trade. After the imposition of a tax of
this kind, he can get this reasonable profit only by paying less rent
to the landlord. The more he is obliged to pay in the way of tax, the
less he can afford to pay in the way of rent. A tax of this kind,
imposed during the currency of a lease, may, no doubt, distress or
ruin the farmer. Upon the renewal of the lease, it must always fall
upon the landlord.

In the countries where the personal taille takes place, the farmer is
commonly assessed in proportion to the stock which he appears to
employ in cultivation. He is, upon this account, frequently afraid to
have a good team of horses or oxen, but endeavours to cultivate with
the meanest and most wretched instruments of husbandry that he can.
Such is his distrust in the justice of his assessors, that he
counterfeits poverty, and wishes to appear scarce able to pay
anything, for fear of being obliged to pay too much. By this miserable
policy, he does not, perhaps, always consult his own interest in the
most effectual manner; and he probably loses more by the diminution of
his produce, than he saves by that of his tax. Though, in consequence
of this wretched cultivation, the market is, no doubt, somewhat worse
supplied; yet the small rise of price which this may occasion, as it
is not likely even to indemnify the farmer for the diminution of his
produce, it is still less likely to enable him to pay more rent to the
landlord. The public, the farmer, the landlord, all suffer more or
less by this degraded cultivation. That the personal taille tends, in
many different ways, to discourage cultivation, and consequently to
dry up the principal source of the wealth of every great country, I
have already had occasion to observe in the third book of this
Inquiry.

What are called poll-taxes in the southern provinces of North America,
and the West India islands, annual taxes of so much a-head upon every
negro, are properly taxes upon the profits of a certain species of
stock employed in agriculture. As the planters, are the greater part
of them, both farmers and landlords, the final payment of the tax
falls upon them in their quality of landlords, without any
retribution.

Taxes of so much a head upon the bondmen employed in cultivation, seem
anciently to have been common all over Europe. There subsists at
present a tax of this kind in the empire of Russia. It is probably
upon this account that poll-taxes of all kinds have often been
represented as badges of slavery. Every tax, however, is, to the
person who pays it, a badge, not of slavery, but of liberty. It
denotes that he is subject to government, indeed; but that, as he has
some property, he cannot himself be the property of a master. A poll
tax upon slaves is altogether different from a poll-tax upon freemen.
The latter is paid by the persons upon whom it is imposed; the former,
by a different set of persons. The latter is either altogether
arbitrary, or altogether unequal, and, in most cases, is both the one
and the other; the former, though in some respects unequal, different
slaves being of different values, is in no respect arbitrary. Every
master, who knows the number of his own slaves, knows exactly what he
has to pay. Those different taxes, however, being called by the same
name, have been considered as of the same nature.

The taxes which in Holland are imposed upon men and maid servants, are
taxes, not upon stock, but upon expense; and so far resemble the taxes
upon consumable commodities. The tax of a guinea a-head for every
man-servant, which has lately been imposed in Great Britain, is of the
same kind. It falls heaviest upon the middling rank. A man of two
hundred a-year may keep a single man-servant. A man of ten thousand
a-year will not keep fifty. It does not affect the poor.

Taxes upon the profits of stock, in particular employments, can never
affect the interest of money. Nobody will lend his money for less
interest to those who exercise the taxed, than to those who exercise
the untaxed employments. Taxes upon the revenue arising from stock in
all employments, where the government attempts to levy them with any
degree of exactness, will, in many cases, fall upon the interest of
money. The vingtieme, or twentieth penny, in France, is a tax of the
same kind with what is called the land tax in England, and is
assessed, in the same manner, upon the revenue arising upon land,
houses, and stock. So far as it affects stock, it is assessed, though
not with great rigour, yet with much more exactness than that part of
the land tax in England which is imposed upon the same fund. It, in
many cases, falls altogether upon the interest of money. Money is
frequently sunk in France, upon what are called contracts for the
constitution of a rent; that is, perpetual annuities, redeemable at
any time by the debtor, upon payment of the sum originally advanced,
but of which this redemption is not exigible by the creditor except in
particular cases. The vingtieme seems not to have raised the rate of
those annuities, though it is exactly levied upon them all.

APPENDIX TO ARTICLES I. AND II. -- Taxes upon the Capital Value of
Lands, Houses, and Stock.

While property remains in the possession of the same person, whatever
permanent taxes may have been imposed upon it, they have never been
intended to diminish or take away any part of its capital value, but
only some part of the revenue arising from it. But when property
changes hands, when it is transmitted either from the dead to the
living, or from the living to the living, such taxes have frequently
been imposed upon it as necessarily take away some part of its capital
value.

The transference of all sorts of property from the dead to the living,
and that of immoveable property of land and houses from the living to
the living, are transactions which are in their nature either public
and notorious, or such as cannot be long concealed. Such transactions,
therefore, may be taxed directly. The transference of stock or
moveable property, from the living to the living, by the lending of
money, is frequently a secret transaction, and may always be made so.
It cannot easily, therefore, be taxed directly. It has been taxed
indirectly in two different ways; first, by requiring that the deed,
containing the obligation to repay, should be written upon paper or
parchment which had paid a certain stamp duty, otherwise not to be
valid; secondly, by requiring, under the like penalty of invalidity,
that it should be recorded either in a public or secret register, and
by imposing certain duties upon such registration. Stamp duties, and
duties of registration, have frequently been imposed likewise upon the
deeds transferring property of all kinds from the dead to the living,
and upon those transferring immoveable property from the living to the
living; transactions which might easily have been taxed directly.

The vicesima hereditatum, or the twentieth penny of inheritances,
imposed by Augustus upon the ancient Romans, was a tax upon the
transference of property from the dead to the living. Dion Cassius, {
Lib. 55. See also Burman. de Vectigalibus Pop. Rom. cap. xi. and
Bouchaud de l'impot du vingtieme sur les successions.} the author who
writes concerning it the least indistinctly, says, that it was imposed
upon all successions, legacies and donations, in case of death, except
upon those to the nearest relations, and to the poor.

Of the same kind is the Dutch tax upon successions. {See Memoires
concernant les Droits, etc. tom i, p. 225.} Collateral successions are
taxed according to the degree of relation, from five to thirty per
cent. upon the whole value of the succession. Testamentary donations,
or legacies to collaterals, are subject to the like duties. Those from
husband to wife, or from wife to husband, to the fiftieth penny. The
luctuosa hereditas, the mournful succession of ascendants to
descendants, to the twentieth penny only. Direct successions, or those
of descendants to ascendants, pay no tax. The death of a father, to
such of his children as live in the same house with him, is seldom
attended with any increase, and frequently with a considerable
diminution of revenue; by the loss of his industry, of his office, or
of some life-rent estate, of which he may have been in possession.
That tax would be cruel and oppressive, which aggravated their loss,
by taking from them any part of his succession. It may, however,
sometimes be otherwise with those children, who, in the language of
the Roman law, are said to be emancipated; in that of the Scotch law,
to be foris-familiated; that is, who have received their portion, have
got families of their own, and are supported by funds separate and
independent of those of their father. Whatever part of his succession
might come to such children, would be a real addition to their
fortune, and might, therefore, perhaps, without more inconveniency
than what attends all duties of this kind, be liable to some tax.

The casualties of the feudal law were taxes upon the transference of
land, both from the dead to the living, and from the living to the
living. In ancient times, they constituted, in every part of Europe,
one of the principal branches of the revenue of the crown.

The heir of every immediate vassal of the crown paid a certain duty,
generally a year's rent, upon receiving the investiture of the estate.
If the heir was a minor, the whole rents of the estate, during the
continuance of the minority, devolved to the superior, without any
other charge besides the maintenance of the minor, and the payment of
the widow's dower, when there happened to be a dowager upon the land.
When the minor came to de of age, another tax, called relief, was
still due to the superior, which generally amounted likewise to a
year's rent. A long minority, which, in the present times, so
frequently disburdens a great estate of all its incumbrances, and
restores the family to their ancient splendour, could in those times
have no such effect. The waste, and not the disincumbrance of the
estate, was the common effect of a long minority.

By a feudal law, the vassal could not alienate without the consent of
his superior, who generally extorted a fine or composition on granting
it. This fine, which was at first arbitrary, came, in many countries,
to be regulated at a certain portion of the price of the land. In some
countries, where the greater part of the other feudal customs have
gone into disuse, this tax upon the alienation of land still continues
to make a very considerable branch of the revenue of the sovereign. In
the canton of Berne it is so high as a sixth part of the price of all
noble fiefs, and a tenth part of that of all ignoble ones. {Memoires
concernant les Droits, etc, tom.i p.154} In the canton of Lucern, the
tax upon the sale of land is not universal, and takes place only in
certain districts. But if any person sells his land in order to remove
out of the territory, he pays ten per cent. upon the whole price of
the sale. {id. p.157.} Taxes of the same kind, upon the sale either
of all lands, or of lands held by certain tenures, take place in many
other countries, and make a more or less considerable branch of the
revenue of the sovereign.

Such transactions may be taxed indirectly, by means either of stamp
duties, or of duties upon registration; and those duties either may,
or may not, be proportioned to the value of the subject which is
transferred.

In Great Britain, the stamp duties are higher or lower, not so much
according to the value of the property transferred (an eighteen-penny
or half-crown stamp being sufficient upon a bond for the largest sum
of money), as according to the nature of the deed. The highest do not
exceed six pounds upon every sheet of paper, or skin of parchment; and
these high duties fall chiefly upon grants from the crown, and upon
certain law proceedings, without any regard to the value of the
subject. There are, in Great Britain, no duties on the registration of
deeds or writings, except the fees of the officers who keep the
register; and these are seldom more than a reasonable recompence for
their labour. The crown derives no revenue from them.

In Holland {Memoires concernant les Droits, etc. tom. i. p 223, 224,
225.} there are both stamp duties and duties upon registration; which
in some cases are, and in some are not, proportioned to the value of
the property transferred. All testaments must be written upon stamped
paper, of which the price is proportioned to the property disposed of;
so that there are stamps which cost from three pence or three stivers
a-sheet, to three hundred florins, equal to about twenty-seven pounds
ten shillings of our money. If the stamp is of an inferior price to
what the testator ought to have made use of, his succession is
confiscated. This is over and above all their other taxes on
succession. Except bills of exchange, and some other mercantile bills,
all other deeds, bonds, and contracts, are subject to a stamp duty.
This duty, however, does not rise in proportion to the value of the
subject. All sales of land and of houses, and all mortgages upon
either, must be registered, and, upon registration, pay a duty to the
state of two and a-half per cent. upon the amount of the price or of
the mortgage. This duty is extended to the sale of all ships and
vessels of more than two tons burden, whether decked or undecked.
These, it seems, are considered as a sort of houses upon the water.
The sale of moveables, when it is ordered by a court of justice, is
subject to the like duty of two and a-half per cent.

In France, there are both stamp duties and duties upon registration.
The former are considered as a branch of the aids of excise, and, in
the provinces where those duties take place, are levied by the excise
officers. The latter are considered as a branch of the domain of the
crown and are levied by a different set of officers.

Those modes of taxation by stamp duties and by duties upon
registration, are of very modern invention. In the course of little
more than a century, however, stamp duties have, in Europe, become
almost universal, and duties upon registration extremely common. There
is no art which one government sooner learns of another, than that of
draining money from the pockets of the people.

Taxes upon the transference of property from the dead to the living,
fall finally, as well as immediately, upon the persons to whom the
property is transferred. Taxes upon the sale of land fall altogether
upon the seller. The seller is almost always under the necessity of
selling, and must, therefore, take such a price as he can get. The
buyer is scarce ever under the necessity of buying, and will,
therefore, only give such a price as he likes. He considers what the
land will cost him, in tax and price together. The more he is obliged
to pay in the way of tax, the less he will be disposed to give in the
way of price. Such taxes, therefore, fall almost always upon a
necessitous person, and must, therefore, be frequently very cruel and
oppressive. Taxes upon the sale of new-built houses, where the
building is sold without the ground, fall generally upon the buyer,
because the builder must generally have his profit; otherwise he must
give up the trade. If he advances the tax, therefore, the buyer must
generally repay it to him. Taxes upon the sale of old houses, for the
same reason as those upon the sale of land, fall generally upon the
seller; whom, in most cases, either conveniency or necessity obliges
to sell. The number of new-built houses that are annually brought to
market, is more or less regulated by the demand. Unless the demand is
such as to afford the builder his profit, after paying all expenses,
he will build no more houses. The number of old houses which happen at
any time to come to market, is regulated by accidents, of which the
greater part have no relation to the demand. Two or three great
bankruptcies in a mercantile town, will bring many houses to sale,
which must be sold for what can be got for them. Taxes upon the sale
of ground-rents fall altogether upon the seller, for the same reason
as those upon the sale of lands. Stamp duties, and duties upon the
registration of bonds and contracts for borrowed money, fall
altogether upon the borrower, and, in fact, are always paid by him.
Duties of the same kind upon law proceedings fall upon the suitors.
They reduce to both the capital value of the subject in dispute. The
more it costs to acquire any property, the less must be the neat value
of it when acquired.

All taxes upon the transference of property of every kind, so far as
they diminish the capital value of that property, tend to diminish the
funds destined for the maintenance of productive labour. They are all
more or less unthrifty taxes that increase the revenue of the
sovereign, which seldom maintains any but unproductive labourers, at
the expense of the capital of the people, which maintains none but
productive.


Such taxes, even when they are proportioned to the value of the
property transferred, are still unequal; the frequency of transference
not being always equal in property of equal value. When they are not
proportioned to this value, which is the case with the greater part of
the stamp duties and duties of registration, they are still more so.
They are in no respect arbitrary, but are, or may be, in all cases,
perfectly clear and certain. Though they sometimes fall upon the
person who is not very able to pay, the time of payment is, in most
cases, sufficiently convenient for him. When the payment becomes due,
he must, in most cases, have the more to pay. They are levied at very
little expense, and in general subject the contributors to no other
inconveniency, besides always the unavoidable one of paying the tax.

In France, the stamp duties are not much complained of. Those of
registration, which they call the Controle, are. They give occasion, it
is pretended, to much extortion in the officers of the farmers-general
who collect the tax, which is in a great measure arbitrary and
uncertain. In the greater part of the libels which have been written
against the present system of finances in France, the abuses of the
controle make a principal article. Uncertainty, however, does not seem
to be necessarily inherent in the nature of such taxes. If the popular
complaints are well founded, the abuse must arise, not so much from the
nature of the tax as from the want of precision and distinctness in the
words of the edicts or laws which impose it.

The registration of mortgages, and in general of all rights upon
immoveable property, as it gives great security both to creditors and
purchasers, is extremely advantageous to the public. That of the
greater part of deeds of other kinds, is frequently inconvenient and
even dangerous to individuals, without any advantage to the public.
All registers which, it is acknowledged, ought to be kept secret,
ought certainly never to exist. The credit of individuals ought
certainly never to depend upon so very slender a security, as the
probity and religion of the inferior officers of revenue. But where
the fees of registration have been made a source of revenue to the
sovereign, register-offices have commonly been multiplied without end,
both for the deeds which ought to be registered, and for those which
ought not. In France there are several different sorts of secret
registers. This abuse, though not perhaps a necessary, it must be
acknowledged, is a very natural effect of such taxes.

Such stamp duties as those in England upon cards and dice, upon
newspapers and periodical pamphlets, etc. are properly taxes upon
consumption; the final payment falls upon the persons who use or
consume such commodities. Such stamp duties as those upon licences to
retail ale, wine, and spiritous liquors, though intended, perhaps, to
fall upon the profits of the retailers, are likewise finally paid by
the consumers of those liquors. Such taxes, though called by the same
name, and levied by the same officers, and in the same manner with the
stamp duties above mentioned upon the transference of property, are,
however, of a quite different nature, and fall upon quite different
funds.

ARTICLE III. -- Taxes upon the Wages of Labour.

The wages of the inferior classes of work men, I have endeavoured to
show in the first book are everywhere necessarily regulated by two
different circumstances; the demand for labour, and the ordinary or
average price of provisions. The demand for labour, according as it
happens to be either increasing stationary or declining; or to require
an increasing, stationary, or declining population, regulates the
subsistence of the labourer, and determines in what degree it shall be
either liberal, moderate, or scanty. The ordinary average price of
provisions determines the quantity of money which must be paid to the
workman, in order to enable him, one year with another, to purchase
this liberal, moderate, or scanty subsistence. While the demand for
the labour and the price of provisions, therefore, remain the same, a
direct tax upon the wages of labour can have no other effect, than to
raise them somewhat higher than the tax. Let us suppose, for example,
that, in a particular place, the demand for labour and the price of
provisions were such as to render ten shillings a-week the ordinary
wages of labour; and that a tax of one-fifth, or four shillings in the
pound, was imposed upon wages. If the demand for labour and the price
of provisions remained the same, it would still be necessary that the
labourer should, in that place, earn such a subsistence as could be
bought only for ten shillings a-week; so that, after paying the tax,
he should have ten shillings a-week free wages. But, in order to leave
him such free wages, after paying such a tax, the price of labour must,
in that place, soon rise, not to twelve shillings a week only, but
to twelve and sixpence; that is, in order to enable him to pay a tax
of one-fifth, his wages must necessarily soon rise, not one-fifth part
only, but one-fourth. Whatever was the proportion of the tax, the
wages of labour must, in all cases rise, not only in that proportion,
but in a higher proportion. If the tax for example, was one-tenth, the
wages of labour must necessarily soon rise, not one-tenth part only,
but one-eighth.

A direct tax upon the wages of labour, therefore, though the labourer
might, perhaps, pay it out of his hand, could not properly be said to
be even advanced by him; at least if the demand for labour and the
average price of provisions remained the same after the tax as before
it. In all such cases, not only the tax, but something more than the
tax, would in reality be advanced by the person who immediately
employed him. The final payment would, in different cases, fall upon
different persons. The rise which such a tax might occasion in the
wages of manufacturing labour would be advanced by the master
manufacturer, who would both be entitled and obliged to charge it,
with a profit, upon the price of his goods. The final payment of this
rise of wages, therefore, together with the additional profit of the
master manufacturer would fall upon the consumer. The rise which such
a tax might occasion in the wages of country labour would be advanced
by the farmer, who, in order to maintain the same number of labourers
as before, would be obliged to employ a greater capital. In order to
get back this greater capital, together with the ordinary profits of
stock, it would be necessary that he should retain a larger portion,
or, what comes to the same thing, the price of a larger portion, of
the produce of the land, and, consequently, that he should pay less
rent to the landlord. The final payment of this rise of wages,
therefore, would, in this case, fall upon the landlord, together with
the additional profit of the farmer who had advanced it. In all cases,
a direct tax upon the wages of labour must, in the long-run, occasion
both a greater reduction in the rent of land, and a greater rise in
the price of manufactured goods than would have followed from the
proper assessment of a sum equal to the produce of the tax, partly
upon the rent of land, and partly upon consumable commodities.

If direct taxes upon the wages of labour have not always occasioned a
proportionable rise in those wages, it is because they have generally
occasioned a considerable fall in the demand of labour. The declension
of industry, the decrease of employment for the poor, the diminution
of the annual produce of the land and labour of the country, have
generally been the effects of such taxes. In consequence of them,
however, the price of labour must always be higher than it otherwise
would have been in the actual state of the demand; and this
enhancement of price, together with the profit of those who advance
it, must always be finally paid by the landlords and consumers.

A tax upon the wages of country labour does not raise the price of the
rude produce of land in proportion to the tax; for the same reason
that a tax upon the farmer's profit does not raise that price in that
proportion.

Absurd and destructive as such taxes are, however, they take place in
many countries. In France, that part of the taille which is charged
upon the industry of workmen and day-labourers in country villages, is
properly a tax of this kind. Their wages are computed according to the
common rate of the district in which they reside; and, that they may
be as little liable as possible to any overcharge, their yearly gains
are estimated at no more than two hundred working days in the year.
{Memoires concernant les Droits, etc. tom. ii. p. 108.} The tax of
each individual is varied from year to year, according to different
circumstances, of which the collector or the commissary, whom
intendant appoints to assist him, are the judges. In Bohemia, in
consequence of the alteration in the system of finances which was
begun in 1748, a very heavy tax is imposed upon the industry of
artificers. They are divided into four classes. The highest class pay
a hundred florins a year, which, at two-and-twenty pence half penny
a-florin, amounts to £9:7:6. The second class are taxed at seventy;
the third at fifty; and the fourth, comprehending artificers in
villages, and the lowest class of those in towns, at twenty-five
florins. {Memoires concemant les Droits, etc. tom. iii. p. 87.}

The recompence of ingenious artists, and of men of liberal
professions, I have endeavoured to show in the first book, necessarily
keeps a certain proportion to the emoluments of inferior trades. A tax
upon this recompence, therefore, could have no other effect than to
raise it somewhat higher than in proportion to the tax. If it did not
rise in this manner, the ingenious arts and the liberal professions,
being; no longer upon a level with other trades, would be so much
deserted, that they would soon return to that level.

The emoluments of offices are not, like those of trades and
professions, regulated by the free competition of the market, and do
not, therefore, always bear a just proportion to what the nature of
the employment requires. They are, perhaps, in most countries, higher
than it requires; the persons who have the administration of
government being generally disposed to regard both themselves and
their immediate dependents, rather more than enough. The emoluments of
offices, therefore, can, in most cases, very well bear to be taxed.
The persons, besides, who enjoy public offices, especially the more
lucrative, are, in all countries, the objects of general envy; and a
tax upon their emoluments, even though it should be somewhat higher
than upon any other sort of revenue, is always a very popular tax. In
England, for example, when, by the land-tax, every other sort of
revenue was supposed to be assessed at four shillings in the pound, it
was very popular to lay a real tax of five shillings and sixpence in
the pound upon the salaries of offices which exceeded a hundred pounds
a-year; the pensions of the younger branches of the royal family, the
pay of the officers of the army and navy, and a few others less
obnoxious to envy, excepted. There are in England no other direct
taxes upon the wages of labour.

ARTICLE   IV. -- Taxes which it is intended should fall indifferently
upon every different Species of Revenue.

The taxes which it is intended should fall indifferently upon every
different species of revenue, are capitation taxes, and taxes upon
consumable commodities. Those must be paid indifferently, from
whatever revenue the contributors may possess; from the rent of their
land, from the profits of their stock, or from the wages of their
labour.

Capitation Taxes.

Capitation taxes, if it is attempted to proportion them to the fortune
or revenue of each contributor, become altogether arbitrary. The state
of a man's fortune varies from day to day; and, without an
inquisition, more intolerable than any tax, and renewed at least once
every year, can only be guessed at. His assessment, therefore, must,
in most cases, depend upon the good or bad humour of his assessors,
and must, therefore, be altogether arbitrary and uncertain.

