CHAP. I. Of the Diviſion of Labour.

THE greateſt improvements in the productive powers of La⯑bour, and the greater part of the ſkill, dexterity, and judg⯑ment with which it is any where 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 com⯑monly 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 ſpec⯑tator. 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 [6] workmen, that it is impoſſible to collect them all into the ſame work⯑houſe. We can ſeldom ſee more, at one time, than thoſe employed in one ſingle branch. Though in them, 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 manufac⯑ture; but one in which the diviſion of labour has been very often taken notice of, the trade of the pin-maker; a workman not edu⯑cated 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 re⯑ceiving 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, di⯑vided into about eighteen diſtinct operations, which in ſome manu⯑factories 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 there⯑fore but indifferently accommodated with the neceſſary machinery, they could, when they exerted themſelves, make among them about [7] twelve pounds of pins in a day. There are in a pound upwards of four thouſand pins of a middling ſize. Thoſe ten perſons, there⯑fore, 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 per⯑forming, 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 ſub⯑divided, nor reduced to ſo great a ſimplicity of operation. The di⯑viſion 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 im⯑provement; what is the work of one man, in a rude ſtate of ſociety, being generally that of ſeveral, in an improved one. In every im⯑proved 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 [8] 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 employ⯑ed in any one of them. This impoſſibility of making ſo complete and entire a ſeparation of all the different branches of labour em⯑ployed in agriculture, is perhaps the reaſon why the improve⯑ment 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 la⯑bour and expence beſtowed upon them, produce more, in propor⯑tion to the extent and natural fertility of the ground. But the ſuperiority of produce is ſeldom much more than in proportion to the ſuperiority of labour and expence. 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, there⯑fore, 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 [9] years nearly about the ſame price with the corn of England, though, in opulence and improvement, France is perhaps in⯑ferior to England. The lands of England, however, are better cultivated than thoſe of France, and the lands of France are ſaid to be much better cultivated than thoſe of Poland. But though the poor country, notwithſtanding the inferiority of its culti⯑vation, 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 does not ſuit the climate of England. 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 ex⯑cepted, without which no country can well ſubſiſt.

THIS great increaſe of the quantity of work, which the ſame number of people are capable of performing, in conſequence of the diviſion of labour, 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 workman ne⯑ceſſarily 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 em⯑ployment of his life, neceſſarily increaſes very much the dexterity [10] 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 accuſ⯑tomed 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 exer⯑ciſed 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 dex⯑terity of the perſon, of whoſe life it has been the ſole buſineſs to perform them, is uſually much greater. The rapidity with which ſome of the operations of thoſe manufactures are performed, exceeds what the human hand could, by thoſe who had never ſeen them, be ſuppoſed capable of acquiring.

SECONDLY, the advantage which is gained by ſaving the time commonly loſt in paſſing from one ſort of work to another, is much greater than we ſhould at firſt view be apt to imagine it. It is impoſſible to paſs very quickly from one kind of work to an⯑other, that is carried on in a different place, and with quite differ⯑ent tools. A country weaver, who cultivates a ſmall farm, muſt loſe 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 car⯑ried [11] 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 ap⯑plication, 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 ſloth⯑ful and lazy, and incapable of any vigorous application even on the moſt preſſing occaſions. Independent, therefore, of his de⯑ficiency in point of dexterity, this cauſe alone muſt always reduce conſiderably the quantity of work which he is capable of perform⯑ing.

THIRDLY, and laſtly, every body muſt be ſenſible how much labour is facilitated and abridged by the application of proper ma⯑chinery. It is unneceſſary to give any example. I ſhall, therefore, only obſerve that the invention of all thoſe machines by which labour is ſo much facilitated and abridged, ſeems to have been originally owing to the diviſion of labour. Men are much more likely to diſcover eaſier and readier methods of attaining any object when the whole attention of their minds is directed towards that ſingle object, than when it is diſſipated among a great variety of things. But in conſequence of the diviſion of labour, the whole of every man's attention comes naturally to be directed towards ſome one very ſimple object. It is naturally to be expected, there⯑fore, that ſome one or other of thoſe who are employed in each particular branch of labour ſhould ſoon find out eaſier and readier methods of performing their own particular work wherever the [12] nature of it admits of ſuch improvement. A great part of the machines employed in thoſe manufactures in which labour is moſt ſubdivided, were originally the inventions of common workmen, who, being each of them employed in ſome very ſimple operation, naturally turned their thoughts towards finding out eaſier and readier methods of performing it. Whoever has been much accuſtomed to viſit ſuch manufactures, muſt frequently have been ſhown very pretty machines, which were the inventions of common workmen in order to facilitate and quicken their own particular part of the work. In the firſt fire-engines, a boy was conſtantly employed to open and ſhut alternately the communi⯑cation 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 em⯑ployment, [13] the principal or ſole trade and occupation of a particular claſs of citizens. Like every other employment too, it is ſub⯑divided into a great number of different branches, each of which affords occupation to a peculiar tribe or claſs of philoſophers; and this ſubdiviſion of employment in philoſophy, as well as in every other buſineſs, improves dexterity and ſaves time. Each indi⯑vidual becomes more expert in his own peculiar branch, more work is done upon the whole, and the quantity of ſcience is con⯑ſiderably increaſed by it.

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

OBSERVE the accommodation of the moſt common artificer or day-labourer in a civilized and thriving country, and you will perceive that the number of people of whoſe induſtry a part, though but a ſmall part, has been employed in procuring him this accommodation exceeds all computation. The woollen coat, for example, which covers the day-labourer, as coarſe and rough as it may appear, is the produce of the joint labour of a great multitude of workmen. The ſhepherd, the ſorter of the wool, [14] 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 particu⯑lar, 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 ſmelt⯑ing the ore, the feller of the timber, the burner of the charcoal to be made uſe of in the ſmelting houſe, the brick-maker, the brick-layer, the workmen who attend the furnace, the mill⯑wright, the forger, the ſmith, muſt all of them join their differ⯑ent 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 [15] 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. Com⯑pared, 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 in⯑duſtrious and frugal peaſant, as the accommodation of the latter exceeds that of many an African king, the abſolute maſter of the lives and liberties of ten thouſand naked ſavages.

CHAP. II. Of the Principle which gives Occaſion to the Diviſion of Labour.

THIS diviſion of labour, from which ſo many advantages are derived, is not originally the effect of any human wiſdom, which foreſees and intends that general opulence to which it gives occaſion. It is the neceſſary, though very ſlow and gradual con⯑ſequence 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 enquire. 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 acci⯑dental 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 [17] 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 en⯑gaging 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 civi⯑lized ſociety he ſtands at all times in need of the co-operation and aſſiſtance of great multitudes, while his whole life is ſcarce ſuf⯑ficient 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 intirely independant, and in its natural ſtate has oc⯑caſion 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 an⯑other 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 chuſes to depend chiefly upon the benevolence of his fellow citi⯑zens. 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 [18] 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 cloaths which another beſtows upon him he exchanges for other old cloaths which ſuit him better, or for lodging, or for food, or for money, with which he can buy either food, cloaths, 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 man⯑ner 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 intirely 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 tan⯑ner or dreſſer of hides or ſkins, the principal part of the cloathing 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 mens labour as he may have occaſion for, encourages every man to apply himſelf to a particular occupation, and to cultivate [19] and bring to perfection whatever talent or genius he may poſſeſs for that particular ſpecies of buſineſs.

THE difference of natural talents in different men is, in reality, much leſs than we are aware of; and the very different genius which appears to diſtinguiſh men of different profeſſions, when grown up to maturity, is not upon many occaſions ſo much the cauſe, as the effect of the diviſion of labour. The difference between the moſt diſſimilar characters, between a philoſopher and a common ſtreet porter, for example, ſeems to ariſe not ſo much from nature, as from habit, cuſtom, and education. When they came into the world, and for the firſt ſix or eight years of their exiſtence, they were perhaps very much alike, and neither their parents nor 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 reſem⯑blance. But without the diſpoſition to truck, barter and ex⯑change, 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 [20] half ſo different from a ſtreet porter, as a maſtiff is from a grey⯑hound, or a greyhound from a ſpaniel, or this laſt from a ſhep⯑herd's dog. Thoſe different tribes of animals, however, tho' 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 independantly, and derives no ſort of advantage from that variety of talents with which nature has diſtinguiſhed its fellows. Among men, on the con⯑trary, the moſt diſſimilar geniuſes are of uſe to one another; the different produces of their reſpective talents, by the general diſ⯑poſition 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 oc⯑caſion for.

CHAP. III. That the Diviſion of Labour is limited by the Extent of the Market.

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

THERE are ſome ſorts of induſtry, even of the loweſt kind, which can be carried on no where 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 vil⯑lages which are ſcattered about in ſo deſart 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 every where obliged to apply themſelves to all the differ⯑ent branches of induſtry that have ſo much affinity to one another [22] 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 navi⯑gable rivers, that induſtry of every kind naturally begins to ſub⯑divide 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, fre⯑quently 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 [23] the maintenance of a hundred men for three weeks, and both the maintenance, and, what is nearly equal to the 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 burden, 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 is at preſent carried on between them, and con⯑ſequently 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 expence of land-carriage between London and Calcutta? Or if there was any ſo precious as to be able to ſupport this expence, with what ſafety could they be tranſported through the territories of ſo many barbarous nations? Thoſe two cities, however, at preſent carry on together a very conſiderable commerce, 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 in⯑land 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 [24] goods, but the country which lies round about them, and ſepa⯑rates them from the ſea coaſt, and the great navigable rivers. The extent of their 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 any where ex⯑tended 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, extreamly 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 ſtreights of Gibraltar, was, in the antient world, long conſidered as a moſt wonderful and dangerous exploit of navigation. It was late before even the Phenicians 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 at⯑tempt 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 [25] degree. Upper Egypt extends itſelf no where 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, ſoem to have afforded a communication by water carriage, not only between all the great towns, but between all the con⯑ſiderable 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 like⯑wiſe 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 break themſelves into many 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 naviga⯑tion much more extenſive than that either of the Nile or the Ganges, or perhaps than both of them put together. It is re⯑markable that neither the antient 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 [26] 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 Eux⯑ine ſeas in both Europe and Aſia, and the gulphs of Arabia, Perſia, India, Bengal and Siam, in Aſia, to carry maritime com⯑merce 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 com⯑merce 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 navi⯑gation 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 one of them poſſeſſed the whole of its courſe till it falls into the Black ſea.

CHAP. IV. Of the Origin and Uſe of Money.

WHEN the diviſion of 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 con⯑ſumption, 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 reſpec⯑tive 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 [28] 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 inſtru⯑ment of commerce; and, though they muſt have been a moſt in⯑convenient 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 Diomed, 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 ex⯑changes in Abyſſmia; a ſpecies of ſhells in ſome parts of the coaſt of India; dried cod at Newfoundland; tobacco in Vir⯑ginia; 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 alehouſe.

IN all countries, however, men ſeem at laſt to have been deter⯑mined by irreſiſtable reaſons to give the preference, for this em⯑ployment, 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 reunited again; a [29] 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 com⯑merce among the antient Spartans; copper among the antient 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, upon the authority of one Remeus an antient author, 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, there⯑fore, performed at this time the function of money.

THE uſe of metals in this rude ſtate was attended with two very conſiderable inconveniencies; firſt, with the trouble of weighing them; and, ſecondly, with the trouble of aſſaying them. [30] In the precious metals, where a ſmall difference in the quantity makes a great difference in the value, even the buſineſs of weigh⯑ing, 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 ope⯑ration 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 extreamly uncertain. Before the inſtitution of coined money, however, unleſs they went through this tedious and difficult ope⯑ration, 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 ex⯑changes, and thereby to encourage all ſorts of induſtry and com⯑merce, it has been found neceſſary, in all countries that have made any conſiderable advances towards improvement, to affix a publick 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 publick offices called mints; inſtitutions exactly of the ſame nature with thoſe of the aulnagers and ſtampmaſters of woollen and linen cloth. All of them are equally meant to aſcertain, by means of a publick ſtamp, the quantity and uniform goodneſs of thoſe different commodities when brought to market.

[31] THE firſt publick 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 fine⯑neſs, 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 antient 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 ex⯑chequer, 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 [32] 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 Eng⯑land till the 18th of Henry 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 pennyweight 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 antient ſtatute of Henry III. then waſtel bread of a farthing ſhall weigh eleven ſhillings and four pence. The pro⯑portion, 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, forty, and forty-eight pennies. Among the antient 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 antient 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 [33] 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 Republick, 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 ope⯑rations the princes and ſovereign ſtates which performed them were enabled, in appearance, to pay their debts and to 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, there⯑fore, 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 publick 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 [34] 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 mean⯑ings, and ſometimes expreſſes the utility of ſome particular object, and ſometimes the power of purchaſing other goods which the poſ⯑ſeſſion 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 ex⯑change for it.

IN order to inveſtigate the principles which regulate the exchange⯑able 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 ſome⯑times 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 ex⯑actly 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 [35] muſt very earneſtly entreat both the patience and attention of the reader: his patience in order to examine a detail which may per⯑haps in ſome places appear unneceſſarily tedious; and his attention in order to underſtand what may, perhaps, after the fulleſt expli⯑cation which I am capable of giving of 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 which is in its own nature extremely abſtracted.

CHAP. V. Of the real and nominal Price of Commodities, or of their Price in Labour, and their Price in Money.

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

[36] 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 ac⯑quiring 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 him⯑ſelf, 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.

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 pro⯑portion 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, how⯑ever, [37] 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 purchaſe. 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 pur⯑chaſe. It is more natural and obvious to him, therefore, to eſti⯑mate their value by the quantity of money, the commodity for which he immediately exchanges them, than by that of bread and beer, the commodities for which he can exchange them only by the intervention of another commodity; and rather to ſay that his butcher's meat is worth threepence or fourpence a pound, than that it is worth three or four pounds of bread, or three or four quarts of ſmall beer. Hence it comes to paſs that the exchange⯑able [38] 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 there 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 quan⯑tity, 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 muſt at all times and places be of equal value to the labourer. 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 quan⯑tity 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 pur⯑chaſes 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 [39] 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 ſome⯑times 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 com⯑modities 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 [40] 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 con⯑tinually 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 far 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 publick [41] market. The money ariſing from this corn rent, though originally but a third of the whole, is in the preſent times, according to Doctor 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 antient 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 value 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 antient 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 ſub⯑ſiſtence of the labourer, or the real price of labour, as I ſhall [42] endeavour to ſhow hereafter, is very different upon different occa⯑ſions; 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, how⯑ever, 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 ſhow hereafter, does not fluctuate from year to year with the money price of corn, but ſeems to be every where 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 ſhow 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 em⯑ployed, and conſequently of corn which muſt be conſumed, in order to bring any particular quantity of it 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, [43] continue the ſame or very nearly the ſame too, and along with it the money price of labour, provided, at leaſt, the ſociety con⯑tinues, 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 from five and twenty to fifty ſhillings the quarter, for example. 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 fluc⯑tuations.

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, eſti⯑mate 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 [44] 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 their 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 neceſ⯑ſaries 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 one which ſells for an ounce at London 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 conve⯑niencies of life than an ounce can do at London. An ounce at [45] 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 fales, 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 com⯑pare, not ſo much the different quantities of ſilver for which it was commonly ſold, as the different quantities of labour which thoſe different quantities of ſilver could have purchaſed. But the current prices of labour at diſtant times and places can ſcarce ever be known with any degree of exactneſs. Thoſe of corn, though they have in few places been regularly recorded, are in general better known and have been more frequently taken notice of by hiſtorians and other writers. We muſt generally, therefore, con⯑tent 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 [46] 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 happened 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 gene⯑rally 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, when they firſt began to coin ſilver. Copper, therefore, appears to have con⯑tinued always the meaſure of value in that republick. 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 Seſ⯑tertius ſignifies two Aſſes and a half. Though the Seſtertius, therefore, was always 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 [47] of guineas, but the number of pounds which we ſuppoſe would be given for it.

IN all countries, I believe, a legal tender of payment could originally be made in the coin of that metal only which was pecu⯑liarly 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 publick law or pro⯑clamation; but was left to be ſettled by the market. If a debtor offered payment in gold, the creditor might either reject ſuch pay⯑ment 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 aſcer⯑tain this proportion, and to declare by a publick 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 ſum. 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 propor⯑tion, this diſtinction becomes, or at leaſt ſeems to become, ſomething [48] 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 obli⯑gations 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 quan⯑tities 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 quan⯑tity 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 mea⯑ſure 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 pro⯑portion between the reſpective values of the different metals in [49] coin, the value of the moſt precious metal regulates the value of the whole coin. Twelve copper pence contain half a pound, avoirdupois, of copper, of not the beſt quality, which, before it is coined, is ſeldom worth ſevenpence in ſilver. But as by the regulation twelve ſuch pence are ordered to exchange for a ſhilling, they are in the market conſidered as worth a ſhilling, and a ſhilling can at any time be had for them. Even before the late reformation of the gold coin of Great Britain, the gold, that part of it at leaſt which circulated in London and its neighbour⯑hood, 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 publick offices but by weight, is likely to preſerve it ſo as long as that order is enforced. The ſilver coin ſtill continues in the ſame worn and degraded ſtate as before the reformation of the gold coin. In the market, however, one and twenty ſhillings of this degraded ſilver coin are ſtill conſidered as worth a guinea of this excellent gold coin.

