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 DISTRlBUTED AMONG THE DIFFERENT RANKS OF THE PEOPLE.

CHAPTER I.

OF THE DIVISlON 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 to much facilitated and

abridged, seems to have been originally owing to the division of labour. Men

are much more likely to discover easier and readier methods of attaining any

object. when the whole attention of their minds is directed towards that

single object, than when it is dissipated among a great variety of things.

But, in consequence of the division of labour, the whole of every man's

attention comes naturally to be directed towards some one very simple

object. It is naturally to be expected, therefore, that some one or other of

those who are employed in each particular branch of labour should soon find

out easier and readier methods of performing their own particular work,

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 rnoney.

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 he 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 be.

fore, 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 he 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 he 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 what. ever.

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, 1 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 1

have frequently heard the same doctrine held in Scotland. I am, however,

somewhat doubtful of the truth of if. 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

acknowdedgment 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 l202 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 he 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 augmetation 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 he 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 £ 3,4l3,43l: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 te 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 prožt 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 te 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 he 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 assertain what is or ought

to be his way of living, or the quantity and quality of the necessaries and

conveniencies of life in which he can with propriety indulge himself.

When, by any particular sum of money, we mean not only to express the amount

of the metal pieces of which it is composed, but to include in its

signification some obscure reference to the goods which can be had in

exchange for them, the wealth or revenue which it in this case denotes, is

equal only to one of the two values which are thus intimated somewhat

ambiguously by the same word, and to the latter more properly than to the

former, to the money's worth more properly than to the money.

Thus, if a guinea be the weekly pension of a particular person, he can in

the course of the week purchase with it a certain quantity of subsistence,

conveniencies, and amusements. In proportion as this quantity is great or

small, so are his real riches, his real weekly revenue. His weekly revenue

is certainly not equal both to the guinea and to what can be purchased with

it, but only to one or other of those two equal values, and to the latter

more properly than to the former, to the guinea's worth rather than to the

guinea.

If the pension of such a person was paid to him, not in gold, but in a

weekly bill for a guinea, his revenue surely would not so properly consist

in the piece of paper, as in what he could get for it. A guinea may be

considered as a bill for a certain quantity of necessaries and conveniencies

upon all the tradesmen in the neighbourhood The revenue of the person to

whom it is paid, does not so properly consist in the piece of gold, as in

what he can get for it, or in what he can exchange it for. If it could be

exchanged for nothing, it would, like a bill upon a bankrupt, be of no more

value than the most useless piece of paper.

Though the weekly or yearly revenue of all the different inhabitants of any

country, in the same manner, may be, and in reality frequently is, paid to

them in money, their real riches, however, the real weekly or yearly revenue

of all of them taken together, must always be great or small, in proportion

to the quantity of consumable goods which they can all of them purchase with

this money. The whole revenue of all of them taken together is evidently not

equal to both the money and the consumable goods, but only to one or other of

those two values, and to the latter more properly than to the former.

Though we frequently, therefore, express a person's revenue by the metal

pieces which are annually paid to him, it is because the amount of those

pieces regulates the extent of his power of purchasing, or the value of the

goods which he can annually afford to consume. We still consider his revenue

as consisting in this power of purchasing or consuming, and not in the

pieces which convey it.

But if this is sufficiently evident, even with regard to an individual, it

is still more so with regard to a society. The amount of the metal pieces

which are annually paid to an individual, is often precisely equal to his

revenue, and is upon that account the shortest and best expression of its

value. But the amount of the metal pieces which circulate in a society, can

never be equal to the revenue of all its members. As the same guinea which

pays the weekly pension of one man to-day, may pay that of another

to-morrow, and that of a third the day thereafter, the amount of the metal

pieces which annually circulate in any country, must always be of much less

value than the whole money pensions annually paid with them. But the power

of purchasing, or the goods which can successively be bought with the whole

of those money pensions, as they are successively paid, must always be

precisely of the same value with those pensions ; as must likewise be the

revenue of the different persons to whom they are paid. That revenue,

therefore, cannot consist in those metal pieces, of which the amount is so

much inferior to its value, but in the power of purchasing, in the goods

which can successively be bought with them as they circulate from hand to

hand.