Capitation taxes, if they are proportioned, not to the supposed
fortune, but to the rank of each contributor, become altogether
unequal; the degrees of fortune being frequently unequal in the same
degree of rank.

Such taxes, therefore, if it is attempted to render them equal, become
altogether arbitrary and uncertain; and if it is attempted to render
them certain and not arbitrary, become altogether unequal. Let the tax
be light or heavy, uncertainty is always a great grievance. In a light
tax, a considerable degree of inequality may be supported; in a heavy
one, it is altogether intolerable.

In the different poll-taxes which took place in England during the
reign of William III. the contributors were, the greater part of them,
assessed according to the degree of their rank; as dukes, marquises,
earls, viscounts, barons, esquires, gentlemen, the eldest and youngest
sons of peers, etc. All shop-keepers and tradesmen worth more than
three hundred pounds, that is, the better sort of them, were subject
to the same assessment, how great soever might be the difference in
their fortunes. Their rank was more considered than their fortune.
Several of those who, in the first poll-tax, were rated according to
their supposed fortune were afterwards rated according to their rank.
Serjeants, attorneys, and proctors at law, who, in the first poll-tax,
were assessed at three shillings in the pound of their supposed
income, were afterwards assessed as gentlemen. In the assessment of a
tax which was not very heavy, a considerable degree of inequality had
been found less insupportable than any degree of uncertainty.

In the capitation which has been levied in France, without-any
interruption, since the beginning of the present century, the highest
orders of people are rated according to their rank, by an invariable
tariff; the lower orders of people, according to what is supposed to
be their fortune, by an assessment which varies from year to year. The
officers of the king's court, the judges, and other officers in the
superior courts of justice, the officers of the troops, etc are
assessed in the first manner. The inferior ranks of people in the
provinces are assessed in the second. In France, the great easily
submit to a considerable degree of inequality in a tax which, so far
as it affects them, is not a very heavy one; but could not brook the
arbitrary assessment of an intendant.

The inferior ranks of people must, in that country, suffer patiently
the usage which their superiors think proper to give them.

In England, the different poll-taxes never produced the sum which had
been expected from them, or which it was supposed they might have
produced, had they been exactly levied. In France, the capitation
always produces the sum expected from it. The mild government of
England, when it assessed the different ranks of people to the
poll-tax, contented itself with what that assessment happened to
produce, and required no compensation for the loss which the state
might sustain, either by those who could not pay, or by those who
would not pay (for there were many such), and who, by the indulgent
execution of the law, were not forced to pay. The more severe
government of France assesses upon each generality a certain sum,
which the intendant must find as he can. If any province complains of
being assessed too high, it may, in the assessment of next year,
obtain an abatement proportioned to the overcharge of the year before;
but it must pay in the mean time. The intendant, in order to be sure
of finding the sum assessed upon his generality, was empowered to
assess it in a larger sum, that the failure or inability of some of
the contributors might be compensated by the overcharge of the rest;
and till 1765, the fixation of this surplus assessment was left
altogether to his discretion. In that year, indeed, the council
assumed this power to itself. In the capitation of the provinces, it
is observed by the perfectly well informed author of the Memoirs upon
the Impositions in France, the proportion which falls upon the
nobility, and upon those whose privileges exempt them from the taille,
is the least considerable. The largest falls upon those subject to the
taille, who are assessed to the capitation at so much a-pound of what
they pay to that other tax.

Capitation taxes, so far as they are levied upon the lower ranks of
people, are direct taxes upon the wages of labour, and are attended
with all the inconveniencies of such taxes.

Capitation taxes are levied at little expense; and, where they are
rigorously exacted, afford a very sure revenue to the state. It is
upon this account that, in countries where the case, comfort, and
security of the inferior ranks of people are little attended to,
capitation taxes are very common. It is in general, however, but a
small part of the public revenue, which, in a great empire, has ever
been drawn from such taxes; and the greatest sum which they have ever
afforded, might always have been found in some other way much more
convenient to the people.

Taxes upon Consumable Commodities.

The impossibility of taxing the people, in proportion to their
revenue, by any capitation, seems to have given occasion to the
invention of taxes upon consumable commodities. The state not knowing
how to tax, directly and proportionably, the revenue of its subjects,
endeavours to tax it indirectly by taxing their expense, which, it is
supposed, will, in most cases, be nearly in proportion to their
revenue. Their expense is taxed, by taxing the consumable commodities
upon which it is laid out.

Consumable commodities are either necessaries or luxuries.

By necessaries I understand, not only the commodities which are
indispensibly necessary for the support of life, but whatever the
custom of the country renders it indecent for creditable people, even
of the lowest order, to be without. A linen shirt, for example, is,
strictly speaking, not a necessary of life. The Greeks and Romans
lived, I suppose, very comfortably, though they had no linen. But in
the present times, through the greater part of Europe, a creditable
day-labourer would be ashamed to appear in public without a linen
shirt, the want of which would be supposed to denote that disgraceful
degree of poverty, which, it is presumed, nobody can well fall into
without extreme bad conduct. Custom, in the same manner, has rendered
leather shoes a necessary of life in England. The poorest creditable
person, of either sex, would be ashamed to appear in public without
them. In Scotland, custom has rendered them a necessary of life to the
lowest order of men; but not to the same order of women, who may,
without any discredit, walk about barefooted. In France, they are
necessaries neither to men nor to women; the lowest rank of both sexes
appearing there publicly, without any discredit, sometimes in wooden
shoes, and sometimes barefooted. Under necessaries, therefore, I
comprehend, not only those things which nature, but those things which
the established rules of decency have rendered necessary to the lowest
rank of people. All other things I call luxuries, without meaning, by
this appellation, to throw the smallest degree of reproach upon the
temperate use of them. Beer and ale, for example, in Great Britain,
and wine, even in the wine countries, I call luxuries. A man of any
rank may, without any reproach, abstain totally from tasting such
liquors. Nature does not render them necessary for the support of
life; and custom nowhere renders it indecent to live without them.

As the wages of labour are everywhere regulated, partly by the demand
for it, and partly by the average price of the necessary articles of
subsistence; whatever raises this average price must necessarily raise
those wages; so that the labourer may still be able to purchase that
quantity of those necessary articles which the state of the demand for
labour, whether increasing, stationary, or declining, requires that he
should have. {See book i.chap. 8} A tax upon those articles necessarily
raises their price somewhat higher than the amount of the tax, because
the dealer, who advances the tax, must generally get it back, with a
profit. Such a tax must, therefore, occasion a rise in the wages of
labour, proportionable to this rise of price.

It is thus that a tax upon the necessaries of life operates exactly in
the same manner as a direct tax upon the wages of labour. The
labourer, though he may pay it out of his hand, cannot, for any
considerable time at least, be properly said even to advance it. It
must always, in the long-run, be advanced to him by his immediate
employer, in the advanced state of wages. His employer, if he is a
manufacturer, will charge upon the price of his goods the rise of
wages, together with a profit, so that the final payment of the tax,
together with this overcharge, will fall upon the consumer. If his
employer is a farmer, the final payment, together with a like
overcharge, will fall upon the rent of the landlord.

It is otherwise with taxes upon what I call luxuries, even upon those
of the poor. The rise in the price of the taxed commodities, will not
necessarily occasion any rise in the wages of labour. A tax upon
tobacco, for example, though a luxury of the poor, as well as of the
rich, will not raise wages. Though it is taxed in England at three
times, and in France at fifteen times its original price, those high
duties seem to have no effect upon the wages of labour. The same thing
maybe said of the taxes upon tea and sugar, which, in England and
Holland, have become luxuries of the lowest ranks of people; and of
those upon chocolate, which, in Spain, is said to have become so.

The different taxes which, in Great Britain, have, in the course of
the present century, been imposed upon spiritous liquors, are not
supposed to have had any effect upon the wages of labour. The rise in
the price of porter, occasioned by an additional tax of three
shillings upon the barrel of strong beer, has not raised the wages of
common labour in London. These were about eighteen pence or twenty
pence a-day before the tax, and they are not more now.

The high price of such commodities does not necessarily diminish the
ability of the inferior ranks of people to bring up families. Upon the
sober and industrious poor, taxes upon such commodities act as
sumptuary laws, and dispose them either to moderate, or to refrain
altogether from the use of superfluities which they can no longer
easily afford. Their ability to bring up families, in consequence of
this forced frugality, instead of being diminished, is frequently,
perhaps, increased by the tax. It is the sober and industrious poor
who generally bring up the most numerous families, and who principally
supply the demand for useful labour. All the poor, indeed, are not
sober and industrious; and the dissolute and disorderly might continue
to indulge themselves in the use of such commodities, after this rise
of price, in the same manner as before, without regarding the distress
which this indulgence might bring upon their families. Such disorderly
persons, however, seldom rear up numerous families, their children
generally perishing from neglect, mismanagement, and the scantiness or
unwholesomeness of their food. If by the strength of their
constitution, they survive the hardships to which the bad conduct of
their parents exposes them, yet the example of that bad conduct
commonly corrupts their morals; so that, instead of being useful to
society by their industry, they become public nuisances by their vices
and disorders. Through the advanced price of the luxuries of the poor,
therefore, might increase somewhat the distress of such disorderly
families, and thereby diminish somewhat their ability to bring up
children, it would not probably diminish much the useful population of
the country.

Any rise in the average price of necessaries, unless it be compensated
by a proportionable rise in the wages of labour, must necessarily
diminish, more or less, the ability of the poor to bring up numerous
families, and, consequently, to supply the demand for useful labour;
whatever may be the state of that demand, whether increasing,
stationary, or declining; or such as requires an increasing,
stationary, or declining population.

Taxes upon luxuries have no tendency to raise the price of any other
commodities, except that of the commodities taxed. Taxes upon
necessaries, by raising the wages of labour, necessarily tend to raise
the price of all manufactures, and consequently to diminish the extent
of their sale and consumption. Taxes upon luxuries are finally paid by
the consumers of the commodities taxed, without any retribution. They
fall indifferently upon every species of revenue, the wages of labour,
the profits of stock, and the rent of land. Taxes upon necessaries, so
far as they affect the labouring poor, are finally paid, partly by
landlords, in the diminished rent of their lands, and partly by rich
consumers, whether landlords or others, in the advanced price of
manufactured goods; and always with a considerable overcharge. The
advanced price of such manufactures as are real necessaries of life,
and are destined for the consumption of the poor, of coarse woollens,
for example, must be compensated to the poor by a farther advancement
of their wages. The middling and superior ranks of people, if they
understood their own interest, ought always to oppose all taxes upon
the necessaries of life, as well as all taxes upon the wages of
labour. The final payment of both the one and the other falls
altogether upon themselves, and always with a considerable overcharge.
They fall heaviest upon the landlords, who always pay in a double
capacity; in that of landlords, by the reduction, of their rent; and
in that of rich consumers, by the increase of their expense. The
observation of Sir Matthew Decker, that certain taxes are, in the
price of certain goods, sometimes repeated and accumulated four or
five times, is perfectly just with regard to taxes upon the
necessaries of life. In the price of leather, for example, you must
pay not only for the tax upon the leather of your own shoes, but for a
part of that upon those of the shoemaker and the tanner. You must pay,
too, for the tax upon the salt, upon the soap, and upon the candles
which those workmen consume while employed in your service; and for
the tax upon the leather, which the saltmaker, the soap-maker, and the
candle-maker consume, while employed in their service.

In Great Britain, the principal taxes upon the necessaries of life,
are those upon the four commodities just now mentioned, salt, leather,
soap, and candles.

Salt is a very ancient and a very universal subject of taxation. It
was taxed among the Romans, and it is so at present in, I believe,
every part of Europe. The quantity annually consumed by any individual
is so small, and may be purchased so gradually, that nobody, it seems
to have been thought, could feel very sensibly even a pretty heavy tax
upon it. It is in England taxed at three shillings and fourpence a
bushel; about three times the original price of the commodity. In some
other countries, the tax is still higher. Leather is a real necessary
of life. The use of linen renders soap such. In countries where the
winter nights are long, candles are a necessary instrument of trade.
Leather and soap are in Great Britain taxed at three halfpence
a-pound; candles at a penny; taxes which, upon the original price of
leather, may amount to about eight or ten per cent.; upon that of
soap, to about twenty or five-and-twenty per cent.; and upon that of
candles to about fourteen or fifteen per cent.; taxes which, though
lighter than that upon salt, are still very heavy. As all those four
commodities are real necessaries of life, such heavy taxes upon them
must increase somewhat the expense of the sober and industrious poor,
and must consequently raise more or less the wages of their labour.

In a country where the winters are so cold as in Great Britain, fuel
is, during that season, in the strictest sense of the word, a
necessary of life, not only for the purpose of dressing victuals, but
for the comfortable subsistence of many different sorts of workmen who
work within doors; and coals are the cheapest of all fuel. The price
of fuel has so important an influence upon that of labour, that all
over Great Britain, manufactures have confined themselves principally
to the coal counties; other parts of the country, on account of the
high price of this necessary article, not being able to work so cheap.
In some manufactures, besides, coal is a necessary instrument of
trade; as in those of glass, iron, and all other metals. If a bounty
could in any case be reasonable, it might perhaps be so upon the
transportation of coals from those parts of the country in which they
abound, to those in which they are wanted. But the legislature,
instead of a bounty, has imposed a tax of three shillings and
threepence a-ton upon coals carried coastways; which, upon most sorts
of coal, is more than sixty per cent. of the original price at the
coal pit. Coals carried, either by land or by inland navigation, pay
no duty. Where they are naturally cheap, they are consumed duty free;
where they are naturally dear, they are loaded with a heavy duty.

Such taxes, though they raise the price of subsistence, and
consequently the wages of labour, yet they afford a considerable
revenue to government, which it might not be easy to find in any other
way. There may, therefore, be good reasons for continuing them. The
bounty upon the exportation of corn, so far us it tends, in the actual
state of tillage, to raise the price of that necessary article,
produces all the like bad effects; and instead of affording any
revenue, frequently occasions a very great expense to government. The
high duties upon the importation of foreign corn, which, in years of
moderate plenty, amount to a prohibition; and the absolute prohibition
of the importation, either of live cattle, or of salt provisions,
which takes place in the ordinary state of the law, and which, on
account of the scarcity, is at present suspended for a limited time
with regard to Ireland and the British plantations, have all had the
bad effects of taxes upon the necessaries of life, and produce no
revenue to government. Nothing seems necessary for the repeal of such
regulations, but to convince the public of the futility of that system
in consequence of which they have been established.

Taxes upon the necessaries of life are much higher in many other
countries than in Great Britain. Duties upon flour and meal when
ground at the mill, and upon bread when baked at the oven, take place
in many countries. In Holland the money-price of the: bread consumed
in towns is supposed to be doubled by means of such taxes. In lieu of
a part of them, the people who live in the country, pay every year so
much a-head, according to the sort of bread they are supposed to
consume. Those who consume wheaten bread pay three guilders fifteen
stivers; about six shillings and ninepence halfpenny. Those, and some
other taxes of the same kind, by raising the price of labour, are said
to have ruined the greater part of the manufactures of Holland
{Memoires concernant les Droits, etc. p. 210, 211.}. Similar taxes,
though not quite so heavy, take place in the Milanese, in the states
of Genoa, in the duchy of Modena, in the duchies of Parma, Placentia,
and Guastalla, and the Ecclesiastical state. A French author {Le
Reformateur} of some note, has proposed to reform the finances of his
country, by substituting in the room of the greater part of other
taxes, this most ruinous of all taxes. There is nothing so absurd,
says Cicero, which has not sometimes been asserted by some
philosophers.

Taxes upon butcher's meat are still more common than those upon bread.
It may indeed be doubted, whether butcher's meat is any where a
necessary of life. Grain and other vegetables, with the help of milk,
cheese, and butter, or oil, where butter is not to be had, it is known
from experience, can, without any butcher's meat, afford the most
plentiful, the most wholesome, the most nourishing, and the most
invigorating diet. Decency nowhere requires that any man should eat
butcher's meat, as it in most places requires that he should wear a
linen shirt or a pair of leather shoes.

Consumable commodities, whether necessaries or luxuries, may be taxed
in two different ways. The consumer may either pay an annual sum on
account of his using or consuming goods of a certain kind; or the
goods may be taxed while they remain in the hands of the dealer, and
before they are delivered to the consumer. The consumable goods which
last a considerable time before they are consumed altogether, are most
properly taxed in the one way; those of which the consumption is
either immediate or more speedy, in the other. The coach-tax and plate
tax are examples of the former method of imposing; the greater part of
the other duties of excise and customs, of the latter.

A coach may, with good management, last ten or twelve years. It might
be taxed, once for all, before it comes out of the hands of the
coach-maker. But it is certainly more convenient for the buyer to pay
four pounds a-year for the privilege of keeping a coach, than to pay
all at once forty or forty-eight pounds additional price to the
coach-maker; or a sum equivalent to what the tax is likely to cost him
during the time he uses the same coach. A service of plate in the same
manner, may last more than a century. It is certainly-easier for the
consumer to pay five shillings a-year for every hundred ounces of
plate, near one per cent. of the value, than to redeem this long
annuity at five-and-twenty or thirty years purchase, which would
enhance the price at least five-and-twenty or thirty per cent. The
different taxes which affect houses, are certainly more conveniently
paid by moderate annual payments, than by a heavy tax of equal value
upon the first building or sale of the house.

It was the well-known proposal of Sir Matthew Decker, that all
commodities, even those of which the consumption is either immediate
or speedy, should be taxed in this manner; the dealer advancing
nothing, but the consumer paying a certain annual sum for the licence
to consume certain goods. The object of his scheme was to promote all
the different branches of foreign trade, particularly the carrying
trade, by taking away all duties upon importation and exportation, and
thereby enabling the merchant to employ his whole capital and credit
in the purchase of goods and the freight of ships, no part of either
being diverted towards the advancing of taxes, The project, however,
of taxing, in this manner, goods of immediate or speedy consumption,
seems liable to the four following very important objections. First,
the tax would be more unequal, or not so well proportioned to the
expense and consumption of the different contributors, as in the way
in which it is commonly imposed. The taxes upon ale, wine, and
spiritous liquors, which are advanced by the dealers, are finally paid
by the different consumers, exactly in proportion to their respective
consumption. But if the tax were to be paid by purchasing a licence to
drink those liquors, the sober would, in proportion to his
consumption, be taxed much more heavily than the drunken consumer. A
family which exercised great hospitality, would be taxed much more
lightly than one who entertained fewer guests. Secondly, this mode of
taxation, by paying for an annual, half-yearly, or quarterly licence
to consume certain goods, would diminish very much one of the
principal conveniences of taxes upon goods of speedy consumption; the
piece-meal payment. In the price of threepence halfpenny, which is at
present paid for a pot of porter, the different taxes upon malt, hops,
and beer, together with the extraordinary profit which the brewer
charges for having advanced than, may perhaps amount to about three
halfpence. If a workman can conveniently spare those three halfpence,
he buys a pot of porter. If he cannot, he contents himself with a
pint; and, as a penny saved is a penny got, he thus gains a farthing
by his temperance. He pays the tax piece-meal, as he can afford to pay
it, and when he can afford to pay it, and every act of payment is
perfectly voluntary, and what he can avoid if he chuses to do so.
Thirdly, such taxes would operate less as sumptuary laws. When the
licence was once purchased, whether the purchaser drunk much or drunk
little, his tax would be the same. Fourthly, if a workman were to pay
all at once, by yearly, half-yearly, or quarterly payments, a tax
equal to what he at present pays, with little or no inconveniency,
upon all the different pots and pints of porter which he drinks in any
such period of time, the sum might frequently distress him very much.
This mode of taxation, therefore, it seems evident, could never,
without the most grievous oppression, produce a revenue nearly equal
to what is derived from the present mode without any oppression. In
several countries, however, commodities of an immediate or very speedy
consumption are taxed in this manner. In Holland, people pay so much
a-head for a licence to drink tea. I have already mentioned a tax upon
bread, which, so far as it is consumed in farm houses and country
villages, is there levied in the same manner.

The duties of excise are imposed chiefly upon goods of home produce,
destined for home consumption. They are imposed only upon a few sorts
of goods of the most general use. There can never be any doubt, either
concerning the goods which are subject to those duties, or concerning
the particular duty which each species of goods is subject to. They
fall almost altogether upon what I call luxuries, excepting always the
four duties above mentioned, upon salt, soap, leather, candles, and
perhaps that upon green glass.

The duties of customs are much more ancient than those of excise. They
seem to have been called customs, as denoting customary payments,
which had been in use for time immemorial. They appear to have been
originally considered as taxes upon the profits of merchants. During
the barbarous times of feudal anarchy, merchants, like all the other
inhabitants of burghs, were considered as little better than
emancipated bondmen, whose persons were despised, and whose gains were
envied. The great nobility, who had consented that the king should
tallage the profits of their own tenants, were not unwilling that he
should tallage likewise those of an order of men whom it was much less
their interest to protect. In those ignorant times, it was not
understood, that the profits of merchants are a subject not taxable
directly; or that the final payment of all such taxes must fall, with
a considerable overcharge, upon the consumers.

The gains of alien merchants were looked upon more unfavourably than
those of English merchants. It was natural, therefore, that those of
the former should be taxed more heavily than those of the latter. This
distinction between the duties upon aliens and those upon English
merchants, which was begun from ignorance, has been continued front
the spirit of monopoly, or in order to give our own merchants an
advantage, both in the home and in the foreign market.

With this distinction, the ancient duties of customs were imposed
equally upon all sorts of goods, necessaries as well its luxuries,
goods exported as well as goods imported. Why should the dealers in
one sort of goods, it seems to have been thought, be more favoured
than those in another? or why should the merchant exporter be more
favoured than the merchant importer?