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

IN the Engliſh mint a pound weight of gold is coined into forty⯑four guineas and a half, which at one and twenty ſhillings the guinea, is equal to forty-ſix pounds fourteen ſhillings and ſixpence. An ounce of ſuch gold coin, therefore, is worth 3l. 17s. 10d. ½ 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 [50] 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 ten-pence 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 3l. 18s. ſometimes 3l. 19s. and very frequently 4l. 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 reform⯑ation of the gold coin, the market price of ſtandard gold bullion ſeldom exceeds 3l. 17s. 7d. 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 pro⯑portion to gold bullion, and probably too in proportion to all other commodities; though the price of the greater part of other com⯑modities being influenced by ſo many other cauſes, the riſe in the value either of 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 two-pence 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 [51] different occaſions, five ſhillings and four-pence, five ſhillings and five-pence, five ſhillings and ſixpence, five ſhillings and ſeven-pence, and very often five ſhillings and eight-pence an ounce. Five ſhillings and ſeven-pence, 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 three-pence, five ſhillings and four-pence, and five ſhillings and five-pence 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 ex⯑changes 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 per⯑miſſion of exporting ſilver bullion, and to the prohibition of ex⯑porting ſilver coin. This permiſſion of exporting, he ſaid, rendered the demand for ſilver bullion greater than the demand [52] 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 pre⯑ſent a like permiſſion of exporting gold bullion and a like prohibi⯑tion 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 ſup⯑poſed 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 incon⯑veniency.

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 [53] 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 evad⯑ing 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 in⯑conveniency to them, it would at the ſame time be a conſiderable ſecurity to their creditors.

THREE pounds ſeventeen ſhillings and ten-pence 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 ſtan⯑dard 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 [54] metals in coin above an equal quantity of either of them in bul⯑lion. 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 propor⯑tion 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 publick 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 im⯑poſed 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 tear and wear of coin, and in the tear and wear 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 mer⯑chant importers, like all other merchants, we may believe, endea⯑vour, 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 over-do the buſineſs, and ſometimes under-do 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 [55] price. But when, under all thoſe occaſional fluctuations, the mar⯑ket 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 propor⯑tionable 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 of 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 uncertainly 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 [56] coin ought to contain, but to that which, upon an average, it is found by experience, it actually does contain.

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

CHAP. VI. Of the component Parts of the Price of Commodities.

IN that early and rude ſtate of ſociety which preceeds both the accumulation of ſtock and the appropriation of land, the pro⯑portion 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; [57] and the produce of one hour's labour in the one way may frequently exchange for that of two hours 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 quantity of labour commonly employed in acquiring or producing any commodity, is the only circum⯑ſtance 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 ex⯑changing 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, ſome⯑thing 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 [58] 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 ex⯑pence of three hundred a year in each manufactory. Let us ſup⯑poſe 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 un⯑dertaker of the one will expect an 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 [59] either altogether or very nearly the ſame. In many great works, almoſt the whole labour of this kind is frequently 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 manage⯑ment; and the owner of this capital, though he is thus diſcharged of almoſt all labour, ſtill expects that his profits ſhould bear a regular proportion to it. In the price of commodities, there⯑fore, the profits of ſtock are a ſource of value altogether different from the wages of labour, and regulated by quite different prin⯑ciples.

IN this ſtate of things, therefore, the quantity of labour com⯑monly employed in acquiring or producing any commodity, is by no means 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 pro⯑perty, 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 only the trouble of gathering them, come to have an additional price fixed upon them. Men muſt then pay for the licence to gather them; and in exchanging them either for money, for labour, or for other goods, over and above what is due, both for the labour of ga⯑thering them, and for the profits of the ſtock which employs that [60] labour, ſome allowance muſt be made for the price of the licence, which conſtitutes the firſt rent of land. In the price, therefore, of the greater part of commodities the rent of land comes in this manner to conſtitute a third ſource of value.

IN this ſtate of things, neither the quantity of labour commonly employed in acquiring or producing any commodity, nor the pro⯑fits of the ſtock which advanced the wages and furniſhed the ma⯑terials of that labour, are the only circumſtances which can regulate the quantity of labour which it ought commonly to purchaſe, command, or exchange for. A third circumſtance muſt likewiſe be taken into conſideration; the rent of the land; and the commo⯑dity muſt commonly purchaſe, command, or exchange for, an additional quantity of labour, in order to enable the perſon who brings it to market to pay this rent.

THE real value of all the different component parts of price is in this manner 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 compo⯑nent 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 imme⯑diately [61] 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 tear and wear of his la⯑bouring cattle, and other inſtruments of huſbandry. But it muſt be conſidered that the price of any inſtrument of huſbandry, ſuch as a labouring horſe, is itſelf made up of the ſame three parts; the rent of the land upon which he is reared, the labour of tending and rearing him, and the profits of the farmer who advances both the rent of this land, and the wages of this labour. Though the price of the corn, therefore, may pay the price as well as the mainte⯑nance of the horſe, the whole price ſtill reſolves itſelf either im⯑mediately 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 ſer⯑vants; 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, to⯑gether with the profits of thoſe who advance the wages of that labour.

THE price of flax reſolves itſelf into the ſame three parts as that of corn. In the price of linen we muſt add to this price the wages of the flax-dreſſer, of the ſpinner, of the weaver, of the bleacher, &c. together with the profits of their reſpective em⯑ployers.

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 [62] 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 al⯑ways be greater. The capital which employs the weavers, for example, muſt be greater than that which employs the ſpinngers; 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 fiſhermen, 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 other⯑wiſe, at leaſt through the greater part of Europe, in river fiſheries. A ſalmon fiſhery pays a rent, and rent, though it cannot well be called the rent of land, makes a part of the price of a ſalmon as well as wages and profit. In ſome parts of Scotland a few poor people make a trade of gathering, along the ſea ſhore, thoſe little variegated ſtones commonly known by the name of Scotch Pebbles. The price which is paid to them by the ſtone-cutter is altogether the wages of their labour; neither rent nor profit make any part of it.

BUT the whole price of every commodity muſt ſtill finally re⯑ſolve 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.

[63] As the price or exchangeable value of every particular commo⯑dity, 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 ex⯑changeable 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 de⯑rived 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 con⯑tracts a ſecond debt in order to pay the intereſt of the firſt. The revenue which proceeds altogether from land, is called rent, and [64] 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 expence of cultivation, ſhould gain both the rent of the land⯑lord and the profit of the farmer. He is apt to denominate, how⯑ever, his whole gain, profit, and thus confounds rent with profit, at leaſt in common language. The greater part of our North American and Weſt Indian planters are in this ſituation. They farm, the greater part of them, their own eſtates, and accordingly we ſeldom hear of the rent of a plantation, but frequently of its profit.

COMMON farmers ſeldom employ any overſeer to direct the general operations of the farm. They generally too work a good deal with their own hands, as ploughmen, harrowers, &c. What remains of the crop after paying the rent, therefore, ſhould not only replace to them their ſtock employed in cultivation, together with its ordinary profits, but pay them the wages which are due to them, both as labourers and overſeers. Whatever remains, [65] 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 his 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 em⯑ployed in raiſing, preparing, and bringing that produce to market. If the ſociety was 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 [66] induſtrious. The idle every where 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.

CHAP. VII. Of the natural and market Price of Commodities.

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

THERE is likewiſe in every ſociety or neighbourhood an ordinary or average rate of rent, which is regulated too, as I ſhall ſhow 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 [67] 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.

[68] 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 de⯑mand the effectual demand; ſince it may be ſufficient to effectuate the bringing of the commodity to market. It is different from the abſolute demand. A very poor man may be ſaid, in ſome ſenſe, to have a demand for a coach and ſix; he might like to have it; but his demand is not an effectual demand, as the commodity can never 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 wil⯑ling 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 the greatneſs of the deficiency increaſes more or leſs the eagerneſs of this competition. The ſame deficiency will generally occaſion a more or leſs eager com⯑petition, according as the acquiſition of the commodity happens to be of more or leſs importance to the competitors. Hence the ex⯑orbitant 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 [69] 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 com⯑petition than in that of durable commodities; in the importation of oranges, for example, than in that of old iron.

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

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

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 [70] 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 com⯑ponent 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 pre⯑paring 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 center 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.

[71] BUT in ſome employments the ſame quantity of induſtry will in different years produce very different quantities of commodities; while in others it will produce always the ſame, or very nearly the ſame. The ſame number of labourers in huſbandry will, in different years, produce very different quantities of corn, wine, oil, hops, &c. But the ſame number of ſpinners and 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 con⯑tinues 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 ex⯑perience will inform him. The price of the one ſpecies of com⯑modities 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.

[72] 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 judge⯑ment, 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 over-ſtocked or under-ſtocked with commodities or with labour; with work done, or with work to be done. A publick mourning raiſes the price of black cloth (with which the market is almoſt always under-ſtocked 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 under-ſtocked with commodities, not with labour; with work done, not with work to be done. It raiſes the wages of journey⯑men taylors. The market is here under-ſtocked with labour. There is an effectual demand for 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 [73] twelvemonth. The market is here overſtocked both with commo⯑dities 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, ſome⯑times natural cauſes, and ſometimes particular regulations of police, may, in many commodities, keep up the market price, for a long time together, a good deal above the natural price.

WHEN by an increaſe in the effectual demand, the market price of ſome particular commodity happens to riſe a good deal above the natural price, thoſe who employ their ſtocks in ſupplying that market are generally careful to conceal this change. If it was commonly known, their great profit would tempt ſo many new rivals to employ their ſtocks in the ſame way that, the effectual demand being fully ſupplied, the market price would ſoon be re⯑duced 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 extra⯑ordinary 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 pro⯑ducing a particular colour with materials which coſt only half the price of thoſe commonly made uſe of, may, with good manage⯑ment, enjoy the advantage of his diſcovery as long as he lives, and even leave it as a legacy to his poſterity. His extraordinary [74] 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 pro⯑ducing them, may not be ſufficient to ſupply the effectual demand. The whole quantity brought to market, therefore, may be diſ⯑poſed 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 em⯑ployed in preparing and bringing them to market, according to their natural rates. Such commodities may continue to be ſold at this high price for whole centuries together, 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 [75] from ever being fully ſupplied, and which may continue, therefore, to operate forever.

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 commo⯑dities much above the natural price, and raiſe their emoluments, whether they conſiſt in wages or profit, greatly above their natu⯑ral 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 apprentice⯑ſhip, 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 to⯑gether and in whole claſſes of employments, keep up the market price of particular commodities above the natural price, and main⯑tain 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 police which give occaſion to them.

[76] 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 ſo much labour, or ſo much ſtock, from being employed about it, that the quantity brought to market would ſoon be no more than ſufficient to ſupply the effectual demand. Its market price, therefore, would ſoon riſe to the natural price. This at leaſt would be the caſe where there was perfect liberty.

THE ſame ſtatutes of apprenticeſhip and other corporation laws indeed, which, when a manufacture is in proſperity, enable the workman to raiſe his wages a good deal above their natural rate, ſometimes oblige him, when it decays, to let them down a good deal below it. As in the one caſe they exclude many people from his employment, ſo in the other they exclude him from many employments. The effect of ſuch regulations, however, is not near ſo durable in ſinking the workman's wages below, as in raiſing them above their natural rate. Their operation in the one way may endure for many centuries, but in the other it can laſt no longer than the lives of ſome of the workmen who were bred to the buſineſs in the time of its proſperity. When they are gone, the number of thoſe who are afterwards educated to the trade will natu⯑rally ſuit itſelf to the effectual demand. The police muſt be as violent as that of Indoſtan or antient 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.

[77] THIS is all that I think neceſſary to be obſerved at preſent con⯑cerning 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, accord⯑ing to their riches or poverty, their advancing, ſtationary, or de⯑clining condition. I ſhall, in the four following chapters, endea⯑vour 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 ſhow what are the circum⯑ſtances 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 propor⯑tion ſeems commonly to take place between both the pecuniary wages in all the different employments of labour, and the pecu⯑niary 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 dependant upon the laws and policy, this proportion ſeems to be little affected by the riches [78] or poverty of that ſociety; by its advancing, ſtationary, or de⯑clining condition; but to remain the ſame or very nearly the ſame in all thoſe different ſtates. I ſhall, in the third place, en⯑deavour to explain all the different circumſtances which regulate this proportion.

IN the fourth and laſt place I ſhall endeavour to ſhow 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.

CHAP. VIII. Of the Wages of Labour.

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

IN that original ſtate of things, which precedes both the appro⯑priation of land and the accumulation of ſtock, the whole pro⯑duce 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 aug⯑mented 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 [79] things be exchanged for one another, they would have been pur⯑chaſed 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 be⯑fore, or have been exchanged for a greater quantity of other goods. Let us ſuppoſe, for example, that in the greater part of employ⯑ments the productive powers of labour had been improved to ten⯑fold, or that a day's labour could produce ten times the quantity of work which it had done originally; but that in a particular em⯑ployment 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 par⯑ticular 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 con⯑ſiderable 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 whatever produce te labourer can either raiſe or col⯑lect [80] 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 compleated. 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 independant work⯑man has ſtock ſufficient both to purchaſe the materials of his work, and to maintain himſelf till it be compleated. 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 independant; and the wages of labour are every where underſtood [81] 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 every where 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 diſ⯑pute, and force the other into a compliance with their terms. The maſters, being fewer in number, cannot only combine more eaſily, but the law authoriſes their combinations, or at leaſt does not prohibit them, 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 diſ⯑putes the maſters can hold out much longer. A landlord, a far⯑mer, 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 every where in a ſort of tacit, but conſtant and uniform combination, not to [82] raiſe the wages of labour above their actual rate. To violate this combination is every where 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 combina⯑tions 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 ſome⯑times do, without reſiſtance, though ſeverely felt by them, they are never heard of by other people. Such combinations, however, are frequently reſiſted by a contrary defenſive combination of the workmen; who ſometimes too, without any provocation of this kind, combine of their own accord to raiſe the price of their la⯑bour. Their uſual pretences are, ſometimes, the high price of pro⯑viſions; 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 cla⯑mour, and ſometimes to the moſt ſhocking violence and outrage. They are deſperate, and act with the folly and extravagance of deſ⯑perate men, who muſt ſtarve or frighten their maſters into an im⯑mediate 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 combinations 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 ne⯑ceſſity which the greater part of the workmen are under of ſub⯑mitting [83] for the ſake of preſent ſubſiſtence, generally end in no⯑thing, 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 to bring up a family, and the race of ſuch workmen could not laſt beyond the firſt generation. Mr. Cantillon ſeems, upon this ac⯑count, to ſuppoſe that the loweſt ſpecies of common labourers muſt every where 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 at⯑tendance on the children, being ſuppoſed no more than ſufficient to provide for herſelf. But one-half the children born, it is com⯑puted, 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 [84] mentioned, or in any other, I ſhall not take upon me to deter⯑mine.

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 in⯑creaſing; 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 them, 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 for 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 independant workman, ſuch as a weaver or ſhoe⯑maker, has got more ſtock than what is ſufficient to purchaſe [85] 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. In⯑creaſe 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 coun⯑try, 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 with⯑out it.

IT is not the actual greatneſs of national wealth, but its con⯑tinual 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 earn 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 taylors, five ſhillings currency, equal to about two ſhillings and ten-pence 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 every where in North America much lower than in England. A dearth has never been known there. In the worſt ſeaſons, they [86] have always had a ſufficiency for themſelves, though leſs for expor⯑tation. If the money price of labour, therefore, be higher than it is any where in the mother country, its real price, the real com⯑mand 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, deſcend⯑ants from their own body. Labour is there ſo well rewarded that a numerous family of children, inſtead of being a burthen, 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.