Money, therefore, the great wheel of circulation, the great instrument of

commerce, like all other instruments of trade, though it makes a part, and a

very valuable part, of the capital, makes no part of the revenue of the

society to which it belongs; and though the metal pieces of which it is

composed, in the course of their annual circulation, distribute to every man

the revenue which properly belongs to him, they make themselves no part of

that revenue.

Thirdly, and lastly, the machines and instruments of trade, 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, sufficient1y

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 he 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-woms, 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, not.

withstanding 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 enrichiug 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

he 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

purchace 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

comnpanies; 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 lahour 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 disadvatageous, 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

he 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 distatnt

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 accummlating 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 somrwhat 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 encouragemnent, 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 statesmn, 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 butchet'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 vallue 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 neccssary 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 in trinsic 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 sup- posed 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 modem 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 nighbours, 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 prorportion 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, how.

ever, 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 nominaly

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 detemnined 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 diliglence 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 twenry 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 Isdands, 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 he

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 countribute a good deal to the relief of a

great number of our fellow-subjects, whose circumstances are by

no means affuent. 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 likaly 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 pruducing 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

shopkeper 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 he 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 mercliant 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 inconveniencics

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 successvely 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 afterwads 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, be ascribed in some measure

to the operation of this statute of Charles II. which had been

enacted about five-and-twenty years before, and which had,

therefore, full time to produce its effect.

A very few words will sufficiently explain all that I have to say

concerning the other three branches of the corn trade.

II. The trade of the merchant-importer of foreign corn for home

consumption, evidently contributes to the immediate supply of the

home market, and must so far be immediately beneficial to the

great body of the people. It tends, indeed, to lower somewhat the

average money price of corn, but not to diminish its real value,

or the quantity of labour which it is capable of maintaining. If

importation was at all times free, our farmers and country

gentlemen would probably, one year with another, get less money

for their corn than they do at present, when importation is at

most times in effect prohibited ; but the money which they got

would be of more value, would buy more goods of all other kinds,

and would employ more labour. Their real wealth, their real

revenue, therefore, would be the same as at present, though it

might be expressed by a smaller quantity of silver, and they

would neither be disabled nor discouraged from cultivating corn

as much as they do at present. On the contrary, as the rise in

the real value of silver, in consequence of lowering the money

price of corn, lowers somewhat the money price of all other

commodities, it gives the industry of the country where it takes

place some advantage in all foreign markets and thereby tends to

encourage and increase that industry. But the extent of the home

market for corn must be in proportion to the general industry of

the country where it grows, or to the number of those who produce

something else, and therefore, have something else, or, what

comes to the same thing, the price of something else, to give in

exchange for corn. But in every country, the home market, as it

is the nearest and most convenient, so is it likewise the

greatest and most important market for corn. That rise in the

real value of silver, therefore, which is the effect of lowering

the average money price of corn, tends to enlarge the greatest

and most important market for corn, and thereby to encourage,

instead of discouraging its growth.

By the 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 freedmn 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 he 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 enmloyed 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 beileve,

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 coin.

age, 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 exportaticn. 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 seignonage 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 impositon 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 mountaim 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,

be 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 nurnerous; 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 Eng1ish 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 dipose 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 legizslature 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 interferred 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 canriage 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 consequcnce 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 he 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, reconoitered

the coast, and took a fictitious possession of the country. The

land was good, and of great extent; and the cultivators having

plenty of good ground to work upon, and being for some time at

liberty to sell their produce where they pleased, became, in the

course of little more than thirty or forty years (between 1620

and 1660), so numerous and thriving a people, that the

shopkeepers and other traders of England wished to secure to

themselves the monopoly of their custom. Without pretending,

therefore, that they had paid any part, either of the original

purchase money, or of the subsequent expense of improvement, they

petitioned the parliament, that the cultivators of America might

for the future be confined to their shop; first, for buying all

the goods which they wanted from Europe; and, secondly, for

selling all such parts of their own produce as 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

ubvious 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 parlimnent, 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 be 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 monpoly 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 advantagenus 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 conpany 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 settlmnents 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 Earope, 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 agreat

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 legisiature, 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 Willimn 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 comnmdity. 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 he 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 Afrira. 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 imprisomnent, 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 expendture 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

controlls 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 degading 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 be 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 cuitivators 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 be

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 anount 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

kindoms 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 ouly, 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    Â     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 herings 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 enterd 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 considerd 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,

prepare 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 defenceles plains of

Scythia or Tartary, have been frequently united under the

dominion of the chief of some conquering horde or clan; and the

havock and devastation of Asia have always signalized their

union. The inhabitants of the inhospitable deserts of Arabia, the

other great nation of shepherds, have never been united but once,

under Mahomet and his immediate successors. Their union, which

was more the effect of religious enthusiasm than of conquest, was

signalized in the same manner. If the hunting nations of America

should ever become shepherds, their neighbourhood would be much

more dangerous to the European colonies than it is at present.