The ancient customs were divided into three branches. The first, and,
perhaps, the most ancient of all those duties, was that upon wool and
leather. It seems to have been chiefly or altogether an exportation
duty. When the woollen manufacture came to be established in England,
lest the king should lose any part of his customs upon wool by the
exportation of woollen cloths, a like duty was imposed upon them. The
other two branches were, first, a duty upon wine, which being imposed
at so much a-ton, was called a tonnage; and, secondly, a duty upon all
other goods, which being imposed at so much a-pound of their supposed
value, was called a poundage. In the forty-seventh year of Edward
III., a duty of sixpence in the pound was imposed upon all goods
exported and imported, except wools, wool-felts, leather, and wines
which were subject to particular duties. In the fourteenth of Richard
II., this duty was raised to one shilling in the pound; but, three
years afterwards, it was again reduced to sixpence. It was raised to
eightpence in the second year of Henry IV.; and, in the fourth of the
same prince, to one shilling. From this time to the ninth year of
William III., this duty continued at one shilling in the pound. The
duties of tonnage and poundage were generally granted to the king by
one and the same act of parliament, and were called the subsidy of
tonnage and poundage. The subsidy of poundage having continued for so
long a time at one shilling in the pound, or at five per cent., a
subsidy came, in the language of the customs, to denote a general duty
of this kind of five per cent. This subsidy, which is now called the
old subsidy, still continues to be levied, according to the book of
rates established by the twelfth of Charles II. The method of
ascertaining, by a book of rates, the value of goods subject to this
duty, is said to be older than the time of James I. The new subsidy,
imposed by the ninth and tenth of William III., was an additional five
per cent. upon the greater part of goods. The one-third and the
two-third subsidy made up between them another five per cent. of which
they were proportionable parts. The subsidy of 1747 made a fourth five
per cent. upon the greater part of goods; and that of 1759, a fifth
upon some particular sorts of goods. Besides those five subsidies, a
great variety of other duties have occasionally been imposed upon
particular sorts of goods, in order sometimes to relieve the
exigencie's of the state, and sometimes to regulate the trade of the
country, according to the principles of the mercantile system.

That system has come gradually more and more into fashion. The old
subsidy was imposed indifferently upon exportation, as well as
importation. The four subsequent subsidies, as well as the other
duties which have since been occasionally imposed upon particular
sorts of goods, have, with a few exceptions, been laid altogether upon
importation. The greater part of the ancient duties which had been
imposed upon the exportation of the goods of home produce and
manufacture, have either been lightened or taken away altogether. In
most cases, they have been taken away. Bounties have even been given
upon the exportation of some of them. Drawbacks, too, sometimes of the
whole, and, in most cases, of a part of the duties which are paid upon
the importation of foreign goods, have been granted upon their
exportation. Only half the duties imposed by the old subsidy upon
importation, are drawn back upon exportation; but the whole of those
imposed by the latter subsidies and other imposts are, upon the
greater parts of the goods, drawn back in the same manner. This
growing favour of exportation, and discouragement of importation, have
suffered only a few exceptions, which chiefly concern the materials of
some manufactures. These our merchants and manufacturers are willing
should come as cheap as possible to themselves, and as dear as
possible to their rivals and competitors in other countries. Foreign
materials are, upon this account, sometimes allowed to be imported
duty-free; spanish wool, for example, flax, and raw linen yarn. The
exportation of the materials of home produce, and of those which are
the particular produce of our colonies, has sometimes been prohibited,
and sometimes subjected to higher duties. The exportation of English
wool has been prohibited. That of beaver skins, of beaver wool, and of
gum-senega, has been subjected to higher duties; Great Britain, by the
conquests of Canada and Senegal, having got almost the monopoly of
those commodities.

That the mercantile system has not been very favourable to the revenue
of the great body of the people, to the annual produce of the land and
labour of the country, I have endeavoured to show in the fourth book
of this Inquiry. It seems not to have been more favourable to the
revenue of the sovereign; so far, at least, as that revenue depends
upon the duties of customs.

In consequence of that system, the importation of several sorts of
goods has been prohibited altogether. This prohibition has, in some
cases, entirely prevented, and in others has very much diminished, the
importation of those commodities, by reducing the importers to the
necessity of smuggling. It has entirely prevented the importation of
foreign wollens; and it has very much diminished that of foreign silks
and velvets, In both cases, it has entirely annihilated the revenue of
customs which might have been levied upon such importation.

The high duties which have been imposed upon the importation of many
different sorts of foreign goods in order to discourage their
consumption in Great Britain, have, in many cases, served only to
encourage smuggling, and, in all cases, have reduced the revenues of
the customs below what more moderate duties would have afforded. The
saying of Dr. Swift, that in the arithmetic of the customs, two and
two, instead of making four, make sometimes only one, holds perfectly
true with regard to such heavy duties, which never could have been
imposed, had not the mercantile system taught us, in many cases, to
employ taxation as an instrument, not of revenue, but of monopoly.

The bounties which are sometimes given upon the exportation of home
produce and manufactures, and the drawbacks which are paid upon the
re-exportation of the greater part of foreign goods, have given
occasion to many frauds, and to a species of smuggling, more
destructive of the public revenue than any other. In order to obtain
the bounty or drawback, the goods, it is well known, are sometimes
shipped, and sent to sea, but soon afterwards clandestinely re-landed
in some other part of the country. The defalcation of the revenue of
customs occasioned by bounties and drawbacks, of which a great part
are obtained fraudulently, is very great. The gross produce of the
customs, in the year which ended on the 5th of January 1755, amounted
to £5,068,000. The bounties which were paid out of this revenue,
though in that year there was no bounty upon corn, amounted to
£167,806. The drawbacks which were paid upon debentures and
certificates, to £2,156,800. Bounties and drawbacks together amounted
to £2,324,600. In consequence of these deductions, the revenue of the
customs amounted only to £2,743,400; from which deducting £287,900 for
the expense of management, in salaries and other incidents, the neat
revenue of the customs for that year comes out to be £2,455,500. The
expense of management, amounts, in this manner, to between five and
six per cent. upon the gross revenue of the customs; and to something
more than ten per cent. upon what remains of that revenue, after
deducting what is paid away in bounties and drawbacks.

Heavy duties being imposed upon almost all goods imported, our
merchant importers smuggle as much, and make entry of as little as
they can. Our merchant exporters, on the contrary, make entry of more
than they export; sometimes out of vanity, and to pass for great
dealers in goods which pay no duty gain a bounty back. Our exports, in
consequence of these different frauds, appear upon the custom-house
books greatly to overbalance our imports, to the unspeakable comfort
of those politicians, who measure the national prosperity by what they
call the balance of trade.

All goods imported, unless particularly exempted, and such exemptions
are not very numerous, are liable to some duties of customs. If any
goods are imported, not mentioned in the book of rates, they are taxed
at 4s:9¾d. for every twenty shillings value, according to the oath of
the importer, that is, nearly at five subsidies, or five poundage
duties. The book of rates is extremely comprehensive, and enumerates a
great variety of articles, many of them little used, and, therefore,
not well known. It is, upon this account, frequently uncertain under
what article a particular sort of goods ought to be classed, and,
consequently what duty they ought to pay. Mistakes with regard to this
sometimes ruin the custom-house officer, and frequently occasion much
trouble, expense, and vexation to the importer. In point of
perspicuity, precision, and distinctness, therefore, the duties of
customs are much inferior to those of excise.

In order that the greater part of the members of any society should
contribute to the public revenue, in proportion to their respective
expense, it does not seem necessary that every single article of that
expense should be taxed. The revenue which is levied by the duties of
excise is supposed to fall as equally upon the contributors as that
which is levied by the duties of customs; and the duties of excise are
imposed upon a few articles only of the most general used and
consumption. It has been the opinion of many people, that, by proper
management, the duties of customs might likewise, without any loss to
the public revenue, and with great advantage to foreign trade, be
confined to a few articles only.

The foreign articles, of the most general  use and consumption in
Great Britain, seem at present to consist chiefly in foreign wines and
brandies; in some of the productions of America and the West Indies,
sugar, rum, tobacco, cocoa-nuts, etc. and in some of those of the East
Indies, tea, coffee, china-ware, spiceries of all kinds, several sorts
of piece-goods, etc. These different articles afford, the greater part
of the perhaps, at present, revenue which is drawn from the duties of
customs. The taxes which at present subsist upon foreign manufactures,
if you except those upon the few contained in the foregoing
enumeration, have, the greater part of them, been imposed for the
purpose, not of revenue, but of monopoly, or to give our own merchants
an advantage in the home market. By removing all prohibitions, and by
subjecting all foreign manufactures to such moderate taxes, as it was
found from experience, afforded upon each article the greatest revenue
to the public, our own workmen might still have a considerable
advantage in the home market; and many articles, some of which at
present afford no revenue to government, and others a very
inconsiderable one, might afford a very great one.

High taxes, sometimes by diminishing the consumption of the taxed
commodities, and sometimes by encouraging smuggling frequently afford
a smaller revenue to government than what might be drawn from more
moderate taxes.

When the diminution of revenue is the effect of the diminution of
consumption, there can be but one remedy, and that is the lowering of
the tax.

When the diminution of revenue is the effect of the encouragement
given to smuggling, it may, perhaps, be remedied in two ways; either
by diminishing the temptation to smuggle, or by increasing the
difficulty of smuggling. The temptation to smuggle can be diminished
only by the lowering of the tax; and the difficulty of smuggling can
be increased only by establishing that system of administration which
is most proper for preventing it.

The excise laws, it appears, I believe, from experience, obstruct and
embarrass the operations of the smuggler much more effectually than
those of the customs. By introducing into the customs a system of
administration as similar to that of the excise as the nature of the
different duties will admit, the difficulty of smuggling might be very
much increased. This alteration, it has been supposed by many people,
might very easily be brought about.

The importer of commodities liable to any duties of customs, it has
been said, might, at his option, be allowed either to carry them to
his own private warehouse; or to lodge them in a warehouse, provided
either at his own expense or at that of the public, but under the key
of the custom-house officer, and never to be opened but in his
presence. If the merchant carried them to his own private warehouse,
the duties to be immediately paid, and never afterwards to be drawn
back; and that warehouse to be at all times subject to the visit and
examination of the custom-house officer, in order to ascertain how far
the quantity contained in it corresponded with that for which the duty
had been paid. If he carried them to the public warehouse, no duty to
be paid till they were taken out for home consumption. If taken out
for exportation, to be duty-free; proper security being always given
that they should be so exported. The dealers in those particular
commodities, either by wholesale or retail, to be at all times subject
to the visit and examination of the custom-house officer; and to be
obliged to justify, by proper certificates, the payment of the duty
upon the whole quantity contained in their shops or warehouses. What
are called the excise duties upon rum imported, are at present levied
in this manner; and the same system of administration might, perhaps,
be extended to all duties upon goods imported; provided always that
those duties were, like the duties of excise, confined to a few sorts
of goods of the most general use and consumption. If they were
extended to almost all sorts of goods, as at present, public
warehouses of sufficient extent could not easily be provided; and
goods of a very delicate nature, or of which the preservation required
much care and attention, could not safely be trusted by the merchant
in any warehouse but his own.

If, by such a system of administration, smuggling to any considerable
extent could be prevented, even under pretty high duties; and if every
duty was occasionally either heightened or lowered according as it was
most likely, either the one way or the other, to afford the greatest
revenue to the state; taxation being always employed as an instrument
of revenue, and never of monopoly; it seems not improbable that a
revenue, at least equal to the present neat revenue of the customs,
might be drawn from duties upon the importation of only a few sorts of
goods of the most general use and consumption; and that the duties of
customs might thus be brought to the same degree of simplicity,
certainty, and precision, as those of excise. What the revenue at
present loses by drawbacks upon the re-exportation of foreign goods,
which are afterwards re-landed and consumed at home, would, under this
system, be saved altogether. If to this saving, which would alone be
very considerable, were added the abolition of all bounties upon the
exportation of home produce; in all cases in which those bounties were
not in reality drawbacks of some duties of excise which had before
been advanced; it cannot well be doubted, but that the neat revenue of
customs might, after an alteration of this kind, be fully equal to
what it had ever been before.

If, by such a change of system, the public revenue suffered no loss,
the trade and manufactures of the country would certainly gain a very
considerable advantage. The trade in the commodities not taxed, by far
the greatest number would be perfectly free, and might be carried on
to and from all parts of the world with every possible advantage.
Among those commodities would be comprehended all the necessaries of
life, and all the materials of manufacture. So far as the free
importation of the necessaries of life reduced their average money
price in the home market, it would reduce the money price of labour,
but without reducing in any respect its real recompence. The value of
money is in proportion to the quantity of the necessaries of life
which it will purchase. That of the necessaries of life is altogether
independent of the quantity of money which can be had for them. The
reduction in the money price of labour would necessarily be attended
with a proportionable one in that of all home manufactures, which
would thereby gain some advantage in all foreign markets. The price of
some manufactures would be reduced, in a still greater proportion, by
the free importation of the raw materials. If raw silk could be
imported from China and Indostan, duty-free, the silk manufacturers in
England could greatly undersell those of both France and Italy. There
would be no occasion to prohibit the importation of foreign silks and
velvets. The cheapness of their goods would secure to our own workmen,
not only the possession of a home, but a very great command of the
foreign market. Even the trade in the commodities taxed, would be
carried on with much more advantage than at present. If those
commodities were delivered out of the public warehouse for foreign
exportation, being in this case exempted from all taxes, the trade in
them would be perfectly free. The carrying trade, in all sorts of
goods, would, under this system, enjoy every possible advantage. If
these commodities were delivered out for home consumption, the
importer not being obliged to advance the tax till he had an
opportunity of selling his goods, either to some dealer, or to some
consumer, he could always afford to sell them cheaper than if he had
been obliged to advance it at the moment of importation. Under the
same taxes, the foreign trade of consumption, even in the taxed
commodities, might in this manner be carried on with much more
advantage than it is at present.

It was the object of the famous excise scheme of Sir Robert Walpole,
to establish, with regard to wine and tobacco, a system not very
unlike that which is here proposed. But though the bill which was then
brought into Parliament, comprehended those two commodities only, it
was generally supposed to be meant as an introduction to a more
extensive scheme of the same kind. Faction, combined with the interest
of smuggling merchants, raised so violent, though so unjust a clamour,
against that bill, that the minister thought proper to drop it; and,
from a dread of exciting a clamour of the same kind, none of his
successors have dared to resume the project.

The duties upon foreign luxuries, imported for home consumption,
though they sometimes fall upon the poor, fall principally upon people
of middling or more than middling fortune. Such are, for example, the
duties upon foreign wines, upon coffee, chocolate, tea, sugar, etc.

The duties upon the cheaper luxuries of home produce, destined for
home consumption, fall pretty equally upon people of all ranks, in
proportion to their respective expense. The poor pay the duties upon
malt, hops, beer, and ale, upon their own consumption; the rich, upon
both their own consumption and that of their servants.

The whole consumption of the inferior ranks of people, or of those
below the middling rank, it must be observed, is, in every country,
much greater, not only in quantity, but in value, than that of the
middling, and of those above the middling rank. The whole expense of
the inferior is much greater titan that of the superior ranks. In the
first place, almost the whole capital of every country is annually
distributed among the inferior ranks of people, as the wages of
productive labour. Secondly, a great part of the revenue, arising from
both the rent of land and the profits of stock, is annually
distributed among the same rank, in the wages and maintenance of
menial servants, and other unproductive labourers. Thirdly, some part
of the profits of stock belongs to the same rank, as a revenue arising
from the employment of their small capitals. The amount of the profits
annually made by small shopkeepers, tradesmen, and retailers of all
kinds, is everywhere very considerable, and makes a very considerable
portion of the annual produce. Fourthly and lastly, some part even of
the rent of land belongs to the same rank; a considerable part to
those who are somewhat below the middling rank, and a small part even
to the lowest rank; common labourers sometimes possessing in property
an acre or two of land. Though the expense of those inferior ranks of
people, therefore, taking them individually, is very small, yet the
whole mass of it, taking them collectively, amounts always to by much
the largest portion of the whole expense of the society; what remains
of the annual produce of the land and labour of the country, for the
consumption of the superior ranks, being always much less, not only in
quantity, but in value. The taxes upon expense, therefore, which fall
chiefly upon that of the superior ranks of people, upon the smaller
portion of the annual produce, are likely to be much less productive
than either those which fall indifferently upon the expense of all
ranks, or even those which fall chiefly upon that of the inferior
ranks, than either those which fall indifferently upon the whole
annual produce, or those which fall chiefly upon the larger portion of
it. The excise upon the materials and manufacture of home-made
fermented and spirituous liquors, is, accordingly, of all the
different taxes upon expense, by far the most productive; and this
branch of the excise falls very much, perhaps principally, upon the
expense of the common people. In the year which ended on the 5th of
July 1775, the gross produce of this branch of the excise amounted to
£3,341,837:9:9.

It must always be remembered, however, that it is the luxuries, and
not the necessary expense of the inferior ranks of people, that ought
ever to be taxed. The final payment of any tax upon their necessary
expense, would fall altogether upon the superior ranks of people; upon
the smaller portion of the annual produce, and not upon the greater.
Such a tax must, in all cases, either raise the wages of labour, or
lessen the demand for it. It could not raise the wages of labour,
without throwing the final payment of the tax upon the superior ranks
of people. It could not lessen the demand for labour, without
lessening the annual produce of the land and labour of the country,
the fund upon which all taxes must be finally paid. Whatever might be
the state to which a tax of this kind reduced the demand for labour,
it must always raise wages higher than they otherwise would be in that
state; and the final payment of this enhancement of wages must, in all
cases, fall upon the superior ranks of people.

Fermented liquors brewed, and spiritous liquors distilled, not for
sale, but for private use, are not in Great Britain liable to any
duties of excise. This exemption, of which the object is to save
private families from the odious visit and examination of the
tax-gatherer, occasions the burden of those duties to fall frequently
much lighter upon the rich than upon the poor. It is not, indeed, very
common to distil for private use, though it is done sometimes. But in
the country, many middling and almost all rich and great families,
brew their own beer. Their strong beer, therefore, costs them eight
shillings a-barrel less than it costs the common brewer, who must have
his profit upon the tax, as well as upon all the other expense which
he advances. Such families, therefore, must drink their beer at least
nine or ten shillings a-barrel cheaper than any liquor of the same
quality can be drank by the common people, to whom it is everywhere
more convenient to buy their beer, by little and little, from the
brewery or the ale-house. Malt, in the same manner, that is made for
the use of a private family, is not liable to the visit or examination
of the tax-gatherer but, in this case the family must compound at
seven shillings and sixpence a-head for the tax. Seven shillings and
sixpence are equal to the excise upon ten bushels of malt; a quantity
fully equal to what all the different members of any sober family,
men, women, and children, are, at an average, likely to consume. But
in rich and great families, where country hospitality is much
practised, the malt liquors consumed by the members of the family make
but a small part of the consmnption of the house. Either on account of
this composition, however, or for other reasons, it is not near so
common to malt as to brew for private use. It is difficult to imagine
any equitable reason, why those who either brew or distil for private
use should not be subject to a composition of the same kind.

A greater revenue than what is at present drawn from all the heavy
taxes upon malt, beer, and ale, might be raised, it has frequently
been said, by a much lighter tax upon malt; the opportunities of
defrauding the revenue being much greater in a brewery than in a
malt-house; and those who brew for private use being exempted from all
duties or composition for duties, which is not the case with those who
malt for private use.

In the porter brewery of London, a quarter of malt is commonly brewed
into more than two barrels and a-half, sometimes into three barrels of
porter. The different taxes upon malt amount to six shillings
a-quarter; those upon strong ale and beer to eight shillings a-barrel.
In the porter brewery, therefore, the different taxes upon malt, beer,
and ale, amount to between twenty-six and thirty shillings upon the
produce of a quarter of malt. In the country brewery for common
country sale, a quarter of malt is seldom brewed into less than two
barrels of strong, and one barrel of small beer; frequently into two
barrels and a-half of strong beer. The different taxes upon small beer
amount to one shilling and fourpence a-barrel. In the country brewery,
therefore, the different taxes upon malt, beer, and ale, seldom amount
to less than twenty-three shillings and fourpence, frequently to
twenty-six shillings, upon the produce of a quarter of malt. Taking
the whole kingdom at an average, therefore, the whole amount of the
duties upon malt, beer, and ale, cannot be estimated at less than
twenty-four or twenty-five shillings upon the produce of a quarter of
malt. But by taking off all the different duties upon beer and ale,
and by trebling the malt tax, or by raising it from six to eighteen
shilling's upon the quarter of malt, a greater revenue, it is said,
might be raised by this single tax, than what is at present drawn from
all those heavier taxes.


In 1772, the old malt tax produced.........  £722,023: 11: 11
                           The additional... £356,776:  7:  9¾
In 1775, the old tax produced............... £561,627:  3:  7½
                           The additional... £278,650: 15:  3¾
In 1774, the old tax  produced  ............ £624,614: 17:  5¾
                           The additional....£310,745:  2:  8½
In 1775, the old tax produced   ....... .....£657,357:  0:  8¼
                           The additional....£323,785: 12:  6¼
                                           £5,855,580: 12:  0¾
Average of these four years  ..............  £958,895:  3:  0

In 1772, the country excise produced.......£1,243,120:  5:  3
                  The London brewery          408,260:  7:  2¾
In 1773, the country excise................£1,245,808:  3:  3
                  The London brewery          405,406: 17: 10½
In 1774, the country excise................£1,246,373: 14:  5½
                  The London brewery          320,601: 18:  0¼
In 1775, the country excise................£1,214,583:  6:  1¼
                  The London brewery          463,670:  7:  0¼
                                         4)£6,547,832: 19:  2¼
Average of these four years  ..............£1,636,958:  4:  9½
To which adding the average malt tax........  958,895:  3:  0¼

The whole amount of those different
              taxes comes out to be........£2,595,835:  7: 10

But, by trebling the malt tax,
or by raising it from six to
eighteen shillings upon the quarter
of malt, that single tax would produce.....£2,876,685:  9:  0
A sum which exceeds the
                       foregoing by....       280,832:  1:  3

Under the old malt tax, indeed, is comprehended a tax of four
shillings upon the hogshead of cyder, and another of ten shillings
upon the barrel of mum. In 1774, the tax upon cyder produced only
£3,083:6:8. It probably fell somewhat short of its usual amount; all
the different taxes upon cyder, having, that year, produced less than
ordinary. The tax upon mum, though much heavier, is still less
productive, on account of the smaller consumption of that liquor. But
to balance whatever may be the ordinary amount of those two taxes,
there is comprehended under what is called the country excise, first,
the old excise of six shillings and eightpence upon the hogshead of
cyder; secondly, a like tax of six shillings and eightpence upon the
hogshead of verjuice; thirdly, another of eight shillings and
ninepence upon the hogshead of vinegar; and, lastly, a fourth tax of
elevenpence upon the gallon of mead or metheglin. The produce of those
different taxes will probably much more than counterbalance that of
the duties imposed, by what is called the annual malt tax, upon cyder
and mum.

Malt is consumed, not only in the brewery of beer and ale, but in the
manufacture of low wines and spirits. If the malt tax were to be
raised to eighteen shillings upon the quarter, it might be necessary
to make some abatement in the different excises which are imposed upon
those particular sorts of low wines and spirits, of which malt makes
any part of the materials. In what are called malt spirits, it makes
commonly but a third part of the materials; the other two-thirds being
either raw barley, or one-third barley and one-third wheat. In the
distillery of malt spirits, both the opportunity and the temptation to
smuggle are much greater than either in a brewery or in a malt-house;
the opportunity, on account of the smaller bulk and greater value of
the commodity, and the temptation, on account of the superior height
of the duties, which amounted to 3s. 10 2/3d. upon the gallon of
spirits. {Though the duties directly imposed upon proof spirits amount
only to 2s. 6d per gallon, these, added to the duties upon the low
wines, from which they are distilled, amount to 3s 10 2/3d. Both low
wines and proof spirits are, to prevent frauds, now rated according to
what they gauge in the wash.}

By increasing the duties upon malt, and reducing those upon the
distillery, both the opportunities and the temptation to smuggle would
be diminished, which might occasion a still further augmentation of
revenue.