[87] 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 pay⯑ment of wages, the revenue and ſtock of its inhabitants, may be of the greateſt extent, but if they have continued for ſeveral cen⯑turies of the ſame, or very nearly of the ſame extent, the number of labourers employed every year could eaſily ſupply, and even more than ſupply, the number wanted the following year. There could ſeldom be any ſcarcity of hands, nor could the maſters be obliged to bid againſt one another in order to get them. The hands, on the contrary, would, in this caſe, naturally multiply beyond their employment. There would be a conſtant ſcarcity of employment, and the labourers would be obliged to bid againſt one another in order to get it. If in ſuch a country the wages of labour had ever been more than ſufficient to maintain the labourer and to enable him to bring up a family, the competition of the labourers and the intereſt of the maſters would ſoon reduce them to this 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 de⯑ſcribed 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, [88] 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 ſervice, 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 no⯑where 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 [89] claſſes of employments, be leſs than it had been the year before. Many who had been bred in the ſuperior claſſes, not being able to find employment in their own buſineſs, would be glad to ſeek it in the loweſt. The loweſt claſs being not only overſtocked with its own workmen, but with the overflowings of all the other claſſes, the competition for employment would be ſo great in it, as to reduce the wages of labour to the moſt miſerable and ſcanty ſubſiſtence of the labourer. Many would not be able to find employment even upon theſe hard terms, but would either ſtarve, or be driven to ſeek a ſubſiſtence either by begging, or by the perpetration perhaps of the greateſt enormities. Want, famine, and mortality would immediately prevail in that claſs, and from thence extend themſelves to all the ſuperior claſſes, till the number of inhabitants in the country was reduced to what could eaſily be maintained by the revenue and ſtock which remained in it, and which had eſcaped either the tyranny or calamity which had deſtroyed the reſt. This perhaps is nearly the preſent ſtate of Bengal, and of ſome other of the Engliſh ſettlements in the Eaſt Indies. In a fertile country which had before been much depopulated, where ſubſiſtence, con⯑ſequently, ſhould not be very difficult, and where, notwithſtanding, three or four hundred thouſand people die of hunger in one year, we may be aſſured that the funds deſtined for the maintenance of the labouring poor are faſt decaying. The difference between the genius of the Britiſh conſtitution which protects and governs North America, and that of the mercantile company which oppreſſes and domineers in the Eaſt Indies, cannot perhaps be better illuſ⯑trated 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 ſtar⯑ving condition that they are going faſt backwards.

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

FIRST, in almoſt every part of Great Britain there is a diſ⯑tinction, even in the loweſt ſpecies of labour, between ſummer and winter wages. Summer wages are always higheſt. But on account of the extraordinary expence of fewel, the maintenance of a family is moſt expenſive in winter. Wages, therefore, being higheſt when this expence is loweſt, it ſeems evident that they are not regulated by what is neceſſary for this expence; but by the quan⯑tity 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 expence; 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 fluc⯑tuate 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, there⯑fore, 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 [91] 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 pro⯑viſions. The prices of bread and butcher's 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 oc⯑caſion 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. Ten-pence may be reckoned its price in Edinburgh and its neighbourhood. At a few miles diſtance it falls to eight pence, the uſual price of com⯑mon labour through the greater part of the low country of Scot⯑land, 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 oc⯑caſion 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 evi⯑dently from experience that a man is of all ſorts of luggage the moſt [92] 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 mea⯑ſure 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 fre⯑quently heard it repreſented as the cauſe. It is not becauſe one man keeps a coach while his neighbour walks a-foot, that the [93] 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 evi⯑dence of the publick 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 five-pence in winter. Three ſhillings a week, the ſame price very nearly, ſtill continues to be paid in ſome parts of the High⯑lands and weſtern Iſlands. Through the greater part of the low country the moſt uſual wages of common labour are now eight⯑pence a day; ten-pence, ſometimes a ſhilling about Edinburgh, in the countries 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, Ayr-ſhire, &c. In England the improvements of agriculture, manufactures and commerce began much earlier [94] 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, eight pence 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 expence 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 can⯑not 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. In 1688, Mr. Gregory King, whoſe ſkill in political arithmetick is ſo much extolled by Doctor Dave⯑nant, 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 cal⯑culation, therefore, though different in appearance, correſponds very nearly at bottom with that of judge Hales. Both ſuppoſe the weekly expence of ſuch families to be about twenty-pence a head. Both the pecuniary income and expence 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 any where ſo much as ſome exaggerated accounts of the preſent wages of labour have lately repreſented them to the publick. The price of labour, it muſt be obſerved, cannot be aſcertained very accurately anywhere, different prices [95] being often paid at the ſame place and for the ſame ſort of labour, not only according to the different abilities of the workmen, but according to the eaſineſs or hardneſs of the maſters. Where wages are not regulated by law, all that we can pretend to deter⯑mine is what are the moſt uſual; and experience ſeems to ſhow 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 ne⯑ceſſaries 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 whole⯑ſome 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 im⯑provements in the coarſer manufactures of both linen and woollen cloth furniſh the labourers with cheaper and better cloathing; and thoſe in the manufactures 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, can⯑dles, leather, and fermented liquors have, indeed, become a good deal dearer; chiefly from the taxes which have been laid upon them. The quantity of theſe however which the labouring poor are under any neceſſity of conſuming, is ſo very ſmall that [96] 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, cloathing 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 ſight 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 re⯑garded as an 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, cloath 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, cloathed 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. Bar⯑renneſs, ſo frequent among women of faſhion, is very rare among thoſe of inferior ſtation. Luxury in the fair ſex, while it enflames perhaps the paſſion for enjoyment, ſeems always to weaken and frequently to deſtroy altogether the powers of generation.

[97] BUT poverty, though it does not prevent the generation, is extreamly 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 borne twenty children not to have two alive. Several officers of great experience have aſſured me that ſo far from recruiting their regi⯑ment, 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 born 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 every where 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 mul⯑tiply beyond it. But in civilized ſociety it is only among the inferior ranks of people that the ſcantineſs of ſubſiſtence can ſet limits to the further multiplication of the human ſpecies; and it can do ſo in no other way than by deſtroying a great part of the children which their fruitful marriages produce.

THE liberal reward of labour, by enabling them to provide better for their children, and conſequently to bring up a greater number, [96] [...] [97] [...] [98] naturally tends to widen and extend thoſe limits. It deſerves to be remarked too, that it neceſſarily does this as nearly as poſ⯑ſible 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 popu⯑lation. If it 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 deter⯑mines 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 tear and wear of a ſlave, it has been ſaid, is at the expence of his maſter; but that of a free ſervant is at his own expence. The tear and wear of the latter, however, is, in reality, as much at the expence 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 journey⯑men and ſervants, according as the increaſing, diminiſhing, or ſtationary demand of the ſociety may happen to require. But though the tear and wear of a free ſervant be equally at the expence [99] 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 tear and wear of the ſlave, is commonly managed by a negligent maſter or careleſs overſeer. That deſtined for perform⯑ing the ſame office with regard to the free man, is managed by the free man himſelf. The diſorders which generally prevail in the oeconomy 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 pur⯑poſe muſt require very different degrees of expence to execute it. It appears, accordingly, from the experience of all ages and na⯑tions, 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 effect and cauſe of the greateſt publick 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 peo⯑ple, ſeems to be the happieſt and the moſt comfortable. It is hard in the ſtationary, and miſerable in the declining ſtate. The pro⯑greſſive ſtate is in reality the chearful and the hearty ſtate to all the different orders of the ſociety. The ſtationary is dull; the declining, melancholy.

[100] 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, ac⯑cordingly, we ſhall always find the workmen more active, diligent, and expeditions, than where they are low; in England, for ex⯑ample, 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 over-work 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. Some⯑thing of the ſame kind happens in many other trades, in which the workmen are paid by the piece; as they generally are in manu⯑factures, 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 pe⯑culiar 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, [101] mutual emulation and the deſire of greater gain, frequently prompt⯑ed them to over-work 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 ir⯑reſiſtable. 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 conſe⯑quences 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 ones more induſtrious than ordinary. A plen⯑tiful 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 well be 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 [102] people years of ſickneſs and mortality, which cannot fail to dimi⯑niſh 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 independant workmen frequently conſume the little ſtocks 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 can 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 bar⯑gains with their ſervants in dear than in cheap years, and find them more humble and dependant 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 [103] 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 independant 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, inde⯑pendant 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 independant 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 independant workmen to journeymen and ſer⯑vants of all kinds, and dear years to diminiſh it.

A FRENCH author of great knowledge and ingenuity, Mr. Meſſance, receiver of the tailles in the election of St. Etienne, endeavours to ſhow 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 publick offices, that the quantity and value of the goods made in all thoſe three manufactures 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 nei⯑ther going backwards nor forwards.

[104] THE manufacture of linen in Scotland, and that of coarſe wool⯑lens 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, how⯑ever, the accounts which have been publiſhed of their annual pro⯑duce, I have not been able to obſerve that its variations have had any ſenſible connection with the dearneſs or cheapneſs of the ſea⯑ſons. In 1740, a year of great ſcarcity, both manufactures, in⯑deed, appear to have declined very conſiderably. But in 1756, another year of great ſcarcity, the Scotch manufacture 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 do ſo ever ſince.

THE produce of all great manufactures for diſtant ſale muſt ne⯑ceſſarily 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 de⯑clenſion of other rival manufactures, and upon the good or bad humour of their principal cuſtomers. A great part of the extra⯑ordinary work, beſides, which is probably done in cheap years, never enters the publick regiſters of manufactures. The men-ſervants who leave their maſters become independant labourers. The wo⯑men return to their parents, and commonly ſpin in order to make cloaths for themſelves and their families. Even the independant workmen do not always work for publick 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 publick regiſters of which the records are ſometimes pub⯑liſhed [105] with ſo much parade, and from which our merchants and manufacturers would often vainly pretend to anounce the proſperity or declenſion of the greateſt empires.

THOUGH the variations in the price of labour, not only do not always correſpond with thoſe in the price of proviſions, but are frequently quite oppoſite, we muſt not, upon this account, ima⯑gine 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 quantity 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 quan⯑tity. 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 num⯑ber cannot always be had. Thoſe maſters, therefore, who want more workmen bid againſt one another, in order to get them, [106] 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 againſt one 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 la⯑bour, 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 varia⯑tions of the price of proviſions, thoſe two oppoſite cauſes ſeem to counter-balance one another; which is probably in part the reaſon why the wages of labour are every where 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 con⯑ſumption 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 en⯑deavours, for his own advantage, to make ſuch a proper diviſion and diſtribution of employment, that they may be enabled to pro⯑duce [107] 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 employment. More heads are occupied in inventing the moſt proper machinery for executing the work of each, and it is, there⯑fore, more likely to be invented. There are many commodities, therefore, which, in conſequence of theſe improvements, come to be produced by ſo much leſs labour than before, that the in⯑creaſe of its price does not compenſate the diminution of its quan⯑tity.

CHAP. IX. Of the Profits of Stock.

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

THE increaſe of ſtock, which raiſes wages, tends to lower profit. When the ſtocks of many rich merchants are turned into the ſame trade, their mutual competition naturally tends to lower its profit; and when there is a like increaſe of ſtock in all the dif⯑ferent 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 [109] 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 al⯑together 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 antient times, ſome notion may be formed of them from the intereſt of money. It may be laid down as a maxim, that wherever a great deal can be made by the uſe of money, a great deal will commonly be given for the uſe of it; and that wherever little can be made by it, leſs will commonly be given for it. According, 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 pro⯑hibited 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 [110] to ſix per cent. ſoon after the reſtoration, and by the 12th of Queen Anne, to five per cent. All theſe different ſtatutary regu⯑lations 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 acce⯑lerated 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 manu⯑factures 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 com⯑petitors, 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 can⯑not 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 [111] 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 de⯑manded 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. 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 3⅓ 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 Abbe 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 [112] 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 mer⯑chants 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 dif⯑ference 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 pre⯑tended 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 [113] 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 the French and Engliſh funds, about forty millions, it is ſaid, in the latter; (in which I ſuſpect, however, there is a conſiderable exaggeration), the great ſums which they lend to private people in countries where the rate of intereſt is higher than in their own, are circumſtances which no doubt demonſtrate the redundancy of their ſtock, or that it has increaſed beyond what they can employ with tolerable profit in the proper buſineſs of their own country: but they do not demonſtrate that that buſineſs has decreaſed. As the capital of a private man, though acquired by a particular trade, may increaſe beyond what he can employ in it, and yet that trade continue to increaſe too; ſo may likewiſe the capital of a great nation.

IN our North American and Weſt Indian colonies, not only the wages of labour, but the intereſt of money, and conſequently the profits of ſtock are higher than in England. In the different colonies both the legal and the market rate of intereſt run from ſix to eight per cent. High wages of labour and high profits of ſtock, however, are things, perhaps, which ſcarce ever go together, except in the peculiar circumſtances of new colonies. A new colony muſt always for ſome time be more underſtocked in proportion to the extent of its territory, and more underpeopled in proportion to the extent of its ſtock, than the greater part of other countries. They have more land than they have ſtock to cultivate. What they have, therefore, is applied to the cultivation only of what is moſt fertile and moſt favourably ſituated, the lands 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 [114] 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 conſider⯑ably 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 diffi⯑culty 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 in⯑tereſt of money, even in a country which is faſt advancing in the acquiſition of riches. The ſtock of the country not being ſufficient [115] 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 neceſſa⯑rily withdrawn from them, and turned into ſome of the new and more profitable ones. In all thoſe old trades, therefore, the com⯑petition comes to be leſs than before. The market comes to be leſs fully ſupplied with many different ſorts of goods. Their price neceſſarily riſes more or leſs, and yields a greater profit to thoſe who deal in them, who can, therefore, afford to borrow at a higher intereſt. For ſome time after the concluſion of the late war, not only private people of the beſt credit, but ſome of the greateſt com⯑panies 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 ſuf⯑ficiently 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 expence 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 cheaper to market than before, and leſs ſtock [116] 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 republick, 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 five 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 back⯑wards, 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 [117] competition, therefore, would everywhere be as great, and con⯑ſequently the ordinary profit as low as poſſible.

BUT perhaps no country has ever yet arrived at this degree of opulence. China ſeems to have been long ſtationary, and had probably long ago acquired that full complement of riches which is conſiſtent with the nature of its laws and inſtitutions. But this complement may be much inferior to what, with other laws and inſtitutions, the nature of its ſoil, climate, and ſituation might admit of. A country which neglects or deſpiſes foreign commerce, and which admits the veſſels of foreign nations into one or two of its ports only, cannot tranſact the ſame quantity of buſineſs which it might do with different laws and inſtitutions. In a country too, where, though the rich or the owners of large capitals enjoy a good deal of ſecurity, the poor or the owners of ſmall capitals enjoy ſcarce any, but are liable, under the pretence of juſtice, to be pillaged and plundered at any time by the inferior mandarines, 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 them⯑ſelves, 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 [118] 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 over⯑run 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 antient 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 Mr. Monteſquieu, not from their poverty, but partly from this, and partly from the dif⯑ficulty 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 pro⯑fit 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 more, charity or friendſhip could be the only motives for lending.

[119] 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 approach⯑ing 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 every where 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 aukward 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 ſuffi⯑cient to pay the labour of preparing and bringing them to market, according to the loweſt rate at which labour can any where 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 Com⯑pany 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 [120] 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.

CHAP. X. Of Wages and Profit in the different Employments of Labour and Stock.

THE whole of the advantages and diſadvantages of the dif⯑ferent 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 either evidently 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 chuſe 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 every where in Eu⯑rope extreamly 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 imaginations of men, make up for a ſmall pecuniary gain in ſome, and counter-balance a great one in others; and partly from the policy of Europe, which nowhere leaves things at perfect liberty.

[122] THE particular conſideration of thoſe circumſtances and of that policy will divide this chapter into two parts.

CHAP. XI. Of the Rent of Land.

RENT, conſidered as the price paid for the uſe of land, is naturally the higheſt which the tenant can afford to pay in the actual circumſtances of the land. In adjuſting the terms of the leaſe, the landlord endeavours to leave him no greater ſhare of the produce than what is ſufficient to keep up the ſtock from which he furniſhes the ſeed, pays the labour, and purchaſes and main⯑tains 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 for which it is naturally meant that land ſhould for the moſt part be lett.

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 land⯑lord upon its improvement. This, no doubt, may be partly the caſe upon ſome occaſions; for it can ſcarce ever be more than partly [180] the caſe. The landlord demands a rent even for unimproved land, and the ſuppoſed intereſt or profit upon the expence of improvement is generally an addition to this original rent. Thoſe improvements, beſides, are not always made by the ſtock of the landlord, but ſome⯑times 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 improvement. 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 make a great part of the ſub⯑ſiſtence 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 com⯑modity, 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 [181] 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 compo⯑ſition 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 be⯑cauſe 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 [182] 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.

CHAP. I. Of the Diviſion of Stock.

WHEN the ſtock which a man poſſeſſes is no more than ſufficient to maintain him for a few days or a few weeks, he ſeldom thinks of deriving any revenue from it. He conſumes it as ſparingly as he can, and endeavours by his labour to acquire ſomething which may ſupply its place before it be conſumed alto⯑gether. 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 ſupplied his immediate con⯑ſumption; 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 gra⯑dually 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 cloaths, houſhold 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 con⯑ſumption.

[331] THERE are two different ways in which a capital may be em⯑ployed ſo as to yield a revenue or profit to its employer.

FIRST, it may be employed in raiſing, manufacturing, or pur⯑chaſing 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 exchanges 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 be⯑tween the fixed and circulating capitals employed in them.

THE capital of a merchant, for example, is altogether a circu⯑lating 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 manufac⯑turer muſt be fixed in the inſtruments of his trade. This part, however, is very ſmall in ſome, and very great in others. A maſter [332] taylor 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 ſlitt-mill, are inſtruments of trade which cannot be erected without a very great expence. 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 circu⯑lating 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 bought 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 [333] 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. Tho' 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 diſ⯑tinct function or office.