In a yet more advanced state of society, among those nations of

husbandmen who have little foreign commerce, and no other

manufactures but those coarse and household ones, which almost

every private family prepares for its own use, every man, in the

same manner, either is a warrior, or easily becomes such. Those

who live by agricuiture 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 govermnents, 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 husbmdman, 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 aweek, 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 Czesar 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 necesarily 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 likeiy 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 distribuion 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 originaliy 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 plantiff 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 socicty, 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 managmnent 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, perbaps {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 procduce 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 convecniency 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 dspleasure.

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 l643, 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 he 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 pay

ment 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 coparnery 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

acertain 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 succesful 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 neighbourlood, 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 raisted, 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 iusurers, 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 establislment 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 performarnce 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 requsite 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 a

gency 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

pnemnatics, 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 subtlelies

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 neccessary 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 controul of his

parents and relations, every useful habit, which the earlier

parts of his education might have had some tendency to form in

him, instead of being riveted and confirmed, is almost

necessarily either weakened or effaced. Nothing but the discredit

into which the universities are allowing themselves to fall,

could ever have brought into repute so very absurd a practice as

that of travelling at this early period of life. By sending his

son abroad, a father delivers himself, at least for some time,

from so disagreeable an object as that of a son unemployed,

neglected, and going to ruin before his eyes.

Such have been the effects of some of the modern institutions for

education.

Different plans and different institutions for education seem to

have taken place in other ages and nations.

In the republics of ancient Greece, every free citizen was

instructed, under the direction of the public magistrate, in

gymnastic exercises and in music. By gynmastic 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 demestic

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 establishmnent 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 eirher 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 digititartes 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 ho0nours 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 managimg

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 ofclergy, 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 he 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

fruquently, 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 Commowealth.

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 commision 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 occations, 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, cou1d

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 tlhe 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 obsevation 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 inconveniecy 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

itseif, 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 freqnently 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 he 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 fudamental 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

necesary 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 thas 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

iudustry. 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 magiatrate, 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 suppused 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 generatlity 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

instrutnents 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-officcs 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 sillings aweek 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 enhancenmnt of

price, together with the profit of those who advance it, must

always be finally paid by the landlords and comsumers.

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-laboururs 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

emolmnents, 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 consunmble 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 inconveniencics 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

contries; 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 quarlerly 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 ascertnining, 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 discouragmnent 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 materiais 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 diminutiun 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 comsumption. 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 necssary 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 liqours 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 protluced....... ...... £561,627: 3 : 7½

The additonal... £278,650: 15 : 3¾

In l774, 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 hitnerto 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

cotnmodity, 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 buing 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 commpound

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 he 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 occassion, 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 inte rest 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-truve 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 be. comes

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 sufticient 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 ot 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 missapply any part of the sinking fund ; the less

likely is the public debt to be reduced to any considerable

degree, the more likely, the more certainly, is the sinking fund

to be misapplied towards defraying all the extraordinary expenses

which occur in time of peace. When a nation is already

overburdened with taxes, nothing but the necessities of a new

war, nothing but either the animosity of national vengeance, or

the anxiety for national security, can induce the people to

submit, with tolerable patience, to a new tax. Hence the usual

misapplication of the sinking fund.

In Great Britain, from the time that we had first recourse to the

ruinous expedient of perpetual funding, the reduction of the

public debt, in time of peace, has never borne any proportion to

its accumulation in time of war. It was in the war which began in

1668, and was concluded by the treaty of Ryswick, in 1697, that

the foundation of the present enormous debt of Great Britain was

first laid.

On the 31st of December 1697, the public debts of Great Britain,

funded and unfunded, amounted to £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 publie 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, not. withstanding

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 acording 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 ayear. 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 larget 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.