It has for some time past been the policy of Great Britain to
discourage the consumption of spiritous liquors, on account of their
supposed tendency to ruin the health and to corrupt the morals of the
common people. According to this policy, the abatement of the taxes
upon the distillery ought not to be so great as to reduce, in any
respect, the price of those liquors. Spiritous liquors might remain as
dear as ever; while, at the same time, the wholesome and invigorating
liquors of beer and ale might be considerably reduced in their price.
The people might thus be in part relieved from one of the burdens of
which they at present complain the most; while, at the same time, the
revenue might be considerably augmented.

The objections of Dr. Davenant to this alteration in the present
system of excise duties, seem to be without foundation. Those
objections are, that the tax, instead of dividing itself, as at
present, pretty equally upon the profit of the maltster, upon that of
the brewer and upon that of the retailer, would so far as it affected
profit, fall altogether upon that of the maltster; that the maltster
could not so easily get back the amount of the tax in the advanced
price of his malt, as the brewer and retailer in the advanced price of
their liquor; and that so heavy a tax upon malt might reduce the rent
and profit of barley land.

No tax can ever reduce, for any considerable time, the rate of profit
in any particular trade, which must always keep its level with other
trades in the neighbourhood. The present duties upon malt, beer, and
ale, do not affect the profits of the dealers in those commodities,
who all get back the tax with an additional profit, in the enhanced
price of their goods. A tax, indeed, may render the goods upon which
it is imposed so dear, as to diminish the consumption of them. But the
consumption of malt is in malt liquors; and a tax of eighteen
shillings upon the quarter of malt could not well render those liquors
dearer than the different taxes, amounting to twenty-four or
twenty-five shillings, do at present. Those liquors, on the contrary,
would probably become cheaper, and the consumption of them would be
more likely to increase than to diminish.

It is not very easy to understand why it should be more difficult for
the maltster to get back eighteen shillings in the advanced price of
his malt, than it is at present for the brewer to get back twenty-four
or twenty-five, sometimes thirty shillings, in that of his liquor. The
maltster, indeed, instead of a tax of six shillings, would be obliged
to advance one of eighteen shilling upon every quarter of malt. But
the brewer is at present obliged to advance a tax of twenty-four or
twentyfive, sometimes thirty shillings, upon every quarter of malt
which he brews. It could not be more inconvenient for the maltster to
advance a lighter tax, than it is at present for the brewer to advance
a heavier one. The maltster does not always keep in his granaries a
stock of malt, which it will require a longer time to dispose of than
the stock of beer and ale which the brewer frequently keeps in his
cellars. The former, therefore, may frequently get the returns of his
money as soon as the latter. But whatever inconveniency might arise to
the maltster from being obliged to advance a heavier tax, it could
easily be remedied, by granting him a few months longer credit than is
at present commonly given to the brewer.

Nothing could reduce the rent and profit of barley land, which did not
reduce the demand for barley. But a change of system, which reduced
the duties upon a quarter of malt brewed into beer and ale, from
twentyfour and twenty-five shillings to eighteen shillings, would be
more likely to increase than diminish that demand. The rent and profit
of barley land, besides, must always be nearly equal to those of other
equally fertile and equally well cultivated land. If they were less,
some part of the barley land would soon be turned to some other
purpose; and if they were greater, more land would soon be turned to
the raising of barley. When the ordinary price of any particular
produce of land is at what may be called a monopoly price, a tax upon
it necessarily reduces the rent and profit of the land which grows it.
A tax upon the produce of those precious vineyards, of which the wine
falls so much short of the effectual demand, that its price is always
above the natural proportion to that of the produce of other equally
fertile and equally well cultivated land, would necessarily reduce the
rent and profit of those vineyards. The price of the wines being
already the highest that could be got for the quantity commonly sent
to market, it could not be raised higher without diminishing that
quantity; and the quantity could not be diminished without still
greater loss, because the lands could not be turned to any other
equally valuable produce. The whole weight of the tax, therefore,
would fall upon the rent and profit; properly upon the rent of the
vineyard. When it has been proposed to lay any new tax upon sugar, our
sugar planters have frequently complained that the whole weight of
such taxes fell not upon the consumer, but upon the producer; they
never having been able to raise the price of their sugar after the tax
higher than it was before. The price had, it seems, before the tax,
been a monopoly price; and the arguments adduced to show that sugar
was an improper subject of taxation, demonstrated perhaps that it was
a proper one; the gains of monopolists, whenever they can be come at,
being certainly of all subjects the most proper. But the ordinary
price of barley has never been a monopoly price; and the rent and
profit of barley land have never been above their natural proportion
to those of other equally fertile and equally well cultivated land.
The different taxes which have been imposed upon malt, beer, and ale,
have never lowered the price of barley; have never reduced the rent
and profit of barley land. The price of malt to the brewer has
constantly risen in proportion to the taxes imposed upon it; and those
taxes, together with the different duties upon beer and ale, have
constantly either raised the price, or, what comes to the same thing,
reduced the quality of those commodities to the consumer. The final
payment of those taxes has fallen constantly upon the consumer, and
not upon the producer.

The only people likely to suffer by the change of system here
proposed, are those who brew for their own private use. But the
exemption, which this superior rank of people at present enjoy, from
very heavy taxes which are paid by the poor labourer and artificer, is
surely most unjust and unequal, and ought to be taken away, even
though this change was never to take place. It has probably been the
interest of this superior order of people, however, which has hitherto
prevented a change of system that could not well fail both to increase
the revenue and to relieve the people.

Besides such duties as those of custom and excise above mentioned,
there are several others which affect the price of goods more
unequally and more indirectly. Of this kind are the duties, which, in
French, are called peages, which in old Saxon times were called the
duties of passage, and which seem to have been originally established
for the same purpose as our turnpike tolls, or the tolls upon our
canals and navigable rivers, for the maintenance of the road or of the
navigation. Those duties, when applied to such purposes, are most
properly imposed according to the bulk or weight of the goods. As they
were originally local and provincial duties, applicable to local and
provincial purposes, the administration of them was, in most cases,
entrusted to the particular town, parish, or lordship, in which they
were levied; such communities being, in some way or other, supposed to
be accountable for the application. The sovereign, who is altogether
unaccountable, has in many countries assumed to himself the
administration of those duties; and though he has in most cases
enhanced very much the duty, he has in many entirely neglected the
application. If the turnpike tolls of Great Britain should ever become
one of the resources of government, we may learn, by the example of
many other nations, what would probably be the consequence. Such
tolls, no doubt, are finally paid by the consumer; but the consumer is
not taxed in proportion to his expense, when he pays, not according to
the value, but according to the bulk or weight of what he consumes.
When such duties are imposed, not according to the bulk or weight, but
according to the supposed value of the goods, they become properly a
sort of inland customs or excise, which obstruct very much the most
important of all branches of commerce, the interior commerce of the
country.

In some small states, duties similar to those passage duties are
imposed upon goods carried across the territory, either by land or by
water, from one foreign country to another. These are in some
countries called transit-duties. Some of the little Italian states
which are situated upon the Po, and the rivers which run into it,
derive some revenue from duties of this kind, which are paid
altogether by foreigners, and which, perhaps, are the only duties that
one state can impose upon the subjects of another, without obstruction
in any respect, the industry or commerce of its own. The most
important transit-duty in the world, is that levied by the king of
Denmark upon all merchant ships which pass through the Sound.

Such taxes upon luxuries, as the greater part of the duties of customs
and excise, though they all fall indifferently upon every different
species of revenue, and are paid finally, or without any retribution,
by whoever consumes the commodities upon which they are imposed; yet
they do not always fall equally or proportionally upon the revenue of
every individual. As every man's humour regulates the degree of his
consumption, every man contributes rather according to his humour,
than proportion to his revenue: the profuse contribute more, the
parsimonious less, than their proper proportion. During the minority
of a man of great fortune, he contributes commonly very little, by his
consumption, towards the support of that state from whose protection
he derives a great revenue. Those who live in another country,
contribute nothing by their consumption towards the support of the
government of that country, in which is situated the source of their
revenue. If in this latter country there should be no land tax, nor
any considerable duty upon the transference either of moveable or
immoveable property, as is the case in Ireland, such absentees may
derive a great revenue from the protection of a government, to the
support of which they do not contribute a single shilling. This
inequality is likely to be greatest in a country of which the
government is, in some respects, subordinate and dependant upon that
of some other. The people who possess the most extensive property in
the dependant, will, in this case, generally chuse to live in the
governing country. Ireland is precisely in this situation; and we
cannot therefore wonder, that the proposal of a tax upon absentees
should be so very popular in that country. It might, perhaps, be a
little difficult to ascertain either what sort, or what degree of
absence, would subject a man to be taxed as an absentee, or at what
precise time the tax should either begin or end. If you except,
however, this very peculiar situation, any inequality in the
contribution of individuals which can arise from such taxes, is much
more than compensated by the very circumstance which occasions that
inequality; the circumstance that every man's contribution is
altogether voluntary; it being altogether in his power, either to
consume, or not to consume, the commodity taxed. Where such taxes,
therefore, are properly assessed, and upon proper commodities, they
are paid with less grumbling than any other. When they are advanced by
the merchant or manufacturer, the consumer, who finally pays them,
soon comes to confound them with the price of the commodities, and
almost forgets that he pays any tax.

Such taxes are, or may be, perfectly certain; or may be assessed, so
as to leave no doubt concerning either what ought to be paid, or when
it ought to be paid; concerning either the quantity or the time of
payment. What ever uncertainty there may sometimes be, either in the
duties of customs in Great Britain, or in other duties of the same
kind in other countries, it cannot arise from the nature of those
duties, but from the inaccurate or unskilful manner in which the law
that imposes them is expressed.

Taxes upon luxuries generally are, and always may be, paid piece-meal,
or in proportion as the contributors have occasion to purchase the
goods upon which they are imposed. In the time and mode of payment,
they are, or may be, of all taxes the most convenient. Upon the whole,
such taxes, therefore, are perhaps as agreeable to the three first of
the four general maxims concerning taxation, as any other. They offend
in every respect against the fourth.

Such taxes, in proportion to what they bring into the public treasury
of the state, always take out, or keep out, of the pockets of the
people, more than almost any other taxes. They seem to do this in all
the four different ways in which it is possible to do it.

First, the levying of such taxes, even when imposed in the most
judicious manner, requires a great number of custom-house and excise
officers, whose salaries and perquisites are a real tax upon the
people, which brings nothing into the treasury of the state. This
expense, however, it must be acknowledged, is more moderate in Great
Britain than in most other countries. In the year which ended on the
5th of July, 1775, the gross produce of the different duties, under
the management of the commissioners of excise in England, amounted to
£5,507,308:18:8¼, which was levied at an expense of little more than
five and a-half per cent. From this gross produce, however, there must
be deducted what was paid away in bounties and drawbacks upon the
exportation of exciseable goods, which will reduce the neat produce
below five millions. {The neat produce of that year, after deducting
all expenses and allowances, amounted to £4,975,652:19:6.} The levying
of the salt duty, and excise duty, but under a different management,
is much more expensive. The neat revenue of the customs does not
amount to two millions and a-half, which is levied at an expense of
more than ten per cent., in the salaries of officers and other
incidents. But the perquisites of custom-house officers are everywhere
much greater than their salaries; at some ports more than double or
triple those salaries. If the salaries of officers, and other
incidents, therefore, amount to more than ten per cent. upon the neat
revenue of the customs, the whole expense of levying that revenue may
amount, in salaries and perquisites together, to more than twenty or
thirty per cent. The officers of excise receive few or no perquisites;
and the administration of that branch of the revenue being of more
recent establishment, is in general less corrupted than that of the
customs, into which length of time has introduced and authorised many
abuses. By charging upon malt the whole revenue which is at present
levied by the different duties upon malt and malt liquors, a saving,
it is supposed, of more than £50,000, might be made in the annual
expense of the excise. By confining the duties of customs to a few
sorts of goods, and by levying those duties according to the excise
laws, a much greater saving might probably be made in the annual
expense of the customs.

Secondly, such taxes necessarily occasion some obstruction or
discouragement to certain branches of industry. As they always raise
the price of the commodity taxed, they so far discourage its
consumption, and consequently its production. If it is a commodity of
home growth or manufacture, less labour comes to be employed in
raising and producing it. If it is a foreign commodity of which the
tax increases in this manner the price, the commodities of the same
kind which are made at home may thereby, indeed, gain some advantage
in the home market, and a greater quantity of domestic industry may
thereby be turned toward preparing them. But though this rise of price
in a foreign commodity, may encourage domestic industry in one
particular branch, it necessarily discourages that industry in almost
every other. The dearer the Birmingham manufacturer buys his foreign
wine, the cheaper he necessarily sells that part of his hardware with
which, or, what comes to the same thing, with the price of which, he
buys it. That part of his hardware, therefore, becomes of less value
to him, and he has less encouragement to work at it. The dearer the
consumers in one country pay for the surplus produce of another, the
cheaper they necessarily sell that part of their own surplus produce
with which, or, what comes to the same thing, with the price of which,
they buy it. That part of their own surplus produce becomes of less
value to them, and they have less encouragement to increase its
quantity. All taxes upon consumable commodities, therefore, tend to
reduce the quantity of productive labour below what it otherwise would
be, either in preparing the commodities taxed, if they are home
commodities, or in preparing those with which they are purchased, if
they are foreign commodities. Such taxes, too, always alter, more or
less, the natural direction of national industry, and turn it into a
channel always different from, and generally less advantageous, than
that in which it would have run of its own accord.

Thirdly, the hope of evading such taxes by smuggling, gives frequent
occasion to forfeitures and other penalties, which entirely ruin the
smuggler; a person who, though no doubt highly blameable for violating
the laws of his country, is frequently incapable of violating those of
natural justice, and would have been, in every respect, an excellent
citizen, had not the laws of his country made that a crime which
nature never meant to be so. In those corrupted governments, where
there is at least a general suspicion of much unnecessary expense, and
great misapplication of the public revenue, the laws which guard it
are little respected. Not many people are scrupulous about smuggling,
when, without perjury, they can find an easy and safe opportunity of
doing so. To pretend to have any scruple about buying smuggled goods,
though a manifest encouragement to the violation of the revenue laws,
and to the perjury which almost always attends it, would, in most
countries, be regarded as one of those pedantic pieces of hypocrisy
which, instead of gaining credit with anybody, serve only to expose
the person who affects to practise them to the suspicion of being a
greater knave than most of his neighbours. By this indulgence of the
public, the smuggler is often encouraged to continue a trade, which he
is thus taught to consider as in some measure innocent; and when the
severity of the revenue laws is ready to fall upon him, he is
frequently disposed to defend with violence, what he has been
accustomed to regard as his just property. From being at first,
perhaps, rather imprudent than criminal, he at last too often becomes
one of the hardiest and most determined violators of the laws of
society. By the ruin of the smuggler, his capital, which had before
been employed in maintaining productive labour, is absorbed either in
the revenue of the state, or in that of the revenue officer; and is
employed in maintaining unproductive, to the diminution of the general
capital of the society, and of the useful industry which it might
otherwise have maintained.

Fourthly, such taxes, by subjecting at least the dealers in the taxed
commodities, to the frequent visits and odious examination of the
tax-gatherers, expose them sometimes, no doubt, to some degree of
oppression, and always to much trouble and vexation; and though
vexation, as has already been said, is not strictly speaking expense,
it is certainly equivalent to the expense at which every man would be
willing to redeem himself from it. The laws of excise, though more
effectual for the purpose for which they were instituted, are, in this
respect, more vexatious than those of the customs. When a merchant has
imported goods subject to certain duties of customs; when he has paid
those duties, and lodged the goods in his warehouse; he is not, in
most cases, liable to any further trouble or vexation from the
custom-house officer. It is otherwise with goods subject to duties of
excise. The dealers have no respite from the continual visits and
examination of the excise officers. The duties of excise are, upon
this account, more unpopular than those of the customs; and so are the
officers who levy them. Those officers, it is pretended, though in
general, perhaps, they do their duty fully as well as those of the
customs; yet, as that duty obliges them to be frequently very
troublesome to some of their neighbours, commonly contract a certain
hardness of character, which the others frequently have not. This
observation, however, may very probably be the mere suggestion of
fraudulent dealers, whose smuggling is either prevented or detected by
their diligence.

The inconveniencies, however, which are, perhaps, in some degree
inseparable from taxes upon consumable communities, fall as light upon
the people of Great Britain as upon those of any other country of
which the government is nearly as expensive. Our state is not perfect,
and might be mended; but it is as good, or better, than that of most
of our neighbours.

In consequence of the notion, that duties upon consumable goods were
taxes upon the profits of merchants, those duties have, in some
countries, been repeated upon every successive sale of the goods. If
the profits of the merchant-importer or merchant-manufacturer were
taxed, equality seemed to require that those of all the middle buyers,
who intervened between either of them and the consumer, should
likewise be taxed. The famous alcavala of Spain seems to have been
established upon this principle. It was at first a tax of ten per
cent. afterwards of fourteen per cent. and it is at present only six
per cent. upon the sale of every sort of property whether moveable or
immoveable; and it is repeated every time the property is
sold. {Memoires concernant les Droits, etc. tom. i, p. 15} The levying
of this tax requires a multitude of revenue officers, sufficient to
guard the transportation of goods, not only from one province to
another, but from one shop to another. It subjects, not only the
dealers in some sorts of goods, but those in all sorts, every farmer,
every manufacturer, every merchant and shopkeeper, to the continual
visit and examination of the tax-gatherers. Through the greater part
of the country in which a tax of this kind is established, nothing can
be produced for distant sale. The produce of every part of the country
must be proportioned to the consumption of the neighbourhood. It is to
the alcavala, accordingly, that Ustaritz imputes the ruin of the
manufactures of Spain. He might have imputed to it, likewise, the
declension of agriculture, it being imposed not only upon
manufactures, but upon the rude produce of the land.

In the kingdom of Naples, there is a similar tax of three per cent.
upon the value of all contracts, and consequently upon that of all
contracts of sale. It is both lighter than the Spanish tax, and the
greater part of towns and parishes are allowed to pay a composition in
lieu of it. They levy this composition in what manner they please,
generally in a way that gives no interruption to the interior commerce
of the place. The Neapolitan tax, therefore, is not near so ruinous as
the Spanish one.

The uniform system of taxation, which, with a few exception of no
great consequence, takes place in all the different parts of the
united kingdom of Great Britain, leaves the interior commerce of the
country, the inland and coasting trade, almost entirely free. The
inland trade is almost perfectly free; and the greater part of goods
may be carried from one end of the kingdom to the other, without
requiring any permit or let-pass, without being subject to question,
visit or examination, from the revenue officers. There are a few
exceptions, but they are such as can give no interruption to any
important branch of inland commerce of the country. Goods carried
coastwise, indeed, require certificates or coast-cockets. If you
except coals, however, the rest are almost all duty-free. This freedom
of interior commerce, the effect of the uniformity of the system of
taxation, is perhaps one of the principal causes of the prosperity of
Great Britain; every great country being necessarily the best and most
extensive market for the greater part of the productions of its own
industry. If the same freedom in consequence of the same uniformity,
could be extended to Ireland and the plantations, both the grandeur of
the state, and the prosperity of every part of the empire, would
probably be still greater than at present.

In France, the different revenue laws which take place in the
different provinces, require a multitude of revenue officers to
surround, not only the frontiers of the kingdom, but those of almost
each particular province, in order either to prevent the importation
of certain goods, or to subject it to the payment of certain duties,
to the no small interruption of the interior commerce of the country.
Some provinces are allowed to compound for the gabelle, or salt tax;
others are exempted from it altogether. Some provinces are exempted
from the exclusive sale of tobacco, which the farmers-general enjoy
through the greater part of the kingdom. The aides, which correspond
to the excise in England, are very different in different provinces.
Some provinces are exempted from them, and pay a composition or
equivalent. In those in which they take place, and are in farm, there
are many local duties which do not extend beyond a particular town or
district. The traites, which correspond to our customs, divide the
kingdom into three great parts; first, the provinces subject to the
tariff of 1664, which are called the provinces of the five great
farms, and under which are comprehended Picardy, Normandy, and the
greater part of the interior provinces of the kingdom; secondly, the
provinces subject to the tariff of 1667, which are called the
provinces reckoned foreign, and under which are comprehended the
greater part of the frontier provinces; and, thirdly, those provinces
which are said to be treated as foreign, or which, because they are
allowed a free commerce with foreign countries, are, in their commerce
with the other provinces of France, subjected to the same duties as
other foreign countries. These are Alsace, the three bishoprics of
Mentz, Toul, and Verdun, and the three cities of Dunkirk, Bayonne, and
Marseilles. Both in the provinces of the five great farms (called so
on account of an ancient division of the duties of customs into five
great branches, each of which was originally the subject of a
particular farm, though they are now all united into one), and in
those which are said to be reckoned foreign, there are many local
duties which do not extend beyond a particular town or district. There
are some such even in the provinces which are said to be treated as
foreign, particularly in the city of Marseilles. It is unnecessary to
observe how much both the restraints upon the interior commerce of the
country, and the number of the revenue officers, must be multiplied,
in order to guard the frontiers of those different provinces and
districts which are subject to such different systems of taxation.

Over and above the general restraints arising from this complicated
system of revenue laws, the commerce of wine (after corn, perhaps, the
most important production of France) is, in the greater part of the
provinces, subject to particular restraints arising from the favour
which has been shown to the vineyards of particular provinces and
districts above those of others. The provinces most famous for their
wines, it will be found, I believe, are those in which the trade in
that article is subject to the fewest restraints of this kind. The
extensive market which such provinces enjoy, encourages good
management both in the cultivation of their vineyards, and in the
subsequent preparation of their wines.

Such various and complicated revenue laws are not peculiar to France.
The little duchy of Milan is divided into six provinces, in each of
which there is a different system of taxation, with regard to several
different sorts of consumable goods. The still smaller territories of
the duke of Parma are divided into three or four, each of which has,
in the same manner, a system of its own. Under such absurd management,
nothing but the great fertility of the soil, and happiness of the
climate, could preserve such countries from soon relapsing into the
lowest state of poverty and barbarism.