THE Firſt, is that portion which is reſerved for immediate con⯑ſumption, and of which the characteriſtick is, that it affords no revenue or profit. It conſiſts in the ſtock of food, cloaths, houſ⯑hold furniture, &c. which have been purchaſed by their proper conſumers, but which are not yet entirely conſumed. The whole ſtock of mere dwelling houſes too ſubſiſting at any one time in the country, make a part of this firſt portion. The ſtock that is laid out in a houſe, if it is to be the dwelling houſe of the proprietor, ceaſes from that moment to ſerve in the function of a capital, or to afford any revenue to its owner. A dwelling houſe, as ſuch, con⯑tributes nothing to the revenue of its inhabitant; and though it is, no doubt, extremely uſeful to him, it is as his cloaths and houſhold furniture are uſeful to him, which, however, make a part of his expence, and not of his revenue. If it is to be lett 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 [334] publick, 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. Cloaths, and houſhold furniture, in the ſame manner, ſometimes yield a revenue, and thereby ſerve in the func⯑tion of a capital to particular perſons. In countries where maſ⯑querades are common, it is a trade to lett out maſquerade dreſſes for a night. Upholſterers frequently lett furniture by the month or by the year. Undertakers lett the furniture of funerals by the day and by the week. Many people lett furniſhed houſes, and get a rent, not only for the uſe of the houſe, but for that of the fur⯑niture. The revenue, however, which is derived from ſuch things, muſt always be ultimately drawn from ſome other ſource of reve⯑nue. 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 cloaths 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 conſump⯑tion, however, is more diſtant, they are ſtill as really a ſtock re⯑ſerved for immediate conſumption as either cloaths, or houſhold furniture.

THE Second of the three portions into which the general ſtock of the ſociety divides itſelf, is the fixed capital; of which the cha⯑racteriſtick 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 their proprietor who [335] letts them for a rent, but to the perſon who poſſeſſes them and pays that rent for them; ſuch as ſhops, warehouſes, workhouſes, farmhouſes, with all their neceſſary buildings, ſtables, granaries, &c. Theſe are very different from mere dwelling houſes. They are a ſort of inſtruments of trade, and may be conſidered in the ſame light:

THIRDLY, of the improvements of land, of what has been profitably laid out in clearing, draining, encloſing, 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, fre⯑quently requiring no other repairs than the moſt profitable applica⯑tion of the farmer's capital employed in cultivating it:

FOURTHLY, of the acquired and uſeful abilities of all the inha⯑bitants or 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 expence, 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 of that of the ſociety to which he belongs. The improved dexterity of a work⯑man may be conſidered in the ſame light as a machine or inſtru⯑ment of trade which facilitates and abridges labour, and which, though it coſts a certain expence, repays that expence 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; [336] of which the characteriſtick 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 uſers and conſumers:

SECONDLY, of the ſtock of proviſions which are in the poſ⯑ſeſſion of the butcher, the grazier, the farmer, the corn-merchant, the brewer, &c. and from the ſale of which they expect to derive a profit:

THIRDLY, of the materials, whether altogether rude, or more or leſs manufactured, of cloaths, 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 brickmakers, &c.

FOURTHLY, and laſtly, of the work which is made up and compleated, but which is ſtill in the hands of the merchant or manufacturer, and not yet diſpoſed of or diſtributed to the proper uſers and conſumers; ſuch as the finiſhed work which we fre⯑quently find ready made in the ſhops of the ſmith, the cabinet-maker, the goldſmith, the jeweller, the china-merchant, &c. The circulating capital conſiſts, in this manner, of the proviſions, ma⯑terials, 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.

[337] OF theſe four parts three, proviſions, materials, and finiſhed work, are, either annually, or in a longer or ſhorter period, regu⯑larly 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 con⯑ſtant repair.

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

TO maintain and augment the ſtock which may be reſerved for immediate conſumption, is the ſole end and purpoſe both of the fixed and circulating capitals. It is this ſtock which feeds, cloaths, and lodges the people. Their riches or poverty depends 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 with⯑drawn 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 [338] ſupplies, without which it would ſoon ceaſe to exiſt. Theſe ſup⯑plies are principally drawn from three ſources, the produce of land, of mines, and of fiſheries. Theſe afford continual ſupplies of pro⯑viſions and materials, of which part is afterwards wrought up into finiſhed work, and by which are replaced the proviſions, mate⯑rials, and finiſhed work continually withdrawn from the circulating capital. From mines too is drawn what is neceſſary for maintain⯑ing 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.

LAND, mines, and fiſheries, require all both a fixed and a cir⯑culating 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 provi⯑ſions 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 cloaths, 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 [339] 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 appli⯑cation 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 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 tolerable ſecurity, does not employ all the ſtock which he com⯑mands, 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 and 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 them⯑ſelves as at all times expoſed. This is ſaid to be a common practice in Turky, in Indoſtan, and, I believe, in moſt other governments [340] of Aſia. It ſeems to have been a common practice among our anceſ⯑tors during the violence of the feudal government. Treaſure-trove was in thoſe 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 im⯑portant an object, that it was always conſidered as belonging to the ſovereign, and neither to the finder nor to the proprietor of the land, unleſs the right to it had been conveyed to the latter by an expreſs clauſe in his charter. It was put upon the ſame footing with gold and ſilver mines, which, without a ſpecial clauſe in the charter, were never ſuppoſed to be comprehended in the general grant of the lands, though mines of lead, copper, tin, and coal were, as things of ſmaller conſequence.

CHAP. II. Of Money conſidered as a particular Branch of the general Stock of the Society, or of the Expence of maintaining the National Capital.

IT has been ſhewn 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 pro⯑ducing 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 theſe 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 re⯑gard 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.

[342] 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 pri⯑vate 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 expence 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 expence of maintaining; firſt, their fixed; and, ſecondly, their circulating capital; or what, without encroaching upon their ca⯑pital, they can place in their ſtock reſerved for immediate con⯑ſumption, 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 expence of maintaining the fixed capital, muſt evi⯑dently be excluded from the neat revenue of the ſociety. Neither the materials neceſſary for ſupporting their uſeful machines and inſtruments of trade, their profitable buildings, &c. nor the pro⯑duce 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 [343] employed may place the whole value of their wages in their ſtock reſerved for immediate conſumption. But in other ſorts of labour, both the price and the produce go to this ſtock, the price to that of the workmen, the produce to that of other people, whoſe ſubſiſtence, conveniencies, and amuſements, are augmented by the labour of thoſe workmen.

THE intention of the fixed capital is to increaſe the productive powers of labour, or to enable the ſame number of labourers to perform a much greater quantity of work. In a farm where all the neceſſary buildings, fences, drains, communications, &c. are in the moſt perfect good order, the ſame number of labourers and labouring cattle will raiſe a much greater produce, than in one of equal extent and equally good ground, but not furniſhed with equal conveniencies. In manufactures the ſame number of hands aſſiſted with the beſt machinery, will work up a much greater quantity of goods than with more imperfect inſtruments of trade. The expence which is properly laid out upon a fixed capital of any kind, is always repaid with great profit, and increaſes the an⯑nual 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, cloathing, and lodging, the ſubſiſtence and conveniencies of the ſociety, are thus diverted to another employment, highly ad⯑vantageous indeed, but ſtill different from this one. It is upon this account that all ſuch improvements in mechanicks, 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 [344] of workmen, which had before been employed in ſupporting a more complex and expenſive machinery, can afterwards be ap⯑plied 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 main⯑tenance of his machinery, if he can reduce this expence to five hundred, will naturally employ the other five hundred in pur⯑chaſing an additional quantity of materials to be wrought up by an additional number of workmen. The quantity of that work, therefore, which his machinery was uſeful only for performing, will naturally be augmented, and with it all the advantage and conveniency which the ſociety can derive from that work.

THE expence of maintaining the fixed capital in a great country, may very properly be compared to that of repairs in a private eſtate. The expence 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 expence 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 ca⯑pital. 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 [345] 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 ex⯑cluded from making any part of his neat revenue, which muſt con⯑ſiſt 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 their's.

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

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

FIRST, as thoſe machines and inſtruments of trade, &c. re⯑quire a certain expence firſt to erect them and afterwards to ſupport them, both which expences, 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 [346] expence, firſt to collect it, and afterwards to ſupport it, both which expences, though they make a part of the groſs, are, in the ſame manner, deductions from the neat revenue of the ſociety. A cer⯑tain 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 amuſe⯑ments of individuals, is employed in ſupporting that great but expenſive inſtrument of commerce, by means of which every indi⯑vidual in the ſociety has his ſubſiſtence, conveniencies, and amuſe⯑ments, regularly diſtributed to him in their proper proportions.

SECONDLY, as the machines and inſtruments of trade, &c. which compoſe the fixed capital either of an individual or of a ſociety, make no part either of the groſs or of the neat revenue of either; ſo money, by means of which the whole revenue of the ſociety is regularly diſtributed among all its different members, makes itſelf no part of that revenue. The great wheel of circulation is alto⯑gether 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 their 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 pro⯑poſition 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 [347] 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 com⯑monly to expreſs not only the amount of the metal pieces which are annually paid to him, but the value of the goods which he can annually purchaſe or conſume. We mean commonly to aſcertain what is or ought to be his way of living, or the quantity and quality of the neceſſaries and conveniencies of life in which he can with propriety indulge himſelf.

WHEN, by any particular ſum of money, we mean not only to expreſs the amount of the metal pieces of which it is compoſed, but to include in its ſignification ſome obſcure reference to the goods which can be had in exchange for them, the wealth or re⯑venue 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 pro⯑perly than to the former, to the guinea's-worth rather than to the guinea.

[348] 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 ex⯑changed 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 in⯑habitants of any country, in the ſame manner, may be, and in reality frequently is paid to them in money, their real riches, how⯑ever, the real weekly or yearly revenue of all of them taken to⯑gether, muſt always be great or ſmall in proportion to the quan⯑tity 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 af⯑ford 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 indivi⯑dual, it is ſtill more ſo with regard to a ſociety. The amount of [349] 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 re⯑venue 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, 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, there⯑fore, 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 cir⯑culate from hand to hand.

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

THIRDLY, and laſtly, the machines and inſtruments of trade, &c. which compoſe the fixed capital, bear this further reſemblance to that part of the circulating capital which conſiſts in money; that as every ſaving in the expence of erecting and ſupporting thoſe [350] machines, which does not diminiſh the productive powers of labour, is an improvement of the neat revenue of the ſociety; ſo every ſaving in the expence of collecting and ſupporting that part of the cir⯑culating 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 expence 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 neceſ⯑ſarily 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 expence 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 opera⯑tion 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 circu⯑lating notes of banks and bankers are the ſpecies which is beſt known, and which ſeems beſt adapted for this purpoſe.

[351] WHEN the people of any particular country have ſuch con⯑fidence 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 promiſſary 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 promiſſary 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 an⯑ſwering 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 promiſſary notes, to the value of a hundred thou⯑ſand pounds, as by an equal value of gold and ſilver money. Eighty thouſand pounds of gold and ſilver, therefore, can, in this manner, be ſpared from the circulation of the country; and if different operations of the ſame kind, ſhould, at the ſame time, be carried on by many different banks and bankers, the whole circulation may thus be conducted with a fifth part only of the gold and ſilver which would otherwiſe have been requiſite.

[352] 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 promiſſary 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 aug⯑mented 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 in 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 [353] 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 the 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 an addition to the neat revenue of their own country. It is like a new fund, created for carrying on a new trade; domeſtick buſineſs being now tranſ⯑acted 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 con⯑ſumption, they may either, firſt, purchaſe ſuch goods as are likely to be conſumed by idle people who produce nothing, ſuch as foreign wines, foreign ſilks, &c.; or, ſecondly, they may purchaſe an additional ſtock of materials, tools, and proviſions, in order to maintain and employ an additional number of induſtrious people, who re-produce, with a profit, the value of their annual con⯑ſumption.

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

[354] 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, re-producing, 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 ſome⯑times increaſe their expence very conſiderably though their revenue does not increaſe at all, we may be aſſured that no claſs or order of men ever does ſo; becauſe, though the principles of common prudence do not always govern the conduct of every individual, they always influence that of the majority of every claſs or order. But the revenue of idle people, conſidered as a claſs or order, cannot, in the ſmalleſt degree, be increaſed by thoſe operations of banking. Their expence 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 [355] be deſtined for the employment of induſtry, and not for the main⯑tenance of idleneſs.

WHEN we compute the quantity of induſtry which the cir⯑culating capital of any ſociety can employ, we muſt always have regard to thoſe parts of it only, which conſiſt in proviſions, mate⯑rials, 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 mate⯑rials 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 pur⯑chaſes, 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 [356] 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, re⯑ſembles that of the undertaker of ſome great work, who, in conſe⯑quence of ſome improvement in mechanicks, 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 fur⯑niſhes 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 fre⯑quently 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, con⯑ſequently, 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 [357] 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 ſhillings 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 publick banks at Edinburgh, of which the one, called The Bank of Scotland, was eſtabliſhed by act of parliament in 1695, 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 re-coined, amounted to 411,117l. ros. 9d. ſterling. No account has been got of the gold coin; but it appears from the antient 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 re⯑payment, [358] 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 con⯑ſiderable, 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 ad⯑vancing 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.

[359] THE commerce of Scotland, which at preſent is not very great, was ſtill more inconſiderable when the two firſt banking com⯑panies 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 promiſſary notes; by granting, what they called, caſh accounts, that is, by giving credit to the extent of a certain ſum, (two or three thouſand pounds, for example), to any individual who could procure two perſons of undoubted credit and good landed eſtate to become ſurety for him, that whatever money ſhould be advanced to him, within the ſum for which the credit had been given, ſhould be repaid upon demand, together with the legal intereſt. Credits of this kind are, I believe, commonly granted by banks and bankers in all different parts of the world. But the eaſy terms upon which the Scotch banking companies accept of re-payment 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, there⯑fore, and almoſt all men of buſineſs, find it convenient to keep ſuch caſh accounts with them, and are thereby intereſted to pro⯑mote 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 [360] promiſſary notes. Theſe the merchants pay away to the manu⯑facturers for goods, the manufacturers to the farmers for mate⯑rials and proviſions, the farmers to their landlords for rent, the landlords repay them to the merchants for the conveniencies and luxuries with which they ſupply them, and the merchants again return them to the banks in order to balance their caſh accounts, or to replace what they may have borrowed of them; and thus almoſt the whole money buſineſs of the country is tranſacted by means of them. Hence, the great trade of thoſe companies.

BY means of thoſe caſh accounts every merchant can, without imprudence, carry on a greater trade than he otherwiſe could do. If there are two merchants, one in London, and the other in Edinburgh, who employ equal ſtocks in the ſame branch of trade, the Edinburgh merchant can, without imprudence, carry on a greater trade, and give employment to a greater number of people than the London merchant. The London merchant muſt always keep by him a conſiderable ſum of money, either in his own coffers, or in thoſe of his banker, who gives him no intereſt for it, in order to anſwer the demands continually coming upon him for payment of the goods which he purchaſes upon credit. Let the ordinary amount of this ſum be ſuppoſed five hundred pounds. The value of the goods in his warehouſe muſt always be leſs by five hundred pounds than it would have been, had he not been obliged to keep ſuch a ſum unemployed. Let us ſuppoſe that he generally diſpoſes of his whole ſtock upon hand, or of goods to the value of his whole ſtock upon hand, once in the year. By being obliged to keep ſo great a ſum unemployed, he muſt ſell in a year five hundred pounds worth leſs goods than he might otherwiſe have done. His annual profits muſt be leſs by all that he could have made by the ſale of five hundred pounds worth more goods; and the number of people employed in pre⯑paring his goods for the market, muſt be leſs by all thoſe that [361] 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 ex⯑change 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 circu⯑late 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 cur⯑rency 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 [362] 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 of 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 expences which are common to every branch of trade; ſuch as the expence of houſe-rent, the wages of ſervants, clerks, accountants, &c.; the expences peculiar to a bank conſiſt chiefly in two articles: Firſt, in the expence of keep⯑ing 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 expence of repleniſhing thoſe coffers as faſt as they are emptied by anſwering ſuch occa⯑ſional 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 [363] to the exceſs of their quantity. Such a company, therefore, ought to increaſe the firſt article of their expence, 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 expence 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 circula⯑tion of the country. It comes in place of a paper which is over and above what can be employed in that circulation, and is there⯑fore, 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 employ⯑ment which it cannot find at home; and this continual exportation of gold and ſilver, by enhancing the difficulty, muſt neceſſarily enhance ſtill further the expence 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 expence 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 [364] 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 expence 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 par⯑ticular banking company has not always underſtood or attended to its own particular intereſt, and the circulation has frequently been overſtocked with paper money.

BY iſſuing too great a quantity of paper, of which the exceſs was continually returning, in order to be exchanged for gold and ſilver, the bank of England was for many years together obliged to coin gold to the extent of between eight hundred thouſand pounds and a million a year; or at an average, about eight hundred and fifty thouſand pounds. For this great coinage, the bank (in conſe⯑quence 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 3l. 17s. 10d. ½ 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 there⯑fore paid no ſeignorage, though the government was properly at the expence of the coinage, this liberality of government did not prevent altogether the expence of the bank.