Taxes upon consumable commodities may either he levied by an
administration, of which the officers are appointed by govermnent, and
are immediately accountable to government, of which the revenue must,
in this case, vary from year to year, according to the occasional
variations in the produce of the tax; or they may be let in farm for a
rent certain, the farmer being allowed to appoint his own officers,
who, though obliged to levy the tax in the manner directed by the law,
are under his immediate inspection, and are immediately accountable to
him. The best and most frugal way of levying a tax can never be by
farm. Over and above what is necessary for paying the stipulated rent,
the salaries of the officers, and the whole expense of administration,
the farmer must always draw from the produce of the tax a certain
profit, proportioned at least to the advance which he makes, to the
risk which he runs, to the trouble which he is at, and to the
knowledge and skill which it requires to manage so very complicated a
concern. Government, by establishing an administration under their own
immediate inspection, of the same kind with that which the farmer
establishes, might at least save this profit, which is almost always
exorbitant. To farm any considerable branch of the public revenue
requires either a great capital, or a great credit; circumstances
which would alone restrain the competition for such an undertaking to
a very small number of people. Of the few who have this capital or
credit, a still smaller number have the necessary knowledge or
experience; another circumstance which restrains the competition still
further. The very few who are in condition to become competitors, find
it more for their interest to combine together; to become copartners,
instead of competitors; and, when the farm is set up to auction, to
offer no rent but what is much below the real value. In countries
where the public revenues are in farm, the farmers are generally the
most opulent people. Their wealth would alone excite the public
indignation; and the vanity which almost always accompanies such
upstart fortunes, the foolish ostentation with which they commonly
display that wealth, excite that indignation still more.

The farmers of the public revenue never find the laws too severe,
which punish any attempt to evade the payment of a tax. They have no
bowels for the contributors, who are not their subjects, and whose
universal bankruptcy, if it should happen the day after the farm is
expired, would not much affect their interest. In the greatest
exigencies of the state, when the anxiety of the sovereign for the
exact payment of his revenue is necessarily the greatest, they seldom
fail to complain, that without laws more rigorous than those which
actually took place, it will be impossible for them to pay even the
usual rent. In those moments of public distress, their commands cannot
be disputed. The revenue laws, therefore, become gradually more and
more severe. The most sanguinary are always to be found in countries
where the greater part of the public revenue is in farm; the mildest,
in countries where it is levied under the immediate inspection of the
sovereign. Even a bad sovereign feels more compassion for his people
than can ever be expected from the farmers of his revenue. He knows
that the permanent grandeur of his family depends upon the prosperity
of his people, and he will never knowingly ruin that prosperity for
the sake of any momentary interest of his own. It is otherwise with
the farmers of his revenue, whose grandeur may frequently be the
effect of the ruin, and not of the prosperity, of his people.

A tax is sometimes not only farmed for a certain rent, but the farmer
has, besides, the monopoly of the commodity taxed. In France, the
duties upon tobacco and salt are levied in this manner. In such cases,
the farmer, instead of one, levies two exorbitant profits upon the
people; the profit of the farmer, and the still more exorbitant one of
the monopolist. Tobacco being a luxury, every man is allowed to buy or
not to buy as he chuses; but salt being a necessary, every man is
obliged to buy of the farmer a certain quantity of it; because, if he
did not buy this quantity of the farmer, he would, it is presumed, buy
it of some smuggler. The taxes upon both commodities are exorbitant.
The temptation to smuggle, consequently, is to many people
irresistible; while, at the same time, the rigour of the law, and the
vigilance of the farmer's officers, render the yielding to the
temptation almost certainly ruinous. The smuggling of salt and tobacco
sends every year several hundred people to the galleys, besides a very
considerable number whom it sends to the gibbet. Those taxes, levied
in this manner, yield a very considerable revenue to government. In
1767, the farm of tobacco was let for twenty-two millions five hundred
and forty-one thousand two hundred and seventy-eight livres a-year;
that of salt for thirty-six millions four hundred and ninety-two
thousand four hundred and four livres. The farm, in both cases, was to
commence in 1768, and to last for six years. Those who consider the
blood of the people as nothing, in comparison with the revenue of the
prince, may, perhaps, approve of this method of levying taxes. Similar
taxes and monopolies of salt and tobacco have been established in many
other countries, particularly in the Austrian and Prussian dominions,
and in the greater part of the states of Italy.

In France, the greater part of the actual revenue of the crown is
derived from eight different sources; the taille, the capitation, the
two vingtiemes, the gabelles, the aides, the traites, the domaine, and
the farm of tobacco. The live last are, in the greater part of the
provinces, under farm. The three first are everywhere levied by an
administration, under the immediate inspection and direction of
government; and it is universally acknowledged, that in proportion to
what they take out of the pockets of the people, they bring more into
the treasury of the prince than the other five, of which the
administration is much more wasteful and expensive.

The finances of France seem, in their present state, to admit of three
very obvious reformations. First, by abolishing the taille and the
capitation, and by increasing the number of the vingtiemes, so as to
produce an additional revenue equal to the amount of those other
taxes, the revenue of the crown might be preserved; the expense of
collection might be much diminished; the vexation of the inferior
ranks of people, which the taille and capitation occasion, might be
entirely prevented; and the superior ranks might not be more burdened
than the greater part of them are at present. The vingtieme, I have
already observed, is a tax very nearly of the same kind with what is
called the land tax of England. The burden of the taille, it is
acknowledged, falls finally upon the proprietors of land; and as the
greater part of the capitation is assessed upon those who are subject
to the taille, at so much a-pound of that other tax, the final payment
of the greater part of it must likewise fall upon the same order of
people. Though the number of the vingtiemes, therefore, was increased,
so as to produce an additional revenue equal to the amount of both
those taxes, the superior ranks of people might not be more burdened
than they are at present; many individuals, no doubt, would, on
account of the great inequalities with which the taille is commonly
assessed upon the estates and tenants of different individuals. The
interest and opposition of such favoured subjects, are the obstacles
most likely to prevent this, or any other reformation of the same
kind. Secondly, by rendering the gabelle, the aides, the traites, the
taxes upon tobacco, all the different customs and excises, uniform in
all the different parts of the kingdom, those taxes might be levied at
much less expense, and the interior commerce of the kingdom might be
rendered as free as that of England. Thirdly, and lastly, by
subjecting all those taxes to an administration under the immediate
inspection and direction or government, the exorbitant profits of the
farmers-general might be added to the revenue of the state. The
opposition arising from the private interest of individuals, is
likely to be as effectual for preventing the two last as the
first-mentioned scheme of reformation.

The French system of taxation seems, in every respect, inferior to the
British. In Great Britain, ten millions sterling are annually levied
upon less than eight millions of people, without its being possible to
say that any particular order is oppressed. From the Collections of
the Abbé Expilly, and the observations of the author of the Essay upon
the Legislation and Commerce of Corn, it appears probable that France,
including the provinces of Lorraine and Bar, contains about
twenty-three or twenty-four millions of people; three times the
number, perhaps, contained in Great Britain. The soil and climate of
France are better than those of Great Britain. The country has been
much longer in a state of improvement and cultivation, and is, upon
that account, better stocked with all those things which it requires a
long time to raise up and accumulate; such as great towns, and
convenient and well-built houses, both in town and country. With these
advantages, it might be expected, that in France a revenue of thirty
millions might be levied for the support of the state, with as little
inconvenience as a revenue of ten millions is in Great Britain. In
1765 and 1766, the whole revenue paid into the treasury of France,
according to the best, though, I acknowledge, very imperfect accounts
which I could get of it, usually run between 308 and 325 millions of
livres; that is, it did not amount to fifteen millions sterling; not
the half of what might have been expected, had the people contributed
in the same proportion to their numbers as the people of Great
Britain. The people of France, however, it is generally acknowledged,
are much more oppressed by taxes than the people of Great Britain.
France, however, is certainly the great empire in Europe, which, after
that of Great Britain, enjoys the mildest and most indulgent
government.

In Holland, the heavy taxes upon the necessaries of life have ruined,
it is said, their principal manufacturers, and are likely to
discourage, gradually, even their fisheries and their trade in
ship-building. The taxes upon the necessaries of life are
inconsiderable in Great Britain, and no manufacture has hitherto been
ruined by them. The British taxes which bear hardest on manufactures,
are some duties upon the importation of raw materials, particularly
upon that of raw silk. The revenue of the States-General and of the
different cities, however, is said to amount to more than five
millions two hundred and fifty thousand pounds sterling; and as the
inhabitants of the United Provinces cannot well be supposed to amount
to more than a third part of those of Great Britain, they must, in
proportion to their number, be much more heavily taxed.

After all the proper subjects of taxation have been exhausted, if the
exigencies of the state still continue to require new taxes, they must
be imposed upon improper ones. The taxes upon the necessaries of life,
therefore, may be no impeachment of the wisdom of that republic,
which, in order to acquire and to maintain its independency, has, in
spite of its meat frugality, been involved in such expensive wars as
have obliged it to contract great debts. The singular countries of
Holland and Zealand, besides, require a considerable expense even to
preserve their existence, or to prevent their being swallowed up by
the sea, which must have contributed to increase considerably the load
of taxes in those two provinces. The republican form of government
seems to be the principal support of the present grandeur of Holland.
The owners of great capitals, the great mercantile families, have
generally either some direct share, or some indirect influence, in the
administration of that government. For the sake of the respect and
authority which they derive from this situation, they are willing to
live in a country where their capital, if they employ it themselves,
will bring them less profit, and if they lend it to another, less
interest; and where the very moderate revenue which they can draw from
it will purchase less of the necessaries and conveniencies of life
than in any other part of Europe. The residence of such wealthy people
necessarily keeps alive, in spite of all disadvantages, a certain
degree of industry in the country. Any public calamity which should
destroy the republican form of government, which should throw the
whole administration into the hands of nobles and of soldiers, which
should annihilate altogether the importance of those wealthy
merchants, would soon render it disagreeable to them to live in a
country where they were no longer likely to be much respected. They
would remove both their residence and their capital to some other
country, and the industry and commerce of Holland would soon follow
the capitals which supported them.




CHAPTER III.

OF PUBLIC DEBTS.

In that rude state of society which precedes the extension of commerce
and the improvement of manufactures; when those expensive luxuries,
which commerce and manufactures can alone introduce, are altogether
unknown; the person who possesses a large revenue, I have endeavoured
to show in the third book of this Inquiry, can spend or enjoy that
revenue in no other way than by maintaining nearly as many people as
it can maintain. A large revenue may at all times be said to consist
in the command of a large quantity of the necessaries of life. In that
rude state of things, it is commonly paid in a large quantity of those
necessaries, in the materials of plain food and coarse clothing, in
corn and cattle, in wool and raw hides. When neither commerce nor
manufactures furnish any thing for which the owner can exchange the
greater part of those materials which are over and above his own
consumption, he can do nothing with the surplus, but feed and clothe
nearly as many people as it will feed and clothe. A hospitality in
which there is no luxury, and a liberality in which there is no
ostentation, occasion, in this situation of things, the principal
expenses of the rich and the great. But these I have likewise
endeavoured to show, in the same book, are expenses by which people
are not very apt to ruin themselves. There is not, perhaps, any
selfish pleasure so frivolous, of which the pursuit has not sometimes
ruined even sensible men. A passion for cock-fighting has ruined many.
But the instances, I believe, are not very numerous, of people who
have been ruined by a hospitality or liberality of this kind; though
the hospitality of luxury, and the liberality of ostentation have
ruined many. Among our feudal ancestors, the long time during which
estates used to continue in the same family, sufficiently demonstrates
the general disposition of people to live within their income. Though
the rustic hospitality, constantly exercised by the great landholders,
may not, to us in the present times, seem consistent with that order
which we are apt to consider as inseparably connected with good
economy; yet we must certainly allow them to have been at least so far
frugal, as not commonly to have spent their whole income. A part of
their wool and raw hides, they had generally an opportunity of selling
for money. Some part of this money, perhaps, they spent in purchasing
the few objects of vanity and luxury, with which the circumstances of
the times could furnish them; but some part of it they seem commonly
to have hoarded. They could not well, indeed, do any thing else but
hoard whatever money they saved. To trade, was disgraceful to a
gentleman; and to lend money at interest, which at that time was
considered as usury, and prohibited bylaw, would have been still more
so. In those times of violence and disorder, besides, it was
convenient to have a hoard of money at hand, that in case they should
be driven from their own home, they might have something of known
value to carry with them to some place of safety. The same violence
which made it convenient to hoard, made it equally convenient to
conceal the hoard. The frequency of treasure-trove, or of treasure
found, of which no owner was known, sufficiently demonstrates the
frequency, in those times, both of hoarding and of concealing the
hoard. Treasure-trove was then considered as an important branch of
the revenue of the sovereign. All the treasure-trove of the kingdom
would scarce, perhaps, in the present times, make an important branch
of the revenue of a private gentleman of a good estate.

The same disposition, to save and to hoard, prevailed in the
sovereign, as well as in the subjects. Among nations, to whom commerce
and manufacture are little known, the sovereign, it has already been
observed in the Fourth book, is in a situation which naturally
disposes him to the parsimony requisite for accumulation. In that
situation, the expense, even of a sovereign, cannot be directed by
that vanity which delights in the gaudy finery of a court. The
ignorance of the times affords but few of the trinkets in which that
finery consists. Standing armies are not then necessary; so that the
expense, even of a sovereign, like that of any other great lord can be
employed in scarce any thing but bounty to his tenants, and
hospitality to his retainers. But bounty and hospitality very seldom
lead to extravagance; though vanity almost always does. All the
ancient sovereigns of Europe, accordingly, it has already been
observed, had treasures. Every Tartar chief, in the present times, is
said to have one.

In a commercial country, abounding with every sort of expensive
luxury, the sovereign, in the same manner as almost all the great
proprietors in his dominions, naturally spends a great part of his
revenue in purchasing those luxuries. His own and the neighbouring
countries supply him abundantly with all the costly trinkets which
compose the splendid, but insignificant, pageantry of a court. For the
sake of an inferior pageantry of the same kind, his nobles dismiss
their retainers, make their tenants independent, and become gradually
themselves as insignificant as the greater part of the wealthy
burghers in his dominions. The same frivolous passions, which
influence their conduct, influence his. How can it be supposed that he
should be the only rich man in his dominions who is insensible to
pleasures of this kind? If he does not, what he is very likely to do,
spend upon those pleasures so great a part of his revenue as to
debilitate very much the defensive power of the state, it cannot well
be expected that he should not spend upon them all that part of it
which is over and above what is necessary for supporting that
defensive power. His ordinary expense becomes equal to his ordinary
revenue, and it is well if it does not frequently exceed it. The
amassing of treasure can no longer be expected; and when extraordinary
exigencies require extraordinary expenses, he must necessarily call
upon his subjects for an extraordinary aid. The present and the late
king of Prussia are the only great princes of Europe, who, since the
death of Henry IV. of France, in 1610, are supposed to have amassed
any considerable treasure. The parsimony which leads to accumulation
has become almost as rare in republican as in monarchical governments.
The Italian republics, the United Provinces of the Netherlands, are
all in debt. The canton of Berne is the single republic in Europe
which has amassed any considerable treasure. The other Swiss republics
have not. The taste for some sort of pageantry, for splendid
buildings, at least, and other public ornaments, frequently prevails
as much in the apparently sober senate-house of a little republic, as
in the dissipated court of the greatest king.

The want of parsimony, in time of peace, imposes the necessity of
contracting debt in time of war. When war comes, there is no money in
the treasury, but what is necessary for carrying on the ordinary
expense of the peace establishment. In war, an establishment of three
or four times that expense becomes necessary for the defence of the
state; and consequently, a revenue three or four times greater than
the peace revenue. Supposing that the sovereign should have, what he
scarce ever has, the immediate means of augmenting his revenue in
proportion to the augmentation of his expense; yet still the produce
of the taxes, from which this increase of revenue must be drawn, will
not begin to come into the treasury, till perhaps ten or twelve months
after they are imposed. But the moment in which war begins, or rather
the moment in which it appears likely to begin, the army must be
augmented, the fleet must be fitted out, the garrisoned towns must be
put into a posture of defence; that army, that fleet, those garrisoned
towns, must be furnished with arms, ammunition, and provisions. An
immediate and great expense must be incurred in that moment of
immediate danger, which will not wait for the gradual and slow returns
of the new taxes. In this exigency, government can have no other
resource but in borrowing.

The same commercial state of society which, by the operation of moral
causes, brings government in this manner into the necessity of
borrowing, produces in the subjects both an ability and an inclination
to lend. If it commonly brings along with it the necessity of
borrowing, it likewise brings with it the facility of doing so.

A country abounding with merchants and manufacturers, necessarily
abounds with a set of people through whose hands, not only their own
capitals, but the capitals of all those who either lend them money, or
trust them with goods, pass as frequently, or more frequently, than
the revenue of a private man, who, without trade or business, lives
upon his income, passes through his hands. The revenue of such a man
can regularly pass through his hands only once in a year. But the
whole amount of the capital and credit of a merchant, who deals in a
trade of which the returns are very quick, may sometimes pass through
his hands two, three, or four times in a year. A country abounding
with merchants and manufacturers, therefore, necessarily abounds with
a set of people, who have it at all times in their power to advance,
if they chuse to do so, a very large sum of money to government. Hence
the ability in the subjects of a commercial state to lend.

Commerce and manufactures can seldom flourish long in any state which
does not enjoy a regular administration of justice; in which the
people do not feel themselves secure in the possession of their
property; in which the faith of contracts is not supported by law; and
in which the authority of the state is not supposed to be regularly
employed in enforcing the payment of debts from all those who are able
to pay. Commerce and manufactures, in short, can seldom flourish in
any state, in which there is not a certain degree of confidence in the
justice of government. The same confidence which disposes great
merchants and manufacturers upon ordinary occasions, to trust their
property to the protection of a particular government, disposes them,
upon extraordinary occasions, to trust that government with the use of
their property. By lending money to government, they do not even for a
moment diminish their ability to carry on their trade and
manufactures; on the contrary, they commonly augment it. The
necessities of the state render government, upon most occasions
willing to borrow upon terms extremely advantageous to the lender. The
security which it grants to the original creditor, is made
transferable to any other creditor; and from the universal confidence
in the justice of the state, generally sells in the market for more
than was originally paid for it. The merchant or monied man makes
money by lending money to government, and instead of diminishing.
increases his trading capital. He generally considers it as a favour,
therefore, when the administration admits him to a share in the first
subscription for a new loan. Hence the inclination or willingness in
the subjects of a commercial state to lend.

The government of such a state is very apt to repose itself upon this
ability and willingness of its subjects to lend it their money on
extraordinary occasions. It foresees the facility of borrowing, and
therefore dispenses itself from the duty of saving.

In a rude state of society, there are no great mercantile or
manufacturing capitals. The individuals, who hoard whatever money they
can save, and who conceal their hoard, do so from a distrust of the
justice of government; from a fear, that if it was known that they had
a hoard, and where that hoard was to be found, they would quickly be
plundered. In such a state of things, few people would be able, and
nobody would be willing to lend their money to government on
extraordinary exigencies. The sovereign feels that he must provide for
such exigencies by saving, because he foresees the absolute
impossibility of borrowing. This foresight increases still further his
natural disposition to save.

The progress of the enormous debts which at present oppress, and will
in the long-run probably ruin, all the great nations of Europe, has
been pretty uniform. Nations, like private men, have generally begun
to borrow upon what may be called personal credit, without assigning
or mortgaging any particular fund for the payment of the debt; and
when this resource has failed them, they have gone on to borrow upon
assignments or mortgages of particular funds.

What is called the unfunded debt of Great Britain, is contracted in
the former of those two ways. It consists partly in a debt which
bears, or is supposed to bear, no interest, and which resembles the
debts that a private man contracts upon account; and partly in a debt
which bears interest, and which resembles what a private man contracts
upon his bill or promissory-note. The debts which are due, either for
extraordinary services, or for services either not provided for, or
not paid at the time when they are performed; part of the
extraordinaries of the army, navy, and ordnance, the arrears of
subsidies to foreign princes, those of seamen's wages, etc. usually
constitute a debt of the first kind. Navy and exchequer bills, which
are issued sometimes in payment of a part of such debts, and sometimes
for other purposes, constitute a debt of the second kind; exchequer
bills bearing interest from the day on which they are issued, and navy
bills six months after they are issued. The bank of England, either by
voluntarily discounting those bills at their current value, or by
agreeing with government for certain considerations to circulate
exchequer bills, that is, to receive them at par, paying the interest
which happens to be due upon them, keeps up their value, and
facilitates their circulation, and thereby frequently enables
government to contract a very large debt of this kind. In France,
where there is no bank, the state bills (billets d'etat {See Examen
des Reflections Politiques sur les Finances.}) have sometimes sold at
sixty and seventy per cent. discount. During the great recoinage in
king William's time, when the bank of England thought proper to put a
stop to its usual transactions, exchequer bills and tallies are said
to have sold from twenty-five to sixty per cent. discount; owing
partly, no doubt, to the supposed instability of the new government
established by the Revolution, but partly, too, to the want of the
support of the bank of England.

When this resource is exhausted, and it becomes necessary, in order to
raise money, to assign or mortgage some particular branch of the
public revenue for the payment of the debt, government has, upon
different occasions, done this in two different ways. Sometimes it has
made this assignment or mortgage for a short period of time only, a
year, or a few years, for example; and sometimes for perpetuity. In
the one case, the fund was supposed sufficient to pay, within the
limited time, both principal and interest of the money borrowed. In
the other, it was supposed sufficient to pay the interest only, or a
perpetual annuity equivalent to the interest, government being at
liberty to redeem, at any time, this annuity, upon paying back the
principal sum borrowed. When money was raised in the one way, it was
said to be raised by anticipation; when in the other, by perpetual
funding, or, more shortly, by funding.

In Great Britain, the annual land and malt taxes are regularly
anticipated every year, by virtue of a borrowing clause constantly
inserted into the acts which impose them. The bank of England
generally advances at an interest, which, since the Revolution, has
varied from eight to three per cent., the sums of which those taxes
are granted, and receives payment as their produce gradually comes in.
If there is a deficiency, which there always is, it is provided for in
the supplies of the ensuing year. The only considerable branch of the
public revenue which yet remains unmortgaged, is thus regularly spent
before it comes in. Like an improvident spendthrift, whose pressing
occasions will not allow him to wait for the regular payment of his
revenue, the state is in the constant practice of borrowing of its own
factors and agents, and of paying interest for the use of its own
money.

In the reign of king William, and during a great part of that of queen
Anne, before we had become so familiar as we are now with the practice
of perpetual funding, the greater part of the new taxes were imposed
but for a short period of time (for four, five, six, or seven years
only), and a great part of the grants of every year consisted in loans
upon anticipations of the produce of those taxes. The produce being
frequently insufficient for paying, within the limited term, the
principal and interest of the money borrowed, deficiencies arose; to
make good which, it became necessary to prolong the term.