[365] 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 expence 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 expence 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 correſpon⯑dents 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 a 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 ſett 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 journies; the debtor, bank, paying always the in⯑tereſt and commiſſion upon the whole accumulated ſum. Even thoſe Scotch banks which never diſtinguiſhed themſelves by their extream 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 [366] 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 con⯑tinual riſe in the price of gold bullion, in conſequence of the continual wearing and clipping of the coin, the expence 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 cir⯑culation of paper money.

[367] 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 quan⯑tity 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 anſwer⯑ing 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 expence 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 [368] 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 ſuf⯑ficiently from his caſh account. The bank, however, in deal⯑ing 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 re⯑payments 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 expence 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 reple⯑niſhed by ſome great and continual effort of expence, 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 repay⯑ments [369] 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 expence of repleniſhing their coffers, they gained two other very conſiderable advantages.

FIRST, by this attention they were enabled to make ſome tolerable judgement concerning the thriving or declining cir⯑cumſtances 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 enquire 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 occu⯑pied 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 re-payments 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 cir⯑culation of the country could eaſily abſorb and employ. When they obſerved that within moderate periods of time the re-pay⯑ments of a particular cuſtomer were upon moſt occaſions fully equal to the advances which they had made to him, they might [370] 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 re-payments 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 re-payments 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 con⯑tinually running out. The advances of the bank paper, by exceed⯑ing 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 cir⯑culation of the country could eaſily abſorb and employ; and the exceſs of this paper money would immediately have returned upon [371] 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 of 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 further aſſiſtance from banks and bankers, who, when they have gone thus far, cannot, conſiſtently with their own intereſt and ſafety, go farther. A bank cannot, conſiſtently with its own intereſt, advance to a trader the whole or even the greater part of the circulating capital with which he trades; becauſe, though that capital is continually returning to him in the ſhape of money, and going from him in the ſame ſhape, yet the whole of the re⯑turns is too diſtant from the whole of the out-goings, and the ſum of his repayments could not equal the ſum of its advances within ſuch moderate periods of time as ſuit the conveniency of a bank. Still leſs could a bank afford to advance him any con⯑ſiderable part of his fixed capital; of the capital which the un⯑dertaker of an iron forge, for example, employs in erecting his forge and ſmelting-houſe, his work-houſes and warehouſes, the dwelling houſes of his workmen, &c.; of the capital which the undertaker of a mine employs in ſinking his ſhafts, in erecting engines for drawing out the water, in making roads and waggon⯑ways, &c.; of the capital which the perſon who undertakes to improve land employs in clearing, draining, encloſing, manuring and ploughing waſte and uncultivated fields, in building farm-houſes, with all their neceſſary appendages of ſtables, granaries, &c. The returns of the fixed capital are in almoſt all caſes much ſlower than thoſe of the circulating capital; and ſuch expences, [372] even when laid out with the greateſt prudence and judgement, 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 enſure, if I may ſay ſo, the capital of thoſe creditors; or to render it ex⯑treamly 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 expence of ſtampt paper, or of attornies 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 [373] 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 them⯑ſelves 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 expence 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 coun⯑try; 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 mort⯑gage. 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, how⯑ever, 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 expence, 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 re-drawing; 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 [374] 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 re-drawing 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 them⯑ſelves, 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 pay⯑ment, 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 endorſed, that is, written their names upon the back of the bill; each endorſer becomes in his turn liable to the owner [375] of the bill for thoſe contents, and if he fails to pay he becomes too from that moment a bankrupt. Though the drawer, ac⯑ceptor, and endorſers 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, re-draws 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 re-draws upon A in Edinburgh an⯑other 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 ex⯑pedient muſt neceſſarily have coſt him ſomething more than eight [376] 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 ſpe⯑culation of which the returns could not only repay the enor⯑mous expence at which the money was thus borrowed for car⯑rying it on; but afford, beſides, a good ſurplus profit to the pro⯑jector. Many vaſt and extenſive projects, however, were under⯑taken, and for ſeveral years carried on without any other fund to ſupport them beſides what was raiſed at this enormous expence. The projectors, no doubt, had in their golden dreams the moſt diſtinct viſion of this great profit. Upon their awaking, 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 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 re-drew upon A in Edinburgh, he as regularly diſcounted either with the bank of England, or with ſome other bankers in Lon⯑don. 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 ad⯑vanced [377] 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 fictiti⯑ous. The ſtream, which by means of thoſe circulating bills of exchange, had once been made to run out from the coffers of the banks, was never replaced by any ſtream which really run into them.

THE paper which was iſſued upon thoſe circulating bills of exchange, amounted, upon many occaſions, to the whole fund deſtined for carrying on ſome vaſt and extenſive project of agri⯑culture, 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 em⯑ploy, 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 re-drawing upon one another, diſcount their bills always with the ſame banker, [378] 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 al⯑together ſo eaſy when they diſcount their bills ſometimes with one banker, and ſometimes with another, and when the ſame two per⯑ſons do not conſtantly draw and re-draw 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 poſ⯑ſible 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 thoſe projec⯑tors 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 [379] doubt, the immediate occaſion, they called the diſtreſs of the coun⯑try; 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 publick credit of the country.

IN the midſt of this clamour and diſtreſs, a new bank was eſta⯑bliſhed 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 rea⯑ſonable ſecurity, the whole capital which was to be employed in 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 publick 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 [380] 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 inſtallments. A great part of the proprietors, when they paid in their firſt inſtallment, 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 inſtall⯑ments. 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 Lon⯑don, 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 ſup⯑port the circulation of thoſe notes, which were continually return⯑ing 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, [381] 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 clear gain, without any other deduction beſides the expence 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 ſup⯑port the ſpirited undertakings, for as ſuch they conſidered them, which were at that time carrying on in different parts of the coun⯑try; 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 [382] 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 re⯑ceived 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 diſ⯑credit.

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 upon 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 by every ſuch operation; ſo that in the long-run they muſt have ruined themſelves as a mer⯑cantile company, though, perhaps, not ſo ſoon as by the more expenſive practice of drawing and re-drawing. They could ſtill [383] 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 expence of this borrowing, of employing agents to look out for people who had money to lend, of nego⯑ciating with thoſe people, and of drawing the proper bond or aſſign⯑ment, muſt have fallen upon them, and have been ſo much clear loſs upon the balance of their accounts. The project of repleniſh⯑ing their coffers in this manner may be compared to that of a man who had a water-pond from which a ſtream was continually running out, and into which no ſtream was continually running, but who propoſed to keep it always equally full by employing a number of people to go continually with buckets to a well at ſome miles diſtance in order to bring water to repleniſh it.

BUT though this operation had proved, not only practicable, but profitable to the bank as a mercantile company; yet the country could have derived no benefit from it; but, on the con⯑trary, muſt have ſuffered a very conſiderable loſs by it. This ope⯑ration 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 [384] account of, were likely, the greater part of them, to be chime⯑rical projectors, the drawers and re-drawers of circulating bills of exchange, who would employ the money in extravagant under⯑takings, which, with all the aſſiſtance that could be given them, they would probably never be able to complete, and which, if they ſhould be compleated, would never repay the expence which they had really coſt, would never afford a fund capable of main⯑taining a quantity of labour equal to that which had been em⯑ployed 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 what⯑ever 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 encreaſing 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 eſta⯑bliſhing 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 [385] 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 con⯑tinue 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 parlia⯑ment, by a charter under the great ſeal, dated the 27th July, 1694. It at that time advanced to government the ſum of one million two hundred thouſand pounds, for an annuity of one hundred thou⯑ſand pounds; or for 96,000 l. a year intereſt, at the rate of eight per cent., and 4000 l. a year for the expence 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 engraftment of 1,001,171 l. 10 s. Its whole capital ſtock, there⯑fore, amounted at this time to 2,201,171 l. 10 s. This engraft⯑ment is ſaid to have been for the ſupport of publick credit. In 1696 tallies had been at forty, and fifty, and ſixty per cent. diſcount, and bank notes at twenty per cent. ^*. During the great recoinage 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.

[386] IN purſuance of the 7th Anne, c. vii. the bank advanced and paid into the exchequer, the ſum of 400,000 l.; making in all the ſum of 1,600,000 l. which it had advanced upon its original annuity of 96,000 l. intereſt and 4000 l. for expence 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 l. 17 s. 10½d. at ſix per cent. intereſt, and was at the ſame time allowed to take in ſubſcriptions for doubling its capital. In 1708, therefore, the capital of the bank amounted to 4,402,343 l.; and it had advanced to government the ſum of 3,375,027 l. 17 s. 10½d.

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

IN purſuance of the 8th George I. c. xxi. the bank purchaſed of the South Sea Company, ſtock to the amount of 4,000,000 l.; 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 l. At this time, therefore, the bank had advanced to the publick 9,375,027 l. 17 s. 10½d.; and its capital ſtock amounted only to 8,959,995 l. 14 s. 8 d. It was upon this occaſion that the ſum which the bank had advanced to the publick, 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 undi⯑vided 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 pub⯑lick [387] 11,686,800 l. and its divided capital had been raiſed by different calls and ſubſcriptions to 10,780,000 l. 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 l. without intereſt or repayment. 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 publick, 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 publick muſt be loſt before its creditors can ſuſtain any loſs. No other banking company in England can be eſtabliſhed by act of parlia⯑ment, 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 publick, 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 thoſe dif⯑ferent operations, its duty to the publick may ſometimes have obliged it, without any fault of its directors, to overſtock the cir⯑culation 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 it is ſaid to have advanced for this pur⯑poſe, in one week, about 1,600,000 l.; 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.

[388] 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 unem⯑ployed, and in ready money for anſwering occaſional demands, is ſo much dead ſtock, which, ſo long as it remains in this ſitu⯑ation, 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 ſub⯑ſiſtence to work for; into ſtock which produces ſomething both to him 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, enables the country to convert a great part of this dead ſtock into active and produc⯑tive 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 judi⯑cious 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 in⯑creaſe 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 [389] 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 againt that multi⯑plication 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 [390] 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 circu⯑lation 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 ten pounds 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 twenty ſhillings, 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 [391] 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 pro⯑miſſory note for five pounds, or even for twenty ſhillings, 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 five pounds. 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 ten pounds value; five pounds being, in moſt parts 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 ten pounds are amidſt the profuſe expence of London.

WHERE paper money, it is to be obſerved, is pretty much con⯑fined 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, [392] 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, ſome⯑what relieved the ſcarcity of gold and ſilver in Scotland; and the ſuppreſſion of twenty ſhilling notes, would 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.

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

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

THE increaſe of paper money, it has been ſaid, by augmenting the quantity, and conſequently diminiſhing the value of the whole currency, neceſſarily augments the money price of commodities. But as the quantity of gold and ſilver, which is taken from the currency, is always equal to the quantity of paper which is added to it, paper money does not neceſſarily increaſe the quantity of the whole currency. From the beginning of the laſt century to the preſent times, proviſions never were cheaper in Scotland than in [394] 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 Scot⯑land 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 in 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 promiſſary 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 [395] 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 promiſſary notes of thoſe banking companies conſtituted at that time the far greater part of the currency of Scotland, which this uncertainty of payment neceſſarily degraded below the value of gold and ſilver money. During the continuance of this abuſe, (which prevailed chiefly in 1762, 1763, and 1764), while the ex⯑change 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 uncer⯑tainty of getting thoſe bank notes exchanged for gold and ſilver coin had thus degraded them four per cent. below the value of that coin. The ſame act of parliament which ſuppreſſed ten and five ſhilling bank notes, ſuppreſſed likewiſe this optional clauſe, and thereby reſtored the exchange between England and Scotland to its natural rate, or to what the courſe of trade and remittances might happen to make it.

IN the paper currencies of Yorkſhire, the payment of ſo ſmall a ſum as a ſixpence 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 promiſſary notes, payable to the bearer, under twenty ſhillings value.

[396] 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, a hundred pounds payable fifteen years hence, for example, in a country where intereſt is at ſix per cent. is worth little more than forty pounds ready money. To oblige a creditor, therefore, to accept of this as full payment for a debt of a hundred pounds 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 Douglaſs aſſures us it was, a ſcheme of fraudulent debtors to cheat their creditors. The government of Penſylvania, 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. Not⯑withſtanding any regulation of this kind, it appeared by the courſe of exchange with Great Britain, that a hundred pounds ſterling was occaſionally conſidered as equivalent, in ſome of the colonies, to a hundred and thirty pounds, and in others to ſo great a ſum as [397] eleven hundred pounds 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 par⯑liament, 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.

PENSYLVANIA 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 de⯑nomination of its coin, and had, by act of aſſembly, ordered five ſhillings ſterling to paſs in the colony for ſix and three-pence, and afterwards for ſix and eight-pence. A pound colony currency, therefore, even when that currency was gold and ſilver, was more than thirty per cent. below the value of a pound 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, [398] 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 alledge, 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, that 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, I have reaſon to believe, is altogether chimerical.

[399] A PAPER currency which falls below the value of gold and ſilver coin, does not thereby ſink the value of gold and ſilver, or occaſion equal quantities of thoſe metals to exchange for a ſmaller quantity of goods of any other kind. The propor⯑tion between the value of gold and ſilver and that of goods of any other kind, depends in all caſes, not upon the nature or 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 im⯑mediate and unconditional payment of ſuch bank notes as ſoon as preſented, their trade may, with ſafety to the publick, 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 publick. It obliges all of them to be more circum⯑ſpect 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. [400] 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 publick. 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 publick, the freer and more general the competition, it will always be the more ſo.

CHAP. III. Of the Accumulation of Capital, or of productive and unpro⯑ductive 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. 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 expence, 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 ma⯑nufacturers: He grows poor, by maintaining a multitude of menial ſervants. The labour of the latter, however, has its value, [401] 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 quan⯑tity 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 or 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 publick, 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, [402] opera-dancers, &c. The labour of the meaneſt of theſe has a certain value, regulated by the very ſame principles which regulate that of every other ſort of labour; and that of the nobleſt and moſt uſeful, produces nothing which could afterwards pur⯑chaſe or procure an equal quantity of labour. Like the decla⯑mation 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 pro⯑duce 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 ſponta⯑neous productions of the earth, being the effect of productive la⯑bour.

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 pro⯑viſions, 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, [403] 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 manufacture, 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 pro⯑ductive labour only. That which is immediately deſtined for con⯑ſtituting a revenue either as profit or as rent, may maintain in⯑differently either productive or unproductive hands.

WHATEVER part of his ſtock a man employs as a capital, he always expects is 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 main⯑taining unproductive hands of any kind, that part is, from that moment, withdrawn from his capital, and placed in his ſtock re⯑ſerved 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 re⯑venue 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 pro⯑ductive labourers only, yet when it comes into their hands, what⯑ever [404] part of it is over and above their neceſſary ſubſiſtence, may be employed in maintaining indifferently either productive or un⯑productive hands. Thus, not only the great landlord or the rich merchant, but even the common workman, if his wages are con⯑ſiderable, 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 honour⯑able 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 unpro⯑ductive hands, till after it has put into motion its full comple⯑ment 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 com⯑penſate, in ſome meaſure, the ſmallneſs of their contribution. The rent of land and the profits of ſtock are every where, there⯑fore, 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 expence of a great lord feeds generally more idle than induſtrious people. The rich merchant, though with his capital he maintains indu⯑ſtrious people only, yet by his expence, that is, by the employ⯑ment of his revenue, he feeds commonly the very ſame ſort as the great lord.

[405] THE proportion, therefore, between the productive and unpro⯑ductive hands, depends very much in every country upon the pro⯑portion between that part of the annual produce, which, as ſoon as it comes either from the ground or from the hands of the pro⯑ductive 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 independant farmer; the other for paying his profits, and the rent of the landlord. But antiently, during the prevalency of the feudal government, a very ſmall portion of the produce was ſufficient to replace the capital employed in cul⯑tivation. It conſiſted commonly in a few wretched cattle, main⯑tained altogether by the ſpontaneous produce of uncultivated land, and which might, therefore, be conſidered as a part of that ſponta⯑neous 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 paultry capital. The occupiers of land were generally bondmen, whoſe perſons and effects were equally his pro⯑perty. Thoſe who were not bondmen were tenants at will, and though the rent which they paid was often nominally little more than a quit-rent, it really amounted to the whole produce of the land. Their lord could at all times command their labour in peace, and their ſervice in war. Though they lived at a diſtance from his houſe, they were equally dependant upon him as his re⯑tainers who lived in it. But the whole produce of the land un⯑doubtedly belongs to him, who can diſpoſe of the labour and ſer⯑vice of all thoſe whom it maintains. In the preſent ſtate of Europe, [406] 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 antient 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 ca⯑pitals. Theſe, however, muſt have yielded very large profits. The rate of intereſt was no where 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 no where higher than ſix per cent. and in ſome of the moſt im⯑proved 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 coun⯑tries, 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 pro⯑ductive 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 con⯑ſtituting 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 [407] proportion to thoſe which, though they may be employed to main⯑tain either productive or unproductive hands, have generally a predilection for the latter.

THE proportion between thoſe different funds neceſſarily deter⯑mines in every country the general character of the inhabitants as to induſtry or idleneſs. We are more induſtrious than our fore⯑fathers; 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 an⯑ceſtors were idle for want of a ſufficient encouragement to in⯑duſtry. 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 employ⯑ment of capital, they are in general induſtrious, ſober, and thriv⯑ing; 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, Compiegne, 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 expence 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 entrepôt of al⯑moſt all the goods which are brought either from foreign coun⯑tries, or from the maritime provinces of France, for the conſump⯑tion of the great city of Paris. Bourdeaux is in the ſame manner the entrepôt of the wines which grow upon the banks of the Ga⯑ronne, and of the rivers which run into it, one of the richeſt wine [408] 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 entrepôts 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 expence 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 [409] and gentry of Scotland, it became a city of ſome trade and induſtry. It ſtill continues, however, to be the reſidence of the principal courts of juſtice in Scotland, of the boards of cuſtoms and exciſe, &c. A conſiderable revenue, therefore, ſtill continues to be ſpent in it. In trade and induſtry it is much inferior to Glaſgow, of which the inhabitants are chiefly maintained by the employment of capital. The inhabitants of a large village, it has ſometimes been obſerved, after having made conſiderable progreſs in manufactures, have become idle and poor, in conſequence of a great lord's having taken up his reſidence in their neighbourhood.

THE proportion between capital and revenue, therefore, ſeems every where to regulate the proportion between induſtry and idleneſs. Wherever capital predominates, induſtry prevails: Where⯑ever 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 inhabi⯑tants.

CAPITALS are increaſed by parſimony, and diminiſhed by pro⯑digality 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 [410] individuals who compoſe it, can be increaſed only in the ſame manner.

PARSIMONY and not induſtry is the immediate cauſe of the increaſe of capital. Induſtry, indeed, provides the ſubject which parſimony accumulates. But whatever induſtry might acquire, if parſimony did not ſave and ſtore up, the capital would never be the greater.

PARSIMONY, by increaſing the fund which is deſtined for the maintenance of productive hands, tends to increaſe the number of thoſe hands whoſe labour adds to the value of the ſubject upon which it is beſtowed. It tends therefore to increaſe the exchangeable value of the annual produce of the land and labour of the country. It puts into motion an additional quantity of induſtry, which gives an additional value to the annual produce.

WHAT is annually ſaved is as regularly conſumed as what is annually ſpent, and nearly in the ſame time too; but it is con⯑ſumed by a different ſett of people. That portion of his re⯑venue which a rich man annually ſpends, is in moſt caſes con⯑ſumed 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 im⯑mediately employed as a capital, is conſumed in the ſame manner, and nearly in the ſame time too, but by a different ſett of people, by labourers, manufacturers, and artificers, who re-produce with a profit the value of their annual conſumption. His revenue, we ſhall ſuppoſe, is paid him in money. Had he ſpent the whole, the food, cloathing, and lodging which the whole could have purchaſed, would have been diſtributed among the former ſett of people. By ſaving a part of it, as that part is for the [411] ſake of the profit immediately employed as a capital either by himſelf or by ſome other perſon, the food, cloathing, 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 or the enſuing year, but, like the founder of a publick workhouſe, 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 after⯑wards 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 expence 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, con⯑ſecrated to the maintenance of induſtry. By diminiſhing the funds deſtined for the employment of productive labour, he neceſſarily diminiſhes, ſo far as depends upon him, the quantity of that labour which adds a value to the ſubject upon which it is beſtowed, and, conſequently, the value of the annual produce of the land and labour of the whole country, the real wealth and revenue of its inhabitants. If the prodigality of ſome was not compenſated by the frugality of others, the conduct of every [412] prodigal, by feeding the idle with the bread of the induſtrious, tends not only to beggar himſelf, but to impoveriſh his country.

THOUGH the expence 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 cloathing, 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 expence, 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 cloathing, which were thus conſumed by unproductive, had been diſtributed among productive hands, they would have reproduced, together with a profit, the full value of their conſumption. The ſame quantity of money would in this caſe equally have remained in the country, and there would beſides have been a reproduction of an equal value of conſumable goods. There would have been two values inſtead of one.

THE ſame quantity of money beſides cannot long remain in any country, in which the value of the annual produce diminiſhes. The ſole uſe of money is to circulate conſumable goods. By means of it, proviſions, materials, and finiſhed work, are bought and ſold, and diſtributed to their proper conſumers. The quantity of money, therefore, which can be annually employed in any country muſt be determined by the value of the conſumable goods annually circulated within it. Theſe muſt conſiſt either in the [413] 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 domeſtick 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 proſ⯑perity 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 declen⯑ſion, 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 publick proſperity. Gold and ſilver are purchaſed every where in the ſame manner. The food, cloathing, and lodging, the revenue and maintenance of [414] all thoſe whoſe labour or ſtock is employed in bringing them from the mine to the market, is the price paid for them in Peru as well as in England. The country which has this price to pay, will never be long without the quantity of thoſe metals which it has occaſion for; and no country will ever long retain a quantity which it has no occaſion for.

WHATEVER, therefore, we may imagine the real wealth and revenue of a country to conſiſt in, whether in the value of the annual produce of its land and labour, as plain reaſon ſeems to dictate; or in the quantity of the precious metals which circulate within it, as vulgar prejudices ſuppoſe; in either view of the matter, every prodigal appears to be a publick enemy, and every frugal man a publick benefactor.

THE effects of miſconduct are often the ſame as thoſe of pro⯑digality. Every injudicious and unſucceſsful project in agricul⯑ture, 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 dimi⯑nution 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.

[415] WITH regard to profuſion, the principle, which prompts to expence, is the paſſion for preſent enjoyment; which, though ſome⯑times 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 inſtant in which any man is ſo perfectly and compleatly ſatisfied with his ſituation, as to be without any wiſh of alteration or improvement of any kind. An augmen⯑tation 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 occaſions. Though the principle of expence, there⯑fore, 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 pre⯑dominate very greatly.

WITH regard to miſconduct, the number of prudent and ſuc⯑ceſsful undertakings is every where 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 care⯑ful [416] 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 publick prodigality and miſconduct. The whole, or almoſt the whole publick revenue, is in moſt countries employed in maintaining unproductive hands. Such are the people who compoſe a numerous and ſplendid court, a great eccleſiaſtical eſtab⯑liſhment, great fleets and armies, who in time of peace produce nothing, and in time of war acquire nothing which can compenſate the expence 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, there⯑fore, to an unneceſſary number, they may in a particular year conſume ſo great a ſhare of this produce, as not to leave a ſuf⯑ficiency for maintaining the productive labourers, who ſhould re⯑produce 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 main⯑tained 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 oc⯑caſions, it appears from experience, ſufficient to compenſate, not only the private prodigality and miſconduct of individuals, but the publick extravagance of government. The uniform, conſtant, [417] and uninterrupted effort of every man to better his condition, the principle from which publick 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 con⯑ſequence either of ſome addition and improvement to thoſe machines and inſtruments which facilitate and abridge labour; or of a 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 con⯑ſtantly 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 nume⯑rous [418] 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 publick 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 judgement 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 publick, 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 falſhood 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.

[419] 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 an 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 publick 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 a hundred and forty five millions of debt, over and above all the [420] other extraordinary annual expence which they occaſioned, ſo that the whole cannot be computed at leſs than two hundred millions. 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 un⯑productive hands. But had not thoſe wars given this particular direction to ſo large a capital, the greater part of it would naturally have been employed in maintaining productive hands, whoſe labour would have replaced, with a profit, the whole value of their conſumption. The value of the annual produce of the land and labour of the country, would have been conſiderably increaſed by it every year, and every year's increaſe would have augmented ſtill more that of the next 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, [421] 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 characteriſtical virtue of its inhabitants. It is the higheſt im⯑pertinence and preſumption, therefore, in kings and miniſters, to pretend to watch over the oeconomy of private people, and to reſtrain their expence 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 expence, and they may ſafely truſt private people with theirs. If their own extravagance does not ruin the ſtate, that of their ſubjects never will.

AS frugality increaſes, and prodigality diminiſhes the publick capital, ſo the conduct of thoſe, whoſe expence juſt equals their revenue, without either accumulating or encroaching, neither increaſes nor diminiſhes it. Some modes of expence, however, ſeem to contribute more to the growth of publick opulence than others.

THE revenue of an individual may be ſpent, either in things which are conſumed immediately, and in which one day's expence can neither alleviate nor ſupport that of another; or it may be ſpent in things more durable, which can therefore be accumulated, and in which every day's expence may, as he chuſes, 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 con⯑tenting [422] 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 magni⯑ficence of the perſon whoſe expence had been chiefly in durable commodities, would be continually increaſing, every day's expence 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 expence of the latter would remain, and the effects of ten or twenty years pro⯑fuſion would be as compleatly annihilated as if they had never exiſted.

AS the one mode of expence 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 cloathing 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 expence 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 [423] 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 the Iſt 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 the genius which planned them ſeems to be extinguiſhed, perhaps from not having the ſame employment.

THE expence 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 publick. 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 ac⯑knowledgement of preceding bad conduct. Few, therefore, of thoſe [424] who have once been ſo unfortunate as to launch out too far into this ſort of expence, 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 expence in building, in furniture, in books or pictures, no imprudence can be in⯑ferred from his changing his conduct. Theſe are things in which further expence is frequently rendered unneceſſary by former expence; 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 expence, beſides, that is laid out in durable com⯑modities, 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 expence of this entertainment had been employed in ſetting to work, maſons, carpenters, upholſterers, mechanicks, a quantity of proviſions, of equal value, would have been diſtributed among a ſtill greater number of people, who would have bought them in penny-worths and pound weights, and not have loſt or thrown away a ſingle ounce of them. In the one way, beſides, this expence maintains pro⯑ductive, 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 expence always betokens a more liberal or generous ſpirit than the other. When a man of fortune [425] 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 ex⯑pence, therefore, eſpecially when directed towards frivolous objects, the little ornaments of dreſs and furniture, jewels, trinkets, gewgaws, frequently indicates, not only a trifling, but a baſe and ſelfiſh diſpoſition. All that I mean is, that the one ſort of expence, as it always occaſions ſome accumu⯑lation of valuable commodities, as it is more favourable to private frugality, and, conſequently, to the increaſe of the publick capital, and as it maintains productive, rather than unproductive hands, conduces more than the other to the growth of publick opulence.

CHAP. IV. Of Stock lent at Intereſt.

THE ſtock which is lent at intereſt is always conſidered as a capital by the lender. He expects that in due time it is to be reſtored to him, and that in the mean time the bor⯑rower 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 im⯑mediate 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 em⯑ployed 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 fre⯑quently as we are ſometimes apt to imagine. Aſk any rich man [427] 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 con⯑ſumed ſo great a quantity of goods, advanced to them upon credit by ſhopkeepers 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 ſhopkeepers and tradeſmen, which the country gen⯑tlemen 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 really 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.

[428] THE quantity of ſtock, therefore, or, as it is commonly ex⯑preſſed, 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 ſuc⯑ceſſively ſerving for many different loans, as well as for many different purchaſes. A, for example, lends to W a thouſand pounds, with which W immediately purchaſes of B a thouſand pounds 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 thouſand pounds 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, aſſign to the three borrowers, W, X, Y, is the power of making thoſe purchaſes. In this power conſiſt both the value and [429] 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 re⯑payment.

A CAPITAL lent at intereſt may, in this manner, be conſidered as an aſſignment from the lender to the borrower of a certain conſiderable portion of the annual produce; upon condition that the borrower in return ſhall, during the continuance of the loan, annually aſſign to the lender a ſmaller 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 [430] 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 in⯑tereſt, 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 quan⯑tity 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 coun⯑try 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 pro⯑ductive 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 di⯑miniſhed 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 di⯑miniſhed with them.

MR. Locke, Mr. Law, and Mr. Monteſquiou, 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 [431] 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 argu⯑ment, 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 any where 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 a hundred pounds are in thoſe countries now of no more value than fifty pounds were then, ten pounds muſt now be of no more value than five pounds 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 pro⯑portion between the value of the capital and that of the intereſt, muſt have remained the ſame, though the rate had never been [432] altered. By altering the rate, on the contrary, the proportion between thoſe two values is neceſſarily altered. If a hundred pounds now are worth no more than fifty were then, five pounds now can be worth no more than two pounds ten ſhillings 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.

ANY increaſe in the quantity of ſilver, while that of the com⯑modities circulated by means of it remained the ſame, could have no other effect than to diminiſh the value of that metal. The no⯑minal value of all ſorts of goods would be greater, but their real value would be preciſely the ſame as before. They would be ex⯑changed 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 cum⯑berſome, 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 no⯑minally 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 [433] before. But the profits of ſtock are not computed by the num⯑ber of pieces of ſilver with which they are paid, but by the pro⯑portion which thoſe pieces bear to the whole capital employed. Thus in a particular country five ſhillings 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 mo⯑ney; 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 con⯑ſequently 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 aug⯑mented, the competition between the different capitals of which it was compoſed, would naturally be augmented along with it. [434] 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 man⯑ner, 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 every where be made by the uſe of money, ſomething ought every where to be paid for the uſe of it. This regulation, inſtead of preventing, has been found from expe⯑rience 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 ac⯑cepting 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 [435] 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 ſome⯑what 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 bor⯑rowers, 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 ſett 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. Not⯑withſtanding 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.

[436] THE ordinary market price of land, it is to be obſerved, depends every where upon the ordinary market rate of intereſt. The per⯑ſon 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 al⯑moſt every where 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 differ⯑ence 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, every body would buy land, which again would ſoon raiſe its ordi⯑nary price. When intereſt was at ten per cent. land was com⯑monly ſold for ten and twelve years purchaſe. As intereſt ſunk to ſix, five, and four per cent. the price of land roſe to twenty, five and twenty, and thirty years purchaſe. The market rate of intereſt is higher in France than in England; and the common price of land is lower. In England it commonly ſells at thirty; in France at twenty years purchaſe.

CHAP. V. Of the different Employment 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 extreamly according to the diverſity of their employment; as does likewiſe the value which that employment adds to the annual pro⯑duce 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 conſump⯑tion; 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 the 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.

[438] 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 [439] 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 publick, 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 neighbourhood. The capital, therefore, which can be employed in the grocery trade cannot exceed what is ſuf⯑ficient 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 to⯑gether, 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 impor⯑tance to deſerve the publick attention, nor would it neceſſarily be prevented by reſtricting their numbers. It is not the multitude [440] of ale-houſes, to give the moſt ſuſpicious example, that occaſions a general diſpoſition to drunkenneſs among the common people; but that diſpoſition ariſing from other cauſes neceſſarily gives em⯑ployment to a multitude of ale-houſes.

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 put into motion very different quantities of productive labour, and aug⯑ment 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 en⯑ables him to continue his buſineſs. The retailer himſelf is the only productive labourer whom it employs. In his profits, conſiſts the whole value which its employment adds to the annual produce of the land and labour of the ſociety.

THE capital of the wholeſale merchant replaces, together with their profits, the capitals of the farmers and manufacturers of whom he purchaſes the rude and manufactured produce which he deals in, and thereby enables them to continue their reſpective trades. It is by this ſervice chiefly that he contributes indirectly to ſupport the productive labour of the ſociety, and to increaſe the value of [441] 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 into motion, there⯑fore, 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 whole⯑ſale 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 expence, its produce has its value, as well as that of the moſt expen⯑ſive workmen. The moſt important operations of agriculture ſeem intended, not ſo much to increaſe, though they do that too, as to [442] 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 fre⯑quently 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 manufacturers, the reproduction of a value equal to their own conſumption, or to the capital which employs them, together with its owners profits; but of a much greater value. Over and above the capital of the farmer and all its profits, they regu⯑larly 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 a 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 manu⯑factures, but in proportion too to the quantity of productive labour which it employs, it adds a much greater value to the annual pro⯑duce of the land and labour of the country, to the real wealth and revenue of its inhabitants. Of all the ways in which a [443] capital can be employed, it is by far the moſt advantageous to the ſociety.

THE capitals employed in the agriculture and in the retail trade of any ſociety, muſt always reſide within that ſociety. Their em⯑ployment 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 any-where, 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 compleat manufacture is conſumed. Lyons is very diſ⯑tant both from the places which afford the materials of its manu⯑factures, and from thoſe which conſume them. The people of faſhion in Sicily are cloathed 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 pro⯑duce of any ſociety be a native or a foreigner, is of very little im⯑portance. 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 pro⯑fits [444] 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 Baltick, are ſurely very uſeful to the countries which produce them. Thoſe materials are a part of the ſurplus produce of thoſe countries which, unleſs it was annually exchanged for ſomething which is in demand there, would be of no value, and would ſoon ceaſe to be produced. The merchants who export it, replace the capitals of the people who produce it, and thereby encourage them to continue the production; and the Britiſh manufacturers replace the capitals of thoſe merchants.