In 1697, by the 8th of William III., c. 20, the deficiencies of
several taxes were charged upon what was then called the first general
mortgage or fund, consisting of a prolongation to the first of August
1706, of several different taxes, which would have expired within a
shorter term, and of which the produce was accumulated into one
general fund. The deficiencies charged upon this prolonged term
amounted to £5,160,459: 14: 9½.

In 1701, those duties, with some others, were still further prolonged,
for the like purposes, till the first of August 1710, and were called
the second general mortgage or fund. The deficiencies charged upon it
amounted to £2,055,999: 7: 11½.

In 1707, those duties were still further prolonged, as a fund for new
loans, to the first of August 1712, and were called the third general
mortgage or fund. The sum borrowed upon it was £983,254:11:9¼.

In 1708, those duties were all (except the old subsidy of tonnage and
poundage, of which one moiety only was made a part of this fund, and a
duty upon the importation of Scotch linen, which had been taken off by
the articles of union) still further continued, as a fund for new
loans, to the first of August 1714, and were called the fourth general
mortgage or fund. The sum borrowed upon it was £925,176:9:2¼.

In 1709, those duties were all ( except the old subsidy of tonnage and
poundage, which was now left out of this fund altogether ) still
further continued, for the same purpose, to the first of August 1716,
and were called the fifth general mortgage or fund. The sum borrowed
upon it was £922,029:6s.

In 1710, those duties were again prolonged to the first of August
1720, and were called the sixth general mortgage or fund. The sum
borrowed upon it was £1,296,552:9:11¾.

In 1711, the same duties (which at this time were thus subject to four
different anticipations), together with several others, were continued
for ever, and made a fund for paying the interest of the capital of
the South-sea company, which had that year advanced to government, for
paying debts, and making good deficiencies, the sum of
£9,177,967:15:4d, the greatest loan which at that time had ever been
made.

Before this period, the principal, so far as I have been able to
observe, the only taxes, which, in order to pay the interest of a
debt, had been imposed for perpetuity, were those for paying the
interest of the money which had been advanced to government by the
bank and East-India company, and of what it was expected would be
advanced, but which was never advanced, by a projected land bank. The
bank fund at this time amounted to £3,375,027:17:10½, for which was
paid an annuity or interest of £206,501:15:5d. The East-India fund
amounted to £3,200,000, for which was paid an annuity or interest of
£160,000; the bank fund being at six per cent., the East-India fund at
five per cent. interest.

In 1715, by the first of George I., c. 12, the different taxes which
had been mortgaged for paying the bank annuity, together with several
others, which, by this act, were likewise rendered perpetual, were
accumulated into one common fund, called the aggregate fund, which was
charged not only with the payment of the bank annuity, but with
several other annuities and burdens of different kinds. This fund was
afterwards augmented by the third of George I., c.8., and by the fifth
of George I., c. 3, and the different duties which were then added to
it were likewise rendered perpetual.

In 1717, by the third of George I., c. 7, several other taxes were
rendered perpetual, and accumulated into another common fund, called
the general fund, for the payment of certain annuities, amounting in
the whole to £724,849:6:10½.

In consequence of those different acts, the greater part of the taxes,
which before had been anticipated only for a short term of years were
rendered perpetual, as a fund for paying, not the capital, but the
interest only, of the money which had been borrowed upon them by
different successive anticipations.

Had money never been raised but by anticipation, the course of a few
years would have liberated the public revenue, without any other
attention of government besides that of not overloading the fund, by
charging it with more debt than it could pay within the limited term,
and not of anticipating a second time before the expiration of the
first anticipation. But the greater part of European governments have
been incapable of those attentions. They have frequently overloaded
the fund, even upon the first anticipation; and when this happened not
to be the case, they have generally taken care to overload it, by
anticipating a second and a third time, before the expiration of the
first anticipation. The fund becoming in this manner altogether
insufficient for paying both principal and interest of the money
borrowed upon it, it became necessary to charge it with the interest
only, or a perpetual annuity equal to the interest; and such
improvident anticipations necessarily gave birth to the more ruinous
practice of perpetual funding. But though this practice necessarily
puts off the liberation of the public revenue from a fixed period, to
one so indefinite that it is not very likely ever to arrive; yet, as a
greater sum can, in all cases, be raised by this new practice than by
the old one of anticipation, the former, when men have once become
familiar with it, has, in the great exigencies of the state, been
universally preferred to the latter. To relieve the present exigency,
is always the object which principally interests those immediately
concerned in the administration of public affairs. The future
liberation of the public revenue they leave to the care of posterity.

During the reign of queen Anne, the market rate of interest had fallen
from six to five per cent.; and, in the twelfth year of her reign,
five per cent. was declared to be the highest rate which could
lawfully be taken for money borrowed upon private security. Soon after
the greater part of the temporary taxes of Great Britain had been
rendered perpetual, and distributed into the aggregate, South-sea, and
general funds, the creditors of the public, like those of private
persons, were induced to accept of five per cent. for the interest of
their money, which occasioned a saving of one per cent. upon the
capital of the greater part or the debts which had been thus funded
for perpetuity, or of one-sixth of the greater part of the annuities
which were paid out of the three great funds above mentioned. This
saving left a considerable surplus in the produce of the different
taxes which had been accumulated into those funds, over and above what
was necessary for paying the annuities which were now charged upon
them, and laid the foundation of what has since been called the
sinking fund. In 1717, it amounted to £523,454:7:7½. In 1727, the
interest of the greater part of the public debts was still further
reduced to four per cent.; and, in 1753 and 1757, to three and a-half,
and three per cent., which reductions still further augmented the
sinking fund.

A sinking fund, though instituted for the payment of old, facilitates
very much the contracting of new debts. It is a subsidiary fund,
always at hand, to be mortgaged in aid of any other doubtful fund,
upon which money is proposed to be raised in any exigency of the
state. Whether the sinking fund of Great Britain has been more
frequently applied to the one or to other of those two purposes, will
sufficiently appear by and by.

Besides those two methods of borrowing, by anticipations and by a
perpetual funding, there are two other methods, which hold a sort of
middle place between them; these are, that of borrowing upon annuities
for terms of years, and that of borrowing upon annuities for lives.

During the reigns of king William and queen Anne, large sums were
frequently borrowed upon annuities for terms of years, which were
sometimes longer and sometimes shorter. In 1695, an act was passed for
borrowing one million upon an annuity of fourteen per cent., or
£140,000 a-year, for sixteen years. In 1691, an act was passed for
borrowing a million upon annuities for lives, upon terms which, in the
present times, would appear very advantageous; but the subscription
was not filled up. In the following year, the deficiency was made
good, by borrowing upon annuities for lives, at fourteen per cent. or
a little more than seven years purchase. In 1695, the persons who had
purchased those annuities were allowed to exchange them for others of
ninety-six years, upon paying into the exchequer sixty-three pounds in
the hundred; that is, the difference between fourteen per cent. for
life, and fourteen per cent. for ninety-six years, was sold for
sixty-three pounds, or for four and a-half years purchase. Such was
the supposed instability of government, that even these terms procured
few purchasers. In the reign of queen Anne, money was, upon different
occasions, borrowed both upon annuities for lives, and upon annuities
for terms of thirty-two, of eighty-nine, of ninety-eight, and of
ninety-nine years. In 1719, the proprietors of the annuities for
thirty-two years were induced to accept, in lieu of them, South-sea
stock to the amount of eleven and a-half years purchase of the
annuities, together with an additional quantity of stock, equal to the
arrears which happened then to be due upon them. In 1720, the greater
part of the other annuities for terms of years, both long and short,
were subscribed into the same fund. The long annuities, at that time,
amounted to £666,821: 8:3½ a-year. On the 5th of January 1775, the
remainder of them, or what was not subscribed at that time, amounted
only to £136,453:12:8d.

During the two wars which began in 1739 and in 1755, little money was
borrowed, either upon annuities for terms of years, or upon those for
lives. An annuity for ninety-eight or ninety-nine years, however, is
worth nearly as much as a perpetuity, and should therefore, one might
think, be a fund for borrowing nearly as much. But those who, in order
to make family settlements, and to provide for remote futurity, buy
into the public stocks, would not care to purchase into one of which
the value was continually diminishing; and such people make a very
considerable proportion, both of the proprietors and purchasers of
stock. An annuity for a long term of years, therefore, though its
intrinsic value may be very nearly the same with that of a perpetual
annuity, will not find nearly the same number of purchasers. The
subscribers to a new loan, who mean generally to sell their
subscription as soon as possible, prefer greatly a perpetual annuity,
redeemable by parliament, to an irredeemable annuity, for a long term
of years, of only equal amount. The value of the former may be
supposed always the same, or very nearly the same; and it makes,
therefore, a more convenient transferable stock than the latter.

During the two last-mentioned wars, annuities, either for terms of
years or for lives, were seldom granted, but as premiums to the
subscribers of a new loan, over and above the redeemable annuity or
interest, upon the credit of which the loan was supposed to be made.
They were granted, not as the proper fund upon which the money was
borrowed, but as an additional encouragement to the lender.

Annuities for lives have occasionally been granted in two different
ways; either upon separate lives, or upon lots of lives, which, in
French, are called tontines, from the name of their inventor. When
annuities are granted upon separate lives, the death of every
individual annuitant disburdens the public revenue, so far as it was
affected by his annuity. When annuities are granted upon tontines, the
liberation of the public revenue does not commence till the death of
all the annuitants comprehended in one lot, which may sometimes
consist of twenty or thirty persons, of whom the survivors succeed to
the annuities of all those who die before them; the last survivor
succeeding to the annuities of the whole lot. Upon the same revenue,
more money can always be raised by tontines than by annuities for
separate lives. An annuity, with a right of survivorship, is really
worth more than an equal annuity for a separate life; and, from the
confidence which every man naturally has in his own good fortune, the
principle upon which is founded the success of all lotteries, such an
annuity generally sells for something more than it is worth. In
countries where it is usual for government to raise money by granting
annuities, tontines are, upon this account, generally preferred to
annuities for separate lives. The expedient which will raise most
money, is almost always preferred to that which is likely to bring
about, in the speediest manner, the liberation of the public revenue.

In France, a much greater proportion of the public debts consists in
annuities for lives than in England. According to a memoir presented
by the parliament of Bourdeaux to the king, in 1764, the whole public
debt of France is estimated at twenty-four hundred millions of livres;
of which the capital, for which annuities for lives had been granted,
is supposed to amount to three hundred millions, the eighth part of
the whole public debt. The annuities themselves are computed to amount
to thirty millions a-year, the fourth part of one hundred and twenty
millions, the supposed interest of that whole debt. These estimations,
I know very well, are not exact; but having been presented by so very
respectable a body as approximations to the truth, they may, I
apprehend, be considered as such. It is not the different degrees of
anxiety in the two governments of France and England for the
liberation of the public revenue, which occasions this difference in
their respective modes of borrowing; it arises altogether from the
different views and interests of the lenders.

In England, the seat of government being in the greatest mercantile
city in the world, the merchants are generally the people who advance
money to government. By advancing it, they do not mean to diminish,
but, on the contrary, to increase their mercantile capitals; and
unless they expected to sell, with some profit, their share in the
subscription for a new loan, they never would subscribe. But if, by
advancing their money, they were to purchase, instead of perpetual
annuities, annuities for lives only, whether their own or those of
other people, they would not always be so likely to sell them with a
profit. Annuities upon their own lives they would always sell with
loss; because no man will give for an annuity upon the life of
another, whose age and state of health are nearly the same with his
own, the same price which he would give for one upon his own. An
annuity upon the life of a third person, indeed, is, no doubt, of
equal value to the buyer and the seller; but its real value begins to
diminish from the moment it is granted, and continues to do so, more
and more, as long as it subsists. It can never, therefore, make so
convenient a transferable stock as a perpetual annuity, of which the
real value may be supposed always the same, or very nearly the same.

In France, the seat of government not being in a great mercantile
city, merchants do not make so great a proportion of the people who
advance money to government. The people concerned in the finances, the
farmers-general, the receivers of the taxes which are not in farm, the
court-bankers, etc. make the greater part of those who advance their
money in all public exigencies. Such people are commonly men of mean
birth, but of great wealth, and frequently of great pride. They are
too proud to marry their equals, and women of quality disdain to marry
them. They frequently resolve, therefore, to live bachelors; and
having neither any families of their own, nor much regard for those of
their relations, whom they are not always very fond of acknowledging,
they desire only to live in splendour during their own time, and are
not unwilling that their fortune should end with themselves. The
number of rich people, besides, who are either averse to marry, or
whose condition of life renders it either improper or inconvenient for
them to do so, is much greater in France than in England. To such
people, who have little or no care for posterity, nothing can be more
convenient than to exchange their capital for a revenue, which is to
last just as long, and no longer, than they wish it to do.

The ordinary expense of the greater part of modern governments, in
time of peace, being equal, or nearly equal, to their ordinary
revenue, when war comes, they are both unwilling and unable to
increase their revenue in proportion to the increase of their expense.
They are unwilling, for fear of offending the people, who, by so great
and so sudden an increase of taxes, would soon be disgusted with the
war; and they are unable, from not well knowing what taxes would be
sufficient to produce the revenue wanted. The facility of borrowing
delivers them from the embarrassment which this fear and inability
would otherwise occasion. By means of borrowing, they are enabled,
with a very moderate increase of taxes, to raise, from year to year,
money sufficient for carrying on the war; and by the practice of
perpetual funding, they are enabled, with the smallest possible
increase of taxes, to raise annually the largest possible sum of
money. In great empires, the people who live in the capital, and in
the provinces remote from the scene of action, feel, many of them,
scarce any inconveniency from the war, but enjoy, at their ease, the
amusement of reading in the newspapers the exploits of their own
fleets and armies. To them this amusement compensates the small
difference between the taxes which they pay on account of the war, and
those which they had been accustomed to pay in time of peace. They are
commonly dissatisfied with the return of peace, which puts an end to
their amusement, and to a thousand visionary hopes of conquest and
national glory, from a longer continuance of the war.

The return of peace, indeed, seldom relieves them from the greater
part of the taxes imposed during the war. These are mortgaged for the
interest of the debt contracted, in order to carry it on. If, over and
above paying the interest of this debt, and defraying the ordinary
expense of government, the old revenue, together with the new taxes,
produce some surplus revenue, it may, perhaps, be converted into a
sinking fund for paying off the debt. But, in the first place, this
sinking fund, even supposing it should be applied to no other purpose,
is generally altogether inadequate for paying, in the course of any
period during which it can reasonably be expected that peace should
continue, the whole debt contracted during the war; and, in the second
place, this fund is almost always applied to other purposes.

The new taxes were imposed for the sole purpose of paying the interest
of the money borrowed upon them. If they produce more, it is generally
something which was neither intended nor expected, and is, therefore,
seldom very considerable. Sinking funds have generally arisen, not so
much from any surplus of the taxes which was over and above what was
necessary for paying the interest or annuity originally charged upon
them, as from a subsequent reduction of that interest; that of Holland
in 1655, and that of the ecclesiastical state in 1685, were both
formed in this manner. Hence the usual insufficiency of such funds.

During the most profound peace, various events occur, which require an
extraordinary expense; and government finds it always more convenient
to defray this expense by misapplying the sinking fund, than by
imposing a new tax. Every new tax is immediately felt more or less by
the people. It occasions always some murmur, and meets with some
opposition. The more taxes may have been multiplied, the higher they
may have been raised upon every different subject of taxation; the
more loudly the people complain of every new tax, the more difficult
it becomes, too, either to find out new subjects of taxation, or to
raise much higher the taxes already imposed upon the old. A momentary
suspension of the payment of debt is not immediately felt by the
people, and occasions neither murmur nor complaint. To borrow of the
sinking fund is always an obvious and easy expedient for getting out
of the present difficulty. The more the public debts may have been
accumulated, the more necessary it may have become to study to reduce
them; the more dangerous, the more ruinous it may be to misapply any
part of the sinking fund; the less likely is the public debt to be
reduced to any considerable degree, the more likely, the more
certainly, is the sinking fund to be misapplied towards defraying all
the extraordinary expenses which occur in time of peace. When a nation
is already overburdened with taxes, nothing but the necessities of a
new war, nothing but either the animosity of national vengeance, or
the anxiety for national security, can induce the people to submit,
with tolerable patience, to a new tax. Hence the usual misapplication
of the sinking fund.

In Great Britain, from the time that we had first recourse to the
ruinous expedient of perpetual funding, the reduction of the public
debt, in time of peace, has never borne any proportion to its
accumulation in time of war. It was in the war which began in 1668,
and was concluded by the treaty of Ryswick, in 1697, that the
foundation of the present enormous debt of Great Britain was first
laid.

On the 31st of December 1697, the public debts of Great Britain,
funded and unfunded, amounted to £21,515,742:13:8½. A great part of
those debts had been contracted upon short anticipations, and some
part upon annuities for lives; so that, before the 31st of December
1701, in less than four years, there had partly been paid off; and
partly reverted to the public, the sum of £5,121,041:12:0¾d; a greater
reduction of the public debt than has ever since been brought about in
so short a period of time. The remaining debt, therefore, amounted
only to £16,394,701:1:7¼d.

In the war which began in 1702, and which was concluded by the treaty
of Utrecht, the public debts were still more accumulated. On the 31st
of December 1714, they amounted to £53,681,076:5:6½. The subscription
into the South-sea fund, of the short and long annuities, increased
the capital of the public debt; so that, on the 31st of December 1722,
it amounted to £55,282,978:1:3 5/6. The reduction of the debt began in
1723, and went on so slowly, that, on the 31st of December 1739,
during seventeen years-of profound peace, the whole sum paid off was
no more than £8,328,554:17:11 3/12, the capital of the public debt, at
that time, amounting to £46,954,623:3:4 7/12.

The Spanish war, which began in 1739, and the French war which soon
followed it, occasioned a further increase of the debt, which, on the
31st of December 1748, after the war had been concluded by the treaty
of Aix-la-Chapelle, amounted to £78,293,313:1:10¾. The most profound
peace, of 17 years continuance, had taken no more than £8,328,354,
17:11¼ from it. A war, of less than nine years continuance, added
£31,338,689:18: 6 1/6 to it. {See James Postlethwaite's History of the
Public Revenue.}

During the administration of Mr. Pelham, the interest of the public
debt was reduced, or at least measures were taken for reducing it,
from four to three per cent.; the sinking fund was increased, and some
part of the public debt was paid off. In 1755, before the breaking out
of the late war, the funded debt of Great Britain amounted to
£72,289,675. On the 5th of January 1763, at the conclusion of the
peace, the funded debt amounted debt to £122,603,336:8:2¼. The
unfunded debt has been stated at £13,927,589:2:2. But the expense
occasioned by the war did not end with the conclusion of the peace; so
that, though on the 5th of January 1764, the funded debt was increased
(partly by a new loan, and partly by funding a part of the unfunded
debt) to £129,586,789:10:1¾, there still remained (according to the
very well informed author of Considerations on the Trade and Finances
of Great Britain) an unfunded debt, which was brought to account in
that and the following year, of £9,975,017: 12:2 15/44d. In 1764,
therefore, the public debt of Great Britain, funded and unfunded
together, amounted, according to this author, to £139,561,807:2:4. The
annuities for lives, too, which had been granted as premiums to the
subscribers to the new loans in 1757, estimated at fourteen years
purchase, were valued at £472,500; and the annuities for long terms of
years, granted as premiums likewise, in 1761 and 1762, estimated at
twenty-seven and a-half years purchase, were valued at £6,826,875.
During a peace of about seven years continuance, the prudent and truly
patriotic administration of Mr. Pelham was not able to pay off an old
debt of six millions. During a war of nearly the same continuance, a
new debt of more than seventy-five millions was contracted.

On the 5th of January 1775, the funded debt of Great Britain amounted
to £124,996,086, 1:6¼d. The unfunded, exclusive of a large civil-list
debt, to £4,150,236:3:11 7/8. Both together, to £129,146,322:5:6.
According to this account, the whole debt paid off, during eleven
years of profound peace, amounted only to £10,415,476:16:9 7/8. Even
this small reduction of debt, however, has not been all made from the
savings out of the ordinary revenue of the state. Several extraneous
sums, altogether independent of that ordinary revenue, have
contributed towards it. Amongst these we may reckon an additional
shilling in the pound land tax, for three years; the two millions
received from the East-India company, as indemnification for their
territorial acquisitions; and the one hundred and ten thousand pounds
received from the bank for the renewal of their charter. To these must
be added several other sums, which, as they arose out of the late war,
ought perhaps to be considered as deductions from the expenses of it.
The principal are,

The produce of French prizes ..............    £690,449: 18: 9
Composition for French prisoners .........      670,000:  0: 0

What has been received from the sale
of the ceded islands .........................   95,500:  0: 0

Total,  .....................................£1,455,949: 18: 9

If we add to this sum the balance of the earl of Chatham's and Mr.
Calcraft's accounts, and other army savings of the same kind, together
with what has been received from the bank, the East-India company, and
the additional shilling in the pound land tax, the whole must be a
good deal more than five millions. The debt, therefore, which, since
the peace, has been paid out of the savings from the ordinary revenue
of the state, has not, one year with another, amounted to half a
million a-year. The sinking fund has, no doubt, been considerably
augmented since the peace, by the debt which had been paid off, by the
reduction of the redeemable four per cents to three per cents, and by
the annuities for lives which have fallen in; and, if peace were to
continue, a million, perhaps, might now be annually spared out of it
towards the discharge of the debt. Another million, accordingly, was
paid in the course of last year; but at the same time, a large
civil-list debt was left unpaid, and we are now involved in a new war,
which, in its progress, may prove as expensive as any of our former
wars. {It has proved more expensive than any one of our former wars,
and has involved us in an additional debt of more than one hundred
millions. During a profound peace of eleven years, little more than
ten millions of debt was paid; during a war of seven years, more than
one hundred millions was contracted.} The new debt which will probably
be contracted before the end of the next campaign, may, perhaps, be
nearly equal to all the old debt which has been paid off from the
savings out of the ordinary revenue of the state. It would be
altogether chimerical, therefore, to expect that the public debt
should ever be completely discharged, by any savings which are likely
to be made from that ordinary revenue as it stands at present.

The public funds of the different indebted nations of Europe,
particularly those of England, have, by one author, been represented
as the accumulation of a great capital, superadded to the other
capital of the country, by means of which its trade is extended, its
manufactures are multiplied, and its lands cultivated and improved,
much beyond what they could have been by means of that other capital
only. He does not consider that the capital which the first creditors
of the public advanced to government, was, from the moment in which he
advanced it, a certain portion of the annual produce, turned away from
serving in the function of a capital, to serve in that of a revenue;
from maintaining productive labourers, to maintain unproductive ones,
and to be spent and wasted, generally in the course of the year,
without even the hope of any future reproduction. In return for the
capital which they advanced, they obtained, indeed, an annuity of the
public funds, in most cases, of more than equal value. This annuity,
no doubt, replaced to them their capital, and enabled them to carry on
their trade and business to the same, or, perhaps, to a greater extent
than before; that is, they were enabled, either to borrow of other
people a new capital, upon the credit of this annuity or, by selling
it, to get from other people a new capital of their own, equal, or
superior, to that which they had advanced to government. This new
capital, however, which they in this manner either bought or borrowed
of other people, must have existed in the country before, and must
have been employed, as all capitals are, in maintaining productive
labour. When it came into the hands of those who had advanced their
money to government, though it was, in some respects, a new capital to
them, it was not so to the country, but was only a capital withdrawn
from certain employments, in order to be turned towards others. Though
it replaced to them what they had advanced to government, it did not
replace it to the country. Had they not advanced this capital to
government, there would have been in the country two capitals, two
portions of the annual produce, instead of one, employed in
maintaining productive labour.

When, for defraying the expense of government, a revenue is raised
within the year, from the produce of free or unmortgaged taxes, a
certain portion of the revenue of private people is only turned away
from maintaining one species of unproductive labour, towards
maintaining another. Some part of what they pay in those taxes, might,
no doubt, have been accumulated into capital, and consequently
employed in maintaining productive labour; but the greater part would
probably have been spent, and consequently employed in maintaining
unproductive labour. The public expense, however, when defrayed in
this manner, no doubt hinders, more or less, the further accumulation
of new capital; but it does not necessarily occasion the destruction
of any actually-existing capital.

When the public expense is defrayed by funding, it is defrayed by the
annual destruction of some capital which had before existed in the
country; by the perversion of some portion of the annual produce which
had before been destined for the maintenance of productive labour,
towards that of unproductive labour. As in this case, however, the
taxes are lighter than they would have been, had a revenue sufficient
for defraying the same expense been raised within the year; the
private revenue of individuals is necessarily less burdened, and
consequently their ability to save and accumulate some part of that
revenue into capital, is a good deal less impaired. If the method of
funding destroys more old capital, it, at the same time, hinders less
the accumulation or acquisition of new capital, than that of defraying
the public expense by a revenue raised within the year. Under the
system of funding, the frugality and industry of private people can
more easily repair the breaches which the waste and extravagance of
government may occasionally make in the general capital of the
society.

It is only during the continuance of war, however, that the system of
funding has this advantage over the other system. Were the expense of
war to be defrayed always by a revenue raised within the year, the
taxes from which that extraordinary revenue was drawn would last no
longer than the war. The ability of private people to accumulate,
though less during the war, would have been greater during the peace,
than under the system of funding. War would not necessarily have
occasioned the destruction of any old capitals, and peace would have
occasioned the accumulation of many more new. Wars would, in general,
be more speedily concluded, and less wantonly undertaken. The people
feeling, during continuance of war, the complete burden of it, would
soon grow weary of it; and government, in order to humour them, would
not be under the necessity of carrying it on longer than it was
necessary to do so. The foresight of the heavy and unavoidable burdens
of war would hinder the people from wantonly calling for it when there
was no real or solid interest to fight for. The seasons during which
the ability of private people to accumulate was somewhat impaired,
would occur more rarely, and be of shorter continuance. Those, on the
contrary, during which that ability was in the highest vigour would be
of much longer duration than they can well be under the system of
funding.

When funding, besides, has made a certain progress, the multiplication
of taxes which it brings along with it, sometimes impairs as much the
ability of private people to accumulate, even in time of peace, as the
other system would in time of war. The peace revenue of Great Britain
amounts at present to more than ten millions a-year. If free and
unmortgaged, it might be sufficient, with proper management, and
without contracting a shilling of new debt, to carry on the most
vigorous war. The private revenue of the inhabitants of Great Britain
is at present as much incumbered in time of peace, their ability to
accumulate is as much impaired, as it would have been in the time of
the most expensive war, had the pernicious system of funding never
been adopted.

In the payment of the interest of the public debt, it has been said,
it is the right hand which pays the left. The money does not go out of
the country. It is only a part of the revenue of one set of the
inhabitants which is transferred to another; and the nation is not a
farthing the poorer. This apology is founded altogether in the
sophistry of the mercantile system; and, after the long examination
which I have already bestowed upon that system, it may, perhaps, be
unnecessary to say anything further about it. It supposes, besides,
that the whole public debt is owing to the inhabitants of the country,
which happens not to be true; the Dutch, as well as several other
foreign nations, having a very considerable share in our public funds.
But though the whole debt were owing to the inhabitants of the
country, it would not, upon that account, be less pernicious.

Land and capital stock are the two original sources of all revenue,
both private and public. Capital stock pays the wages of productive
labour, whether employed in agriculture, manufactures, or commerce.
The management of those two original sources of revenue belongs to two
different sets of people; the proprietors of land, and the owners or
employers of capital stock.

The proprietor of land is interested, for the sake of his own revenue,
to keep his estate in as good condition as he can, by building and
repairing his tenants houses, by making and maintaining the necessary
drains and inclosures, and all those other expensive improvements
which it properly belongs to the landlord to make and maintain. But,
by different land taxes, the revenue of the landlord may be so much
diminished, and, by different duties upon the necessaries and
conveniencies of life, that diminished revenue may be rendered of so
little real value, that he may find himself altogether unable to make
or maintain those expensive improvements. When the landlord, however,
ceases to do his part, it is altogether impossible that the tenant
should continue to do his. As the distress of the landlord increases,
the agriculture of the country must necessarily decline.

When, by different taxes upon the necessaries and conveniencies of
life, the owners and employers of capital stock find, that whatever
revenue they derive from it, will not, in a particular country,
purchase the same quantity of those necessaries and conveniencies
which an equal revenue would in almost any other, they will be
disposed to remove to some other. And when, in order to raise those
taxes, all or the greater part of merchants and manufacturers, that
is, all or the greater part of the employers of great capitals, come
to be continually exposed to the mortifying and vexatious visits of
the tax-gatherers, this disposition to remove will soon be changed
into an actual removing. The industry of the country will necessarily
fall with the removal of the capital which supported it, and the ruin
of trade and manufactures will follow the declension of agriculture.

To transfer from the owners of those two great sources of revenue,
land, and capital stock, from the persons immediately interested in
the good condition of every particular portion of land, and in the
good management of every particular portion of capital stock, to
another set of persons (the creditors of the public, who have no such
particular interest ), the greater part of the revenue arising from
either, must, in the long-run, occasion both the neglect of land, and
the waste or removal of capital stock. A creditor of the public has,
no doubt, a general interest in the prosperity of the agriculture,
manufactures, and commerce of the country; and consequently in the
good condition of its land, and in the good management of its capital
stock. Should there be any general failure or declension in any of
these things, the produce of the different taxes might no longer be
sufficient to pay him the annuity or interest which is due to him. But
a creditor of the public, considered merely as such, has no interest
in the good condition of any particular portion of land, or in the
good management of any particular portion of capital stock. As a
creditor of the public, he has no knowledge of any such particular
portion. He has no inspection of it. He can have no care about it. Its
ruin may in some cases be unknown to him, and cannot directly affect
him.

The practice of funding has gradually enfeebled every state which has
adopted it. The Italian republics seem to have begun it. Genoa and
Venice, the only two remaining which can pretend to an independent
existence, have both been enfeebled by it. Spain seems to have learned
the practice from the Italian republics, and (its taxes being probably
less judicious than theirs) it has, in proportion to its natural
strength, been-still more enfeebled. The debts of Spain are of very
old standing. It was deeply in debt before the end of the sixteenth
century, about a hundred years before England owed a shilling. France,
notwithstanding all its natural resources, languishes under an
oppressive load of the same kind. The republic of the United Provinces
is as much enfeebled by its debts as either Genoa or Venice. Is it
likely that, in Great Britain alone, a practice, which has brought
either weakness or dissolution into every other country, should prove
altogether innocent?

The system of taxation established in those different countries, it
may be said, is inferior to that of England. I believe it is so. But
it ought to be remembered, that when the wisest government has
exhausted all the proper subjects of taxation, it must, in cases of
urgent necessity, have recourse to improper ones. The wise republic of
Holland has, upon some occasions, been obliged to have recourse to
taxes as inconvenient as the greater part of those of Spain. Another
war, begun before any considerable liberation of the public revenue
had been brought about, and growing in its progress as expensive as
the last war, may, from irresistible necessity, render the British
system of taxation as oppressive as that of Holland, or even as that
of Spain. To the honour of our present system of taxation, indeed, it
has hitherto given so little embarrassment to industry, that, during
the course even of the most expensive wars, the frugality and good
conduct of individuals seem to have been able, by saving and
accumulation, to repair all the breaches which the waste and
extravagance of government had made in the general capital of the
society. At the conclusion of the late war, the most expensive that
Great Britain ever waged, her agriculture was as flourishing, her
manufacturers as numerous and as fully employed, and her commerce as
extensive, as they had ever been before. The capital, therefore, which
supported all those different branches of industry, must have been
equal to what it had ever been before. Since the peace, agriculture
has been still further improved; the rents of houses have risen in
every town and village of the country, a proof of the increasing
wealth and revenue of the people; and the annual amount of the greater
part of the old taxes, of the principal branches of the excise and
customs, in particular, has been continually increasing, an equally
clear proof of an increasing consumption, and consequently of an
increasing produce, which could alone support that consumption. Great
Britain seems to support with ease, a burden which, half a century
ago, nobody believed her capable of supporting, Let us not, however,
upon this account, rashly conclude that she is capable of supporting
any burden; nor even be too confident that she could support, without
great distress, a burden a little greater than what has already been
laid upon her.

When national debts have once been accumulated to a certain degree,
there is scarce, I believe, a single instance of their having been
fairly and completely paid. The liberation of the public revenue, if
it has ever been brought about at all, has always been brought about
by a bankruptcy; sometimes by an avowed one, though frequently by a
pretended payment.

The raising of the denomination of the coin has been the most usual
expedient by which a real public bankruptcy has been disguised under
the appearance of a pretended payment. If a sixpence, for example,
should, either by act of parliament or royal proclamation, be raised
to the denomination of a shilling, and twenty sixpences to that of a
pound sterling; the person who, under the old denomination, had
borrowed twenty shillings, or near four ounces of silver, would, under
the new, pay with twenty sixpences, or with something less than two
ounces. A national debt of about a hundred and twenty-eight millions,
near the capital of the funded and unfunded debt of Great Britain,
might, in this manner, be paid with about sixty-four millions of our
present money. It would, indeed, be a pretended payment only, and the
creditors of the public would really be defrauded of ten shillings in
the pound of what was due to them. The calamity, too, would extend
much further than to the creditors of the public, and those of every
private person would suffer a proportionable loss; and this without
any advantage, but in most cases with a great additional loss, to the
creditors of the public. If the creditors of the public, indeed, were
generally much in debt to other people, they might in some measure
compensate their loss by paying their creditors in the same coin in
which the public had paid them. But in most countries, the creditors
of the public are, the greater part of them, wealthy people, who stand
more in the relation of creditors than in that of debtors, towards the
rest of their fellow citizens. A pretended payment of this kind,
therefore, instead of alleviating, aggravates, in most cases, the loss
of the creditors of the public; and, without any advantage to the
public, extends the calamity to a great number of other innocent
people. It occasions a general and most pernicious subversion of the
fortunes of private people; enriching, in most cases, the idle and
profuse debtor, at the expense of the industrious and frugal creditor;
and transporting a great part of the national capital from the hands
which were likely to increase and improve it, to those who are likely
to dissipate and destroy it. When it becomes necessary for a state to
declare itself bankrupt, in the same manner as when it becomes
necessary for an individual to do so, a fair, open, and avowed
bankruptcy, is always the measure which is both least dishonourable to
the debtor, and least hurtful to the creditor. The honour of a state
is surely very poorly provided for, when, in order to cover the
disgrace of a real bankruptcy, it has recourse to a juggling trick of
this kind, so easily seen through, and at the same time so extremely
pernicious.

Almost all states, however, ancient as well as modern, when reduced to
this necessity, have, upon some occasions, played this very juggling
trick. The Romans, at the end of the first Punic war, reduced the As,
the coin or denomination by which they computed the value of all their
other coins, from containing twelve ounces of copper, to contain only
two ounces; that is, they raised two ounces of copper to a
denomination which had always before expressed the value of twelve
ounces. The republic was, in this manner, enabled to pay the great
debts which it had contracted with the sixth part of what it really
owed. So sudden and so great a bankruptcy, we should in the present
times be apt to imagine, must have occasioned a very violent popular
clamour. It does not appear to have occasioned any. The law which
enacted it was, like all other laws relating to the coin, introduced
and carried through the assembly of the people by a tribune, and was
probably a very popular law. In Rome, as in all other ancient
republics, the poor people were constantly in debt to the rich and the
great, who, in order to secure their votes at the annual elections,
used to lend them money at exorbitant interest, which, being never
paid, soon accumulated into a sum too great either for the debtor to
pay, or for any body else to pay for him. The debtor, for fear of a
very severe execution, was obliged, without any further gratuity, to
vote for the candidate whom the creditor recommended. In spite of all
the laws against bribery and corruption, the bounty of the candidates,
together with the occasional distributions of coin which were ordered
by the senate, were the principal funds from which, during the latter
times of the Roman republic, the poorer citizens derived their
subsistence. To deliver themselves from this subjection to their
creditors, the poorer citizens were continually calling out, either
for an entire abolition of debts, or for what they called new tables;
that is, for a law which should entitle them to a complete
acquittance, upon paying only a certain proportion of their
accumulated debts. The law which reduced the coin of all denominations
to a sixth part of its former value, as it enabled them to pay their
debts with a sixth part of what they really owed, was equivalent to
the most advantageous new tables. In order to satisfy the people, the
rich and the great were, upon several different occasions, obliged to
consent to laws, both for abolishing debts, and for introducing new
tables; and they probably were induced to consent to this law, partly
for the same reason, and partly that, by liberating the public
revenue, they might restore vigour to that government, of which they
themselves had the principal direction. An operation of this kind
would at once reduce a debt of £128,000,000 to £21,333,333:6:8. In the
course of the second Punic war, the As was still further reduced,
first, from two ounces of copper to one ounce, and afterwards from one
ounce to half an ounce; that is, to the twenty-fourth part of its
original value. By combining the three Roman operations into one, a
debt of a hundred and twenty-eight millions of our present money,
might in this manner be reduced all at once to a debt of
£5,333,333:6:8. Even the enormous debt of Great Britain might in this
manner soon be paid.

By means of such expedients, the coin of, I believe, all nations, has
been gradually reduced more and more below its original value, and the
same nominal sum has been gradually brought to contain a smaller and a
smaller quantity of silver.

Nations have sometimes, for the same purpose, adulterated the standard
of their coin; that is, have mixed a greater quantity of alloy in it.
If in the pound weight of our silver coin, for example, instead of
eighteen penny-weight, according to the present standard, there were
mixed eight ounces of alloy; a pound sterling, or twenty shillings of
such coin, would be worth little more than six shillings and
eightpence of our present money. The quantity of silver contained in
six shillings and eightpence of our present money, would thus be
raised very nearly to the denomination of a pound sterling. The
adulteration of the standard has exactly the same effect with what the
French call an augmentation, or a direct raising of the denomination
of the coin.

An augmentation, or a direct raising of the denomination of the coin,
always is, and from its nature must be, an open and avowed operation.
By means of it, pieces of a smaller weight and bulk are called by the
same name, which had before been given to pieces of a greater weight
and bulk. The adulteration of the standard, on the contrary, has
generally been a concealed operation. By means of it, pieces are
issued from the mint, of the same denomination, and, as nearly as
could be contrived, of the same weight, bulk, and appearance, with
pieces which had been current before of much greater value. When king
John of France, {See Du Cange Glossary, voce Moneta; the Benedictine
Edition.} in order to pay his debts, adulterated his coin, all the
officers of his mint were sworn to secrecy. Both operations are
unjust. But a simple augmentation is an injustice of open violence;
whereas an adulteration is an injustice of treacherous fraud. This
latter operation, therefore, as soon as it has been discovered, and it
could never be concealed very long, has always excited much greater
indignation than the former. The coin, after any considerable
augmentation, has very seldom been brought back to its former weight;
but after the greatest adulterations, it has almost always been
brought back to its former fineness. It has scarce ever happened, that
the fury and indignation of the people could otherwise be appeased.

In the end of the reign of Henry VIII., and in the beginning of that
of Edward VI., the English coin was not only raised in its
denomination, but adulterated in its standard. The like frauds were
practised in Scotland during the minority of James VI. They have
occasionally been practised in most other countries.

That the public revenue of Great Britain can never be completely
liberated, or even that any considerable progress can ever be made
towards that liberation, while the surplus of that revenue, or what is
over and above defraying the annual expense of the peace
establishment, is so very small, it seems altogether in vain to
expect. That liberation, it is evident, can never be brought about,
without either some very considerable augmentation of the public
revenue, or some equally considerable reduction of the public expense.

A more equal land tax, a more equal tax upon the rent of houses, and
such alterations in the present system of customs and excise as those
which have been mentioned in the foregoing chapter, might, perhaps,
without increasing the burden of the greater part of the people, but
only distributing the weight of it more equally upon the whole,
produce a considerable augmentation of revenue. The most sanguine
projector, however, could scarce flatter himself, that any
augmentation of this kind would be such as could give any reasonable
hopes, either of liberating the public revenue altogether, or even of
making such progress towards that liberation in time of peace, as
either to prevent or to compensate the further accumulation of the
public debt in the next war.

By extending the British system of taxation to all the different
provinces of the empire, inhabited by people either of British or
European extraction, a much greater augmentation of revenue might be
expected. This, however, could scarce, perhaps, be done, consistently
with the principles of the British constitution, without admitting
into the British parliament, or, if you will, into the states-general
of the British empire, a fair and equal representation of all those
different provinces; that of each province bearing the same proportion
to the produce of its taxes, as the representation of Great Britain
might bear to the produce of the taxes levied upon Great Britain. The
private interest of many powerful individuals, the confirmed
prejudices of great bodies of people, seem, indeed, at present, to
oppose to so great a change, such obstacles as it may be very
difficult, perhaps altogether impossible, to surmount. Without,
however, pretending to determine whether such a union be practicable
or impracticable, it may not, perhaps, be improper, in a speculative
work of this kind, to consider how far the British system of taxation
might be applicable to all the different provinces of the empire; what
revenue might be expected from it, if so applied; and in what manner a
general union of this kind might be likely to affect the happiness and
prosperity of the differrent provinces comprehended within it. Such a
speculation, can, at worst, be regarded but as a new Utopia, less
amusing, certainly, but no more useless and chimerical than the old
one.

The land-tax, the stamp duties, and the different duties of customs
and excise, constitute the four principal branches of the British
taxes.

Ireland is certainly as able, and our American and West India
plantations more able, to pay a land tax, than Great Britain. Where
the landlord is subject neither to tythe nor poor's rate, he must
certainly be more able to pay such a tax, than where he is subject to
both those other burdens. The tythe, where there is no modus, and
where it is levied in kind, diminishes more what would otherwise be
the rent of the landlord, than a land tax which really amounted to
five shillings in the pound. Such a tythe will be found, in most
cases, to amount to more than a fourth part of the real rent of the
land, or of what remains after replacing completely the capital of the
farmer, together with his reasonable profit. If all moduses and all
impropriations were taken away, the complete church tythe of Great
Britain and Ireland could not well be estimated at less than six or
seven millions. If there was no tythe either in Great Britain or
Ireland, the landlords could afford to pay six or seven millions
additional land tax, without being more burdened than a very great
part of them are at present. America pays no tythe, and could,
therefore, very well afford to pay a land tax. The lands in America
and the West Indies, indeed, are, in general, not tenanted nor leased
out to farmers. They could not, therefore, be assessed according to
any rent roll. But neither were the lands of Great Britain, in the 4th
of William and Mary, assessed according to any rent roll, but
according to a very loose and inaccurate estimation. The lands in
America might be assessed either in the same manner, or according to an
equitable valuation, in consequence of an accurate survey, like that
which was lately made in the Milanese, and in the dominions of
Austria, Prussia, and Sardinia.

Stamp duties, it is evident, might be levied without any variation, in
all countries where the forms of law process, and the deeds by which
property, both real and personal, is transferred, are the same, or
nearly the same.

The extension of the custom-house laws of Great Britain to Ireland and
the plantations, provided it was accompanied, as in justice it ought
to be, with an extension of the freedom of trade, would be in the
highest degree advantageous to both. All the invidious restraints
which at present oppress the trade of Ireland, the distinction between
the enumerated and non-enumerated commodities of America, would be
entirely at an end. The countries north of Cape Finisterre would be as
open to every part of the produce of America, as those south of that
cape are to some parts of that produce at present. The trade between
all the different parts of the British empire would, in consequence of
this uniformity in the custom-house laws, be as free as the coasting
trade of Great Britain is at present. The British empire would thus
afford, within itself, an immense internal market for every part of
the produce of all its different provinces. So great an extension of
market would soon compensate, both to Ireland and the plantations, all
that they could suffer from the increase of the duties of customs.

The excise is the only part of the British system of taxation, which
would require to be varied in any respect, according as it was applied
to the different provinces of the empire. It might be applied to
Ireland without any variation; the produce and consumption of that
kingdom being exactly of tho same nature with those of Great Britain.
In its application to America and the West Indies, of which the
produce and consumption are so very different from those of Great
Britain, some modification might be necessary, in the same manner as
in its application to the cyder and beer counties of England.

A fermented liquor, for example, which is called beer, but which, as
it is made of molasses, bears very little resemblance to our beer,
makes a considerable part of the common drink of the people in
America. This liquor, as it can be kept only for a few days, cannot,
like our beer, be prepared and stored up for sale in great breweries;
but every private family must brew it for their own use, in the same
manner as they cook their victuals. But to subject every private
family to the odious visits and examination of the tax-gatherers, in
the same manner as we subject the keepers of ale-houses and the
brewers for public sale, would be altogether inconsistent with
liberty. If, for the sake of equality, it was thought necessary to lay
a tax upon this liquor, it might be taxed by taxing the material of
which it is made, either at the place of manufacture, or, if the
circumstances of the trade rendered such an excise improper, by laying
a duty upon its importation into the colony in which it was to be
consumed. Besides the duty of one penny a-gallon imposed by the
British parliament upon the importation of molasses into America,
there is a provincial tax of this kind upon their importation into
Massachusetts Bay, in ships belonging to any other colony, of
eight-pence the hogshead; and another upon their importation from the
northern colonies into South Carolina, of five-pence the gallon. Or,
if neither of these methods was found convenient, each family might
compound for its consumption of this liquor, either according to the
number of persons of which it consisted, in the same manner as private
families compound for the malt tax in England; or according to the
different ages and sexes of those persons, in the same manner as
several different taxes are levied in Holland; or, nearly as Sir
Matthew Decker proposes, that all taxes upon consumable commodities
should be levied in England. This mode of taxation, it has already
been observed, when applied to objects of a speedy consumption, is not
a very convenient one. It might be adopted, however, in cases where no
better could be done.