A PARTICULAR country, in the ſame manner as a particular perſon, may frequently not have capital ſufficient both to improve and cultivate all its lands, to manufacture and prepare their whole rude produce for immediate uſe and conſumption, and to tranſport [445] 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 im⯑prove and cultivate all their lands. The wool of the ſouthern counties of Scotland is, a great part of it, after a long land car⯑riage 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 con⯑ſumption for it. If there are any merchants among them, they are properly only the agents of wealthier merchants who reſide in ſome of the greater 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 put 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, pre⯑maturely 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 [446] 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 cer⯑tain purpoſes. The capital of all the individuals of a nation is increaſed in the ſame manner as that of a ſingle individual, by their continually accumulating and adding to it whatever they ſave out of their revenue. It is likely to increaſe the faſteſt, therefore, when it is employed in the way that affords the greateſt revenue to all the inhabitants of the country, as they will thus be enabled to make the greateſt ſavings. But the revenue of all the inhabi⯑tants 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 houſhold and coarſer manufactures excepted which neceſſarily accompany the progreſs of agriculture, and which are the work of the women and children in every pri⯑vate 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 Vir⯑ginia 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 im⯑portation of European manufactures, and, by thus giving a mo⯑nopoly 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 [447] 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 ſearce ever to have been of ſo long continuance as to enable any great country to acquire capital ſufficient for all thoſe three purpoſes; unleſs, perhaps, we give credit to the wonderful accounts of the wealth and cultivation of China, of thoſe of antient Egypt, and of the antient 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 antient Egyptians had a ſuperſtitious antipathy to the ſea; a ſuper⯑ſtition 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 em⯑ployed in agriculture, manufactures, and wholeſale trade. The difference too is very great, according to the different ſorts of whole⯑ſale trade in which any part of it is employed.

ALL wholeſale trade, all buying in order to ſell again by whole⯑ſale, may be reduced to three different ſorts. The home trade, the foreign trade of conſumption, and the carrying trade. The home [448] 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 tranſ⯑acting the commerce of foreign countries, or in carrying the ſur⯑plus 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 con⯑tinue that employment. When it ſends out from the reſidence of the merchant a certain value of commodities, it generally brings back in return at leaſt an equal value of other commodities. When both are the produce of domeſtick 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 domeſtick induſtry, replaces too, by every ſuch operation, two diſtinct capitals; but one of them only is employed in ſupporting domeſtick induſtry. The capital which ſends Britiſh goods to Portugal, and brings back Portugueſe goods to Great Britain, re⯑places by every ſuch operation only one Britiſh capital. The other [449] is a Portugueſe one. Though the returns, therefore, of the foreign trade of conſumption ſhould be as quick as thoſe of the home-trade, the capital employed in it will give but one-half the encouragement to the induſtry or productive labour of the country.

BUT the returns of the foreign trade of conſumption are very ſeldom ſo quick as thoſe of the home-trade. The returns of the home-trade generally come in before the end of the year, and ſometimes three or four times in the year. The returns of the foreign trade of conſumption ſeldom come in before the end of the year, and ſometimes not till after two or three years. A capital, therefore, employed in the home-trade will ſometimes make twelve operations, or be ſent out and returned twelve times, before a capi⯑tal 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 domeſtick induſtry, but with ſome other foreign goods. Theſe laſt, however, muſt have been purchaſed either immediately with the produce of domeſtick 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 ex⯑changes. 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 flax and hemp of Riga are pur⯑chaſed with the tobacco of Virginia, which had been purchaſed [450] with Britiſh manufactures, the merchant muſt wait for the returns of two diſtinct foreign trades before he can employ the ſame ca⯑pital in re-purchaſing 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. Whe⯑ther 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 particu⯑lar merchants. Three times a greater capital muſt in both caſes be employed, in order to exchange a certain value of Britiſh ma⯑nufactures 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 em⯑ployed, therefore, in ſuch a round about foreign trade of con⯑ſumption, 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 en⯑couragement and ſupport which it can give to the productive labour of the country from which it is carried on. If they are pur⯑chaſed with the gold of Brazil, for example, or with the ſilver [451] 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. An equal quantity of foreign goods, therefore, may frequently be purchaſed with a ſmaller quantity of the produce of domeſtick 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 compleatly and at a ſmaller expence than in any other. Whether, by the con⯑tinual 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 here⯑after.

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 belong 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 [452] 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 di⯑ſtributed among, and puts into motion a certain number of pro⯑ductive 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 de⯑rived its name from it, the people of ſuch countries being the carriers to other countries. It does not, however, ſeem eſſential to the nature of the trade that it ſhould be ſo. A Dutch merchant may, for example, employ his capital in tranſacting the commerce of Poland and Portugal, by carrying part of the ſurplus produce of the one to the other, not in Dutch, but in Britiſh bottoms. It may be preſumed, that he actually does ſo upon ſome particular occaſions. It is upon this account, however, that the carrying trade has been ſuppoſed peculiarly advantageous to ſuch a country as Great Britain, of which the defence and ſecurity depend upon the number of its ſailors and ſhipping. But the ſame capital may employ as many ſailors and ſhipping, either in the foreign trade of conſumption, or even in the home-trade, when carried on by coaſting veſſels, as it could in the carrying trade. The number of ſailors and ſhipping which any particular capital can employ, does not depend upon the nature of the trade, but partly upon the bulk of the goods in proportion to their value, and partly upon the diſtance of the ports between which they are to be car⯑ried; chiefly upon the former of thoſe two circumſtances. The coal-trade from Newcaſtle to London, for example, employs more [453] 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 al⯑ways 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 oeconomy of every country, is to encreaſe 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 ca⯑pital 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 in⯑troduces it.

WHEN the produce of any particular branch of induſtry exceeds what the demand of the country requires, the ſurplus muſt be [454] ſent abroad, and exchanged for ſomething for which there is a demand at home. Without ſuch exportation, a part of the pro⯑ductive 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 hard ware, than the demand of the home-market requires. The ſurplus part of them, there⯑fore, muſt be ſent abroad, and exchanged for ſomething for which there is a demand at home. It is only by means of ſuch ex⯑portation, that this ſurplus can acquire a value ſufficient to compenſate the labour and expence of producing it. The neigh⯑bourhood 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 ſome⯑thing elſe which is more in demand there.

WHEN the foreign goods which are thus purchaſed with the ſur⯑plus produce of domeſtick 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 ninety-ſix thouſand 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 fourteen thouſand. If the remaining eighty-two thouſand, therefore, could not be ſent abroad and ex⯑changed 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 em⯑ployed in preparing the goods with which theſe eighty-two thou⯑ſand 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 [455] 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 conſump⯑tion, and ſupporting the productive labour of that particular coun⯑try, 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 encouragements, ſeem to have miſtaken the effect and ſymptom for the cauſe. Holland, in proportion to the extent of the land and the number of its inhabitants, by far the richeſt country in Europe, has, accordingly, the greateſt ſhare of the carrying trade of Europe. England, perhaps the ſecond richeſt country of Europe, is likewiſe ſuppoſed to have a con⯑ſiderable ſhare of 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 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 car⯑ried 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.

[456] 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 ſur⯑plus 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 ca⯑pitals.

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 dif⯑ferent ways, never enter into his thoughts. In countries, there⯑fore, 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 pub⯑lick 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 ob⯑ſervation may ſatisfy us that the reſult of them muſt be falſe. We ſee every day the moſt ſplendid fortunes that have been acquired [457] 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 un⯑cultivated, 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 every where capable of abſorbing a much greater capital than has ever yet been employed in it. What cir⯑cumſtances 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 improve⯑ment and cultivation of the moſt fertile fields in their own neigh⯑bourhood, I ſhall endeavour to explain at full length in the two following books.

CHAP. 1. 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 pro⯑duce, 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 ma⯑nufacture. 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 pro⯑duce 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, [460] or what is over and above the maintenance of the cultivators, and it is there that the inhabitants of the country exchange it for ſome⯑thing elſe which is in demand among them. The greater the num⯑ber 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 expence of raiſing and bringing it to market, but afford too the ordinary profits of agriculture to the farmer. The proprietors and cultivators of the country, therefore, which lies in the neighbourhood of the town, over and above the ordinary profits of agriculture, gain, in the price of what they ſell, the whole value of the carriage of the like produce that is brought from more diſtant parts, and they ſave, beſides, the whole value of this carriage in the price of what they buy. Compare the cultivation of the lands in the neighbourhood of any conſiderable town, with that of thoſe which lie at ſome diſtance from it, and you will eaſily ſatisfy yourſelf how much the country is benefited by the commerce of the town. Among all the abſurd ſpeculations that have been pro⯑pagated 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 [461] above the maintenance of the cultivators, that conſtitutes the ſubſiſt⯑ence of the town, which can therefore increaſe only with the increaſe of this 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 coun⯑tries; 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 inſtitu⯑tions had never thwarted thoſe natural inclinations, the towns could no where have increaſed beyond what the improvement and cultivation of the territory in which they were ſituated could ſup⯑port; 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 chuſe 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 fre⯑quently 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 cha⯑racter 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 pleaſures 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 [462] that more or leſs attract every body; 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 cul⯑tivation of land cannot be carried on, but with great incon⯑veniency and continual interruption. Smiths, carpenters, wheel⯑wrights, and plough-wrights, maſons, and bricklayers, tanners, ſhoemakers, and taylors, 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 in⯑habitants of the country, neceſſarily regulates the quantity of the materials and proviſions which they buy. Neither their employ⯑ment 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 inſtitu⯑tions, therefore, never diſturbed the natural courſe of things, the [463] progreſſive wealth and increaſe of the towns would, in every political ſociety, be conſequential, and in proportion to the im⯑provement and cultivation of the territory or country.

IN our North American colonies, where uncultivated land is ſtill to be had upon eaſy terms, no manufactures for diſtant ſale have ever yet been eſtabliſhed in any of their towns. When an artificer has acquired a little more ſtock than is neceſſary for carrying on his own buſineſs in ſupplying the neighbouring country, he does not, in North America, attempt to eſtabliſh with it a manufacture for more diſtant ſale, but employs it in the purchaſe and improvement of uncultivated land. From artificer he be⯑comes 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 un⯑cultivated land, or none that can be had upon eaſy terms, every artificer who has acquired more ſtock than he can employ in the occaſional jobs of the neighbourhood, endeavours to prepare work for more diſtant ſale. The ſmith erects ſome ſort of iron, the weaver ſome ſort of linen or woollen manufactory. Thoſe different manufactures come, in proceſs of time, to be gradually ſubdivided, and thereby improved and refined in a great variety of ways, which may eaſily be conceived, and which it is therefore unneceſſary to explain any further.

[464] 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 domeſtick 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 com⯑pleateſt manner the whole of their rude produce, there is even a conſiderable advantage that it ſhould be exported by a foreign capital, in order that the whole ſtock of the ſociety may be employed in more uſeful purpoſes. The wealth of ancient Egypt, that of China and Indoſtan, ſufficiently demonſtrate that a nation may attain a very high degree of opulence, though the greater part of its exportation trade be carried on by foreigners. The progreſs of our North American and Weſt Indian colonies would have been much leſs rapid, had no capital but what belonged to themſelves been employed in exporting their ſurplus produce.

ACCORDING to the natural courſe of things, therefore, the greater part of the capital of every growing ſociety is, firſt, directed to agriculture, afterwards to manufactures, and laſt of all to foreign commerce. This order of things is ſo very natural, that in every ſociety that had any territory, it has [465] 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, intirely 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 in⯑troduced, and which remained after that government was greatly altered, neceſſarily forced them into this unnatural and retro⯑grade order.

CHAP. II. Of the Diſcouragement of Agriculture in the antient State of Europe after the Fall of the Roman Empire.

WHEN the German and Scythian nations over-ran 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 antient 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 princi⯑pal 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 ſuc⯑ceſſion or by alienation. The law of primogeniture hindered them from being divided by ſucceſſion: the introduction of entails pre⯑vented 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 [467] 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 ſove⯑reign. 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 ſecu⯑rity of the monarchy, may not be weakened by diviſion, it muſt deſcend entire to one of the children. To which of them ſo im⯑portant a preference ſhall be given, muſt be determined by ſome general rule, founded not upon the doubtful diſtinctions of per⯑ſonal 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 ſcx, and that of age. The male ſex is univerſally preferred to the female; and when all other things are equal, the elder every where takes place [468] 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 of his poſſeſſion as the proprietor of a hundred thouſand. 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 in⯑tereſt 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 primo⯑geniture. They were introduced to preſerve a certain lineal ſuc⯑ceſſion, 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 deviſe, 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 fideicommiſſes bear any reſemblance to entails, though ſome French lawyers have thought proper to dreſs the modern inſtitution in the language and form of thoſe antient 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 [469] well as great eſtates derive their ſecurity from the laws of their country, nothing can be more compleatly 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 ex⯑cluſive privilege of the nobility to the great offices and honours of their country; and that order having uſurped one unjuſt ad⯑vantage over the reſt of their fellow citizens, left 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 of the country, are at preſent 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 forever. It ſeldom happens, however, that a great proprietor is a great improver. In the diſorderly times which gave birth to thoſe bar⯑barous 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 [470] the expence 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 oeconomiſt, he generally found it more profitable to employ his annual ſavings in new purchaſes, than in the improvement of his old eſtate. To im⯑prove land with profit, like all other commercial projects, re⯑quires 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 houſhold furniture, are objects which from his infancy he has been accuſtomed to have ſome anxiety about. The turn of mind which this habit natu⯑rally forms, follows him when he comes to think of the improve⯑ment of land. He embelliſhes perhaps four or five hundred acres in the neighbourhood of his houſe, at ten times the expence 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 neigh⯑bourhood, and you will require no other argument to convince you how unfavourable ſuch extenſive property is to improve⯑ment.

IF little improvement was to be expected from ſuch great pro⯑prietors, ſtill leſs was to be hoped for from thoſe who occupied the land under them. In the antient ſtate of Europe, the occupiers of land were all tenants at will. They were all or almoſt all ſlaves; [471] but their ſlavery was of a milder kind than that known among the antient Greeks and Romans, or even in our Weſt Indian colo⯑nies. 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 ac⯑quired 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 expence. 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, Mo⯑ravia, 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 poſ⯑ſible. Whatever work he does beyond what is ſufficient to pur⯑chaſe his own maintenance, can be ſqueezed out of him by vio⯑lence only, and not by any intereſt of his own. In antient Italy, [472] how much the cultivation of corn degenerated, how unprofitable it became to the maſter when it fell under the management of ſlaves, is remarked by both Pliny and Columella. In the time of Ariſtotle it had not been much better in antient Greece. Speak⯑ing of the ideal republic deſcribed in the laws of Plato, to main⯑tain five thouſand 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 expence 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 Penſyl⯑vania to ſet at liberty all their negroe 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 cul⯑tivation 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 expence 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.

[473] TO the ſlave cultivators of antient 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 re⯑ſtored 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 expence of the proprietor, 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 poſ⯑ſible, 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 ſovereign, always jealous of the great lords, gradually encouraged their villains to make upon their authority, and which ſeem at laſt 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 revo⯑lution 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. [474] 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 after⯑wards, 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 enfran⯑chiſed, 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 lord, 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 hinderance 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 pro⯑prietors complain that their metayers take every opportunity of employing the maſters 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 antient Engliſh tenants, who are ſaid by chief Baron Gilbert and Doctor Blackſtone to have been rather [475] bailiffs of the landlord than farmers properly ſo called, were pro⯑bably of the ſame kind.

TO this ſpecies of tenancy 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 extreamly precarious, and ſtill is ſo in many parts of Europe. They could before the expiration of their term be legally outed of their leaſe, 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 ex⯑treamly imperfect. It did not always re-inſtate them in the poſ⯑ſeſſion of the land, but gave them damages which never amounted to the 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 the VIIth 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 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 vote for a member of parliament; [476] 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 the IId. 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 flackened their ſetters, though they are ſtill by much too ſtrait. In Scotland, beſides, as no leaſehold gives a vote for a member of parliament, the yeomanry are upon this account leſs reſpectable to their landlords than in England.

IN other parts of Europe, after it was found convenient to ſecure tenants both againſt heirs and purchaſers, the term of their ſecurity was ſtill limited to a very ſhort period; in France, for example, to nine years from the commencement of the leaſe. It has in that country, indeed, been lately extended to twenty ſeven, a period ſtill too ſhort to encourage the tenant to make the moſt important improvements. The proprietors of land were antiently the legiſ⯑lators of every part of Europe. The laws relating to land, there⯑fore, were all calculated for what they ſuppoſed the intereſt of the proprietor. It was for his intereſt, they had imagined, that no [477] 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 antiently, 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 en⯑tirely arbitrary, ſubjected the tenant to many vexations. In Scot⯑land 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 publick 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, every where, though with different degrees of oppreſſion in different countries, was not the only one. When the king's troops, when his houſhold 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 publick taxes to which they were ſubject were as irregular and oppreſſive as the ſervices. The antient lords, though extreamly unwilling to grant themſelves any pecuniary aid to their ſovereign, eaſily allowed him to tallage, as they called it, their tenants, and [478] 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 antient 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 that 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 antient tenths and fifteenths, ſo uſual in England in former times, ſeem, ſo far as they affected the land, to have been taxes of the ſame nature with the taille.

UNDER all theſe diſcouragements, little improvement could be expected from the occupiers of land. That order of people, with all the liberty and ſecurity which law can give, muſt always improve under great diſadvantages. The farmer compared with the pro⯑prietor, is as a merchant who trades with borrowed money com⯑pared 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 [479] 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 infe⯑rior 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 pro⯑feſſion to the improvement of land in the way of farming. More does perhaps in Great Britain than in any other country, though even there the great ſtocks which are, in ſome places, employed in farming, have generally been acquired by farming, the trade, perhaps, in which of all others ſtock is commonly acquired moſt ſlowly. After ſmall proprietors, however, rich and great far⯑mers 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 antient 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, regrators, and fore⯑ſtallers, and by the privileges of fairs and markets. It has already [480] 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 antient 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 gene⯑ral prohibition of exportation, muſt have diſcouraged the cul⯑tivation of countries leſs fertile, and leſs favourably circumſtanced, it is not perhaps very eaſy to imagine.

CHAP. III. Of the Riſe and Progreſs of Cities and Towns, after the Fall of the Roman Empire.

THE inhabitants of cities and towns were, after the fall of the Roman empire, not more favoured than thoſe of the country. They conſiſted, indeed, of a very different order of people from the firſt inhabitants of the antient republicks of Greece and Italy. Theſe laſt were compoſed chiefly of the proprietors of lands, among whom the publick territory was originally divided, and who found it convenient to build their houſes in the neigh⯑bourhood 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 lands 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 inha⯑bited by tradeſmen and mechanicks, who ſeem in thoſe days to have been of ſervile, or very nearly of ſervile condition. The pri⯑vileges [481] which we find granted by antient 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 ſett of people, who uſed to travel about with their goods from place to place, and from fair to fair, like the hawkers and pedlars of the pre⯑ſent 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 ſer⯑vile, or very nearly of ſervile condition, were upon this account called Free-traders. They in return uſually paid to their pro⯑tector 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, [482] both thoſe poll-taxes and thoſe exemptions ſeem to have been altogether perſonal, and to have affected only particular indivi⯑duals, during either their lives, or the pleaſure of their protectors. In the very imperfect accounts which have been publiſhed from Domeſday-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.

BUT how ſervile ſoever may have been originally the condition of the inhabitants of 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 lett in farm, during a term of years for a rent certain, ſome⯑times to the ſheriff of the county, and ſometimes to other perſons. The burghers themſelves frequently got credit enough to be admitted to farm the revenues of this ſort which aroſe out of their own town, they becoming jointly and ſeverally an⯑ſwerable for the whole rent. To lett a farm in this manner was quite agreeable to the uſual oeconomy of, I believe, the ſovereigns of all the different countries of Europe; who uſed frequently to lett whole manors to all the tenants of thoſe manors, they be⯑coming 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 impor⯑tance.

[483] AT firſt, the farm of the town was probably lett 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 be⯑come the general practice to grant it to them in fee, that is forever, 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 after⯑wards 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 men⯑tioned, 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 commonality 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, [484] as antiently 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.

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 ex⯑pence or attention of their own: and that they ſhould, beſides, have in this manner voluntarily erected a ſort of independent republicks 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 indi⯑viduals, [485] 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 of 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 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 jea⯑louſy 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 [486] kind to their burghs. King John of England, for example, appears to have been a moſt munificent benefactor to his towns. Philip the firſt 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 con⯑ſiſted 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 com⯑mand 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.

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 ad⯑vantage in their diſputes with the neighbouring lords. In coun⯑tries, ſuch as Italy and 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 republicks, 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 republick of Berne, as well as [487] 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 republicks, 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 or England, where the authority of the ſovereign, though frequently very low, never was deſtroyed altogether, the cities had no opportunity of becoming entirely in⯑dependent. They became, however, ſo conſiderable that the ſove⯑reign 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 counter-balance to the authority of the great lords in thoſe aſſem⯑blies. Hence the origin of the repreſentation of burghs in the ſtates general of all the 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 ex⯑poſed to every ſort of violence. But men in this defenceleſs ſtate naturally content themſelves with their neceſſary ſubſiſtence; be⯑cauſe to acquire more might only tempt the injuſtice of their op⯑preſſors. On the contrary, when they are ſecure of enjoying the fruits of their induſtry, they naturally exert it to better their con⯑dition, 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 [488] 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 op⯑portunity of running away to a town. The law was at that time ſo indulgent to the inhabitants of towns, and ſo deſirous of di⯑miniſhing 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 ac⯑quired 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 ma⯑nufactured 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 ſplendor, 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, how⯑ever, within the narrow circle of the commerce of thoſe times, ſome countries that were opulent and induſtrious. Such was the [489] 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 con⯑quered 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 center of what was at that time the improved and civilized part of the world. The Cruzades 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 extreamly 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 tranſport⯑ing 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 pur⯑chaſed 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 of Poland is at this day exchanged for the wines and brandies of France, and for the ſilks and velvets of France and Italy.

[490] 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 expence 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 cloath⯑ing and houſhold furniture of the far greater part of the people, are the produce of their own induſtry. This is even more univer⯑ſally 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 cloaths and houſhold 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 [491] commerce, and ſuch ſeem to have been the antient manufactures of ſilks, velvets, and brocades that were introduced into Venice in the beginning of the thirteenth century. Such too ſeem to have been the manufactures of fine cloths that antiently flouriſhed in Flanders, and which were introduced into England in the beginning of the reign of Elizabeth; and ſuch are the preſent ſilk manu⯑factures of Lyons and Spital-fields. Manufactures introduced in this manner are generally employed upon foreign materials; being in imitations of foreign manufactures. When the Venetian manufacture flouriſhed, there was not a mulberry tree, nor conſe⯑quently a ſilkworm in all Lombardy. They brought the materials from Sicily and from the Levant, the manufacture itſelf being in imitation of thoſe carried on in the Greek empire. Mulberry trees were firſt planted in Lombardy in the beginning of the ſix⯑teenth century, by the encouragement of Ludovico Sforza duke of Milan. 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 Spital-fields 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 ſome⯑times in an inland town, according as their intereſt, judgement 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 houſhold and coarſer manufactures which muſt at all times be carried on even in the pooreſt and rudeſt countries. Such [492] 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 expence of land carriage, and inconveniency of river navigation, it may frequently be difficult to ſend this ſur⯑plus abroad. Abundance, therefore, renders proviſions cheap, and encourages a great number of workmen to ſettle in the neigh⯑bourhood, 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 expence 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 fer⯑tility of the land had given birth to the manufacture, ſo the pro⯑greſs of the manufacture re-acts upon the land, and increaſes ſtill further its fertility. The manufacturers firſt ſupply the neigh⯑bourhood, 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, ſup⯑port the expence of a conſiderable land carriage, the refined and [493] 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, con⯑tains 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 com⯑merce. 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 manu⯑factures immediately introduced by it, and which I ſhall now pro⯑ceed to explain.

CHAP. IV. How the Commerce of the 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 manu⯑factured produce, and conſequently gave ſome encouragement to the induſtry and improvement of all. Their own country, how⯑ever, 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. Mer⯑chants 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 [495] employ it chiefly in expence. 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. A 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 expence. The other, if he has any capital, which is not always the caſe, ſeldom ventures to employ it in this manner. If he improves at all, it is commonly not with a capital, but with what he can ſave out of his annual revenue. Whoever has had the fortune to live in a mercantile town ſituated in an un⯑improved 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, oeconomy 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 [496] whole in ruſtick hoſpitality at home. If this ſurplus produce is ſuf⯑ficient 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. Weſt⯑minſter 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 ſtrowed 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 cloaths when they fat down on the floor to eat their dinner. The great earl of Warwick is ſaid to have entertained every day at his different manors, thirty thouſand people; and though the number here may have been exaggerated, it muſt, how⯑ever, have been very great to admit of ſuch exaggeration. A hoſ⯑pitality 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 [497] 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 fre⯑quently 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 dependant 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 antient barons. They neceſſarily became the judges in peace, and the leaders in war, of all who dwelt upon their eſtates. They could maintain order and execute the law within their reſpective demeſnes, becauſe each of them could there turn the whole force of all the inhabitants againſt the injuſtice of any one. No other perſon had ſufficient authority to do this. The king in particular had not. In thoſe antient times he was little more than the greateſt proprietor in his dominions, to whom for the ſake of common defence againſt their common ene⯑mies, the other great proprietors paid certain reſpects. To have enforced payment of a ſmall debt within the lands of a great pro⯑prietor, [498] 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 adminiſ⯑tration 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 coin⯑ing 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, appears 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 au⯑thority 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 au⯑thority and thoſe juriſdictions all neceſſarily flowed from the ſtate of property and manners juſt now deſcribed. Without remount⯑ing 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 Lochabar in Scot⯑land, 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 Argylle, and without being ſo much as a juſtice of [499] peace, uſed, notwithſtanding, to exerciſe the higheſt criminal juriſ⯑diction 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 publick peace. That gentleman, whoſe rent never exceeded five hundred pounds a year, carried, in 1745, eight hundred 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 diſ⯑poſing of him in marriage, provided it was in a manner not un⯑ſuitable 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 eſtabliſh⯑ing 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 ſubordi⯑nation, the king was as incapable of reſtraining the violence of the great lords as before. They ſtill continued to make war ac⯑cording [500] 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 fur⯑niſhed 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 con⯑ſuming the whole value of their rents themſelves, they had no diſ⯑poſition 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 a thouſand 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 antient method of expence they muſt have ſhared with at leaſt a thouſand 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 ſiner manufactures, a man of ten thouſand a year cannot well employ his revenue in any other way than in maintaining, perhaps, a thouſand families, who are all of them neceſſarily at his com⯑mand. In the preſent ſtate of Europe, a man of ten thouſand a year can ſpend his whole revenue, and he generally does ſo, with⯑out [501] 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 antient method of expence. For though the quantity of precious productions for which he ex⯑changes 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 work⯑men and their employers. He generally contributes, however, but a very ſmall proportion to that of each, to very few perhaps a tenth, to many not a hundredth, and to ſome not a thouſandth nor 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 independant of him, becauſe generally they can all be maintained without him.

WHEN the great proprietors of land ſpend their rents in main⯑taining 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 ruſtick 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 dependant upon any one of them.

[502] THE perſonal expence of the great proprietors having in this manner gradually increaſed, it was impoſſible that the number of their retainers ſhould not as gradually diminiſh, till they were at laſt diſmiſſed altogether. The ſame cauſe gradually led them to diſmiſs the unneceſſary part of their tenants. Farms were enlarged, and the occupiers of land, notwithſtanding the complaints of depopulation, reduced to the number neceſſary for cultivating it according to the imperfect ſtate of cultivation and improvement in thoſe times. By the removal of the unneceſſary mouths, and by exacting from the farmer the full value of the farm, a greater ſurplus, or what is the ſame thing, the price of a greater ſurplus, was obtained for the proprietor, which the merchants and manufacturers ſoon fur⯑niſhed him with a method of ſpending upon his own perſon in the ſame manner as he had done the reſt. The ſame cauſe continu⯑ing to operate, he was deſirous to raiſe his rents above what his lands, in the actual ſtate of their improvement, could afford. His tenants could agree to this upon one condition only, that they ſhould be ſecured in their poſſeſſion, for ſuch a term of years as might give them time to recover with profit whatever they ſhould lay out in the further improvement of the land. The expenſive vanity of the landlord made him willing to accept of this condition; and hence the origin of long leaſes.

EVEN a tenant at will, who pays the full value of the land, is not altogether dependent upon the landlord. The pecuniary ad⯑vantages which they receive from one another, are mutual and equal, and ſuch a tenant will expoſe neither his life nor his fortune in the ſervice of the proprietor. But if he has a leaſe for a long term of years, he is altogether independent; and his landlord muſt not expect from him even the moſt trifling ſervice beyond what is either expreſſly ſtipulated in the leaſe, or impoſed upon him by the common and known law of the country.

[503] 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 diſ⯑turbing 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 play-things of children, than the ſerious purſuits of men, they became as inſignificant as any ſubſtantial burgher or tradeſman 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 antient 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 main⯑tain, he is not 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 expence, 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 diſſi⯑pation, very ſeldom remain long in the ſame family. Among [504] 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 neceſ⯑ſarily renders all ſuch regulations impoſſible.

A REVOLUTION of the greateſt importance to the publick hap⯑pineſs, 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 ridi⯑culous, 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 forefight of that great revolution which the folly of the one, and the induſtry of the other was gradually bringing about.

IT is 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 ſup⯑poſed 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 per⯑petuities of different kinds, prevent the diviſion of great eſtates, [505] and thereby hinder the multiplication of ſmall proprietors. A ſmall proprietor, however, who knows every part of his little territory, who views it all with 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 intelli⯑gent, 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 every where in Europe a moſt unprofitable employment of a ſmall capital. For the ſake of the ſuperior ſecu⯑rity, indeed, a man of moderate circumſtances, when he retires from buſineſs, will ſometimes chuſe 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, forever, 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, 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 [506] to begin a plantation with. The purchaſe and improvement of uncultivated land, is there the moſt profitable employment of the ſmalleſt as well as of the greateſt capitals, and the moſt direct road to all the fortune and illuſtration which can be acquired in that country. Such land, indeed, is in North America to be had almoſt for nothing, or at a price much below the value of the natural produce; a thing impoſſible in Europe, or, indeed, in any country where all lands have long been private property. If landed eſtates, however, were divided equally among all the children, upon the death of any proprietor who left a numerous family, the eſtate would generally be ſold. So much land would come to market, that it could no longer ſell at a monopoly price. The free rent of the land would go nearer to pay the intereſt of the purchaſe money, and a ſmall capital might be employed in pur⯑chaſing land as profitably as in any other way.

ENGLAND, on account of the natural fertility of the ſoil, of the great extent of 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 intereſts 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 manu⯑factures 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 [507] commerce and manufactures. The greater part of the country muſt probably have been cultivated before the reign of Elizabeth; and a very great part of it ſtill remains uncultivated, and the cultivation of the far greater part much inferior to what it might be. The law of England, however, favours agriculture not only indirectly by the protection of commerce, but by ſeveral direct encouragements. Except in times of ſcarcity, the exportation of corn is not only free, but encouraged by a bounty. In times of moderate plenty, the importation of foreign corn is loaded with duties that amount to a prohibition. The importation of live cattle, except from Ireland, is prohibited at all times, and it is but of late that it was permitted from thence. Thoſe who cultivate the land, therefore, have a monopoly againſt their countrymen for the two greateſt and moſt important articles of land-produce, bread and butcher's meat. Theſe encouragements, though at bottom, perhaps, as I ſhall endeavour to ſhow hereafter, altogether illuſory, ſufficiently demonſtrate at leaſt the good intention of the legiſlature to favour agriculture. But what is of much more importance than all of them, the yeomanry of England are rendered as ſecure, as independent, and as reſpectable as law can make them. No country, therefore, in which the right of primogeniture takes place, which pays tithes, and where perpetuities, though contrary to the ſpirit of the law, are admitted in ſome caſes, can give more encouragement to agriculture than England. Such, however, notwithſtanding, is the ſtate of its cultivation. What would it have been, had the law given no direct encouragement to agriculture beſides what ariſes indirectly from the progreſs of commerce, and had left the yeomanry in the ſame condition as in moſt other countries of Europe? It is now more than two hundred years ſince the beginning of the reign of Elizabeth, a period as long as the courſe of human proſperity uſually endures.

[508] FRANCE ſeems to have had a conſiderable ſhare of foreign com⯑merce near a century before England was diſtinguiſhed as a com⯑mercial country. The marine of France was conſiderable, according to the notions of the times, before the expedition of Charles the VIIIth to Naples. The cultivation and improvement of France, however, is, upon the whole, inferior to that of England. The law of the country has never given the ſame direct encouragement to agriculture.

THE foreign commerce of Spain and Portugal to the other parts of Europe, though chiefly carried on in foreign ſhips, is very conſiderable. That to their colonies is carried on in their own, and is much greater, on account of the great riches and extent of thoſe colonies. But it has never introduced any conſiderable manufactures for diſtant ſale into either of thoſe countries, and the greater part of both ſtill remains uncultivated. The foreign commerce of Portugal is of older ſtanding than that of any great country in Europe, except Italy.

ITALY is the only great country of Europe which ſeems to have been cultivated and improved in every part, by means of foreign commerce and manufactures for diſtant ſale. Before the invaſion of Charles the VIIIth, Italy, according to Guicciardin, was cultivated not leſs in the moſt mountainous and barren parts of the country, than in the plaineſt and moſt fertile. The ad⯑vantageous ſituation of the country, and the great number of independent ſtates which at that time ſubſiſted in it, probably contributed not a little to this general cultivation. It is not impoſſible too, notwithſtanding this general expreſſion of one of the moſt judicious and reſerved of modern hiſtorians, that [509] Italy was not at that time better cultivated than England is at preſent.

THE capital, however, that is acquired to any country by com⯑merce and manufacturers, is all 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 par⯑ticular 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 Hans 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 cen⯑turies 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 [510] 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.