Sugar, rum, and tobacco, are commodities which are nowhere necessaries
of life, which are become objects of almost universal consumption, and
which are, therefore, extremely proper subjects of taxation. If a
union with the colonies were to take place, those commodities might be
taxed, either before they go out of the hands of the manufacturer or
grower; or, if this mode of taxation did not suit the circumstances of
those persons, they might be deposited in public warehouses, both at
the place of manufacture, and at all the different ports of the
empire, to which they might afterwards be transported, to remain
there, under the joint custody of the owner and the revenue officer,
till such time as they should be delivered out, either to the
consumer, to the merchant-retailer for home consumption, or to the
merchant-exporter; the tax not to be advanced till such delivery. When
delivered out for exportation, to go duty-free, upon proper security
being given, that they should really be exported out of the empire.
These are, perhaps, the principal commodities, with regard to which
the union with the colonies might require some considerable change in
the present system of British taxation.

What might be the amount of the revenue which this system of taxation,
extended to all the different provinces of the empire, might produce,
it must, no doubt, be altogether impossible to ascertain with
tolerable exactness. By means of this system, there is annually levied
in Great Britain, upon less than eight millions of people, more than
ten millions of revenue. Ireland contains more than two millions of
people, and, according to the accounts laid before the congress, the
twelve associated provinces of America contain more than three. Those
accounts, however, may have been exaggerated, in order, perhaps,
either to encourage their own people, or to intimidate those of this
country; and we shall suppose, therefore, that our North American and
West Indian colonies, taken together, contain no more than three
millions; or that the whole British empire, in Europe and America,
contains no more than thirteen millions of inhabitants. If, upon less
than eight millions of inhabitants, this system of taxation raises a
revenue of more than ten millions sterling; it ought, upon thirteen
millions of inhabitants, to raise a revenue of more than sixteen
millions two hundred and fifty thousand pounds sterling. From this
revenue, supposing that this system could produce it, must be deducted
the revenue usually raised in Ireland and the plantations, for
defraying the expense of the respective civil governments. The expense
of the civil and military establishment of Ireland, together with the
interest of the public debt, amounts, at a medium of the two years
which ended March 1775, to something less than seven hundred and fifty
thousand pounds a year. By a very exact account of the revenue of the
principal colonies of America and the West Indies, it amounted, before
the commencement of the present disturbances, to a hundred and
forty-one thousand eight hundred pounds. In this account, however, the
revenue of Maryland, of North Carolina, and of all our late
acquisitions, both upon the continent, and in the islands, is omitted;
which may, perhaps, make a difference of thirty or forty thousand
pounds. For the sake of even numbers, therefore, let us suppose that
the revenue necessary for supporting the civil government of Ireland
and the plantations may amount to a million. There would remain,
consequently, a revenue of fifteen millions two hundred and fifty
thousand pounds, to be applied towards defraying the general expense
of the empire, and towards paying the public debt. But if, from the
present revenue of Great Britain, a million could, in peaceable times,
be spared towards the payment of that debt, six millions two hundred
and fifty thousand pounds could very well be spared from this improved
revenue. This great sinking fund, too, might be augmented every year
by the interest of the debt which had been discharged the year before;
and might, in this manner, increase so very rapidly, as to be
sufficient in a few years to discharge the whole debt, and thus to
restore completely the at-present debilitated and languishing vigour
of the empire. In the meantime, the people might be relieved from some
of the most burdensome taxes; from those which are imposed either upon
the necessaries of life, or upon the materials of manufacture. The
labouring poor would thus be enabled to live better, to work cheaper,
and to send their goods cheaper to market. The cheapness of their
goods would increase the demand for them, and consequently for the
labour of those who produced them. This increase in the demand for
labour would both increase the numbers, and improve the circumstances
of the labouring poor. Their consumption would increase, and, together
with it, the revenue arising from all those articles of their
consumption upon which the taxes might be allowed to remain.

The revenue arising from this system of taxation, however, might not
immediately increase in proportion to the number of people who were
subjected to it. Great indulgence would for some time be due to those
provinces of the empire which were thus subjected to burdens to which
they had not before been accustomed; and even when the same taxes came
to be levied everywhere as exactly as possible, they would not
everywhere produce a revenue proportioned to the numbers of the
people. In a poor country, the consumption of the principal
commodities subject to the duties of customs and excise, is very
small; and in a thinly inhabited country, the opportunities of
smuggling are very great. The consumption of malt liquors among the
inferior ranks of people in Scotland is very small; and the excise
upon malt, beer, and ale, produces less there than in England, in
proportion to the numbers of the people and the rate of the duties,
which upon malt is different, on account of a supposed difference of
quality. In these particular branches of the excise, there is not, I
apprehend, much more smuggling in the one country than in the other.
The duties upon the distillery, and the greater part of the duties of
customs, in proportion to the numbers of people in the respective
countries, produce less in Scotland than in England, not only on
account of the smaller consumption of the taxed commodities, but of
the much greater facility of smuggling. In Ireland, the inferior ranks
of people are still poorer than in Scotland, and many parts of the
country are almost as thinly inhabited. In Ireland, therefore, the
consumption of the taxed commodities might, in proportion to the
number of the people, be still less than in Scotland, and the facility
of smuggling nearly the same. In America and the West Indies, the
white people, even of the lowest rank, are in much better
circumstances than those of the same rank in England; and their
consumption of all the luxuries in which they usually indulge
themselves, is probably much greater. The blacks, indeed, who make the
greater part of the inhabitants, both of the southern colonies upon
the continent and of the West India islands, as they are in a state of
slavery, are, no doubt, in a worse condition than the poorest people
either in Scotland or Ireland. We must not, however, upon that
account, imagine that they are worse fed, or that their consumption of
articles which might be subjected to moderate duties, is less than
that even of the lower ranks of people in England. In order that they
may work well, it is the interest of their master that they should be
fed well, and kept in good heart, in the same manner as it is his
interest that his working cattle should be so. The blacks,
accordingly, have almost everywhere their allowance of rum, and of
molasses or spruce-beer, in the same manner as the white servants; and
this allowance would not probably be withdrawn, though those articles
should be subjected to moderate duties. The consumption of the taxed
commodities, therefore, in proportion to the number of inhabitants,
would probably be as great in America and the West Indies as in any
part of the British empire. The opportunities of smuggling, indeed,
would be much greater; America, in proportion to the extent of the
country, being much more thinly inhabited than either Scotland or
Ireland. If the revenue, however, which is at present raised by the
different duties upon malt and malt liquors, were to be levied by a
single duty upon malt, the opportunity of smuggling in the most
important branch of the excise would be almost entirely taken away;
and if the duties of customs, instead of being imposed upon almost all
the different articles of importation, were confined to a few of the
most general use and consumption, and if the levying of those duties
were subjected to the excise laws, the opportunity of smuggling,
though not so entirely taken away, would be very much diminished. In
consequence of those two apparently very simple and easy alterations,
the duties of customs and excise might probably produce a revenue as
great, in proportion to the consumption of the most thinly inhabited
province, as they do at present, in proportion to that of the most
populous.

The Americans, it has been said, indeed, have no gold or silver money,
the interior commerce of the country being carried on by a paper
currency; and the gold and silver, which occasionally come among them,
being all sent to Great Britain, in return for the commodities which
they receive from us. But without gold and silver, it is added, there
is no possibility of paying taxes. We already get all the gold and
silver which they have. How is it possible to draw from them what they
have not?

The present scarcity of gold and silver money in America, is not the
effect of the poverty of that country, or of the inability of the
people there to purchase those metals. In a country where the wages of
labour are so much higher, and the price of provisions so much lower
than in England, the greater part of the people must surely have
wherewithal to purchase a greater quantity, if it were either
necessary or convenient for them to do so. The scarcity of those
metals, therefore, must be the effect of choice, and not of necessity.

It is for transacting either domestic or foreign business, that gold
or silver money is either necessary or convenient.

The domestic business of every country, it has been shewn in the
second book of this Inquiry, may, at least in peaceable times, be
transacted by means of a paper currency, with nearly the same degree
of conveniency as by gold and silver money. It is convenient for the
Americans, who could always employ with profit, in the improvement of
their lands, a greater stock than they can easily get, to save as much
as possible the expense of so costly an instrument of commerce as gold
and silver; and rather to employ that part of their surplus produce
which would be necessary for purchasing those metals, in purchasing
the instruments of trade, the materials of clothing, several parts of
household furniture, and the iron work necessary for building and
extending their settlements and plantations; in purchasing not dead
stock, but active and productive stock. The colony governments find it
for their interest to supply the people with such a quantity of paper
money as is fully sufficient, and generally more than sufficient, for
transacting their domestic business. Some of those governments, that
of Pennsylvania, particularly, derive a revenue from lending this
paper money to their subjects, at an interest of so much per cent.
Others, like that of Massachusetts Bay, advance, upon extraordinary
emergencies, a paper money of this kind for defraying the public
expense; and afterwards, when it suits the conveniency of the colony,
redeem it at the depreciated value to which it gradually falls. In
1747, {See Hutchinson's History of Massachusetts Bay vol. ii. page 436
et seq.} that colony paid in this manner the greater part of its
public debts, with the tenth part of the money for which its bills had
been granted. It suits the conveniency of the planters, to save the
expense of employing gold and silver money in their domestic
transactions; and it suits the conveniency of the colony governments,
to supply them with a medium, which, though attended with some very
considerable disadvantages, enables them to save that expense. The
redundancy of paper money necessarily banishes gold and silver from
the domestic transactions of the colonies, for the same reason that it
has banished those metals from the greater part of the domestic
transactions in Scotland; and in both countries, it is not the
poverty, but the enterprizing and projecting spirit of the people,
their desire of employing all the stock which they can get, as active
and productive stock, which has occasioned this redundancy of paper
money.

In the exterior commerce which the different colonies carry on with
Great Britain, gold and silver are more or less employed, exactly in
proportion as they are more or less necessary. Where those metals are
not necessary, they seldom appear. Where they are necessary, they are
generally found.

In the commerce between Great Britain and the tobacco colonies, the
British goods are generally advanced to the colonists at a pretty long
credit, and are afterwards paid for in tobacco, rated at a certain
price. It is more convenient for the colonists to pay in tobacco than
in gold and silver. It would be more convenient for any merchant to
pay for the goods which his correspondents had sold to him, in some
other sort of goods which he might happen to deal in, than in money.
Such a merchant would have no occasion to keep any part of his stock
by him unemployed, and in ready money, for answering occasional
demands. He could have, at all times, a larger quantity of goods in
his shop or warehouse, and he could deal to a greater extent. But it
seldom happens to be convenient for all the correspondents of a
merchant to receive payment for the goods which they sell to him, in
goods of some other kind which he happens to deal in. The British
merchants who trade to Virginia and Maryland, happen to be a
particular set of correspondents, to whom it is more convenient to
receive payment for the goods which they sell to those colonies in
tobacco, than in gold and silver. They expect to make a profit by the
sale of the tobacco; they could make none by that of the gold and
silver. Gold and silver, therefore, very seldom appear in the commerce
between Great Britain and the tobacco colonies. Maryland and Virginia
have as little occasion for those metals in their foreign, as in their
domestic commerce. They are said, accordingly, to have less gold and
silver money than any other colonies in America. They are reckoned,
however, as thriving, and consequently as rich, as any of their
neighbours.

In the northern colonies, Pennsylvania, New York, New Jersey, the four
governments of New England, etc. the value of their own produce which
they export to Great Britain is not equal to that of the manufactures
which they import for their own use, and for that of some of the other
colonies, to which they are the carriers. A balance, therefore, must
be paid to the mother-country in gold and silver and this balance they
generally find.

In the sugar colonies, the value of the produce annually exported to
Great Britain is much greater than that of all the goods imported from
thence. If the sugar and rum annually sent to the mother-country were
paid for in those colonies, Great Britain would be obliged to send
out, every year, a very large balance in money; and the trade to the
West Indies would, by a certain species of politicians, be considered
as extremely disadvantageous. But it so happens, that many of the
principal proprietors of the sugar plantations reside in Great
Britain. Their rents are remitted to them in sugar and rum, the
produce of their estates. The sugar and rum which the West India
merchants purchase in those colonies upon their own account, are not
equal in value to the goods which they annually sell there. A balance,
therefore, must necessarily be paid to them in gold and silver, and
this balance, too, is generally found.

The difficulty and irregularity of payment from the different colonies
to Great Britain, have not been at all in proportion to the greatness
or smallness of the balances which were respectively due from them.
Payments have, in general, been more regular from the northern than
from the tobacco colonies, though the former have generally paid a
pretty large balance in money, while the latter have either paid no
balance, or a much smaller one. The difficulty of getting payment from
our different sugar colonies has been greater or less in proportion,
not so much to the extent of the balances respectively due from them,
as to the quantity of uncultivated land which they contained; that is,
to the greater or smaller temptation which the planters have been
under of over-trading, or of undertaking the settlement and plantation
of greater quantities of waste land than suited the extent of their
capitals. The returns from the great island of Jamaica, where there is
still much uncultivated land, have, upon this account, been, in
general, more irregular and uncertain than those from the smaller
islands of Barbadoes, Antigua, and St. Christopher's, which have, for
these many years, been completely cultivated, and have, upon that
account, afforded less field for the speculations of the planter. The
new acquisitions of Grenada, Tobago, St. Vincent's, and Dominica, have
opened a new field for speculations of this kind; and the returns
front those islands have of late been as irregular and uncertain as
those from the great island of Jamaica.

It is not, therefore, the poverty of the colonies which occasions, in
the greater part of them, the present scarcity of gold and silver
money. Their great demand for active and productive stock makes it
convenient for them to have as little dead stock as possible, and
disposes them, upon that account, to content themselves with a
cheaper, though less commodious instrument of commerce, than gold and
silver. They are thereby enabled to convert the value of that gold and
silver into the instruments of trade, into the materials of clothing,
into household furniture, and into the iron work necessary for
building and extending their settlements and plantations. In those
branches of business which cannot be transacted without gold and
silver money, it appears, that they can always find the necessary
quantity of those metals; and if they frequently do not find it, their
failure is generally the effect, not of their necessary poverty, but
of their unnecessary and excessive enterprise. It is not because they
are poor that their payments are irregular and uncertain, but because
they are too eager to become excessively rich. Though all that part of
the produce of the colony taxes, which was over and above what was
necessary for defraying the expense of their own civil and military
establishments, were to be remitted to Great Britain in gold and
silver, the colonies have abundantly wherewithal to purchase the
requisite quantity of those metals. They would in this case be
obliged, indeed, to exchange a part of their surplus produce, with
which they now purchase active and productive stock, for dead stock.
In transacting their domestic business, they would be obliged to
employ a costly, instead of a cheap instrument of commerce; and the
expense of purchasing this costly instrument might damp somewhat the
vivacity and ardour of their excessive enterprise in the improvement
of land. It might not, however, be necessary to remit any part of the
American revenue in gold and silver. It might be remitted in bills
drawn upon, and accepted by, particular merchants or companies in
Great Britain, to whom a part of the surplus produce of America had
been consigned, who would pay into the treasury the American revenue
in money, after having themselves received the value of it in goods;
and the whole business might frequently be transacted without
exporting a single ounce of gold or silver from America.

It is not contrary to justice, that both Ireland and America should
contribute towards the discharge of the public debt of Great Britain.
That debt has been contracted in support of the government established
by the Revolution; a government to which the protestants of Ireland
owe, not only the whole authority which they at present enjoy in their
own country, but every security which they possess for their liberty,
their property, and their religion; a government to which several of
the colonies of America owe their present charters, and consequently
their present constitution; and to which all the colonies of America
owe the liberty, security, and property, which they have ever since
enjoyed. That public debt has been contracted in the defence, not of
Great Britain alone, but of all the different provinces of the empire.
The immense debt contracted in the late war in particular, and a great
part of that contracted in the war before, were both properly
contracted in defence of America.

By a union with Great Britain, Ireland would gain, besides the freedom
of trade, other advantages much more important, and which would much
more than compensate any increase of taxes that might accompany that
union. By the union with England, the middling and inferior ranks of
people in Scotland gained a complete deliverance from the power of an
aristocracy, which had always before oppressed them. By a union with
Great Britain, the greater part of people of all ranks in Ireland
would gain an equally complete deliverance from a much more oppressive
aristocracy; an aristocracy not founded, like that of Scotland, in the
natural and respectable distinctions of birth and fortune, but in the
most odious of all distinctions, those of religious and political
prejudices; distinctions which, more than any other, animate both the
insolence of the oppressors, and the hatred and indignation of the
oppressed, and which commonly render the inhabitants of the same
country more hostile to one another than those of different countries
ever are. Without a union with Great Britain, the inhabitants of
Ireland are not likely, for many ages, to consider themselves as one
people.

No oppressive aristocracy has ever prevailed in the colonies. Even
they, however, would, in point of happiness and tranquillity, gain
considerably by a union with Great Britain. It would, at least,
deliver them from those rancourous and virulent factions which are
inseparable from small democracies, and which have so frequently
divided the affections of their people, and disturbed the tranquillity
of their governments, in their form so nearly democratical. In the
case of a total separation from Great Britain, which, unless prevented
by a union of this kind, seems very likely to take place, those
factions would be ten times more virulent than ever. Before the
commencement of the present disturbances, the coercive power of the
mother-country had always been able to restrain those factions from
breaking out into any thing worse than gross brutality and insult. If
that coercive power were entirely taken away, they would probably soon
break out into open violence and bloodshed. In all great countries
which are united under one uniform government, the spirit of party
commonly prevails less in the remote provinces than in the centre of
the empire. The distance of those provinces from the capital, from the
principal seat of the great scramble of faction and ambition, makes
them enter less into the views of any of the contending parties, and
renders them more indifferent and impartial spectators of the conduct
of all. The spirit of party prevails less in Scotland than in England.
In the case of a union, it would probably prevail less in Ireland than
in Scotland; and the colonies would probably soon enjoy a degree of
concord and unanimity, at present unknown in any part of the British
empire. Both Ireland and the colonies, indeed, would be subjected to
heavier taxes than any which they at present pay. In consequence,
however, of a diligent and faithful application of the public revenue
towards the discharge of the national debt, the greater part of those
taxes might not be of long continuance, and the public revenue of
Great Britain might soon be reduced to what was necessary for
maintaining a moderate peace-establishment.

The territorial acquisitions of the East India Company, the undoubted
right of the Crown, that is, of the state and people of Great Britain,
might be rendered another source of revenue, more abundant, perhaps,
than all those already mentioned. Those countries are represented as
more fertile, more extensive, and, in proportion to their extent, much
richer and more populous than Great Britain. In order to draw a great
revenue from them, it would not probably be necessary to introduce any
new system of taxation into countries which are already sufficiently,
and more than sufficiently, taxed. It might, perhaps, be more proper
to lighten than to aggravate the burden of those unfortunate
countries, and to endeavour to draw a revenue from them, not by
imposing new taxes, but by preventing the embezzlement and
misapplication of the greater part of those which they already pay.

If it should be found impracticable for Great Britain to draw any
considerable augmentation of revenue from any of the resources above
mentioned, the only resource which can remain to her, is a diminution
of her expense. In the mode of collecting and in that of expending the
public revenue, though in both there may be still room for
improvement, Great Britain seems to be at least as economical as any
of her neighbours. The military establishment which she maintains for
her own defence in time of peace, is more moderate than that of any
European state, which can pretend to rival her either in wealth or in
power. None of these articles, therefore, seem to admit of any
considerable reduction of expense. The expense of the
peace-establishment of the colonies was, before the commencement of
the present disturbances, very considerable, and is an expense which
may, and, if no revenue can be drawn from them, ought certainly to be
saved altogether. This constant expense in time of peace, though very
great, is insignificant in comparison with what the defence of the
colonies has cost us in time of war. The last war, which was
undertaken altogether on account of the colonies, cost Great Britain,
it has already been observed, upwards of ninety millions. The Spanish
war of 1739 was principally undertaken on their account; in which, and
in the French war that was the consequence of it, Great Britain, spent
upwards of forty millions; a great part of which ought justly to be
charged to the colonies. In those two wars, the colonies cost Great
Britain much more than double the sum which the national debt amounted
to before the commencement of the first of them. Had it not been for
those wars, that debt might, and probably would by this time, have
been completely paid; and had it not been for the colonies, the former
of those wars might not, and the latter certainly would not, have been
undertaken. It was because the colonies were supposed to be provinces
of the British Empire, that this expense was laid out upon them. But
countries which contribute neither revenue nor military force towards
the support of the empire, cannot be considered as provinces. They
may, perhaps, be considered as appendages, as a sort of splendid and
shewy equipage of the empire. But if the empire can no longer support
the expense of keeping up this equipage, it ought certainly to lay it
down; and if it cannot raise its revenue in proportion to its expense,
it ought at least to accommodate its expense to its revenue. If the
colonies, notwithstanding their refusal to submit to British taxes,
are still to be considered as provinces of the British empire, their
defence, in some future war, may cost Great Britain as great an
expense as it ever has done in any former war. The rulers of Great
Britain have, for more than a century past, amused the people with the
imagination that they possessed a great empire on the west side of the
Atlantic. This empire, however, has hitherto existed in imagination
only. It has hitherto been, not an empire, but the project of an
empire; not a gold mine, but the project of a gold mine; a project
which has cost, which continues to cost, and which, if pursued in the
same way as it has been hitherto, is likely to cost, immense expense,
without being likely to bring any profit; for the effects of the
monopoly of the colony trade, it has been shewn, are to the great body
of the people, mere loss instead of profit. It is surely now time that
our rulers should either realize this golden dream, in which they have
been indulging themselves, perhaps, as well as the people; or that
they should awake from it themselves, and endeavour to awaken the
people. If the project cannot be completed, it ought to be given up.
If any of the provinces of the British empire cannot be made to
contribute towards the support of the whole empire, it is surely time
that Great Britain should free herself from the expense of defending
those provinces in time of war, and of supporting any part of their
civil or military establishment in time of peace; and endeavour to
accommodate her future views and designs to the real mediocrity of her
circumstances.









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